1 Economics of Farm Enterprises II. (Farm Management II.) MSc level Lecture 9 Whole farm budgeting : complete budgeting, programming techniques

2 Background to Gross Margin Planning 1.Increasing gross margins with the same fixed costs 2.Increasing gross margins with higher fixed costs 3.Maintaining present gross margins but reducing fixed costs 4.Lower gross margins with lower fixed costs

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4 Gross margin planning (Planning – Bush Estate) Step 1: Objectives Step 2: Resources (land, labour, capital) Step 3: Enterprises Step 4: Constraints Step 5: Normalised gross margins ( per hectare, last year’s data in brackets )

5 Gross margin planning / cont’d (Planning – Bush Estate) Step 6: Response to change in scale Step 7: Enterprise selection Step 8: Fixed costs Step 9: Repeat using possible breaks in constraints Step 10: Select and implement plan

6 The results of the new plan are: (Plan 2)

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8 Whole farm planning without gross margins Step 1: Objectives Step 2: Incomes and expenditures Step 3: Constraints Step 4: –Principally livestock farm –Principally cropping farm Step 5: Budgets Step 6: Select and implement a plan

9 Programming techniques Net revenues Production possibilities Programme planning Planning techniques using computers

10 Production possibilities

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