Cost of production and indicators of economic performance in the production of sugarcane in the Province of Tucumán, Argentina – Sugar harvest 2015

Abstract

Sugar industry is indeed important in the economy of the Province of Tucuman, and thus the profitability of production of sugarcane. This paper attempts to assess the level of costs of a model of sugarcane production and efficient use of resources through the estimation of indicators of economic performance, including profitability. The methodology for estimating costs and results is standard among those involved in the subject and is properly detailed for newcomers to the topic. Within the cost study it is interesting to note that expenses ( cash expenditures) represent 77 % of them , while the return on tied-up capital in the production process is 20% of the cost, being the amortization the remaining 3%. The calculation of profitability shows that a sugar producer is undergoing a process of disinvestment at a annual rate of 3.51 %, a situation that is rapidly displayed by observing that the income received by the producer is not enough to cover the total expenditure. In this situation the producer must decide which costs will not disburse, a decision that may lead the producer not to reap, renew reedbeds and even to cease the activity.