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Show Me The Money: Farming Pays

Monday, August 20, 2018

Maize Production Gross Margin Guide-Maize Pays big

  • PLANT WITH THE FIRST EFFECTIVE RAINS-ALWAYS
  • ADOPT GOOD AGRONOMIC PRACTICES (GAPs)

Total Variable Costs/Ha

 

 

 

100,00%

 1 100,00

Gross Income at 10.0 t/ha

Best Case 1

 

 

 

 3 900,00

Gross Margin before overheads

 

 

 

 

 2 800,00

Return per $TVC

 

 

 

 

       3.54

 

 

 

 

 

 

Total Variable Costs/Ha

 

 

 

 

 1 100,00

Gross Income at 6.0 t/ha

Middle Case 1

 

 

 

 2 340,00

Gross Margin before overheads

 

 

 

 

1 240,00

Return per $TVC

 

 

 

 

       2,12

 

 

 

 

 

 

Total Variable Costs/Ha

 

 

 

 

 1 100,00

Gross Income at 8.0 t/ha

Best Case 2

 

 

 

 3 120,00

Gross Margin before overheads

 

 

 

 

 2 020,00

Return per $TVC

 

 

 

 

       2,84

Maize Grain Price/Ton (GMB, 2018)

 

 

 

 

 390,00

Break-even yield at $390.00/Ton

 

 

 

 

 2.8Ton/Ha

This is only a Gross Margin Budget Guide and is based on industrial average prices and only applies to commercial maize. Farmers should use figures relevant for their circumstances. Improve yields and contain costs below $1300.00/Ha to maintain a health value wedge/margin!!

Visit www.seedcogroup.com/zw for cost breakdown and more.

“Do not let anyone fool you, farming pays and pays big” (John Basera, 2018). But, some fundamentals have to be true! One of the key fundamentals for farming enterprise management is to have different income streams. The more the better, is the narrative! The principle follows that a farmer must send produce to the market every month-two months (at most), weekly or daily…the better and healthier. This is key to improved liquidity flow on the farm, but more importantly addresses the overall top-line (annual, monthly or weekly incomes) of the whole farming enterprise. We can also add that crop diversity spreads risks and broadens the catch. The principle can be achieved through enterprise diversity (crops, animal husbandry, poultry etc. on one farm) and/or crop diversity (maize, soyabean, sugarbean, green mealies, vegetables, wheat etc.). It is almost hard to have a smoothly run and financially sound farming enterprise without having different streams of income.

Maize is one venture with a very lucrative Return On Investment (ROI), which farmers can consider for production this coming summer season.

It is one enterprise which follows a basic gross margin principle that if you invest a dollar you can get at least two-fold return and more, assuming best agronomic practices are religiously followed. Normally, the cost of production per hectare of commercial maize averages $1,000 up to $1300, after absorbing all variable costs e.g. fertilisers, tillage, chemicals, seed, labour and harvesting costs, to mention just a few cost items. This cost structure excludes fixed costs.

If everything is done optimally, and GAPs (Good Agronomic Practices) are adopted as we strongly recommend, and achieving at least 6 ton/Ha, a farmer can rake in a minimum gross income of at least $2,300, and more after a period of 6 months. The rolling price of $390.00 per ton of maize is a “sweetener” enough to encourage farmers to take this venture and make more money. Another scenario, if a farmer can achieve 10 ton/Ha, a farmer can earn an income of $3 900.00, realising a gross margin of $2 800.00. This is serious business!

However, a farmer must always target to achieve yields above the break even yield of 2.8Ton/Ha, above 3.5 Ton/Ha, the better! At all times, a farmer must improve yields and contain costs to maintain health margins. This is the rule of the thumb for sustainable farming enterprises and it is always wise to follow this tenet!

The key phrase is Good Agronomic Practices (GAPs). Religious adoption of GAPs is a key fundamental to improved productivity and profitability of any farming venture. If productivity and profitability go wrong, nothing else will go right for the farming enterprise (John Basera, 2018).

Maize Pays Big!

Seed Co Agronomy and Extension Services
Contact: +263 772 413 184
Email: john.basera@seedcogroup.com
Website: www.seedcogroup.com/zw
Twitter: @basera_john or @SeedCoGroup

Author: 
John Basera

Seed Co has provided us with a stable market and technical support during the season.

We received a planter, plough and harrow from Seed Co and this greatly improved our lives as communal farmers.

Firstly, I would to thank Seed Co for the opportunity to brag about Seed Co. They are a fantastic company and they have put me on the map.