A Financial Costing Model for Onion Seed Production

This study aims to help onion seed producers through the development of a financial cost-planning tool. This tool will help producers to make strategic financial decisions about adopting their own onion seed enterprise. This model provides a clearer understanding of how the physical production process is translated into the financial implications. It can also be used to compare projected- with actual expenses to identify, evaluate and address the irregularities. Risk strategies can be developed using this model to identify and quantify the influential cost-sensitive risks involved with the production of onion seed. The development process of this tool employs activity-based costing, presented within the structure of an enterprise budget. The practices involved with commercially producing onion seed are vastly different from producing onions for the market. The study focuses on the bulb-to-seed production method, which is a two-year process. Therefore, a thorough understanding of the entire production process and producers' needs was necessary to build this tool in an easily accessible way. Since each producer has their own management practices for their farm, the model is flexible to fit each producer’s specific needs and situation. This model underwent a validation process through willing participation to ensure accuracy and user-friendliness. Three key financial factors were selected to assess the enterprise's sensitivity to system shocks. The first factor was a change in the minimum wage. Here, an increase of 10% in the minimum wage led to a 5.3% increase in labour costs and a 10.85% decrease in enterprise profit. The second factor was fertiliser costs, where a 25% increase in fertiliser prices led to a 24% decrease in enterprise profit. The third factor was seed yield, where a 5% decrease in yield led to a 38% decrease in enterprise profit. These scenarios highlight the importance of closely monitoring production factors and impacts affecting the enterprise's performance. Therefore, it is vitally important for producers to consider the financial implications of a new enterprise to determine whether it would be financially feasible on their farm.

Grantor dc:publisher

Stellenbosch : Stellenbosch University

Year dc:date.issued

2026

Author dc:creator

• Venter, Lizaan

Advisor dc:contributor.advisor

• Hoffmann, Willem Hendrik

Language dc:language.iso

en

Repository record dc:identifier.uri

https://scholar.sun.ac.za/handle/10019.1/135622

OAI identifier oai:identifier

oai:scholar.sun.ac.za:10019.1/135622