Transcript Partial Budgeting

Goat Budgets
A decision tool you can use.
Roger Sahs
Extension Specialist, Ag Economics
Oklahoma State University
Meat Goat Investment Costs
No.
Units
$/Unit
% to
Herd
$/Doe
Does
50
Head
$125
100
125
Bucks
2
Head
$300
100
12
Vehicle
1
Pickup
$17,500
25
88
Tractor
1
$25,000
25
125
Baler
1
$12,500
50
125
Swather
1
$7,500
50
75
$1,500
100
30
$1,500
100
600
$25,000
50
250
Equipment
Native pasture
Barn
Total
20
Acres
$1,430
Farm and Ranch Realities
Annual per acre payments: 30 year loan*
Interest rate
Land price
per acre
6%
8%
10%
$ 500
36
44
53
$ 1000
72
89
106
$ 1500
109
133
159
$ 2000
145
177
212
*Land loan is based on 90% of land price.
Uses of production and financial
information

Historical analysis
 Monitor current performance
 Forward planning
Enterprise Budget
 An Enterprise Budget estimates the full
economic costs and returns expected to
accrue to a production activity – raising goats,
producing grain or forage – for one year.
Enterprise Budget
 Allows for consistent evaluation of
alternative enterprises
 What’s included - Production
 Goal, technique, resources required, returns
 Costs
 Variable and fixed
Why Budget?






1st step in developing marketing/business plan
Evaluate options before you commit resources
Estimate potential income
Estimate the size of operation needed to earn a
specified return
Compare the profitability of two or more
systems of production
Identify production and financial risks and
whether they may be managed
Budgets can help with “what-ifs”
Management change
5%  in weaning %
Impact
? lbs per doe, $? per doe
5%  in feed costs
$? per doe
5%  in grazing costs
5%  in other costs
 market price by $5/cwt
$? per doe
$? per doe
$? per doe
Total
$? per doe
Food for thought…..

You don’t know if you are making a profit
unless you know your costs of production.

If you can’t pencil in a profit, you aren’t likely
to plow (or raise) one!
OSU Enterprise Budget Software

Excel spreadsheet-based software 24 Crop/livestock commodities



$20 each, 5 for $75, $250 entire set
Free data updates available
Available via CD or online
http://www.agecon.okstate.edu/budgets
Other Sources of Budget Information






Books on goat production and industry
Goat producer organizations
Other goat operations
University specialists, educational
materials, and meetings
Websites – Langston Univ.
Web-based training and certification

http://www2.luresext.edu/goats/training/qa.html
Ten Commandments for
Farmers/Ranchers





Focus on financial management as much
as production performance.
Count your goats (and other assets) at
least annually.
Keep your lender happy.
Code your checks and sort your expenses
for enterprise accounting.
Develop a record-keeping and information
system that works for you.
Ten Commandments
for Farmers/Ranchers





Don’t just minimize taxes, maximize after
tax income.
Don’t expect too much from your does.
Never stop learning.
Go slowly when attempting new things.
Match the livestock and crop enterprises
to the land resource.
The Bottom Line 
Make sure your operation is as cost-effective
as possible.
 Identify production practices that will lower
costs.
 Find leverage points that will generate the
most bang for the buck.
 Benchmark the competition.
Questions??