This template provides an example of a partial budget to plan, cost and test modest investment projects and changes to operating procedures that will impact on enterprise budget if implemented. All in current dollar terms and annual cost where applicable.
Template of partial budget calculations
The three critical goals of any change decision are that:
• It makes a good marginal return to capital over and above alternative less risky uses of capital, such as off-farm investment;
• Any additional investments in the farm go into the area of next highest return on marginal capital invested; and
• Investments must increase the current rate of return, or significantly reduce risk. It won’t do this unless its marginal rate of return is higher than current return on total funds invested.
Examples of items in the returns and costs categories:
Gross income:
Income from sale of cattle will be the main source; but there may be others like sale of excess hay and agistment.
Variable costs:
Costs associated with cattle health, feed, pasture production, casual labour, repairs and maintenance, vehicles and lease costs.
Overhead costs:
Operator’s labour and management; permanent and part time paid labour; depreciation of plant and improvements; and administration costs, including office equipment and training.
Capital investment:
Land value, improvements, cattle value, plant and equipment, and shares in the meat cooperative.
