Part 1, Section 12: Farm Management: Enterprise Budgets
Farm Management: Enterprise Budgets
SAMPLE ENTERPRISE BUDGETS
Commodity Price and Input Costs
Rapid increases in prices for most agricultural commodities and the costs of inputs (in particular, fuel and fertilizer) make it particularly important to keep up with trends in futures markets and monitor your cost of prodution. These budgets are a good starting point for developing your own estimates, but changing economic conditions and governmental policies can alter the marketplace and affect your profitability very quickly. The commodity prices used in the corn, soybean, wheat, and oat budgets reflect 2009 future prices (as of late May 2008) for delivery at harvest (adjusted for local basis). Prices for corn silage are set at nine times the corn price (eight to ten times the corn price is a commonly used estimate for valuing corn silage). Prices for barley and grain sorghum are set at 85 percent of the corn price (based on relative feed value). Forage sorghum is valued at 85 percent of corn silage (based on relative feed value). Canola price is adjusted from projected 2009 North Dakota prices modified for transportation. Hay prices reflect the average price received for all hay of a particular type; this is perhaps the commodity with the highest variability because of the impact that local supply and demand conditions, quality differences, differences in bale size, (e.g., small rectangular, small round, large round, and large square bales), and transportation costs have on price. Input prices are likely to increase in future years because of increasing prices for energy and increased world demand for inputs such as fertilizer. Since 2006, fuel prices have almost doubled and fertilizer prices have increased by two to three times. Production of crops for biofuels will continue to put pressure on the cost of all input for the foreseeable future.