Exercise #4

Farm Planning and Budgeting

Enterprise, partial, whole-farm and cash flow budgets are important and useful
tools of a farm manager, and each provides a framework for the use of these concepts.
Budgeting is often described as “testing it out on paper” before committing
resources to a plan or a change in an existing plan. It is a forward-planning tool or a way
to estimate the profitability or feasibility of a plan, a proposed change in plan or an
enterprise, before making the decision and implementing it. Budget reflects the
managers’ best estimate as to what will happen in the future if a certain plan is followed.
The combination of budgeting and economic principles provides some powerful,
practical and useful techniques for the manager to use when analyzing alternatives.
This step is an important one in the decision making process, because only a proper
and correct analysis will lead to making right decision.

II. Objectives

The main objective of this exercise is for students to gain knowledge and skills in
preparing an enterprise and partial budget.
Specifically, it aims to:

1. Illustrate the different sections of an enterprise and partial budget;

2. Learn how to construct an enterprise and partial budget;
3. Analyze enterprise and partial budget.

III. Enterprise Budget

A certain farmer (MRO Farm) want to engage in one hectare squash production.
Help him out by completing the tables below and make an enterprise budget (in your
exercise notebook) out of the data showing all the necessary sections. Compute also
cost of production, breakeven price and break even yield.

A. Schedule of Labor Requirements

Activities Labor Available Labor
Requirement
(MD or MAD) Family Labor Hired Labor TOTAL
No. Amount No. Amount
Land Preparation 10 MAD 0 10
Furrowing 1 MAD 0 1
Sowing 4MD 1 3
Weeding 8 MD 2 6
Interrow Cultivation 4MAD 0 4
Fertilizer 6MD 1 5
Aplication
Spraying 2MD 0 2
Harvesting 15MD 2 10
Total
MD = P200.00 MAD = P300.00

B. Expected Production
Yield (Tons) Price of Output
EXPECTED(Kgs.) 30 4/kg
Actual 25 5/kg
C. Supplies and Materials
MATERIALS  Requirment  Price/Unit  Amount
A.Seeds ( Hybrid Suprema) 3 x 250 g can 1,800/can
B.Fertilizer    
i.14-14-14 3 bags 1,1150/bag
ii.46-0-0 1 bag 1,110/bag
iii.0-0-60 1 bag 1,570/bag
iv.Chicken Dung 20 bags 150/bag
C.Pesticides    
i.Insecticides 2 liters 400/li
ii.Fungicides 1 kg 350/kg
iii.Foliar 1Kg 140/kg

D. Choose a particular crop (except corn and squash) and make your own enterprise
budget use actual prices at present.

IV. Partial Budget

Make a partial budget showing the change in net farm income resulting from
extending the age of disposal of 100 heads broiler from 28days to 35days using the
following assumptions:

1. Average weekly weight gain ……………………. O.30kg/head

2. Price of live weight chicken ………………………P150.00/Kg
3. Feed Consumption
No. of Days Kind of Feed No. of Feeding Feed Consumption
(Days) (Kilograms)
1–9 Booster 9 22
10 – 21 Starter Crumble 12 200
22 – 28 Finisher 7 20
29 - 35 Finisher 7 50
Booster P35/Kg; Starter Crumble P30/kg Finisher P30/Kg

4. Veterinary Drugs ……………………………………P100/wk

5. Light …………………………………………………..P500/mo.
6. Water ………………………………………………… P 350/mo.
7. Hired Labor ………………………………………….. P 200/day
8. Manure Sales 4 sacks/mo. ………………………... P200/sack
9. Mortality …………………………………………….. 1%