Last year Nebraska Extension introduced the free Agricultural Budget Calculator (ABC) program. This program is designed to assist agricultural producers in determining their cost of production and projected cash and economic returns for their various farm or ranch enterprises. It is developed by the Center for Agricultural Profitability in the University of Nebraska-Lincoln's Department of Agricultural Economics. This article comes from recent issues of CropWatch where Glennis McClure and other members of the Center for Ag Profitability Team explained the program and a couple of , specific questions that may come up when using it.
How it Works
When using ABC, an enterprise can be defined by the user based on what makes sense and fits their operation. Crops may be entered individually or entered field by field, and/or by dryland or irrigated enterprise acres. To break down cost of production information even further, individual field operations and data can be entered. This could be one way to analyze cost and returns field by field for a specified crop. Then, all separate enterprise budgets (field by field or dryland and irrigated) completed for a particular crop, such as corn, will be added together so the user will have a projected cost of production and estimated returns for their total corn production for the production year. This would be similar for soybeans, wheat, or any crop enterprise that producers enter information for into the program. The ability to add livestock enterprise data into ABC will be forthcoming.
The ABC program link is: https://agbudget.unl.edu
To create your own enterprise budgeting account, enter your email address and create a password that you can remember. Budgets that you create now and into the future will be saved in your account. There are help messages throughout the program using the question mark icon. Click on the icon to show or close the help messages.
Agricultural Budget Calculator program funding sources include: The Nebraska Soybean Board, The North Central Extension Risk Management Education Center, USDA National Institute of Food and Agriculture under Award Numbers 1018-70027-28586 and 2021-70027-34694, and the Nebraska Corn Board.
1. What price do I need to receive for my crop to cover my operating costs? To cover my cash costs? To cover my total costs of production?
After specifying the crop, ABC prompts you in identifying your field operations and the machinery/equipment and operating inputs used in each field operation. Labor, fuel, depreciation, investment charges, land, real estate taxes, etc., are identified so that all operating and ownership costs are accounted for. An economic report (including opportunity costs such as owner labor and investment) and a cash report can be printed. Each includes the breakeven cost of operation that must be obtained to cover operating, ownership, and total costs of production. These break-even numbers will give the farmer an indication of his/her marketing targets. Bonus: the sensitivity section allows you to specify up to a 100% increase and decrease in breakeven prices or breakeven yields on either an economic or cash expense basis.
2. How do I allocate my whole-farm overhead costs to my enterprises so I can have a more accurate break-even figure?
It is easy to overlook farm overhead expenses when determining break-even costs on an enterprise basis because of the time involved in compiling them and the often perplexing job of allocating those costs by enterprise. ABC allows you to simply estimate a cost per acre for each enterprise or to identifying each overhead cost (accounting, legal, office, utilities, etc.). Any proportion of each overhead expense can be automatically allocated effortlessly to individual enterprises based on number of acres or percentage of total revenue created by each enterprise. Alternatively, you can allocate each overhead category, however you choose, to your enterprise budgets with ABC keeping track of the dollars remaining to be allocated.
We’re interested in user feedback, so please stay in touch as you have questions and comments about the ABC program by emailing gmcclure3@unl.edu .