The Economic Division of Latvian Rural Advisory and Training Centre (LRATC), in co-operation with crop farming and livestock farming experts, as well as agriculturists, has prepared 214 provisional gross margins for different groups of plant cultures and animals for 2019. Gross margins are developed with the purpose of promoting rationalisation and optimisation of agricultural production at agricultural farms (gross margin may still be corrected/supplemented by 1 June this year).
Gross margin is an indicator that demonstrates the difference between the income from manufactured products and variable costs per one production unit (in crop farming – per 1 hectare or 1,000 m2, in livestock farming – per one animal). A particular production technology that is considered to be optimal is used for each gross margin calculation. Gross margins differ by the degree of production intensity (extensive/ intensive) and specific nature of production (integrated/ biological). To enable the use of gross margins for the needs of the particular farm, the production technology used at the farm and other conditions must be taken into consideration.
Like in the previous years, two types of gross margins have been prepared for cereals, oil plants, grasses, fodder cultures and nectar plants. The first type uses average market prices of technical services, while the other uses costs of technical operations that arise, if the technical operations are performed with the equipment owned by the farm.
Gross margins have been prepared to:
- provide information on the economic results of cultivation of certain groups of crops and livestock to existing and future agriculturists, as well as other stakeholders, thus creating the awareness of the positions included in calculations, and to help in planning the distribution of income and variable costs;
- offer gross margin calculations of particular groups of crops and livestock in order to compare the results of the particular farm, assess the efficiency of operation thereof and plan the development of production;
- provide economic comparison of several technologies for crops and groups of livestock (for instance, intensive and extensive production).
To enable any stakeholder to calculate gross margin quickly and conveniently, LRATC has developed a Gross margin Calculation Tool, which is available on the website – http://laukutikls.lv/riki/gross_margins/
Information source: Latvian Rural Advisory and Training Centre