Farm Budgets More Important Than Ever

Clint Thompson Agri-business, Alabama, Top Posts

By Clint Thompson

In an era of high input costs for all and low commodity prices for some, farm budgeting is an essential part of any vegetable or specialty crop producer’s farming operation.

Jessie Rowan

Jessie Rowan, Alabama Regional Extension agent, who specializes in commercial horticulture and farm and agribusiness management, stresses the importance of keeping track of daily costs. It will help farmers be more efficient.

“A couple of the main points when I try to explain the importance of either record keeping or creating good budgets is the fact that they can help with decision making on the farm, which is really important in this day in age when input costs are rising,” Rowan said.

“You really want to make the best use of the resources that you have and just run everything as efficiently as you can and to determine the viability and profitability of your enterprises. It helps you pinpoint inefficiencies in your operation and just how profitable you’re being in certain enterprises.

“That’s really the importance of a whole farm budget.”

Most High Costs are Temporary

Jeff Dorfman, University of Georgia Professor in the Department of Agricultural and Applied Economics and State Fiscal Economist for Georgia, said most high costs like freight, pallets and boxes are temporary. But for the time being costs are extraordinarily high, and a budget is the best way for a farmer to navigate their way through.

“I feel like a lot of people have noticed the rising input prices and really don’t anticipate them lowering any more. It’s kind of like a year or so ago when lumber prices skyrocketed. They’ve stopped increasing at that high of a rate, but they haven’t decreased, gotten any cheaper,” Rowan said. “Farmers knowing what they’re spending on each enterprise or certain aspects of their farm. It really can help them realize, ‘Hey, I realize I’m not making as much money off of this as I thought, or I’m spending way more than I thought on this certain practice.’

“Maybe they need to reevaluate and see if they need to switch to a different practice? A different irrigation system? Anything like that.”