Budgeting helps guide you through your decision making process as you attempt to commit resources to the most profitable enterprises on the farm. Crops or Livestock? Corn or Soybeans? Or Wheat? We can begin to answer these questions with well thought out budgets that include all revenue and costs. Without some form of budgeting and some method to track your enterprises’ progress you’ll have difficulty determining your most profitable enterprise(s) and if you’ve met your goals for the farm.
Budgeting is often described as “penciling it out” before committing resources to a plan. Ohio State University Extension has had a long history of developing “Enterprise Budgets” that can be used as a starting point for producers in their budgeting process.
Newly updated Enterprise Budgets for 2008 have been completed and posted to the Farm Management Website of the Department of Agricultural, Environmental and Development Economics. Updated Enterprise Budgets can be downloaded from the following website:
http://aede.osu.edu/Programs/FarmManagement/Budgets/
Enterprise Budgets updated for 2008 include: Corn-Conservation Tillage; Soybeans-No-Till (Roundup Ready); Wheat-Conservation Tillage, (Grain & Straw); Alfalfa Hay–Spring Seeding; Grass Hay-Large Bale System; Dairy Cow & Replacement-Large Breed; Ewe & Lamb Budget–Winter Lambing.
Our enterprise budgets are compiled on downloadable Excel Spreadsheets that contain macros for ease of use. Users can input their own production and price levels to calculate their own numbers. These Enterprise Budgets have a new look with color coded cells that will enable users to plug in numbers to easily calculate bottoms lines for different scenarios. Detailed footnotes are included to help explain methodologies used to obtain the budget numbers. Starting this year we will be updating these Enterprise Budgets periodically during the year is large changes occur in price or costs. Budgets will include a date in the upper right hand corner of the front page indicating when the last update occurred.
Highlights (or lowlights) of this years Crop Enterprise Budgets include increased prices for diesel and nitrogen. Three different Corn Production Budgets were developed with different Nitrogen sources; Anhydrous Ammonia (NH3), Urea-Ammonia Nitrate Solution (UAN or 28% N), and Urea. Price assumptions per lb. of actual N included in these three budgets are $0.415 per lb. for NH3 ($680/ton), $0.518 per lb. for UAN ($290/ton), and $0.549 per lb. for Urea ($505/ton). Off-Road Diesel is pegged at $3.00 per gallon.
Landlords and tenants should proceed with caution when negotiating cash rents based on 2008 field crop budgets. Commodity prices and input costs may change dramatically resulting in much lower or negative returns. Different price and cost combinations should be evaluated when budgeting for long term decision making such as long term cash rental agreements.
The entire set of Enterprise Budgets can be accessed at: