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Category FAQs Search : Sustainable

Question: Economic Profitability (Sustainable Agriculture)

Answer: To be sustainable, a farm must be economically viable. While the environmental and social spheres of sustainability may not always translate into immediate economic profit, sustainable practices will have a positive economic impact on the farm.

For example, the diversification of crops can help reduce financial risk over time, while improving water quality and increasing other environmental benefits that raise the value of the farm itself.

These factors must be taken into consideration when managing a farm business.

Production and machinery costs are directly affected by sustainable farming practices. Fertilizer and pesticide applications can be applied responsibly and, in most cases, reduced, based on crop rotation, variety selection or market availability for the end-product. Sometimes, overall yield may decrease, but differences between production cost and revenue can be improved, leading to increased profitability for the farm. Likewise, management, marketing skills and the experience of decision-makers will have direct economic impact on the business.

Indicators of a farm's economic profitability may include:

- increasing net worth or savings
- consistently decreasing debt
- consistently profitable farm, year after year

(Source: Ontario Ministry of Agriculture, Food and Rural Affairs, 19 Mar 2021)

Source Link: http://www.omafra.gov.on.ca/english/busdev/facts/15-023.htm#EconProfit