An enterprise budget is a useful tool for determining costs of production for a perennial crop, in this case strawberries. An excellent current example of costs and returns spreadsheets for perennial crops from Iowa State University includes asparagus, raspberries, and strawberries, among other crops.
With perennial crops, you need to amortize (or spread out) your establishment expenses over the estimated life of the crop. Yields and harvest expenses may vary over time as well. Using a spreadsheet to create an enterprise budget allows for easy calculations of many possibilities.
In this strawberry production example, there’s an establishment year followed by three years of production. Yields are assumed to fall from 4,000 quarts per acre in the first year to 3,000 quarts in the second year and 2,000 quarts in the third year. Details of estimated receipts per year are listed in the first section of the enterprise budget, Strawberry Production in Iowa. The next section describes costs of production for the establishment year, including plants, fertilizing, irrigation, labor, and interest on establishment year costs. The total costs of $5,931.45 (line 36) will need to be amortized over the three years of strawberry production. In this case, a simple approach would be to divide by three (see line 99 in the spreadsheet).
Three additional sections of variable costs list annual expenses for the three years of production. These costs are averaged on a per acre basis (line 89) and per quart (line 90). Annual ownership costs for the irrigation system, machinery, and land are listed in the next section (lines 92-96).
Total costs are calculated on both a per acre and a per quart basis by summing average variable costs in lines 89 and 90, total ownership costs from line 96, and amortized preproduction costs from line 99. Annual returns over both variable and total costs are calculated in lines 105 and 106.
These simple tools will help producers create estimates of profitability with full and proper accounting for all the variables. While enterprise budgeting may seem daunting at first, using a template like this will help break the process down into doable tasks. With detailed enterprise budgets like these, growers will find it easier to get funding and other support for their ventures.