 I'm going to talk a little bit about blueberry production budgeting, and I'm going to start by introducing business planning as a whole, the idea of planning and evaluating. Then I'll shift into where enterprise budgets fit as a tool for planning and evaluating and business planning. And finally, I'll go through an example of a blueberry budget and basically how those could be useful for your operation. So starting out with planning and evaluating, it's important to outline the goals your operation has. Different operations will have different goals. For some, the goal is pure profit. That might be a short-term goal. It might be a long-term goal. Others that might be more of a hobby type of a thing with any type of agricultural production. So outlining your goals first is important. Second, looking at how you're going to take your resources, how you're going to transform the factors of production, talking about land, labor, capital, other inputs into a product. So having a good plan about where you're going to get those inputs from and how you're going to actually grow the blueberries is important. Lastly, how you're going to market the product. There are a lot of different opportunities there, whether you're talking about large-scale production and selling through wholesale or some other channel like that or selling locally at farmer's markets, understanding what potential price points are for your products is crucial. And then lastly, the most important thing though is the what-if. You can have a good plan, but being able to work off of that plan and understand that things might not always happen as you draw them up. So what's going to happen if prices fall by 10%? What's going to happen if fertilizer prices go up? What's going to happen if yield is higher or lower than expected? And how will those affect the bottom line of the operation? Now in terms of planning and evaluating, it's always a good idea to use your resources. And one of those is just having a situational awareness of what's going on in the world. And so one of the important aspects there is the overall economy. And so keeping track of things like the GDP, what's the strength of the economy? How will that affect the market you're selling into? For blueberries, it really depends. Are you selling into a luxury good market, something where if the economy crashes and people are losing some of their discretionary income, are they going to decrease their consumption or is it something that's going to be pretty stable year-round? So that's just one thing to consider. Another is inflation, just an overall macroeconomic indicator. Fruit and vegetable prices have been up about 6% over the past year. So how's that going to affect where your operation is going to price the product in the end? And going back to the last presentation, talked a lot about harvesting mechanically just because of high labor costs. So understanding what's happening in the labor market is especially important with fruit and vegetable production. They tend to have about 30% to 40% of costs being labor related. So understanding what's going on with the unemployment rate is a good time to hire workers is the unemployment rate low as it is now where it might be hard to hire workers in thinking about adjusting to some other type of labor or being able to mechanically harvest or something like that considering whether those are possibilities is always important. Now, switching on from overall economic indicators to the industry as a whole, it can be important to think about what's your competition look like. So from a blueberry perspective, we've seen consumption increase about four times from about half a pound per person to about two pounds per person annually over the past couple decades. And so we've seen since from 2010 to 2019, we've increased our imports of blueberries to meet this increased consumption. So used to be a lot of imports from Chile. And that's still the case, but a lot of other countries there as well. And all those have seen increases in what they export to us throughout the entire year. And on the other side, in terms of what we're producing in the US, we've seen blueberry production really increase both in times of the timing. So it used to be we'd import pretty much exclusively early parts of the year, late parts of the year where other countries have their harvest and we're producing their most. Nowadays, we've increased the amount of time we're producing over the past few years. But we've also increased the peak of our production drop those summer months to especially in the southeast, which can be shown by those red bars increasing over that decade. Now we've looked at some of the overall market scenarios, but the most important tool you can use for your operation is budgets. And those are important because we can take the information we have from what we expect to happen to the market. If we expect prices to go up, we can play around with what will happen in our budget with that. If we expect labor prices will go up or down, we can plug that into our budget and see how it affects our operation as a whole. So looking into enterprise budgets, the enterprise budget is basically a summary of projected income and expenses from producing a good. And so we generally express those either per acre or per unit of acre produced. And so we can think about it as if we have this operation where we're producing blueberries. We might think, well, on one acre of production, what are the total expenses? I'm going to have to incur to produce a certain amount of products. And then what's the value of that product when I sell it? And I market it in the end. And looking at differences there to tell whether the operation is profitable or not. Another way of looking at it is per unit produced. So thinking of, I'm producing, let's say, 7,000 pounds per acre. Looking at all the costs there, you can say, well, what's the cost of producing one plant, one pound of blueberries on this operation? And so you can look at it from that perspective and say, for instance, maybe it costs $2.50 to produce. And then that can help inform a marketing plan later on. Maybe you're weighing different farmers market options where you think you can get different prices at a market that's farther away. You might be able to increase from, say, $2.50 to $3. Well, you have your overall cost per blueberries. So you know what the price you have to sell it on to breakeven is. And you can kind of consider different markets and say, well, if I add 30 cents per pound in transportation costs, will it be worth it to sell at a location that's further away? And so that's sort of one of the ways these enterprise budgets come in handy. Now, what is an enterprise budget? In essence, it's a planning guide. We have rough estimates of what the total cost of production will be. Really, we want to include all the costs that will go into the operation for producing the given good. With budgets, we use recommended management practices. So you might think of those as extension recommendations. They're considered to be better than average. So they're things that we think most people would consider to be reasonable. So not every producer is going to do things the exact same way. So there are going to be differences across operations. But our goal is, if we hand these budgets to a producer, they might look at them and say, yeah, this isn't right for my operation, but I think it's reasonable for a large number of producers. Now, what enterprise budgets are not? First, they're not going to be perfect. They're not going to be exact. So they're not going to account for every single item. In a perfect world, they would, but in reality, they're not going to account for every nail, screw, roll of duct tape, everything like that. They're also not going to apply to every situation or operation, just because there's so many different ways of doing things. Whether we're talking about from a widespread types of irrigation, organic conventional, different types of pesticides used, timing of treatments, number of treatments per year, those are things that will differ quite a bit. And so one enterprise budget isn't going to be able to capture all of those changes. They're also not a production guide or a how to guide. There's plenty of opportunities, plenty of resources on the ASIS website that talk more about how to produce certain things. An enterprise budget isn't going to tell all that, but it's going to try to put dollar figures on all of those production guide type of expenses, at least the ones that we feel are most representative to our farms. And lastly, they're not a tax advisor, although I will point out that a lot of the records that are important for taxes could also be useful in creating your own enterprise budgets. And lastly, importantly, they're not going to reflect entertainment values or hobbies. So the enterprise budget is going to tell you basically whether an enterprise is profitable or not, but it's not going to tell you whether you should be in that enterprise. So for instance, you might find that a certain operation is losing money. It doesn't mean they should get out of it necessarily. If there is that entertainment value, that hobby, that enjoyment that the producer is getting out of it, even if it's not profitable, it's not my job to tell anyone to get out of it. The enterprise budget just tells the bottom line, or in other words, the expense that the person would be paying for that hobby, which is always good information to know. Now, why budget? First is to decide what enterprises to have. So from a planning perspective, you might think, is a blueberry operation good for me or some other operation? Would that enterprise be a good thing to add to my farm? And so you could look at existing budgets and say, how does it fit in? Especially with blueberries being a longer term thing where you have the management costs over several years, but also the establishment upfront costs, being able to understand how that will fit into an entire farm is a good thing to know. But also for evaluating, being able to see, once you have planted, harvested, sold the product, being able to understand, was this enterprise profitable? Is it a good idea for me to expand this enterprise? Maybe expand to more acreage or something like that? Or is it something where maybe it's not the most profitable one? And so you might think about either scaling back or just maintaining where you are. And so having a solid enterprise budget can help you with those types of decisions. Lastly, I mentioned the what ifs. So you might have management changes or market changes, such as a 10% increase in yields. If nothing else changes, you're not changing your costs at all, that will increase your revenues per acre and increase your profits. But the question is how much? And having a solid enterprise budget can tell you that. If you have a 10% increase in fertilizer prices, that will reduce your bottom line. So looking at how that will affect your operation, is there likewise a $2 per gallon increase in fuel prices? Understanding how much of an impact that would have on the operation is important information to know. Or going back to something else, a 20 cent per pound increase in blueberry prices, understanding how that will increase your revenues as a whole and how that will increase profitability is good too. So being able to consider all sorts of factors that might change from the planning stage to what actually happens, having an enterprise budget can help with that process and make it a lot easier. Now the enterprise budget format, typically you have, first you have your revenues, which you have the prices you're selling your product for times the amount of product you're selling. You have the variable costs, which you can think of as being the cash costs or out of pocket expenses. And so in general, whether you produce or not, that's going to affect what your variable costs are. And then you have your income above variable costs. So looking at whether you're able to cover your variable costs just with the amounts of product that you're selling. And that's important because we tend to think of that from an economic perspective as being the decision point as to whether you can produce in the short run. So if your income isn't covering your variable costs, then it might be important to think about whether the operation or whether that enterprise is viable for the operation. You then have your fixed costs and those are all costs that will be incurred whether or not you produce. So you can think of it as maybe you have equipment, machinery that you've purchased, stuff like that that you have certain costs for overhead expenses that even if you don't produce a single blueberry, you're still going to have to pay to maintain or upkeep that equipment, taxes, stuff like that. Then there's usually returns to risks, management, whatever is included in the budget. So that's sort of our measure of profitability there. So that will give a number of whether your revenues are able to cover your costs. And then lastly, we like to look at a sensitivity table, again, getting into that what if analysis, looking at what happens if prices increase or revenue or quantities produced fall. So kind of looking at yield and prices and how those will affect profits. Now enterprise budgets are for specified time periods and production practices, keeping in mind the production cycles differ across these budgets. So if you've used any of our like tomato budgets or in the past, we've had strawberry budgets, then some of those are for a single growing season or for a single year. Other ones will have longer cycles. So for example, goats, blueberries, pine trees or black walnuts, those are going to be long term budgets. Sometimes two or three years up to maybe 20 years overall, just depending on what the production cycle is for the crop in question. Now another thing to consider is with enterprise budgets, you must be paid. So accounting for your own labor in the budget is important too. Make sure any operator labor is included as a line in the budgets and use your own numbers. So I'll go through an example shortly. But on the ASIS website, we have several budgets for fruits and vegetables as well as row crops and cattle budgets. And they all have places where you can input your own numbers. And so since, you know, going back to what I said earlier, budgets are a good general guide, but the way to perfect them as much as possible is to put in your own information from your operation to make them as accurate as possible. And that will help with any time you want to use these budgets, having your own information, especially if you're at a point where you have records available to input, those will really help with decision making in the future. Now, one other thing I'll mention is you want to watch your units with budgets. Some items are going to be on a per gallon basis. Some are like labor might be per hour or machinery use might be per hour. Certain things might be per plant, you know, if we're talking about pruning or stuff like that, some harvest figures might be per plant. Others will just be general costs as a per acre basis. And some products might be sold on a per pound basis. So within one budget, they're going to be a lot of different units. So making sure if you're inputting your own values that, you know, which in which units you're you're putting in to make sure it's accurate. Now I'm going to go through an example. Now I'm going to steal the University of Georgia's blueberry budget. We have an aces blueberry budget is currently under developments. And so we're hoping to have that one out pretty soon where I've talked with Jesse Rowland, she's putting that one together and looking to test it out with farmers to make sure it's reasonable right now. So instead of sharing that work in progress, decided to go to our neighbors and take what they have. And what they have is a multi-year budget with establishments in year one production over several other years and then reaching full scale production at around year four. And so looking at this budget, the first thing is sort of everything is going to be on a it's assuming one acre of production. So thinking of it on a per acre basis and an irrigated budget there. So the first step they're looking at the revenues, they do what they show is a range of plausible values, which I like that approach because you have, you know, sort of the median you might think of that as the expected value of, you know, both 7,000 pounds per acre and a price of $2.75 per pound. But they also have sort of a worst case scenario. Suppose you have 5,600 pounds per acre and a best case scenario where you go up to 8,400 pounds per acre and worst case price scenarios and have $2.20 and a best case of $3.30. So that sort of gets into the what if scenario just on the revenue side. But that's really useful there for calculating what the total revenue could be for this operation. Next, looking at variable costs. These are, this is sort of the bulk of the budget where we have most of our expenses are going to be variable, especially if we're looking at a longer term horizon. So what I like to do with these variable costs is if you are in a situation where at the end you're looking at it and you're seeing that the enterprise isn't profitable, one step can be to look at the variable costs and seeing if there's any way to lessen some of the main costs. So looking at this one, you see maybe fungicides jump out to you at about $388 per acre in cost. That's a pretty high expense. Pruning, large expense there. Harvesting is a huge expense. So thinking of, is there a way to make these expenses come down at all? Now with these blueberry budgets, they do separate them into the pre-harvest variable costs. This top portion there from fertilizers, weed control, insect and disease control and pruning to the post harvest variable costs, which include harvesting and marketing costs, as well as a combination of all variable costs shown on the bottom line there. Lastly, we have our fixed costs and those might include things like tractors and equipment on a per acre basis. Looking at an expense of about $1,600 per acre in equipment, overhead and management, the dollar expense there, the last column just showing the total expense per acre at around $255 per acre and irrigation expense, the fixed costs for irrigation in addition to the actual water consumption cost, but looking at $300 per acre as a fixed cost there. Now once we have all of our costs, we have both our fixed costs and our total costs, we can combine those, our fixed costs and our variable costs, we can combine them for our total costs. We also might want to look at how our returns are expected to compare to our costs. So going back to before we have, again with this blueberry budget, it's a long-term budget. So year one we're looking at the establishment. So our yield there is zero because we're not really looking to harvest anything that first year. Second year we're starting to produce a little bit. So looking at a yield much less than what it's going to be overall, but still some harvest there. Year three still looking at a lower yield than what we'll see in future years, but by year four getting up to that sort of expected yield over time. Now I'll look at the first red box there return over variable costs. That'll tell you how your returns compared to the cash expenses or the variable costs that you're putting out or your operating costs in other words. And so we see that the first two years we're not able to cover those variable costs at all just because of those large upfront costs that come in with regards to establishment. But once we get past year three and onward we're starting to be in a situation where returns are covering our variable costs. And so generally they're in a spot where production should be viable there on in the short run. Now if we're looking at our profits or return over total costs so the last column there we see huge losses again the first four years, but then after that we're starting to get in a situation where we are able to cover our total costs and so we are becoming profitable. And so in this example we'd see somewhere around year nine or ten is where our overall returns or our revenues will start to cover our long-term total costs. So in essence the losses we took on the first three years those will all be overcome by year nine or ten according to this budget. So from a planning perspective being able to say look there's about $10,000 in establishment costs per acre at what point am I going to be able to recover that cost that's kind of one of the things a budget can really do for you there. Breakeven analysis that's another thing to look at we might be thinking about from a cost perspective how much do I need to sell the product for to be able to make a profit. And so I'm looking at breakeven costs you can think of those as the maximum costs such that your revenue will still cover your total cost or in other words your profit will be you won't be making a loss. And so I'll focus on the second to last line there the total budgeted costs per pound we're looking at about $2.63 in total costs per pound of blueberries such that you could still break even. Another way to look at that is to think okay well let's suppose all of our costs are accurate those are all going to happen what's the lowest yield I could have where I would still break even and so the bottom line the breakeven yields at 6706 pounds per acre there showing that that's the lowest yield you could have if all of our costs hold true that you could still break even. Also supposing that prices stay the same at that $3 I think it was 30 cents clip or $2.75 clip there and the last thing we like to look at is our sensitivity analysis of prices and yields so we might think you know our costs are pretty good we don't think we can do too much to change those so let's suppose our costs stay fixed or stay as we said they would be let's just see what happens if we change our prices and yields so looking at this this matrix here on going down the columns from 2.2 to 3.3 those are different prices per pound of blueberries and going across from 8400 to 5600 looking at different yield levels and so what they do in this budget is they look at essentially all combinations there the colors in red will be the net returns so in other words the returns over our total costs and so the red figures suggest that we're making a loss there the ones in the black means that we are profitable and so in essence we see if yields get low enough we're pretty much always going to be losing money if prices get low enough we're going to be losing money but but looking at the places where if we do have increased yields or even if we do have a decreased yield but prices managed to increase at that time see that we are still able to make money in that enterprise and they also do a good job of showing the percent chance there that's sort of a probability of those events occurring so our cumulative probability there so that can kind of help us take into account risk assessments and what might happen there in our operation so you know in conclusion enterprise budgets are useful for planning evaluating and also considering those what if scenarios you know whether we're talking about increased prices whether it's in price of the blueberries we're selling or the prices of the inputs we're using to produce just looking at how those might affect the operation in the end but most importantly using numbers from your own operation will really help improve the accuracy of the budget so you know a lot of people don't like to do this keeping good records it's not the most fun part of having a business or a having a farm but it is really important to keep those accurate records so you can put in those labor expenses those pruning expenses stuff like that as accurate as possible so you can have the best possible budget and help you make decisions later on I want to thank you all for watching and my contact information is here but I'd be happy to take any questions if there are any