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Published byClaire Francis Modified over 9 years ago
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Forage Management Unit for Adults Lesson 6: Cost and Returns for Forages
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Direction and Purpose to: Understand and develop budgets Make management decisions based on budget interpretation
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Key Points: 1. What are fixed and variable costs? 2. What are the production costs and return per acre and/or ton for different forage management systems?
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3. What should be considered when working profitability and feasibility studies? 4. How are budgets developed for profitability and feasibility of forage systems?
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5. What is feasibility and how is it measured?
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Fixed Costs land depreciation machinery buildings and equipment insurance interest taxes
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Fixed Cost Examples: new baler more land storage shed
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Variable Costs fertilizer and lime chemicals machinery expenses (fuel, oil, repairs) storage operating interest
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Variable Cost Examples: cost decisions that occur in forage production type of seed how much seed how to fertilize
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Profitability Will this management decision (change) increase my profits and is it practical?
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Production Costs per Acre and/or Ton 1. Seed 2. Plant Food 3. Chemicals 4. etc.
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Return Per Acre HO-1: Hay-All Other Enterprise
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Budget Development HO-2: Budget Worksheet
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Feasibility 1. Land 2. Labor 3. Capital 4. Management
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Land Is the land suitable for the changes considered?
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Labor Is the labor available to meet the change? Will the labor be skilled enough and desire to make the change?
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Capital Will the cost of making the change be affordable? Will I be able to pay for the cost of making the change?
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Management Is the management willing and capable of making the change work?
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Conclusions Forage Management System Changes: may increase production may increase livestock # and lb.
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but... Is it profitable and feasible? Careful planning should provide the answers.
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