The Importance—And Joy!—Of Creating A Farm Budget

Keep your farm business financially sustainable by creating a budget that works for your operation and lifestyle.

by Jesse Frost
PHOTO: Suzie's Farm/Flickr

No doubt that some of the least romantic elements of farming are those that involve paperwork. But that doesn’t mean they have to be burdensome, and it definitely doesn’t mean they aren’t important. In fact, the day-to-day record-keeping required to be a farmer can ultimately save you time and energy in your work, freeing up more time and energy for the projects you want to do. In the case of making a farm budget, it may very well be used to determine your every step.

What Is A Farm Budget?

A farm budget is simply what you need to earn in a year. This document takes into account monthly expenses, emergency expenses, any money you want to put back for college funds or savings (because you should be saving), entertainment, your own salary, vacation—anything you can think of. The total of all of your expenses, everything you need to earn in a year, equals your farm budget.

How To Start

Hopefully, you’ve set your farm up to allow for a little winter (or maybe summer) downtime, and this is a great opportunity to bust out a farm budget before production begins. If you keep great records, start there. Start by looking at what you generally spend in a year. You want this number to be accurate, so really take your time. Like I said above, include every expense you can think of, but don’t go so nuts that it’s coming down to pennies. Try to get within a few hundred dollars of what you actually spend—that’s the goal.

If this proves difficult based on your current records or experience, then start taking great records now. Still make your budget, just adjust it next year. In fact, you should adjust your farm budget every year if possible, as expenses are likely to change.

Why Bother Budgeting?

A lot of farmers start planning their marketing strategies and gardens without really knowing what they need to earn through those outlets. The farm budget gives you a goal: an amount of money your farm needs to make. You can start there, and then divide the budget between your markets. Perhaps you think your CSA can take care of 80 percent of the farm budget, for instance. Now, you just need to figure out where that remaining 20 percent will come from. Knowing that, you can plan your gardens (or livestock or flowers or what have you) accordingly.

You may quickly realize you have too much or too little space. Or you may realize you need to focus more on higher-profit crops and restaurant sales for that remaining percentage. Again, your farm budget could very well be the overriding thing that shapes your farm and your farming. No matter what, it should have a big say.

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What If Your Farm Can’t Meet You Budget?

Chances are, you are more likely to find that your budget is a bigger number than your gross income—the total income before expenses—than the reverse. This should not end your farming career. Again, your budget is your goal, and it may take you several years to get there. Meeting this farm budget might require you to get a second job for a while, especially if your family is depending on you to make money. It could also mean taking a different approach to farming altogether. If you realize you don’t have the acreage to ever achieve your farm budget, for instance, you might have to diversify—better to learn that earlier by doing your budget sooner than later. Either way, use the farm budget as your guide, and don’t be afraid to adapt. After all, it may be your budget that needs changing, not your farm.

Farming isn’t all about money, of course, but it needs to be financially sustainable. Knowing what financial stability means to you and your family by making a farm budget will help ensure you can stay in business for a long time, doing what you love.

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