The Fundamental Components for Establishing a Crop Enterprise

The Fundamental Components for Establishing a Crop EnterpriseNew Crop development is a process rather than just a selected crop.

There are three legs to the Trifecta for successful crop development: Growing the crop, processing the crop and marketing the crop.

If new crops are developed without consideration of all three issues, the venture is likely to fail.

There are a number of fundamental components for establishing a Crop Enterprise; these can be categorised as being of a capital nature, an input nature, yield components, and demand estimations.

The first fundamental component category is Capital:

  • Field Investigations: Knowledge of current farm plans, as well as comprehensive surveys of soils and climatic conditions on the property are required in order to establish possible cropping options.
  • Land: Suitability of topography, soils and access (i.e. transport) for potential cropping options must be taken into consideration.
  • Buildings: There must be suitable sheds for storage of the crop produce if required.
  • Stock: Seed stock (i.e. seedlings) will be required to initiate the crop.
  • Machinery: Tractors, ploughs, harvesters, irrigation equipment, etc will also be necessary for the installation of a crop enterprise. Sharing costs of some machinery is a method to decrease the initial costs of machinery (i.e. split costs between several farmers).
  • Processing: The crop produce will need to be processed (e.g. drying, oil extraction, winemaking, etc) either on the property or at a nearby processing plant.
  • Establishment: Fences, channels, drains, trellises, and banks will need to be established based on the required cropping option.
  • Processing: The crop produce will need to be processed (e.g. drying, oil extraction, winemaking, etc) either on the property or at a nearby processing plant.
  • Distribution: Packing facilities, bulk silos and transporters will be required to distribute the produce and this can also be completed on the property or at a nearby distribution plant.
  • Markets: There is a need to research i) established or ii) prospective markets for your produce and investigate the opportunities for your crop to succeed.
  • Permits, etc: Permits, licences and industry association memberships are required grow and sell your produce to various markets.
  • Working Capital: Finance (value of one season’s inputs) is required to initiate the crop enterprise

Input components for establishing a crop enterprise include:

  • Seed: Seedlings, rootstock or cuttings are required to establish the crop.
  • Irrigation/Water: Irrigation may be required for the crop.
  • Soil Preparation: Soils may need to be prepared for the new crop (i.e. tilling, stubble burning, etc).
  • Fertilisers: Soils and crops have specific fertiliser requirements which need to be fulfilled to ensure a successful crop (e.g. phosphates, urea, etc).
  • Chemicals: Herbicides and pesticides may be required (dependant upon the type of crop) to maintain a healthy and productive crop.
  • Crop Protection: Some crops may need protection against the elements (i.e. frosts). This includes items such as shade cloth, frost fans, trellises, etc.
  • Harvesting: requires time and labour inputs.
  • Maintenance: General maintenance of fences, banks and structures are required to ensure an efficient product.
  • Disposals: Unused products such as grapeskins, grain husks, etc need to be disposed of efficiently.
  • Permits, etc: Annual permits, licenses and industry levy renewals will be required to continue growing and selling the produce.

The fundamental yield components are:

  • Primary Yield: The unit yield of the primary crop should be calculated to determine profitability.
  • By-Product Yield: The unit yield of each by-product should be calculated to determine profitability.

The fundamental demand estimations required are:

  • Demand Value: This is the unit farm-gate price, or the market price minus the cost of transport and handling.
  • Quantified Demand: The size of the accessible market needs to be determined to calculate the potential for the produce.
  • Price Elasticity: The impact (financial) of new supply on market prices.
  • Projected Demand: The market outlook for your crop and produce needs to be taken into account to verify projected profitability.