Organic Grain Crop Enterprise Budgets

Enterprise budgets are a useful tool for planning and learning about the economic performance of a specific cropping system because they estimate several common cost components and approximate the returns from producing that crop or "enterprise." They provide farm managers with frameworks to consider the potential effects of decisions that determine the financial viability of their enterprises. Budgets can be used to

1. estimate profitability
2. project cash flows
3. provide a basis for credit
4. assist in farm planning.

They can account for the unique production costs associated with each farming system by providing a snapshot of the financial health of each farm enterprise. More detailed information about enterprise budgets and partial budgets is available online.

These Penn State University Organic Enterprise Budgets estimate returns and selected costs for a 3-year, organic grain rotation of small grains, corn, and soybeans when cover crops are planted after wheat and corn and winter wheat is double-cropped after soybean (Figure 1). The enterprise budgets can help producers understand the economic performance of a single organic grain crop or of a typical organic grain rotation. Organic producers include cover and perennial crops in their rotations to help manage pests and soil fertility, however costs for these crops are often not captured within a single crop budget. To help organic producers better understand the economic impact associated with longer crop rotations, cover crop data is included within each year where they follow a cash crop. The budgets attempt to reflect a three-year rotation, but data is presented individually by year.  

Figure 1. Schematic demonstrating the organic crop and cover crop rotation used to inform the enterprise budgets.

The enterprise budgets are customizable and farm managers can tailor them to their unique management practices by entering their own values into the worksheets. This allows managers to account for many possible organic grain production practices used across geographic locations. On-farm values can be compared to estimates determined at Penn State research trials, which were based on costs and returns associated with studies conducted at Penn State University's Russell E. Larson Research and Education Center in Central Pennsylvania. Although our estimates were based on values for feed grade wheat, corn, and soybean, higher values can be used when farmers produce food grade quality grain instead. The data was modified to reflect average estimated equipment use and costs for producers in Pennsylvania. These budgets can serve as a starting point for individual producers to understand their own specific enterprises and situations.

Further descriptions of costs and instructions for use are included in the worksheets.

Additional Resources

• Born, H. 2004. NCAT ATTRA RL041.
• Chase, C. et al. 2008. Agricultural Marketing Resource Center.

Acknowledgements: The authors are grateful to Lynn Kime and Jay Harper for assistance and to the following agencies who provided funding. USDA Organic Research and Extension Initiative, Project PENW-2015-07433, Grant No. 2015-51300-24156, Accession No. 1007156  and USDA Organic Research and Extension Initiative, A Reduced-Tillage Toolbox: Alternative approaches for integrating cover crops and reduced tillage in an organic feed and forage system. Award Number 1003757.