Few accomplishments in life happen without a plan. Although farming and ranching may look similar year after year, there is a real need to have a yearly plan for a profitable outcome. This plan will include the projected income as well as expected expenses for each part of an operation. An enterprise budget is a goal stating the activity goal for a crop or livestock. To make the goal realistic, production, managment activities, resources, and economics are considered. The recipe for making an enterprise budget include:

  • a production goal,
  • expected market price and gross receipts,
  • planned management activities including their costs and requirements in terms of inputs and resources,
  • and the net return estimate and break-even price for the goal production.

Gathering these ingredients will enable a producer to answer the following questions.

  • What is a realistic production goal for this area?
  • What management and resources are needed to accomplish this goal?
  • What factors may deter me from my goal?
  • What is the true cost of production?
  • What are the risks?
  • Are there other choices that will bring a better net return?

    Answers to these questions will let a producers see what really happened during a season or year and plan for improving the operation in subsequent years. One enterprise budget often leads to another. If an area of one budget is costing too much, then using another enterprise budget for that specific area may lead to increasing profits. Enterprise budgets are useful to look at alternatives within and between enterprises.

    There are many published enterprise budgets because they are area specific. The best enterprise budget is one that matches your operation, so one may need to be created. Use existing budgets as examples. Creating an enterprise budget that is fine-tuned to your operation will pay off.

    Some samples:

  • http://fbminet.ca/bc/budget.htm
  • http://www.uky.edu/Agriculture/AgriculturalEconomics/hort96.html#part5
  • http://agguide.agronomy.psu.edu/sect10/sec10toc.htm
  • http://unr.edu/homepage/myer/fact.html