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The Whole Farm Budget

The Whole Farm Budget. Final Table(s) in the Farm Plan. Steps . Develop Enterprise Budgets Develop the Whole Farm Plan (LP) Use LP results, Enterprise Budgets, and estimates of next year's fixed costs to make the whole farm budget. Table 6 contains information on cash fixed costs.

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The Whole Farm Budget

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  1. The Whole Farm Budget Final Table(s) in the Farm Plan

  2. Steps • Develop Enterprise Budgets • Develop the Whole Farm Plan (LP) • Use LP results, Enterprise Budgets, and estimates of next year's fixed costs to make the whole farm budget.

  3. Table 6 contains information on cash fixed costs. In the absence of better information, use last year’s fixed costs to project next year’s fixed cost. Also, you can assume your depreciation for the next year is the same as last year’s.

  4. Find the Variable Costs for WFB Use your enterprise levels from the whole farm plan, plus the variable costs from the enterprise budgets. Example:

  5. Our old LP with a rotation constrain (rot lim) to keep corn acreage less than or equal to soybean acreage. New solution 150 acres corn, 150 acres soybeans, 1.111 units of cow-calf.

  6. Making Variable Cost Table • Make a row with the enterprises to be produced, plus “total” and “modified” • Get LP “answers” and fill in the next row with correct enterprise levels • Make a column of all types of variable costs you see in the enterprise budgets • Fill in values for each crop, by copying the numbers from the right enterprise budget

  7. Values from LP “answers”

  8. These values are copied in directly from the ACES corn budget

  9. Values are copied into table 15a.

  10. Next copy in the values from ACES enterprise budgets for soybeans and cattle.

  11. Next, find the total cost for each variable input by multiplying the level of each enterprise produced by the cost of the variable input and adding them up. For example: Seed Cost = 25.30*150 + 25*150 + 0*1.11 = 7545 corn soybeans cattle

  12. Check your work To make sure you have copied all values correctly, sum the values in each column and check against the totals from the Enterprise Budgets

  13. Last Step in Table 15a As a last step, modify the costs to reflect the cost structure on your farm, using the ratio you calculated in table 9. For our example, that ratio is 1.05

  14. Values multiplied by ratio from table 9 projected total variable cost

  15. Also check The Returns above Variable Cost on the Whole Farm Budget should be close to the OBJ value in your LP!

  16. Making the WFB Calculate expected revenue from enterprise budgets. Subtract the expected variable costs you calculated in table 15a. Then subtract the fixed costs (from farm records.)

  17. level * gross income Take from income statement

  18. Final Step Calculate the Improvement If Net Income on Income Statement is Positive Net Returns from WFB -- Old Net Income Old Net Income Multiply by 100% to get percentage improvement

  19. Final Step Calculate the Improvement If Net Income on Income Statement is Negative: Calculate the absolute improvement. By how many dollars did projected income for next year increase compared to last year?

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