42). However, Jack believes that inadequate record-keeping may also be to blame for farmer's reluctance to use TCM in the industry. Even if TCM must be modified for agriculture, this does not negate its applicability. Farmers must learn how to make TCM work for them. Certain factors make it more difficult to identify target prices and costs, but they are not reasons to avoid implementing TCM. Rather, using TCM could encourage farmer to adopt more innovative practices and help to manage risks inherent in this industry. Jack believes that the resistance to TCM is more endemic to the culture of the agricultural industry than due to real problems with its use in agriculture.

The formula for TCM is fairly simple, despite the fact that only major agribusinesses tend to use it: "anticipated price minus required return equals target cost" (Ross 2008, p.43). Jack advises using sensitivity analysis by running the formula with different possible prices to guard against the extreme volatility of food prices that farmers face, in contrast to manufacturers. Jack states that finding the required return only seems problematic because "return on capital is a concept rarely used in farm accounting. Typical farm accounts identify the operating costs for an enterprise as a whole, rather than specific activities. Gross margin is the output minus variable costs, but too much expenditure is considered to be fixed costs -- including labor and machinery, which arguably aren't fixed and are certainly...

A relevant cost approach that includes overheads and fixed costs would have more merit" and thus TCM would improve current ways of accounting for so-called fixed costs (Ross 2008, p.43). Finally, the concept of target cost is used by most farmers who already strive to gain a "competitive advantage by reducing costs or justifying value-adding measures" (Ross 2008, p.43).
The question-and-answer formula of this journal article is extremely useful, given the degree to which it clarifies the complicated concepts discussed by the interviewee. Jack's experience as a university lecturer is clearly advantageous in terms of her ability to explain TCM in such a straightforward manner and to make a case for its use in agriculture. However, the changeability of the farming industry also means that Jack must concede many points to her critics, particularly those who argue that the price of food is too unstable to effectively make use of future cost scenarios. How many future scenarios can and must be projected, to make use of TCM in agriculture. A real-life example and extended anecdote or mini-case study might have been more persuasive in showing how this cost accounting technique that began in Japanese factories could be useful for farmers around the world.

Works Cited

Ross, L. (2008, October). Target cost management. Financial Management, 42-43. Retrieved

July 4, 2009, from ABI/INFORM Global. (Document…