Basic Cost Tracking for Farm Products (Without Complicated Accounting)

Cost tracking is simply answering one question with numbers you trust: “What does it cost me to produce one sellable unit?” You do not need full accounting software to do this. You need a repeatable habit that turns receipts and time notes into a unit cost you can use when setting or adjusting prices.

This chapter uses a practical, lightweight method built around batches (a harvest day, a wash/pack run, a bake day, a flock week—whatever makes sense for your product). Each batch gets a short cost record. Once per week, you total and update your unit cost.

Four Cost Buckets (Keep Them Consistent)

To keep tracking simple and comparable week to week, put every cost into one of these four buckets. The goal is not perfection; it is consistency.

1) Direct Inputs (Used Up in the Product)

These are costs that clearly “go into” the product and are consumed.

• Seed/feed: seed, potting mix, fertilizer, compost, chick starter, layer feed, minerals.
• Packaging: egg cartons, labels, twist ties, clamshells, bags, rubber bands, boxes.
• Ingredients: if you make value-added items (salt, vinegar, oil, spices, etc.).

Rule of thumb: if you can point to it and say “this batch used it up,” it’s a direct input.

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2) Labor (Your Time + Hired Help)

Labor is often the biggest hidden cost. Track it as hours and assign a simple hourly rate.

• Your time: harvesting, washing, packing, feeding, collecting, cleaning, labeling, loading, selling, admin directly tied to the batch.
• Hired help: wages plus payroll taxes/fees if applicable (or just the hourly wage if you want a simple start).

Set a “labor rate” you will actually use. Many small farms start with a target like $15–$25/hour for owner labor, then adjust as they learn.

3) Overhead Allocation (Shared Costs)

Overhead is everything that supports production but isn’t used up in one batch. You will allocate it using a simple method so it becomes part of unit cost.

• Utilities: water, electricity for coolers, propane.
• Fuel and vehicle use: deliveries, market trips (if you choose to include here).
• Market fees: stall fees, permits that apply to selling days.
• Equipment wear: harvest knives, wash station parts, cooler maintenance, depreciation (keep it simple—use a weekly allowance).

Simple allocation options:

• Per batch: assign a flat overhead amount to every batch (fastest).
• Per labor hour: overhead = overhead rate × labor hours (more accurate when batch sizes vary).
• Per unit: overhead per unit (useful for very consistent products like eggs).

4) Waste/Shrink (Spoilage, Unsold Returns)

Waste is real cost. If you ignore it, your unit cost will be too low.

• Spoilage: bruised produce, cracked eggs, moldy items.
• Trim loss: outer leaves removed, culls.
• Unsold returns: product brought back and not sellable later.

Track waste as units (or pounds) lost and assign the cost to the remaining sellable units.

The Repeatable Batch Template (One Page)

Use a notebook, spreadsheet, or notes app. The key is to record the same fields every time.

Step 1: Define Your “Unit” and “Batch”

• Unit: what you sell (e.g., 1 dozen eggs, 1 bunch kale, 1 jar salsa).
• Batch: the production run you can track (e.g., “Tuesday harvest + wash/pack,” “Eggs collected Mon–Wed,” “Jam cook #12”).

Step 2: Record Direct Inputs for the Batch

Save receipts (photo is fine). For each batch, list only what was used for that batch.

• Packaging used (count × cost each)
• Ingredients used (quantity × cost per quantity)
• Feed/seed allocation (simple estimate is acceptable; improve later)

Step 3: Record Labor Time

Use a simple time log. Track in 15-minute blocks if that’s easier.

• Task
• Who
• Minutes/hours

Then calculate: Labor cost = total hours × labor rate.

Step 4: Add Overhead Allocation

Pick one method and stick with it for at least a month.

• Flat per batch: e.g., $8 per batch for utilities/equipment wear.
• Per labor hour: e.g., $4 overhead per labor hour.

Then calculate: Overhead cost = overhead rate × labor hours (or your flat amount).

Step 5: Record Waste/Shrink

Write down how many units were not sellable.

• Units produced
• Units wasted/returned
• Sellable units = produced − wasted

Step 6: Calculate Cost per Unit

Use this formula:

Total batch cost = Direct inputs + Labor + Overhead + (any disposal/return costs if you track them) Cost per unit = Total batch cost ÷ Sellable units

Important: waste is handled by dividing by sellable units, not total produced.

Step 7: Update Weekly (10–20 Minutes)

Once per week:

• Total your batches for the week (or pick your most common batch and update it).
• Update any changing inputs (feed price, carton price, market fees).
• Compare this week’s unit cost to last week’s. If it moved, note why (feed increase, more waste, fewer units, more labor).

Copy-and-Use Template (Spreadsheet-Friendly)

Worked Example: 20 Bunches of Kale (From Receipts + Time Log to Unit Cost)

Scenario: You harvest and pack kale for market. You sell by the bunch.

A) Gather Your Inputs (Receipts + Counts)

Packaging receipt:

• Produce bags: $12 for 100 bags → $0.12/bag
• Rubber bands: $4 for 200 bands → $0.02/band
• Labels: $10 for 250 labels → $0.04/label

Batch usage: 20 sellable bunches will use 20 bags, 20 bands, 20 labels.

Direct packaging cost:

• Bags: 20 × $0.12 = $2.40
• Bands: 20 × $0.02 = $0.40
• Labels: 20 × $0.04 = $0.80

Total direct inputs (packaging): $3.60

If you want to include a direct input estimate for compost/fertilizer/seed, you can add a simple per-bed or per-harvest allowance (example: $1.50 per harvest from that bed). For this example, we’ll keep it to packaging to show the method clearly.

B) Time Log (Labor)

You track your time the same day:

• Harvest: 1.0 hour
• Wash + spin + bunch: 1.0 hour
• Pack + cleanup: 0.5 hour

Total labor time: 2.5 hours

Labor rate: $18/hour

Labor cost: 2.5 × 18 = $45.00

C) Overhead Allocation

You choose a simple overhead rate of $4 per labor hour to cover water, electricity for the cooler, equipment wear, and small supplies.

Overhead cost: 2.5 × 4 = $10.00

D) Waste/Shrink

You harvested 22 bunches total, but 2 were not sellable (wilted/undersized).

• Units produced: 22
• Waste: 2
• Sellable units: 20

E) Calculate Total Batch Cost and Unit Cost

Total batch cost = Direct inputs + Labor + Overhead Total batch cost = $3.60 + $45.00 + $10.00 = $58.60 Cost per bunch = $58.60 ÷ 20 = $2.93 per bunch

What this tells you: if you sell kale at $3.00/bunch, you are very tight after costs (and this example did not include seed/soil amendments). If you sell at $4.00/bunch, you have room for profit and for weeks with higher waste or slower harvest.

Worked Example: 30 Egg Cartons (Dozen Eggs) Using Feed + Cartons + Time

Scenario: You pack 30 cartons (30 dozen) for the week.

A) Direct Inputs

Egg cartons: receipt shows $60 for 200 cartons → $0.30/carton

Carton cost for 30 cartons: 30 × 0.30 = $9.00

Feed allocation (simple method): You decide to allocate feed weekly based on what the flock ate.

• Feed purchased: $18 per 50 lb bag
• This week the flock used: 2 bags → 2 × 18 = $36.00

Total direct inputs: $9.00 + $36.00 = $45.00

B) Labor

Time log for the week’s egg work:

• Collecting eggs (multiple days total): 1.2 hours
• Washing/sorting (if applicable): 0.8 hours
• Packing + labeling: 0.7 hours

Total labor: 2.7 hours

Labor rate: $18/hour

Labor cost: 2.7 × 18 = $48.60

C) Overhead Allocation

Use a flat overhead allowance for the week to keep it easy (water, bedding portion, small equipment wear): $12.00

D) Waste/Shrink

You packed 30 cartons, but 1 carton worth of eggs was lost to cracks and rejects across the week.

• Cartons produced: 30
• Waste: 1
• Sellable cartons: 29

E) Unit Cost

Total batch cost = Direct inputs + Labor + Overhead Total batch cost = $45.00 + $48.60 + $12.00 = $105.60 Cost per carton (dozen) = $105.60 ÷ 29 = $3.64 per carton

This number becomes your baseline for pricing decisions. If feed prices rise or waste increases, your weekly update will show it quickly.

Common Simplifications That Keep You Moving (Without Losing the Point)

• Use “allowances” for hard-to-split costs: If you can’t easily assign compost, bedding, or sanitizer to a batch, start with a small per-batch or per-week allowance and refine later.
• Track owner labor even if you don’t “pay yourself” yet: It prevents underpricing and helps you see which products truly support your time.
• Don’t chase pennies at the start: Focus on the big drivers: labor hours, feed/inputs, waste rate, and market fees.
• Keep notes on what changed: “Heat wave,” “new helper,” “switched carton supplier.” Those notes explain cost swings.

Weekly Checklist (Print This)

• Collect receipts (photo folder on phone is fine).
• Enter each batch: units produced, waste units, direct inputs used.
• Total labor hours per batch (or per product line).
• Apply your overhead method consistently.
• Compute unit cost and write it where you can see it when pricing.