Production costs

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Soil erosion is the main sustainability issue for farming in the cereal zone of
the WANA region. The impact of the four rotations on soil erosion is

The possible benefits of moisture storage still lingers on as an issue with
many farmers. This chapter shows how moisture storage (if it occurs) cannot justify the use of a long cultivated fallow.


Costs and returns are the major determinants of farmers profits. The cost of production for each rotation is examined both for small and large farmers.

Returns relate to the level of output and price. This chapter looks mainly at

For small farmers with few resources and financial reserves risk is
particularly import. A balance needs to be struck between high profits and

Each rotation has an inherent level of weed control. Other weed control
measures can be applied (see later chapters) but the natural ability of the
rotation to "clean" the land or otherwise is an important part of the decision
making process.

The amount of labour and the time it is used are an important aspect of each rotation.

This chapter looks at the capital requirements for each rotation but machinery is treated separately (see below)

Machinery is a special part of the general capital requirements. It is
particularly difficult for small farmers.

We have assumed that the starting point for most farmers is the growing of a cereal crop. We have examined the conflict between the requirement of the cereal crop and the new crop, new forage or pasture being introduced into the rotation.

Small farmers are resource poor. In this chapter we have selected the aspects of the above comparisons that would be appropriate for small farmers.

This chapter provide a framework for selecting a combination of the four
rotations and other variations.

The Zaghouan 4 rotation is not included in the comparison. It is an innovation from Tunisia that cleverly overcomes many of the problems of medic on small farms.





( Traditional rotation)




Cereal crop sown

Cereal crop sown

Cereal crop sown

Cereal crop sown


Cereal crop grows

Cereal crop grows

Cereal crop grows

Cereal crop grows


Cereal crop matures

Cereal crop matures

Cereal crop matures

Cereal crop matures


Cereal crop harvested
Stubble grazed by livestock

Cereal crop harvested
Stubble grazed by livestock

Cereal crop harvested
Stubble grazed by livestock

Cereal crop harvested
Stubble grazed by livestock


Weeds germinate naturally

Medic regenerates from seed
produced 18 months earlier.
No cultivation of the land required.

Land cultivated and sown to vetch or similar forage legumes.

Land cultivated and sown to grain legume such as lentils or
chick peas.


Weeds grazed. Low stocking rate.

Medic pasture grazed. High stocking rate.

Grazed or more often left for hay.

Grain legumes grow.


Land cultivated for fallow

Medic grazed. Pods produced for future regeneration.

Cut for hay.

Grain legumes mature.


Bare soil vulnerable to erosion.

Pods and stubble grazed.

Stubble grazed.

Grain legumes harvested.

Stubble grazed.


Cereal cycle begins again.

Cereal cycle begins again

Cereal cycle begins again

Cereal cycle begins again

The following comparison includes direct costs - not the long-term costs caused by soil erosion.

There are considerable cost saving from SHALLOW  CULTIVATION rather than DEEP PLOUGHING. These are often associated with the medic rotation but SHALLOW CULTIVATION can be used for all rotations. It is not included in these cost comparisons. More on SHALLOW CULTIVATION is included in  Conflict with cereals.

Production costs are particularly important for farmers in the WANA region. Cereal yields are generally low.

Yields can be improved considerably but the potential is limited due to the semi-arid climate. Much of the technology used in the region has been imported from Europe and North America where yields are much higher (from double to five times higher) With these higher returns and higher potential returns there is less pressure to reduce costs.


Here is the failure of the fallow in a nutshell. Sheep are grazing on poor weedy pasture. Their feed supply (in spring) is poor. This poor pasture is being ploughed for a long summer fallow. Deep ploughing is creating large clods and is drying the soil.

Different types of costs

    Economists and accountants have analysed the cost structure of farming enterprises in great detail. This analysis is important but for this chapter I have tried to simplify costs down to factors that are both relevant to small farmers and are realistic within their resources.

    * Cash costs.

     These are costs such as fertiliser, tractor fuel and transport of products to market.

Cash costs should also include items which are easily converted into cash. For example a farmer may save his own cereal seed from the previous crop. This is not a cash cost but it amounts to the same thing as the seed could have been sold as grain. There are cash costs added to the grain when it is treated with fungicide.

Similarly farmers feeding hay and grain to their sheep incur a cash cost even if the hay and grain was produced on the farm. The same reasoning applies. They could easily have been sold for cash.

If a farmer does not have a tractor and implements he will need to use a contractor. The contractors charge for the use of the machinery and the operator. The charges are paid in cash.

    Cash costs are the most important. The farmer must find the cash or borrow the cash. If the crop fails the cash is lost.

    * Overhead costs

    These are discussed in more detail in Working Capital  It is tempting to ignore them in a comparison between the various rotations as they are incurred for the farm as a whole.

They cannot be ignore as there such enormous differences between the rotations.

A small change between rotations will not change overhead costs. The difference between say a cereal - grain legume rotation with its intensive cultivation of all the land every years and the Zaghouan 4 rotation with a cereal crop every fourth year is so great that overhead costs must be included in the selection process.

Overhead costs are very sensitive to economies of scale. That is a shepherd can guard a flock up to 150 to 200 sheep. Increasing a flock from 50 to 100 sheep costs nothing in terms of additional shepherding costs.

    * Labour costs

    These costs are discussed in more detail in Labour   but the essential problem is that family labour is readily available and as long as it is prepared to do tasks such as shepherding sheep there is no point in trying to place a cost on it equivalent to employing a shepherd.

I have generally costed family labour as an overhead cost that exists on the farm and must be supported. Of course it is not a simple as this as the labour is limited and big changes to the farming system may need additional labour from off the farm. Family labour changes over time and the farming system needs to adapt to these changes.

    * Opportunity costs

    Opportunity costs are difficult to handle as they are not real. They are implied.

They are the cost of not doing something. That is the profit that is not made from the land because some crop or enterprise has not been adopted. They are important but need to be moderated with realism.

The most obvious example of opportunity cost is the fallow in the cereal - fallow rotation. The land grows a sparse cover of weeds with little feed value and is then fallowed. The minute return means in effect that the land is used for two years to produce a single cereal crop.

If the land can be used more profitably (sown to medic for example) without reducing cereal production there is an opportunity for greater profit. When this opportunity is not taken there is an opportunity cost.

The problem is what is a realistic opportunity? If the fallow land is used for grain legumes the profits could be much greater. However the grain legumes require more farm machinery, more working capital, more farming skills and are suited to better soils and rainfall.

They can hardly be considered as a simple opportunity that has been lost.

Alternatively a medic pasture can be grown instead of the fallow. Changes are small and medic is adaptable to many soils and rainfall zones. It is realistic to say that the fallow has a cost equivalent to the opportunity for greater returns from a medic pasture.

By ignoring the opportunity to increase livestock production with a medic pasture farmers are incurring an opportunity cost.

Cereal - fallow rotation

    * The cereal phase

    The cereal/fallow rotation is a low input system. Cash costs are low.

The fallow  can be an effective means of weed control, reducing the need for herbicides. The yield of cereals is low when the rotation has been used for some years because the fertility of the soil is exhausted.

Nitrogen fertiliser is often used in an attempt to increase yields of cereals but this increased the cost and the risk.

Mechanical harvesting of the low yielding cereal crop is inefficient. The harvest loss is a considerable cost.

    * The fallow phase

    The major cost of the cereal/fallow rotation is an opportunity cost of the fallow.

There is almost zero return (only a small amount of winter grazing from the self regenerating weeds) from the fallow the land.

The land is used for two years to produce a single cereal crop. All the overhead costs of land ownership and maintenance are borne by the cereal crop.

The fallow controls weeds effectively but at a high cost in terms of lost production.

Calculating the opportunity cost is not easy as one needs to choose what enterprise could be grown on the land. The selection needs to be simple otherwise farmers will say that the opportunity was only theoretical as they do not have the resources to make substantial changes.

 Cereal-medic rotation

    * The cereal phase.

    A good medic pasture provides abundant nitrogen for the cereal crop. There is no need to apply nitrogen fertiliser. 

Yields will increase and fertiliser costs will be lower. The management of the medic pasture requires some skill. Poorly managed pasture will increase the carry-over of weed seeds to the cereal crop.

These can be controlled using herbicides (an added cost) or by using the Zaghouan 4 rotation.

    * The pasture phase.

    The cost of the medic phase is first considered as an ESTABLISHMENT  COST  and then a MAINTENANCE COST (mostly phosphate fertiliser).

    The ANNUAL COST depends on the length of time the pasture survives.


        + Using seed.

        This is the traditional means of establishing a medic pasture in the first season.

It is the method used for more than half a century in Australia.

In the WANA region farmers have little experience of sowing small seeds such as medic. They need to prepare a better quality seed bed than they usually prepare for cereals. This will require more work.

The seed cannot be sown using a cereal drill as the medic seeds are too small and the drill places the medic seed too deep. The drill must be modified or the seed broadcast by hand or with a small hand held machine.

    Given the difficulties of sowing it is usual to apply a high seeding rate. More than 25 kg of seed per hectare are used in order to try to establish a dense pasture in spite of the inadequate seed bed and poor sowing.

This adds considerably to the cost. In total ICARDA has estimated that medic is two or three time more expensive to establish than vetch if this traditional method is used.

       +  Using pods.

        This is a method developed by farmers in Tunisia and Syria and ICARDA. It will be described in more detail later.

    Medic pods are harvested in summer using a simple machine developed by ICARDA.

In the autumn the pods are broadcast over the cereal crop. There is no need to prepare a special seed bed.

In the season following the cereal crop the medic pasture regenerates from the hard seed in the pods.

The cost of establishment is low. It is lower than the cost of vetch as the pods can be harvested by the farmers themselves. There is no special land preparation for the medic.


    *  The maintenance cost of medic pasture is an annual application of phosphate fertiliser.


    The ANNUAL COST of a medic pasture is the MAINTENANCE COST plus a part of the ESTABLISHMENT  COST. The fraction of the ESTABLISHMENT  COST depends on the time the medic pasture survives.

                                        ESTABLISHMENT      COST
    ANNUAL  COST   =         ----------------------------------------      MAINTENANCE COST
                                          YEARS  MEDIC SURVIVES

    In South Australia there are medic pastures that have survived in rotation with cereals for 50 years. The fraction of the ESTABLISHMENT COST attributable to these pastures can be considered zero. The ANNUAL COST is the MAINTENANCE COST.

    At the other extreme some medic pastures in Algeria did not survive the cereal phase of the rotation because of deep ploughing.  The ANNUAL COST was the ESTABLISHMENT COST.

    Using pods is an effective means of reducing ESTABLISHMENT  COSTS.

Retaining the medic pasture for two or more season before sowing cereals means that the only half or less of these lower costs are attributable to the annual cost of medic pasture.

If the medic fails to regenerate after the cereal due to deep ploughing the pasture costs will still be affordable.

Cereal - vetch rotation

    *  The cereal phase

        The use of vetch or forage peas in rotation with cereals provides some additional soil nitrogen to the cereal crop.

If the vetch is grazed it will provide almost as much as the medic pasture. 

If the vetch is cut for hay and then grazed it will provide an effective means of reducing the burden of weed seeds.

Less nitrogen will be returned to the soil if a hay crop is cut and removed. The addition of some nitrogen fertiliser may be necessary.

    * The vetch phase

        The land needs to be cultivated, a seed bed prepared and the vetch sown each season.

The cost of establishing vetch is:-

    + less than medic using the traditional method of sowing medic seed at high seeding rates of 25 kg of medic per ha but

    + more than the cost of sowing medic pods over a cereal crop. The vetch cost is the same each season as there is no regeneration.

    The medic pasture annual cost is reduced to little more than the application of phosphate if the medic pasture survives for a number of years.
    The cost that is difficult to calculate is the cultivation, seeding and hay making. For a farmer with a tractor and machinery this is a useful means of turning an overhead cost and family labour into cash sales and profit. For a farmer without machinery and dependent on contractors it is a cash cost and a displacement of family labour that is still being supported by paid labour to operate the machinery.

Cereal  -  grain legume rotation

        * The cereal phase

        Grain legumes will provide some additional nitrogen to the soil but considerably less than a grazed medic pasture or grazed vetch.

Most of the nitrogen is removed when the grain legume is harvested.

See Zaghouan 4 for a long term rotational trial that includes field peas harvested for grain. Over about 50 years they performed badly in rotation with cereals. It was obvious that soil fertility was poor compared to rotations that included pasture legumes.

Grain legumes are poor competitors with weeds. The use of grain legumes in the rotation will usually increase the weed-seed burden. Cereal crops will be contaminated and herbicides may be necessary.

        * The grain legume phase

        The land preparation for grain legumes needs to be good particularly if mechanical harvesting is used.

Weed control needs to be excellent if the full yield potential is to be achieved.

In all grain legumes are expensive crops to establish. 

Harvesting by machine or by hand is also expensive compared to cereal crops.

Zaghouan 4 Rotation

        * The cereal phase

    Cost of production low because only one quarter of the land in sown instead of one half with all the other rotation. Cereal costs are closely related to area and half the area will mean roughly half the cost.

Weed control is good due to the fallow.

Soil fertility levels are extremely high due to the 2.5 years of medic. The fallow mobilises the organic nitrogen. Available nitrogen is higher than the medic - cereal rotation.

    Farmers have a choice of cultivation using scarifiers which will be considerably cheaper and faster (although speed is not so critical with the reduced area) or deep ploughing. Deep ploughing is more expensive in running costs but cheaper in capital costs as the equipment already exists on most farms.

    * The medic phase

Costs are low.

The first year pasture is established using pods.

The next two pasture years are established from natural regeneration. The risk of failure is small as the land is not cultivated.

Annual applications of phosphate are needed.