ARE140 FINAL
For a given yield level, the basic ways to adjust an enterprise budget to reach a profit goal are:
- raise the price per unit - lower the cost per unit
There are ________ soil units on the Case Study No. 1 property.
6
(T/F) Capital is just another word for money.
False
(T/F) Crop water needs don't vary much given the weather is ceteris paribus.
False
(T/F) In farm management, the most important aspect of business is to make money.
False
(T/F) In the step 6 economic test all the crops must be measured by the same unit of yield.
False
(T/F) Livestock production requires more water than most crops produced.
False
(T/F) Riparian water rights can be sold to a third party who doesn't own farmland.
False
(T/F) The irrigation system installed for the lowest cost will always be the most efficient in cost of operation.
False
If the lease on 1000 acres specifies a crop share of 20%, the gross income is $4000 per acre, and expenses are $200 per acre, then the share rent per acre in dollars is:
$800 per acre
The soil rating in the Land Capability Classification System for the soil units you identified in question 1 is:
Class II
What does "CAFO" stand for?
Concentrated Animal Feeding Operation
One good reference in California for rating climatic zones is:
Western Garden Handbook
Favorable market prices would be considered:
an external force it would be well to heed and adjust to
TRUE OR FALSE: The difference between an animal unit (AU) and an animal unit month (AUM) is that the AU measures a whole year while the AUM only measures a month
false
In enterprise budgets, opportunity cost is typically expressed as:
interest on expenses
Given the information in question number 1 above, and that the total operating costs (or cost of goods sold) was $450,000 in one production season, what would be an appropriate measure of financial efficiency for a production season?
$ to produce one 6-pack
Return to management per acre in your budget is:
$-123
Incorporating your answer from question 8, continue with the same cash flow spreadsheet. What would be the cash flow ending balance in 2012 if the farm again grossed $1,000,000 with operating expenses at 60 % of the gross?
$1,209,214
Now assume that in 2013 the farm has built more greenhouse space with $250,000 of the profits from 2012, and is able to increase production by 25%, also increasing gross revenues by 25% to $1,250,000 in 2013. Assuming operating expenses remain 60% of gross revenue, what is the cash flow balance at the end of 2013?
$1,358,900 ( $1,360,308 (beg cash) − 250,000 (build greenhouse) − 0.6·1,250,000 (op expenses) − 200,000 (overhead) + 1,250,000 (revenue) )
Based on your research, you have found that the average price of watermelons (you will find watermelons as a subset of melons on the website) in California in 2016 is:
$18.20/cwt
The total cash out for the second quarter is
$180,250
In your budget, the variable costs for tomatoes are:
$2,872 per acre
Assuming ceteris paribus, if on one acre of land the yield without adding compost is 30 tons per acre, but if you add one ton of compost the yield is 40 tons per acre, and it cost you $200, the marginal input cost per acre is
$200
Refer to the original micro-greens business cash flow spread-sheet (slide no. 12 in the sequence of the mini case study). If the micro-greens farm had successfully corrected their problems outlined in slides 3 through 7, and had thereby increased the gross income in 2011 to $1,000,000 and at the same time reduced operating expenses that same year to 60% of the gross income, what would have been the resulting net income for 2011? (note there is no change to overhead expenses).
$200,000
The fixed costs per acre in your budget are:
$214
The bank balance for beginning of second quarter is
$239,825
The loan principle balance at year end is:
$250,000
For tomatoes, use "fresh market" on the website for the price, and select the correct answer for the tomato price:
$28
The gross margin per acre in your tomato budget is:
$3,190
All costs per acre in your tomato budget amount to:
$3313
The total cash in for the third quarter is
$380,875
The ending bank balance for the year (end of fourth quarter) is:
$390,950
The correct sequence of operating loan principle ending balances for the four quarters is:
$500,000, $500,000, $400,000, $250,000
If you produce 165 lambs at a cost of $350 per head, and are able to sell them for an average price of $500 per head, your total expenses for that lamb enterprise are:
$57,750
The interest payment for the first and second quarters is:
$6,250
Calculate the breakeven cost per acre for cabbage. Yield: 400 cwt per acre Price: $27.60 per cwt Expenses: $6,796 per acre
$6,796
The total fixed overhead costs for the second quarter are:
$66,750
Find the Real Median Household Income in California for 2016:
$67,739
The tomato revenue in your budget of $3,190 per acre is based on (select all that apply):
- 44 tons per acre times the 2018 statewide crop price - An average of annual county tomato yields combined across the Sacramento Valley including neighboring San Joaquin County over the past five years
Which is or are the correct equation for the balance sheet?
- Assets = liabilities + owner's equity. - Owner's equity = assets − liabilities
Net Farm Income Ratio
- Compares profit to gross farm income - is a measure of financial efficiency, showing how effective the business is in generating profit - expressed as a ratio, it shows how much is left after all farm expenses, except for unpaid labor and/or management, are paid.
Which of the following are true statements regarding glyphosate and glyphosate-based herbicides such as Roundup?
- For many years glyphosate was thought to be safe for humans until it was realized that glyphosate affects the human gut microbiome. - Weeds are becoming increasingly resistant to glyphosate-based herbicides requiring more frequent applications of glyphosate as well as the use of additional herbicides. - Glyphosate-based herbicides are widely used in US agriculture today with many cropping systems and practices dependent on its use, making it difficult to turn away from. - The federal judge in the current multi-district lawsuits against the manufacturer of glyphosate by plaintiffs who claim that glyphosate caused their cancers, revealed emails evidencing corruption within the EPA concerning the science and safety review of glyphosate. - Glyphosate-based herbicides are systemic products that are taken into the plant tissue and are thereby present throughout the plant body. - Glyphosate is patented as an antibiotic
The following aspects of climate should be considered in step 2 of a feasibility analysis:
- Growing season as measured by frost-free days - Seasonal temperature highs and lows - Water percolation rates
Which of the following are true statements relating to the anonymously written 2002 South African book on HIV/AIDS and the Struggle for the Humanization of the African?
- In 2010 the US government ceased HIV testing of visa applicants and called HIV infection "not a communicable disease that is of significant public health risk" lending support to this anonymous South African author's assertions that HIV is not necessarily the cause of AIDS in Africa. - This anonymous author asserts that poverty, not HIV infection is the primary cause of AIDS (Acquired Immune Deficiency Syndrome) in Africa
Which is a correct statement about of the "cash method" of accounting? - This method is not widely used by farmers. - It is widely used by farmers, because it is the best method of tracking profits. - It is helpful for maintaining an accurate balance sheet. - It is "cash in, cash out". - It is widely used by farmers, but it is not the best method of tracking profits.
- It is "cash in, cash out". - It is widely used by farmers, but it is not the best method of tracking profits.
Which of the following are true statements relating to Andre Leu and his 2014 book The Myths of Safe Pesticides?
- Leu formatted his book in response to Dennis Avery's Saving the Planets with Pesticides and Plastics? - The introduction to the book is written by an Indian colleague of Helena Norberg-Hodge, who is also concerned about globalization issues. - Leu uses peer-reviewed scientific research to demonstrate that pesticides are more toxic than is generally thought by the general public. - The publisher, Acres USA, is a long-time publisher on production-scale organic and sustainable farming.
Which of the following are true statements of Francis Moore Lappé and her book Diet for a Small Planet?
- Many Americans became vegetarians in response to Diet for a Small Planet - The controversial idea that Lappé introduced in 1971 about the appropriate distribution of food being the key to feeding the world rather than the need to increase yields is being promoted by the United Nations today. - it was important to Lappé that people experience that their personal decisions, such as their choice of food, make a difference in the welfare of other people in the world.
Adopting a different work schedule as was done with windmills before fossil fuels were used as an energy source
- might greatly increase the amount of energy that wind and solar can provide - might greatly improve the capital cost efficiency of wind and solar energy
Which of the following are true statements of Francis Moore Lappé and her book Diet for a Small Planet?
- Many Americans became vegetarians in response to the book. - The controversial ideas that Lappé introduced in 1971 about the appropriate distribution of food being the key to feeding the world rather than increasing yields is being promoted by the United Nations today. - It was important to Lappé that people experience that their personal decisions, such as their choice of food, makes a difference in the welfare of other people in the world.
By including non-cash overhead, the cost study is effectively(select all that apply): - Requiring a return of 5 percent on all of the capital investments listed in table 6 of the cost study - implying that all growers should seek a 5 percent return on investment - saying that growing these tomatoes is not profitable under an assumed 5 percent interest rate in the capital recovery formula - asserting that management can get a 5 percent return on investment - making it difficult, if not impossible, to compare the growing of tomatoes under the assumptions outlined in the study to investments such as the stock market, bitcoin, or Us Treasury bonds
- Requiring a return of 5 percent on all of the capital investments listed in table 6 of the cost study - saying that growing these tomatoes is not profitable under an assumed 5 percent interest rate in the capital recovery formula - making it difficult, if not impossible, to compare the growing of tomatoes under the assumptions outlined in the study to investments such as the stock market, bitcoin, or Us Treasury bonds
Which of the following are true statements concerning Alan Savory and his popular TED talk gone-viral? (SELECT ALL THAT APPLY)
- Savory challenges the common idea that desertification of grasslands is caused by livestock because of his repeated observation that the removal of animals did not stop grassland desertification, but rather accelerated it. - Savory's solution to the climate change issue is based on supporting the health and biological carbon sequestration activity of the world's grasslands by bringing grazing herds back and managing them consistent with how grasses, large herds of grazing animals, and large predators all evolved together over time. - Savory's controversial holistic management education and outreach programs support the grass-fed beef industry, an emerging industry in the introductory phase of the life cycle of an industry.
In lecture slide 9, the ecological economics perspective, the "full" world has a larger "economy" box than the "empty" word indicating:
- That in our modern world we are using ore and more of the natural resources in the entire world ecosystem - We produce more goods and services than in the empty world of previous centuries - Other living things in the world ecosystems are being eliminated due to the growing size of the economy
Which of the following are true about choosing the accounting period? The accounting period
- The United States Internal Revenue Service (IRS) regulates the choice of the accounting period. - The accounting period may correspond to an annual agricultural production cycle. - The accounting period is always one year in length.
Which of the following are true statements of Sally Fallon's controversial book Nourishing Traditions and the related Weston A. Price Foundation (WAPF)?
- The WAPF local chapters can provide valuable marketing contacts with dedicated customers interested in nutrient-dense and live foods for farmers and processors. - Fallon says the recommendations of the government (the "diet dictocrats") are more likely to be politically motivated than be based on science. - The WAPF is dedicated to exploring the scientific validation of dietary, agricultural, and medical traditions throughout the world.
Which of the following are true statements concerning Theo Colborn's work and The Wingspread Consensus Statement on Chemically-Induced Alterations in Sexual Development: The Wildlife/Human Connection?
- The Wingspread Statement was a result of an historic meeting of scientists from different disciplines brought together under the leadership of Theo Colborn to discuss concerns about endocrine disrupting chemicals in the environment. - Endocrine disrupting chemicals can cause demasculinization and feminization in male animals and defeminization and masculinization in female animals. - Known endocrine disruptors include some pesticides (fungicides, herbicides, and insecticides), some industrial chemicals, some metals (lead and mercury), and a few natural chemicals (in soy products). - Colborn's work refutes the traditional model of toxicology that the lower the dose the less the effect of the poison in recognizing that, in the case of endocrine disrupting chemicals, there is a point or points at which the toxicity can increase as the dose decreases.
Which are true statements about the comparison between "cash" and "accrual" methods of accounting?
- The cash method records income when it is received, while the accrual method records income when it is earned. - The cash method records expenses when they are paid, while the accrual method records expenses when they are incurred. - The accrual method is superior to the cash method for tracking enterprise profitability. - Books of accounting kept by accrual method can produce an accurate balance sheet, while books by the cash method cannot.
Which of the following agricultural, food system, or business management practices are consistent with the new developing interest and science of the soil and human microbiomes?
- The direct marketing of unwashed fruits and vegetables from the farm. - The sale and distribution of unpasteurized milk for human consumption. - Fermented or "live" foods such as yogurt, kombucha, sauerkraut, kimchi.
Which is or are true of the income statement? - The income statement is a summary of revenue and expenses for a given point in time. - The income statement is a summary of revenue and expenses for a given accounting period. - Its purpose is to measure expenses. - It is also known as an "operating statement". - It is also known as a "profit-and-loss statement".
- The income statement is a summary of revenue and expenses for a given accounting period. - It is also known as an "operating statement". - It is also known as a "profit-and-loss statement".
Which is or are true of the income statement? - The income statement shows shows profit or loss for a period of time. - The income statement can be for whole business or for a separate enterprise. - The income statement shows financial condition of the business
- The income statement shows shows profit or loss for a period of time. - The income statement can be for whole business or for a separate enterprise.
A ground water aquifer is: - potential source of irrigation water - generally must be pumped out of the ground - not a significant source of irrigation water - never found in CA
- potential source of irrigation water - generally must be pumped out of the ground
Which of the following are true statements relating to Dennis Avery and his 2000 book Saving the Planet with Pesticides and Plastics?
- The publisher, the Hudson Institute, is a think tank supported by the chemical industry. - The book's premise is that high-yield farming is required to feed the world and that high-tech chemical industrial farming is the only kind of farming that can produce high yields. - Avery looks to separate food production from nature, reasoning that by producing the highest possible yields on the acreage that is used for food production, more land would be left over for nature. - Avery uses peer-reviewed scientific research to demonstrate that pesticides are not as toxic as generally thought by the general public.
Which of the following statements correctly apply to the Overton Window model?
- Understanding the Overton Window model is useful to management decision- makers in long-term business planning. - The Overton Window, also callled the window of discourse, describes the range of ideas tolerated in public discourse. - The Overton Window models how the new radicals become more radical than the old radicals when ideological change is adopted by society. - The Overton Window explains how "sensible" Americans today concerned about their health will say, "I limit my meat consumption, especially red meat," while 70 years ago "sensible" Americans said, "Be sure to include red meat in your diet for strength, to feed your blood."
Which of the following statements are true regarding the concept of conformable units of measurement?
- When we measure the same quality or phenomenon, such as length, in two different ways, we say that the two measurements are conformable. - gallons and acre-feet are conformable - acres and hectares are conformable
In setting up a farm business there are a number of initial decisions which need to be addressed.
- Where will the farm business be located? - What are the suitable enterprises? - Will specializing in one enterprise bring the greatest return? - Which farming method or model to follow or use.
Some typical capital expenses include:
- a drip irrigation system for an almond orchard - tractors - land leveling for furrow irrigation - vines for planting a vineyard
Which are true about "enterprises" as discussed in this class?
- a whole business has one or more enterprises - a crop of carrots is an example of an enterprise - production of spring lambs is an example of an enterprise
If a rice farmer in 2018 receives crop income for a 2017 rice crop, to correctly record this income in the accounting books, that farmer must:
- actually the farmer can use any accounting system of choice as long as the income is recorded accurately
Which of the following are conformable with "AUM"?
- animal units stocked times months the grazing season is long - AU year-round - carrying capacity
An enterprise budget might consist of (select all that apply): - a corn-soybean rotation - beef cattle in a 500-acre pasture - multiple fields of tomatoes on one farm - the tractors used in an asparagus field - one field of soybeans on a farm
- beef cattle in a 500-acre pasture - multiple fields of tomatoes on one farm - one field of soybeans on a farm
The milpas of Mexico is a traditional agroecological system that:
- can produce increased yield production per unit of area, measured in total biomass - is a multiple crop system
In evaluating the efficiency of an irrigation system one should consider:
- capital cost of instillation vs the cost of operation - topography of the land to be irrigated - the kind or kinds of crop to be grown
Expenses typically paid at beginning of a project, or at the acquisition of a capital item are called (select all that apply): - investment opportunities - capital - capital costs - trees, vines and tractors - capital expenses
- capital costs - capital expenses
The components of pricing for farm commodities include (Select all that apply): - cost - competition - gross margin - yield - supply and demand
- cost - competition
Judging the efficiency of water usage by measuring amount of water it takes to produce one pound of beef or almond:
- doesn't really address the value of the commodities produced - is not really fair test since it doesn't apply a true unit of comparison
In a business partnership
- every partner is legally responsible for the debt of the partnership - every partner's personal assets can be attached by a debtor seeking to recover unpaid debts - every partner is legally responsible for the actions of the other partners
n the example given in lecture 4b, slide 5, some reasons why lettuce in Monterey County might use less total water than almonds is:
- growing season of lettuce is shorter than almonds - the lettuce grown at a cooler time of year - it's Monterey Co. location may have a cooler climate and thus less ET than Fresno Co
The Southern Corn Blight disaster in US corn production in 1968 is an example of:
- how a small biological problem can can quickly develop into a very large population problem - a lack of genetic diversity in the corn seed being used at the time
In an enterprise budget, equipment overhead expenses:
- include depreciation or a capital recovery charge
A good use of a sensitivity analysis in enterprise budgeting is:
- indicate the breakeven yield at a given price - indicate the breakeven price at a given yield
The following is true of depreciation (select all that apply):
- is not a cash expense - is typically treated as a fixed cost - is loss in value to farm machinery due to use and age
Using the AU model or one of its derivatives such as rotational grazing or Alan Savory's holistic grazing methods is a good management practice to avoid _________.
- loss of future forage productivity - market risk - the predominance of weedy plant species - soil erosion - loss of soil organic matter
The treament of certain commodities as fungible in the marketplace is useful to:
- make sure the product meets minimum quality standards - establish a market price based on a definite standard grade for the commodity
Examples of fixed costs are:
- property tax on the farm land - telephone and cell phone expense for the farm business
In designing a complimentary crop system the farmer would:
- seek a mixture of crops that makes thorough use of available resources - reduce competition for light, water and nutrients among the crops - might have some tall and some short crops - use a multiple crop system
Which is or are true of the balance sheet? The balance sheet __________.
- shows financial condition of the business - is for a whole business
In measuring water use over a growing season the following factors are considered in using the ET model:
- solar radiation - amount of rainfall - temperature
When inventorying the water resource in step 2, one should consider:
- source of water - availability of the water throughout the year - water quality
(Choose all that apply) An appropriately designed irrigation system will: - take the percolation rate of the soil into consideration - be based on the amount of water needed - take terrain and slope into consideration - consider the depth to which the crops will root
- take the percolation rate of the soil into consideration - be based on the amount of water needed - take terrain and slope into consideration - consider the depth to which the crops will root
In assessing the potential impact of climate change to a particular farm, you should consider (select all that apply):
- the estimated cost of trying to mitigate a problem resulting from the climate change - that changes in the weather may affect the farm's physical resources - how impacts to the production practices might affect the economics
The following items are typical kinds of items that should be included in production records (select all that apply):
- the number of times you disc-harrowed a field prior to planting barley - cartons of lettuce produced per acre - the day you planted your okra crop - pounds of fertilizer applied to a broccoli field
The term "AU" refers to:
- the rate of forage consumption by grazing animals, i.e., rate of grazing - animal units, a unit of measurement for stocking rate
Farmers are often price takers because:
- they often lack enough market share to influence the price one way or another - they often do not have the ability to profitably raise the market price of their products over their marginal cost - there are often many farmers selling the same commodities at the same time
Examples of variable costs are (select all that apply): - tires for a tractor - purchased compost used to fertilize a lettuce field - labor costs to hoe an onion field - land rent - liability insurance
- tires for a tractor - purchased compost used to fertilize a lettuce field - labor costs to hoe an onion field
Your budget does not include (select all that apply): - total cost of drip irrigation system - preplant costs - opportunity cost on variable costs - capital recovery - depreciation
- total cost of drip irrigation system - depreciation
An enterprise budget for one acre of asparagus should contain which of the following?
- units of production inputs to be used - overhead items such as land rent and taxes - expenses for growing the crop - calculation of profit or loss
Using evapo-transpiration (ET) as a means to measure crop water use:
- will give varying data depending on the kind of crop - will give varying the data depending on the weather - gives the lowest estimate of total applied water in most cases
If the microgreens business were to have borrowed less money at the beginning ($1,000,000 versus $3,000,000), based on the income and expenses given in the mini case study, its debt to asset ratio
- would have remained in the green zone the whole time period shown - would have been low, providing evidence that the farm was never at great risk in being or becoming insolvent - from a banker's perspective would likely be eligible to obtain additional loans if sought in the future.
The following kinds of water can be diverted from the source and flow to a farm field by gravity of may need a lift pump: - surface water - reclamation water - riparian water - rain water
-surface water - reclamation water - riparian water
Now, because the farm made profits in 2011 and 2012 and has plenty of cash at the end of 2012 (refer to your cash flow spreadsheet) make an extra loan repayment of $750,000 in 2013 (this is in addtion to the regularly scheduled principle repayment). With this repayment, what is the debt/asset ratio at the end of 2013?
0.44
Go to Slide 11 which is the original debt/asset ratio spreadsheet for the micro-greens farm. Insert $250,000 as a capital improvement in 2013. This changes the debt/asset ratio for the farm in 2013 to:
0.60
You have 10 doe goats in a 5-acre pasture. How long can you keep them there if you do not provide any supplemental feed, and the AUM rating of that pasture is 4 AUM per acre? N.B.—Assume 0.2 AU per doe.
10 months
A new Pinot Gris vineyard planting as a capital investment will cost you $50,000 per acre. If from that same vineyard you project your annual gross income to be $15,000 per acre, and your expenses to be $10,000, then your annual return on investment (ROI) is:
10 percent
Assuming ceteris paribus, if on one acre of land the yield without adding compost is 30 tons per acre, but if you add 2,000 pounds of compost the yield is 40 tons per acre, the delta δ is :
10 tons per acre
Using asset value instead of cash-flow to determine credit-worthiness of a borrower for a farm operating loan is:
10 tons per acre
You have 5 horses in a 10-acre irrigated pasture. How long can you keep them there if you do not provide any supplemental feed, and the AUM of that pasture is 10 AUM per acre? Assume 1.4 AU for each horse
14 months—meaning, you can keep them there year-round
The scenario is the same as the previous (problem 27): 125 acres of rangeland where you wish to operate a grazing enterprise for meat production. You are now considering sheep instead of steer. You are still keeping your two horses on-site year round, as in the previous problem, and have calculated how much carrying capacity in AUM will be leftover, which was the answer to the previous. How many head of sheep can you keep for a six-month grazing season with the two year-round horses? Each sheep is equivalent to 0.2 AU. (Round answer to the nearest 1 head.)
149 head
You have 125 acres of rangeland in Humboldt County, California suitable for grazing. This land has a usable carrying capacity for grazing animals of 1.7 AUM per acre in each annual cycle of grass renewal (assuming average rainfall and grass renewal). Your proposed business enterprise is raising steer for beef; they will be stocked for six months. You also have two working horses that you keep year-round, necessary helpers for managing the cattle. Assume that for steer, one head is 0.85 AU; and for horses, one head is 1.4 AU. Given this information, if you keep your horses on this land year-round, how much surplus carrying capacity will be left for your steer operation? (Round answer to the nearest 0.1 AUM.)
178.9 AUM
Assume that you have used the USDA Web Soil Survey to create these soil maps for the 19.3-acre field. From these maps you have learned that there are ____ soil types on the 19.3 acres.
2
Using the same information for cabbage as in question 14, what is the breakeven yield in cwt per acre?
246.23
If you get 2 units of energy by expending one unit in the manufacture of the 2, the EROEI of your energy source is:
2:1
If all costs presented in the cost study are considered and the same price per ton as given in the cost study's table 2 is used, in order for the tomatoes to make a profit of $159 per acre, the tomatoes would have to yield:
47.9 tons per acre
Given that the product being produced at the microgreens farm is a package containing 6 individual plastic clam-shells containers each weighing 72 grams (so we can call the unit a 6-pack) what would be an appropriate measure of physical efficiency for a production season?
6-packs per square foot of greenhouse space
In slide 24 of Lecture 10a, the crop yield of winter wheat levels off and ceases to increase at about:
80 lbs. per acre applied nitrogen
The correct gross income for wheat, sunflower and tomato are repectively
84,000, $296,875, $440,000
The EPA states that of the the total GHG produced in the USA as an externality of human activities, agriculture contributes
9% of the annual total
Based on your research, you have found that the average yield of tomatoes (use the data for "tomatoes in the open" on the website) in California in 2016 are:
903.6 cwt/acre
You have been asked to determine what is the carrying capacity of 5,000 acres of rangeland in a remote part of San Benito County. By studying the soil survey, you have discovered that the soils of these 5,000 acres in aggregate are rated as having 0.75 AUM per acre. How many cow-calf pairs can you safely place on these 5,000 acres for 4 months?
937
The profit in your budget does not equal the profit in the cost study because:
Actually, your budget profit does equal the profit in the cost study
In the Land Capability Classification System:
Class I through IV are suited for cultivation
Given the following set of data, sort the data by unit of comparison, with highest to lowest net income. Farm 1 is 100 acres, has $300,000 in gross income, and has $200,000 in expenses. Farm 2 is 50 acres, has $500,000 in gross income, and has $400,000 in expenses. Farm 3 is 3000 acres, has $1,000,000 in gross income, and $500,000 in expenses. Farm 4 is 20 acres, has $100,000 in gross income and $20,000 in expenses. The net income of the farms sorted by acres as unit of comparison has the following order, highest to lowest (choose the one right answer):
Farm 4, Farm 2, Farm 1, Farm 3
From your previous knowledge in ARE 140 you know that the Land Capability Classification System soil class rating of your 19.3 acres have:
Few limitations requiring only simple conservation practices when cultivated
To best apply the law of diminishing marginal returns in planting corn seed you should:
Look for the point where adding one more unit of seed input does not return any additional yield, and stop planting more seeds per acre at that point
From the following list of agricultural commodities select the one that is treated as fungible in the marketplace:
No. 2 yellow corn
In the Farm Management Plan Outline:
The Property Description is roughly analogous to the factors of production discussed in lesson 2.
Which is a correct statement about of the "cash method" of accounting? - The cash method is good for tracking enterprise profitability. - The cash method is desirable because it can help shift or defer tax liabilities. - It is widely used by farmers.
The cash method is desirable because it can help shift or defer tax liabilities. - It is widely used by farmers.
The concept of "food miles" is a controversy because:
there is a debate about what to measure and how to measure the energy use in bringing food to the end consumer
(T/F) A soil unit is a distinct and unique type of soil that can occur in more than one location.
True
(T/F) In lecture 5 slide 2, the farm business is shown embedded within the Economy, and the Economy is embedded within the World ecosystem.
True
(T/F) Interactions among various crops, crop plans, and equipment availability can sometimes be harmonious and beneficial.
True
(T/F) Models use assumptions which are not 100% verified
True
(T/F) More surface water is used for irrigation in CA than groundwater.
True
(T/F) Net income per acre is a valid unit of comparison.
True
(T/F) The USDA Land Capability Classification System is a handy rating system for soils:
True
(T/F) The household is part of the Economy even though no wages are paid for services provided.
True
(T/F) The production of beef cattle raised on a rain fed-pasture can be considered to use much less water than cows in a dairy fed grain grown under irrigation
True
(T/F) There are many goals in farm management that are not monetary.
True
You are a rancher with both sheep and cattle. You have been solicited to make a bid on renting a range property of 15,000 acres for grazing. You estimate your expenses at $500 per head for producing yearling steer (cattle) and $250 per head for producing spring lambs. You plan to stock 4,000 head of either animal. If you can get $750 per head for the steer at market time and $500 per head for the lambs, will one or the other enterprise yield higher net income?
Yes, the lambs will yield higher net income
You have leased a rangeland property of 12,500 acres in Washoe County (state of Nevada) for grazing sheep or cattle, with estimated expenses of $500 per head for producing yearling steer and $250 per head for producing spring lambs, and estimated marketing prices of $750 per head for steer and $500 per head for lambs. You plan to stock the land's carrying capacity of either spring lambs or steer. Will one or the other enterprise yield higher net income?
Yes, the lambs will yield higher net income
When used as fertilizer, nitrogen as anhydrous ammonia can be considered an energy input in agricultural production because:
a large amount of natural gas or other energy source is used to manufacture it
Profit per acre in your tomato budget amounts to:
a loss of $−123
What is the meaning of "externality" as it applies to farms?
a positive or negative consequence caused by an industrial or commercial activity that affects other parties but does not figure into the cost of production
Over the past century, productivity increases of modern industrial agriculture versus pre-industrial agriculture is associated with:
a sharp increase in the quantity of energy used in production
A government imposed quarantine that prevents one from marketing a crop due to a pest outbreak is an example of:
a step 4 nonphysical restraint that affects the property in question
In livestock production where the enterprise involves keeping and breeding the animals, having the proper percentages of different ages, to permit stable flock or herd size is an example of:
a typical management consideration
Solvency is
ability of the business to pay all of its debts if the business were to close, sell, etc. tomorrow.
If a grower sends 10,000 cartons of strawberries to Malmart with an invoice for $100,000, and then makes an entry of the $100,000 sale in her accounts-receivable journal, this is an example of:
accrual accounting
How does intercropping differs from complimentary crops?
actually, intercropping is a kind of complimentary system
Now you are ready to prepare a Step 6 economic test on the vegetable crops. Create your own tabular grid, using headings as illustrated in table 1:
all of the crops have the same yield unit of cwt per acre
A line of credit is a kind of farm loan that
allows the grower to draw from it as needed for cashflow up to a fixed limit
The use of least-cost rations is based on
an animal feed mix that treats all components of the feed formula as fungible
Riparian water rights:
are a right to the use of a natural flow of water on land if the land abuts the watercourse
That Caterpillar tractor you just bought for $150,000 cash would normally be recorded in your accounting records as:
asset
Not having a thermostat to control temperature is an example of
bad design or planning of the greenhouse and its operations
The difference between step 6 of the feasibility study and an enterprise budget is (select all that apply): - step six considers soil quality while an enterprise budget does not - step 6 uses generalized figures that are not necessarily specific to the farm situation - step 6 is a per acre calculation while the enterprise budget does not use a basic unit of comparison - A enterprise budget can be for crops or livestock - step 6 is better used to first compare the feasibility of different crops or livestock, but may not be as precise as an enterprise budget because step 6 may not have site specific figures
b) step 6 uses generalized figures that are not necessarily specific to the farm situation e) step 6 is better used to first compare the feasibility of different crops or livestock, but may not be as precise as an enterprise budget because step 6 may not have site specific figures
The micro-greens farm lost customers by not producing to order, but instead producing microgreen products on speculation, and not producing enough of the products desired by the customers (for various reasons including the horticultural problems mentioned). This production scheduling problem is an example of
bad planning and lack of management controls to recognize the problem
TRUE OR FALSE: In farming, given ceteris paribus, the cost of producing one more unit of a good can gradually decrease as as the amount of a single factor of production is incrementally increased.
false
As described in the mini case study, having no watering schedule and allowing an employee to water the microgreens whenever he wanted to water them is an example of:
bad planning, bad staffing and lack of management controls to recognize the problem
In a cashflow budget, the reason why the repayment of loan principle is shown as a cash outflow after net income is calculated is:
because repayment of debt principle is not a business expense.
The Cornell University study cited by the Pakistani researchers described successful small farmers in the USA as:
being niche marketers who may often sell directly to their local customers
Take your answer to question 15 and compare it to the debt/asset ratio for 2013 as shown in slide 23 of the mini case study, which is based on the strategy of borrowing only $1,000,000 and growing the business more slowly than was done by borrowing $3,000,000. From the standpoint of solvency, what was the better strategy? (refer to Financial Scorecard)
borrow the $1,000,000 and avoid most of the inefficiency problems
TRUE OR FALSE: Monocropping is the same as industrial agriculture.
false
For the 19.3 acres, step 6 of the feasibility analysis just performed is useful in:
comparing and ranking suitable crops for potential profitability
While all three components of pricing need to be taken into consideration, _____ is the most important.
cost
If you were setting up a partial budget to compare the cost of using a harvester operated by 2 laborers versus the cost of owning and operating a completely robotic harvester, what would you tabulate as the reduced cost? Assume that the same harvester is used in both cases, except that for the robotic harvest the exact same harvester is fitted with all necessary equipment.
cost of 2 laborers
If you were setting up a partial budget to compare the cost of using a harvester operated by 2 laborers versus the cost of owning and operating a completely robotic harvester, what would you tabulate as the additional cost? Assume that the same harvester is used in both cases, except that for the robotic harvest the exact same harvester is fitted with all necessary equipment, and one software engineer must operate the computer software.
cost of software engineer, cost of robotic software, cost of robotic equipment for harvester
A lease that pays rent of $250 per acre:
could be a cash lease or share crop lease
If you were forced to choose only one of the following for the microgreens business, which is more important, that the business should have a high NFIR (well into the green zone), or a low debt to asset ratio (in the green zone).
debt to asset ratio in the green zone
In CA from 1970 to 2010 the total acreage of irrigated field crops have:
decreased
Opportunity cost is not shown in a cashflow budget because
depreciation is not an actual cash expense.
TRUE OR FALSE: Multiple crop systems generally have less stable and constant productivity in the long term.
false
TRUE OR FALSE: In cost accounting, only crop fields and livestock can be cost centers.
false
TRUE OR FALSE: Net worth is the same as profit.
false
The addition of an interest on operating capital makes this tomato budget you just created a ___________ budget.
economic
For many crops such as corn and wheat:
energy (including fertilizer) make up more than half of total operating expenses
The fundamental management control function that the micro-greens farm could have used to identify the production scheduling problem noted above in question 5 is:
establish financial and physical standards for comparing results
A unit of comparison:
establishes a common point of reference
Because the capital debt repayment capacity (CDRC) is an absolute number rather than a ratio, it is a practical formula to:
estimate the maximum amount of capital that a borrower can repay within the specific time period being examined
"Ceteris paribus" is an assumption of many economic models that:
every variable but one is kept constant or equal
Your answer to question 13 means that the farm at the end of 2013 has:
fairly strong financial efficiency
TRUE OR FALSE: A shipping log for purposes of documenting food safety practices will always have the price of the commodity being shipped.
false
TRUE OR FALSE: Because farmer Vernon does not plant tomatoes until April each year, Vernon can run a cash accounting system over the 12-month period of April through March.
false
TRUE OR FALSE: Cost accounting at a field level is not valid because fields may vary in yield or expense.
false
TRUE OR FALSE: Fixed costs are never cash costs.
false
TRUE OR FALSE: In accounting, profit always includes opportunity costs.
false
TRUE OR FALSE: Owner's equity is also called net income.
false
Overhead is another word for:
fixed costs
Besides sunshine, the most significant energy source for modern industrial agriculture is:
fossil fuels such as diesel fuel and natural gas
The concept of appropriate technology seeks to:
get the job done at a low capital cost and also be energy efficient
On average, the energy input (measured as food calories) for modern production of grain is less than fruits and vegetables because:
grain has less transportation and production costs than fruits and vegetables
A gravity, flood or furrow irrigation system is cheaper to set up than a drip-irrigation system because:
gravity, flood or furrow irrigation systems typically have no above ground pipes, sprinkler heads, or emitters
On average in the USA, the farmer's share of the money spent on food in the USA:
has decreased from about 40% in 1950 to about 10% currently
The acreage of farm land in the USA used for pasturing work animals was approximately 46% in 1900 but dropped to approximately 3% in 2012 because:
horses, mules and oxen have been replaced by fossil fuels as the major energy source in agriculture
An agricultural system or model that depends heavily on purchased inputs in this course is called:
industrial agriculture
Intensive use of proprietary technology, often on a large scale, is a characteristic of
industrial agriculture
In terms of EROEI (measured in calories), industrial agriculture:
is far less efficient than ancient agriculture which used human and horses as the major energy source
Keeping sheep on range or biodiverse natural pastures _________.
is often an economical way to raise sheep and lambs
One problem in relying solely on wind and solar energy sources is:
is that wind and solar energy are not available 24/7, and so do not match the energy consumption pattern of modern life
From the perspective of EROEI, making ethanol from corn:
is very inefficient because it takes almost as much energy to produce it as it yields
An advance-purchase contract can be a form of capital if:
it advances money or production supplies to the farmer
Topography is an important factor of production because:
it affects water infiltration and soil depth
Leasing is a form of capital because:
it gives temporary possession of land to the tenant (lessee)
As a measure of energy efficiency EROEI is useful because:
it tells you what the net energy yield is of any activity
In the CA table grape industry:
labor expenses are increasing, and this has an effect on net profits
If a crop or livestock option does not prove to be suitable to the conditions identified in step 2, one would:
likely determine that option is not really feasible given the conditions
A good reason to keep production records is to
make appropriate marketing plans
One way of determining physically possible uses in step 3 is to:
match the crop with the soil pH
If the managers had established financial and physical standards for the micro-greens business, they could have:
measured the production and sales performance against the standards and then take action to improve performance
A certain meat-goat enterprise requires approximately $60,676 in capital start up costs while an alternative milk-goat enterprise requires an estimated $337,950 in start up costs. The meat-goat enterprise maintains an ongoing flock of 157 does and the milk goat enterprise maintains 500 does. Which enterprise has a lower start up cost per doe?
meat goat
The soils of Case Study no. 1 are:
mostly class II, irrigated in the Land Capability classification system.
On average, the biggest single energy input for corn is:
nitrogen fertilizer
The basic unit for a livestock enterprise budget is:
one head
Diesel fuel and gasoline are made from
petroleum
In the sum of energies model, population growth and energy use are:
plotted together to show how significant energy input has been to human population growth
In range and pastures, the four factors that control forage productivity and seasonal species composition are:
precipitation, temperature, soil characteristics, and residue
The difference between "dryland' and "rain fed" crops is:
rain fed crops grow during the rainy season
By completing the step 6 economic test one has:
ranked potential crop or livestock options in terms of net income per acre, or per hectare, etc.
How does your answer to question 12 score on the financial scorecard for NFIR? (See the Financial Scorecard sheet in lecture 11b, pp. 15 to 18, or the same image in the mini-case study, slide no. 17.)
red zone for 2010, border between yellow and green for 2011 & 2012 and green zone for 2013
The Haber-Bosch process for manufacturing nitrogen fertilizer:
requires a large amount of energy derived from the burning of natural gas (methane)
A grazing system that allows for sufficient recovery time of the plants so that forage amounts are increased overall is called
rotational grazing
In the economic study study in Punjab, one additional rupee(Rs.) spent on seed, fertilizer and pesticides returned Rs. 0.47 in net income, meaning:
spending that extra rupee on fertilizer increased profit
Based on your research completing the step 6 grid, what are the bottom five crops in net income per acre?
spinach, asparagus, garlic, broccoli, cucumber
In a feasibility analysis identifying severe pest problems is a part of:
step 2
The economic study in Punjab described in the lesson and lecture concluded that the farmers with the highest net income:
substituted management and labor for capital and purchased inputs
The law of the minimum and the law of limiting factors are useful in analyzing:
which factor is the one that limits the yield
You can use the carrying capacity concept to understand the number of grazing animals ___________.
that can be stocked so that a pasture is well utilized but not degraded
The time value of money is based on:
the concept that being given a dollar today is worth more than being given a dollar next year
R.H. Phillips winery opened in 1983 and started selling its first wine in 1984. The company was founded by husband-and-wife team John and Lane Giguiere, and John Giguiere's brother, Karl. R.H. Phillips Winery went public in 1995. The company was sold in August 2000 to Canadian wine giant Vincor International Inc. Then in 2006 Constellation Brands purchased Vincor. This latter stage of the RH Phillips winery business would be characterized as
the consolidation stage
In the law of diminishing returns, marginal cost is:
the cost of producing one more unit of a crop or livestock
Even though ceteris paribus is rarely achieved, the general principle of the production function is useful in planning the use of farming inputs because
the farmer needs to realize that there is a likely maximum output obtainable from a given set of inputs
Mama's Best Produce started in 1981 on 10 acres of land near Davis, California, and was an early adopter of the CSA method of selling its vegetables to local residents of the Davis area. In 2002, the farm began an agressive advertising campaign and began delivering vegetables to customers as far as Los Angeles, some 350 miles away. In the life cycle of a business, this latter stage of Mama's Best Produce business history is an example of
the growth stage
An example of the commons portion of the economy is:
the internet
The effect of added nitrogen in slide 24 of Lecture 10a is an example of:
the law of diminishing returns
Professional farm management is distinguished from other kinds of management by:
the manager has a contractual relationship with the land owner to act as his agent in managing the farm
Which of the the following is not a factor of agricultural production: - soil - vegetation - pests - the production function
the production function
A dis-economy of scale can occur if
the scope of the business exceeds the farmer's management capacity
One major advantage of a corporation over other forms of business organization is that:
the shareholders and managers of the corporation are not personally liable for the corporation's debt or legal affairs
One measure of energy efficiency in agriculture is:
the specific input of primary energy per tonne of agricultural product
The management of drip irrigation systems is rated easy in lecture 4b, slide 30 because:
the technology of the system is high, and is designed specifically for the site and the crop
Crops can use rainwater for evapo-transpiration directly if:
the water percolates into the soil and is stored there
If you were setting up a partial budget to compare the cost of using a harvester operated by 2 laborers versus the cost of owning and operating a completely robotic harvester, what would you tabulate as the additional revenue? Assume that the same harvester is used in both cases, except that for the robotic harvest the exact same harvester is fitted with all necessary equipment, and one software engineer must operate the computer software. Also assume that there is no difference in the amount of grain harvested by either method.
there is no additional revenue
If you were setting up a partial budget to compare the cost of using a harvester operated by 2 laborers versus the cost of owning and operating a completely robotic harvester, what would you tabulate as the reduced revenue? Assume that the same harvester is used in both cases, except that for the robotic harvest the exact same harvester is fitted with all necessary equipment, and one software engineer must operate the computer software. Also assume that there is no difference in the amount of grain harvested by either method, and that the barley price remains the same in both cases.
there is no reduced revenue
No till crop production has the potential to be energy efficient because:
tillage requires energy, usually diesel fuel
Based on your research completing the step 6 grid, what are the top five crops in net income per acre?
tomato, pepper, potato, watermelon, cabbage
TRUE OR FALSE: A land-usage charge—rent—is included in your budget.
true
TRUE OR FALSE: A real estate lease conveys the right of temporary possession
true
TRUE OR FALSE: A university cost study can be a good source of information to create an enterprise budget, provided the assumptions in the study are in line with your own assumptions.
true
TRUE OR FALSE: Acquiring tenure is a major impediment to beginning farmers
true
TRUE OR FALSE: Cost accounting collects revenue and expense information in cost centers that then can be analyzed in enterprise budgets.
true
TRUE OR FALSE: Farmers that are price takers are an example of the economic theory of perfect competition.
true
TRUE OR FALSE: Forage refers to vegetation that animals can eat.
true
TRUE OR FALSE: In terms of real estate, tenure can be permanent or temporary.
true
TRUE OR FALSE: It is okay to record the purchase of a $150,000 Caterpillar tractor in a cash accounting system if you plan to depreciate the tractor over a 5-year period.
true
TRUE OR FALSE: Land rents in agriculture typically are related to the market value of the land
true
TRUE OR FALSE: Most farms in the USA are organized as sole proprietorships.
true
TRUE OR FALSE: No-till farming practices have historically and typically depended on the use of herbicides to control weeds, although recently organic methods of no-till are beginning to be adopted
true
TRUE OR FALSE: The animal unit (AU) is a standard measure that can be used to compare the amount of feed or forage different animal species will consume.
true
TRUE OR FALSE: The concept of carrying capacity in livestock grazing management is based on the observation that there is only so much forage available at any one time, and so to avoid over-grazing a pasture, either the time allowed for grazing must be limited, or the number of animals must be limited
true
TRUE OR FALSE: To prepare an accurate budget, you will required a crop plan that details the farming operations for that specific crop
true
TRUE OR FALSE: Was the goal to reduce the loan principle achieved at year end?
true
One practical method of being energy efficient in using farm machinery is:
use the minimum horsepower required to the job
The economic study in Punjab described in the lesson and lecture found a difference in net income among Punjab farmers due to:
using more intensive management
When we say that a farm is a primary producer we mean:
utilizing solar energy, the farm makes food and fiber products directly from natural resources
When we examine a model for appropriateness we mean:
we are asking does the model adequately explain all the data
Grazing animals as a commercial enterprise is often called "grass farming" because:
weight gain in the animals is closely related to the management of the grass
An example of a non-physical constraint (step 4) imposed by government is:
zoning laws imposed by the local jurisdiction
Using your new spreadsheet created from the answers to problems 9,10 and 11, calculate the Net Farm Income Ratio (NFIR) for the farm in the years 2010 through 2013. Your answers for the years in sequence as 2010, 2011, 2012, 2013:
−100%, 20%, 20%, 24% (use NEW income)
