By Katie Nichols
Successful farming requires careful planning, and the Alabama Cooperative Extension System has tools to make that job easier for producers. Extension’s annual enterprise budgets help producers make the best decisions possible for the upcoming growing season.
Enterprise budgets are reasonable estimates of the costs and returns for a particular enterprise. Available worksheets include row crops, fall and winter forage crops, fruits, vegetables, beef, goat and rabbit budgets.
Budgets Developed to Assist Producers
The Alabama Extension Farm and Agribusiness Management team develops these budgets. While there is no way to predict growing conditions—such as weather or rainfall—prior to the growing season, budgets are based on above-average management.
Jessica Kelton, a member of the Farm and Agribusiness Management team, said crop budgets will differ for each farmer and operation.
“Crop budgets will differ, but the enterprise budgets developed by Alabama Extension give producers a starting point when developing their own budgets,” she said. “This year budgets include a new feature: the ability to modify nitrogen, potassium and phosphorous rates based on poultry litter applications by the grower.”
Kelton, who is also a regional Extension agent in the Wiregrass, said growers who spend time working on the numbers before planting have a clearer picture of what the season may look like.
“If numbers don’t work on paper, they won’t be likely to work in the field,” she said.
Alabama Extension economist Max Runge said the budgets have shifted in the past four years following record-high commodity prices in 2013. These prices lead to record-high farm income, as well as higher input prices. While input costs have decreased slightly, the decreases aren’t in proportion to the lower commodity prices. Commodity revenues are close to the cost of production.
“Keep in mind that we are producing commodities,” Runge said. “This means a bushel of corn produced in Alabama is the same as a bushel of corn produced in Iowa or Brazil. Prices are reflected in the supply and demand of that commodity. In the long run, a producer should break even.”
Budgets Assist Lenders, Identify Trends
Budgets help lenders make loan decisions, while also helping producers identify the best crop mix for their operation.
Runge said the crop mix selected may not necessarily be the most profitable due to crop rotation and long-term agronomic goals producers may have.
Kelton said while input prices hold steady, the last several years have seen lower commodity prices.
“Even with higher yields, farm incomes have been lower compared to highs seen in 2013,” Kelton said. “If current prices hold, then it is critical to effectively manage input costs to offset this reduced farm revenue.”
Other Factors
There is uncertainty surrounding global markets with the possibility of changes in international trade. There is also uncertainty surrounding the U.S. Farm Bill. These factors bear watching.
Weather is another major factor, but this is a factor in each and every growing season.