New crop budgets provide additional planning options for growers, lenders
- Interactive Crop Budgets for Arkansas field crops are available for download at no cost
- The 2015 budgets reflect a greater emphasis on crop insurance in the 2014 Farm Bill
LITTLE ROCK — One of the most useful planning tools that Arkansas growers have come to depend on has been updated for the upcoming planting season.
The 2015 Crop Enterprise Budgets are now available for download from the University of Arkansas System Division of Agriculture website.
The interactive budgets are designed to help growers, land owners and lenders make better-informed choices regarding production, crop insurance, financing and land values. The budgets, along with a user guide, can be found at http://www.uaex.edu/farm-ranch/economics-marketing/farm-planning/budgets/crop-budgets.aspx.
Archie Flanders, assistant professor of Agricultural Economics based at the Northeast Research and Extension Center in Keiser, said the 2015 interactive budgets include several new features, including condensed summaries for expected costs and returns.
“Each year, we have revised the budget program and added features, trying to make more informative, more useful in the decision–making process,” Flanders said.
The interactive budgets have been available through the Division of Agriculture’s website since 2010, Flanders said. Budgets are available for cotton, corn, grain sorghum, soybeans, rice, wheat, and peanuts. Peanut budgets were added for 2015 as Arkansas acreage has been increasing in recent years. Features of the 2014 Farm Bill allow generic cotton base acreage to be allocated to peanuts, as well as other crops, for which the farm may not have established base acreage.
Corresponding to provisions in the Farm Bill, Flanders said the 2015 budgets include a feature for determining the level of insurance coverage needed to meet risk management objectives.
The budgets come preloaded with per acre costs for standard expenses, including seed, fertilizers, pesticides, and fuel. A new feature for 2015 can be used to determine capitalization rates for estimating land values.
Flanders said the methods applied in the enterprise budgets are based on standards developed by the American Society of Agricultural and Biological Engineers. Input data for the budgets are from the various Crop Research Verification Programs conducted by crop specialists and scientists of the Division of Agriculture, Flanders said.
H.L Goodwin, a professor of Agricultural Economics and Agribusiness for the University of Arkansas System Division of Agriculture and the Bumpers College, said the process of providing modern enterprise budgets to growers originated with the U.S. Department of Agriculture in the mid-20th century, when the department had offices at land-grant universities throughout the country.
“At the time, they were providing ‘cost of production’ data for various crops,” Goodwin said.
Through the 1970s and early 1980s, as the federal government began to close the USDA positions at universities, agricultural economics departments and county extension service offices continued the work of providing data-based crop budgets, Goodwin said.
In the 1980s, Mississippi State University developed a budget generator, which became the gold standard in calculating time, money and resources necessary for different crops under varied circumstances, Goodwin said.
Goodwin said the budgets served three primary purposes.
“It certainly assists growers’ risk-management planning,” Goodwin said. “Second, they have a much better relationship with their lenders — they can show their ability to pay back debts and calculate their financial ratios.
“Finally, the budgets tend to make operations more efficient and profitable, which leads to peace of mind. They’re not having to worry that they’ve guessed wrong on stuff.”
For more information on the Farm Bill, contact your county extension office or visit http://uaex.edu/farm-ranch/economics-marketing/farm-bill/.
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By Ryan McGeeney
The Cooperative Extension Service
U of A System Division of Agriculture
Media Contact: Ryan McGeeney
U of A Division of Agriculture
Cooperative Extension Service