Financial stability

Calculation of labour costs for family members

The farmer’s own labour, and that of his or her family for agricultural production, is not a monetary cost. However, own labour is a component of economic costs, with the consequent need to value its inputs.

If the labour costs of family members are not taken into account, the financial result obtained in a given year will not give us full information about the actual profitability of production. However, this can be important, for example, when a spouse doing certain work on the farm is expecting a child. Both during this period and after the birth, a replacement will be needed, which will result in certain labour costs. Therefore, if the cost of the spouse’s labour has not been calculated beforehand, in a situation of replacement, this will disturb the financial stability of the farm.

The cost of unpaid labour incurred on the farm is estimated on the basis of the unit cost of hired labour on farms with hired workers. This cost is estimated on the basis of the average wage per hour of hired workers on farms in a given region and of a given agricultural type. In estimating the unit cost of a farmer’s own labour, a maximum of 3,000 hours of labour per year per full-worker (FWU) is taken into account. This corresponds to 8.2 hours of work per day for 365 days per year. This limitation has been applied due to the fact that, on many farms, the working hours of the farmer’s family members are determined in excess.