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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.
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