Farm Budgeting

Farm budgeting,types of farm budgeting-partial budgeting and complete budgeting

1. Farm Budgeting Partial Budgeting Complete Budgeting BY Dr.KAVITA D. CHOPDE

2. Definition of Farm Budgeting: Farm plan is a programme of the total farm activity of a farmer drawn up in advance . Farm plan serves as the basis of farm budgeting. Therefore farm plan can be prepared without a budget but budgeting is not possible without farm plan. Therefore the budgeting can be defined as under : ( a) The expression of farm plan in monetary terms by estimation of receipts, expenses and net income is called budgeting. (b) Farm budgeting is a process of estimating costs, returns and net profit of a farm or a particular enterprise. (c) Budget is a statement of estimated income and expenditure .

3. Types of Farm Budgeting: ( a)  Partial Budgeting : It refers to estimating costs and returns and net income of a particular enterprise. It refers to estimating the returns for a part of the business i.e. one or few activities for example: To estimate additional cost and returns from growing one hectare of hybrid Jowar in place of local Jowar . ii. To estimate additional cost and returns by adopting foliar application of chemical fertilizers instead of soil application.

4. (b) Complete Budgeting/Total Budgeting : It refers to preparing budget for the farm as a whole . Complete budgeting considers all the crops, livestock, methods of production and aspects of marketing in consolidated form and estimates costs and returns for the farm as a whole. Complete budgeting can be prepared for short run (annual budget) and for long run .

5. Advantages of Farm Budgeting: (a) It evaluates the old plan and guides the farmers to adopt a new farm plan with advantage. ( b) It makes the farmer conscious of the waste (leakage) in the farm business . ( c) It gives comparative study of receipts, expenses and net earnings on different farms in the same locality and in different localities for formulating national agricultural policies. (d It guides and encourages the most efficient and economical use of resources. (e It It serves as valuable basis for improvements in farm management practices.

6. DIFFERENCE BETWEEN PARTIAL BUDGETING AND COMPLETE BUDGETING Partial Budgeting: It considers a few alternatives & do not affect the organization vitally . 2 . Partial budgeting does not indicate the break- even point as to when to start one practice and abandon another. 3. It does not consider all the alternatives open to a farmer within the restraints of his present reources . 4. It is the estimation of cost and return analysis for a part of farm business . 5 . It considers variable cost only. 6 . It is used in the minor changes in the farm business . Complete Budgeting: 1. It takes care of all the alternatives. 2 . Full budgeting does indicate the break-even-point. 3 . It considers all the alternatives open to a farmer. 4 . It is the estimation of cost-and return analysis of the whole farm business as a single unit. 5. It considers variable and fixed both costs. 6. It is used in the drastic change farm business.

7. Partial Budgeting : 7.It is estimated in the context of an available farm structure . 8.Partial budgeting is needed   in   the partial changes in the farm business e.g. in the adoption of new enterprise in place of old one . 9.It fails to consider all the relevant factors in maximising net returns to the farm as a whole . 10.does not allow substitution between resources . 11.It does not consider the complementary and supplementary relationship between different enterprises but it simply assumes to be competitive . 12. It is simple, quick and easy. Complete Budgeting: 7.In it several alternative farm plans to be economically evaluated . 8.Full budgeting is needed in the case of complete re-organisation of the farm business (e.g. adoption of new crop rotation) or before starting farming on a new farm . 9.It considers all the relevant factors . 10.It allows substitution between resources . 11.Competitive , complimentary and supplementary relationships are taken care of in full budgeting . 12.It requires more time and efforts and more basic data in accurate form.

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