Guidelines for Estimating
Potato Production Costs
2016
in Manitoba
...............................................
Guidelines For Estimating
Irrigated Processing Potato Costs - 2016
Based on 780 Acres Production
Date: January, 2016
The following budgets is estimates of the cost of producing processing
potatoes in Manitoba. General Manitoba Agriculture, Food and Rural
Development (MAFRD) recommendations are assumed in using fertilizers and
chemical inputs. These figures provide an economic evaluation of the crops
and estimated yields required to cover all costs. Costs include labour,
investment, depreciation, and owner management costs, but do not
necessarily represent the average cost of production in Manitoba.
These budgets may be adjusted by putting in your own figures. As a producer
you are encouraged to calculate your own costs of production for various
crops. On each farm, costs and yields differ due to soil type, climate and
This tool is available as an Excel worksheet at: www.manitoba.ca/agriculture
or at your local MAFRD GO Office. The Farm Machinery Custom and Rental Rate
is also available to help determine machinery costs.
Note: This budget is only a guide and is not intended as an in depth study of the cost of production
of this industry. Interpretation and use of this information is the responsibility of the user. If you
need help with a budget, contact your local MAFRD GO Office.
Guidelines: Potato Production Costs
2
Irrigated Processing Potato Cost of Production - 2016
A. Operating Costs
1.01 Seed & cutting
Seed treatment
1.02 Fertilizer
1.03 Herbicides
1.04 Fungicide & Insecticide
1.05 Fuel Costs-Field
1.06 Trucking Costs
1.07 Irrigation Fuel
1.08 Maintenance & Repairs
1.09 Custom Work & Rental
1.10 Hired Labour
1.11 Insurance
1.12 Utilities
1.13 Other Costs
Subtotal Operating Costs
1.14 Interest on Operating
Total Operating Costs
Cost / Acre
$306.00
$79.20
$332.86
$48.00
$191.50
$55.89
$106.44
$54.94
$357.42
$144.00
$400.00
$105.97
$105.38
$103.33
$2,390.93
$65.75
$2,456.68
Cost /CWT (Based on Gross Yield)
305 CWT 330 CWT 355 CWT 380 CWT
$1.00
$0.93
$0.86
$0.81
$0.26
$0.24
$0.22
$0.21
$1.09
$1.01
$0.94
$0.88
$0.16
$0.15
$0.14
$0.13
$0.63
$0.58
$0.54
$0.50
$0.20
$0.19
$0.18
$0.18
$0.35
$0.35
$0.35
$0.35
$0.18
$0.17
$0.15
$0.14
$1.17
$1.08
$1.01
$0.94
$0.47
$0.44
$0.41
$0.38
$1.31
$1.21
$1.13
$1.05
$0.40
$0.37
$0.35
$0.33
$0.35
$0.32
$0.30
$0.28
$0.34
$0.31
$0.29
$0.27
$7.91
$7.35
$6.87
$6.45
$0.22
$0.20
$0.19
$0.17
$8.12
$7.55
$7.06
$6.62
B. Fixed Costs
2.01 Own Land Cost
2.02 Depreciation
2.03 Investment
Total Fixed Costs
$144.44
$578.10
$158.85
$881.39
$0.47
$1.90
$0.52
$2.89
$0.44
$1.75
$0.48
$2.67
$0.41
$1.63
$0.45
$2.49
$0.38
$1.52
$0.42
$2.32
C. Labour
3.01 Own Labour
$100.00
$0.33
$0.30
$0.28
$0.26
$3,438.07
$11.34
$10.53
$9.83
$9.21
$11.11
355
302
$3,355.22
$11.11
380
323
$3,588.53
Total Cost of Production
Your Cost
Profitability & Breakeven Analysis
Estimated Farmgate
Price $ per cwt
Gross Yield per acre (cwt)
Marketable Yield per acre (cwt)
Gross Revenue / acre
$11.11
Marginal Returns
Over Operating Costs
Over Total Costs (Net Profit)
Operating Expense Ratio
Breakeven Price Per Unit
Operating Costs
Total Costs
Breakeven Yield (Gross cwt)
Operating Costs
Total Costs
Return on Assets (ROA)
$11.11
305
259
$2,877.49
$11.11
330
281
$3,121.91
$420.81
($560.58)
85.4%
$665.23
($316.16)
78.7%
$9.49
$13.27
$8.74
$12.24
$8.13
$11.38
$7.61
$10.64
0.363%
1.109%
1.822%
2.534%
$898.54 $1,131.85
($82.85)
$150.46
73.2%
68.5%
260
364
(Includes estimated return from annual non-potato acres in crop rotation)
Note: This budget is only a guide and is not intended as an in depth study of the cost of production of this industry.
Interpretation and utilization of this information is the responsibility of the user.
Manitoba Agriculture, Food and Rural Development
Guidelines: Potato Production Costs
3
Risk & Sensitivity Analysis
Potato
$ per acre
A. Operating Costs
B. Fixed Costs
Total Costs
$2,456.68
$881.39
$3,438.07
305 CWT
Estimated Farmgate
Price $ per cwt
Marketable Yield (cwt per acre)
Percent Price Variation
Higher Price ($ per cwt)
Lower Price ($ per cwt)
Higher Yield (cwt per acre)
Lower Yield (cwt per acre)
Your Farm
$11.11
259
Up
5%
$11.67
$10.00
284.9
246.1
Potato - Gross Yield
330 CWT
355 CWT
$11.11
281
$11.11
302
Down
10%
$11.67
$10.00
309.1
267.0
380 CWT
$11.11
323
Percent Yield Variation
$11.67
$10.00
332.2
286.9
Up
10%
Down
5%
$11.67
$10.00
355.3
306.9
Higher Margin Scenario - Price Up 5% and Yield Up 10%
Gross Revenue / acre
Marginal Returns
Over Operating Costs
Over Total Costs (Net Profit)
Operating Expense Ratio
$3,323.50
$3,605.81
$3,875.28
$4,144.75
$866.82
($114.57)
73.9%
$1,149.13
$167.74
68.1%
$1,418.60
$437.21
63.4%
$1,688.07
$706.68
59.3%
Lower Margin Scenario - Price Down 10% and Yield Down 5%
Gross Revenue / acre
Marginal Returns
Over Operating Costs
Over Total Costs (Net Profit)
Operating Expense Ratio
$2,460.25
$2,669.23
$2,868.71
$3,068.19
$3.58
($977.81)
99.9%
$212.56
($768.83)
92.0%
$412.04
($569.35)
85.6%
$611.52
($369.87)
80.1%
Note: This budget is only a guide and is not intended as an in depth study of the cost of production of this industry. Interpretation
and utilization of this information is the responsibility of the user.
Manitoba Agriculture, Food and Rural Development
Guidelines: Potato Production Costs
4
Irrigated Processing Potato - Input
Assumptions
1. This budget outlines the cost of producing processing potatoes under irrigated conditions.
2. A potato land base of 780 harvested acres was assumed in developing this budget. The crop
rotation was based on growing potatoes no more than 1 in 3 years.
3. Total gross yield per acre was estimated at 305 to 380 cwt/acre with marketable yield estimated
at 259 to 323 cwt/acre.
4. MASC Crop Insurance, is based on 2015 rates at 80% coverage.
5. Utilities cost is based on flat rate for all yields.
6. All trucking operations related to marketing of processed potatoes were assumed to be custom
hauled to the processors. A rate applicable to hauling potatoes approximately 100 miles was
assumed.
Total land base
Number of irrigation pivot circles
Acres per circle
Potato harvested acres (annual basis)
Potato rotation (time in rotation - how many years)
Total Acres
Total Rented Acres
Land Rental Per Acre (potato acres only)
Total Owned Acres
Owned Land Value Per Acre
6
130
780
3
2,880
320
$225
2,560
$6,500
Yields
Dockage
Shrink
9%
6%
Low
305
0%
259
Estimated Yields
Gross Yield (cwt/acre)
Acres - Percentage
Marketable Yield (cwt/acre
Potato Contract Price
Base Rate ($/cwt)
Bonus Rate ($/cwt)
Penalty Rate ($/cwt)
Medium
330
10%
281
Med-High
355
70%
302
High
380
20%
323
$11.11
$0.00
$0.00
Interest Rate
Operating
Investment
5.5%
2.5%
1.01 Seed Cost & Treatment Cost
Seed Cost
Cutting Cost - Custom Rate
Seed Treatment - Fungicide
Seed Treatment - Insecticide
Seeding Rate
Cost ($/cwt) (cwt/acre)
$15.00
18
$2.00
18
$2.40
18
$2.00
18
Total Cost
Per Acre
$270.00
$36.00
$43.20
$36.00
$385.20
Rate
Actual
Lbs/acre Nutrient $/lb
95
$0.557
95
$0.529
65
$0.805
Total Cost
Per Acre
$52.94
$50.21
$52.32
1.02 Fertilizer Cost
Nitrogen: (UAN) 28-0-0
Nitrogen: (urea) 46-0-0
Phosphate: 10-34-0
Bulk Price
$/tonne
$344
$536
$723
Manitoba Agriculture, Food and Rural Development
Guidelines: Potato Production Costs
Phosphate: 11-52-0
Potash: 0-0-60
Sulphur: 20.5-0-0-24
Other (Micro, etc.)
5
$779
$507
$449
45
260
45
$0.565
$0.383
$0.385
$25.41
$99.66
$17.32
$35.00
$332.86
Times
Cost Per
Applied Application
Total Cost
Per Acre
$3.00
$45.00
$48.00
Crop Pesticide Costs
1.03 Herbicide Costs
Preplant
Post emergent
1.04 Fungicide Costs & Insecticides
Contact Fungicide
Systemic Fungicide
Phos Acid Fungicide
Insecticide
1.05 Fuel Costs (field & trucking)
Field Operation
Harrow
Rotera
Cultivate
Plant
Spray
Cultivate
Hilling
Fertilize
Harvest
Ripper
Tandem Disk
Times
Over
0
1
1
1
3
1
2
1
1
1
1
11
2
3
1
$6.50
$20.00
$20.00
$20.00
Diesel Fuel Cost $/litre
Fuel Use
Litres/Ac
0.75
4.60
1.29
1.40
0.42
1.74
1.74
0.42
8.50
5.75
1.85
Fuel Use
Imp.Gal/Ac
0.16
1.01
0.28
0.31
0.09
0.38
0.38
0.09
1.87
1.26
0.41
Truck Fuel-Harvesting
Truck Capacity (cwts)
Fuel Consumption (miles/gal)
Distance to storage (miles)
$71.50
$40.00
$60.00
$20.00
$191.50
$0.85
Total Cost
Per Acre
$0.00
$3.91
$1.10
$1.19
$1.07
$1.48
$2.96
$0.36
$7.23
$4.89
$1.57
$25.75
275
2.5
15
1.06 Trucking Costs - Processor
Trucking Rate ($/cwt) based on 70 miles to processor
Trucking Reimbursement ($/cwt)
$0.70
$0.35
1.07 Irrigation Costs
Inches applied
Hours/pivot (.75" water)
Percent of pumping - Hydro
Hourly pumping costs - Hydro
Percent of pumping - Diesel
Hourly pumping costs - Diesel
12
72
60%
$5.00
40%
$8.00
1.08 Maintenance & repairs
Machinery
Potato Storage
Irrigation Equipment
Rate
6.25%
1.50%
1.50%
Total Cost
$193,900
$70,200
$14,685
Total Cost/ac
$249
$90
$19
Manitoba Agriculture, Food and Rural Development
Guidelines: Potato Production Costs
6
1.09 Custom Work & Rental
Custom - aerial
Custom - granular
1.10 Hired labour costs
Labour per acre
Acres
Number
14
2
Rate/ac
$9.00
$9.00
Total Cost/ac
$126
$18
Hours
16
Rate
$25.00
Total Cost/ac
$400
780
$312,000
Total
1.11 Insurance Costs
Rate
Crop Insurance (80%)
$50.84
Hail Insurance
$0.00
Buildings & Equipment
0.25%
Farm trucks (seasonal)
$500
Farm trucks (annual)
$1,000
Content Insurance (value of production)
Insured value of production ($/cwt)
Number
1.12 Utilities
Hydro
Phone / Cell
6
1.13 Other Costs
Accounting & Legal
Publications & Membership
Crop Consulting per acre
Property Taxes
Land Rental
Shop Supplies
Miscellaneous
Acres
780
780
10
5
Rate
$7,500
$100
Months
10
12
Rate
Acres
0
$40
$25.00
$225.00
780
693
87
$39,655
$0
$19,831
$5,000
$5,000
0.5%
$11.11
Total Cost
$75,000
$7,200
$6,500
$2,000
$31,200
$17,325
$19,575
$2,000
$2,000
Capital Costs
Depreciation (straight line):
Useful Life:
Buildings
Storage Building
Machinery & Equipment
Irrigation Equipment
20
20
15
15
Salvage Value (% of original cost)
Buildings
Storage Building
Machinery & Equipment
Irrigation Equipment
years
years
years
years
5.0%
5.0%
15.0%
30.0%
Capital Investment
Land Value
Owned land 2,560 ac. @ $6,500/acre
Storage Facilities
Building, climate control
& loading area
Machine Shed Workshop
Size
312,000
$16,640,000
Rate/cwt
$15.00
$4,680,000
$150,000
Manitoba Agriculture, Food and Rural Development
Guidelines: Potato Production Costs
7
Total Storage Costs
$4,830,000
Irrigation System
River pump station
Booster pump station
Well & Pump
Water Reservoir
Pipeline (per 2 miles)
Electrical & pipeline
Pivots & generators
Total Irrigation Costs
Value
$74,000
$45,000
$50,000
$150,000
$40,000
$25,000
$90,000
Number
1
1
1
0
3
6
6
Machinery & Equipment
Bin piler (primary)
Bin piler (secondary)
Picking table
Conveyor (3'x150')
Dirt conveyor
Diggers
Hog
Skid Steer
Tractor (280hp)
Tractor (350hp)
Ripper
Roterra
Cultivator
Disc
Even Flow Tub
Tandem Truck
Belt Bottom Boxes
(enter equipment here)
(enter equipment here)
(enter equipment here)
(enter equipment here)
(enter equipment here)
(enter equipment here)
(enter equipment here)
Total Machinery Costs
Value
$89,600
$33,600
$280,000
$56,000
$22,400
$168,000
$89,600
$72,800
$336,000
$364,000
$28,000
$22,400
$28,000
$22,400
$89,600
$44,800
$33,600
$0
$0
$0
$0
$0
$0
$0
Number
1
1
1
3
1
2
1
1
2
1
1
1
1
1
1
10
10
1
1
1
1
1
1
1
Per Acre
Total Capital Investment
Labour Costs (Owner Labour and Management)
Hours per acre
Rate per hour
Return on Asset (ROA) Assumptions
Total annual non-potato acres in crop rotation
Estimated non-potato acres in crop rotation (per acre)
- Marginal Return Over Total Costs (Net Profit)
- Land Investment Cost
- Machinery Investment Cost
- Operating Interest
$74,000
$45,000
$50,000
$0
$120,000
$150,000
$540,000
$979,000
$89,600
$33,600
$280,000
$168,000
$22,400
$336,000
$89,600
$72,800
$672,000
$364,000
$28,000
$22,400
$28,000
$22,400
$89,600
$448,000
$336,000
$0
$0
$0
$0
$0
$0
$0
$3,102,400
$3,977
$25,551,400
4
$25.00
2,100
$25.00
$72.22
$11.25
$6.88
Manitoba Agriculture, Food and Rural Development
Guidelines: Potato Production Costs
8
Assumptions
1.
This budget outlines the cost of producing processing potatoes under irrigated conditions and is
based on a pivot system.
2.
A potato land base of 2,880 harvested acres was assumed in developing this budget. The cost
of production does not include the cost of maintaining the corners not under irrigation. The crop
rotation was based on growing potatoes no more than 1 in 3 years.
3.
Total gross yield per acre was estimated at 305 to 380 cwt/acre with marketable yield estimated
at 259 to 323 cwt/acre.
4.
MASC Crop Insurance, is based on 2015 rates at 80% coverage.
5.
All trucking operations related to marketing of processed potatoes were assumed to be custom
hauled to the processors. A rate applicable to hauling potatoes approximately 100 miles was
assumed.
Irrigated Potato Cost of Production Worksheet
A. Operating Costs
Your Cost
1.01 Seed & Cutting Cost
Seed
x
=
18
$15.00
$270.00
cwt/acre
$/cwt
$/acre
x
=
18
$2.00
$36.00
cwt/acre
$/cwt
$/acre
=
$306.00
+
x
=
$2.40
$2.00
18
$79.20
$/cwt fungicide
$/cwt insecticide
cwt/acre
$/acre
1.02 Fertilizer
Nitrogen: (UAN) 28-0-0
x
=
95
$0.557
$52.94
lbs/acre
$ / lb
$/acre
Nitrogen: (urea) 46-0-0
x
=
95
$0.529
$50.21
lbs/acre
$ / lb
$/acre
Phosphorus: 10-34-0
x
=
65
$0.805
$52.32
lbs/acre
$ / lb
$/acre
Phosphorus: 11-52-0
x
=
45
$0.565
$25.41
lbs/acre
$ / lb
$/acre
Cutting
Total
$/acre
Treatment Cost
Manitoba Agriculture, Food and Rural Development
Guidelines: Potato Production Costs
Potash
9
x
=
260
$0.383
$99.66
lbs/acre
$ / lb
$/acre
x
=
45
$0.385
$17.32
lbs/acre
$ / lb
$/acre
=
$35.00
$/acre
=
$332.86
$/acre
1.03 Herbicide
Preplant
Post emergent
Total
$3.00
$45.00
$48.00
$/acre
$/acre
$/acre
1.04 Fungicide & Insecticide
Contact Fungicide
x
=
11
$6.50
$71.50
number applications
cost per application
$/acre
Systemic Fungicide
x
=
2
$20.00
$40.00
number applications
cost per application
$/acre
Phos Acid Fungicide
x
=
3
$20.00
$60.00
number applications
cost per application
$/acre
Insecticide
x
=
1
$20.00
$20.00
number applications
cost per application
$/acre
Total =
$191.50
Sulfur
Micro
Total
1.05 Fuel Costs
a) Field Fuel Costs
Field
Operation
Harrow
Roterra
Cultivate
Plant
Spray
Cultivate
Hilling
Fertilize
Harvest
Ripper
Tandem Disk
Times
Over
0
1
1
1
3
1
2
1
1
1
1
Fuel Use
Litres/Ac
0.75
4.60
1.29
1.40
0.42
1.74
1.74
0.42
8.50
5.75
1.85
$/acre
Fuel Cost $/litre
$0.85
Fuel Use
Imp.Gal/Ac
0.16
1.01
0.28
0.31
0.09
0.38
0.38
0.09
1.87
1.26
0.41
Total Cost
Per Acre
$0.00
$3.91
$1.10
$1.19
$1.07
$1.48
$2.96
$0.36
$7.23
$4.89
$1.57
$25.75
b) Truck Fuel Costs - harvest from field to storage
Low Yield
305
gross yield (cwt)/ac.
=
15.25
tons/ac.
Manitoba Agriculture, Food and Rural Development
Guidelines: Potato Production Costs
÷
=
x
=
÷
=
x
=
+
=
÷
Total =
Medium Yield
=
÷
=
x
=
÷
=
x
=
+
=
÷
Total =
Med-High Yield
=
÷
=
x
=
÷
=
x
=
+
=
÷
Total =
High Yield
=
÷
=
x
=
÷
=
x
=
+
=
10
13.75
1.11
15
16.64
2.5
6.65
$0.85
$25.71
$25.75
$51.46
259
$0.1987
truck capacity (tons)
trips/acre
distance/trip (miles)
total miles/acre
fuel consumption (miles/gal)
gallons required fuel
fuel cost ($/litre)
field to storage fuel cost
field fuel cost
Fuel Costs - Field
marketable yield (cwt)/ac.
per cwt
330
16.50
13.75
1.20
15
18.00
2.5
7.20
$0.85
$27.82
$25.75
$53.57
281
$0.1906
gross yield (cwt)/ac.
tons/ac.
truck capacity (tons)
trips/acre
distance/trip (miles)
total miles/acre
fuel consumption (miles/gal)
gallons required fuel
fuel cost ($/litre)
field to storage fuel cost
field fuel cost
Fuel Costs - Field
marketable yield (cwt)/ac.
per cwt
355
17.75
13.75
1.29
15
19.36
2.5
7.75
$0.85
$29.93
$25.75
$55.68
302
$0.1844
gross yield (cwt)/ac.
tons/ac.
truck capacity (tons)
trips/acre
distance/trip (miles)
total miles/acre
fuel consumption (miles/gal)
gallons required fuel
fuel cost ($/litre)
field to storage fuel cost
field fuel cost
Fuel Costs - Field
marketable yield (cwt)/ac.
per cwt
380
19.00
13.75
1.38
15
20.73
2.5
8.29
$0.85
$32.04
$25.75
$57.79
gross yield (cwt)/ac.
tons/ac.
truck capacity (tons)
trips/acre
distance/trip (miles)
total miles/acre
fuel consumption (miles/gal)
gallons required fuel
fuel cost ($/litre)
field to storage fuel cost
field fuel cost
Fuel Costs - Field
Manitoba Agriculture, Food and Rural Development
Guidelines: Potato Production Costs
11
÷
Total =
323
$0.1789
Total Fuel Costs =
$55.89
marketable yield (cwt)/ac.
per cwt
$/acre
1.06 Trucking Costs - from storage to processor (Custom haul)
Low Yield
259
cwt net yield/acre
$0.35
net trucking rate/cwt
x
$/acre
=
$90.65
Medium Yield
281
cwt net yield/acre
$0.35
net trucking rate/cwt
x
$/acre
=
$98.35
Med-High Yield
302
cwt net yield/acre
$0.35
net trucking rate/cwt
x
$/acre
=
$105.70
High Yield
323
cwt net yield/acre
$0.35
net trucking rate/cwt
x
$/acre
=
$113.05
Total =
1.07 Irrigation Costs
Hydro
=
x
=
x
x
÷
=
Diesel
=
x
=
x
x
÷
=
Total =
$106.44
72
96
12
1152
$5.00
3.6
468
$44.31
72
96
12
1152
$8.00
2.4
312
$70.89
$54.94
$/acre
hours for .75 inches
hours for 1.0 inches
inches water applied
hours pumping
hourly pumping costs
number of pivots
acres
$/acre
hours for .75 inches
hours for 1.0 inches
inches water applied
hours pumping
hourly pumping costs
number of pivots
acres
$/acre
$/acre
1.08 Maintenance & Repairs
+
+
=
÷
=
$193,900
$70,200
$14,685
$278,785
780
$357.42
machinery
potato storage
irrigation
total
acres
$/acre harvested
14
$9.00
$126.00
2
$9.00
aerial applications
rate
total per acre
aerial applications
rate
1.09 Custom Work & Rental
x
=
x
Manitoba Agriculture, Food and Rural Development
Guidelines: Potato Production Costs
=
Total =
12
$18.00
$144.00
total per acre
$/acre
x
=
$16
$25.00
$400.00
Hours per acre
rate
total per acre
+
+
+
+
=
÷
=
$0
$39,655
$5,000
$5,000
$19,831
$69,486
780
$89.08
hail insurance
crop insurance
farm trucks (seasonal)
farm trucks (annual)
buildings & equipment
total insurance
acres
$/acre
x
x
=
÷
Total =
259
$11.11
0.5%
$14.39
259
$0.0556
gross yield (cwt)/ac.
Insured value of production ($/cwt)
content insurance
per acre
marketable yield (cwt)/ac.
per cwt
x
x
=
÷
Total =
281
$11.11
0.5%
$15.61
281
$0.0556
gross yield (cwt)/ac.
Insured value of production ($/cwt)
content insurance
per acre
marketable yield (cwt)/ac.
per cwt
Med-High Yield
x
x
=
÷
Total =
302
$11.11
0.5%
$16.78
302
$0.0556
gross yield (cwt)/ac.
Insured value of production ($/cwt)
content insurance
per acre
marketable yield (cwt)/ac.
per cwt
High Yield
x
x
=
÷
Total =
323
$11.11
0.5%
$17.94
323
$0.0556
gross yield (cwt)/ac.
Insured value of production ($/cwt)
content insurance
per acre
marketable yield (cwt)/ac.
per cwt
Total Insurance =
$105.97
$/acre
$75,000
$7,200
$82,200
780
$105.38
hydro
telephone
total utilities
acres
$/acre
1.10 Hired Labour Costs
1.11 Insurance
Content insurance
Low Yield
Medium Yield
1.12 Utilities
+
=
÷
=
Manitoba Agriculture, Food and Rural Development
Guidelines: Potato Production Costs
13
1.13 Other Costs
+
+
+
+
+
+
=
÷
=
$6,500
$2,000
$31,200
$17,325
$19,575
$2,000
$2,000
$80,600
780
$103.33
accounting & legal
membership
crop consulting
property taxes
land rental
shop supplies
other costs
total other costs
acres
$/acre
1.14 Interest on Operating Costs
(Operating interest is charged on one-half the sub-total
operating costs)
$2,390.93
operating costs
÷
2
average
average value
=
$1,195.46
operating interest
x
5.5%
$/acre
=
$65.75
Capital Investment
Land Value
Own land 2,560 ac. @ $6,500/ac
$16,640,000
Storage Facilities (312,000 cwt @ $15.00 per cwt)
Building & Climate Control
Workshop
Total Storage Costs
Irrigation System
River pump station
Booster pump station
Well & Pump
Water Reservoir
Pipeline (per 2 miles)
Electrical & pipeline
Pivots & generators
Total Irrigation Costs
$4,680,000
$150,000
$4,830,000
$74,000
$45,000
$50,000
$0
$120,000
$150,000
$540,000
$979,000
Machinery & Equipment
$3,102,400
Total Capital Investment
$25,551,400
B. Fixed Costs
2.01 Land Costs
x
x
$6,500
2.5%
88.9%
$/acre
investment rate
potato acres - owned land
Manitoba Agriculture, Food and Rural Development
Guidelines: Potato Production Costs
=
14
$144.44
$/acre
2.02 Depreciation
Original Value - Salvage Value
Useful life (yrs.)
Storage Facilities
$4,830,000
$241,500
20
780
$294.13
original value
salvage value
useful life (yrs.)
total acres
$/acre
$3,102,400
$465,360
15
780
$225.39
original value
salvage value
useful life (yrs.)
total acres
$/acre
÷
÷
=
$979,000
$293,700
15
780
$58.57
original value
salvage value
useful life (yrs.)
total acres
$/acre
Total =
$578.10
÷
÷
=
Machinery & Equipment
÷
÷
=
Irrigation System
$/acre
2.03 Investment Cost
Original Value + Salvage Value X Investment Rate
2
Storage Facilities
+
÷
x
÷
=
Machinery & Equipment
+
÷
x
÷
=
Irrigation System
$4,830,000
$241,500
2
2.5%
780
$81.27
original value
salvage value
average value
Investment rate
total acres
$/acre
$3,102,400
$465,360
2
2.5%
780
$57.18
original value
salvage value
average value
Investment rate
total acres
$/acre
$979,000
original value
Manitoba Agriculture, Food and Rural Development
Guidelines: Potato Production Costs
15
+
÷
x
÷
=
$293,700
2
2.5%
780
$20.40
salvage value
average value
Investment rate
total acres
$/acre
Total =
$158.85
$/acre
4
$25.00
$100.00
hours/acre
$/hour
$/acre
C. Own Labour Costs
x
=
Profitability & Breakeven Analysis:
Gross Revenue = Price per unit x Yield per acre
(eg. potato: $11.11/cwt x 259 marketable cwt/ac = $2,877.49/ac)
Net Profit = Gross Revenue - Total Cost
(eg. potato: $2,877.49 gross revenue - $3,438.07 total cost = $-560.58 per acre)
Operating Expense Ratio = (Operating Cost / Gross Revenue) x 100
(eg. potato: $2,456.68 operating expense / $2,877 gross revenue = 85.4%)
Breakeven Price = Cost / Target Yield (eg. potato cost $3,438.07 / 259 cwt = $13.27 per cwt)
Breakeven Yield = Cost / Price per Unit
(eg. potato cost $3,438.07 / $11.11 cwt / (1 - (0.09 shrink + 0.06 dockage)) = 364.1 cwt)
(((Potato acres: net profit + operating interest + land inv. cost +
investment cost) x acres) + (Non-potato acres: net profit + operating
interest + land inv. cost + investment cost) x acres)))
Return on Assets =
Total Capital Investment
(eg. 355 CWT potato: (((-$82.85 net profit + $65.75 op. interest + $144.44 land inv. cost +
$158.85 inv. cost) x 780 potato acres) + ($25. net profit + $6.88 op. interest + $72.22 land inv.
cost + $11.25 inv. cost) x 2100 rotation acres))) / $25,551,400 total capital investment = 1.822%
ROA
Created and maintained by MAFRD Farm Management
January, 2016
For more information, contact your local MAFRD GO Office or:
Roy Arnott
Farm Management Specialist
Gary Smart
Farm Management Specialist
Manitoba Agriculture, Food and Rural Development
For more information
• Contact your local Manitoba Agriculture,
Food and Rural Development (MAFRD)
Growing Opportunities (GO) Office.
• Visit us at manitoba.ca/agriculture.
ESR-016086
January 2015