AGRICULTURAL NEWS - A budget is an estimate of revenue and expenses over a specified future period and is compiled and re-evaluated regularly. It is a vital tool for any business, including a farming operation, as it enables management to take full financial and economic control.
A budget thus underpins the liquidity and solvency of the business.
A difficult yet necessary exercise
If you are like many farmers, you may find that budgeting is a challenging process, especially with decreasing profit margins, increasing input costs and South Africa’s currently constrained economy. But this cannot be an excuse for avoiding the exercise; indeed, it makes it even more imperative.
Alternatively, you may be hesitant to conduct a formal budget, preferring to make a rough-and-ready estimate on a slip of paper. Unrealistic expectations and worry can also make it a challenge to sit down and commit a proper budget to paper.
