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Top Cost Reduction Strategies in Agriculture


Want to boost your ROI on crop yields? Looking for the best cost reduction strategies in agriculture? Let’s discuss some spending cuts in the farming practices to reduce your farming expenses and to increase ROI.

Field reports show that many breeders will take expensive lengths when planning for the 2023 development season. The cost of production has been rising for a very long time. The low production cost is directly proportional to higher net income.

The cost of basic supplies like beds, compost, and seeds have increased in the years 2020 and 2021. This is just the tip of the iceberg. 

Dr. Greenville stated that the farm income forecast for Australia predicts an average of $619,000 per cropping farm in 2021-22, reflecting a 28% increase.

Factors That Contribute In Rising Cost Of Agriculture

There are many benefits of low-cost production in farming. Therefore, cost reduction of agriculture is now becoming important. Following are three main factors that have a great contribution to the cost of agriculture:

1. Transportation Bottlenecks 

Various transportation bottlenecks this year, including shipping gaps and port terminations, have resulted in increased delivery costs, which translate into higher manufacturing costs. 

2. Increased Item Costs

While rising product costs benefit the manufacturers who develop them, it can have opposite effects for manufacturers such as dairy farmers who use these products such as animal feed. 

3. Unlimited Gaps In The Inventory Network 

Deficiencies in farm equipment, manure and pesticide shortages, is also a vital factor to be highlighted in regard to cost reduction strategies. 

Best Cost Reduction Strategies In Agriculture

1. Key Performance Indicators And Prioritise Your Projects

Before deciding how to reduce production costs, it’s crucial to recognize and comprehend the crucial data points that measure the factors impacting the financial health of your business. KPIs are helpful in the evaluation of the success of an operation.

However, it is essential to note that they differ depending on the operation. Set a budget and prepare for the steps needed to complete the project, and don’t start another one until it’s complete. 

Once you have established yourself, you should be able to save money by growing your hay. After that, you can replenish your funds and work on your next business goal.

2. Smartly Purchase Seeds

Before buying seeds, pesticides, herbicides, and composts, it is important to conduct research and check cost and quality between suppliers.

 Cheaper seeds aren’t a bargain. Assuming you have bought varieties of seeds from a previously low-priced organisation, and it’s been successful, it’s not quite the same as switching to an organisation because their seeds are cheaper and have virtually no experience in the past.

When the collection is complete, talk to your seed vendors about ways to maximise your return on investment within a year. Since seed suppliers usually have to follow their customers to get orders, you’ll be a “must-have reminder” for them, as long as you approach them proactively.

3. Keep A Detail Record

It’s not about paying an annual review of your benefits and suffering. Monitor the farm’s funds by consistently keeping accurate records. This will help you in observing current patterns, occasional trends, and long-term changes in profits.

The ultimate records consist of purchases, maintenance and organisational expenses, as well as details like, raw material costs which are crucial for analysing patterns. You may be surprised to discover that the least profitable area of your business may actually be costing you the most.

4. Maintain Your Equipment

Capital investment can be huge, both in terms of cost and impact. Whenever you focus on an interest in new equipment, you want to benefit from their life expectancy. When investing in new equipment, it is essential to maximise their lifespan. To achieve this, establish and adhere to an extended support plan that covers the following areas:

  • Preventing breakdowns
  • Extending equipment lifespan
  • Enhancing safety

5. Sustainable Farming Practices

Adopting sustainable farming practices such as cover cropping, composting, and utilising natural fertilisers can enhance soil health and curtail expenses linked with synthetic fertilisers and pesticides.

  • Cover cropping 

A cover crop typically refers to a rapidly-growing plant that can quickly germinate and form a dense layer over the soil. The main objective of cover cropping is to enhance soil health and minimise the requirement for costly inputs like herbicides, pesticides, and fertilisers.

 An additional advantage of cover cropping is its ability to stifle the growth of weeds, reducing the need for expensive herbicides. Thereby, the need for chemical intervention is minimised.

  • Composting 

Composting is an agricultural practice that involves repurposing organic materials, such as food waste, yard waste, and animal manure, to create a soil amendment that can enhance soil health and fertility.

The process involves the use of microorganisms like bacteria, fungi, and worms, which decompose the organic materials into a nutrient-rich substance known as humus. 

This humus is a dark, crumbly material that contains beneficial microorganisms and nutrients that can be incorporated into the soil to improve its structure, water retention, and provide essential nutrients to plants.

6. Turn To Solar Power System

Solar power has the potential to be an effective cost reduction strategy in agriculture through various means, such as lowering energy costs, increasing efficiency, decreasing reliance on non-renewable energy sources, and promoting better crop yields.

Here are some of the advantages of using solar power: 

  • Reduced Dependence On Fossil Fuels 

Adopting solar power as a renewable energy source can lower the carbon footprint of farmers, enabling them to play a part in creating a more sustainable future.

  • Improve Crop Yields 

Solar power can help improve crop yields by providing a reliable source of energy for irrigation systems and other equipment.

  • Reduce Electricity Bills

Farmers can reduce their reliance on grid electricity and lower their electricity bills by installing solar panels on their farms, as solar power systems generate electricity from the free and abundant sunlight.

  • Long-Term Saving

Despite the high initial installation cost, the long-term savings from solar power systems can be substantial, thanks to the 25-30 year lifespan of solar panels and their low maintenance costs. 


It is essential for farmers to implement cost reduction strategies in the agriculture industry to maintain their competitiveness and profitability. By implementing these strategies, farmers can improve their productivity and ultimately reduce their operational expenses.To reduce cost in agriculture practices, count on Kelly Tillage.