Developing farm enterprise budgets : an experiment in the Dominican Republic

This study describes this new budgeting methodology and provides guidelines for its replication in other countries. Direct farmer interviews were used to collect agricultural production data because they proved more accurate than the estimates made by bank credit agents; because bank credit agents were available to do the interviewing; and because they provided an opportunity to specify farming technology and increase budgets line-item detail. Initially, the information collected was limited to variable production costs of single harvest crops, excluding fixed costs, product prices, perennial crops, intercropping, and livestock enterprises. A budget code was assigned to identify the crop and any special crop characteristics; the area of applicability; the planting, watering, fertilizing, and land preparation techniques; the harvest month; and the source of data. Farmers were then interviewed for data on crop varieties, yields, unit costs, standard work day and wage rate, and variable production costs by line item in order of production activity. To create a representative picture of farm production data, the farmers interviewed should cultivate crops vital to the regional economy; use technology packages most common in the area; cultivate medium-sized plots; and be able to record solicited information reliably and accurately. A minimum of five interviews are required. Detailed interview and tabulation procedures are also included. In replicating this farm enterprise budget system in another developing country, particular attention must be paid to selecting the institution and the office that will be responsible for the budgets, assessing the agricultural sector"s demand for a more sophisticated budgeting process, and assessing the capabilities of the budget office.