Horti-Business Management

Cost of Cultivation

• Monitoring and controlling costs is one of the most important tasks of the farmer / manager, since it has a great impact on the efficiency and profitability of the enterprise. Generally farmers in India do have a written account of costs and this is done in an informally way. This is one of the key areas that a farmer requires training and sensitization. Though there are different methods of estimating the costs, the most common method is explained.
• Cost of Cultivation refers to the total cost incurred by the farmer for cultivation of a crop in an unit area i.e., acre or hectare.
• Total cost is a sum of the Total Fixed Cost and Total Variable Cost.
a) Total Fixed Cost It includes the cost incurred due to fixed resources in the farm, permanent labour, land revenue, etc. TFC includes;

i Land revenue
ii Depreciation of Buildings, machineries and equipments etc
iii Permanent labour
iv. Interest on average capital investment
v Other fixed costs

Total Fixed costs:

b) Total Variable Costs It includes the cost incurred for use of all variable inputs for the cultivation of the particular crop. It includes hired labour and material cost for all the cultivation operations such as;

i Land preparation
ii Seeds
iii Fertilizers (a) Urea
(b) Others
iv Weeding and other cultivation operations
v Irrigation water charges
vi Plant protection measures
vii Harvest
viii Interest on average capital investment
ix Others
Total Variable costs:

• In the case of perennial crops like Coconut, Mango etc., the establishment cost has to be estimated. The estimated establishment cost has to be spread over the entire life period of the perennial crops. Hence in the case of perennial crops, total cost includes fixed cost (establishment cost + cost towards use of fixed resources annually) and Variable cost.
• Establishment cost includes cost of planting material, labour towards digging pits and planting, and expenses towards al cultivation expenses until the crop starts yielding.