{"id":2588,"date":"2019-10-31T16:23:11","date_gmt":"2019-10-31T16:23:11","guid":{"rendered":"http:\/\/www.karongadiocese.org\/?p=2588"},"modified":"2019-10-31T16:23:11","modified_gmt":"2019-10-31T16:23:11","slug":"development-desk-emphasizes-the-importance-of-gross-margin-analysis-in-farming-business","status":"publish","type":"post","link":"https:\/\/www.karongadiocese.org\/index.php\/development-desk-emphasizes-the-importance-of-gross-margin-analysis-in-farming-business\/","title":{"rendered":"Development Desk Emphasizes the Importance of Gross Margin Analysis in Farming Business"},"content":{"rendered":"\n<p><strong>By Harold Mwale<\/strong><\/p>\n\n\n\n<p>One most\nimportant aspect that entrepreneurs overlook in starting and managing a farm\nbusiness is that of gross margin. Thanks to Development Desk\u2019s ACCES Plus (A+)\nProject which facilitated a training in gross margin analysis for farmers in\nTraditional Authority Mwalweni which is under Saint Francis De Sales Parish of\nKaronga Diocese in Rumphi district. <\/p>\n\n\n\n<p>Gross Margin is the remaining income from an\nenterprise after the variable costs are deducted. This is an extremely important number for every new\nand small farm business to manage, as it impacts both the possibility of\nreaching breakeven (the product price needed to recover all variable costs\nincurred in production at a given output level and cost of input) and the\namount of profit that a farmer can earn beyond breakeven. In other words, it\ndirectly impacts risk and return.<\/p>\n\n\n\n<p>Gross\nmargin affects breakeven and profit. As a simple example of how it affects,\nduring the training a farmer was considered starting-up with MK300, 000 in\nfixed overhead. If this farm business gross margin as a percent of sales is 50%\n(which means fifty tambala out of each kwacha in sales is retained for the\nfarmer to cover fixed costs), it would need to reach sales of MK600, 000 to\ncover its overhead. <\/p>\n\n\n\n<p>If that\nsame start-up were able to achieve a gross margin of 52% instead, breakeven\nwould decrease by MK23,000, or approximately 4%. The farmer would then begin\nearning a before-tax profit of fifty-two tambala on each kwacha in sales after\nrevenues reach MK577, 000 rather than fifty tambala on the kwacha after MK600,\n000.<\/p>\n\n\n\n<p>Managing\ngross margin helps farmers avoid problems with prices that are too low and\ndirect costs that are too high, and hence problems with breakeven and profit.\nWhen farmers generate adequate sales but gross margins are low, it signals an\nissue in one or both of these areas.<\/p>\n\n\n\n<p>Most\nfarmers surrounding the area did not know what gross margin on sales was for different\ncrops and involving them in calculation of gross margins for different crops\nsuch as maize, groundnuts and soya beans will help them identify the right crop\nto produce and therefore address the problems they were experiencing. Each\nparticipant simply knew that some of the crops they were producing was losing\nmoney and did not know where to begin to remedy the situation. The training,\ntherefore, assisted them to address the gaps. <\/p>\n\n\n\n<p>Farmers\u2019\nlack of understanding in gross margin analysis often leads to decisions that\nonly worsen the farmer&#8217;s position, such as attempting to increase sales via\nlower prices, leading to even smaller gross margins.<\/p>\n\n\n\n<p>Gross\nmargin analysis does not get the attention it deserves. Farmers should be aware\nof the factors that will impact their margins and pay close attention to them. The\nparticipants were encouraged to find a benchmark for gross margin using data\nfrom their nearest competitors to give themselves a target to manage and be\naware that the factors impacting gross margins may change over time.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Harold Mwale One most important aspect that entrepreneurs overlook in starting and managing a farm business is that of gross margin. Thanks to Development Desk\u2019s ACCES Plus (A+) Project which facilitated a training in gross margin analysis for farmers in Traditional Authority Mwalweni which is under Saint Francis De Sales Parish of Karonga Diocese [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":2589,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"iawp_total_views":6,"footnotes":""},"categories":[25],"tags":[],"class_list":["post-2588","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-development-desk"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.karongadiocese.org\/index.php\/wp-json\/wp\/v2\/posts\/2588","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.karongadiocese.org\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.karongadiocese.org\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.karongadiocese.org\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.karongadiocese.org\/index.php\/wp-json\/wp\/v2\/comments?post=2588"}],"version-history":[{"count":0,"href":"https:\/\/www.karongadiocese.org\/index.php\/wp-json\/wp\/v2\/posts\/2588\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.karongadiocese.org\/index.php\/wp-json\/wp\/v2\/media\/2589"}],"wp:attachment":[{"href":"https:\/\/www.karongadiocese.org\/index.php\/wp-json\/wp\/v2\/media?parent=2588"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.karongadiocese.org\/index.php\/wp-json\/wp\/v2\/categories?post=2588"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.karongadiocese.org\/index.php\/wp-json\/wp\/v2\/tags?post=2588"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}