Farm Gross Margin Guide

The Farm Gross Margin is essentially the difference between the gross income and the variable costs associated with a particular farming enterprise. Variable costs are those that fluctuate in direct proportion to the scale of production, such as fertilisers, fuel, and cartage. It’s important to recognise that gross margin is not the same as profit as it doesn’t’ take into account fixed or overhead costs like depreciation, interest payments, or permanent labour.

Gross margins are typically expressed per unit of the most limiting resource, such as land, labor, capital, or irrigation water.

Developed by Ag Excellence Alliance with support from the Sheep Industry Fund, these guides help livestock and cropping producers evaluate the relative profitability of different farm enterprises, incorporating the latest input and output pricing data.

• Compare gross margins of enterprises, paddocks, and rotations
• Assess the impact of production, cost, and price changes
• Make informed decisions for a successful farming season