Using the NC State University Beef Enterprise Budget Guidelines
The NC State University beef enterprise budget guidelines are just that–guidelines. They should be used to guide the development of specific budgets for a specific farm situation. They are not intended to be used “as is” without being modified. Budgets provide a template or framework that can guide the development of a complete estimate of economic costs and returns for an enterprise. These budgets are not cash flow projections and separate cash flow projections are recommended if the proposed enterprise will require a large investment financed by borrowing.
NC State University extension specialists developed the beef budgets to reflect a typical farm situation, assuming somewhat above average performance and normal growing conditions. Production costs and revenue are examples only and not intended to match a particular farm situation or time frame. The costs and returns for a specific cattle enterprise are likely to vary from the budget for a number of reasons. Cattle prices are cyclical, that is, there are years of increasing prices, which then reach a peak, followed by several years of declining prices. In most years, there is a predictable seasonal pattern to prices. The price received for a particular group of cattle is affected by the time of year they are sold, weight, breed or hide color, sex, frame size and fleshiness, whether cattle are raised with special attributes such as pre-conditioned, pasture finished. Prices and marketing costs are affected by the way cattle are marketed, e.g., weekly auction, special sales, on-farm sales in truck load lots. Production costs also vary depending on weather, soil type and fertility, forage type, and type and level of supplementary feeding. Different technology may be used or input costs may be different, for example, because of specific pest problems or because animal byproducts are used instead of purchased commercial fertilizers.
Note that machinery cost estimates are based on new equipment prices for the year in which the budget was developed. Used equipment has lower ownership costs (depreciation, interest on investment, tax, and insurance) but has higher annual repair and maintenance costs. Labor costs depend on the farm situation. The cattle enterprise might use hired farm labor or the activities might be performed by the owner. In this latter case, a labor charge should be included to reflect the minimum return the owner expects for his or her time or the value of this time if used in some other activity.