Farm budget manual 1973

Abstract

In an era of increasing sophistication in farm management analytical techniques the budget remains the simplest and yet most versatile technique available to the farmer and his adviser. Essentially a farm budget is a written plan which formalizes an anticipated farm programme and translates it into expected financial results.

The final form of any budget will depend on the purpose for which it is to be used and the vocation and point of view of the person doing it. Thus budgets produced for the same farmer by his farm adviser and his accountant might vary quite markedly in approach and presentation. A demonstration of this can be seen by comparing the three budget layouts reproduced in the next section of this manual. All three have been designed to serve slightly different ends and thus no single one is superior to the others for all uses.

The Lincoln College budget is designed primarily as a teaching aid and thus lays considerable emphasis on formalizing the farm programme for the budget year. The Society of Accountants budget on the other hand is designed for use by accountants whose main interest lies in the finances of the farm rather than the details of the farm programme. Both of these budget layouts contain too much detail for some purposes, and for some people. The third budget-that used by the New Zealand Dairy Board is an example of a budget layout reduced to its bare bones. For a seasonal supply dairy farm with only a small number of variables to be considered it is quick to use and easy to understand. In addition to the three layouts reproduced in this manual there are many more in use servicing the agricultural sector.

The general layout of this manual follows the layout of the Lincoln College budget. Sections I and III are devoted to the revenue and expenditure data required to convert a physical programme into a financial one. Section III contains some relevant notes on taxation as applied to farming enterprises. In the final section a considerable number of gross margins have been reproduced for the benefit of those people who may be interested in analysing individual enterprises.