Enterprise Budgets

1
Enterprise Budgets

• An enterprise budget is a recipe for a
  particular activity in a farm operation.
• Like any good recipe, a good enterprise budget
  tells us about
• what ingredients or inputs well need,
• the steps well take to accomplish the task, and
• what well have when we finish.

2
Enterprise Budgets

• An enterprise budget lists the inputs,
  activities, revenues, and costs for one unit of
  an operation
• one acre
• one cow
• one trip to market
• A budget can be based on historical data or on
  economic engineering when data are not
  available.

3
Enterprise Budgets

• Enterprise budgets are a basic tool for farm
  planning
• selection of enterprises
• allocation of limited resources
• Enterprise budgets are often set up like a
  financial income statement, but the best budgets
  include information about much more than
  financial returns and costs.

4
Enterprise Budgets

• Many states publish enterprise budgets
• Minnesota
• http//www.apec.umn.edu/faculty/wlazarus/interests
  -croplivestock.html
• http//www.finbin.umn.edu/CropPercentiles/default.
  aspx
• Ohio
• http//newfarm.osu.edu/
• Oregon
• http//oregonstate.edu/dept/EconInfo/ent_budget/

5
Enterprise Budgets

• The draft budget template for our class
• focuses on planning for use of limited resources
  over time
• mist benches
• grow benches
• land
• labor
• places little emphasis on machinery costs and
  overhead expenses

6
Enterprise Budgets

• Conventions and assumptions
• Crop budgets focus on production and processing
  to the farm gate well also do marketing
  budgets.
• 100 ft2 field growing area
• Budgets scale up or down linearly.
• Weekly space and labor requirements are adequate
  for planning.

7
Enterprise Budgets

• Lets look at our sample budget.

8
Enterprise Budgets

• Enterprise budgets are also a useful management
  tool.
• Over time, we should monitor how accurate they
  are in predicting labor and space use flows.
• Are there important costs we are missing?
• How do our results compare with those of other
  growers?