Combining Total Cost of Ownership and Multi-Criteria Decision Analysis to Improve Cost Management in Family Farming

Abstract

Family farming is an important pillar of the global primary food sector and is characterized by a significant local and regional impact. The sustainability of these businesses depends greatly on the use of effective management practices in family farming and smallholder farmer’s activities. However, there is a lack of methodologies to support decision making in this sector related to the recognition of all aspects involved in the acquisition of inputs. Commonly, the existing approaches are focused on cost as the major criterion, which might impact on the agribusiness sustainability in the short or long term. Furthermore, traditional cost-focused approaches should be complemented with multi-criteria aspects within comprehensive and practical methodologies. This paper presents a Cost Management Model (CMM) integrating the concepts of Total Cost of Ownership (TCO) and Multiple Criteria Decision Analysis (MCDA), which includes both monetary and non-monetary attributes. The use of TCO was mostly focused on industrial applications and studies on costs in agribusiness are still scarce and incomplete. The model was applied to a set of agribusiness families in Southern Brazil to support the supplier selection process of the three main inputs (i.e., fertilizer, fungicide, and soybeans). A significant cost reduction of approximately 13% for fertilizers, 7% for fungicides, and 3% for soybeans can be achieved. The CMM can be applied by smallholder farmers in any region of the world, and its flexibility allows changes in weights and criteria at any time by the decision maker. Buyers are more prepared to select the best supplier for each input and the later can recognize how they are more or less competitive when all costs and relevant criteria are taken into consideration. It can be also applied from an industry-level perspective to highlight the industry’s cost structure and value chain, supporting more focused and effective public policies namely the design of subsidies that mitigate relevant context costs and the investment in infrastructures. Both, subsidies and public investment, are of major importance in rural areas of developing countries.

Analysis of Modern Instruments for Strategic Management Accounting at Agricultural Enterprises

“…Today, many agricultural enterprises, when calculating the cost of production, face a significant problem in choosing the method of allocating overhead (indirect) costs between types of products (Lizot et al, 2021). For a long time, in their management accounting Khushvakhtzoda system, they have been accepting direct labour costs for the production of a unit of output as the basis for the distribution of overhead costs.…”

Reflexos da pandemia do Covid-19 nos custos de aquisição de insumos agrícolas: uma investigação empírica com o uso da metodologia Total Cost of Ownership

“…Vários métodos de gestão mostram-se relevantes para o processo decisório, de interação da gestão de custos e demais áreas afins do ambiente administrativo das propriedades rurais familiares. Dentre esses métodos destaca-se o TCO (Lizot et al, 2021b).…”

“…De tal modo, a indústria e o comércio não subsidiaram totalmente o aumento nos custos, permanecendo uma parcela significativa desses custos para o setor primário absorver (Lizot et al, 2020;Baser & Bozoglu, 2021). Na agricultura familiar, os efeitos do aumento dos custos inesperados são potencializados, pois as propriedades contam com poucas atividades e pouco volume de produção (Lizot et al, 2021b;Mattei & Michellon, 2021).…”

“…Nesse cenário de instabilidade econômica, a gestão de custos é primordial para minimizar os prejuízos na agricultura familiar, assim como a utilização de técnicas e métodos que possam proporcionar elementos úteis para tomada de decisão (Lizot et al, 2018a(Lizot et al, , 2018bDeina et al, 2023). Dentre os métodos de gestão de custos para tomada de decisão no agronegócio, destacase o TCO (Total Cost of Ownership) ou Custo Total de Propriedade (Lizot et al, 2021b). O TCO tem por objetivo calcular os custos do ciclo de vida e de aquisição de um insumo ou serviço, não contabilizando somente os custos conhecidos, mas também os chamados "custos ocultos" (Degraeve et al, 2000).…”

Análise Comparativa Dos Resultados Econômicos E Financeiros Das Atividades De Produção De Soja E Leiteira Em Uma Propriedade Rural Familiar

“…O cenário do agronegócio brasileiro vem evoluindo nos últimos anos, chegando a duplicar sua produção de grãos na mesma área plantada em apenas duas décadas (AMORIM; TERRA, 2014). Esses ganhos são consequências dos avanços tecnológicos, que possibilitam aos produtores a utilização de máquinas, insumos, sementes melhoradas e estimula a comercialização dos produtos ao exterior (LIZOT; TROJAN; AFONSO, 2021).…”