Using partial budgets……

Using partial budgets…… To answer all sorts of questions you or others may have… Craig Chase, Field Specialist Farm & Ag Business Management

Partial Budget • A partial budget allows you to analyze a portion of your farm to determine if minor adjustments should be made. • For example, should you: • Add an enterprise • Change your product mix or production practices • Custom hire or purchase machinery • Change marketing outlets • Purchase transplants or grow from seed…

Partial Budget • Partial budgets allows you to compare two alternatives side-by-side. • The analysis tells you one of the alternatives is comparatively better than the other.

Partial Budget Components • There are seven components to a partial budget: increased revenue, reduced cost, reduced revenue, increased cost, total positive effects, total negative effects, and net change.

Partial Budget Example

Partial Budget Exercise #1

Limitations • As always, the decisions you make are only as good as the numbers you used to make them. Some numbers are better than none; more is better… • Partial budgets compare two alternatives, neither which may be the best alternative available to you. • Partial budgets (all types of budgets) look at only $, other factors come into play as well in your decisions (health, environment, etc.)

Questions….. Any questions or comments? Thank You for This Opportunity! Craig A. Chase Leopold Center for Sustainable Agriculture Marketing and Food System Initiative Program Leader Iowa State University Extension and Outreach Local Food and Farm Program Coordinator Local Food Systems and Alternative Enterprise Analysis 209B Curtiss Hall Ames, IA 50014 (515) 294-1854 cchase@iastate.edu

Using partial budgets……