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East central Iowa | You need to use oppertunity cost. My sheep use acres not in row crop production. Every acre that is used for hay or pasture was or could be in corn/soybean production, so my cost for hay/pasture is land cost+ profit if it was cropped and cost of harvesting the hay. So my added value is $ of sheep sold/acre minus sheep expences/acre, minus corn prfit/acre. This gives me $200 to 300 dollars/ acre my sheep enterprise adds per acre. Others have explained it more clearly but this is how I determine my true profit. I know my capacity per acre so it is easy to figure backwards my expences/ewe. Always use real world numbers in your operation.
Good Luck, Dave | |
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