Resources / Horticulture / Operating expense ratio
Horticulture · Financial · Efficiency

Operating expense ratio

74%

Total farm operating costs as a percentage of gross income — how many cents of each dollar earned are consumed by running the orchard, before finance and drawings.

Worked example · Operating costs ÷ gross income
74% Costs 74% Margin 26%
Operating costs ÷ gross income
The benchmark

Labour-intensive horticulture typically runs a higher operating-cost share of income than broadacre; efficient orchards keep the ratio in check through packout and productivity, and it climbs sharply in low-yield or low-price years.

APAL Orchard Business Analysis ↗
What it signals

A lower ratio is real financial resilience: it builds the cash cushion that covers interest, funds netting and replanting, and carries the orchard through a hail or heat year. A ratio creeping up over time is an early warning that costs are outrunning production.

Data required to calculate
Total operating expenses$Depreciation$Gross income$

Silo pulls each of these from the sources the operation already uses, and keeps the figure current automatically.

How to improve it
01

Grow premium tonnes to dilute fixed overheads across more income.

02

Review labour, machinery and finance — the largest costs — per tonne.

03

Benchmark and competitively source major input purchases each year.

Questions & answers

What is operating expense ratio?

Total farm operating costs as a percentage of gross income — how many cents of each dollar earned are consumed by running the orchard, before finance and drawings.

What data do you need to calculate operating expense ratio?

You need: Total operating expenses ($), Depreciation ($), Gross income ($). Silo pulls each of these from the sources the operation already uses and keeps the figure current automatically.

What is a good operating expense ratio benchmark?

Labour-intensive horticulture typically runs a higher operating-cost share of income than broadacre; efficient orchards keep the ratio in check through packout and productivity, and it climbs sharply in low-yield or low-price years.

How do you improve operating expense ratio?

Grow premium tonnes to dilute fixed overheads across more income. Review labour, machinery and finance — the largest costs — per tonne. Benchmark and competitively source major input purchases each year.

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