farm planning, budgeting and record keeping

FARM PLANNING, BUDGETING AND RECORD KEEPING

Build a HOUSE

RICE COMPETITIVENESS ENHANCEMENT FUND

How do we build our house?

• It is a process of choosing alternative courses of action at a given time for the future.

• “Planning" means preparing a sequence of action or steps to achieve specific goal.

• A plan is like a map. RICE COMPETITIVENESS ENHANCEMENT FUND

What is Planning?

• Limited farm resources, especially capital

• Useful for making decisions on how to increase profits or help the farm closer in attaining its goals


Why do we need to plan?

• For preparing the series of necessary activities in the farm

• A record of all that need to be prepared for every activity

• A reminder when to conduct farm operations (schedule of farm activities)

• A guide for analysis and effective farm operations


Uses of Farm Plan

Farm Planning A good farm plan could answer the following

questions and characters:

Why (bakit)

What (ano)

When (kailan)

Where (saan)

Who (sino)

How (paano)

How much (gaano)

Specific (Tiyak)

Manageable (Magagampanan)

Doable (Maisasakatuparan)

Realistic (Makatotohanan)

Time bound (May taning)

Step 1. Review Goals and Specify Objectives

- crop yields (higher production)

- cost of production (low cost of production)

- net income (higher profit)

Include both farm & personal goals

- to maximize profit (additions to revenue exceed the additions to cost)

- Maintain financial independence

- Allowing time for leisure activities

Specify performance objectives


Farm Planning Procedure

Land resource (type, source of irrigation)

Machinery (number, type, size, capacity)

Labor

quantity (hours available)

quality (skill levels)

labor requirement (hired, contract) RICE COMPETITIVENESS ENHANCEMENT FUND

Farm Planning Procedure Step 2. Inventory of Available Resources

Capital (operating capital, equity, amount to be borrowed)

Management (skill levels)

Other resources (local markets, transportation, etc.)


Farm Planning Procedure Step 2. Inventory of Available Resources

The resource inventory will show which alternatives are possible

Estimate the resource requirements


Farm Planning Procedure Step 3. Identify Possible Interventions

The Estimate the gross income/ revenue and variable costs

*Gross Margin = Total Revenue - Variable Costs

Data needs:

Total Revenue: Yield estimates and selling price

Variable Costs: Quantity of inputs needed and its corresponding costs


Farm Planning Procedure Step 4. Estimate Gross Margin/ Revenue


Farm Planning Procedure Step 5. Prepare the Farm Budget

Items Price/ unit Total Cost (P)

GROSS REVENUE Yield (kg) Price (P/kg)

VARIABLE COSTS Seeds Fertilizer Chemicals Labor Fuel and oil Irrigation fee Farm supplies Other costs

• process of determining requirements and allocation of resources to different activities in the plan and estimation of the results or returns.

• to enable farmers to objectively assess what plan or enterprise would be most profitable.


Budgeting

Budgeting • is the process of creating a plan to spend your money

• is simply balancing your expenses with your income

Why bother to Budget?

SO WE CAN WORRY BEFORE WE

SPEND MONEY, AS WELL AS

AFTERWARDS

“A budget is telling your money where to

go instead of wondering where it

went”


Importance of Record Keeping

• Every farmer should practice farm record keeping and accounting regularly to observe an efficient farm operation.

• A famous economist stated that “running a business without record is like running a clock without hands.”


Farm Record Keeping and Accounting

• If a farmer does not keep farm records, he would not able to track down whether he is earning profits or losing.


Farm Record Keeping and Accounting

• To easily recall what happened in the last cropping season, specifically:

• To determine which variety performs best


Why do we need to record?

• To determine which nutrient management lead to highest yield

• To monitor which pest attack in each season and record which management practice is effective



• To easily compute and determine farm income – whether earning or losing

• To economize on inputs!

• To easily detect causes of income losses

• To determine sources of BIG income



• To aid in analyzing what went wrong and what went perfectly

• If crop is successful, it will be easy to repeat the same practices to get the same yield

• If crop fails, it will be easy to recognize the ineffective practices and avoid them



• Keep it simple

• Record immediately

• Record accurately

• Organize


Tips in Record Keeping

________________ (Indicate month and year)

Name of farmer-cooperator: ______________________________________ Size of farm (in hectare):_____________ Tenurial status: (Please check) ____ Tenant ____Owned _____Rented ____ Leased ____ Others ____________ Address (village, town, province) ____________________________________________________________________________ Sharing arrangement/cropping (if leasehold or share tenant): __________________________________________ Field Supervisor: ______________________________________________________________________________________________ Land Tax/Prevailing land rental in the village (if owned): _________________________________________________ Cropping Season: ___1st ____2nd ____3rd


Farm Record Keeping Calendar

Date Activity Source of Power

Type of Power

Rent/ Payment

Source of Labor

Number of Person

Number of Hours/ Persons

Wage/ Contract Payment

Material Inputs

Quantity Price/ Local Unit

Other Expenses


Cost and Returns of Inbred Rice Production (sample)

Item Amount Yield (mt/ha) 5.12 Price (P/kg) 16 GROSS RETURNS (P/ha) 81,920 Production Costs Materials 10,612

Seeds 1,700 Fertilizer 5,834 Pesticides 2,418 Bags/sacks/ropes 660

Labor 22,317 Other Costs 10,260 TOTAL PRODUCTION

COSTS 43,189

NET RETURNS 38,731 Net Profit-Cost Ratio 0.9 Cost per kg (P/kg) 8.43

THANK YOU

farm planning, budgeting and record keeping

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