Page 329 - Agriculture_Form_Three

Agriculture for Secondary Schools

Use of gross margin in improving farming business

Gross margins can be improved either by increasing gross income, reducing costs or
both. Generally, gross income can be increased by increasing the expected yield, the
marketable yield, or the selling price through one or combination of the following
techniques.
(a) The expected yield in crop enterprises can be increased by selection of
appropriate and high yielding varieties of the crop, as well as proper selection
and use of other inputs such as fertilisers and chemicals. Similarly, in livestock
enterprises, yield can be incresed by selection of appropriate and high yielding
breeds as well as proper selection and use of available technologies.

(b) In crop enterprises, practices such as weeding, irrigating and pest and disease
control as well as crop specific management practices can result in increased
yields which in turn can lead to increased income. In livestock enterprises,
proper housing, feeding, breeding and health management can result in increased
yields and hence increased income.

(c) The marketable yield from both crop and livestock enteprises can be increased
by proper harvesting and timing of harvest, correct post-harvest handling,
processing, value addition as well as transportation and marketing of produce.
(d) The selling price can be improved by synchronising production to coincide with
periods when the market price is high or for products that you can store such
as maize or processed crop and livestock products to sell them when the price
is high. High prices are also usually fetched when the quality of the produce
is high. For example, it may be better to grade product according to market
requirements, and get premium prices for the high grades, rather than having a
mixture of grades thereby getting an average price.

In case of total variable costs, gross margin can be improved in various ways. For
instance, in assessing the viability of a particular crop or livestock enterprise, the
farmer can increase the gross margin by carefully analysing total variable costs and
eliminating those that are not necessary. For example, if the farmer is not applying
the recommended quantity of inputs due to inadequate knowledge, he/she could seek
extension advice to address that gap. By applying the correct quantity of inputs, and
not over or under applying, the farmer can reduce the total variable costs. Likewise,
careful planning and management of labour can also help in reducing total variable
costs.

Student’s Book Form Three
318

10/01/2025 12:32
AGRICULTURE FORM 3 9.11.2022.indd 318
AGRICULTURE FORM 3 9.11.2022.indd 318 10/01/2025 12:32