NC Farm School Take Home
Assignment: What to do for Ag Plan Chapter 4
In Chapter 4 we want you to develop your enterprise budgets to come up with a
breakeven based on the scale of farm you plan to start. For Chapter 3 of the NC Farm
School curriculum you actually developed part of your enterprise budget when you
developed the cost to start up your business and then depreciated those cost to come up
with an annual cost of ownership. Plan on transferring those numbers you developed to
your enterprise budget. The annual cost of ownership is the fixed cost of operation in
your enterprise budget. Remember that fixed are cost that are related to equipment and
capitol and generally are not used up in the production year. Now you need to develop
your variable cost section of your enterprise budget.
Variable Cost Estimation
Variable cost are all the cost that will increase or decrease if production were to increase
or decrease within a given planning year and can be counted as expenses towards a
business. These are items that are used up in production like seed and fertilizer for a
grain farmer. Other items could include cost that are related to equipment and capitol
such as fuel and maintenance for a tractor. If you are a chicken farmer producing eggs it
will be items like feed and egg cartons. On the pages following we have included blank
enterprise budgets for you to estimate your cost with. You may want to use our
numbers but we recommend you investigate how our scale of production may be
different from yours and if your fixed and variable cost are accurate to what you will
need to produce your product.
Basic Enterprise Budget Questions for Variable Cost:

What expenses do you have for the equipment you chose?
o oil changes, gas, repairs, electricity, or replacement parts/cost

What random supplies might you need that will be expenses during the year?
o temporary trellis, stakes, fence repairs, plant trays, or cleaning supplies

What will you need to produce your product?
o feed, fertilizer, seed, medicine, pest control, cover crops, water, or labor

What expenses might be incurred from getting your product to the customer?
o Cleaning, packaging, time at market, deliveries, internet services, or
samples
Yield, Price, and Receipts
You will also need to estimate some reasonable level of yield and price. The goal is to
accurately estimate your total receipts for an entire year of production. You can use our
numbers to get you started but we want you to investigate this for yourself.
Make sure that you are working to understand all the variables that will affect your
yields. These variables might include the kind of feed you use or your plant spacing.
Another important aspect of enterprise budgeting is separating your enterprises by
product. In general if you have chickens and tomatoes you will want to develop
separate budgets for those items. The market garden budget is an exception to this
because you are utilizing the same space and tools on a smaller scale. The other issue
with estimating yield is that we assume that all the product you produce is sold. We
will work more on this in later chapters but assuming that you can make the returns in
the enterprise budget assumes that you can actually sell 100% of your yield at the given
price.
Estimating price should be based on what the product is currently being sold for
including price increases or decreases based on variations of value in your product. For
example, if you plan to use grocery store prices for your market garden budget you
may want to adjust your prices up 10%-20% if you are selling heirloom varieties that are
sold under local food marketing practices. We will cover more about pricing as we get
to the marketing section.
Basic Enterprise Budget Questions for Receipts:

What is my unit of yield per unit of production size?
o eggs per chicken, lbs per row, lbs per plant, bushels per acre

What is my total yield in a given year based on how many units I have in
production?
o total lbs produce sold, total animals sold, total eggs sold, total bushels sold

What is a reasonable market price for my area?
o $ per bushel, $ per pound, $ per bunch, $ per dozen

Is my math correct?
o Make sure your revisit your budget numbers to double check that your
numbers are good
4.5 Your Farm – Enterprise Budget
Horticultural Enterprise Budget
Crop
Crop
Crop
Crop
GROSS RETURNS
VARIABLE PRODUCTION COSTS
Seed
Lime
Fertilizer
Black Plastic/Drip Lines
Weed Control - Herbicides, etc.
Pest Control - Insecticide, etc.
Fungicides/Disease Control
Pollination
Irrigation - cost of water, electricity
Hired Labor
Machinery Variable Costs
Total Preharvest Variable Costs
HARVESTING AND MARKETING
Containers
Hired Labor
Harvest
Wash/Pack
Marketing Costs (% of Gross Revenue)
Transportation Cost
Total Harvesting and Marketing Cost
Interest on Variable Costs
TOTAL VARIABLE COST
Quantity Unit
box, bu, lb
box, bu, lb
box, bu, lb
box, bu, lb
Price
Total
Quantity Unit
lb
ton
cwt
acre
qts
application
application
hive
acre
hrs.
acre
Cost
Total
Quantity Unit
boxes
Cost
Total
Cost
Total
box
box
% revenue
RETURN ABOVE VARIABLE COSTS
FIXED COSTS
Machinery and Equipment
Depreciation on Irrigation System
Taxes on Land
Insurance
TOTAL FIXED COSTS
Quantity Unit
TOTAL COSTS
Operator and Unpaid Family Labor
RETURN TO LAND, CAPITAL, AND MANAGEMENT
hrs.
$
Row Crop Enterprise Budget
Quantity Unit
GROSS RETURNS
Crop
Other Return
VARIABLE COSTS
Production
Seed
Lime
Fertilizer
Weed Control - Herbicides, etc.
Pest Control - Insecticide, etc.
Fungicides/Disease Control
Hired Labor
Machinery Variable Costs
Total Preharvest Variable Costs
HARVESTING AND MARKETING
Custom Harvest
Hired Labor
Transportation Cost
$/Unit
bu, lb
Unit Example
lb
ton
cwt
qts
application
application
hrs.
acre
acre
Total Harvesting and Marketing Cost
Interest on Variable Costs
TOTAL VARIABLE COST
RETURN ABOVE VARIABLE COSTS
FIXED COSTS
Machinery and Equipment
Depreciation on Irrigation System
Taxes on Land
Insurance
TOTAL FIXED COSTS
TOTAL COSTS
Operator and Unpaid Family Labor
RETURN TO LAND, CAPITAL, AND MANAGEMENT
hrs.
$ 15.00
Total
Generic Livestock Enterprise Budget Template
Item
Quantity
Unit
Price
____________
____________
___________
____________ ____________
____________ ____________
____________ ____________
Total
Receipts
Livestock:_______________
Livestock:_______________
Other: ________________
____________
____________
____________
Total Receipts
Variable Cost
Cost of livestock
Feed
Grain
Pasture
Hay
Silage
Other
Animal Care
Veterinarian and medicine
Breeding
Uitlities
Bedding
Expenses and Supplies
____________________
Hourly Labor
Interest on Operating Capitol
____________
head
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________
head
head
head
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________ ____________ _____________ _____________
_____________
hr.
_____________ _____________
_____________ ____________ _____________ _____________
Total Variable Cost
Fixed Cost
Salaried Labor
Equipment
Building
Management (owner salary)
____________
____________
____________
____________
____________
Total Fixed Cost
Total Cost
Returns
Returns over Variable Cost
Net Return
Budgeting Resources-
____________
Year
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________
____________
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USDA Price Reports: http://www.ers.usda.gov/data-products/organicprices/documentation.aspx
NC Fresh Market Prices:
http://www.ncagr.gov/markets/mktnews/retail_farmers_markets_reports.htm
Row Crops
o NC Yield: http://www.ncagr.gov/stats/release/croprelease01.pdf
o NC Price: https://www.ams.usda.gov/mnreports/ra_gr110.txt
o Organic Price Report: https://www.ams.usda.gov/mnreports/lsbnof.pdf
o US Price:
http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?docu
mentID=1002
Chickens
o Eggs Yield: http://blog.chickenwaterer.com/2012/09/how-many-eggs-toexpect-your-chickens.html
 Sample budget with fixed and variable
cost:http://extension.psu.edu/business/agalternatives/livestock/files/budgets/small-scale-eggproduction/sample-small-scale-egg-budget-brown-egg
o Meat Yeild: http://www.chickenthistlefarm.com/blog/2011/8/17/2011pastured-chicken-season-statistics.html
 Fixed and Variable Cost examples:
http://ucanr.edu/sites/placernevadasmallfarms/files/103017.pdf
Beef, Goat, and Pigs
o Meat Goat Budget Example and instructions:
https://meatgoats.ces.ncsu.edu/marketing-economics/
o NC Local Grass Fed Beef Prices:
https://www.ams.usda.gov/mnreports/ra_lo101.txt
o Hoof Prices:
http://www.cattle.com/markets/states.aspx?state=North+Carolina
o Local Pork Farm Example: http://coonrockfarm.com/pigs/
o Sample Cow Calf Budget: http://extension.psu.edu/business/agalternatives/livestock/files/budgets/beef-cow-calf-production/sample-beefcow-calf-budget
Vegetables
o http://www.cias.wisc.edu/wp-content/uploads/2008/07/grwr2grwr.pdf
For More Enterprise Budget Resources visit:
https://ncfarmschool.ces.ncsu.edu/farm-school-resource-page/session-4/
Enter your Username as you see it here: NCfarmschool
Enter your Password as you see it here: 2016NCfarmschool
What to DO: Try some of the business plan in AgPlan on your own
This week the worksheets we have asked you to fill out will help you develop some
items you will be entering in your business plan next month as we develop your capitol
cost. We want you to try filling out the following sections of your business plan on your
own using the sample business plans in AgPlan. The following sections should be
completed:
 Competitive Advantage
 Management and Organization
 Management Team
 Personnel Plan
 Professional Services
 Market Trends