Making a budget

This study guide was published by ILO as a MATCOM Learning Element in 1984. It takes the reader through the discussions of a farmers' cooperative committee meeting as they prepare a budget for their next year's operations. The example cooperative is involved in both marketing produce and selling inputs and each lesson covers a different stage in the budgeting process, e.g. estimating income from the sales of produce and sales of supplies, estimating the running costs, preparing the final budget and estimating the net surplus, preparing a cash budget. All the calculations involved are carefully explained. The original Learning Element was written in the days when there was much more government intervention in agricultural markets in developing countries than there is now. Prices were often controlled and produce had to be sold to state controlled marketing boards. So the text has been edited to place the cooperative in the context of free market conditions for produce sales. However, a government controlled price for fertiliser has retained as this does still occur and it may be helpful to show how a cooperative can budget to make a surplus, even under these conditions.

Copyright © 1984 International Labour Organization 

Web edition (revised) Copyright © 2006 Food and Agriculture Organization

Resources

resource title type year resource
"Check out!" Test Questions on Making a Budget Document 1984
This resource appears in: Making a budget

A set of multiple choice and discussion questions to help you check how well you have understood the process of making a budget for an agricultural cooperative.

Author MATCOM / ILO
Region / Country Global
Keywords Self Assessment Exercise
A summary of steps in making a budget Document 1984
This resource appears in: Making a budget

A brief summary setting out the main steps in the process of making a budget as a series of checklists.

Author MATCOM / ILO
Number of Pages 1 pp.
Region / Country Global
Keywords Budgeting, Agricultural Cooperatives
Lesson 1: Introduction to the Cooperative Lesson 1984
This resource appears in: Making a budget

This brief introduction sets the scene for the following lessons by introducing the cooperative and the agenda for the budget preparation committee meeting.

Author MATCOM / ILO
Region / Country Global
Keywords Cooperative Services
Lesson 2: Estimating the sales of produce Lesson 1984
This resource appears in: Making a budget

In this lesson the committee discuss the estimates of how much produce they will be selling on behalf of their members and what prices they can expect to get. They then review the commission that they will need to deduct from the selling price to cover their costs. At the end of this process they have the figures of projected income from their marketing service to include in the overall budget.

Author MATCOM / ILO
Region / Country Global
Keywords Cooperative Services
Lesson 3: Estimating the sales of supplies Lesson 1984
This resource appears in: Making a budget

In this lesson the committee of Unity Cooperative work out how much income they can expect to get from their input supply service. They make sales estimates and review their mark-up policy, taking into account the effects of price inflation, government controlled prices and leakage on their calculations.

Author MATCOM / ILO
Region / Country Global
Keywords Cooperative Services
Lesson 4: Estimating the gross surplus and running costs Lesson 1984
This resource appears in: Making a budget

In this lesson the committee of Unity Cooperative work out the gross surplus they expect to get and then discuss and decide on estimates for their expected running costs in the next year, including wages, interest, transport, depreciation and other costs.

Author MATCOM / ILO
Region / Country Global
Keywords Cooperative Services
Lesson 5: Completing the budget Lesson 1984
This resource appears in: Making a budget

The objective of this lesson is to show how the estimates of sales and costs are used to complete a budget for a cooperative and how the management committee can then see if they will make enough surplus altogether to cope with any problems that may arise

Author MATCOM / ILO
Region / Country Global
Keywords Cooperative Services
Lesson 6: Preparing a cash budget Lesson 1984
This resource appears in: Making a budget

In this lesson you will follow the manager of Unity Cooperative as he constructs a cash budget to see whether there are months in which he may have insufficient cash to meet expenditure requirements. This type of budget enables a manager to predict when it is necessary to arrange short term borrowing to maintain operations.

Author MATCOM / ILO
Region / Country Global
Keywords Cooperative Services
Lesson 7: Following up the budget Lesson 1984
This resource appears in: Making a budget

The objective of this lesson is to explain the importance of checking the cash budget and comparing actual results with the estimates. This process enables the manager to see if things are going to plan and if they are not, to discuss remedial action with the committee or bank.

Author MATCOM / ILO
Region / Country Global
Keywords Cooperative

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