July 22, 2003
NEW CROP BUDGETING SPREADSHEET RELEASED
A new Crop Budgeting Tool has been released
on farmdoc. Crop Budgeting compares the costs and returns
from alternative crops and determines the funds available to pay
for cash rent. This tool is part of FAST, a series of Microsoft
Excel spreadsheets that aid farmers in economic decision-making.
The spreadsheet is available in the FAST
Tools section of farmdoc or by clicking here.
Layout of Spreadsheet
A screenshot of the spreadsheet is shown in the
figure below. The spreadsheet contains five columns. The first four
columns are crop budgets in which a user enters acres in the crop;
expected price per bushel; and per acre estimates of yield, government
payments and expenses. The tool then calculates revenue less expenses
for each crop. Comparing revenue less expenses across the crops
allows a user to assess the relative profitability of differing
Users can begin budgeting for crops by using defaults
within Crop Budgeting. Defaults are controlled by the crop
type designation at the top of each budget column. In the screenshot,
crop types are Corn after beans for the first column,
Soybeans for the second column, Wheat for
the third column, and Corn after corn for the fourth
column. These types can be changed by the user from the following
list: corn after soybeans, corn after corn, soybeans, wheat, double
crop soybeans, oats, and other. By clicking on the Use Defaults
button in the top right-hand corner of the spreadsheet, defaults
values for yield per acre, price per bushel, government payments,
and all expense categories are brought into the worksheet. Defaults
can be selected for northern Illinois, central Illinois with high-productivity
farmland, central Illinois with low productivity farmland, and southern
Illinois. Defaults are based on Illinois Farm Business Farm Management
(FBFM) records, supplemented
with information from University
of Illinois Crop Budgets. The screenshot shows central Illinois
with high productivity farmland defaults.
The final column is a summary column which a user
can select to show either totals for the farm or averages for an
acre weighted by the acres in each crop. The screenshot show averages
Uses of the spreadsheet
Crop Budgeting is designed for two uses:
1. To examine the relative profitability of crops.
The first four columns of the spreadsheet allow a user to assess
crop profitability by comparing revenue less expenses for different
crops. In the above example, which uses defaults for central Illinois
with high productivity farmland, the most profitable crop is wheat
having revenue less expenses of $99 per acre, followed by corn after
soybean ($94 per acre), soybeans ($80 per acre), and corn after
corn ($70). This example illustrates that wheat is a competitive
crop with corn and soybeans given current prices for these crops.
2. To determine the amount that can be paid for
cash rent. Crop Budgeting includes categories for all costs except
land costs. It also includes return to the operator for his labor,
management, and equity capital (i.e., operators return). Revenue
less expenses is the amount available to pay cash rent. In the above
example, $87 is available for cash rent. Paying more than this number
will cut into operators return. Paying more than revenue less
expenses plus operators return ($117 in the above example)
means that some of the remaining cost categories will not be covered.
Crop Budgeting aids users in budgeting.
Recent commodity prices, along with changes brought about with implementation
of the 2002 Farm Bill, have increased the relative profitability
of corn and wheat relative to soybeans. Hence, cropping decisions
could be more important in this and upcoming years than in the 1990s.
Crop Budgeting uses defaults. Costs and
yields vary from farm to farm. Using a farms own costs and
yields are advisable.
Defaults in Crop Budgeting come from the
local Farm Business Farm Management (FBFM)
Associations across the State of Illinois. Without their cooperation,
information as comprehensive and accurate as this would not be available
for educational purposes. FBFM, which consists of 6,000 plus farmers
and 62 professional field staff, is a not-for-profit organization
available to all farm operators in Illinois. FBFM field staff provides
on-farm counsel with computerized recordkeeping, farm financial
management, business entity planning and income tax management.
For more information, please contact the State FBFM Office located
at the University of Illinois Department of Agricultural and Consumer
Economics at 217-333-5511 or visit the FBFM website at www.fbfm.org.
Issued by: Gary Schnitkey,
Department of Agricultural and Consumer Economics