Why use this calculator
Knowing what a hectare of crop costs to grow is the base of every cropping decision: which paddocks to sow, how hard to push inputs, when to forward sell and at what price. Most growers can quote their fertiliser bill but not the total cost per hectare, and the gap is where losses hide.
This calculator adds the variable costs of one crop, then shows the two numbers that matter at sowing and at marketing time: the yield you need at your expected price, and the price you need at your expected yield. It replaces the old fixed $300 per tonne assumption with your own net price, and shows gross margin per hectare so you can compare crops or paddocks on the same footing.
How to use it
- Enter seed cost per hectare including treatment.
- Enter the fertiliser cost per hectare for every product applied to the crop.
- Enter the chemical cost per hectare across the full spray program.
- Enter fuel, oil and repairs per hectare from last season's records. Enter casual labour and contract work per hectare.
- Enter insurance, levies, agronomy and other crop costs per hectare. Enter the area sown in hectares.
- Enter your net grain price after freight and charges.
- Enter a realistic expected yield in tonnes per hectare.
What each result means
- Total variable cost per hectare
- The direct cost of growing one hectare of this crop before land, finance and overhead costs are counted.
- Total cost for the area
- Cost per hectare multiplied by hectares sown, which is the working capital the crop ties up before harvest.
- Break-even yield
- Tonnes per hectare needed at your net price just to pay the variable costs. Anything above it is margin.
- Yield buffer above break-even
- How many tonnes per hectare your expected yield sits above the break-even yield, or how far below it, which shows how bad a season can get before the crop loses money.
- Break-even price
- The net price per tonne needed at your expected yield to cover variable costs, a floor for forward selling decisions.
- Gross margin per hectare
- Income per hectare at your expected yield and price, minus variable costs. It is what is left to pay overheads and profit.
- Gross margin for the area
- Gross margin per hectare multiplied by hectares sown, the crop's total contribution to fixed costs and profit.
- Largest cost item
- The biggest single cost line per hectare, and usually the first place to look when trimming or benchmarking costs.
- Cost breakdown
- Each cost category as a share of the total, showing where the money in this crop actually goes.
The formula
Total variable cost per hectare
($/ha) = seed + fertiliser + chemicals + fuel and repairs + labour + other
Total cost
($) = cost per hectare x area sown (ha)
Break-even yield
(t/ha) = cost per hectare / net grain price ($/t)
Break-even price
($/t) = cost per hectare / expected yield (t/ha)
Gross margin per hectare
($/ha) = expected yield x net price minus cost per hectare
Each item share
(%) = item cost / total cost per hectare x 100
How this number is used in practice
Gross margin analysis is how most Australian growers and their advisers compare crops. State departments publish annual gross margin budgets for wheat, barley, canola and pulses in each region, and they are a useful check on your own figures. The numbers here stop at variable costs on purpose: machinery depreciation, finance, rates and your own wage are overheads that have to be paid whatever you sow, so they are best covered from the total gross margin of the farm rather than loaded onto one crop.
The two break-even figures answer different questions. Break-even yield is a sowing decision: if a paddock has not produced above it in most seasons, or stored soil water is low, the crop is a gamble. Break-even price is a marketing decision: it is the floor below which forward selling locks in a loss on the variable costs.
Run both with a poor, average and good yield. The table under the results shows how quickly margin swings with yield, which is why many growers only commit inputs such as in-crop nitrogen once the season has shown its hand.
Worked examples
Wheat: $80 seed, $120 fertiliser, $60 chemicals, $40 fuel, $30 labour, $20 other, 100 ha, $300/t net, 2.5 t/ha expected
$350.00 per hectare, $35,000 in total, break-even yield 1.17 t/ha, break-even price $140.00/t and a gross margin of $400.00 per hectare.
Canola: $120 seed, $200 fertiliser, $100 chemicals, $50 fuel, $40 labour, $30 other, 200 ha, $650/t net, 1.4 t/ha expected
$540.00 per hectare, $108,000 in total, break-even yield 0.83 t/ha, break-even price $385.71/t and a gross margin of $370.00 per hectare.
Barley in a dry start: $60 seed, $90 fertiliser, $50 chemicals, $35 fuel, $25 labour, $15 other, 300 ha, $260/t net, 1.2 t/ha expected
$275.00 per hectare, break-even yield 1.06 t/ha and a slim gross margin of $37.00 per hectare.
When people use it
- Comparing wheat, barley, canola and pulse options on gross margin per hectare
- Setting a forward selling floor from the break-even price
- Deciding whether a marginal paddock is worth sowing in a dry start
- Budgeting working capital for the season with the bank
- Benchmarking input costs against district gross margin budgets
Tips
- Use net price after freight, receival and levies, not the port price. The difference is often $30 to $60 a tonne.
- Run a poor, average and good yield before committing in-crop inputs, and look at the margin table rather than one number.
- Split costs by paddock where you can. Averages across the farm hide the paddocks that lose money every year.
- Keep fixed costs out of the per-hectare figure and cover them from total farm gross margin.
- Compare your figures with your state department's gross margin guides to find which cost lines are out of step.
What it assumes, and where it stops being accurate
- Only variable costs are counted. Depreciation, finance, rates, rent and owner labour are excluded.
- The grain price entered is a net on-farm price after freight, handling and levies.
- Costs per hectare apply evenly across the whole area sown.
- Quality downgrades, screenings and protein premiums are not modelled; adjust the net price for them.
- Yield and price are treated as independent. In a widespread drought, low yields and high prices often arrive together.
Terms used on this page
- Variable cost
- A cost that rises with the area sown, such as seed, fertiliser, chemicals and fuel.
- Gross margin
- Income from a crop minus its variable costs, before overheads are deducted.
- Break-even yield
- Yield at which income equals variable costs at a given price.
- Net price
- The grain price after freight, receival charges and levies are deducted, as received on farm.
Questions people ask
- What should go in other costs?
- Crop insurance, agronomy fees, soil and plant tests, the grain levy if not already taken out of your price, and any freight on inputs not included in their delivered price. Keep machinery depreciation, finance and rates out, because they are overheads that remain whichever crop you sow and are better covered by total farm gross margin.
- What grain price should I use?
- Use a net on-farm price: the cash or forward price at your delivery site minus freight, receival and storage charges and levies. Many growers use the current forward price for the harvest period for planning, then rerun the numbers with a lower price to see how much downside the crop can absorb.
- What is the difference between gross margin and profit?
- Gross margin is income minus the variable costs of the crop. Profit also takes off overheads such as depreciation, interest, rates, insurance on the plant and owner labour. A crop can have a positive gross margin and still leave the farm short if the total gross margin across all enterprises does not cover the overheads.
- How do I use break-even yield at sowing time?
- Compare it with the paddock's yield history and with the stored soil water at sowing. If the break-even yield sits close to what the paddock produces in a below-average year, the crop carries real risk. Some growers cut inputs or choose a cheaper crop when stored water is low and the break-even is high.
- Why is the break-even price useful?
- It is the lowest net price at which your expected yield still covers variable costs. Forward selling below it locks in a loss before the crop is harvested. Knowing it lets you set a price floor with your grain marketer and decide how much of the expected crop you are comfortable pricing early.
Use this with
Cost Per Hectare Calculator answers one part of the question. These pick up where it stops: Crop Yield Estimator, Harvest Yield Estimator, Fertiliser Application Calculator, Seed Rate Calculator, Spray Dilution Calculator and Profit Margin Calculator.
Where these figures come from
Figures and rules on this page follow Australian law and ATO guidance.
- Grains Research and Development Corporation. Spray application, farm budgeting, crop water use and phenology research for Australian grain growers
- NSW Department of Primary Industries. Farm budgets, drought feeding, fencing, farm dam and soil water guidance
- ABARES, Australian Bureau of Agricultural and Resource Economics and Sciences. Farm cost, price and financial performance data
- Primary Industries and Regional Development, Western Australia. Dryland cropping costs, farm water planning and soil water holding data
Cost Per Hectare Calculator produces an estimate for general information. It is not financial, tax, medical, legal or engineering advice. read the full disclaimer. Spotted a wrong number? Report it and it gets fixed. The form picks up this calculator and the inputs you used.