In any business, purchases or acquisitions are made as necessary for the development of the business, which involve a financial outlay. This also occurs in agricultural firms dedicated to cultivating the land.
In organized accounting, these payments can be classified as expenses or investments, depending on their purpose. The fundamental aspect that differentiates an expense from an investment is what is expected to be gained from them. We expect the investment to generate a return on investment in the future.
Meanwhile, an expense is the payment for a good or service with which we cover a need, but from which we do not expect any economic return in the future.
Based on this definition we can affirm that Acquiring treatments to improve crop yields is an investment, as it will result in increased production of better quality fruit, which will be sold at a higher price in the market.
However, in this sector, we often encounter farmers who seek to save money on cultivation by cutting costs, based on the premise that savings can be achieved by reducing "the cost per hectare." In the long run, this translates to: less investment in treatments and crop care, lower profits from production, and a meager financial result.
So why do some farmers consider buying quality professional products an expense and instead use low-cost products with questionable results on their crops? Often, it's not a matter of ignorance of these 'economic rules,' but rather flawed approaches to farm economics stemming from a lack of training and a business-oriented mindset.
These flawed premises only take into account the cost per hectare when calculating how much a crop costs.
If we measure the investment made based on the kilograms harvested and sold, our paradigm changes completely, and we enter into the true meaning of agricultural economics. Therefore, The investments made will be much more profitable the greater the number of kilos harvested per hectare. The mathematical formula is as follows: Investment made / kilos harvested and placed on market. The greater the number of kilos, the lower the cost of production per kilo.
How can we ensure that buying products for our crop is a safe investment?
By relying on professional, reliable manufacturers with a proven track record that guarantees the quality and results of their products.
