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Agricultural Microeconomics Lesson 8: Advanced Spreadsheet Modeling

Agricultural Microeconomics Lesson 8: Advanced Spreadsheet Modeling.

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Agricultural Microeconomics Lesson 8: Advanced Spreadsheet Modeling

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  1. Agricultural MicroeconomicsLesson 8: Advanced Spreadsheet Modeling This course developed by The Environmental Finance Center at UNC Chapel Hill for The North Carolina School of Science and Math and NCDPI is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License

  2. What is a “Pro-Forma”? • A projection or estimate of what a business might look like in the future. • It is based on assumptions for how a business might operate. • When a new innovation or product is added to the business operation, a farmer will prepare a 3 or 5 year “pro-forma” income statement.

  3. Developing a Three-Year Income Projection for Piedmont Farm

  4. Projecting Revenue and Expense • Amount of “harvest” (# of cattle sold) • Pricing considerations • Percentage of sales to grocery stores vs. local sales. • Amount of electricity produced declines • Labor cost increase • Marketing cost increase • Increase in equipment repair or maintenance

  5. Discussion Questions • How much did changing the price of the product impact net earnings? • Did the amount of cattle harvested change net earnings? • What types of expenses seems to have the largest impact? • Did you change anything that resulted in a Net Loss (negative earnings)? • What other factors did you change?

  6. Next Class: Developing a Business Plan This course developed by The Environmental Finance Center at UNC Chapel Hill for The North Carolina School of Science and Math and NCDPI is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License

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