Field crop enterprise budgets can help streamline decisions

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COLUMBUS — Plant crops or raise livestock? If planting, should you go with corn, soybeans, wheat or maybe hay?

As farmers decide what resources to commit to achieving the most profitable enterprises on their farms, devising a budget can be one of the best ways to help streamline the decision-making process, said a pair of Ohio State University Extension experts.

Budgeting helps guide farmers through the decision-making process and can help farmers begin to answer these questions, said Barry Ward, production business management leader for OSU Extension.

In fact, well-thought-out enterprise budgets that include all revenue and costs associated with the farm enterprise can be extremely helpful for farmers, he said.

“Without some form of budgeting and some method to track your enterprise’s progress you’ll have difficulty determining your most profitable enterprise or enterprises and if you’ve met your goals for the farm,” said Ward. “Budgeting is often described as ‘penciling it out’ before committing resources to a plan.”

Starting point

Budgets can be used in several ways, including helping to give farmers a place to start, said Dianne Shoemaker, OSU Extension’s state dairy financial management specialist.

“One of the real benefits of using enterprise budgets is that they help you to not forget expenses that should be included in the planning or budgeting process,” she said. “The budgets don’t just look at cash, or variable, expenses such as seed, fertilizer, sprays and fuel, but they also take into consideration the overhead, or fixed, costs such as charges for land, labor and management, and machinery and equipment.

“The budget helps us make sure we are including all expenses involved in a livestock or crop enterprise,” she said.

Resources

OSU Extension has a long history of developing enterprise budgets that can be used as a starting point for producers in their budgeting process.

Farmers can find enterprise budgets for 2012 at http://aede.osu.edu/programs/farmmanagement/budgets.

The website is offered by Ohio State University’s Department of Agricultural, Environmental and Development Economics. The budgets include: corn-conservation tillage, soybeans-no-till (Roundup Ready), wheat-conservation tillage (grain and straw), corn silage, alfalfa hay and alfalfa haylage.

The budgets are downloadable Excel spreadsheets. Users can input their production and price levels to calculate their numbers.

The budgets feature color-coded cells that allow users to plug in numbers to easily calculate bottom lines for different scenarios.

Detailed footnotes are included to help explain methodologies used to obtain the budget numbers. The budgets also include a date in the upper right-hand corner of the front page indicating when the last update occurred.

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