1. Forage Management Unit for Adults Lesson 6: Cost and Returns for Forages

2. Direction and Purpose to: Understand and develop budgets Make management decisions based on budget interpretation

3. Key Points: 1. What are fixed and variable costs? 2. What are the production costs and return per acre and/or ton for different forage management systems?

4. 3. What should be considered when working profitability and feasibility studies? 4. How are budgets developed for profitability and feasibility of forage systems?

5. 5. What is feasibility and how is it measured?

6. Fixed Costs land depreciation machinery buildings and equipment insurance interest taxes

7. Fixed Cost Examples: new baler more land storage shed

8. Variable Costs fertilizer and lime chemicals machinery expenses (fuel, oil, repairs) storage operating interest

9. Variable Cost Examples: cost decisions that occur in forage production type of seed how much seed how to fertilize

10. Profitability Will this management decision (change) increase my profits and is it practical?

11. Production Costs per Acre and/or Ton 1. Seed 2. Plant Food 3. Chemicals 4. etc.

12. Return Per Acre HO-1: Hay-All Other Enterprise

13. Budget Development HO-2: Budget Worksheet

14. Feasibility 1. Land 2. Labor 3. Capital 4. Management

15. Land Is the land suitable for the changes considered?

16. Labor Is the labor available to meet the change? Will the labor be skilled enough and desire to make the change?

17. Capital Will the cost of making the change be affordable? Will I be able to pay for the cost of making the change?

18. Management Is the management willing and capable of making the change work?

19. Conclusions Forage Management System Changes: may increase production may increase livestock # and lb.

20. but... Is it profitable and feasible? Careful planning should provide the answers.