Tips for Making a Farm Budget
A farm budget can be a really useful exercise particularly when cashflow and market conditions are volatile.
A good farm budget will help you understand the costs necessary for an enterprise and the expected income it will generate and when. It will also help you to plan your finances so you don't have any unexpected bills.
However a budget is only as good as the information you enter, so here are some things to remember when creating your farm budget.
Prices can vary wildly these days and it's important to be realistic about the price you can expect to achieve for your crop. With FarmBudgets.com we've made it really easy to vary the estimated sale price and yield to give you a gross return you can expect. However it's probably wise to err on the side of caution when entering the expected sale price and be realistic.
Cost of labour
Many farmers are inclined to not account for their own time when budgeting. It's important to factor in a realistic figure for your time. Imagine you need to pay someone else to do your work and use this figure as a baseline amount.
Wear and tear
Machinery sometimes needs replacing and large items such as tractors might suddently break, causing unexpected costs. You can factor this in to your annual budgets by allowing for a set amount towards these costs each year.
It's always wise to allow a little wiggle room in your budgets for the unexpected. You'll never be 100% accurate
Check your budget and refine
Your budget should be a constantly evolving exercise where you are slowly turning expected costs and incomes into real ones. With FarmBudgets.com you can easily compare your budget with reality and use this as a basis for next years budget, which will hopefully be more accurate and useful.