AgDM newsletter article, August 2006
Craig Chase, extension farm management field specialist, 515-294-1854, email@example.com
A new Iowa State University (ISU) Extension publication is now available to address the need for accurate budgeting tools among organic crop producers.
Organic Crop Production Enterprise Budgets (AgDM File A1-18 or ISU Extension Publication FM1876) contains four enterprise budget worksheets that can be used to estimate the costs and revenue associated with planting and harvesting organic field crops. Organic growers may have three to six different products to develop budgets for, depending upon the number of crops within their rotation. These budgets reflect a four-year rotation of corn, soybeans, oats with alfalfa and a second year of alfalfa as the crops.
To help producers budget expenses, the first element of the worksheet requires a projection of total demand for a given commodity, or an estimate of what the producer thinks is a realistic sales goal. Based on this projected demand, a producer can input estimated production expenses into the worksheet to calculate the total cost of production.
“Developing an enterprise budget allows organic crop producers to evaluate production costs and change production practices to become more efficient, as well as to determine the best crops to produce in a rotation,” said Craig Chase, ISU Extension farm management field specialist.
Each worksheet is divided into sections by cost, including:
- Total projected receipts (demand) in units (bushels, tons) and dollars per unit
- Ownership costs associated with assets (land, machinery)
- Cost of labor for planting and associated machinery expenses
- Cost of seed, fertilizer and crop insurance
- Interest expense associated with pre-harvest crops
- Total cost of labor for harvesting, handling and hauling commodity
- Summary of returns over variable and total cost
Each worksheet also provides sample budgets, which are based on a long-term study located at an Iowa State University research farm in southwest Iowa. The data was modified to more accurately reflect average Iowa results as indicated by organic farmers who reviewed the budgets. This tool does not account for marketing or transaction costs, since these vary greatly based on location. Producers should include marketing costs to accurately estimate the overall profitability of an enterprise.
The information file is available on the Ag Decision Maker web site at: http://www.extension.iastate.edu/agdm/crops/html/a1-18.html. Decision Tools for each of enterprise are also available through Ag Decision Maker.
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