As far as you are in agribusiness, I want to really believe you are in it to make a profit. There are quite a number of factors that can limit your profit, but today I want to focus on your production cost.
Production cost talks about how much you spend in making or producing your products, many factors are put into consideration when calculating. Also many things can shoot up or reduce your production costs.
Now, let us use a practical example of a livestock farmer who formulates feed for his livestock. Feeding in livestock production takes up to or even over 70% of all expenses, an average livestock farmer might use Groundnut cake or soybean meal as a protein source in his livestock feed, they are different but do the same work.
In a scenario whereby you find yourself using two or more inputs with considerably the same function, I will advise you use just one which might be the cheapest if you are sure you will get the same results, avoid repetition of usage.
In reducing your production cost, try to cut down excesses, even you as the farm owner can do some work to reduce the number of persons you employ, multitasking is necessary by your workers and even you as the farm owner. Work on wastage and ensure you get maximum value from every input and money spent.
Don’t forget to keep records of all expenses/inputs, check and recheck to find out if you are wasting money at any point. If you are not the one purchasing the inputs, from time to time find out the costs of the inputs elsewhere so as to be sure you are not being cheated.
Lastly, never copy or imitate some practices of already established or big farms, they can decide to overlook some activities or practices because they know how or have the ability to curtail excesses somewhere along the line.
