1. Cash –vs- Non-Cash Farm Business Planning – Lesson 1

2. A Project Funded by: USDA BFRDP Grant #10506276 Development Partners Include: Mississippi State University National Association of Agricultural Educators Oklahoma State University Agricultural Economics Department Oklahoma Cooperative Extension Service

3. Revenue Two main types of revenue you should know: ▫ Cash ▫ Non-Cash

4. Cash Revenue Cash sales ▫ Quantity sold × price ▫ Examples:  100 bushels of corn × $3.40/bu. = $340  260 pound hog × $0.75/lb. = $195  4 tons of hay × $40/ton = $160 Cash received for services ▫ Example: custom work Government program payments ▫ Subsidies ▫ Crop insurance proceeds

5. Non-Cash Revenue Sources Raised and gifted breeding stock can increase in value For example, value increases ▫ Heifer to Bred heifer ▫ Bred heifer to 1 st calf heifer ▫ 1 st calf heifer to 3 rd year old Estimate change in value on enterprise budget

6. Expenses Two main types of expenses you should know: ▫ Cash ▫ Non-Cash

7. Cash Expenses Feed, fuel, veterinary, utilities, insurance, property taxes, hired labor, seed, fertilizer, rent,… Interest on operating expenses ▫ Paid on percent of operating expenses that are financed with debt ▫ Note, “interest on percent financed with equity is a non-cash expense (Opportunity cost)” NOT AN EXPENSE—Principal payments to a loan!

8. Non-Cash Expenses The most common non-cash expense is depreciation Durable (long-lived assets) decrease in value over time due to wear and obsolescence ▫ Exception—NO DEPRECIATION FOR LAND The loss of value from depreciation is a non- cash expense We will examine depreciation in more detail in future activities.

9. Special Thanks to: USDA BFRDP Grant Program Oklahoma State University ▫ Eric A. DeVuyst, Department of Agricultural Economics National Association of Agricultural Educators