Agriculture Reference
In-Depth Information
important factors to be used for selecting proper breeding
does. Records for breed of bucks and does used in breeding
programs to produce improved crossbreeds with better
genetics is important for selecting proper offspring.
Additionally, health records such as problems that require
veterinary attention, deworming, and other veterinary-
related expenses can help select the best-fi t animals
needing minimum veterinary intervention. These records
can help the producer/manager raise a herd that is effi cient
in converting feed to meat, milk, or fi ber, etc.
Proper records can help select animals that are easily
bred, can produce more milk and fi ber, and wean large kids
in a short amount of time. These records can also assist in
breeding animals that are healthy with a genetic profi le that
is best fi t for a given farm environment.
example, during winter in the northern hemisphere.
Similarly, in the meat goat enterprise, one can increase
revenue by coordinating operations in such a way that the
maximum numbers of meat kids are scheduled to reach
market age during specifi c times of year, when demand
and prices are high. Currently, timing corresponds with
ethnic holidays in the U.S.
Operation Costs
There are two types of costs associated with production in
any enterprise: variable and fi xed costs. Variable costs are
costs that can be expected to increase as the operation
expands and output increases. Variable costs include costs
associated with feeding, bedding, veterinary services,
labor, marketing, hauling, fuel, and equipment repair.
Fixed costs are those that are independent of the level of
output produced. Fixed costs include buildings, land,
equipment depreciation, building and fencing repairs,
insurance, taxes, and interest. Note, that interest on capital
investments for purchase of buildings, fencing, and equip-
ment is usually considered a fi xed cost; however, if it is
used for animal purchase or equipment repairs, it can be
considered a variable cost. It is also important to differenti-
ate between cash and noncash overhead costs. Cash over-
head costs are cash expenses paid out during the year that
are assigned to the whole farm; these include property
taxes, offi ce expenses, interest on operating capital, liabil-
ity and property insurance, equipment repairs, and man-
agement service. Noncash overhead costs are the capital
recovery cost for land, equipment and other farm invest-
ments; these costs represent the depreciation in value of
investments.
ENTERPRISE BUDGET ANALYSIS
A goat farm enterprise selection is one of the most impor-
tant planning tasks for a farm manager/owner. Selection of
a meat, dairy, or fi ber goat enterprise should depend on
location and resources availability. The optimal location
of a dairy farm is near a raw milk-hauling route, while that
of a meat goat farm is near areas where meat-processing
plants are located. However, fi ber goat operations require
warehouses for national or international trade. Resources
needed for a goat enterprise include capital, land, labor,
animal, feed, and veterinary supplies.
An enterprise budget is a tool used to examine both
physical and economical performance of an enterprise and
is a critical building block of a farm business plan and
budget. Accurate record keeping can be an important input
factor in the development of an enterprise budget and help
the managers make informed decisions. Enterprise budgets
will differ depending on the kind of business and are
affected by market prices. Three samples of enterprise
budgets for meat, milk, and fi ber enterprises and their
assumptions are provided in Tables 18.1, 18.2, and 18.3,
respectively, for reference. In order to understand enter-
prise budgets, some economic terminology will be defi ned
here.
Profi t
Profi t is defi ned as revenue minus expenses. An operation
is profi table when total revenue exceeds total expenses.
Profi t and breakeven point are two useful economic indica-
tors of the success of an enterprise (Table 18.1). Profi t is
usually calculated on a “per doe” basis and can be expressed
as either income above variable costs or income above
fi xed costs. Profi t can also be expressed as returns to risk
and management whereby income is measured against
total variable costs plus cash and noncash overhead
expenses (Table 18.2). The breakeven point (BEP) is the
number of units required to sell in order to cover costs
calculated as total costs over sale price of one unit. BEP
can be calculated using only variable costs or total cost
(variable + fi xed cost). There are additional economic indi-
cators that may be useful in guiding decisions. For example,
feed costs over total operational costs (including or exclud-
Revenue or Income
Revenue is defi ned as the number of items sold multiplied
by the price. Market demand and therefore market prices
for milk, fi ber, and adult and kid goats can fl uctuate
throughout the year. In light of this fl uctuation, operations
can be structured to maximize production and sale during
the times of high demand or shortage of supply. In a dairy
operation, revenue can be increased by increasing produc-
tion and sale of milk during months of high demand, for
