How do I spread fertilizer costs over multiple production cycles?

Overview:

In some scenarios, farmers may want to spread input costs among multiple production cycles.  Lime is a great example in that it is generally spread every 4-5 years to help with soil nutrient management.

Requirements

• Set up Inputs and have costs associated
• Set up Financial Accounts for Lime Revenue & Cost

Process

For the year lime was applied:

1. Enter the activity record as normal.  In this example, we have a financial account for the application cost & then entered the activity record (inputs are required).
   
   
   
   
2. Next, run Input Usage Analyzer to find the Actual Cost of lime so we can split the input costs over several years. 
   
   
   
   
3. Now you will want the breakdown of how you want to split the input costs over the years.  This will determine how we set up the Financial Accounts.  This breakdown will vary on how you want to account for nutrients each year & how frequent you apply lime.  For this example:
   
   2018: 35% ~ $478.28 total input cost
   2019: 25% ~ $341.63 total input cost
   2020: 25% ~ $341.63 total input cost
   2021: 15% ~ $204.97 total input cost
   
   Note:  In 2018, we allocated slightly more of the cost in year, since the first year benefits the most from the nutrients.  Following years, have less cost allocated.  This may vary depending on input type, quantity, etc.  Please use the percentages that you think are best.
   
   
4. Create a Revenue - Financial Account for Lime Credit in the year the lime was applied.
   Type: Revenue
   Calculated as: Variable
   Allocated to: Plans
   Category: Pick whatever category you would like
   Unit: Per Acre
   Default Rate: Select any rate.  We will change this to match actual rate later.
   Click Save & Allocate.
   
   
   
   
5. Choose the boundary you need to add the Lime Credit.  Click Add/Edit Allocation.  In this example, $888.23 (or $15.5999/ac) will be allocated to future production cycles so we need to create a credit for the year it was applied (i.e. 2018).
   
   2018: 35% of input cost.    (35% x $1366.51) = $888.23 or $15.5999/ac
   
   
   
   
6. To view the input usage + Lime Revenue Credit, view Profit Analyzer.
   
   
   
   

For the following production cycles, you want to spread input costs:

1. Add Field Plans for the following production cycles to the boundary you want to allocate lime costs.  If you don't know what Plan will be associated, create a generic "Fall Work" Plan and assign to boundaries (ie. 2019, 2020, 2021).
2. Create a Cost - Financial Account for Lime - Applied 20XX.
   Type: Cost
   Calculated as: Variable
   Allocated to: Plans
   Category: Pick whatever category you would like
   Unit: Per Acre
   Default Rate: Select any rate.  We will change this to match actual rate later.
   Click Save & Allocate.
   
   
   
   
3. Choose the boundary you need to allocate to Lime - Applied 2018.  Click Add/Edit Allocation.  In this example, $341.63 ($6/ac) will be allocated to 2019.
   
   2019: 25% of input cost.    (25% x $1366.51) = $341.63 or $6/ac
   
   
   
   
4. Allocate for future years as well.
   
   2020: 25% of input cost.    (25% x $1366.51) = $341.63 or $6/ac
   2021: 15% of input cost.    (15% x $1366.51) = $204.97 or $3.5997/ac
   
   
5. To view the Lime - Applied 2018 Allocations, view Profit Analyzer.
   
   

For this scenario, we only charge Labor & Equipment charges to the year that the lime was actually applied.  If you would like to allocate these costs to future production cycles as well, please reach out to Support for how to best accomplish this.

Related Articles:
Getting Started: How to add Financial Accounts and Allocations?
Getting Started: How are costs & revenue calculated in Profit Analyzer?