Developing an enterprise budget for each crop is necessary to understand the revenue for the farm. Below I have constructed an Enterprise Budget for my Coastal Star Romaine Lettuce Seed. The budget was created by using a beet crop template provided by KPU: Enterprise Budgets. Ideally an enterprise budget would be made for each seed and vegetable crop on my farm.
Assumptions I have made in this budget:
1. The seed is intended to be sold through a co-op where there is a one time $500 membership fee which would be deducted from the first season of revenue.
2. One farmer conducts all the work and is being paid out of the profits
3. Land is owned, no rent due, only municipal property tax
4. Bookkeeping will done myself while very small scale
Overall, this crop is profitable for the land size and scale of production!
Hi Carla; You've done a great job of understanding and completing a detailed enterprise budget, which is a powerful tool for determining if a crop is financially viable. One important consideration is that your final analysis can vary quite a bit depending on the data/numbers you've entered. It's good that you looked at a maximum and minimum gross revenue scenario.
ReplyDeleteI have once cautionary comment to make which dampens the forecast a bit. It looks like you've based your prices on what the BC Eco Seed salls at and that is good for a realistic outlook. But keep in mind the price you'll receive (your gross) is only half of the price listed on the website, the other half goes to the co-op to cover all it's operational expenses. So, you're gross sales would be half of what you have forecast here. Also, you assume the co-op could sell all of your estimated 3# seed harvest. This may or may not be true, and likely it isn't at this point true as the co-op is still just growing in sales. So, let's assume you could only sell one pound of your seed, that would mean you now will only gross one sixth of the original amount you calculated. It get complicated when real-life situations arise. You would probably want to also market your seed in other ways, through another seed company as well, for example.