1 Farm management assignment University of Pannonia Georgikon Faculty of Agriculture Keszthely, Hungary

2 Conditions of Assignment Degree: Farm Business Management –Students: 3rd yr BSc students (final yr) –Subject: Business Management and Finance Or Degree: General Agriculture –Students: 4th yr (1st yr MSc) –Subject: Agricultural Extension Preliminary knowledge required: –Basic microeconomics –Basic farming technology

3 General Description of Assignment What? –Project: collect information about a farm enterprise, estimate its profitability and give suggestions about possible improvements Resources? –Students get basic information about a particular farm enterprise in class –Students go to visit the farm, look around and ask the farmers about questions about the enterprise How? –Relying on collected information assess the profitability of the farm enterprise (P&L account, budgeting) –Suggest possible ways of improvement (partial budgeting) – technology-related and financial aspects How to present? –Write up an assessment in 5 pages (describe technology and financial situation) –Prepare presentation (depends on class size… Timing: approx hours (1 hour classroom preparation, 3hours farm visit, 2 hours assessment, 2 hours preparing presentation/essay) Assessment: –Quality of data collected –Profitability calculations and results –Suggestions for improvement – are they correct and realistic financially and technologically –Quality of presentation, essay

4 SAMPLE PROJECT Assess the profitability of a broiler farm in a nearby village (Balatonkeresztúr) Give suggestions for improvement of the financial situation In class: Student get the following data (handout)

5 Handout Technical data Number of chicken per crop: 1000 heads – only females Input: day old chicks purchased Fattening period: 49 days Slaughter weight: 2,0 kg/chicken Feeding (automatic system) Feeds purchased: –starter: 0,8 kg/chicken (fed for 1st and 2nd weeks) –grower: 1,5 kg/chicken (fed for 3rd and 4th weeks) –finisher: 2,0 kg/chicken (fed for 5th and 7th weeks) Light (automatic control system) 1st day: 24 hours lighted, then 23 hours light and 1 hour dark period Preparation for transport at slaughter: catching – hired labour (5 persons: 2 family, 3 hired) Labour: mainly family labour but 3 persons hired at transportation of crop for cleaning the chicken house

6 Expected result Find out the output per crop, and also the output per year Calculate the market revenue Find out the variable costs per crop and for the whole year Calculate gross margin Find out the fixed costs Calculate profits

7 Work process Students prepare for farm visit (1 hour): –List of information to ask at farm Farm visit – approx 3 hours spent at farm –Collect information about technological details –Collect info about financial details Homework (approx 4 hours): –Describe broiler fattening technology –Prepare Gross Margin Calculation –Prepare suggestions on improvement –Prepare essay/presentation Classwork: present results, discussions Teacher evaluates output

8 Expected information to collect at farm Info about technology, input and output quantities Output related info: Sale price of chicken per kg at slaughter Input, variable cost items: Purchase price of day old chicks Number of crops per year Purchase price of feed (starter, grower, finisher) Labour: number of days, cost per day per person Any other variable cost item? (vet, extensionist…) Fixed cost items and fixed costs

9 Sample output/1 Description of technology: –Tasks before purchasing day old chicks Cleaning chicken house, handling manure (amount, spreading, time needed, labour needed) Disinfecting the chicken house (labour needed, disinfenctant needed) Washing feeders and drinkers (time and labour need) Spreading new litter (amount and price, time and labour needed) Preparing equipment, placing feeders and drinkers Heat up chicken hours (1 day before new batch arrives to 32 degrees C) Placing day-old chicks into chicken house (time, labour) –Technical info about chicken house: ventilation, humidity, temperature, heating system –Number of crops per year: e.g. 5,5 crops = 330 workdays (49 days + 11 days cleaning) –Feeding technology, feed conversion ratio: total feed needed per 2 kg chichen = 4.3 kg –Drinkers, water needed for drinking per crop –Medication and vitamings, –Visits by vet, visits by extension agent –Preparation for transport, labour needed –Losses during transport (day-old chicks, slaughter), losses during feeding period

10 Sample output /2 Per crop (HUF)Per year (5.5 crops, HUF) OUTPUT: 1000 chicken of HUF/kg Less: 1050 day old HUF per chick NET SALES INCOME: VARIABLE COSTS: Feed / 1000 chicken starter: 1000 x 0,8 HUF/kg grower: 1000 x 55 HUF/kg finisher: 1000 x HUF/kg Feed cost total: Heating, electricity Labour (3 persons, for 11 days HUF/day Other (vet, extensionist) VARIABLE COST TOTAL GROSS MARGIN Fixed costs (maintenance, phone, accountant, etc.) HUF/year Profits: HUF

11 Sample output /3 improvement Per crop (HUF)Per year (5.5 crops, HUF) OUTPUT: 1000 chicken of HUF/kg Less: 1050 day old HUF per chick NET SALES INCOME: VARIABLE COSTS: Feed / 1000 chicken starter: 1000 x 0,8 HUF/kg grower: 1000 x 55 HUF/kg finisher: 1000 x HUF/kg Feed cost total: Heating, electricity Labour (3 persons, for 11 days HUF/day Other (vet, extensionist) VARIABLE COST TOTAL GROSS MARGIN Fixed costs (maintenance, phone, accountant, etc.) HUF/year Profits: HUF

12 Experiences with project Students tend to get detailed technological data Often forget about general economic data. Project is generally popular Organisational difficulty: organised farm visit by bus, willingness of farmer to disclose of information Learning difficulty: student has to find out what information should be collected for the project Marks: by content, by work process, by output