How to Calculate Export Costs for Agricultural Products

7/31/2019 How to Calculate Export Costs for Agricultural Products

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Agribusiness seriese p o t H a d o o k

Inter-American Institute or Cooperation on Agriculture, IICAit-Amca Poam o th Pomoto o Tad,

A ad Food saty

How to Calculate ExportCosts for Agricultural

Products


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it-Amca ittt o Coopato o Aclt (iiCA). 2006

Th ittt coa th a o th docmt. Pop ctato qtd.

Th docmt wa ppad y th Mam-ad it-Amca Poamto Pomot Tad, A ad Food saty, at th qt o th iiCAA Compttv Dctoat. it wa wtt y Fa Lam, iiCAA pcalt.

Th plcato alo avalal lctoc (PDF) omat om iiCAwt at www.ca.t.

Lam, Fa

How to calclat pot cot o acltal podctFa Lam sa Jo, C.r. : iiCA. A CompttvDctoat, 2006.

32 p. ; 15 22 cm. (A s. epot Hadoo/ iiCA, issn 1819-9208 ; no. 06)

isbn 92-90-39-764-0

1. Cot Acltal podct 2. epot Acltalpodct i. iiCA ii. Ttl iii. s

Agris DeWeYe70 382.4

Mam, FL., u.s.A.2006


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INDEX

FOreWOrD 5

inTrODuCTiOn 7

i. COsTs OF THe exPOrT PrOCess 9

a. Podct Ppaato ad Paca Cot ............................. 9. Podct Hadl Cot......................................................12c. Tapotato Cot ...........................................................13d. iac Cot .................................................................14. Cot d to Lo o Podct ...............................................15. stoa Cot ....................................................................18. Taomato Cot ..........................................................20h. Cot o Captal .................................................................21. Facal Maamt Cot ..............................................23

j. Pomoto ad Advt Cot .......................................24. impot ad epot Ta ....................................................24l. Cot o F, Lc ad Commo .............................25m. Th itmdato o Mat Ma ............................25

ii. HOW TO CALCuLATe THe TOTAL COsT OFTHe exPOrT PrOCess AnD inTerMeDiATiOnOr MArkeTing MArgin 27

Annex 1: inCOTerMs: risks AnD COsTs 30

Annex 2: FOrM FOr CALCuLATing exPOrT COsTs 32


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How to Calculate Export Costs for Agricultural Products /

FOREWORD

Th it-Amca ittt o Coopato o Aclt (iiCA),thoh t A Compttv Dctoat, to hlpcot dty ad ta advata o oppott povdd y thmat, ad to ppot plc ad pvat ttto that coacompttv dvlopmt o a.

i Jaay 2004, th iiCA lachd th Inter-American Program or thePromotion o Trade, Agribusiness and Food Saety, whch ha t ma oc Mam, Floda. Th tatv wa dta wth a madat to oat tchcal coopato o tth th tpalalty o mall ad mdm-z a iiCA mmcot, hlp dty tad oppott ad povd omatothat pomot tad y acltat dco-ma.

Th a, th actvt codctd y th poam hav ald to

dty cta d that mall ad mdm-z a thAmca m to hav commo. Th d hav opdaccod to poty ad w hav plhd aaly o thm oAgribusiness Series, plcato amd at hlp tth thcompttv o mall ad mdm-z th hmph.O o th cto, Exporting Handbooks, am patcla to t othcocpt ad oto that ca acltat dco-ma o tho whowh to cclly t th tatoal mat.

Th docmt, How to Calculate Export Costs or Agricultural Products,dt th cot volvd th pot poc ad how how tocalclat tho cot, pactcal ampl. it alo cld a lt otatoal commcal tm icotm ad a om o calclatpot cot o acltal podct.

Th docmt wa ppad y Fa Lam, A spcalt o thInter-American Program to Promote Trade, Agribusiness and Food Saety.


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/Agribusiness series

W a codt that th plcato wll com a docmt oc o mall ad mdm-z a, ad at th iiCAw hop w ca cott to tth yo compttv admpov yo lv codto.

Sincerely,

Miguel Garca WinderDirector o Agribusiness Competitiveness

Inter-American Program to Promote Trade,

Agribusiness and Food Saety

IICA Ofce in Miami


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Introduction

Th ojctv o th docmt to amlaz th ad wth ctaac oto latd to th pot o acltal podct, patclawth th cot ad ma that hold ta to codato yth o pactcal ampl. W hav oht to o a cla ad mpltptato o cot.

Th poc o pot q mo pcc owld tha local o

domtc mat do. A, al, oc o podctocot t td to dad th cot actd y tatoal mat.it mpotat to pot ot that tmda ad pot ad y ad ll podct domtc ad tatoal mat mthav -dpth owld o th cot that th actvty tal.

i ct dcad, th ha a mpha o th latohptw coomc dvlopmt ad th pomoto o pot, wthth da that th latt ca attact vtmt ad at th am tm

cat jo ad walth. Fthmo, th ha ctly a tdtowad lalz tatoal tad ad th o latalad mltlatal tad amt. Th tato v pota caly lvat ol to play th dvlopmt taty oato.

i th cott, acltal podct pom a hhly lvat cto;howv, to al to compt tatoally, oth cot ada mt claly d th taty wth pct to cotad alo wth ad to qalty. gv that mot cot th wthmph tll act a ppl o aw matal, mplmt a cottaty o th tmot mpotac to p compttv th mat.

kowld aot ad th appopat maamt o cot othpodcto ad pot ca th y compot o athat vt to th tatoal aa, pcally o mall admdm-z compa whch hav ot yt maad to cat acoomy o cal.


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/Agribusiness series

Th ta that hav to covd to ta podct om aa to th com cottt what calld th matcha. i ach ta, whth yo wat to patcpat th domtco tatoal mat, t cay to cay ot a o actothat tal cot. Th cot may mpl, ch a th aoppotty cot1, o a compl a th cot o taom th podct od to l t phalty.

Why do a acltal podct old a Mam pmat o aChcao podc to ally hav a pc that mch hh thawhat wa pad to th podc? Th cot tald y th pot poca ot alway ay to dty; howv, th a may cot, mot o

whch a ot wll ow, o com ad podc. Fo tac,t ot thoht that tmda ma la pot om thpatcpato th mat cha, t thy too c cot that atal o dclt to dty.

i th ca o local mat, wh th mat cha td to lcompl, th dc tw th pc pad at th am o pacaplat ad th pc whch th com pay latvly mall. it otoly ca o phycal pomty, t alo ca th a w

mat ta. i cotat, wh tatoal mat a volvd,th mat cha volv a at m o acto ad qtlytal hh cot, d to th at m o tp volvd th opato, ch a th paymt o dt, lc, pmt, tc.

i th pot poc, w ca dty vaal cot whch, a tham dcat, vay accod to volm. eampl o vaal cota paca ad tapot cot, whch ally td to vaal at. Alo th a d o m-d cot, whch a tatc o

qa-tatc at, adl o qatty; th cld th cot olc, pmt, tc.

i th docmt, w wll am th ma typ o cot th potpoc ad povd ampl that lltat th cocpt ptd.

1. Oppotty cot: to th t o pot, whch ot cvd ca aoc, ch a tm, allocatd to a dt actvty.


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a. Product PreParationand Packaging costs

it ally thoht that th cot o havt ad tapot om tham to th paca plat o om th am to th poc plata pat o podcto cot. Howv, th cot o ot ad cla

podct a codd to ppaato cot. ually th actvta ot cad ot th ld, t th paca o poc plat.som cot q cta podct to do pcal tatmto potd, ad tho tatmt ca ppaato cot.

Th cot o paca th podct cldd th am ta; that ,th cot o ptt t to a paca that al t adqat tato th al com. Dpd o th podct ad dtato, thcot may cottt a cat pcta o th al pc. nowaday,

th dt lato ct tatoal mat hav a majofc o th cot.

Podct ppaato ad paca cot ca aly dtd:ppaato cot ally lat to th volm o wht o th podct;paca cot lat to m o t.

a.1. Costs o preparation o the agricultural product

i th pot poc, o o th ma ta to cad ot at th podct om th ld to ppa t o qtpaca. Th o o th mot mpotat ta c th hmatvto cat ad poo ppaato o th podct cadtoy moth o wo. Amo th mot qt actvt a:

Preparing: cot o mov oot, lav o tm that aattachd to th podct ad that may act t qalty.

Costs of the Export

Process


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10 /Agribusiness series

Selection: paato o th podct to matal ad o-matal ad o mat cta ch a hap, colo, tt,tc.

Cleaning: lmato o ol ad o ojct.

Sorting: paato o podct accod to qalty ad z od to add val; may ca, th podct lald at thta; lal al t to dtatd om oth mlapodct.

Treatment: applcato o a chmcal o phycal poc to hacth podct qalty, dalty, o appaac.

a.2. Packaging costs

Mot acltal podct tdd o th tatoal matq paca. Paca ha o ma ojctv. Ft, to potctth podct, c hadl ca act th qalty. scod, to acltatth podct movmt all ta o th mat cha. Thd,paca al th podct to dvdd to tal t. Fally,paca v a omato ad pomotoal cto, o thdt at th mat cha a wll a o com. Latly,th acltal podct mat ha cam mo ophtcatd, adcom a caly dmad al ad vomtallydly paca.

Paca cot a latvly ay to dty, c thy a dctlylatd to th podct. Oc w ow th capacty o th paca oampl, th ca o mao o pot, th o hav a capacty o4.2 loam, ad th ca o aaa o pot, th o a 18loam w ca dtm paca cot p loam.

Paca cot alo cld th cot o tap, platom ad clamp.Thoh th cot a ot mmal, thy hold ta to accotto avod lat p.


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How to Calculate Export Costs for Agricultural Products / 11

How to calculate preparation and packaging costs?

To lltat th cocpt, w wll a hypothtcal pot ampl.sppo w hav to pac a cota o mao o th u.s. mat.bo pacad, th podct mt clad, lctd, otd,ad tatd wth hot wat, o th mat patcla. Th pocha a cot o $0.18 p loam. Oc th poc ha cadot, th podct pacad o o 4.2 loam capacty, whch qal to:

Weight range o eachmango (grams)

300 400

400 500

500 550

No. o units perbox

12

10

8

Tatmt cot (4.2 k. * $0.18) $0.76

Paca cot $0.30

Oth cot $0.20

Preparation and packaging cost/Box $1.26

Cot p cota (1,400 o) $1,746.00

A yo ca th aov tal, o wth mall mao wll hav

a la m o t, whl o wth la mao wll havw t; howv, th wht o th o ma almot cotat.

i th cot o th cadoad o $0.30 p t placd th pacaplat, ad tap, clamp, pallt o platom ad lao accot o aaddtoal $0.20 p o, th cot o ppaato ad paca a 40oot cota, wth a capacty o appomatly 1,400 o, wold calclatd a ollow:


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b. Product Handling costs

Podct hadl cottt a cat pcta o th matcha cot tct. i patcla, acltal podct dohadl at vao pot d pot, otaly at pot, apot, adctom, oth th pot coty ad th mpot coty. imay ca, wh cao cooldato cad ot, hadl cottd to ca.

Fo ampl, o th u.s. mat, d to th cty lato ctly ct, mpotd podct a jctd to vy tct cotol, whch

at addtoal hadl cot.

Dpd o th podct maplato, hadl cot may cottta cat catoy; howv, dty th hadl cot thpot poc ca omwhat dclt ca t may qdth t om aoth cot.

How to calculate product handling costs?

Cot th aov ampl, w hav th ollow cot: thpaca plat, a cot o $0.23 p o, whch pt th movmto th podct wth th plat; at th pot o o, a towa cot o$0.03 p o ad a mato ad pcto cot o $0.12 p o;ad at th pot o aval, a cot o load ad hadl th t,$0.41 p o.

Th, th hadl cot p cota th cha wll a ollow:

Hadl cot (paca plat) $0.23

stowa cot (pot o o) $0.03

Fmato cot (pot o o) $0.12

Cot o load ad hadl (pot o aval) $0.41

Total cost o handling/box $0.79

Total cot o hadl p cota (1,400 o) $1,106.00


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c. transPort costs

Oc pacad, th podct mt tapotd. Dpd o that ad tt o th compay oazato, tapot may mata o podct to aoth ta th pot poc (o ampl,to a ato oom o to a vtoy ct) wh t tod tlth volm oh o th tapot.

i al, tapot cot ay to dty, c th amao pot ally ha to pay t y t o wht o volm (p lo,qtal, o, tc.) o p dtac.Th cot ot dtmd p

cota o p tc. Wh th a ow th ma otapot, th calclato o tapot cot mo compl.

Tapot o podct to th al mat a cat cot o pot.Th, dpd o what wa ad, th may vao ma otapot (od, a, al o a).

Mot acltal podct tavl y lad o a, dpd o thlocato o th pot coty ad mpot coty. bt wh

podct whch a phal, dlcat o mo val, ch a fow,a cocd, t cay to ot to a tapot.

Th mot commo mthod o pt tapot cot p t. ith ca o od tapot, t omally qotd p cota o 20(1 Teu2) o 40 (2 Teu), ad th cot dpd o dtac tavld adtyp o cota, whch ca dy, atd o oz. Wh odtapot o a acltal podct pad p cota, th cotacot dvdd y th m o o o loam that t cota to

dtm th t cot.

Fo a tapot, whch ally low t chap, cot aomally qotd p cota, ad o wht, qatty o volm.Thoh th a oth way o d podct y a, mot acltalpodct a t cota, to acltat hadl.

A tapot mo pv t at tha th oth th hppmthod that a d: pla that tapot pa ad cao,

2. Teu = Twty-oot eqvalt ut.


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cao pla ad chat fht. Th cot dpd maly o whto volm, dtato, ad ao.

i al, th cota d a tapot a owd y th alad a a tal pat o th acat. Thy ally a latvlyom ad th capacty va om 120 to 1,077 cc t.

How to calculate transport costs

Cot th aov ampl, lt ppo that a cota to tapotd om th paca plat to th pot o pot ad wll tho y a to t al dtato.

i th ca, th cot o od tapot, om th paca plat to thpot o pot $266.00 p cota ($0.19/o) ad th cot o atapot $1,288.00 p cota ($0.92/o). To calclat th cotp cota, w mt total th od cot ad a cot, ad mltplyth lt y th m o o p cota to dtm th cot pcota:

god cot $0.19

sa cot $0.92

Tapot cot/o $1.11

Cot p cota (1,400 o) $1,544.00

Tapot cot o o th mot mpotat acto th pot poc.

Calclat t o ay hpmt tal to th cc o thtaacto.

d. insurance costs

evy tatoal taacto tal om , whth commcal(ach o cotact, olvcy o th ppl o clt, accdt tapot ad dlvy o podct, tc.), typ o ccy (dt


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qotato o cc at th tm o cotact ad at th tm ocollcto o paymt o th taacto), tt at, poltcal ,vomtal hazad, tc.

To mmz th , pot ally pcha ac polc,whch pt addtoal cot. Dtm th cot o ac dctly latd to th taacto poalty. Th cot o acva catly, accod to th ccmtac whch th dal wamad, typ o podct, mat, tc.

How to calculate insurance costs

Cot th aov ampl, two typ o ac a codd th ca: a ac polcy o $0.08 p o whch cov th podctd od tapot ad matm ac o $0.20 p o.

Cot o od ac $0.08

Cot o matm ac $0.20

Cot ac/o $0.28

Cot p cota (1,400 o) $392.00

e. costsdueto lossof Product

i th tal ta o th mat cha, patclaly d tapotad hadl, acltal podct do mo qattatvad qaltatv lo. Qattatv lo to lo o wht ovolm. Tho, th paca plat, compa ally addmo podct p o to cotact th dca wht ltom maplato ad tapot (o ampl, wth topcal t). ith ca o phal acltal podct, lo qatty a ottatal ad may dpd o th typ o paca that wa d.

Qaltatv lo, o th oth had, to th dtoato o thoaolptc qalt that a podct may hav wh t ach th


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al com. A podct dtoato qalty matd tappaac, tt, aoma ad tat.

Th cot atd y th typ o lo a dclt to pcyca a m o acto whch a dclt to atcpat com toplay. Fqtly th dtoato oat th am o acltalopato tl, a mpop havt tchq o dctv hadlo podct wll lad to vl dama to qalty. To lltat thcocpt, cod th ca o th aaa. baaa havtd om platctd wth Mycosphaerella fjiensis (blac satoa)3 p pmatly,.., o av th p oom. Th ca a tatal loo qalty, ad t ot commo that omtm a t cotaca a lot.

Th tato ca wo th podct hadld mpoply dtapot, ppaato o paca. Fo ampl, wh a podct tapotd to th paca plat, omtm t pod totmpat cha, ola adato, havy a, jctd to lotoa pod, o cal hadl that ca ca phycal dama.

To cotact th dca wht d to lo o hmdty, potally ca th o al wht y 1 to 5%. Th a addtoalcot o th pot, t t omth that ha to dalt wth. Thpolm o podct lo d to dtoato o qalty ca , patlyolvd y mo cal hadl th dt ta o th cha.

i ay ca, t cla that all ta o th mat cha thwll alway om podct lo, maly d to mpop hadl.epot wll hav to dcad damad podct om tho that atact. Tho, t tal to tmat th cot that lt ompodct lo. Th t way to calclat th cot y compa thqatty pacad wth th qatty cvd y th mpot.

How to calculate costs due to product loss

Cot th aov ampl, ppo w d a cota wth 1,400o o mao. i th ca, a wht lo o 5% pctd. i th

3. A whch attac aaa plat


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wht lo ot ta to accot, th mpot wll apply a paltyto compat o cv l podct tha cotactd.

epot ally atcpat a dca ad commoly ca thwht d paca, o that th podct av wth th coctwht. somtm pot al to ta podct lo to codatoad c a palty mpod y th mpot whch thy mt pay. Thtal low pla th calclato o cot d to podct lo:

(a): Th pot atcpat th lo ad ca th wht thpaca plat

(b): Th pot al to atcpat th lo ad do ot cath wht th paca plat

i th cod colm, hypothtcally th podct do ot hav aylo ad at a ma o $1.83. i th thd colm, th potatcpat th dca, c a addtoal cot o $0.21 p o oaccot hav cad th wht o th podct. i th oth colm,th pot al to atcpat th lo ad palzd y th mpot. i

Product Product with Product with

with no loss 5% loss (a) 5% loss (b)

Cot o th podct 4.0 k* $0.35 / k 4.2 k * $0.35 / k 4.0 k* $0.35 / k

= $1.40 = $1.47 = $1.40

Cot o hadl, $ 2.77 $ 2.91 $ 2.77packa, tapot,tc.

Total cot $ 4.17 $4.38 $ 4.17

Pc o th podct $6.00 $6.00 $6.00 * 95% =

(4 k o) $ 5.70Ma $1.83 $1.62 $1.53

Cot d to $0.21 p o $0.30 p opodct lo


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th ca, th pc p o $5.70, ad th mat ma dcdy $0.30 p o, compad to th t ad cod colm.

A 5% dca podct wht om th paca plat to thmpot waho, ha a cot o $0.21 p o.

i cotat, th th ca wh th pot al to cod thpodct lo om th paca plat to th mpot waho, thcot $0.30 p o. Podct wht lo hold mmzd ad otod. Th compat o podct wht lo ha a cot t thcot ch l tha th palty cot mpod y th mpot.

i oth ca th lo a cat, ad th typ o taacto,wh mat ma a vy low, a ca cot ca dato o a compay.

Lo d to qalty ca hav hah coqc tha lo dto qatty o wht. Th om occ wh a pot ll pat oh podct d th comt ytm ad cv a low pctha pctd. Th happ wh th podct ha damadd hadl ad tapot, o wh t pctd po aval atth pot o dtato ad od ot to mt th pctd tadado qalty.

stato l th occ th pot o acltal podct.epot ot hav to ll a pcta o th podct at a lowpc d to lo o qalty.

f. storage costs

D to t aoalty, may acltal podct a havtd olyat cta tm o th ya. Th may tod od to oldlat. stoa o o th mot mpotat cot o may acltalpodct, ad t ma ojctv to td th hl ad a lthpc th mat. Th wo ampto that hav atpodct avalalty th mat d moth wh th podctwold ot othw avalal wll compat toa cot.


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stoa cot ally dpd o two acto: th cot o th podctwhch wll tod ad th typ o waho. Waho cotdpd la ma o th maamt, th typ o vcqd ad th dato o th toa. i th waho at llcapacty thohot th ya, th cot wll latvly low tha t d oly cta moth. stoa ca do y th pot oth mpot.

Mot acltal podct a phal y at ad caot todo a lo tm. Th a om t, oot, ad t whch ca tod o a lo pod ad mad avalal to ctom thohtotth ya.

stoa cot ca catozd a ollow:

Admtatv cot: cot o mata th podct d ctapod o tm; thy a latd maly to th cot o phycaltallato (dpcato, matac, tal, maamt, tc.).

Tatmt cot: latd to tho tatmt whch hav to madto ppa th podct o toa to mata t qalty.

Cot d to podct lo: dca th qalty ad qatty opodct alo occ d toa.

Captal cot: a ay actvty, th cot o moy hold copoatd to total cot.

How to calculate storage costs

To lltat th cocpt, w a a ampl ca toao mao a. Mothly tal o th waho $1,500.00 ad tha a 2,500 o capacty. Howv, dpt th act that t codtoa adqat, a mothly 3% dca podct wht pctd.Th pctd ll pc $7.80 p o.


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Fo th aov ampl, th toa cot o o moth $2,085.00,otad y add th waho tal cot ad podct lo dtoa.

g. transformation costs

Taomato o podct ot a cat acto matcot. som podct ch a co hav to taomd odto tal o compto. Th pc o a lo o chy a ot th am a that o a lo o co. Taomato cotvay accod to th tcholocal alty ad z o th compaypol o povd th vc.

To calclat taomato cot, th t tp to dty th covoat, .., how mch aw matal wll covtd to al podct. it

mpotat to ow th m ad qatty o y-podct whch acatd th taomato poc, ad th val.

How to calculate transormation costs

rt to th ampl o mao o pot, o o th mot commopoc d o mao that do ot comply wth tatoal

tadad to taom t to plp. Plp ally d to ppajc o d o local compto.

nm o o 2,500.00Wht (o) loam 13.00

Waho tal (p moth) $1,500.00Dca wht (p moth) 3%

Calculations

Total wht: 2,500 caja * 13 = 32,500 .Dca wht: 32,500 * 3% = 975 / 13 = 75 o

rtal cot: $1,500.00Cot o dca wht: 75 o * $7.80 / o $585.00Total mothly toa cot: $2,085.00


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i th mao ca, a covo at o 60% tmatd; that , ovy 100 loam o mao, 60 loam o plp ad 40 loamo pl ad d wll otad. Th pl ad plp hav ot coomcval. Th cot o poc 100 loam o mao $16.00 ad thcot o paca t $28.00.

Th pc o cod-ad qalty mao, .., that whch ot clado th tatoal mat, $0.15 p loam.

Th ppaato cot p loam o plp wll :

Cot o th mao o poc 100 * $0.15 / . = $15.00

Cot o poc $16.00

Cot o paca $28.00

Otpt 60%

Cot o plp/ o plp $15.00 * 100 * 0.6 =$0.25

Cot o poc/ o plp $16.00 * 100 * 0.6 =$0.27

Cot o paca/ o plp $28.00 * 100 * 0.6 =$0.47

Total cot / o plp $0.99

i th ca, a how th aov tal, th cot o podc o loo mao plp $0.99.

H. costsofcaPital

Captal cot, whch a ot ot ta to accot, cottt acat cot th pot poc. Mot pot, od to acth pot d cah. A hot cdt fow wll al th pot toa th pot cot. i mot ca, local a o ld a oco cah ad cdt loa. Loa hav a tt whch mt adddto th cot o th pot poc.

A pot may h ow captal, thoh th ha a oppotty cot.by h captal, a pot wold ot cv th copod

com c th d hav allocatd to ac th pot cotpoc.


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Th cot o captal ally va om o coty to aoth,dpd maly o a tt. Th cot o captal ca tmzda ollow:

Cot o wo captal. ually, ay pot wll d h ow otal ac to cov podcto cot o th cot o ypodct ad t qt cot th pot poc. it qtpol o may mall ad mdm-z pot to y podct,pot t ad, wth th moy otad, y mo podct; tho,th ac d a lmtd, pcally wh tho hav lmtd cah avalalty. epot who y podct o llthm o cdt wll d a la amot o wo captal. iom ca, pot wll y a havt advac; that , thypatally o totally ac th podc ad, tho, thy havto ac th podcto thohot t dato. Th ma thcot o captal v hh.

Cot o vtmt captal. i om ca, to t p a potopato, t cay to acq at. Th pot ha twoopto: la (ld, cold oom, machy, vhcl, tc.)o y th at. Th latt q mo moy p ot ad,tho tal a captal cot.

i th wo ad vtmt captal a acd y th pot, thcaptal cot a ot ta ddctal. Th oppot appl th potot to tal ac oc, ch a a commcal a whchcha a tt o th loa. bca o th ta d, potp tal ac od to lva opato ad cat ata hlt whch dca th ta thy mt pay.

How to calculate capital costs

i mot tatoal taacto, th ll ad collcto poca ot mltao. ually, pot hav to cdt ad thycv paymt 30, 60 o 90 day tm.

A pot hold cod th captal cot tm o tm. Lt

ppo a compay d $6,000.00 to ppa a cota o mao.


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Th pot oow $6,000.00 at 60 day tm. Th APr (AalPcta rat) 9.75%. Th captal cot o that hpmt wold :

$6,000.00 * 9.75% * (60 day/360 day) = $98.00

Th pot wold hav a captal cot o $98.00 o ach cotapotd. To calclat th captal cot p o o mao, dvd $98.00y 1,400 o, ad th lt $0.07 p o.

i. financial management costs

i al, th pot poc volv mo tp o a acalat that ca at addtoal ad pctd cot thy aot maad poply. Th tp a latd to th paymt mthodotatd y th pot ad thy ally cld:

Payment in advance. Th th at mthod, t th o lattlzd y pot. it ha a at advata o th pot,ca o cd at th podct ha t.

Letter o credit. Th a vy c mthod ad t cot o aa, act at th mpot' qt, commtt to ma paymtto th pot.

Bank collection. Th paymt typ o th pot thath ltt o cdt. ba collcto al th pot to collctpaymt o th al o h podct thoh a a.

Credit or open account. Th typ o taacto cot o thpot a cdt to th mpot accod to tm pvolyad y oth pat. Wth th pocd, w commd thpot to ota ac, ca t th t mthod.

i addto, pot may a addtoal cot latd to ccycha ytm. Alo, th may commo o o th ccy to th coty o o.


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How to calculate fnancial management costs

Cot wth th ampl, th acal maamt cot, ..,th cot o collct th al voc total $42.00. i th ca, thacal maamt cot p o $0.03 p o whch otady dvd $42.00 y 1,400 o.

j. Promotionand advertising costs

Thoh acltal podct ally do ot dpd o a pcfc pomoto

ad advt taty, th td to mak cla ot to dtatpodct y coty o o, vaty, o podcto mthod. Th atcot latd to pomoto ad advt actvt, ch a patcpato a, advtmt dt mda, tc. i al, th cot a otdctly latd to th podct tl.

k. imPortand exPort taxes

Dpt th act that may ctom a hav dappad wth thlalzato o tatoal tad, mpot ta tll t may cot.Th ta cottt a addtoal cot th pot poc ad ca calclatd vao way:

Ad valorem tax: Th a ta whch a appld to mchad adwhch a t a a pcta o th ctom val.

Specifc merchandise taxes: Th a ta appld to mchadat a fd amot o moy o ach t o mamt talhdohad, whch may a kloam, lt, doz, mt, tc.

Customs surcharge: Th a ctom ta that apply to ctamchad ad who tal ppo to potct domtc dtywh that dty ha mad clam o dmp y oth cot; thya alo kow a compatoy o at-dmp . gally t apcta appld to th ctom val o a pcfd pod.


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Export taxes: Th a ta whch a pot mt pay to th ovmtwhv a pot cad ot. epot ta povd addtoal como th ovmt whch ot d to fac dvlopmt poam,ach, tc., to tth th compttv poto o th cto to whchthy a appld.

l. costsof fees, licensesand commissions

Th cot mtod aov a codd th mot mpotat o thpot poc. Howv, pot alo hav to dal wth oth cot, ch

a pot ad lc. Th cot ally vay om coty tocoty, t mot ca thy ca a fcat to a pot podctcot tct.

Commo, ch a ad lc, cottt addtoal cot thpot poc. Thoh thy a dfclt to pdct, may ca thyca tatal ca pot cot.

m. intermediationor mark-uP

Oc all cot tald th pot poc hav accotd o, whav to add what kow a th tmdato o makt ma.Th makt ma ptd y a pcta. i mot ca,th pcta to paymt o th k ad cot that hav cd; claly, tho cot a ot kow, t wll dfclt to kow thy a lly compatd ad th ma aoal o ot.

Th tmdato o makt ma a pcta o th falwhtd-ava ll pc whch dtmd at ach ta thpot cha, ch a that whch th dt pc a t o thmpot. Fo ampl, a pot ca ll h podct exW (e Wok),whch ma that th cot ad lalty wll o h accot p to thpacka o poc plat.

i th pot dcd to ll h podct FAs (F Alod shp), h wllcov tapot cot p to th pot o pot, cao ac ad hadl


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cot. Fo c addtoal cot ad polt, th pot wllwat to hav a tmdato o makt ma th w ta.

i th vt that th pot ad to ll h podct FOb (F Oboad), h wll hav to add th ad commo whch mt pado ptt th cao th ma o tapot that wll t to th poto dstato. Just as th pvous stag, t s commdd that thxpot, o assumg ths sk cluds a maktg mag.

i th sllg pc s CFr (Cost ad Fght: pot o dstato), thxpot should cosd th costs o taspot (ght) ad also th

hadlg costs to b cud movg th poduct th pot odstato, plus th cospodg mag.

Pc CiF (Cost, isuac ad Fght) mas th xpot wll bsposbl o payg th suac cost, ad ay addtoal cost thatth tasacto cluds ad, o cous, a tmdato mag otg to ths addtoal stag.

Mags a ot utlzd to aalyz th ctvss o maktgsystms, but, though thy may b wll calculatd, thy a ot dfcultto udstad. expssg that pat o th pc o whch th xpot ssposbl ay o th stags as a pctag ca gv th cosuma oous mpsso. nvthlss, t s cssay to cosd thcosts that w cud, as wll as th sposblts ad sks thatw assumd.

Th xpot has vaous mthods at hs dsposal o sllg hs poduct,

ach wth ts spctv sposblts ad sks. Fo uth sght toth ssu, w commd g to Ax 1, wh th pcpaltatoal commcal tms (icotms) a lstd.


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How to CAlCulAtE tHE totAl

Cost of tHE ExPort ProCEss

And tHE intErmEdiAtion or

mArkEting mArgins

Oc th cot hav accotd o, thy mt addd p tocalclat th total cot o th pot poc. epot cot wll vay

accod to typ o podct, dtato mat, ad mot o all, thpc ad o y th pot ad mpot.

etalh th pc volv two majo : a vy low pc, whth mpot ota mot o th t, o too hh a pc, wh oy wll ttd pcha th podct.

i th ca o pot o acltal o ao-dtal podct, thmpot, wholal, o tal almot alway talh th pc,

ca th podct od a ally avalal om mltpldomtc o o podc. i th ca, th pc do ot coma mat tool, ad pot mt loo o altatv tat cha aat th al o a mmm volm o podct o povda lal dlvy.

To cot wth th ampl o pot mao to th u.s., ppow pot o cota o mao wly. Oc th cot o th podctha dtmd (what t cot to podc t o y t), th aov-

dcatd cot a copoatd to t ad th th pot cot (tallow), whch wll dpd o th typ o taacto ad o y thpot:


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Cot / boCot o th podct $1.47

+ Cot d ppaato o th podct $0.76

+ Hadl cot $0.23+ Cot o paca $0.50+ Cot o podct lo4 $0.21+ Cot o captal5 $0.07+ Cot o acal maamt6 $0.03+ Cot o potato ad mpotato /astotal $3.27

+ Mat ma $0.48Precio EXW $3.75

Cot / bo+ Cot o tmal ad commo $0.12

+ Hadl cot $0.03stotal $3.69

+ Mat ma $0.55Price FAS $4.24

Cot / bo+ Cot o a/a tapot $0.92stotal $4.61

+ Mat ma $0.69

Price CFR $5.30 Cot / bo+ Addtoal cot $0.41+ Cot o ac $0.20stotal $5.22

+ Mat ma $0.78

Price CIF $6.00

4. Th pot copoat th lo to th paca poc.5. Th th cot o wo captal that wa d to ac th pcha

o th podct ad th pot cot.6. Th to th cot o collct th voc.

Cot / bo+ Cot o od tapot $0.19+ Cot o ac $0.08stotal $3.54

+ Mat ma $0.53Price FAS $4.07


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To calclat th pc how aov, w d a mat ma o 15%aov cot; v thoh that at ma d d th ta oth cha, th omal amot ca a th ad polt th poc amd y th pot ca.

bo tat to otat wth th mpot, th pot holddtm what ta o th cha h o to ll h podct adwhat h cot wll . Wth that omato, h wll al to otatth ll pc.Lw, w aalyz th cot tct o a o o mao (CiF), wca that th o com cvd y th podc cotttappomatly 25% o th total cot o th o ($1.47/$6.00), ad thatpcta dca to th tt val addd to th podct.

Cot wth th ampl, th com pc appomatly$1.297 p mao, a o o 8 t wll at v o $10.32.Th, w that at th pot o th mat cha, th ha o thpodc dca to 14%.

To dtm th mat ma appld th tmato oth ll pc wll al to hav a compttv podct, wcommd ma a dtato to o aaly, th ollowma:

a. etalh th pc o th podct th dtato mat accodto th pc o mla o ttt podct.

b. Dtm th pot cot o th podct.c. stact th pot cot om th pc o th podct th

dtato mat.d. Vy whth yo ca compt th cho mat wth th

lt pc.e. i th aw o, vw th cot ad adjt thm to mt th

mat pc.

i coclo, pot ca ot dtat th podct y ad,qalty, vaty, tc., th compttv taty whch wll v thm th

7. Pc p mao th Pl pmat cha, Mam, Floda (Mach2006)


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Incoterms Explanation

EXW (Ex Works): Th pot dlv th podct to aNamed place pcc plac (waho, paca

plat, tc.), t do ot c pot ohadl cot.

FCA: Named place F Ca: Th pot dlv thpodct ady o pot to th caad th latt pol o thcao.

FAS: Named place F Alod shp: Th potd th podct to th mao tapot (hp, ta, apla).Th pot am all adpolt p to that momt.

FOB: Named place F o boad: Th pot plac thpodct th ma o tapot (a,

a, al). Th pot am th ad polt p to that ta.

udotdly, th lmtd paymt ma atd y tad acltal podct a ot ot y th volm o podct. Thwll cot to a acto p acltal compa to dcot tat that wll al thm to mo compttv thtatoal mat.

udtad th cot volvd th podcto ad pot poca dpal tool o vy pot. Poply maad cotca dcd ad th av codd a com. Th m act o al to dty th mot lvat cot o a poc ca al apot to tt tcholocal opto o way to dcatho cot.

Annex 1:

incotems: rsks and Costs


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CFR (Port or place o Cot ad Fht: Th pot destination) pol o dlv th podct

th pot o plac o dtato, t ot pol o th o lo oo dama to th podct, o o othcot that may cd d thdlvy poc.

CIF (Port or place o Cot, iac ad Fht: Thdestination) pot pol o dlvy

o th podct th pot o plac odtato ad am th cot o

th podct.

DES (Port or place o Dlvd e shp: Th potdestination) lll h olato to plac th

mchad o oad th hp, tdo ot am polty ompotato ad load pocd.

DEQ (Port or place o Dlvd e Qay: Th potdestination) pt th podct at th mpot

dpoto o th wha (loadd),t do ot am polty ompotato pocd.

DAF (place o destination) Dlvd At Fot: Th potpt th podct at th mpotdpoto at th od o th cotyo dtato, hav compld wthpot pocd t ot mpot

pocd. it mpotat to dpcly th plac ad pot odtato.

DDP (place o destination) Dlvd Dty Pad: Th potam polty o cayot mpotato pocd ad ocov th cot (ta, , ctomomalt) t ot o load th

podct.

soc: http://www.ccwo.o/cotm


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Annex 2: fom o

Calculatng Expot Costs

Podct:

Mat:

Paca t:

Tapotato:

Paymt: Cah: Cdt: day / moth

Pc o pcha o podcto __________________

Cot o ppaato ad hadl __________________

Cot o paca __________________

Cot o podct lo __________________

Cot o captal __________________

Mat ma __________________

Cot o podct to ll exW __________________

Cot o od tapot __________________Cot o ac __________________

Mat ma __________________

Cot o podct to ll FAs __________________

Cot o tmal ad commo __________________

Hadl cot __________________

Mat ma __________________

Cot o podct to ll FOb __________________

Cot o a/a tapot __________________

Mat ma __________________

Cot o podct to ll CFr __________________

iac cot __________________

Mat ma __________________

Cot o podct to ll CiF __________________


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Documents

How to Calculate Export Costs for Agricultural Products