Partial Budget Analysis

Partial budget analysis is a marginal method of farm management economics that evaluates the profitability of a single, well-defined change to a farm plan — adopting a new variety, adding an irrigation, switching a feed ration — without rebuilding the whole-farm budget. Codified for agronomic recommendation work in the CIMMYT Economics Program's 1988 manual From Agronomic Data to Farmer Recommendations, it rests on a simple insight: only the costs and revenues that actually change need to be counted. The analyst arranges those changes into four cells — added revenue and reduced costs on the positive side, reduced revenue and added costs on the negative side — and the net of the two columns is the change in profit attributable to the change alone.