B-1241
c
BUDGETS FOR TEXAS CROPS AND LIVESTOCK
INTRODUCTION
Enterprise budgets were developed by the Extension
economist-management for each of the fourteen Ex
tension Districts.
— EHW ■-'■■ I—
Pinhnndle 1
• District Headquarters
©Texas A&M University
r
C O N TA nE NI T
n tS
roduction
to
the
Te x a s
Crop
and
Livestock
Budgets
Procedure
Te r m i n o l o g y
Used
in
Budgets
Calculating
Annual
Capital
Requirements
C a l c u l a t i n g M a c h i n e r y, E q u i p m e n t a n d L i v e s t o c k O w n e r s h i p C o s t s
Other
Information
Available
Limitations
A
va
i
1
ab
i
1
i
ty
4
Appendix
I.
Formulae
for
Estimating
Machinery
Cost
5
and
Implement
Cost
Calculation
Capacity
Calculation
Requirement
and
Cost
Calculations
Cost
Calculation
Tractor,
Field
Fuel
Lube
Machinery
Repair
Insurance
and
Maintenance
1
2
3
5
6
7
7
8
9
9
9
10
10
10
11
Depreciation
11
Interest
on
Investment
11
Note on Hours of Annual Use of Tractors, Machinery and Implements 12
J^N,
Equipment
Fuel
Repair
Hired
Insurance
Depreciation
Interest
Auto
Fuel
and
Cost
Calculation
Costs
Maintenance
Labor
and
on
Truck
Repair
Operator
Insurance,
Depredation
Interest
and
Cost
Calculations
Ta x e s
and
Working
Livestock
Insurance
(Purchased
Livestock)
on
Investment
Calculation
Utility
and
Property
Insurance
Procedure
Cost
Maintenance
Ta x
Depreciation
Interest
O p Te E
r aXt Ai nSg
Procedures
Investment
Cost
or
Repair
Labor
r
Calculation
Maintenance
Labor
License,
and
Milking
Building
Fuel
Calculations
Investment
on
Breeding,
Livestock
Depredation
Interest
Procedure
on
CP
aA
p iNt a
H lA N D L E C o s t
12
12
12
12
12
13
13
13
13
13
14
14
14
14
15
15
15
15
15
15
15
16
16
16
Investment
DIS
C Ta R
l cI uCl Ta t i o n
C 1P r o c e d u r.e
16
16
16
1
Alfalfa
Establishment,
Alfalfa,
Furrow
Furrow
Irrigated,
Winter
Winter
Corn
Corn
for
Corn
Corn
Furrow
Grain,
Grain,
Sprinkler
Irrigated,
(Natural
Gas)
C1.13
(Natural
Gas)
C1.15
C1.17
Irrigated
C1.21
Sorghum,
Furrow
Sorghum
Sorghum,
Dryland
Irrigated,
for
Furrow
Sprinkler
Irrigated,
C1.25
C1.27
C1.29
Gas)
C1.31
Gas)
C1.33
(Natural
Irrigated,
(Natural
Gas)
C1.35
Irrigated,
(Natural
Gas)
C1.37
Continuous
Irrigated
Wheat,
Furrow
Sprinkler
Dryland
(Natural
Beets,
Wheat,
Gas)
Continuous
Irrigated,
Sprinkler
C1.23
(Natural
H a y,
Dryland,
Furrow
Wheat,
C 1 . 11
Sprinkler
Sugar
Cont.
Gas)
Spanish,
Sorghum,
Continuous
C1.9
C1.19
Sorghum,
Soybeans,
Gas)
Irrigated
Sorghum,
Soybeans,
C1.7
Sprinkler
Forage
Cont.
Gas)
Dryland
Forage
Cont.
C1.3
Florunner,
Peanuts,
Forage
(Natural
Irrigated,
Cotton
Peanuts,
(Natural
Irrigated,
C1.1
C1.5
(Natural
Irrigated,
Sprinkler
Gas)
Dryland
Irrigated,
Furrow
Gas)
(Natural
Furrow
Silage,
Silage,
(Natural
B a r l e y,
B a r l e y,
for
Irri.
Dryland
Irrigated,
Irrigated,
C1.39
C1.41
(Natural
(Natural
Gas)
Gas)
C1.43
C1.45
Rotation:
Wheat-Fallow-Wheat:
Conv
Till
Wheat
Bud
C1.47
Rotation:
Wheat-Fallow-Wheat:
Conv
Till
Fallow
Bud
C1.49
Min
Till
Wheat
Bud
C1.51
M1n
Till
Fallow
Bud
C1.53
Rotation:
Rotation:
Wheat-Fallow-Wheat:
Wheat-Fallow-Wheat:
11
^S
Set Aside Land for Dryland Crops - Conventional C1.55
Set Aside Land for Irrigated Corn - Conventional C1.57
Set Aside Land for Irrigated Small Grains - Conv C1.59
Rotation: Sorghum-Fallow-Wheat: Min Till Fallow C1.61
Rotation: Wheat-Fallow-Sorghum: M1n Till Fallow C1.63
Rotation: Wheat-Fa1 low-Sorghum: No Till Fallow C1.65
Permanent Pasture Establ ishment,. Sprinkler Irrlg C1.67
Permanent Pasture, Sprinkler Irrlg. (Natural Gas) C1.69
Crop
Tractors,
Products
Implements
Operating
Auto
and
Input
or
Custom
/Sff^v,
Report
Truck
Resources
C1.78
C1.79
Crop
or
C1.80
Resources
Improvements
C1.81
Resources
C1.82
Equipment
Cost
Report
Parameters
PA N H A N D L E
DISTRICT
Winter
Summer
SOUTH
»
C1.84
Stocker
Calf
Stocker
Irrigated
111
L1
C1.87
1
.
Budget
Products
PLAINS
Establishment,
C1.83
Report
Cow-Calf
Alfalfa
C1.77
Resources
Irrigation
\
C1.76
Resources
Perennial
Livestock
TEXAS
C1.75
Resources
Land
Budget
TEXAS
C1.72
Resources
Operation
Livestock
Machinery
Equipment
Resources
Labor
Buildings
C1.71
Budget
Calf
L1.1
.
.
Budget
Report
DISTRICT
(Pivot)
'.
L1.3
L1.5
L1.7
C2.1
C2.1
Alfalfa
H a y,
Corn,
Irrigated
Irrigated
Corn,
Cotton,
2X1,
Cotton,
2X1,
Furrow
Cotton,
Fresh
Grain
(Heavier
Dryland
Irrigated
Sprinkler
Irrigated
Sorghum,
Dryland
(Heavier
Sorghum,
Sorghum,
Irrigated
Set
Aside
Pivot
Land
Soybeans,
Wheat,
Wheat,
Wheat.
Irrigated
Set
Crop
Auto
Custom
Aside
Te x t u r e
and
(Sandy
Truck
Operation
Resources
1v
Soil)
Wheat
Equipment
Resources
Soils)
Sdls)
Te x t .
Resources
C2.13
C2.15
C2.17
C2.19
C2.21
C2.23
C2.25
C2.27
C2.33
Soils)
for
C 2 . 11
C2.29
Soils)
Te x t u r e
(Heavier
Land
Input
or
Pivot
C2.9
C2.31
Report
Implements
Operating
Crops
Irrigated
(Heavier
Pivot
Products
Tractors,
Soils)
Row
(Sandy
-
-
Soils)
Irrigated
.(Heavier
Irrigated
Irrigated
Soil)
Te x t u r e d
Furrow
Dryland
Furrow
Soil)
Dryland
S u n fl o w e r s ,
Wheat,
Irrigated
Te x t u r e d
Furrow
Dryland
Soils)
(Sandy
for
S u n fl o w e r s .
Wheat,
Soils)
(Sandy
(Heavier
-
Soils)*
Pivot
Dryland
Irrigated
Soils)*
(Sandy
Center
Furrow
C2.7
Te x t u r e d
Potatoes,
Sorghum,
(Pivot)
(Sandy
Market
Grain
C2.5
Te x t u r e d
(Heavier
C2.3
(Furrow)
Irrigated
Dryland
Cotton,
(Pivot)
C2.35
C2.37
C2.39
C2.41
C2.43
C2.45
C2.47
C2.48
C2.50
C2.51
C2.52
Labor
Resources
C2.53
Land
Resources
C2.54
Perennial
Crop
Resources
Irrigation
Equipment
Machinery
Cost
Budget
TEXAS
Parameters
PA N H A N D L E
C2.56
Report
C2.57
Report
DISTRICT
C2.59
L1.1
Cow-Calf
Winter
Budget
Stocker
Summer
Livestock
TEXAS
C2.55
Calf
Stocker
Products
PLAINS
ROLLING
Alfalfa
Calf
Dryland
Cotton,
Cotton,
Cotton,
Dryland(2x1
(Solid
(2X2
Planting)
Cotton,
Guar,
Guar,
Sorghum,
Sorghum,
Dryland,
H a y,
C3.1
C3.5
C3.7
Establishment,
Dryland,
Dryland,
Sorghum,
Irrigated
Bermudagrass
L1.7
1
C3.3
Irrigated
Bermudagrass
Cotton.
L1.5
Dryland
Establishment,
Coastal
Budget
Dryland
Alfalfa,
Coastal
L1.3
C3.
Establishment,
Alfalfa
Budget
Report
DISTRICT
Alfalfa,
/0^\,
L1.1
Irrigated
C3.9
Irrigated
C 3 . 11
Rows)
C3.13
Row
C3.15
Pattern)
C3.17
40"
Narrow
Planting
Conservation
Tillage
C3.19
Irrigated
C3.21
Dryland
C3.23
Irrigated
C3.25
Dryland
C3.27
Irrigated
C3.29
Conservation
Tillage
C3.31
Wheat,
Wheat,
Crop
Tractors,
Dryland,
and
Labor
C3.45
Resources
C3.46
Resources
Perennial
Crop
or
C3.47
Resources
Improvements
Irrigation
Budget
TEXAS
C3.48
Resources
C3.49
Equipment
Cost
C3.50
Report
Parameters
ROLLING
PLAINS
Farrow
to
C3.51
Report
DISTRICT
Cow-Calf
Finish
Feeder
Stocker
Calf
Hog
L3.3
-
Calf
Production
Pull
Coastal
off
Wheat
Budget
L3.5
-
L3.7
March
Grazeout
Report
DISTRICT
Bermudagrass
Coastal
Production
Hogs
Products
CENTRAL
TEXAS
Coastal
C3.53
1
L3.1
Pig
Budget
Stocker
L3.
/-S%
Production
Finishing
Livestock
NORTH
C3.44
Resources
Land
Machinery
C3.43
Resources
Livestock
Buildings
C3.41
Resources
Operation
C3.35
C3.38
Resources
Truck
/^^.
C3.37
Equipment
Input
Custom
Tillage
Report
Implements
or
C3.33
Conservation
Products
Operating
Auto
Dryland
C4.
Establishment
Bermudagrass
Bermudagrass
Hay
1
L3.9
L 3 . 11
L3.13
1
C4.1
C4.3
Pasture
C4.5
. y f 3 % .
Bermudagrass
Overseeded
with
Ryegrass
&
Clover
C4.7
1
Sorghum
#**•-•
Set
Aside
Set
Corn
Corn
Cotton
after
Sorghum
Side
Dress
(Side
Dress
C 4 . 11
Crop
C4.13
Nitrogen)
Nitrogen)
Control)
C4.19
(Full
Season
Insect
Control)
C4.21
Plant
C4.23
Dryland,
Solid
(Nitrogen
Sorghum
Fertilizer
after
Only)
Wheat
Wheat
&
High
Production,
Input
Management
C4.37
Grazing
C4.39
Only
C4.41
Resources
Resources
Resources
Livestock
Crop
C4.44
C4.48
C4.50
C4.51
C4.53
Resources
Perennial
C4.43
C4.52
Resources
Land
C4.33
C4.35
Resources
Operation
Only
C4.31
Fertilizer
Equipment
Truck
Labor
Spring
Grazing
and
Input
Custom
Fertilizer
Report
Implements
or
Fertilizer
with
Products
Operating
Auto
Nitrogen
Production
Wheat
Tractors,
No
Fall
Production,
Wheat
Crop
Fall
Production,
Wheat
C4.29
Production,
Production,
C4.25
C4.27
Soybeans
Wheat
C4.17
Insect
Wheat
Wheat
C4.15
Season
Peanuts,
after
Cover
Crop
(Early
Wheat
Spanish
C4.9
Cover
with
(No
Wheat
Wheat
Hay
without
Land
Wheat
after
after
Cotton
Land
Aside
after
for
C4.54
Resources
C4.55
JP\
Buildings
or
Improvements
vii
Resources
C4.56
Irrigation
Equipment
Machinery
C4.57
Cost
Budget
Report
Parameters
Peaches,
/^^
C4.58
Report
Dryland,
50
C4.60
Trees/Acre,
1st
Ye a r
C4.61
P e a c h e s , D r y l a n d , 5 0 Tr e e s / A c r e , 2 n d Ye a r C 4 . 6 3
Peaches,
Dryland,
50 Trees/Acre,
3 r d Ye a r
C4.65
P e a c h e s , D r y l a n d , 5 0 T r e e s / A c r e , 4 t h t o 1 5 t h Ye a r C 4 . 6 7
P e a c h e s , I r r i g a t e d , 1 0 0 Tr e e s / A c r e , 1 s t Ye a r C 4 . 6 9
P e a c h e s , I r r i g a t e d , 1 0 0 Tr e e s / A c r e , 2 n d Ye a r C 4 . 7 1
P e a c h e s , I r r i g a t e d , 1 0 0 Tr e e s / A c r e , 3 r d Ye a r C 4 . 7 3
P e a c h e s , I r r i g a t e d , 1 0 0 T r e e s / A c r e , 4 t h - 1 5 t h Ye a r C 4 . 7 5
P E C A N S , I R R I G AT E D , E S TA B L I S H M E N T Y E A R C 4 . 7 7
Pecans,
Irrigated,
Pecans,
Irrigated,
Pecans,
Crop
Tractors,
and
Input
or
to
to
Ye a r s
9th
20th
Ye a r s
Ye a r s
C4.89
C4.90
Resources
or
C4.91
Resources
Improvements
Irrigation
C4.92
Resources
C4.93
Equipment
Cost
Parameters
CENTRAL
TEXAS
viii
C4.83
C4.88
Resources
Crop
^^i
C4.87
Resources
Perennial
C4.81
C4.86
Resources
Operation
C4.79
C4.85
Equipment
Truck
Land
Budget
NORTH
4th
Resources
Labor
Machinery
10th
to
Report
Implements
Custom
Buildings
5th
Products
Operating
Auto
Irrigated,
1st
C4.94
Report
C4.95
Report
DISTRICT
C4.96
1
L4.
■**%K
Cow-Calf Production Improved Pastures 40 Cow Herd L4.1
Cow-Calf
Production
Pastures
40
Cow
Herd
L4.3
Stocker
Steers
(Wheat
Grazing
Nov-Feb
120
Days)
L4.5
Stocker
Steers
(Wheat
Grazing
Nov-May
210
Days)
L4.7
Stocker
Calf
Dairy
Production
Production
Dairy
Livestock
NORTHEAST
Native
Silage)
(with
Silage)
Report
DISTRICT
Corn,
.
C5.
Dryland
Cotton,
Coastal
Coastal
C5.9
Establishment
Bermudagrass
Bermuda
Pasture,
L4.15
1
C5.7
Dryland
Bermuda
L4.13
C5.5
Dryland
Wheat,
L 4 . 11
C5.3
Dryland
Soybeans,
L4.9
C5.1
Dryland
Sorghum,
Coastal
Pasture)
(without
Production
Products
TEXAS
(Native
Hay
C 5 . 11
C5.13
Maintenance
C5.15
Cstl Bermuda Pasture, Overseeded Clover & Ryegrass C5.17
Small
Grains
Christmas
Christmas
-
Ryegrass
Tree
Tree
Production
Production
Peaches,
Peaches,
Peaches,
Peaches,
Peaches,
Peaches,
Winter
Sixth
(Wholesale)
(Choose
&
Cut)
C5.19
C5.21
C5.25
First
Ye a r
C5.29
Second
Ye a r
C5.31
Third
Ye a r
C5.33
Fourth
Ye a r
C5.35
Fifth
Ye a r
C5.37
through
ix
Pasture
Twelfth
Ye a r s
C5.39
Crop
Products
Tractors,
Report
Implements
Operating
and
or
Labor
C5.46
Resources
Operation
C5.48
Resources
C5.49
Resources
Livestock
C5.50
Resources
Land
C5.51
Resources
Perennial
C5.52
Crop
Buildings
or
Resources
Improvements
Irrigation
C5.53
Resources
C5.54
Equipment
Machinery
C5.55
Cost
Budget
NORTHEAST
Report
Parameters
TEXAS
Cow-Calf
WEST
Report
DISTRICT
Production
Stocker
with
Production
Products
TEXAS
•***%>
C5.42
Resources
Truck
Custom
Livestock
FAR
Equipment
Input
Auto
C5.41
-
Winter
Winter
C5.56
C5.59
1
L5.
Pasture
L5.1
Pasture
L5.3
C6.
L5.5
1
Report
DISTRICT
^^
COTTON,DRYLAND-Per Ground Acre Costs & Returns 2X1 C6.1
SOUTHERN HIGH PLAINS SET ASIDE BUDGET C6.3
C O T T O N , I R R I G AT E D - P e r G r o u n d A c r e C o s t s & R e t u r n s C 6 . 5
P E C O S VA L L E Y P U M P A R E A S E T A S I D E B U D G E T C 6 . 7
Crop
Products
Tractors,
Implements
Operating
Auto
Custom
Report
and
Input
or
Truck
C6.9
Equipment
Resources
Resources
Operation
Resources
C6.10
C6.12
C6.
13
C6.14
^*«a^v
Labor
Resources
C6.15
J0^.
Livestock
Resources
Land
Buildings
Resources
or
C6.17
Improvements
Irrigation
Resources
Equipment
Machinery
Budget
FAR
C6.16
C6.19
Cost
WEST
Report
Parameters
TEXAS
Sorghum,
Coastal
j0^\.
Establishment,
Bermudagrass
Bermudagrass
Coastal
Hybrid
Pasture,
Establishment,
Bermudagrass
Coastal
Pasture,
Bermudagrass
Sudan-Sorghum
Kleingrass
H a y,
Hay
Oats,
Spanish
Grain
Peanuts,
Irrigated,
Cotton,
Wheat,
Tractors,
Products
Implements
C7.5
Irrigated
C7.7
Grazing
Dryland
Dryland
for
C7.9
C 7 . 11
C7.13
C7.15
C7.17
C7.19
Grazing
Solid
Planting
C7.21
C7.23
Dryland
C7.25
Irrigated
C7.27
Dryland
C7.29
Report
and
C7.3
Dryland
Dryland
Cotton,
Crop
Dryland
Irrigated
and
Pasture,
C7.1
Irrigated
Establishment,
Kleingrass
Small
L6.3
C7.1
Dryland
Bermudagrass
Coastal
L6.1
Report
DISTRICT
TEXAS
Coastal
C6.22
L6.1
Production
Products
CENTRAL
C6.20
Report
DISTRICT
Cow-Calf
Livestock
WEST
C6.18
Equipment
C7.31
C7.32
iP*\
Operating
Input
Resources
XI
C7.35
Auto
or
Truck
Custom
Operation
Labor
C7.37
Resources
C7.38
Resources
Land
C7.39
Resources
Perennial
Crop
or
C7.40
Resources
Improvements
Irrigation
C7.41
Resources
Equipment
Machinery
Budget
WEST
C7.36
Resources
Livestock
Buildings
Resources
C7.43
Cost
Report
Parameters
CENTRAL
Production
L7.3
Goat
Production
L7.5
Budget
Coastal
Bermudagrass
Corn
H a y,
Sorghum,
Dryland
Kleingrass
Native
H a y.
Grass
for
Peanuts,
x11
Dryland
Dryland
Pasture,
Grazing,
Dryland,
Solid
C8.1
C8.3
C8.5
C8.7
C8.9
Dryland
Pasture,
Grain
Dryland
Dryland
Establishment,
Kleingrass
Dryland
Dryland
Pasture,
Silage,
Kleingrass
L7.9
C8.1
Establishment,*
Bermudagrass
Coastal
L7.7
Report
DISTRICT
Bermudagrass
Runner
L7.1
Production
Products
TEXAS
Small
C7.46
L7.1
Sheep
Ranch
Coastal
C7.44
Report
DISTRICT
TEXAS
Cow-Calf
Livestock
CENTRAL
C7.42
Dryland
Dryland
Planted
C 8 . 11
C8.13
C8.15
C8.17
C8.19
C8.21
Runner
Peanuts,
Runner
Runner
Dryland,
Peanuts,
Peanuts,
Spanish
Irrigated,
Irrigated,
Peanuts,
Spanish
Skip-Row
Peanuts,
Skip-Row
Irrigated,
Solid
Plant
C8.31
H a y,
Dryland
C8.33
Pasture,
Dryland
C8.35
Irrigated,
Fourth
Production
after
Set
Aside
Land
Sorghum
Tractors,
Production
Wheat
Production
Wheat
Production.
Auto
Custom
Labor
Livestock
Land
C8.43
Fifteenth
Ye a r s
Diversion
for
Following
and
Input
C8.49
Payment
C8.51
C8.53
Hay
C8.55
with
Resources
Resources
Operation
Resources
Resources
Resources
Resources
xiii
C8.47
Wheat
Sorghum
C8.57
Grazing
C8.59
Equipment
Truck
C8.45
Sorghum
Grain
Continuous
Ye a r s
Wheat
Report
Implements
or
Ye a r
after
Products
Operating
Third
after
Sorghum
Crop
C8.41
Previous
without
C8.39
Ye a r
through
Production
Ye a r
Second
Irrigated,
Irrigated,
C8.37
First
Irrigated,
Peaches,
C8.27
C8.29
Dryland
Peaches,
Cotton
Planting
C8.25
Plant
Wheat,
Corn
Plant
Solid
Sudangrass
Peaches,
Solid
C8.23
Dryland,
Sudan-Sorghum
Peaches,
Planting
C8.61
C8.62
C8.69
C8.72
C8.73
C8.74
C8.75
C8.76
Perennial
Buildings
Crop
or
Resources
Improvements
Irrigation
Resources
C8.78
Equipment
Machinery
C8.79
Cost
Budget
CENTRAL
Report
Parameters
TEXAS
Dairy
Dairy
Dairy
Dairy
Lactating
Lactating
Cow
Cow
Production,
Production,
Dairy
Farrow
Feeder
(with
Lactating
Lactating
Finishing
L8.1
Cow
L8.3
Silage)
L8.5
Cow*
(without
Dry
Hog
Silage)
(without
Production,
to
C8.84
L8.1
Production
Production,
Production,
C8.81
Report
DISTRICT
Cow-Calf
Pig
L8.7
Silage)
Cow
Production
*.
L8.9
L 8 . 11
.
.
Production
Market
Livestock
EAST
C8.77
L8.13
L8.15
Hogs
L8.17
Goat
Production
L8.19
Sheep
Production
L8.21
Stocker
Calf
Production
L8.23
Stocker
Calf
Production
L8.25
Products
Report
TEXAS
DISTRICT
Corn,
Dryland
Coastal
Bermuda
Coastal
Coastal
L8.27
1
C9.
Establishment
Bermudagrass
Bermuda
C9.1
Pasture,
C9.3
Hay
C9.5
Maintenance
C9.7
Cstl Bermuda Pasture, Overseeded Clover & Ryegrass C9.9
Small
Grains
Christmas
Tree
-
Ryegrass
Production
xiv
Winter
Pasture
(Wholesale)
.
.
C 9 . 11
.
C9.13
Christmas
Tree
Production
Peaches,
First
Peaches,
Tractors,
Ye a r
C9.25
Fourth
Ye a r
C9.27
Fifth
Ye a r
C9.29
Auto
or
C9.40
Resources
C9.41
Resources
C9.42
Resources
Land
C9.43
Resources
Perennial
C9.44
Crop
or
Resources
Improvements
Irrigation
C9.45
Resources
Equipment
Machinery
Report
Parameters
TEXAS
Stocker
with
Production
-
Products
CENTRAL
TEXAS
Coastal
Bermudagrass
Coastal
C9.48
Report
DISTRICT
Production
C9.46
C9.47
Cost
Cow-Calf
C9.34
C9.38
Resources
Operation
C9.31
C9.33
Equipment
Truck
Livestock
Livestock
SOUTH
Ye a r s
Resources
Labor
Budget
EAST
Twelfth
and
Input
Custom
Buildings
through
Report
Implements
C9.21
Third
Products
Operating
Ye a r
C9.17
C9.23
Peaches,
Crop
Cut)
Ye a r
Peaches,
Sixth
&
Second
Peaches,
Peaches,
(Choose
C9.51
L9.1
Winter
Winter
Pasture
Pasture
Report
DISTRICT
Establishment,
Bermudagrass
H a y,
Dryland
Dryland
L9.1
L9.3
L9.5
C10.1
C10.1
C10.3
ji*\
Coastal
Bermudagrass
Pasture,
Dryland
C10.5
Corn.
Dryland
Cotton,
Dryland
Cotton,
Brazos
H a y,
Sorghum
Pasture,
Auto
and
Input
C10.23
C10.24
C10.29
C10.31
Resources
C10.32
Resources
C10.33
Resources
C10.34
Resources
Perennial
Crop
or
C10.35
Resources
Improvements
Management
C10.36
Resources
C10.37
Resources
Irrigation
C10.38
Equipment
Cost
C10.39
Report
Parameters
CENTRAL
TEXAS
Report
DISTRICT
Cow-Calf
C10.40
'
Production
Feeder
P1g
Finishing
Stocker
Livestock
C10.21
Resources
Operation
Land
Budget
SOUTH
Dryland
Equipment
Truck
Livestock
Machinery
C10.19
Resources
Labor
Buildings
C10.17
Report
Implements
Custom
Dryland
Pasture,
Products
or
C10.15
Dryland
Winter
Operating
C10.13
Dryland
Wheat,
Tractors,
C 1 0 . 11
Dryland
Sorghum
Steer
Products
C10.43
L10.1
L10.1
Production
L10.3
Hogs
L10.5
Production
L10.7
Report
xv 1
/*^%
C10.9
Va l l e y
Sorghum,
Crop
C10.7
L10.9
TEXAS
UPPER
COAST
DISTRICT
Cotton,
Dryland
Rice,
Rice,
First
First
and
Second
Auto
Custom
and
Input
Resources
C 11 . 1 6
..*
C 11 . 1 7
C 11 . 1 8
Resources
C 11 . 1 9
Resources
or
C 11 . 2 0
Improvements
Irrigation
Resources
Equipment
Cost
Parameters
UPPER
COAST
Report
DISTRICT
C 11 . 2 5
L 11 . 1
L 11 . 1
Report
DISTRICT
Corn,
L 11 . 3
C12.1
Irrigated
Cotton,
Cotton,
Forage
C 11 . 2 3
Production
Products
TEXAS
Sorghum
Sorghum,
C 11 . 2 1
C 11 . 2 2
Report
Cow-Calf
Livestock
SOUTH
C 11 . 1 5
Resources
Land
Budget
TEXAS
C 11 . 1 2
Resources
Operation
Livestock
Machinery
C 11 . 11
Resources
Labor
Buildings
C 11 . 9
Equipment
Truck
C 11 . 5
C 11 . 7
Report
Implements
or
Crop
Dryland
Products
Operating
C 11 . 3
Dryland
Soybeans,
Tractors,
C 11 . 1
Crop
Sorghum,
Crop
C 11 . 1
C12.1
Dryland
C12.3
Irrigated
C12.5
H a y,
Dryland
Dryland
C12.7
C12.9
iSPN.
Sorghum,
xvii
Irrigated
•.
C 1 2 . 11
Sorghum,
Dryland,
Conservation
Soybeans,
Tillage
Irrigated
Peanuts,
Spanish,
Peanuts,
Spanish,
C12.13
C12.15
Dryland
C12.17
Irrigated
C12.19
Broccoli,
Irrigated
C12.21
Cabbage,
Irrigated
C12.23
Cantaloupes,
Irrigated
Carrots,
Irrigated
C12.25
C12.27
Cucumbers,
Irrigated
C12.29
Honeydews,
Irrigated
C12.31
Lettuce,
Irrigated
Ye l l o w
Bell
Onions,
Irrigated
C12.35
Peppers,
Irrigated
C12.37
Jalapeno
Fresh
C12.33
Peppers,
Spring
Irrigated
To m a t o e s ,
Watermelons,
Watermelons,
Irrigated
C12.39
C12.41
Dryland
C12.43
Irrigated
C12.45
Grapefruit
Establishment
-
Ye a r
1
(145
trees/acre)
C12.47
Grapefruit
Establishment
-
Ye a r
2
(145
trees/acre)
C12.49
Grapefruit
Establishment
-
Ye a r
3
(145
trees/acre)
C12.51
Grapefruit
Establishment
-
Ye a r
4
(145
trees/acre)
C12.53
Grapefruit,
Mature
Grove
(145
trees/acre)
C12.55
Oranges
Establishment
-
Ye a r
1
(200
trees/acre)
C12.57
Oranges
Establishment
-
Ye a r
2
(200
trees/acre)
C12.59
Oranges
Establishment
-
Ye a r
3
(200
trees/acre)
C12.61
Oranges
Establishment
-
Ye a r
4
(200
trees/acre)
C12.63
Oranges
-
Mature
XV111
Grove
(200
trees/acre)
C12.65
{ * * * -■
Plant
Cane
Ratoon
Bermuda
Type
Cane,
Grasses,
Bermuda
Irrigated
Establishment,
Grass
Bermuda
B u f fl e
H a y,
Pasture,
Grass
Kleingrass
(
or
and
C12.81
Dryland
C12.83
C12.85
Equipment
C12.86
C12.90
Resources
Operation
C12.92
Resources
C12.93
Resources
Livestock
C12.95
Resources
Land
C12.96
Resources
Perennial
C12.97
Crop
Buildings
or
Resources
Improvements
Irrigation
C12.98
Resources
C12.99
Equipment
Machinery
Cost
TEXAS
Cow-Calf
Livestock
SOUTHWEST
'
Production,
Cow-Calf
C12.100
Report
Parameters
DISTRICT
Cow-Calf
J0^\
C12.79
Resources
Labor
Budget
SOUTH
C12.77
Report
Truck
Custom
C12.75
Dryland
Pasture,
Input
Auto
C12.73
Dryland
Establishment,
Implements
Operating
C12.71
Dryland
Products
Tractors,
Irrigated
Irrigated
Establishment,
Kleingrass
C12.69
Irrigated
B u f fl e g r a s s ,
Crop
C12.67
.
1/3
Production,
Products
TEXAS
Report
.
Unimproved
Production,
C12.101
.
Brush
Improved
Improved
Report
DISTRICT
xix
.
C12.104
L12.1
Country
Pasture
Pasture
L12.1
L12.3
L12.5
L12.7
C13.1
Coastal
Bermuda
Coastal
Coastal
Pasture
Bermuda
Bermuda
Coastal
Coastal
Establishment,
Pasture,
Pasture,
Bermuda
Coastal
Forage
Pasture,
H a y,
Oats
For
Forage
H a y,
For
Forage
Grazing,
Sorghum
Corn
for
Corn
Cotton,
Cotton,
H a y,
Cotton,
Long
Extra
C13.5
C13.7
C13.9
C 1 3 . 11
C13.13
C13.15
Irrigated
C13.19
C13.21
C13.23
Irrigated
Season
Long
C13.3
C13.17
Irrigated
Food,
C13.1
Dryland
Dryland
Irrigated,
Cotton,
Irrigated
Silage,
for
Irrigated,
Irrigated
H a y,
Corn,
Irrigated
Irrigated
Grazing,
Sorghum
Irrigated
Irrigated
Establishment,
Bermuda
Sorghum
Dryland
Establishment,
Bermuda
Dryland
Va r i e t i e s
Staple
Va r i e t i e s
C13.25
C13.27
C13.29
Irrigated,
Short
Season
Va r i e t i e s
C13.31
Dryland,
Short
Season
Va r i e t i e s
C13.33
Sorghum,
Dryland
C13.35
Irrigated
C13.37
Dryland
C13.39
Irrigated
C13.41
Sorghum,
Guar,
Guar,
Peanuts,
Runner,
Peanuts,
Spanish,
Sesame,
Irrigated
C13.43
Dryland
C13.45
Irrigated
Soybeans,
Winter
Irrigated
Wheat,
Winter
Wheat,
xx
C13.47
C13.49
Irrigated
C13.51
Dryland
C13.53
/ * ^ ^ L
J^V
Spring
Wheat,
Irrigated
Spring
Processed
C13.55
Wheat,
Dryland
C13.57
Beets,
Irrigated
C13.59
Cabbage,
Irrigated
C13.61
Cantaloupes,Irrigated
Carrots,
C13.63
Irrigated
Processed
Carrots,
C13.65
Irrigated
Cucumbers,
Irrigated
Cucumbers
(Pickles),
C13.67
C13.69
Irrigated
C13.71
Lettuce,
Irrigated
C13.73
Onions,
Irrigated
C13.75
Fresh
Market
Processed
Pecan
Spinach,
Spinach,
Orchard,
Irrigated
Irrigated
Establishment
Phase
C13.77
C13.79
C13.81
P e c a n O r c h a r d , P r e - P r o d u c t i o n P h a s e ( Ye a r s 1 - 4 ) C 1 3 . 8 3
P e c a n O r c h a r d , E a r l y P r o d u c t i o n P h a s e ( Ye a r s 5 - 9 ) C 1 3 . 8 5
Pecan
Orchard,
Operational
Phase
( Ye a r s
10-20)
C13.87
P e c a n O r c h a r d , E a r l y P r o d u c t i o n P h a s e ( Ye a r s 5 - 9 ) C 1 3 . 8 9
Pecan
Crop
Labor
Livestock
and
Input
or
Phase
( Ye a r s
Report
Implements
Operating
Custom
Operational
Products
Tractors,
Auto
Orchard,
Equipment
Resources
Truck
Resources
Operation
Resources
Resources
Resources
10-20)
C13.91
C13.93
C13.94
C13.98
C13.100
C13.101
C13.102
C13.103
ijpP^N
Land
Resources
xx 1
C13.104
Perennial
Buildings
Crop
or
Resources
Improvements
Management
C13.106
*
C13.107
Equipment
Machinery
Cost
Budget
SOUTHWEST
C13.108
Report
Parameters
TEXAS
Cow-Calf
1/3
Production,
Country
Improved
Improved
Pasture
Pasture
L13.1
L13.3
L13.5
L13.7
Goat
Production
L13.9
Alfalfa,
Report
DISTRICT
BEND
Dryland,
Dryland,
Corn,
Claypan/Blackland
Claypan/Blackland
Claypan/Blackland
Sorghum,
Set
Brush
Production
Establishment,
Winter
C 1 3 . 11 4
L13.1
Sheep
Products
C O A S TA L
Alfalfa
Unimproved
Production,
Cow-Calf
C 1 3 . 111
Report
DISTRICT
Production,
Cow-Calf
Livestock
TEXAS
Resources
Resources
Irrigation
C13.105
Claypan/Blackland
Wheat,
Aside
Dryland,
Land,
Claypan/Blackland
Clean
Tilled,
Upland
L 1 3 . 11
C14.1
C14.1
C14.3
C14.5
C14.7
C14.9
C 1 4 . 11
Coastal Bermudagrass Estab. - Claypan/Blackland C14.13
Coastal Bermuda Pasture, Dryland-Claypan/Blackland C14.15
Kleingrass Establishmt., Dryland-Claypan/Blackland C14.17
Kleingrass
Pasture,
Corn,
Cotton,
Rice,
Coastal
Dryland,
Irrigated,
Sorghum,
Coastal
Coastal
Coastal
xxii
Dryland
Plain
C14.19
C14.21
Plain
C14.23
Plain
C14.25
Plain
C14.27
Set
Aside
Land
Clean
Sorghum
Peanuts,
Peanuts,
Plain
Dryland
C14.29
C14.31
Dryland,
Rio
Grande
Plain
C14.33
Irrigated,
Rio
Grande
Plain
C14.35
Rio
Sorghum
B u f fl e g r a s s
Coastal
Pasture,
Watermelons,
B u f fl e g r a s s
Tilled,
Grande
Pasture,
Estab.,
Dryland,
Pasture,
Dryland
Plain
Dryland
Rio
-
Grande
Rio
Grande
C14.37
C14.39
Plain
C14.41
Plain
C14.43
Coastal Bermuda Establishment - Rio Grande Plain C14.45
Coastal Bermuda Pasture, Dryland-Rio Grande Plain C14.47
Kleingrass
Establishment,
Kleingrass
Crop
and
Input
or
Custom
C14.61
Resources
C14.62
C14.63
Resources
C14.64
Resources
Perennial
Crop
or
Irrigation
C14.65
Resources
Improvements
Cost
Parameters
C O A S TA L
Cow-Calf
BEND
Production,
C14.68
Report
C14.69
Report
DISTRICT
Improved
Report
xx i i i
C14.67
v
Partially
Products
C14.66
Resources
Equipment
Machinery
Livestock
C14.60
Resources
Land
C14.51
C14.54
Resources
Operation
Livestock
Budget
TEXAS
Equipment
Truck
C14.49
C14.53
Resources
Labor
Buildings
Dryland
Report
Implements
Operating
Auto
Pasture,
Products
Tractors,
Dryland
C14.73
L14.1
Pasture
L14.1
L14.3
Budget
Index
11
c\
xxiv
AN INTRODUCTION TO THE TEXAS CROP AND LIVESTOCK BUDGETS*
Estimating the production costs and returns of, farm enterprises for planning purposes is a
difficult, but important, task. Timely and accurate cost of production estimates are necessary:
(a) to make input use decisions, and to arrange for operating capital requirements, (b) for
enterprise selection, (c) to estimate the potential profitability of capital investment decisions,
and (d) to develop marketing strategies and assess their impact on costs and returns.
Budgeting is a deceivingly simple tool which can be used for analysis of problems ranging
from day-to-day detailed choices to major questions about the size and type of farm business.
Budgeting, as a management tool, is the testing and estimation of likely outcomes from
decisions before they are implemented. Enterprise budgets are both a product of and the basic
building block for the planning process.
The Texas Crop and Livestock Budgets are projected enterprise budgets jointly prepared by
the Texas Agricultural Extension Service (TAEX) and the Texas Agricultural Experiment Station
(TAES) to assist farmers and ranchers in estimating "real" economic costs and returns of
production, in current dollars.1 The information presented in the budgets is prepared as a
management planning guideline and therefore is not intended to recognize or predict the costs
and returns from any particular farm or ranch operation. It is suggested that users modify the
budgets to fit their individual situations by making changes in yields, input levels, prices and
other factors. A column titled "Your Estimate" is provided on each budget to make
modifications convenient. Furthermore, the expiration date on each budget indicates updating is
necessary.
* Prepared by Robert H. Jenson, Assistant for Management Analysis, Department of
Agricultural Economics, Texas A&M University, College Station, February, 1986. This paper is
designed to accompany the distribution of the Texas Crop and Livestock Budgets (TAEX) and
is reviewed and updated annually.
1 Alternative procedures are mixed in their method of handling the impact of inflation on
costs, or attempt to estimate nominal cash costs of production either before or after relevant
taxes. In fact, most budgets are a mixed bag of nominal, real, before-tax, after-tax, cash
and non-cash concepts and procedures.
THE 1992 CROP BUDGETS INCLUDE THE ANTICIPATED GOVERNMENT deficiency
payments for cotton, corn, sorghum, barley, oats and wheat. To qualify for these payments
producers must be in compliance with the government program for the respective crops. In
evaluating the whole farm situation proper acreage adjustments and fallow acreage costs must
be included when determining costs and returns per acre. Budgets for "set aside" land are
included in several of the districts. Some of the crop budgets include the cost from the "set
aside" budgets. In using budgets for crops that are in the government program, care must be
taken to correctly account for "set aside" land.
The budgets also include several enterprises that require an establishment that may include
one or more years of providing inputs before realizing any income. Enterprises that require
this type of establishment include pasture and hay enterprises and orchards or groves. Budgets
for these enterprises generally include a Perennial Crop line listed in the fixed cost section
and are usually preceded by an establishment budget. The cost of establishment is amortized at
an interest rate and number of years defined in the Perennial Crop. This works well for
enterprises like hay and pastures where a single year of establishment is required. Enterprises
with several years preceding production followed by some years of increasing production before
reaching a mature production level require budgeting techniques beyond the capabilities of most
enterprise budgeting analysis. Perennial crop values may provide an estimate of amortized
costs, but capital budgeting analysis using net present value or internal rate of return as well
as cash flow analysis would be required to adequately determine the profitability of these types
of enterprises.
Procedure
One of the major problems involved in enterprise budgeting is the lack of information
concerning the amount of production which will result from a particular combination of
inputs. Information for the Texas Crop and Livestock budgets is assembled from published and
unpublished sources. The data are obtained and continually revised with the cooperation of
farmers, ranchers, and agribusiness firms through informal surveys and personal contacts. Data
2
1
supplied by these sources are confidential and provide average values which are used in
developing and revising budgets. Scientific sampling techniques required to produce statistically
reliable estimates, however, are not used due to time and cost limitations. When possible,
published information from the Texas Statistical Reporting Service and published research from
the Texas Agricultural Experiment Station (TAES) are used in preparation of the budgets.
Regionally based agricultural economists provide leadership in assembling the data and
constructing the budgets.
The input levels used, the combination of inputs and machinery operations, and the type
and length of ownership of machinery and equipment are not necessarily profit-maximizing.
They are only believed to be representative or typical for the specified geographic area.
Budget preparation is a time consuming task involving numerous data and mathematical
calculations. A computer program has been developed to aid in budget preparation. The TAEX
budgets are prepared using the Microcomputer Budget Management System (MBMS). This
computerized tool stores and retrieves base data, prices, and other factors; calculates machinery,
capital, and labor costs; organizes the costs and returns in a variety of formats; and performs
a number of budgeting analyses.
Terminology Used in Budgets
An enterprise budget is an economic recipe for the production of a commodity usually
expressed in terms of the production unit (e.g., per bushel, per head, etc.) or by a common
resource (e.g., per acre of cropland). It is a statement of all expected revenues and expenses,
both actual and imputed.
There are three general types of costs that make up the total economic cost of producing
any farm commodity. These are variable costs, fixed costs, and overhead costs.
Variable costs (sometimes referred to as operating costs) are those short-run costs that may
j0$te\
2 McGrann, James, M., Kent D. Olson, Timothy A. Powell and Ted R Nelson,
"Microcomputer Budget Management System User Manual." Dept of Agricultural Economics,
Texas A&M University, College Station, February 11, 1986.
change with changes in level of production and/or are controlled by the manager. They are /-t-^
generally the cost of items that will be used up during one production cycle. If the manager
decided to cease the production activity, these costs are avoidable. Examples are such operating
inputs as fuel, fertilizer, chemicals and some hired labor costs. In the long run, all production
costs are variable.
In the TAEX published budgets, variable costs are further divided into pre-harvest and
harvest costs where applicable. This separation is particularly useful for decisionmaking in
which crop abandonment or graze-out are common practices. Once variable costs are incurred
(e.g., seed after planting), they have the characteristics of fixed costs and are referred to as
"sunk" costs.
Income above variable costs serves to guide most farm management decisions, particularly
in the short run. If income over variable costs is negative, and since variable costs are by
definition avoidable, a producer will minimize his losses by ceasing production. Selecting
enterprises which maximize income over variable costs will lead to greater short-run profit. "**\
Fixed costs may be defined as those costs that either do not change with the level of
production or cannot be controlled or avoided. Examples are items such as property taxes,
insurance, depreciation, and interest on investment. Cash or fixed dollar land rents and owneroperator labor may also be considered fixed costs.
Fixed and variable cost analysis is a useful tool in determining profitability of an
investment (e.g., machinery) based on its life or ownership period. It can aid in determining
the best replacement policies, whether to own or custom-hire services, and a host of other
decisions. However, fixed and variable cost analysis does not adequately explain the cash flow
and income tax effects of an investment Cash flow analysis is directed more to the question
of fiscal feasibility, or the ability to meet the financial obligations of the investment, than to
the question of profitability. Consequently, the two types of analysis must be used together in
order to present a clear and total picture of investment alternatives.
Overhead costs are costs of machinery, equipment, buildings, and management that cannot
J^-
be directly identified with an individual enterprise. Since these items are involved in the
overall farm operation, it is sometimes difficult to reasonably include them in enterprise
budgets. Examples of overhead costs might be telephone service, office supplies, general utilities
and legal and secretarial expenses.
The allocation of fixed and overhead costs is not generally required for most farm
management decisionmaking. At best, it is an arbitrary procedure for shared resources (e.g., the
fixed costs are allocated by percentage of total annual use in the Texas budgets). However,
estimates of the fixed resource requirements and the relative efficiency at which alternative
enterprises use fixed and limiting resources are important to enterprise selection.
The concept of opportunity cost, rather than incidence of cost, is used in estimating a
number of production cost items. The opportunity cost of a production resource is its current
value in its next best alternative use. The opportunity cost concept is useful in estimating the
appropriate costs of inputs that are either not purchased or do not have a clear market value,
dp\
such as equity capital, land rents, returns to operator labor, and farm-produced feedstuffs.
Cost incidence versus opportunity cost is the primary difference between economic cost of
production and cost estimates derived from cost accounting records when all inputs to the
production process are included.
The projected net return in the budgets (the "bottom line") is the residual returns
remaining after accounting for accrued and imputed costs to other factors of production. (The
variable and fixed costs discussed above.) In most cases, the net return is a projected return to
certain overhead, management, and profit (risk) for the enterprise, the only remaining factors
of production for which returns have not been imputed.
Calculating Annual Capital Requirements
Annual operating capital is the short term capital required to finance cash variable and
fixed costs during the enterprise production cycle. The MBMS program allows for the
internally generated cash (e.g., from the sales of products of the enterprise) to offset the
operating input expenses. Any cash surplus is carried forward as savings and any deficit
5
constitutes an operating capital requirement The annual capital requirement is the weighted
average net capital requirement (weighted by days outstanding). The annual operating capital is
not the minimum or maximum of short-term financing required by the enterprise. Annual
capital requirements may even be negative if accumulated monthly receipts are greater than
expenses over the production cycle.
The interest charge on borrowed capital and the interest savings on surplus cash are listed
separately on the budgets to allow for different interest rates. In most cases, the TAEX
budgets assume that 100% of the required capital is borrowed (0% equity capital is used to
meet operating requirements).
Calculating Machinery, Equipment and Livestock Ownership Costs
One of the more difficult tasks in estimating costs of production is estimating the cost of
owning and operating farm machinery. Coupled with this difficulty is the associated problem
of how to allocate the cost of items (e.g., tractors) shared by a number of enterprises on a
farm. The MBMS program divides equipment and livestock into seven categories: tractors, selfpropelled machinery, implements, equipment, auto and trucks, breeding, milking and working
livestock, and buildings and other improvements.
Current replacement values and capital budgeting techniques are used as the basis for
calculating projected ownership costs (depreciation, interest, taxes and insurance) in the TAEX
budgets. This projected (economic) cost may be more or less than the estimated cost based on
the book values and IRS-approved depreciation schedules of the various classes of equipment
and livestock (rather than current market value) for established farms or ranches that have a
combination of used and new machinery. This method, however, more closely reflects the
"real" earnings required to cover the "real" cost of recapturing equipment investment, especially
during high rates of inflation. The depreciation method based on book value and used for
income tax purposes underestimates the total amount of capital needed for replacement of
machinery and equipment under inflation. Accelerated depreciation schedules, combined with
short accounting lives, may overestimate the real economic depreciation needed for long run
6
f*' production. Users of the budgets should review their fixed costs closely and be conscious of
the differences in ownership cost based on current replacement values versus those developed
from historical or accounting costs and used for income tax purposes.
Since detailed information on equipment fuel, lubrication, repair and labor requirements is
not generally available, MBMS uses a series of functional relationships and parameter settings
for each machinery and equipment item to estimate ownership and operating costs. (See
machinery and equipment data and parameters at the end of each budget set and formula
section that follows). The hourly cost calculated for each piece of machinery or equipment and
the per acre or per mile cost of each farming operation, including associated labor and
materials costs, is also printed at the end of each set of crop budgets.
Other Information Available
Budget analyses available from the budget generator are detailed line item reports, summary
jiP^ reports and reports by stage, operation, resource, residual returns and expense type. The crop
budgets are printed using the report by stage. The livestock budgets use the residual returns
and operations reports. Also available is. the ability to generate whole farm cash flow
summaries on the basis of enterprise budgets and the number of units of each in the farm
organization. Details concerning this information may be obtained from the economistmanagement serving the particular Extension district
Limitations
Careful evaluation of the resource situations must precede the drawing of inferences from
an enterprise budget Farms having resource situations (available land, machinery, capital, and
management, for example) that differ from the situation assumed by the budgets can come to
considerably different conclusions. Differences in assumed annual hours of use of machinery
and equipment because of farm size or other uses, or size of the machinery used, can make
significant differences in per unit costs and net returns. These differences in resources and
organization must be evaluated and accounted for adequately if reliable conclusions are to be
drawn.
The Texas Crop and Livestock Budgets are projected budgets, not historical or actual. It is
difficult to make accurate estimates of future prices, yields, or other production uncertainties.
Most of the budgets are prepared 12 to 18 months in advance of the crop harvest or the end
of the livestock production cycle. Therefore, the user should evaluate current production
outlook information and use his expectations to update the budgets in preparing to use them.
In addition, year-to-year comparisons of the published budgets are not advisable due to
changes in farm size, technology, and farming patterns.
Availability
The Texas Crop and Livestock Budgets are published annually and distributed in loose-leaf
form on a subscription basis. Various budgets are published for each of the fourteen Extension
Districts in the state. To subscribe send $100 to: Extension Farm Management, Dept of
Agricultural Economics, Texas A&M University, College Station, Texas, 77843.
Individual copies of budgets for major enterprises in a particular Extension District may be
obtained at no cost through local county Extension offices.
APPENDIX I. FORMULAE FOR ESTIMATING MACHINERY COST4
TRACTOR, MACHINERY AND IMPLEMENT COST CALCULATION5
The tractor, self-propelled machinery, and implement calculation section is the major
computational part of MBMS. Several options are available to users to calculate both hourly
and per acre costs. The two major options are for calculation of repair, maintenance and
depreciation costs. Option one is based on user defined costs associated with an hourly use
base while option two duplicates the procedure and formulas in the 1983 ASAE Yearbook to
calculate repair, maintenance and depreciation costs. Nearly all of the published budgets are
calculated using option two, so that is what will be explained here.
Field Capacity Calculation
The field capacity of different implements and self-propelled equipment must be calculated
to determine tractor hours or self-propelled hours per acre.
Calculated capacity for tractors and self-propelled machinery is similar except that selfpropelled machinery has its own capacity estimate. A wheel tractor or a track layer relies on
the implements to determine capacity and power requirements.
Since multiple implements are allowed on one tractor the slowest implement should
determine the overall capacity. A tractor multiplier is used to convert the implement hours
per acre into tractor hours per acre.
The implement hours per acre is calculated from the implement information.
The capacity of self-propelled machinery, such as a combine, is calculated from the speed,
width and field efficiency information. The following equation is used to calculate capacity.
C = (S * W * FE) / 8.25
where
C = acres per hour calculated capacity
S = implement speed in miles per hour
W = swath width of the implement in feet
FE = field efficiency is the ratio of accomplishment in acres per hour compared
to theoretical maximum efficency
Speed is expressed in miles per hour, width in feet, and field efficiency as the ratio of
actual capacity to theoretical capacity. The constant, 8.25, is used to convert the units to
acres per hour.
The tractor and machine hours per acre are used to calculate operator hours per acre and
fuel per acre. They are also used to allocate the fixed costs of interest, depreciation and the
annual lease payment
The required operator's hours are a multiple of the tractor or machinery hours per acre.
We expect the operator to work longer than the machine due to pre-operation checkouts,
waiting, etc. This additional time is expressed as a percentage of the tractor or the machine
hours. The following equations are used to calculate operator's hours per acre for tractors or
self-propelled machinery.
4 For a complete listing of formulas used by MBMS see the "Microcomputer Budget
Management System User Manual", Chapter 9 (See footnote 2).
5 Irrigation equipment calculations are nearly identical except calculated on an acre-inch basis.
9
Operator's hours/acre = Tractor hours/acre * labor multiplier
Operator's hours/acre = Machine hours/acre * self-propelled labor multiplier
The operator wage is multiplied by the operator's hours per acre to calculate the cost of
operator labor per acre.
Operator cost/acre = operator's hours/acre * wage rate
Fuel Requirement and Cost Calculations
Fuel cost is calculated using equivalent PTO horsepower of the implement(s) and the
required fuel use multiplier of the fuel type. Equivalent PTO horsepower required varies
directly with implement width, tillage depth, soil texture, and speed of operation. All these
factors determine draft of an implement For tractors pulling two or more implements, the
required horsepower for that tractor is the sum of the required horsepower for each
implement The formulas for calculating fuel cost are shown below.
CFC = (F * HPR * FM)
where
CFC = calculated fuel use cost per hour
HPR = equivalent PTO horsepower required
FM = fuel use multiplier for each fuel type
FMd.esel = .52X + .77 - .04 * (738X + 173)0,5
FMLPG = .53X + .62 - .04 * (646X)05
X = HPR divided by the maximum PTO horsepower available
Lube Cost Calculation
Lube cost per hour is calculated as a percent of the fuel cost The multiplier is stored in
the parameter file.
where
LC = FC * (LM * .01)
LC = lube cost per hour
FC = fuel cost as defined for the two options
LM = lube multiplier
Repair and Maintenance
Repair, maintenance and depreciation calculation procedure duplicates the Agricultural
Engineers Yearbook of 1983, sections: ASAE EP391 and ASAE D230.3. The formulae for
these calculations are:
R = LP * RC#1 * ((HPU + AU)/1000)RCW - (HPU/IOOO)*0*2)/ AU
where
R = repair and maintenance cost per hour (R & M)
LP = current list price
RC#1 = repair coefficient #1
HPU = hours of previous accumulated use
AU = hours of annual use
RC#2 = repair coefficient #2 .
10
r R e p a i r CRC#1
o e f fiisc i ae nvariable
t # 1 that helps determine the shape of the repair curve for a specific
machine.
Repair Coefficient #2
RC#2 is an exponent variable which, in conjuction with RC#1, determines the shape of the
repair curve.
Repair and maintenance costs are highly variable and unpredictable as to time of
occurrence. These equations are but estimates of average values. A typical variation could be
expected to range from 50 percent to 200 percent of the estimated cost in this data.
Insurance
Insurance cost is based on a fixed percentage of market value. Insurance cost per hour is
calculated by the following formula:
INS = (INR * .01 * M) / HAU
where
INS = insurance cost per hour
INR = insurance rate based on current market value (%)
M = current market value
HAU = hours of annual use
Depreciation
Depreciation is based on equations to estimate the remaining value of the machine and on
the assumption of constant annual use of the machine. Two values that are specified are
factors used to calculate salvage value and hourly depreciation. DF#1 is the percentage of
original value that remains after the first year depreciation. DF#2 is a component of the
standard double declining balance equation. Values for both depreciation factors were taken
from the 1983 Agricultural Engineers Yearbook.
Depreciation cost calculation uses the two depreciation factors to calculate salvage value and
to adjust current market value. This value is then divided by the number of years of expected
ownership times annual use.
The formula for calculating depreciation (D) is:
D = M - SV / (HAU * YO)
where
D = depreciation per hour
M = current market price
SV = LP * DF#1 * (DF#2) ** YO
LP = list price
DF#1 = depreciation factor #1
DF#2 = depreciation factor #2
YO = years owned
HAU = hours of annual use
Interest on Investment
Interest on investment is calculated using the following formula.
0**\
f
IC = ((M + SV) * (IR * .01)) / (2 * HAU)
where
IC = hourly interest cost on capital investment
11
M = current market value, purchase price
SV = salvage value, defined in depreciation calculations
HAU= hours of annual use
IR = interest rate, annual percent
Note on Hours of Annual Use of Tractors, Machinery and Implements
Hours of annual use (HAU) is a key variable in all the equations. The machinery cost in
the budgets can be significantly different from an actual farm with different annual machinery
use.
EQUIPMENT COST CALCULATION PROCEDURE
The costs of equipment such as augers, livestock handling equipment etc. are calculated
with defined data. The option to have costs calculated does not exist as with tractors and
machinery. Depreciation, interest, insurance, taxes, fuel consumption, and repair and
maintenance costs are all calculated from defined data.
Fuel Costs
Fuel costs are calculated by multiplying the annual use by the fuel price. The annual use
is calculated by multiplying the specified gallons per hour of use by the annual hours of use.
Not all equipment uses fuel.
Repair and Maintenance Calculations
The hours of owner and hired on-farm labor and off-farm purchased parts and labor for a
specific repair and maintenance base hours of use level are defined. The formula for this
calculation is as follows:
R = ((FHL * CHL + FOL * COL + PLS) / BASE)
where
R = repair and maintenance cost per hour (R & M)
FHL = on-farm hired labor (hr)
CHL = cost of on-farm hired labor for R & M
FOL = on-farm owner labor for R & M (hr)
COL = cost of on-farm owner labor for R & M
PLS = off-farm parts, labor and supplies for annual R & M
BASE = operating hours on which repair and maintenance cost is based
Hired Labor
The amount of hired operator labor is specified on an hourly basis when the enterprise
budget is defined. The hourly quantity is multiplied by the hourly labor wage stored in the
labor resource file to determine hourly hired labor cost This value is added to repair and
maintenance hired labor to determine total hired labor cost.
Insurance
Insurance costs per hour are based on a fixed percentage of market value divided by hours
of annual use.
INS = (INR * .01 * M) / HAU
where
INS = insurance cost per hour
INR = insurance rate based on current market value
M = current market value
HAU = hours of annual use
12
'•^v
r
D e p r e cDepreciation
iation
is a measure of the actual decline in value of the equipment in the current
year. It is dependent on the portion of remaining life used in the current year and on the
current market value adjusted for salvage value.
D = ((HAU / RL) * (M * (1 - (SV * .01)))) / HAU
where
D = current depreciation per hour
HAU = hours of annual use
RL = remaining life
M = current market value
SV = salvage value as a percent of current market value
Interest on Investment
Interest costs per hour are based on the average amount of investment (market value)
adjusted for one-half of depreciation in the current year. The total interest cost is then
divided by hours of annual use.
IC = ((M - D * HAU/2) * (IR * .01)) / HAU
where
IC = interest cost of capital
M = current markt value
D = depreciation as defined in depreciation calculations
HAU = hours of annual use
IR = interest rate (%)
AUTO AND TRUCK COST CALCULATION PROCEDURES
The costs of operating automobiles and trucks include both fixed ownership costs and
variable operating costs. Fixed costs include depreciation, interest on investment, annual
insurance premium, license and tax. Operating costs include repair and maintenance costs, fuel
costs and owner operator labor costs. Costs are calculated on a per hour and per mile basis.
Fuel
Fuel costs are calculated on both a per hour basis and on a per mile basis. Both are
dependent on the efficiency of fuel use and on fuel costs.
FCMI = FUC / FU
FCHR= FCMI * MPH
where
FCMI = fuel cost per mile
FU = miles per gallon of fuel
FUC = fuel cost per gallon of fuel
FCHR= fuel cost per hour
MPH = average speed of operation in miles per hour
j0^\
Repair and Maintenance Calculations
The hours of owner and hired on-farm and off-farm purchased parts and labor for a
specific repair and maintenance base hours of use level are defined. The formula for this
calculation is as follows:
13
R
=
((FHL
*
CHL
+
FOL
*
COL
+PLS)
where
R = repair and maintenance cost per hour (R & M)
FHL = on-farm hired labor (hr)
CHL = cost of on-farm hired labor for R & M
FOL = on-farm owner labor for R & M (hr)
COL = cost of on-farm owner labor for R & M
PLS = off-farm parts, labor and supplies for annual R & M
BASE = operating hours on which repair and maintenance cost is based
/
BASE)
^
/
Operator Labor
The number of hours of operator labor used for each vehicle is based on the number of
hours the vehicle is in operation. Hours of annual use is determined by multiplying the
number of miles the vehicle is driven annually by the average speed of operation.
OL = (1 / MPH) * MAU * LMULT
where
OL = hours of owner operator labor used annually
MPH = average speed of operation in miles per hour
MAU = miles of annual use
LMULT = labor multiplier
Insurance, License, and Taxes
The annual insurance premium and any applicable licensing fees and taxes paid for each
vehicle are defined values.
Depreciation
Depreciation is a measure of the actual loss of value in the auto or truck occurring in the
current year. Thus it may be different than depreciation used for tax purposes. The formula
takes the fraction of remaining life used in the current year (AU/RL) and multiplies it by the
current market value of the auto or truck (M) less salvage value (LP * SV * .01).
^\
D = (AU / RL) * (M * (1 - (SV * .01)))
where
D = current annual depreciation
AU = annual use based on miles
RL = remaining life based on miles
M = current market value
SV = salvage value as a percent of current market value
Interest on Investment
Interest on investment is calculated as the opportunity cost of capital. Interest is calculated
on the actual market value of the vehicle less half the year's depreciation. This is justified by
thinking of interest in the following manner: the opportunity cost of capital is the rate of
return on capital which could be obtained in an alternative use. The alternative use of capital
in this case would be to sell the vehicle and use the receipts in another investment
IC =
where
IC =
M =
D =
IR
(M - D / 2) * IR * .01
total interest cost or opportunity cost of investment
current market value
d e p r e c i a t i o n a s d e fi n e d i n d e p r e c i a t i o n c a l c u l a t i o n j t a i .
=
interest
rate
^]
14
BREEDING, MILKING AND WORKING LIVESTOCK
The cost of owning livestock depends on whether the animals were raised or purchased.
Raised animals must include all production inputs associated with raising the animal. Purchased
animals are treated like any other purchased asset, so depreciation must be calculated.
Livestock costs include interest on investment, insurance and property tax cost
Livestock Insurance
INS = INR * .01 * M
where
INS = insurance cost
INR = insurance rate based on current market value (%)
M = current market value
Depreciation (Purchased Livestock)
Depreciation is a measure of the actual loss of value in the purchased livestock occurring
in the current year. Thus it may be different than depreciation used for tax purposes. The
formula takes the fraction of remaining life used in the current year (1/RL) and multiplies it
by the current market value of the livestock (M) less salvage value .
D = (1/RL) * (M * (1 - (SV * .01)))
where
D = current annual depreciation
RL = remaining life
M = current market value
SV = salvage value as a percent of market value
V Interest on Investment
Purchased and raised animals are treated as a capital asset There is an interest
opportunity cost of holding onto the animal. This cost is calculated by the following formula:
IC = (M-D/2) * IR * .01
where
IC = opportunity cost of holding the animal
M = current market value
D = depreciation as defined in depreciation calculation
IR = interest rate
BUILDING COST CALCULATION PROCEDURE
Building costs include both ownership costs and variable or operating costs. Ownership costs
include depreciation, interest on investment, insurance and property tax. Operating costs include
repair and maintenance costs and annual fuel costs or utility payments. The procedures and
formulas to calculate these costs are given below.
Fuel or Utility Cost
Annual fuel or utility cost is defined.
Repair and Maintenance
The repair and maintenance cost calculation procedure requires the following data: off-farm
parts and labor cost, and the number of hours of hired labor and operator labor which are
used for repair and maintenance.
15
R =
where
R =
FHL
CHL
FOL
COL
PLS
((FHL * CHL) + (FOL * COL) + PLS)
annual repair and maintenance
= on-farm hired labor
= cost of on-farm hired labor
= on-farm owner-operator labor
= cost of on-farm owner-operator labor
= off-farm parts and labor
Labor
The labor for operation of the building is specified when the enterprise budget is defined.
On-farm labor costs for maintenance and repair are calculated when repair and maintenance
costs are determined.
Property Tax
The calculation of property tax is also straightforward. Annual property tax is entered as a
$/yr value that appears in the fixed cost section of the budget.
Insurance
Insurance is the cost of insuring the capital investment (building) against loss or damage.
Thus it is based on a percentage of the current market value of the building.
INS = INR * .01 * M
where
INS = insurance cost
INR = insurance rate based on current market value (%)
Depreciation
Depreciation is a measure of the actual loss of value in the building occurring in the
current year. Thus it may be different than depreciation used for tax purposes.
D = (1 / RL) * (M * (1 - (SV * .01)))
where
D = current annual depreciation
RL = remaining life (yrs)
M = current market value
SV = salvage value as a percent of current market value
Interest on Investment
Interest on investment is calculated as the opportunity cost of capital. Interest is calculated
on the actual market value of the building less half the year's depreciation.
IC = (M - D / 2) * IR * .01
where
IC = total interest cost or opportunity cost of investment
M = current market value
D = depreciation as defined above in depreciation calculation
IR = interest rate (%)
OPERATING CAPITAL COST CALCULATION PROCEDURE
Annual operating capital is the short term capital required to finance cash variable and
16
fixed costs during the enterprise production cycle. The MBMS program allows for the
internally generated cash (e.g., from the sales of products of the enterprise) to offset the
operating input expenses. Any cash surplus is carried forward as savings and any deficit
constitutes an operating capital requirement The annual capital requirement is the weighted
average net capital requirement (weighted by the days outstanding). The annual operating
capital is not tie minimum or maximum of short-term financing required by the enterprise.
Annual capital requirements may even be negative if accumulative monthly receipts are greater
than expenses over the production cycle.
An example will illustrate how the annual operating capital interest borrowed and interest
earned are derived. Suppose you can borrow money at 12% interest, and you can receive 12%
interest on any cash surplus (called operating capital borrowed and surplus cash flow in the
parameter file). Assume 100% of the operating capital is borrowed. The following table
shows the effect of three transactions.
Date
01/01/84
01/15/84
02/01/84
02/15/84
Cash
Receipts.
—
50
100
Cash
Expenses Difference
100
—
—
—
100
50
100
—
Balance
Days
to Date Outstanding
-100
-50
50
50
—
15
15
14
Annual
Capital
Interest
on OC
—__—
—_—
4.167
2.083
-1.944
.50
.25
-.233
The annual capital is calculated as the outstanding balance times the days outstanding
divided by 360 (e.g., 100 X 15 / 360 = 4.167). This value times the interest rate yields
interest payed or received (e.g., 4.167 X .12 = .5). In the budgets annual capital and interest
will appear positive (+) for money borrowed and negative (-) for money earned, i.e., interest
earned is a negative cost
There are two operating capital interest rates in the budgets including: (1) interest rate on
borrowed capital and (2) interest rate on equity capital. Separating operating capital into these
categories allows for different interest rates.
j0&\
17