The National Rural Apprenticeship Service (Senar) launched a video that teaches rural producers how to identify the invisible costs of rural property and activity. These costs are called invisible because there is no disbursement during production, but they must be accounted for.
Senar technician Thiago Campos explains the three items that make up the fixed cost of the activity; family labor, depreciation and opportunity cost.
According to him, family labor is the cost of value that family members can receive working on another property to perform the same activity, “this cost is accounted for in production, but there is no financial disbursement. The objective is to assess whether family members are worth working on another property to improve their income or work on the land itself ”, explains the field technician.
Still on costs, he explains that depreciation is the cost of replacing materials and maintaining equipment due to aging. For this reason, the producer must have a monetary reserve to cover expenses with the exchange of new equipment, such as machinery, improvements, non-annual forage, reproducers and service animals at the end of their useful life.
Regarding opportunity cost, the field technician also explains that this cost refers to possible investments “it is based on the measurement of financial performance, if you choose to invest the money in another activity with a certain return or low risk application instead of investing in agricultural activity ”, he concludes.
Learn more about Invisible Costs by watching Senar’s ATeG video: