KWAZULU - NATAL ENTERPRISE BUDGETS

Obtainable From:

Directorate: Economics, Marketing and Value Adding

Sub-Directorate: Agricultural Economics

.

KWAZULU - NATAL

ENTERPRISE BUDGETS

PASTURES PREFACE

1 Directorate: EM&VA, PASTURES Sub-directorate: Economics, CONTENTS; INDEX; INTRODUCTION KZNDARD, Cedara

KWAZULU - NATAL FIELD CROP ENTERPRISE BUDGETS

Contents Page

1. DISCLAIMER .............................................................................................................................. 2

2. TERMINOLOGY ......................................................................................................................... 3

3. INTRODUCTION ........................................................................................................................ 4

4. OBJECTIVES OF THE ENTERPRISE BUDGETS .............................................................. 4

5. ASSUMPTIONS ......................................................................................................................... 5

6. PRINTOUTS ............................................................................................................................... 6

7. FORMULATION AND ACTIVE INGREDIENTS FOR CHEMICALS ............................... 10

8. PROVICIAL OFFICES ............................................................................................................ 12

9. INDEX OF PASTURES ........................................................................................................... 13


1. DISCLAIMER

While every reasonable effort has been made by the Economics Sub-directorate to ensure the accuracy

and reliability of the information provided in this publication, neither the Economics Sub-directorate,

Economics, Marketing and Value Adding Directorate (EM&VA) nor the Kwa-Zulu Natal Department of

Agriculture and Rural Development (KZN DARD), make any warranty, expressed or implied, or assume

any legal liability or responsibility for the accuracy, completeness or usefulness of any information or

process disclosed by this publication. The publication does not promise and/or present suitability or

otherwise of the information to your particular circumstances. Users should seek appropriate advice for

their own situation.

Prices are obtained via personal and/or electronic contact with suppliers, and these prices are not subject

to any tenders existing between the KZN DARD and the suppliers.

The use of trade names in the budgets is purely for information purposes. KZN DARD does not endorse,

promote, intend to advertise, or favour, any of the products listed in the budgets. Products used in the

budgets are understood to be reliable/correct at the time of publication, and may be subject to change

within the production period (i.e. may be banned, discontinued, prohibited, deregulated etc.) The omission

of products does not imply, in any manner whatsoever, that the KZN DARD regards these products in a

negative light, and it does not imply that the KZN DARD discourages the use of these products (provided

they are regulated and used correctly).

The use of KZN DARD Enterprise Budgets is purely for planning and should the Enterprise Budgets be

altered in any manner by third parties, KZN DARD will not be held responsible for the contents on the

amended Enterprise Budgets.

INFORMATION FROM THESE PASTURES ENTERPRISE BUDGETS MAY ONLY BE USED

WITH DUE RECOGNITION TO THE SUB-DIRECTORATE: AGRICULTURAL ECONOMICS

(DIRECTORATE: E.M &V.A.), KWAZULU - NATAL DEPARTMENT OF AGRICULTURE AND

RURAL DEVELOPMENT


2. TERMINOLOGY

a) Enterprise Budgets

An enterprise budget is an estimate of the costs and income to produce a commodity. In

economic terms, enterprise budgets help to allocate limited resources (land, labour, and capital),

to the most appropriate use.

b) Gross Income

Gross income is total revenue (market price per unit x output per unit) and gains before any

deductions.

c) Costs

The following costs are included in the enterprise budgets:

i. Directly Allocated Variable Costs

These are variable costs directly associated with the production of a commodity/enterprise.

Any change in production of the commodity/enterprise, has a direct effect on these costs.

These costs are easy to allocate to a specific enterprise, e.g. fertilizers, chemicals, temporary

(seasonal) labour, contract work, etc.

ii. Indirectly Allocated Variable Costs

Indirect costs are expenses incurred in the production process that cannot be traced back to

a specific commodity or enterprise. In other words, they are costs that are not directly linked

to the cost item in a production process. These costs cannot normally be allocated to a

specific enterprise without detailed record-keeping; e.g. regular labour costs, fuel and oil

costs, repair costs, tyre costs, etc. The machinery costs are included because they can be

calculated according to specific norms e.g. repairs and maintenance costs.

iii. Casual Labour

People who are employed on a temporary, rather than a permanent or regular basis. The cost

of temporary (casual) labour is based on the legal minimum wage in the agricultural sector,

as at May 2019, and is R18.00/hour, for a 9-hour day.

iv. Pre-harvest Costs

Cost of activities on the farm that occur before crop or livestock products are sold.

v. Harvest Costs

These are costs incurred during the process or period of gathering in crops

d) Gross Margin

Normally it is assumed that the Gross Margin is the difference between the Gross Value of

Production (total revenue/gross income) and Total Directly Allocated Variable Costs. However,

the budgets are short-term planning aids, and the Total Indirectly Allocated Variable Costs and

the Total Allocated Casual Labour costs must be taken into account. The Gross Margin in these

budgets reflects the difference between Gross Income and Total Allocated Variable Costs

(excluding regular labour).

e) Parametric (Sensitivity) Analysis

The parametric analysis examines the relationship between the price and volume of produce

sold, given the cost of producing the crop in one hectare. It shows gross margins under varying

prices and yields.

f) Break-even Analysis

The first type of analysis determines the yields that will result in a zero gross margin; i.e. the

income and the total allocated variable costs are the same or equal. The second type of analysis

uses variable yields, and the objective is to determine the product price that will result in a zero

gross margin. When yields vary, then income and some costs (notable marketing, transport,

packaging, and casual labour) also vary.


3. INTRODUCTION

Enterprise budgets give details of estimated income, costs, and gross margins associated with the

production of agricultural crops and livestock. The first portion of the Enterprise Budgets illustrates

estimated market price, yield and income. The second portion lists all the resources necessary for

production, along with the quantities used and costs. The difference between the income and the costs is

the gross margin of the enterprise. The last portion shows the difference between the Income and Costs,

which are the Gross Margins.

The information contained in the enterprise budgets can be used by agricultural producers, extension

specialists, financial institutions, governmental agencies, and other advisers and decision makers

operating in the agricultural sector.

Many decisions can have important financial implications, and farm managers need to analyse existing

enterprises, and compare alternative enterprises, in a consistent manner.

While enterprise budgets are only reviewed and updated once a year, prices fluctuate regularly. It is

crucial to note that, enterprise budgets serve as a guide – and only as a guide – this then means that the

end-user has responsibility to:

i. Ensure accurate soil/livestock fertility testing is done.

ii. Source the most recent prices/quotations from their specific suppliers.

iii. Conduct environmental assessments (rainfall estimates, EIAs, temperatures etc.).

iv. Select the correct cultivars and livestock breeds.

v. Ensure suitability of the production system implemented (e.g. conventional vs no till,

dryland vs irrigated etc.).

4. OBJECTIVES OF THE ENTERPRISE BUDGETS

KZN DARD Enterprise budgets are useful for estimating costs incurred and income earned in a farm

business. They serve as a short-term planning aid. When planning for the medium-term or long-term,

various overhead and fixed costs are involved, which have been excluded in the enterprise budgets.

Enterprise budgets are constructed on a per unit basis, and this permits comparison of margins for

alternative and competing enterprises. In simple terms, per unit basis allows for the end-user, whether

analysing for an emerging, small-scale or commercial farm business, to be able to manipulate the data to

suite the specific operations. Additionally, enterprise budgets allow initial estimates to be made on paper,

prior to the commitment of funds or resources to an activity, allowing for the anticipation and avoidance of

problems that will likely be encountered based on historical records. A gross margin is important because

it shows whether the sales are sufficient to cover the variable costs.


5. ASSUMPTIONS

The KZN DARD Enterprise Budgets were compiled under the following assumptions:

a. Income and cost budgets are intended to be a short-term planning aid. When planning for the

medium-term or long-term, various overhead and fixed costs are involved, and these costs are

not included in the Enterprise Budgets.

b. In the long-term, better yields may be attainable depending on a combination of inputs, cultivation

practices and acceptable management practices in that specific budget.

c. The production inputs used in the budgets are aimed at achieving the yields in that specific

enterprise budget.

d. The fertiliser and chemical prices and application rates have been included solely for budgeting

purposes.

e. Prices vary, depending on where and when the items are purchased.

f. Farmers/clients consult fertiliser and chemical advisors, to obtain their recommendations as to

the correct fertilisers and chemicals to apply, and the correct application rates using results from

the soil analysis.

g. Only registered fertilisers and chemicals are used, and applied strictly in accordance with label

information and directions.

h. The quantities applied depend on the type of application (e.g. full-cover, ground, or aerial), the

formulation (e.g. SC, EC, WP), and the amount of the active ingredient. (See Formulation and

Active Ingredients codes for chemicals in Section 7).

i. The type of chemical, fertiliser, planting material and other inputs and their application must be in

accordance with the manufacturer’s directions, and in consultation with relevant experts.

j. Any costs not applicable to the farmer’s production system may be adjusted accordingly e.g.

marketing commission, harvesting contract etc. Alternatively any costs omitted from the

enterprise budgets but is applicable to the farmer’s production systems may be added e.g.

mechanisation for land preparation and other inputs.


6. PRINTOUTS

a) Gross Margin Budget: Example – Eragrostis Curvula Dryland (Maintenance)

PRODUCTION YEAR

UnitPrice Per

UnitQty Per Ha Value Per Ha

Value Per

Yield Unit

GROSS INCOME (A)

Product Income

Eragrostis Hay Ton 1,562.50 10.00 15,625.00 1,562.50

TOTAL (A) 15,625.00 1,562.50

DIRECTLY ALLOCATED VARIABLE COSTS *

PRE-HARVEST COST (B)

Fertilizer

KCl Ton 7440.44 0.10 744.04 74.40

LAN 28% Ton 5955.96 0.75 4,466.97 446.70

MAP (33) Ton 8189.38 0.15 1,228.41 122.84

TOTAL (B) 6,439.42 643.94

HARVEST COSTS (C)

Baling : Square bales : 2 kg baling twine per ton hay

Twine cost per ton hay Ton 180.00 10.00 1,800.00 180.00

Transport : Contract Ton 321.38 10.00 3,213.80 321.38

TOTAL (C) 5,013.80 501.38

TOTAL DIRECTLY ALLOCATED VARIABLE COSTS (B + C = D) 11,453.22 1,145.32

INDIRECTLY ALLOCATED VARIABLE COSTS

PRE-HARVEST COST (E)

Fuel Litre 14.35 30.00 430.50 43.05

Repairs & Maintenance 110% of Fuel Cost 473.55 47.36

TOTAL (E) 904.05 90.41

HARVEST COSTS (F)

Fuel Litre 14.35 70.00 1,004.50 100.45

Repairs & Maintenance 110% of Fuel Cost 1,104.95 110.50

TOTAL (F) 2,109.45 210.95

TOTAL INDIRECTLY ALLOCATED VARIABLE COSTS (E + F = G) 3,013.50 301.35

TOTAL ALLOCATED VARIABLE COSTS (D + G = H) 14,466.72 1,446.67

GROSS MARGIN ABOVE TOTAL ALLOCATED VARIABLE COSTS (A - H) 1,158.28 115.83

TOTAL PRE-HARVEST COSTS (B + E) 7,343.47 734.35

TOTAL HARVEST COSTS (C + F) 7,123.25 712.33

DRYLAND DATE UPDATED

2019 - 2020

OCTOBER 2019

GROSS MARGIN

ERAGROSTIS CURVULA

MAINTENANCE


b) Machinery: Fixed and Variable Costs

The purpose of the following table is only to illustrate the type of equipment and the type of costs

which can be calculated from the “Guide to Machinery Costs”, providing the relevant equipment

data are available.

Month

Activity

2WD

Tractors

Implements

Fixed Costs Per Hour Variable Costs Per Hour Total Fixed

+ Variable

Costs per

Hour

Depr.

Lic & Ins

Interest

Total

Fuel

Repairs

Total

Sep

Deep Plough

70 Kw HP

3 furrow mtd rever.

mouldboard plough

176.75 22.01 132.00 330.78 115.91

198.21 314.12 644.90

Sep

Disc

70 Kw HP

2.3m trld offset disc

harrow

152.63 18.42 116.53 287.59 115.91

247.17 363.08 650.67

Sep

Lime

60 Kw MP

5t trld lime spreader

213.03 18.87 125.40 357.30 62.53

209.62 272.15 629.45

Oct

Disc

70 Kw MP

2.3m trld offset disc

harrow

152.63 18.42 116.53 287.59 115.9

227.74 343.65 631.24

Oct

Plant

70 Kw HP

4 row (0.9 m) Air/Hydro

maize mtd conventional

planter

154.67 18,61

117.84 191.12 115.91

220.17 336.08 527.20

Oct

Fertilize

60 Kw LP

500l mtd double disc

fert spreader

103.45 10.84 69.15 183.33 62.53

138.18 200.71 384.04

Nov

Spray

60 Kw LP

10m (800l) mtd boom-

sprayer

68.42 10.28 75.51 143.93 62.53

130.67 193.20 337.13

Notes:

1. LP refers to Low Power Demand; i.e. fuel consumption is based on 35% of kW is used, and litres used per kW hour = 0.40.

2. MP refers to Medium Power Demand; i.e. fuel consumption is based on 45% of kW is used, and litres used per kW hour = 0.35.

3. HP refers to High Power Demand; i.e. fuel consumption is based on 60% of kW is used, and litres used per kW hour = 0.30.

4. The tractor costs are taken from the Guide to Machinery Costs 2017 – 2018, and the implement costs are taken from the Guide to

Machinery Costs 2017 – 2018.

5. The salvage value is 10 per cent of the purchase price.

6. The license and insurance costs is 1.75 per cent of the average investment.

7. The interest rate is 10.5 per cent

8. The diesel price used in this costing is R12.71 per litre.

9. The repair costs are a percentage of the average investment.

10. The costs in the above table need to be adjusted by allowing for the time taken to plough, plant, spray, etc 1 hectare.


c) Parametric (Sensitivity) Analysis for Eragrostis Hay (Maintenance)

A parametric analysis shows the income per hectare, the total allocated cost per hectare, and the gross

margin per hectare for different yields and crop prices.

Price per ton 8.00 9.00 10.00 11.00 12.00

1,600 12,800 14,400 16,000 17,600 19,200

1,800 14,400 16,200 18,000 19,800 21,600

1,900 15,200 17,100 19,000 20,900 22,800

2,000 16,000 18,000 20,000 22,000 24,000

Cost per ton 8.00 9.00 10.00 11.00 12.00

1,447 11,573 13,020 14,467 15,913 17,360

Price per ton 8.00 9.00 10.00 11.00 12.00

1,600 1,227 1,380 1,533 1,687 1,840

1,700 2,027 2,280 2,533 2,787 3,040

1,800 2,827 3,180 3,533 3,887 4,240

1,900 3,627 4,080 4,533 4,987 5,440

2,000 4,427 4,980 5,533 6,087 6,640

PARAMETRIC ANALYSIS FOR ERAGROSTIS HAY

TOTAL INCOMES, COSTS AND GROSS MARGINS PER HECTARE

When the PRICE of Eragrostis Hay varies from R1600 to R2000 per ton

When the QUANTITY of Eragrostis Hay varies from 8 tons to 12 tons per hectare

TOTAL COSTS

YIELD/HA

GROSS MARGIN

YIELD/HA

TOTAL INCOME

YIELD/HA


d) Break-Even Analysis for Eragrostis Hay

Tons/Ha 8.00 9.00 10.00 11.00 12.00

Price 1,728.00 1,571.70 1,446.67 1,344.37 1,259.12

Income 13,823.96 14,145.34 14,466.72 14,788.10 15,109.48

Transport 2,571.04 2,892.42 3,213.80 3,535.18 3,856.56

Balance of costs 11,252.92 11,252.92 11,252.92 11,252.92 11,252.92

Total Cost 13,823.96 14,145.34 14,466.72 14,788.10 15,109.48

Gross Margin 0.00 0.00 0.00 0.00 0.00

Rand/Ton 1,600.00 1,700.00 1,800.00 1,900.00 2,000.00

Yield 8.15 7.67 7.24 6.86 6.52

Income 13,037.40 13,037.40 13,037.40 13,037.40 13,037.40

Transport 1,784.48 1,784.48 1,784.48 1,784.48 1,784.48

Balance of costs 11,252.92 11,252.92 11,252.92 11,252.92 11,252.92

Total Cost 13,037.40 13,037.40 13,037.40 13,037.40 13,037.40

Gross Margin 0.00 0.00 0.00 0.00 0.00

BREAK-EVEN PRICES FOR ERAGROSTIS HAY

When the YIELD of Eragrostis Hay varies from 8.0 tons per hectare to 12.0 t per hectare

YIELD PER HECTARE (T/HA)

BREAK-EVEN YIELDS FOR ERAGROSTIS HAY

When the PRICE of Eragrostis Hay varies from R1600 per ton to R2000 per ton

PRICE PER TON (R/TON)


7. FORMULATION AND ACTIVE INGREDIENTS FOR CHEMICALS

a) Formulation Codes for Chemicals

CODE TERM USE

EC Emulsifier Concentrate (= Flowable Concentrate) W

For Mixing and

Spraying with

Water

SC Suspension Concentrate W

SL Soluble Concentrate W

SP Water Soluble Powder W

WP Wettable Powder W

WS Water Dispersible Powder For Slurry Seed Treatment W

EW Emulsion, Oil in Water W

WG Water Dispersible Granules W

DC Dispersible Concentrate W

DS Powder for Dry Seed Treatment S

Seed Treatment ES Emulsion for Seed Treatment S

FS Flowable Concentrate for Seed Treatment S

GR Granule (Generic, But Defined Size Range) D Dry

DP Dispersible POWDER D


b) Formulation and Active Ingredients Codes for Chemicals

HERBICIDES INSECTICIDES

CHEMICAL ACTIVE/S CHEMICAL ACTIVE/S

Amethryn Ametryn SC Alphathrin Alpha-cypermethrin SC

Atrazine Atrazine SC Aphox Pirimicarb WG

Basagran Bendioxide SL Cutworm bait Sodium Fluosilicate RB

Buctril Bromoxynil EC Decis Deltamethrin EC

Callisto Mesotrione SC Dimethoate Dimethoate EC

Cato Rimsulfuron WG Dithane Mancozeb WG

Cotoguard Fluometuron/Prometryn SC Dursban Chlorpyrifos WG

Dual Gold S-metolachlor EC Fastac Alpha-cypermethrin SC

Duiron 800 S-metolachlor EC Folicur Carbendazim/tebuconazole SC

Eptam Super EPTC (+safener) Karate Lambda-cyhalothrin EC

Focus Ultra Cycloxydim EC Kemprin Cypermethrin EC

Fusilade Forte Fluazifob-P-butyl EC Lebaycid Fenthion EC

Gallant Super Haloxyfob-R-methyl ester EC Mercaptothion Mercaptothion WP

Goal Oxyfluorfen EC Metasystox Oxydemeton-methyl EC

Gramoxone Paraquat dichloride SL Methomex Methomyl SL

Guardian Acetochlor EC Mospilan Acetamiprid SP

Hammer Imazethapyr SL Nemacur Fenamiphos EC

Kerb Propyzamide WP Nemacure Fenamiphos EC

Lasso Alachlor EC Omite Propargite EC

Linagan Linuron SC Patron Cyromazine WP

Linuron Linuron SC Snailbait Carbaryl/Metaldehyde SC

Pyramin Pyramin WG Talstar Bifenthrin SC

Roundup Glyphosate SL Tefluben Zuron Tefluben Zuron SC

Sencor Metribuzin SC Thiosulfan Endosulfan SC

Terbo Bromoxynil SE Vydate Oxanyl SL

Trifluralin Trifluralin EC

Triflurex Trifluralin EC

FUNGICIDES

CHEMICAL ACTIVE/S CHEMICAL ACTIVE/S

Benlate Benomyl WP Punch C Carbendazim/flusilazole SC

Bravo Chlorothalonil SC Punch Extra Carbendazim/flusilazole SC

Chronos EC Prochloraz Zinc Complex WP Ridomil MZ Metalaxyl-m GR

Eria Difenaconazole/carbendazim SC Rovral Iprodione SC

Ethapon Ethephone SL Score Difenoconazole EC

Kocide Copper hydroxide SC Tanos Cymoxanil/Famoxadone WG

Mancozeb Mancozeb WP Thiram Thiram DS


8. PROVINCIAL OFFICES

The agricultural economists in KwaZulu-Natal provincial office can be contacted at the following address:

Directorate: Economics, Marketing and Value Adding (E.M &V.A.)

Department of Agricultural and Rural Development

Private Bag X9059

Pietermaritzburg

3200

Fax: 033 – 355 9250

E-mail: [email protected] (033) 343 8220

[email protected] (033) 343 9298

[email protected] (033) 343 8038

mailto:[email protected]




9. INDEX OF PASTURES

PAGE

Page

ERAGROSTIS (ESTABLISHMENT) Dryland …………………………. 14

ERAGROSTIS (MAINTENANCE) Dryland …………………………. 15

FESCUE CLOVER (ESTABLISHMENT) Irrigated …………………………. 16

FESCUE CLOVER (MAINTENANCE) Irrigated …………………………. 17

JAPANESE RADISH (ANNUAL) Dryland …………………………. 18

KIKUYU (ESTABLISHMENT) Dryland …………………………. 19

KIKUYU (MAINTENANCE) Irrigated …………………………. 20

KIKUYU (ESTABLISHMENT) Irrigated …………………………. 21

KIKUYU (MAINTENANCE) Dryland …………………………. 22

LUCERNE (ESTABLISHMENT) Dryland …………………………. 23

LUCERNE (MAINTENANCE) Dryland …………………………. 24

LUCERNE (ESTABLISHMENT) Irrigated …………………………. 25

LUCERNE (MAINTENANCE) Irrigated …………………………. 26

MAIZE SILAGE (ANNUAL) Dryland …………………………. 27

OATS (GRAZING) Dryland …………………………. 28

RYEGRASS-CLOVER (ANNUAL - ITALIAN RYEGRASS) Irrigated …………………………. 29

RYEGRASS (ESTABLISHMENT; PERENNIAL) Irrigated …………………………. 30

RYEGRASS (MAINTENANCE; PERENNIAL) Irrigated …………………………. 31

SMUTS FINGER GRASS (ESTABLISHMENT) Irrigated …………………………. 32

SMUTS FINGER GRASS (MAINTENANCE) Irrigated …………………………. 33

TEFF (ANNUAL) Dryland …………………………. 34

WHITE CLOVER (ESTABLISHMENT) Irrigated …………………………. 35

WHITE CLOVER (MAINTENANCE) Irrigated …………………………. 36

ESTIMATED COSTS OF MAKING HAY …………………………. 37

KWAZULU - NATAL ENTERPRISE BUDGETS

Documents

Transcript of KWAZULU - NATAL ENTERPRISE BUDGETS