Costs do matter (continued from last month)
Whilst I initially indicated that income is a stronger driver of profit than cost control, it would not be feasible to pursue some aspect of income generation which cost more to implement than the income that it generated.
There are two main aspects to cost: nominal dollar cost and unit cost.
Nominal dollar cost is the total amount of money spent on inputs (fertiliser, chemicals, labour, etc), whilst unit cost refers to the cost of a bin of fruit, or a carton of fruit.
To be competitive, growers must have a low unit cost structure. This is measured by dividing total input costs by marketable yield and should be monitored for each variety.
Conclusion
There are many jobs to do on an orchard each season, and it can be difficult for growers to identify the important tasks that could make a favourable impact on business performance.
An understanding of marketable yield and input costs for each variety will assist growers to make good decisions about the best use of their land to maximise income.
