Know your numbers: the gross margin that tells you what to grow
One simple sum — income minus variable costs — tells you which crops actually make you money and which only look busy. Here's how to work out your gross margin.
Plenty of farmers work hard all season and still aren’t sure which crop actually paid. One simple calculation answers it — the gross margin — and it’s the most useful number on your whole farm.
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The one sum that matters
Gross margin = gross income − variable costs.
- Gross income: what the crop earns (yield × price).
- Variable costs: the things that rise and fall with the crop — seed, compost and fertiliser, labour you pay for, chemicals, transport (NSW DPI).
For example, if a hectare of maize sells for $800 and you spent $500 on seed, inputs and hired labour, your gross margin is $300 a hectare. (Illustration only — use your own real figures from your farm records.)
Why it guides what to grow
Gross margin lets you compare crops fairly — which one earns the most from the same land, water and labour (NSW DPI, SNV). A crop with a smaller harvest but lower costs can beat a “bigger” crop that eats its earnings in inputs. Work out the gross margin per hectare for each option and let the numbers choose.
Know your break-even
It also tells you your safety line (UMD):
- Break-even yield = total costs ÷ expected price (the yield you must hit just to cover costs).
- Break-even price = total costs ÷ expected yield (the lowest price you can accept).
Know these before you plant, and you’ll never be talked into a giveaway at the market — pair this with pricing your produce.
Where soil comes in
Your gross margin improves two ways: earn more or spend less. Rebuilding soil with PCAT BLOCK C does both over time — healthier soil lifts yield and gets more out of every bag of fertiliser, so the same costs return more. That’s margin, not just yield.
Do this now
- Work out the gross margin per hectare for each crop you grow.
- Compare them and shift land to the winners.
- Calculate your break-even before you plant.
PCAT BLOCK C — the locally-made, field-proven compost that rebuilds Zimbabwe’s tired, acidic soils.
Related: farm records that win you a loan · pricing your produce
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