Profits can be different from one farm to another because of the ownership structure or the amount of fixed costs such as debt servicing. Gross margin is the difference between total farm income per hectare and variable or operating expenses per hectare. Examples of variable costs include those of fertilizers, pesticides, biodynamic preparations, fuel, and labor. We only examined farming enterprises requiring similar commitments of owner-operator resources per hectare, except for dairy farm pair 2, where the biodynamic farm was selling yogurt and the conventional farm milk. Here, the additional direct costs of yogurt production were included in the gross margin analysis of the biodynamic farm.
Economic stability is one of the most significant characteristics of sustainable farming systems.
From farmer interviews and their annual accounts, we determined that the biodynamic citrus, livestock, and dairy 1 farms have been able to secure reliable markets for their products, which is an important factor for economic stability. Gross margins for the biodynamic market garden were less than for the conventional counterpart in 1988 and 1989 but greater in 1990 and 1991. Annual returns per hectare for the biodynamic market garden have increased consistently over this 4-year period because of the development of biodynamic or organic markets and improved productivity and farm management practices. Although gross margins provide a comparison of financial performance of two farms under different management approaches, total gross margins illustrate the financial return to each whole farm or to the major farm enterprise. Total gross margin is simply the gross margin times the effective enterprise area of each farm or each MAF model.