Here you can find information on production costs and returns for 26 common vegetable and livestock enterprises in southwest British Columbia. ISFS’s enterprise budgets are specific for small-scale farm operation whose products are sold mainly through direct marketing channels, such as farmers’ markets and CSA box program.
Each budget is prepared in a pdf format with accompanying Excel spreadsheet. The user-friendly spreadsheets allow you to enter your own inputs. You can evaluate your farm operations in just minutes! A publication entitled “Enterprise Budget User Guide” explains in details the components of a budget and their calculations.
This project was generously funded by Vancity
If you have any questions, please contact Wallapak at firstname.lastname@example.org
2015 Southwest British Columbia Enterprise Budgets
Enterprise Budget Guide: An Accompanying Guide to the Southwest British Columbia Small-Scale Farm Enterprise Budgets. Enterprise Budget Users Guide.pdf
Frequently Asked Questions (FAQ)
Cucumber (High Tunnel)
|Fresh Market Bean (Bush Bean)
|SPECIALTY CROP BUDGETS
Frequently Asked Questions
An enterprise budget projects the costs and returns of growing and selling a particular crop or livestock over a period of time. It comprises of a simple listing of income and expenses, based on a set of assumptions. An enterprise budget is a physical plan because it indicates the types and quantities of production inputs and output; as well as a financial plan because it assigns costs to all inputs used in producing the enterprise. Some of the uses of an enterprise budget are itemizing costs and returns (income), listing inputs and production practices, evaluating the financial efficacy of the enterprise, estimating benefits and costs of fundamental changes in production practices (for example, investing in irrigation), providing a foundation for a total farm plan, and supporting applications for credit.
- An enterprise budget can be included as part of a business plan, which can be used to obtain financial aid to implement the plan.
- Enterprise budgets allow farmers to track expenses and revenue for a particular product more effectively. A farmer can change production practices by determining where key costs occur, calculating breakeven price and yield, and comparing average costs with other farmers. For example, if the average cost of producing carrot is much higher than other farmers, then that is an indication that costs could potentially be reduced somewhere by changing the production practice.
- Enterprise budgets provide detailed account of costs of growing a crop or raising a livestock. Based on that information, a farmer can set a price that covers all costs and earns a profit. However, farmers should note that the price also depends on other factors such as competition from other farmers.
- A farmer can choose the mix of products to grow by comparing the profitability and labour use among various enterprises, thus allocating more resources to profitable products.
Analogous to the economic and accounting concept of costs, there are economic enterprise budgets and cash enterprise budgets. In an economic budget, both implicit and explicit costs are included, while a cash budget does not incorporate implicit cost.
Explicit cost is directly paid in money, therefore, called monetary cost. A farm incurs explicit cost when it pays for a factor of production at the same time it uses it. For example, cost of seed, labour, compost, feed for livestock are all paid for in money.
Implicit cost on the other hand is measured in monetary terms, but there is no direct monetary payment for using a factor of production. Implicit cost measures the “lost income opportunity” associated with using own resources. For example, implicit costs would be a potential wage forgone by working on one’s own farm, or an interest income forgone by investing capital in one’s own farm.
Economic budgets use the concept of “opportunity cost”, which is defined as the cost of using a resource based on what it could have earned if it was used for the next best alternative.
For instance, suppose a farmer has $10,000, which he considers using it in one of the two ways: either to purchase a tractor, or to invest in bonds. If the farmer decides to buy the tractor, the opportunity cost of that choice is the principal plus the interest income (say at five percent) that could have been earned had the farmer chosen the next best alternative: buying bonds. To realize an economic profit from the investment in the tractor, the farm needs to generate an income above $10,500 (interest included).
While economic budgets include both monetary costs and ‘perceived’ non-cash costs, there is a second kind of enterprise budget which accounts for only explicit costs and excludes opportunity costs: cash budgets. Economic budgets cover all the expected costs of running a farm business; therefore, they provide a better picture of expected costs and returns. However, for producers who have significant equity in their farm businesses, an economic enterprise budget is likely to overestimate costs. For that reason, although the economic enterprise budget may show a negative economic profit, it does not necessarily indicate the business is unprofitable in accounting terms.
Economic enterprise budgets.