Approximately one-third of planting costs were allocated to the plant-cane, first stubble, and second stubble crops. No planting costs were assigned to third stubble crop.
This is primarily because that in addition to including planting costs, the method also includes future net returns expected from the crop cycle through harvest of a third stubble crop; the rationale for this inclusion is that the producer invested in planting costs with the expectation of harvesting the crop through the end of the crop cycle.
(+.)Assumes first stubble crop is sold, and gross returns are received, at the end of November.
(#.)Assumes second stubble and third stubble crop is sold, and gross returns are received, at the end of October.
Harvest of the first crop is called the plant-cane crop, and successive crop harvests are called stubble crops. In the valuation of perennial crops like sugarcane, yield potential and current age of the crop are significant considerations when valuing sugarcane growing on a particular tract of land.
No planting costs are allocated to third stubble crops. An estimated return on investment is calculated using a rate approximating the rate that would have been earned on the entir e sugarcane crop cycle.
When calculating net returns from harvest and sale of future crops, the planting costs associated with plantcane, first stubble, and second stubble crops are included in the return calculation for those respective years.