The budget generator has machinery complements from 

 which the analyst can select appropriate machinery for 

 production of a specific commodity. A complement can 

 include up to 100 machines and the additional data to 

 compute ownership and operational costs. Each 

 complement is specific for a region. 



Machinery list prices and purchase prices are updated each 

 year; machinery sizes, engineering coefficients, and annual 

 hours of use are updated when new survey data become 

 available. Estimates of average fuel prices and wage rates 

 for each State are kept up to date in the parameter sets. 



Equipment Sets 



Equipment sets are generally needed along with machinery 

 complements for livestock budgets. Crop budgets may 

 require equipment sets in some cases, but the machinery 

 complement is generally sufficient. ERS has developed 20 

 equipment sets from which analysts can select the appro- 

 priate items of equipment necessary to produce a specific 

 commodity. Each set can include up to 100 items and the 

 necessary data to compute their ownership and operation- 

 al costs. Each set is specific for a region. 



An equipment set used in a dairy enterprise, for example, 

 includes buildings, water equipment and systems, milk- 

 handling equipment, hay- and manure-handling 

 equipment, and breeding livestock. 



Equipment costs are computed for the entire livestock 

 enterprise. ERS uses information obtained from COP 

 surveys to determine sizes and types of equipment to use in 

 the budget generator for calculating equipment costs. 



Irrigation Complements 



Many crop budgets have irrigation components and costs. 

 Some 400 irrigation complements are available for 

 describing the irrigation costs. A budget may call for one 

 or more than one irrigation complement to describe the 

 specific irrigation system being used. Each irrigation file 

 has 66 line items describing the wells or water source, the 

 pumps, the distribution systems, and the component costs. 



Budget Files 



Each enterprise has its own budget file. At any given time, 

 there arc three years of data in the budget files. Seeding 

 rates, fertilizer application rates, and livestock feeding 

 rates are examples of budget file data. Prices of some 

 inputs, such as seed, are also included. Annual updating is 

 frequently done by a direct update of the budget file. For 

 example, Cf)mmodily yields and prices and seed prices arc 

 entered each year ('J, If), IS). When new survey data are 

 available, the entire data matrix must be entered. The 



physical input data are the same for each year in the case 

 of enterprises that have not been surveyed during the past 

 2 years. Price data, however, change annually. 



Name Lists 



These two data sets contain the names of the inputs and 

 outputs for the budgets. One is for crops and the other is 

 for livestock. Each name list contains 500 names of such 

 items as "nitrogen," "chemicals," "protein supplements," 

 and so on. They are used in the budget generator to 

 identify cost items by name. 



Budget Assumptions and Data Sources 



Each State budget shows costs of producing a crop or 

 livestock commodity under a specific type of production 

 system (for example, wheat on fallow land, continuous 

 cropped wheat, cow-calf production, or fed bcci) in a 

 designated geographic area. The budget estimates average 

 costs and returns for all producers identified by type of 

 operation in that area. Budgets represent "average" 

 conditions, so costs for some individual farming operations 

 are likely to differ significantly. The budgets have three 

 major divisions: (1) cash receipts, (2) enterprise cash 

 expenses, and (3) economic (full ownership) costs. 



Cash Receipts 



Enterprise cash receipts consist of cstimalcd returns 

 generated from producing the specific commodity. Cash 

 receipts are a function of both yield and price as reported 

 by NASS. Yields are season averages reported by NASS. 

 Crop prices reflect harvest-month prices. Livestock prices 

 reflect season-average market prices. Gains (losses) 

 accruing from asset appreciation (depreciation) arc not 

 included. Weather is primarily responsible for yield 

 fluctuations, and supply and demand factors arc primarily 

 responsible for the yearly price fluctuations. Costs per 

 acre have until recently trended upward without sharp 

 annual changes over recent decades. Thus, the volatility of 

 cash receipts has been the primary cause of fluctuations in 

 the amount of available cash and in returns to 

 management and risk. Yield and price com|Kii isoiis ,irc 

 thus useful in assessing whether a given situation is 

 temporary or long term in nature. 



ERS includes the estimated gross value of production 

 generated from the sale of both primary and secondary 

 products. Secondary products typically include items like 

 cottonseed, the value of residues from crop production, or 

 the sale of culled livestock. Total costs shown incluile 

 tho.sc for the production of all primary and secondary 

 products because such costs cannot be estimated 

 separately. Therefore, FiRS analysts estimate receipts and 

 costs from all prodiuls. 



8 



