WACE ATAR Agribusiness key terms

The difference between the income earned from an enterprise and its variable costs, usually expressed per hectare or per head. It measures how much each unit of production contributes to covering fixed costs and profit.

Expenses that change in direct proportion to the level of production, such as seed, fertiliser, fuel and casual labour. They are the costs subtracted from enterprise income when calculating a gross margin.

Expenses that do not vary with the volume of output in the short run, such as rates, insurance, depreciation and permanent labour. They must be covered by the combined gross margins of all enterprises on the farm.

The level of output or price at which total revenue equals total costs, so neither profit nor loss is made. Managers use it to judge how far production can fall before the business loses money.

A forecast showing the timing of money coming into and leaving the business over a period, usually monthly. It reveals periods of shortage so that overdraft or loan arrangements can be made in advance.

A statement listing what a business owns (assets), what it owes (liabilities) and the owner's equity at a particular date. It shows the financial position rather than the trading result for a period.

The owner's share of a business, calculated as total assets minus total liabilities. It grows when profits are retained and falls when losses occur or drawings are taken.

The funds available for day-to-day operations, found by subtracting current liabilities from current assets. Shortages can stall planting or feeding even when the business is profitable overall.

The gradual reduction in the recorded value of an asset such as machinery or fencing as it wears out or becomes obsolete. It spreads the cost of the asset over the years it is used.

A ratio comparing the profit generated by an activity with the money invested in it, often expressed as a percentage. It allows managers to compare competing uses of limited capital.

The sequence of businesses and activities that move a product from the farm through storage, processing, transport and distribution to the final customer. Coordination along it affects cost, quality and timeliness.

Processing or presenting a raw product in a way that increases its sale price, such as turning milk into cheese or grain into flour. It can raise returns but usually adds cost and complexity.

Dividing a broad market into groups of buyers with similar needs, such as by age, income or lifestyle, and targeting one or more groups. It helps a producer match product and promotion to specific customers.

The specific group of customers a business aims its product, price, promotion and distribution at. A clear target market makes marketing decisions consistent rather than trying to appeal to everyone.

The combination of product, price, place and promotion decisions used to sell a product. The four elements should reinforce each other and suit the chosen target market.

The planned systems and checks used to ensure products consistently meet agreed standards and customer requirements. It includes on-farm practices, record keeping, testing and certification.

The management of hazards such as bacteria, chemicals and foreign matter so that food is safe to eat. On farm it involves hygiene, withholding periods for chemicals and traceable records.

The minimum time that must pass between applying an agricultural chemical and harvesting, grazing or slaughtering the treated product. It protects consumers and keeps residues within legal limits.

A strategy that combines biological, cultural, physical and chemical controls to keep pests below damaging levels while minimising chemical use. It relies on monitoring and thresholds rather than routine spraying.

Meeting current production needs without reducing the ability of future generations to meet theirs, balancing economic, environmental and social outcomes. In agribusiness it is assessed across all three dimensions, not only profitability.

A way of evaluating business performance against three sets of outcomes: profit, environmental quality and social wellbeing. It encourages reporting beyond financial results alone.

The variety of living organisms and ecosystems present in an area. On farms it supports pollination, pest control and soil health, and is often used as an indicator of environmental condition.

The total greenhouse gases released directly and indirectly by an activity or product, expressed as carbon dioxide equivalent. Producers measure it to identify emissions hot spots and respond to market expectations.

Greenhouse gas emissions expressed per unit of product, such as per kilogram of grain or litre of milk. Lowering intensity means producing each unit with fewer emissions, which can improve both environmental and market performance.

The amount of product obtained per unit of water used, for example kilograms of grain per megalitre. Improving it reduces costs and pressure on limited water resources.

The loss of topsoil through wind or water, which reduces fertility and can pollute waterways. It is managed through ground cover, contour works, reduced tillage and shelterbelts.

The number of animals carried on a given area of land over a period, often expressed as dry sheep equivalents per hectare. It strongly influences pasture condition, profitability and erosion risk.

The maximum stocking rate an area can support over the long term without degrading the resource base. It varies with season, pasture type and management.

The amount of product harvested or produced per unit of land, animal or input, such as tonnes per hectare. It is a core measure of production performance and is compared against benchmarks.

Comparing a business's performance measures, such as yield, cost or profit per hectare, with those of similar businesses or industry averages. It identifies strengths and areas for improvement.

A measurable value chosen to track how well a business is achieving an important objective, such as lambing percentage or cost per litre. Good indicators are specific, measurable and reviewed regularly.

The activities involved in recruiting, training, motivating, paying and retaining the people who work in a business. In agriculture it includes managing family members, permanent staff and contractors.

The legal and practical duty to protect workers and visitors from injury and illness, through risk assessment, training, safe equipment and procedures. Farms carry high risks from machinery, chemicals and livestock.

The process of preparing for the transfer of ownership and management of a business to the next generation or to new owners. It addresses timing, finance, fairness among family members and training of successors.

Identifying possible threats to a business, assessing their likelihood and impact, and choosing actions to avoid, reduce, transfer or accept them. Tools include insurance, diversification and forward contracts.

An agreement made now to sell a specified quantity and quality of a product at a set price on a future date. It reduces price uncertainty but removes the chance of benefiting from later price rises.

Adding new enterprises, products or income sources to a farm business. It can spread risk and use spare resources, but also demands extra capital, skills and management attention.

A business taking control of another stage of the supply chain, such as a processor owning farms or a farmer owning a packing facility. It can improve coordination and margins but increases exposure.