A comparison of whole farm budgets versus farm accounts and suggestions for future planning of farm expansion and economic management

Bjorn Gunnar Hansen and Torfinn Naerland

International Journal of Agricultural Management, 2017, vol. 06, issue 2

Abstract: For the farming family, planners, banks and other lending institutions it is crucial to know how reliable whole- farm budgets are, and what the pitfalls are.We explore how well whole- farm budgets match with the accounts in the first years after investment in a new cowshed. We explain what causes the discrepancies and suggest how budgeting can be improved. We follow a panel of 36 dairy farms in Norway over a period of three to five years. All farms have undertaken large investments in cowsheds. We merge the interview data with a database on herd data, whole- farm budgets and accounts data. There are significant discrepancies between whole- farm budgets and accounts, particularly when it comes to fixed costs, investments and debt. Milk production well beyond budgets, deviation from estimated building cost, unplanned investments and poor budgeting practices are some of the reasons for the discrepancies. Farmers struggle with transition problems when the new cowshed is put into use. Recommendations to improve the process of farm expansion and managing the economy after the expansion are provided.

Keywords: Agribusiness (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/287288/files/Hansen.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:ijameu:287288

DOI: 10.22004/ag.econ.287288

Access Statistics for this article

More articles in International Journal of Agricultural Management from Institute of Agricultural Management Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().