| RESOURCES
Regional budget and cost information
from around the country, including links to enterprise
budgets, conservation costs, and budgeting software
put out by agricultural economics departments, extension
agencies and government organizations.
http://waterhome.tamu.edu/
care/budgets/
Farm Select- a tool that lets you
do simple side-by-side comparisons of conventional and
organic management on your own farm, using your own
numbers, including enterprise budgets for each crop.
http://www.newfarm.org/
farmselect/ or www.farmselect.org
"Using Enterprise Budgets to Make Decisions
about Your Farm"- a budgeting fact sheet
with excellent explanations of interest, depreciation,
and other budget features.
http://cru.cahe.wsu.edu/
CEPublications
/pnw0535/pnw0535.pdf
Enterprise Budgets - Penn State Cooperative
Extension, The Pennsylvania State University, 112 Agricultural
Administration Building, University Park, PA, 16802;
(814) 865-6713 - corn grain, corn silage, and dairy
budgets.
http://farmmanagement.
aers.psu.edu/FMbudgets.htm
Farm Management, Rutgers Cooperative
Extension, Cook College, Rutgers, The State University
of New Jersey, 88 Lipman Dr., New Brunswick, NJ, 08901-8525;
(732) 932-9306 – budgets for field crops and greenhouse
production (includes some organic production information
as well). http://aesop.rutgers.edu/
~farmmgmt/index.html
OSU Farm Management Information Resources,
The Ohio State University, 103 Agricultural Administration,
2120 Fyffe Rd., Columbus, OH, 43210-1067; (614) 688-3959
– budgets for field crops under various tillage
regimes, all kinds of livestock, dairy, specialty crops,
equine businesses, aquaculture, perennial and orchard
fruit crops, and Christmas trees, along with Ohio calculators
for land values, custom rates, grain storage, and prices.
http://aede.ag.ohio-state.edu/
people/moore.301/index.htm
Interactive Enterprise Budgets, University
of Georgia – budgets for some field crops, livestock,
and a few vegetables, including excellent instructions
and explanations.
http://www.ces.uga.edu/
Agriculture/
agecon/interactive.htm
Cost and Return Studies, Department.
of Agricultural and Resource Economics, UC Davis, One
Shields Ave., Davis, CA, 95616; (530)752-4424 –
many kinds of vegetable crop budgets.
http://www.agecon.ucdavis.edu/
Tools for better decisions - Budgets,
Utah State University, Logan, UT, 84322; (435) 797-1000
– budgets for field crops, livestock, and specialty
crops.
http://extension.usu.edu/
cooperative/agribusiness/
index.cfm/cid.273/tid.421
Enterprise Budgets, 520 Ag Hall, Oklahoma
State University, Stillwater, OK, 74078; (405) 744-7075
– budgets for field crops, cow/calf operations,
forage pasture and hay, some perennial and orchard fruit
crops, and pecans, along with budget software.
http://www.agecon.okstate.edu/
budgets/
Agronomic Crop Enterprise Budgets,
Department of Applied Economics & Statistics, Clemson
University, Clemson, SC, 29634 - budgets for field crops
under various tillage regimes, including instructions
that include equations to calculate equipment repairs
and fuel use.
http://cherokee.agecon.
clemson.edu/crop_bud.htm
Machinery cost estimates, or farmdoc
Project, 406 Mumford Hall, 1301 W. Gregory Dr., Department
of Agricultural and Consumer Economics, College of Agricultural,
Consumer and Environmental Sciences, University of Illinois
at Urbana-Champaign, Urbana, IL 61801; (217)333-2792
– farm machinery cost estimates, per hour and
per acre.
http://www.farmdoc.uiuc.edu/
manage/machinery/
"Budgeting Farm Machinery Costs",
(877) 424-1300 - a fact sheet on budgeting farm machinery
costs (money values are Canadian, but the concepts do
not require conversion).
http://www.gov.on.ca/OMAFRA/
english/busdev/facts/
01-075.htm
"Machine Management - Estimating Farm
Machinery Costs" - an excellent, comprehensive
booklet on machinery costs from Iowa State University.
http://www.extension.
iastate.edu/Publications/
PM710.pdf
Agricultural Management E-School - Farm Machinery
Economics- an online course on farm machinery
economics made available by Iowa State University.http://www.extension.
iastate.edu/ames/fme.htm
"Farm Machinery Economic Cost Estimates
for 2005"- another excellent booklet on
machinery costs from the University of Minnesota.
http://www.extension.umn.edu/
distribution/
businessmanagement/
DF6696.pdf
Agronomy Guide 2005-2006, Penn State
Cooperative Extension, The Pennsylvania State University,
112 Agricultural Administration Building, University
Park, PA, 16802; (814) 865-6713 – an online source
to obtain the Pennsylvania State Agronomy Guide.
http://agguide.agronomy.
psu.edu/
“Assessing and Improving Farm Profitability”,
Fact Sheet #539, University of Maryland, College of
Agriculture and Natural Resources, Symons Hall, College
Park, MD 20742. http://www.agnr.umd.edu/MCE
/Publications/PDFs/FS539.pdf.
“Assessing and Improving Farm Cash Flow”
Fact Sheet #541, University of Maryland, College of
Agriculture and Natural Resources, Symons Hall, College
Park, MD 20742. http://www.agnr.umd.edu/MCE/
Publications/PDFs/FS541.pdf.
“Assessing and Improving Your Farm Solvency”,
Fact Sheet #540, University of Maryland, College of
Agriculture and Natural Resources, Symons Hall, College
Park, MD 20742. http://www.agnr.umd.edu/MCE/
Publications/PDFs/FS540.pdf.
“Cost and Revenue Considerations in Farm
Management Decision Making”, Fact Sheet
#546, University of Maryland, College of Agriculture
and Natural Resources, Symons Hall, College Park, MD
20742. http://www.agnr.umd.edu/
MCE/Publications/
PDFs/FS546.pdf.
“Enterprise Budgets In Farm Management”,
Fact Sheet # 545, University of Maryland, College of
Agriculture and Natural Resources, Symons Hall, College
Park, MD 20742. http://www.agnr.umd.edu/MCE/
Publications/PDFs/FS545.pdf.
“Managing Risk In Agriculture”,
NCR#406, Purdue University Extension, West Lafayette,
IN, 47907; (888) 398-4636 (EXT-INFO). http://www.ces.purdue.edu/
extmedia/NCR/NCR-406.html.
“Measuring and Analyzing Farm Financial
Performance” (publication and web site),
Purdue University Extension, West Lafayette, IN, 47907;
(888) 398-4636 (EXT-INFO). http://www.agecon.purdue.edu/
extensio/finance/.
“The Projected Cash Flow Statement”,
EC-616, Purdue University Extension, West Lafayette,
IN, 47907; (888) 398-4636 (EXT-INFO). http://www.ces.purdue.edu/
extmedia/EC/EC-616.html.
“Diagnosing Your Farm’s Financial
Health”, Fact Sheet #538, University
of Maryland, College of Agriculture and Natural Resources,
Symons Hall, College Park, MD 20742. http://www.agnr.umd.edu/MCE/
Publications/PDFs/FS538.pdf.
“Checking Your Farm Business Management
Skills”, ID-237, Purdue University Extension,
West Lafayette, IN, 47907; (888) 398-4636 (EXT-INFO).
http://www.ces.purdue.edu/
extmedia/ID/ID-237.pdf
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Once you know your different types of costs (Part 2) and have created
a system to capture them (Part 3), you need to decide how you want
to use your cost numbers. There are four distinct kinds of budgets
into which you can plug your cost and income data:
- Enterprise budget: records the costs and income
from the production of one single type of farm product, during
one cycle of production. For example, if your farm produces poultry,
beef, hay, corn, and soybeans, you will create an individual enterprise
budget for each of these five products, covering a single crop
growing season, or one animal life cycle. These budgets are usually
developed on a per-acre or per-head basis.
- Whole farm budget: adds the costs and income
from each enterprise budget, along with other miscellaneous income
and expenses, to determine total expenses and income for the farm
as a whole. This kind of budget includes off-farm income and other
small-scale miscellaneous work, expenses, and income.
- Partial budget: measures the effects of small
changes in a farm operation, leaving out unaffected parts of the
overall farm budget. This kind of budget provides quick information
to help guide smaller-scale decisions, such as changes in a production
practice, or choosing between hired custom harvesting and an equipment
purchase.
- Cash flow budget: tallies the cash receipts
and expenses of the farm over a fixed time period (usually a year).
This budget shows whether or not expected total cash income will
be adequate to cover cash expenses, which is useful to assess
major purchase, and to plan loan repayment or new borrowing.
Of these four types of budgets, an enterprise budget is usually
considered to be the most useful because it is the basis on which
all the other types of budgets are built, and because it provides
practical cost information that you can use right away and over
time.
A yearly enterprise budget can help you to:
- Set reasonable production goals for each of your farm products,
- Accurately calculate your costs of production for each product,
- Estimate the break-even price and net return you need from
each product in order to cover all your costs and make a profit,
- Choose management strategies that can help you achieve your
production and price goals,
- Identify problems that can cause you to miss your production
and price goals,
- Compare the returns you make from each of your farm products,
to better assess and plan for the profitability of the whole operation,
and
- Quickly gather important information for business planning
and loan applications.
Of course, the value and usefulness of any budget depends on the
type and quality of numbers you plug into it. A good record keeping
system, like the one described in the Record Keeping fact
sheet, can: 1) help ensure that your budget numbers are
as accurate as possible, and 2) identify which numbers are “spot
on” or “less than perfect”.
At the same time, the numbers you use in your budget will depend
on the budget accounting style you choose. Any budget can be presented
in one of two different accounting styles:
- Economic accounting: includes cash or numeric
values for all inputs and outputs, including operations and transactions
that aren’t cash based, such as use of farm-raised feeds
for livestock, or use of livestock manure as an ingredient in
compost. Economic accounting works best for enterprise and whole
farm budgets and is often useful for partial budgets.
- Financial accounting: lists only inputs and
outputs that require actual cash transactions. Financial accounting
works best for cash flow budgets and, sometimes, for partial budgets.
In most cases, economic accounting creates a better, more complete
budget, especially if you’re developing an enterprise budget.
Also, if you start with economic accounting, it’s very easy
to pull out the basic financial accounting numbers when you need
them.
However, don’t get discouraged if you’re not able to
fill in all the blanks in an economic accounting budget. To reiterate
the most important point of budgeting and cost calculations,
a few numbers are better than no numbers at all! It’s
good enough to plug in the numbers you have to get started. Just
be sure to make an effort to fill in the “blanks” as
time goes on.
Enterprise budget work sheets can vary from “short and simple”
to “long and comprehensive”, depending on the amount
of detail you want to include. Of course, the more detail you include,
the more informative your budget will be. For example, by individually
listing each fertility amendment you add to the soil (rather than
lumping them in a general category of “Fertilizers”
or “Soil Amendments”), you can easily see what amendments
you’ve used from year to year and how much you spent on each.
That information can help you assess the cost/benefit ratio of each
amendment, giving you another valuable tool to guide your future
plans.
However, increased budget detail does not necessarily increase
your budget’s accuracy. Accuracy depends entirely on the quality
of the numbers you plug in. Even the shortest budget will be accurate,
as long as you keep good records and include all the costs that
fall under each category (drawn from a good record keeping system).
The following work sheet is a “standard” crop enterprise
budget (in economic style) that you can start using right now, if
you want. To help you choose the level of detail you want to include,
some cost categories are followed with a list of possible sub-headings
that you might want to use for greater detail. Feel free to include
even more detail if it’s useful to you!
| CROP ENTERPRISE
BUDGET |
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Though livestock budgets contain some very different items from
crop budgets (such as animal purchases, feed and vitamins, veterinary
services and medicines, housing and bedding, and breeding), there
are a number of key components (such as interest on operating capital,
taxes, insurance, office expenses, management, and labor) that are
similar for both budgets. The following resource section provides
information to help you find a wide range of useful livestock and
crop budget samples or develop a budget design that works for you.
Be sure to look at as many different budget samples as you can,
so you can identify the components, lay-out, and level of detail
that make the most sense for your operation. |
