Whole-Farm Budgets

Since it is a plan for the future use of farm resources and establishes the future direction of the farm organization, the whole-farm budget must conform to the farm family goals and objectives to be successful. Farm management that is goal-directed integrates the goals and objectives of the farm with those of the family and reduces pressure on competitive uses of family controlled resources. Oklahoma State University (OSU) Extension fact sheet F-244, "Goal Setting for Farm and Ranch Families," can help develop a process for identifying farm and family goals, prioritizing them, and identifying management strategies that achieve identified goals.

The whole-farm budget should start with the inputs the operator has available for use in the farm business. Often the amount of land and operating capital available are limiting factors. Other factors such as buildings, the farmer's managerial skills, and available markets can also be relatively fixed. It is important to start with those fixed elements in planning a whole-farm budget. The results of the whole-farm budget should combine the resources, constraints, technical information, and price data into a realistic whole-farm budget for the farm being considered. The outcome should be a plan that can provide direction for the farmer and family to follow in maximizing the returns to owned resources.

To develop a whole-farm budget:

  • List the goals and objectives of the farm firm.
  • Inventory the resources available for use in production.
  • Determine physical production data that will be used in the input/output process.
  • Identify reliable input and output prices.
  • Calculate the expected variable and fixed costs and all returns.

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