BUDGETING
We begin by:
Listing your equipment, its cost, useful life to you (not useful life as determined by your accountant or the IRS), repair costs, its size, and average speed and field efficiency.
In-putting prices paid for seed, fertilizer, herbicides, insecticides, fuel, labor, custom work, ginning and prices received for your produce.
Compiling a Field Operations Logbook; this is a diary of every operation or
trip you made or plan to make across your field.
If you cannot recall what your exact prices paid or costs were, we have an
average cost compiled by the State Ag Statistics Service.
Your figures and field operations are input into a computer program, the
Budget Generator. This program returns the following information:
Estimated Operation Costs Per Acre and Per Hour
Hourly Equipment Use by Month
Returns at Selected Prices Received
Estimated Cash Requirements by Month
By determining your
How should overhead costs should be allocated to these crops?
In other words, if you spend ten tractor hours in cotton, five in corn and
five in peanuts, 50% of your overhead equipment costs are charged to cotton,
25 % to corn and 25% to peanuts. By combining this information with your crop budget, we can show you exactly what its costing you to produce a pound of cotton or a bushel of grain. Then, we can determine your most profitable enterprise combination or mix which will maximize your profits.
Now here is a little poll that we have been taking.
Send Ed Hood's an Express E-mail
Costs & Returns Per Acre
CASH FLOW
Your lender may require a cash flow and/or a minimum operating loan balance.
It is an indicator of potential problems. After your per acre budget has
been developed for all your crop and livestock enterprises, your cash flow
requirements by month can be compiled.
ENTERPRISE ANALYSIS
Do you know your cost of production per pound or per bushel of each crop or
animal you produce ? Most growers have pretty good guess. For an intelligent
marketing decision to be made, you should know your production costs before
you sell your produce, otherwise you're gambling that the market will go up.
COST CENTERS
and your PROFIT
CENTERS
We use two methods:
BY LABOR DOLLARS
INVESTMENT ANALYSIS
Do you want to purchase a new tractor, but don't know whether you can afford
to pay for it ? By looking at your long term (2 to 5 year) cash flow
projection, and using financial evaluation tools such as Internal Rate of
Return (IRR) or Net Present Value (NPV), we can determine if you purchase or
investment will be profitable.
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