Production Costs

Minnesota West Ag Services believes that the first step to profitable marketing is to understand your costs. With an easy to use format, we help producers list their expected variable costs, land costs, and fixed costs to establish a "Profit Zone," "Revenue Goal" and  "Sensitivity Analysis" for each of their crops.  Prior to planting MWAS uses a forward looking approach to help producers estimate their cost of production. Revisions can be made throughout the year to update costs to provide producers with their actual cost of production.

The first step is to list the planting intentions and crop insurance program

The Second step is to estimate the variable costs per acre for each crop.

The variable costs per enterprise are then automatically calculated for each crop using the planted acres.

The Third step is provide the costs for rented land and owned property to calculate an average land cost.

The Forth step is to provide fixed costs. Using a percentage allocation based on criteria such as crop acres for each crop or allocations to livestock enterprises, reports are generated for fixed costs allocated to each enterprise by both total dollars and dollars per acre.

The Fifth and final step involves establishing a "Profit Goal." By using the producer's net worth and a percent return a simple allocation can be made to establish a return goal for each enterprise.  The profit goal can be modified to give a meaningful and realizable goal based on the expectations for an individual crop marketing year.

The Profit Zone is calculated from the associated costs listed for each crop.

A Sensitivity Analysis for each crop provides a look at profitability per acre. Crop insurance revenue floor values can be enabled and reflected within the sensitivity analysis.