Decision Aid Software on the Farm
Economic and financial decisions on the farm should never be made on hunches, feelings, or seat of the pants guesses. The back of an envelope, a pencil, and some good educated estimates are better than charging blindly into a decision armed only with feelings and hopes that things will turn out ok.
Far too many important decisions about what to grow, how much input to use, or what investments to make are made without ever developing any kind of financial analysis or budget. One reason for this is that budgeting takes time. Another reason is that we're afraid we'll leave something out. So rather than doing it wrong, we don't do it at all.
For years agricultural economists at land grant universities have developed enterprise budgets and decision aids. Usually these were printed budgets with some experts' best estimate of costs and returns. They rarely fit any specific farm. They almost always have a column titled "your farm" where users were encouraged to fill in their own numbers.
Doing a pencil and paper budget is pretty straightforward and relatively simple but can become burdensome when you start to ask the what-if questions. What if the price is 10% lower, or what if yields are only 125 bu/ac instead of 150. A new budget has to be calculated for every change.
Computer spreadsheet budgets have been around for over a decade now. They allow users to ask and answer the "what-if" questions easily and quickly. They work fine for folks with computers, spreadsheet software, and the abilities to use them. However, it is difficult to develop applications that will run successfully in different brands of spreadsheet software. It's like trying to design a spare tire that will fit all makes of cars. This has limited the usefulness of these budgeting tools.
To capture the power of spreadsheet budgets while overcoming the problems of software compatibility, farm management specialists in the Agricultural Economics department at the University of Kentucky have developed several budgeting templates and decision aids that are easy to use, are available free of charge to anyone with Internet access (or to everyone through a county extension office). They do not require any additional software applications, or the specialized skills to use them.
These tools are found in the Ag Economics web site at the University of Kentucky. You can find them on the Extension Management webpage.
Instructions on how to download and use the budgets and decision aids are found at the site. Budget templates are available for field crops, horticultural crops, and livestock. Decision aids are available for evaluating GM crop planting decisions, the economics of precision ag technologies, and breakeven harvest decisions. New to the siter are baled versions of a balance sheet and income statement that can be used to create your own financial statements. The tools require no additional software and users change values in blue numbered cells to generate and print their own customized output. New budgets and decision aids will be added as they are developed.
For More Information
Questions about the budgets may be directed to please contact,Steve Isaacs.