The use of management accounting in the agricultural industry has received very little attention by accounting researchers. Agriculture is currently in an era of significant change and adjustment, where change in accounting practice needs to occur in response to external pressures. The traditional use of the gross margin system of accounting has tended to underline a notion that has had a powerful influence on farm business planning that most costs are fixed and that the best way of reducing them to achieve profit maximisation is to spread them by increasing the scale of operation. This logic has been supported by an economic environment heavily influenced by agricultural policy measures that focused on artificial support for market prices and/or direct payments linked to production activities. We argue that the decoupling of support from production has combined with a number of other changes related to payments and cost structures (including those linked to the recent dramatic rise in the price of oil) to provide a very different economic context for farm business planning. The response we advocate to this changed situation is to make greater use of two alternative methods of cost analysis; namely relevant costing and target costing. These have been developed and applied outside agriculture. They have not so far been used in a formal sense within agriculture but have links to existing methodologies used in farm business planning, such as partial budgeting, and in intuitive approaches already adopted by farmers as revealed in recent fieldwork.