Budgeting resource

Our observation and interview with farmers show that farmers are not aware of enterprise and family budget. Below is the brief idea about enterprise budget.

FARM PLANNING

Planning means taking decisions in advance. It stimulates thinking, broadens understanding & challenges the farmer to move forward. It is a forward-looking approach.

The farm plan helps a farmer to decide how to combine new ideas & old ones to his best advantage. By identifying his credit & supply needs, the farm plan helps him to arrange for the timely supplies of credit, seeds, fertilisers, etc. A specific farm plan setting fort his expected output,expenses & income, serves as a sound basis on which a credit institution can give him production credit, based on his productive capability rather than on his net financial assets. It is out of his income & not through the sale of assets that the cultivator has to pay off his loan. Thus the farm plan or the budget is to the farmer what the blue-print of the architect is to a building contractor. It shows what is to be done & how it is to be done. It furnishes an organised & logical approach to his problems & helps him to work out the solution.

DIFFERENT TYPES OF FARM BUDGETING & PLANNING

There are three main types of farm budgetings:

• Enterprise budgeting
• Partial budgeting
• Full or complete budgeting & planning.

Enterprise budgeting. The enterprise budgets are the input-output relationship for individual enterprises. An enterprise budget includes all the variable resources required per unit (a hectare/animal/tree, etc.) of an enterprise & its cost, the expected output,gross returns, etc. A format of an enterprise budget is given in Table 1.

TABLE 1: format of an enterprise budget

Items

Quantity(kg/litre)

Value(Rs)

GROSS RETURNS
Main product
By-product
Total
CASH VARIABLE EXPENSES
1. Seed & seed treatment
(i)Seed
(ii)Sub-total
2. Manures & fertilisers
A. Farmyard manure
B. Chemical fertilisers
(i)CAN urea
(ii)Superphosphate
(iii)Muriate of Potash
Sub-total
3. Insecticides & fungicides
4. Tractor fuel cost
5. Irrigation hours
6. Human labour
7. Threshing hours with diesel engine
8. Cost of typing material
9. Marketing charges
Sub-total
10. Interest on variable expenses for half the period of growth
11. Total variable expenses
12. Returns over variable expenses
13. Man-hours
14. Bullock labour (pair hours)
15. Machine(tractor hours)

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Enterprise budgets provide useful information regarding the resources requirements & the relative profitability of different enterprises. Thus these budgets, considered in the framework of farm resources, are the alternatives from among which the most profitable ones are to be selected. In this context, the enterprise budgets need to be prepared at different levels of technology, as (a)the existing level of technology; and (b) the improved or recommended level of technology.

A comparison of the enterprise budgets at the existing & improved levels of technology provides the scope or the potential of making farm improvements. The enterprise budgets lack in one important aspect that these do not consider the complementary & supplementary relationships amongst themselves which are quite common among farm enterprises at low level of production, but they simply assume to be competitive to one another right from the beginning. But these relationships are taken care of in complete planing & budgeting.