Understand your cost of production

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Cost of production is a fundamental economic concept that applies to nearly any business model. Due to the high risk and slim profit margins of farm businesses, it is particularly important that producers understand the costs and potential revenue associated with each enterprise they manage, says James DeDecker with Michigan State University Extension.

Estimating and managing production costs require a great deal of information. To help you do this, Michigan State University Extension offers a variety of free online crop and livestock budgeting resources.

DeDecker says the online tools are an excellent resource for producers interested in developing a deeper understanding of their production costs, which is a fundamental step toward managing risk and maximizing profit.

Check out the MSU crop and livestock budget resources here.

Source: Michigan State University Extension

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