July 1986 A .E. Ext. CENT AL PLAI REGIO 1985 J": IOUY JO. 1916 IfY ........... . ...... PARJoo WO. l'OOl 19'5 FARM lRJ'ar.-uS lO , hel t.ancl/blcS91 rellCe ref Tax•• Infirane8 RUlt r. 1.... 1'O'I'J.L o'DA..'rur Uv..-toc Mat .... ,. 4.pr.ci l B\lilcll nt d8pnci .. TOnL >.CdI!JAI • if.£ uouni or SN= tbe yNZ. A 4aol will l.no:r-ua .. that dU .... •• un.,.ld or the yeu' . lID. .. '0 flaccO ;r.75 ••• 14(]OO ... 14 .. 3l0'10, ... 4. J, 7•• .!.!!.! " '0 9Ii!I4IOO L75 ." 1.... 00 . .. 14 '" 4.17 ... 5719 2351 ill, ,.. S -fU5 .. ·"'1 $ -lit•• -15. ", " " 1111150-, <I,;:; '<0 J4!OQ '.7 " '" 5.41!1 "l 18557 1.)1502 2174 -6 .5 , - Robert A. Milliga n linda D. Putn am Dep ar tme nt of Agr ic ultu ral Econo mics New York St at e Co ll ege of Agr iculture an d life Sciences A Colle"., 01 Ihe Sia l. Uni.e" i Iy Cornell University. Ithaca, New York 14853
29
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July 1986 AE Ext 86~21
CENT AL PLAI REGIO 1985
JIOUY JO 1916
IfY
PARJoo WO lOOl 195 DAlr~ y FARM lRJar-uS ~y
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-Robert A Milliga n
linda D Putn am
Department of Agricultu ral Econo mics New York State College of Agriculture and life Sciences
A SIQI~Qry Colle 0 1 Ihe Sial Unie i Iy
Cornell University Ithaca New York 14853
1985 DAIRY FARM BUSINESS SUMMARY Central Plain Region
Introduction
Dairy farmers throughout the State have been participating in New York Cooperative Extensions farm business summary and analysis program since the early 1950s Each participating farmer receives a complete summary and analysis of his or her farm business in addition to this publication The information in this report is compiled by averaging data submitted from the region described at the bottom of this page
Program Objective
The primary objective of the dairy farm business summary DFBS is to provide farm managers information concerning profitability financial condishytion productivity and efficiency to be used to assist them in delineating the strengthsweaknesses of the farm business and to improve decision-making In short DFBS identifies the records farmers need and provides information to be used in making business and financial management decisions
Program Improvements
The 1985 DFBS report features improved accrual accounting procedures a new measure of farm profitability a more indepth balance sheet an annual cash flow statement and several major improvements in the business analysis format and the analysis measures used These and other changes are identified in the body of this report
The revised format provides one full page for the analysis of the farm cropping program and another for complete analysis of the dairy program Corn and hay crop related expenses are evaluated separately for cooperating farmers The cost of producing milk per cow and per hundredweight of milk sold has been compiled An annual cash flow worksheet has been added to the farmers individual report The popular Progress of The Farm Business report has been moved to page one of the farmers report and added to this pubHcation
Micro DFBS which allows Cooperative Extension agents and specialists to calculate and print individual farm business reports in their offices is now being used by more than 50 percent of our dairy farm management field staff This innovative program provides faster processing of farm record data and increased use of DFBS in farm management programs
This summary was prepared by Linda D Putnam and Robert A Milligan Department of Agricultural Economics New York State College of Agriculture and Life Sciences Cornell University in cooperation with Cooperative Extension Specialist Larry N Davis The Central Plain Region is comprised of Ontario Seneca Wayne and Yates counties
2
SUMMARY OF THE FARM BUSINESS
Business Characteristics
Finding the right management strategies is an important part of farming Various combinations of farm resources enterprises business arrangements and management techniques are used by the dairy farmers in this region The following table shows important farm business characteristics and the number of farmers reporting these characteristics
BUSINESS CHARACTERISTICS 23 Central Plain Region Dairy Farms 1985
Type of Farm Number Type of Business Number Dairy 14 Single proprietorship 14 Part-time dairy 2 Partnership 9 Dairy cash-crop 5 Corporation o Part-time cash-crop dairy 2 Other o
Type of Ownership Number Type of Barn Number Owner 22 Stanchion 7 Renter 1 Freestall 13
Other 3
Milking System Number Business Record System Number Bucket amp carry o CAMIS 5 Dumping station 2 Account Book 8 Pipeline 8 Agrifax (mail-in only) 7 Herringbone parlor 12 On-Farm Computer I Other parlor 1 Other 2
Dairy Records Service Number Number DHIC 21 Other 1 OS 1 None o
Milk Diyersion Prosram Participants Number 4
The averages used in this report were compiled using data from all the participating dairy farms in this region unless noted otherwise There may be regular dairy farms part-time farms dairy cash-crop farms farm renters partnerships and corporations included in the average These specific classifications are used to separate farms in the State Business Summary
A part-time farm has less than 12 months of labor from all operators
A dairy cash-crop farm has income from crop sales that exceed 10 percent of milk sales
A farm renter owns no farm real estate at the end of the year or owns no tillable land
Milk Diversion Proampram Participants are the farmers that were in the 1984-85 federal milk diversion program These farms have also been included in the regional summary averages
3
Income Statement
The revised accrual income statement begins with an accounting of all farm business expenses
CASH AND ACCRUAL FARM EXPENSES 23 Central Plain Region Dairy Farms 1985
Cash Change in Change in Accrual EXBense Item faid + Inventoo + Acconta fapoundable Ji2Wenses
Cash Baid is the actual amount of money paid out during the year and does not necessarily represent the cost of goods and services actually used
Accrual eXBenses are the costs of inputs actually used in this years production The value of feed and supplies used out of inventory are included as are the costs of inputs purchased but not paid for (net increases in accounts payable) Items paid for and not used (net additions to inventory) are excluded from accrual expenses as are payments made on inputs used in a prior year (net decreases in accounts payable)
4
Worksheets are provided to enable any dairy farmer to compute his or her accrual farm income and compare it with the averages on the opposite page
CASH AND ACCRUAL FARM EXPENSES WORKSHEET
Cash Change in Change in Accrual Expense Item Paid + Inventory + Accounts Payable Expenses
Hired Labor Feed Dairy grain amp cone Dairy roughage Other livestock Machinery Mach hire rentlease Machinery repairsparts Auto expense (fs) Fuel oil amp grease Livestock Replacement livestock Breeding Vet amp medicine Milk marketing Cattle leaserent Other livestock expense Crops Fertilizer amp lime Seeds amp plants Spray other crop expo Real Estate Landjbldgfence repair Taxes Insurance Rent amp lease Other Telephone (fs) Electricity (fs) Interest paid Miscellaneous Total Operating Expansion livestock Machinery depreciation Building depreciation
TOTAL ACCRUAL EXPENSES
$_-- $_-- $_-- $_--shy
$___ $_-- $_-- $_--shy
$ $ $ $
Cash paid is the actual amount of money paid out during the year and does not necessarily represent the cost of goods and services actually used
Accrual expenses are the costs of inputs actually used in this years production Purchased feed and supplies used out of inventory must be included Beginning of year less end of year purchased feed and supply inventory equals the change in inventory to include in accrual expenses Feed supplies and services used but not paid for must be included by adding the net increase in operating accounts payable Increases in operating accounts payable are determined by subtracting the balance at the beginning of the year from the end of year balance
5
CASH AND ACCRUAL FARM RECEIPTS 23 Central Plain Region Dairy Farms 1985
Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other
Total Accrual Receipts
$177 112 11623
2073 3898
12481 6576
148 303
5234
$219448
$1216
-741 100
$ 575
$-423 550
0 0
298 -969
0 0
---22
$-322
$176689 13388
2073 3157
12879 5607
148 303
5456
$219700
Cash receipts includes the gross value of milk checks received during the year plus all other payments received for the sale of farm products services and government programs
Accrual receipts represent the value of all farm commodities produced and services actually provided by the farmer during the year Increases in liveshystock inventory caused by herd growth andor quality are included as accrual receipts Decreases in inventory caused by herd reduction are deducted Changes in inventories of crops grown are accounted for in accrual receipts Changes in accounts receivable include the January milk check for this Decemshybers marketings compared with the previous Januarys check and other delayed payments
Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other
Total Accrual Receipts
$_-- $_-shy
$_-- $_-shy
To calculate the change in inventory to be included in the above worksheet subtract the beginning of year values from the end of year values excluding appreciation Th~ changes in inventories caused by declining prices must be excluded from the calculation of accrual receipts Changes in accounts receivable are also determined by subtracting beginning of year balances from end of year balances
----_ _--shy
6
Profitability Analysis
Farm ownersoperators contribute labor management and capital to their businesses and the best combination of these resources produces optimum profits Farm profits can be measured as the return to all family resources or as the return to one or more individual resources such as labor and management
Net farm income is the total combined return to the farm operator(s) and other unpaid family members for their labor management and equity capital It is the farm familys net annual return from working managing financing and owning the farm business This is not a measure of cash available from the years business operation Cash flow is evaluated later in this report
Net farm income is computed with and without appreciation Appreciashytion represents the change in livestock machinery and real estate inventory values caused by changes in prices during the year Appreciation is a major factor contributing to changes in farm net worth and must be included in the profitability analysis
NET FARM INCOME 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Total accrual receipts Appreciation Livestock
Machinery Real Estate
Total Including Appreciation Total accrual expenses Net Farm Income (with appreciation) Net Farm Income (without appreciation)
$219700 -7658 5072
-114 $217000
211545 $ 5455 $ 8155
$_--shy
$_-shy
$_-shy$_-shy
Return to operators) labor management and equity capital measures the total business profits for the farm operators It is calculated by deducting a charge for unpaid family labor from net farm income Operator(s) labor is not included in unpaid family labor Return to operator(s) labor manageshyment and equity capital has been compiled with and without appreciation Appreciation is considered an important part of the return to ownership of farm assets
RETURN TO OPERATOR(S) LABOR MANAGEMENT AND EQUITY 23 Central Plain Region Dairy Farms 1985
Item
Av~uage Without With Wprec Wprec
My Farm Without With Wprec Apprec
Net farm income $8155 $5455 $_-shy $_-shyFamily labor unpaid
Labor and manaampement income is the share of net farm income without appreciashytion returned to the operator(s) labor and management Appreciation is not included as part of the return to labor and management Labor and management income is determined by deducting the cost of using equity capital at a real interest rate of five percent from the return to operator(s) labor manageshyment and equity capital excluding appreciation The interest charge reflects the long-term average rate of return that a farmer might expect to earn in comparable risk investments in a low inflation economy
Labor and manaampement income per operator measures the return to each operators labor and management
LABOR AND MANAGEMENT INCOME 23 Central Plain Region Dairy Farms 1985
Item Averaampe My Farm
Return to operator(s) labor management amp equity without appreciation
Real interest 5 on $338140 equity capital
Labor amp Management Income (142 operators)
Labor amp Management Income per Operator
$ 7055 $_-shy
16907
$-9852
$-6954
$_-shy
$_--shy
Return on equity capital measures the net return remaining for the farmers equity or owned capital after a charge has been made for the owner-operators labor and management The earnings or amount of net farm income allocated to labor and management is the opportunity cost or value of operator(s) labor and management estimated by the cooperators Return on equity capital is calculated with and without appreciation The rate of return on equity capital is determined by dividing the amount returned by the end of year farm net worth or equity capital
RETURN ON EQUITY CAPITAL 23 Central Plain Region Dairy Farms 1985
Item Averaampe My Farm
Return to operator(s) labor management amp equity capital with appreciation
Value of operator(s) labor amp management
Return on equity capital with appreciation
Rate of return on equity capital with appreciation
Return on equity capital without appreciation
Rate of return without appreciation
$ 4355
26118
$-21763
-64
$-19063
-56
$_--shy
$_-shy
$_-shy
8
Farm and Family Fipancial Status
Evaluating the financial status of the farm business and the farm family is an important part of business analysis The first step is to recognize all the assets and liabilities that make up the balance sheet The second step is to analyze your filled out balance sheet by evaluating changes made during the year
1985 FARM BUSINESS amp NONFARM BALANCE SHEET 23 Central Plain Region Dairy Farms 1985
Farm Liabilities Farm Ass~tsect JSn 1 Dec 31 ~ Net W0Ith JSn 1 Dilc 31
Total Farm Assets $656953 $637122 Total Farm Liab $299804 $298981 FARM NET WORTH $357149 $338140
Nonfarm Liabilities NonfSI Assect~tsect Jm 1 D~pound n ~ N~t i2Ith Jm 1 Qec 31
Personal cash chkg amp savings $ 505
Cash value life ins 5331 $ 692
6058
Nonfarm Uab NOHfARM HiT iQRTH
IfARM amp6QHFARM
$ 0 ~17lJZ Jan 1
$ 0 ~18JIZ Qec ~l
Nonfarm real estate 1063 451 ITotal Assets $674090 $655439 Auto (personal sh) Stocks ampbonds
2861 1611
3087 2034
ITotal Liabilities I
2998Q4 98981
Household furn 5365 5674 I All other Ql 321 ITOTAL FARM amp NON-
Total Nonfarm $ 17137 $ 18317 I FARM NET WORTH $374286 $356457
Financial lease obligations are included in the balance sheet The present values of all future payments are listed as liabilities since the farmer (lessee) is committed to make the payments The present values are also listed as assets representing the future value the item has to the business
9
1985 FARM BUSINESS amp NONFARM BALANCE SHEET
Farm Assets Jan 1 Dec 31 Farm Liabilities amp Net Worth Jan 1 Dec 31
Current Farm cash checking amp savings
Accounts rec Feed amp supplies
Current Accounts payable Operating debt Short-term
Nonfarm Liabilities Nonfarm Assets Jan 1 Dec 31 ampNet Worth Jan 1 Dec 31
Nonfarm Liab Personal cash
amp savings chkg
Cash value life ins
Nonfarm real est Auto (pers share) Stocks ampbonds
Total Nonfarm Liabilities
Household furn All other Nonfarm
Total Nonfarm Net Worth
TOTAL FARM ~ NONFARM Jan 1 Dec 31
Total Farm amp Nonfarm Assets Less Total Farm amp Nonfarm Liabilities Farm amp Nonfarm Net Worth
10
Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed
BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309
Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047
long-term 058 intermediatecurrent 036
Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59
Intermediate amp current debt
Current amp inter 1iab as a of total debt 41
Farm Debt Levels Total farm debt Long-term debt
Per Cow $3082
1830
Per Tillable Acre Owned
$1220 725
Per Cow $_-shy
1252 496
$_-shy$_-shy
----_ ---_ ---_
Per Tillable Acre Owned $_--shy
Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these assets used on the balance sheet and the changes that occur from the beginning to end of year Changes in the livestock inventory are included in the dairy analysis
FARM INVENTORY BALANCE 23 Central Plain Region Dairy Farms 1985
Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg
Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy
$1330 land and $4097 buildings andor depreciable improvements
11
Cash Flow Summary and Analysis
Completing an annual cash flow summary and analysis is important to determine how well the cash generated by the business plus that brought in from outside met the annual cash needs of the business and the farm family Understanding last years cash flow is the first step toward planning and managing cash flow for the current and future years
The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end When all the cash inflows and outflows are correct the statement will balance If the imbalance (error) amount is positive recorded cash inflows exceed outflows by this amount If it is negative cash outflows are too high in relation to inflows
ANNUAL CASH FLOW STATEMENT 23 Central Plain Region Dairy Farms 1985
Item Average My Farm Cash Inflows
Beginning farm cash checking amp savings
Cash farm receipts
Sale of assets Machinery
Real estate
Money borrowed (intermediate amp long-term)
Money borrowed (short-term)
Increase in operating debt
Nonfarm income
Money borrowed - nonfarm
Total
Cash Outflows
Cash farm expenses
Capital purchases Expansion livestock
Machinery
Real estate
Principal payments (intermediate amp long-term)
Principal payments (short-term)
Decrease in operating debt
Nonfarm debt payments
Personal withdrawals amp family expo
Ending farm cash checking amp savings
Total
Imbalance (error)
$ 2675
219448
214
7363
24469
2485
750
1461
0
$258865
$182243
918
11654
5427
27561
620
0
0
10708
1734
$240860
$ 18005
$
12
Repayment Analysis
The second step of cash flow planning is to compare and evaluate debt payments planned and made last year and estimate the payments required in the current year It is helpful to compare and evaluate by using debt payments per unit of production and receiptdebt payment ratios
FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986
Debt Payments
Avetaamp~ 1985 Payments
Planned Made Planned
1986
My Farm 1985 Payments
Planned Made Planned
1986
Long-term IntermShort-Operating (net
redu
(net reduction)
ediate-term term
ction Accounts payable
$20431 30095 9705
0
6294
$28583 29330 1004
0
3548
$17021 27543
3490
3769
2112
$_-- $_-- $_-shy
Total $66526 $62465 $53934 $ $_-- $_-shy
Per cow Per cwt Percen
1985 milk t of total
$723 $477
$679 $448
$ $_-shy$_-_$_-shy
1985 receipts Percent of 1985
29 27
milk receipts 38 35
The Cash Flow Covetaampe Ratio measures the ability of the farm business to meet its planned debt payment schedule The ratio shows the percentage of planned payments that could have been made with last years available cash flow report
Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments
CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985
(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077
Personal withdrawals and family expenditures less nonfarm income If family withdrawals are excluded the cash flow coverage ratio will be incorrect
------
13
ANALYSIS OF THE FARM BUSINESS
The farm business has been divided into three parts indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency
to allow a m and the
more factors
Cropping Program Analysis
The cropping program is an important part of the dairy farm business and sometimes it is overlooked and neglected A complete evaluation of available land resources how they are being used how well crops are producing and what it costs to produce them is required to evaluate alternative cropping and feed purchasing choices
LAND RESOURCES AND CROP PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Land Tillable Nonti1lable Other nontillable
Total
Crop Yields Hay crop Corn silage
Other forage Total forage Corn grain Oats Wheat Other crops Tillable pasture Idle
Total Tillable Acres
~ Rented Total 245 163 407
20 7 26 90 -1Q 100
355 180 533
fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn
47 tn DM 2 14 12 tn DM
23 205 35 tn DM 22 124 806 bu 13 46 807 bu
9 36 626 bu 8 42 6 19
12 45 407
Rented
~ frodLAcre tn DM tn tn DM tn DM tn DM bu bu bu
Average crop acres and yields compiled for the region are for the number of farms reporting each crop Yields of forage crops have been converted to tons of dry matter using dry matter coefficients reported by the farmers Grain production has been converted to bushels of dry grain equivalent based on dry matter information provided
The following measures of crop management measure how efficiently the land resource is being used and how well total forage requirements are being met
CROP MANAGEMENT FACTORS 23 Central Plain Region Dairy Farms 1985
Item My Farm
Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow
431 217 760
14
Cropping Program Analysis (continued)
A substantial number of cooperators have allocated crop expenses to hay crop corn and other crop production This additional data has been compiled to show the traditional crop expenses per acre and per production unit for these crops Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed
to equal one ton of
CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops
Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres
Corn grain converted to silage equivalent using 588 bushels - one ton silage as fed
Most machinery costs are associated with crop production and should be analyzed with the crop enterprise Total machinery expenses include the major fixed costs (interest and depreciation) as well as the accrual operating costs Although machinery costs have not been allocated to individual crops they are shown per total tillable acre
ACCRUAL MACHINERY EXPENSES 23 Central Plain Region Dairy Farms 1985
My Farm Machinery Total Per Til Total Per Til
Expense Item Expenses Acre Expenses Acre
Fuel oil amp grease Machinery repairs amp parts
$ 9606 12071
$2358 2963
$_-shy $_-shy
Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919
Total $51364 $12607 $_-shy $_--shy
15
Dairy Program Analysis
Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business Changes in dairy herd size and market values that occur during the year are identified in the table below The change in inventory value without appreciation is attributed to physical changes in herd size and quality This real increase in inventory has been included as an accrual farm receipt on page 5
DAIRY HERD INVENTORY 23 Central Plain Region Dairy Farms 1985
pairy Cows Heifers Item Number Value Number Value
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
92
96 97 95
$79625 3763
-4784 $78604
89
87
88
$42800 -2548 -2757
$37495
My Farm
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
$_--shy
$_--shy
$_--shy
$_--shy
Total milk sold and milk sold per cow are extremely valuable measures of productivity on the dairy farm These measures of milk output are based on pounds of milk marketed during the year
MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item
Total milk sold lbs
Average
1399978
My Farm
Milk sold per cow lbs 14811
Average milk plant test percent butterfat 365
16
The cost of producing milk has been compiled using the whole farm method and is featured in the following table Accrual receipts from milk sales can be compared with the accrual costs of producing milk per cow and per hundredweight of milk Using the whole farm method operating costs of producing milk are estimated by deducting nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation
ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt
Accrual Costs of Producing Milk Operating costs Total costs withshy
$140178 $1483 $1001 $_-shy $_-shy $_-shy
out op(s) labor mgmt amp capital
Total Costs $169633 $212658
$1795 $2250
$1212 $1519
$_-shy$_-shy
$_-shy$_-shy
$_-shy$_-shy
The accrual operating expenses most commonly associated with the dairy enterprise are listed in the table below Evaluating these costs per unit of production enables the comparison of different size dairy farms
DAIRY RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt
Purchased dairy grain amp concentrates
Purchased dairy roughage Total Purchased
Dairy Feed Purchased grain amp conc as of milk receipts
as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense
$308 ---12
$208 JLU
$ $_-shy
$339 $229 $ $_--shy
$571 16
$386 $ -- $_-shy
$31 41
101 2
81
3U $021 027 068 001 055
$ $_-shy
17
Capital and Labor Efficiency Analysis
Capital efficiency factors measure how intensively the capital is being used in the farm business Measures of labor efficiency are key indicators of managements success
CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985
Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned
Farm capital Real estate Machinery amp equipment Capital turnover years
$180569
36469
$6845 3280 1383
295
$1588
321
$2641 1265
My Farm Farm capital Real estate
$_-shy $_--shy $_-shy $_-shy
Machinery amp equipment Capital turnover years
LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985
Labor Force Months Age
Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired
Total
My Farm Total Operators
11 4 2 6 2
18 43
44 44 32
+ 12 shy
+ 12 shy+ 12 shy
Years of gf Educ
Value of Labor amp Mgmt
14 13 13
$17283 6574 2261
358 Yorker Equivalent 142 OperatorManager Equiv
___ Yorker Equivalent OperatorManager Equiv
Labor Efficiency
Average Total Per Yorker Total
My Farm Per Yorker
Cows average number Milk sold pounds Tillable acres
95 1399978
407
26 390692
114 York units 1105 308
Average My Eatm Per Per Per Per
Labor Costs Total Cow Iil Acre Iotal Cow Til Acre
Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $
Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691
Total Less Int Paid $164775 $_--shy
Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy
- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp
family expenditures 10708 Available for Debt Payments
Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment
amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle
machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy
___ _
19
PROGRESS OF THE FARM BUSINESS
Comparing your business with average data from regional DFBS cooperashytors that participated in both of the last two years is one part of a business checkup It is equally important for you to determine the progress your business has made over the past two or three years and to set targets or goals for the future
PROGRESS OF THE FARM BUSINESS Same 17 Central Plain Dairy Farms 1984 and 1985
Average My Farm Selected Factors 1984 1985 1984 1985 Goal
Size of Business Average number of cows Average number of heifers Milk sold lbs Worker equivalent Total tillable acres
Rates of Production Milk sold per cow 1bs Hay DM per acre tons Corn silage per acre tons
Labor Efficiency Cows per worker Milk sold per worker lbs
Cost Control Grain amp conc purchased
as of milk sales Dairy feed amp crop expo
per cwt milk Labor amp mach costscow
Capital Efficiency Farm capital per cow Real estate per cow Mach amp equip per cow Capital turnover years
Profitability Net farm inc wo apprec Net farm inc wapprec Labor amp mgmt income Rate of return on eq
capital wapprec
Financial Summary Farm net worth Debt to asset ratio Farm debt per cow
Average for the year
89 92 88 89
1340447 1393320 353shy408
15081 31
14
25 379267
17
$439 $1079
$7740 $3749 $1522
30
$12702 $22767 $-7123
-09
$377688 045
$3537
375 409
15135 31 14
25 371552
16
$391 $1094
$7434 $3592 $1492
30
$8617 $3815
$-10616
-62
$362655 046
$3273
$___ $___ $___
$___ $___ $___
$_-shy$_-shy$_-shy
$_-shy$_--shy$_-shy
$_-shy$_-shy$_-shy
-
21
Financial AnalYsis Chart
The farm financial analysis chart 1s designed just like the ~ Business Chart and may be used to measure the financial health of the farm business Most of the financial measures used in the chart are presented on ~ages 7 10 12 and 17 of this publication
FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984
Liguidity ~Reeayent Available for Cash Flow Debt Payments
Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
1985 DAIRY FARM BUSINESS SUMMARY Central Plain Region
Introduction
Dairy farmers throughout the State have been participating in New York Cooperative Extensions farm business summary and analysis program since the early 1950s Each participating farmer receives a complete summary and analysis of his or her farm business in addition to this publication The information in this report is compiled by averaging data submitted from the region described at the bottom of this page
Program Objective
The primary objective of the dairy farm business summary DFBS is to provide farm managers information concerning profitability financial condishytion productivity and efficiency to be used to assist them in delineating the strengthsweaknesses of the farm business and to improve decision-making In short DFBS identifies the records farmers need and provides information to be used in making business and financial management decisions
Program Improvements
The 1985 DFBS report features improved accrual accounting procedures a new measure of farm profitability a more indepth balance sheet an annual cash flow statement and several major improvements in the business analysis format and the analysis measures used These and other changes are identified in the body of this report
The revised format provides one full page for the analysis of the farm cropping program and another for complete analysis of the dairy program Corn and hay crop related expenses are evaluated separately for cooperating farmers The cost of producing milk per cow and per hundredweight of milk sold has been compiled An annual cash flow worksheet has been added to the farmers individual report The popular Progress of The Farm Business report has been moved to page one of the farmers report and added to this pubHcation
Micro DFBS which allows Cooperative Extension agents and specialists to calculate and print individual farm business reports in their offices is now being used by more than 50 percent of our dairy farm management field staff This innovative program provides faster processing of farm record data and increased use of DFBS in farm management programs
This summary was prepared by Linda D Putnam and Robert A Milligan Department of Agricultural Economics New York State College of Agriculture and Life Sciences Cornell University in cooperation with Cooperative Extension Specialist Larry N Davis The Central Plain Region is comprised of Ontario Seneca Wayne and Yates counties
2
SUMMARY OF THE FARM BUSINESS
Business Characteristics
Finding the right management strategies is an important part of farming Various combinations of farm resources enterprises business arrangements and management techniques are used by the dairy farmers in this region The following table shows important farm business characteristics and the number of farmers reporting these characteristics
BUSINESS CHARACTERISTICS 23 Central Plain Region Dairy Farms 1985
Type of Farm Number Type of Business Number Dairy 14 Single proprietorship 14 Part-time dairy 2 Partnership 9 Dairy cash-crop 5 Corporation o Part-time cash-crop dairy 2 Other o
Type of Ownership Number Type of Barn Number Owner 22 Stanchion 7 Renter 1 Freestall 13
Other 3
Milking System Number Business Record System Number Bucket amp carry o CAMIS 5 Dumping station 2 Account Book 8 Pipeline 8 Agrifax (mail-in only) 7 Herringbone parlor 12 On-Farm Computer I Other parlor 1 Other 2
Dairy Records Service Number Number DHIC 21 Other 1 OS 1 None o
Milk Diyersion Prosram Participants Number 4
The averages used in this report were compiled using data from all the participating dairy farms in this region unless noted otherwise There may be regular dairy farms part-time farms dairy cash-crop farms farm renters partnerships and corporations included in the average These specific classifications are used to separate farms in the State Business Summary
A part-time farm has less than 12 months of labor from all operators
A dairy cash-crop farm has income from crop sales that exceed 10 percent of milk sales
A farm renter owns no farm real estate at the end of the year or owns no tillable land
Milk Diversion Proampram Participants are the farmers that were in the 1984-85 federal milk diversion program These farms have also been included in the regional summary averages
3
Income Statement
The revised accrual income statement begins with an accounting of all farm business expenses
CASH AND ACCRUAL FARM EXPENSES 23 Central Plain Region Dairy Farms 1985
Cash Change in Change in Accrual EXBense Item faid + Inventoo + Acconta fapoundable Ji2Wenses
Cash Baid is the actual amount of money paid out during the year and does not necessarily represent the cost of goods and services actually used
Accrual eXBenses are the costs of inputs actually used in this years production The value of feed and supplies used out of inventory are included as are the costs of inputs purchased but not paid for (net increases in accounts payable) Items paid for and not used (net additions to inventory) are excluded from accrual expenses as are payments made on inputs used in a prior year (net decreases in accounts payable)
4
Worksheets are provided to enable any dairy farmer to compute his or her accrual farm income and compare it with the averages on the opposite page
CASH AND ACCRUAL FARM EXPENSES WORKSHEET
Cash Change in Change in Accrual Expense Item Paid + Inventory + Accounts Payable Expenses
Hired Labor Feed Dairy grain amp cone Dairy roughage Other livestock Machinery Mach hire rentlease Machinery repairsparts Auto expense (fs) Fuel oil amp grease Livestock Replacement livestock Breeding Vet amp medicine Milk marketing Cattle leaserent Other livestock expense Crops Fertilizer amp lime Seeds amp plants Spray other crop expo Real Estate Landjbldgfence repair Taxes Insurance Rent amp lease Other Telephone (fs) Electricity (fs) Interest paid Miscellaneous Total Operating Expansion livestock Machinery depreciation Building depreciation
TOTAL ACCRUAL EXPENSES
$_-- $_-- $_-- $_--shy
$___ $_-- $_-- $_--shy
$ $ $ $
Cash paid is the actual amount of money paid out during the year and does not necessarily represent the cost of goods and services actually used
Accrual expenses are the costs of inputs actually used in this years production Purchased feed and supplies used out of inventory must be included Beginning of year less end of year purchased feed and supply inventory equals the change in inventory to include in accrual expenses Feed supplies and services used but not paid for must be included by adding the net increase in operating accounts payable Increases in operating accounts payable are determined by subtracting the balance at the beginning of the year from the end of year balance
5
CASH AND ACCRUAL FARM RECEIPTS 23 Central Plain Region Dairy Farms 1985
Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other
Total Accrual Receipts
$177 112 11623
2073 3898
12481 6576
148 303
5234
$219448
$1216
-741 100
$ 575
$-423 550
0 0
298 -969
0 0
---22
$-322
$176689 13388
2073 3157
12879 5607
148 303
5456
$219700
Cash receipts includes the gross value of milk checks received during the year plus all other payments received for the sale of farm products services and government programs
Accrual receipts represent the value of all farm commodities produced and services actually provided by the farmer during the year Increases in liveshystock inventory caused by herd growth andor quality are included as accrual receipts Decreases in inventory caused by herd reduction are deducted Changes in inventories of crops grown are accounted for in accrual receipts Changes in accounts receivable include the January milk check for this Decemshybers marketings compared with the previous Januarys check and other delayed payments
Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other
Total Accrual Receipts
$_-- $_-shy
$_-- $_-shy
To calculate the change in inventory to be included in the above worksheet subtract the beginning of year values from the end of year values excluding appreciation Th~ changes in inventories caused by declining prices must be excluded from the calculation of accrual receipts Changes in accounts receivable are also determined by subtracting beginning of year balances from end of year balances
----_ _--shy
6
Profitability Analysis
Farm ownersoperators contribute labor management and capital to their businesses and the best combination of these resources produces optimum profits Farm profits can be measured as the return to all family resources or as the return to one or more individual resources such as labor and management
Net farm income is the total combined return to the farm operator(s) and other unpaid family members for their labor management and equity capital It is the farm familys net annual return from working managing financing and owning the farm business This is not a measure of cash available from the years business operation Cash flow is evaluated later in this report
Net farm income is computed with and without appreciation Appreciashytion represents the change in livestock machinery and real estate inventory values caused by changes in prices during the year Appreciation is a major factor contributing to changes in farm net worth and must be included in the profitability analysis
NET FARM INCOME 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Total accrual receipts Appreciation Livestock
Machinery Real Estate
Total Including Appreciation Total accrual expenses Net Farm Income (with appreciation) Net Farm Income (without appreciation)
$219700 -7658 5072
-114 $217000
211545 $ 5455 $ 8155
$_--shy
$_-shy
$_-shy$_-shy
Return to operators) labor management and equity capital measures the total business profits for the farm operators It is calculated by deducting a charge for unpaid family labor from net farm income Operator(s) labor is not included in unpaid family labor Return to operator(s) labor manageshyment and equity capital has been compiled with and without appreciation Appreciation is considered an important part of the return to ownership of farm assets
RETURN TO OPERATOR(S) LABOR MANAGEMENT AND EQUITY 23 Central Plain Region Dairy Farms 1985
Item
Av~uage Without With Wprec Wprec
My Farm Without With Wprec Apprec
Net farm income $8155 $5455 $_-shy $_-shyFamily labor unpaid
Labor and manaampement income is the share of net farm income without appreciashytion returned to the operator(s) labor and management Appreciation is not included as part of the return to labor and management Labor and management income is determined by deducting the cost of using equity capital at a real interest rate of five percent from the return to operator(s) labor manageshyment and equity capital excluding appreciation The interest charge reflects the long-term average rate of return that a farmer might expect to earn in comparable risk investments in a low inflation economy
Labor and manaampement income per operator measures the return to each operators labor and management
LABOR AND MANAGEMENT INCOME 23 Central Plain Region Dairy Farms 1985
Item Averaampe My Farm
Return to operator(s) labor management amp equity without appreciation
Real interest 5 on $338140 equity capital
Labor amp Management Income (142 operators)
Labor amp Management Income per Operator
$ 7055 $_-shy
16907
$-9852
$-6954
$_-shy
$_--shy
Return on equity capital measures the net return remaining for the farmers equity or owned capital after a charge has been made for the owner-operators labor and management The earnings or amount of net farm income allocated to labor and management is the opportunity cost or value of operator(s) labor and management estimated by the cooperators Return on equity capital is calculated with and without appreciation The rate of return on equity capital is determined by dividing the amount returned by the end of year farm net worth or equity capital
RETURN ON EQUITY CAPITAL 23 Central Plain Region Dairy Farms 1985
Item Averaampe My Farm
Return to operator(s) labor management amp equity capital with appreciation
Value of operator(s) labor amp management
Return on equity capital with appreciation
Rate of return on equity capital with appreciation
Return on equity capital without appreciation
Rate of return without appreciation
$ 4355
26118
$-21763
-64
$-19063
-56
$_--shy
$_-shy
$_-shy
8
Farm and Family Fipancial Status
Evaluating the financial status of the farm business and the farm family is an important part of business analysis The first step is to recognize all the assets and liabilities that make up the balance sheet The second step is to analyze your filled out balance sheet by evaluating changes made during the year
1985 FARM BUSINESS amp NONFARM BALANCE SHEET 23 Central Plain Region Dairy Farms 1985
Farm Liabilities Farm Ass~tsect JSn 1 Dec 31 ~ Net W0Ith JSn 1 Dilc 31
Total Farm Assets $656953 $637122 Total Farm Liab $299804 $298981 FARM NET WORTH $357149 $338140
Nonfarm Liabilities NonfSI Assect~tsect Jm 1 D~pound n ~ N~t i2Ith Jm 1 Qec 31
Personal cash chkg amp savings $ 505
Cash value life ins 5331 $ 692
6058
Nonfarm Uab NOHfARM HiT iQRTH
IfARM amp6QHFARM
$ 0 ~17lJZ Jan 1
$ 0 ~18JIZ Qec ~l
Nonfarm real estate 1063 451 ITotal Assets $674090 $655439 Auto (personal sh) Stocks ampbonds
2861 1611
3087 2034
ITotal Liabilities I
2998Q4 98981
Household furn 5365 5674 I All other Ql 321 ITOTAL FARM amp NON-
Total Nonfarm $ 17137 $ 18317 I FARM NET WORTH $374286 $356457
Financial lease obligations are included in the balance sheet The present values of all future payments are listed as liabilities since the farmer (lessee) is committed to make the payments The present values are also listed as assets representing the future value the item has to the business
9
1985 FARM BUSINESS amp NONFARM BALANCE SHEET
Farm Assets Jan 1 Dec 31 Farm Liabilities amp Net Worth Jan 1 Dec 31
Current Farm cash checking amp savings
Accounts rec Feed amp supplies
Current Accounts payable Operating debt Short-term
Nonfarm Liabilities Nonfarm Assets Jan 1 Dec 31 ampNet Worth Jan 1 Dec 31
Nonfarm Liab Personal cash
amp savings chkg
Cash value life ins
Nonfarm real est Auto (pers share) Stocks ampbonds
Total Nonfarm Liabilities
Household furn All other Nonfarm
Total Nonfarm Net Worth
TOTAL FARM ~ NONFARM Jan 1 Dec 31
Total Farm amp Nonfarm Assets Less Total Farm amp Nonfarm Liabilities Farm amp Nonfarm Net Worth
10
Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed
BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309
Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047
long-term 058 intermediatecurrent 036
Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59
Intermediate amp current debt
Current amp inter 1iab as a of total debt 41
Farm Debt Levels Total farm debt Long-term debt
Per Cow $3082
1830
Per Tillable Acre Owned
$1220 725
Per Cow $_-shy
1252 496
$_-shy$_-shy
----_ ---_ ---_
Per Tillable Acre Owned $_--shy
Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these assets used on the balance sheet and the changes that occur from the beginning to end of year Changes in the livestock inventory are included in the dairy analysis
FARM INVENTORY BALANCE 23 Central Plain Region Dairy Farms 1985
Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg
Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy
$1330 land and $4097 buildings andor depreciable improvements
11
Cash Flow Summary and Analysis
Completing an annual cash flow summary and analysis is important to determine how well the cash generated by the business plus that brought in from outside met the annual cash needs of the business and the farm family Understanding last years cash flow is the first step toward planning and managing cash flow for the current and future years
The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end When all the cash inflows and outflows are correct the statement will balance If the imbalance (error) amount is positive recorded cash inflows exceed outflows by this amount If it is negative cash outflows are too high in relation to inflows
ANNUAL CASH FLOW STATEMENT 23 Central Plain Region Dairy Farms 1985
Item Average My Farm Cash Inflows
Beginning farm cash checking amp savings
Cash farm receipts
Sale of assets Machinery
Real estate
Money borrowed (intermediate amp long-term)
Money borrowed (short-term)
Increase in operating debt
Nonfarm income
Money borrowed - nonfarm
Total
Cash Outflows
Cash farm expenses
Capital purchases Expansion livestock
Machinery
Real estate
Principal payments (intermediate amp long-term)
Principal payments (short-term)
Decrease in operating debt
Nonfarm debt payments
Personal withdrawals amp family expo
Ending farm cash checking amp savings
Total
Imbalance (error)
$ 2675
219448
214
7363
24469
2485
750
1461
0
$258865
$182243
918
11654
5427
27561
620
0
0
10708
1734
$240860
$ 18005
$
12
Repayment Analysis
The second step of cash flow planning is to compare and evaluate debt payments planned and made last year and estimate the payments required in the current year It is helpful to compare and evaluate by using debt payments per unit of production and receiptdebt payment ratios
FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986
Debt Payments
Avetaamp~ 1985 Payments
Planned Made Planned
1986
My Farm 1985 Payments
Planned Made Planned
1986
Long-term IntermShort-Operating (net
redu
(net reduction)
ediate-term term
ction Accounts payable
$20431 30095 9705
0
6294
$28583 29330 1004
0
3548
$17021 27543
3490
3769
2112
$_-- $_-- $_-shy
Total $66526 $62465 $53934 $ $_-- $_-shy
Per cow Per cwt Percen
1985 milk t of total
$723 $477
$679 $448
$ $_-shy$_-_$_-shy
1985 receipts Percent of 1985
29 27
milk receipts 38 35
The Cash Flow Covetaampe Ratio measures the ability of the farm business to meet its planned debt payment schedule The ratio shows the percentage of planned payments that could have been made with last years available cash flow report
Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments
CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985
(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077
Personal withdrawals and family expenditures less nonfarm income If family withdrawals are excluded the cash flow coverage ratio will be incorrect
------
13
ANALYSIS OF THE FARM BUSINESS
The farm business has been divided into three parts indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency
to allow a m and the
more factors
Cropping Program Analysis
The cropping program is an important part of the dairy farm business and sometimes it is overlooked and neglected A complete evaluation of available land resources how they are being used how well crops are producing and what it costs to produce them is required to evaluate alternative cropping and feed purchasing choices
LAND RESOURCES AND CROP PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Land Tillable Nonti1lable Other nontillable
Total
Crop Yields Hay crop Corn silage
Other forage Total forage Corn grain Oats Wheat Other crops Tillable pasture Idle
Total Tillable Acres
~ Rented Total 245 163 407
20 7 26 90 -1Q 100
355 180 533
fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn
47 tn DM 2 14 12 tn DM
23 205 35 tn DM 22 124 806 bu 13 46 807 bu
9 36 626 bu 8 42 6 19
12 45 407
Rented
~ frodLAcre tn DM tn tn DM tn DM tn DM bu bu bu
Average crop acres and yields compiled for the region are for the number of farms reporting each crop Yields of forage crops have been converted to tons of dry matter using dry matter coefficients reported by the farmers Grain production has been converted to bushels of dry grain equivalent based on dry matter information provided
The following measures of crop management measure how efficiently the land resource is being used and how well total forage requirements are being met
CROP MANAGEMENT FACTORS 23 Central Plain Region Dairy Farms 1985
Item My Farm
Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow
431 217 760
14
Cropping Program Analysis (continued)
A substantial number of cooperators have allocated crop expenses to hay crop corn and other crop production This additional data has been compiled to show the traditional crop expenses per acre and per production unit for these crops Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed
to equal one ton of
CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops
Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres
Corn grain converted to silage equivalent using 588 bushels - one ton silage as fed
Most machinery costs are associated with crop production and should be analyzed with the crop enterprise Total machinery expenses include the major fixed costs (interest and depreciation) as well as the accrual operating costs Although machinery costs have not been allocated to individual crops they are shown per total tillable acre
ACCRUAL MACHINERY EXPENSES 23 Central Plain Region Dairy Farms 1985
My Farm Machinery Total Per Til Total Per Til
Expense Item Expenses Acre Expenses Acre
Fuel oil amp grease Machinery repairs amp parts
$ 9606 12071
$2358 2963
$_-shy $_-shy
Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919
Total $51364 $12607 $_-shy $_--shy
15
Dairy Program Analysis
Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business Changes in dairy herd size and market values that occur during the year are identified in the table below The change in inventory value without appreciation is attributed to physical changes in herd size and quality This real increase in inventory has been included as an accrual farm receipt on page 5
DAIRY HERD INVENTORY 23 Central Plain Region Dairy Farms 1985
pairy Cows Heifers Item Number Value Number Value
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
92
96 97 95
$79625 3763
-4784 $78604
89
87
88
$42800 -2548 -2757
$37495
My Farm
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
$_--shy
$_--shy
$_--shy
$_--shy
Total milk sold and milk sold per cow are extremely valuable measures of productivity on the dairy farm These measures of milk output are based on pounds of milk marketed during the year
MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item
Total milk sold lbs
Average
1399978
My Farm
Milk sold per cow lbs 14811
Average milk plant test percent butterfat 365
16
The cost of producing milk has been compiled using the whole farm method and is featured in the following table Accrual receipts from milk sales can be compared with the accrual costs of producing milk per cow and per hundredweight of milk Using the whole farm method operating costs of producing milk are estimated by deducting nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation
ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt
Accrual Costs of Producing Milk Operating costs Total costs withshy
$140178 $1483 $1001 $_-shy $_-shy $_-shy
out op(s) labor mgmt amp capital
Total Costs $169633 $212658
$1795 $2250
$1212 $1519
$_-shy$_-shy
$_-shy$_-shy
$_-shy$_-shy
The accrual operating expenses most commonly associated with the dairy enterprise are listed in the table below Evaluating these costs per unit of production enables the comparison of different size dairy farms
DAIRY RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt
Purchased dairy grain amp concentrates
Purchased dairy roughage Total Purchased
Dairy Feed Purchased grain amp conc as of milk receipts
as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense
$308 ---12
$208 JLU
$ $_-shy
$339 $229 $ $_--shy
$571 16
$386 $ -- $_-shy
$31 41
101 2
81
3U $021 027 068 001 055
$ $_-shy
17
Capital and Labor Efficiency Analysis
Capital efficiency factors measure how intensively the capital is being used in the farm business Measures of labor efficiency are key indicators of managements success
CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985
Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned
Farm capital Real estate Machinery amp equipment Capital turnover years
$180569
36469
$6845 3280 1383
295
$1588
321
$2641 1265
My Farm Farm capital Real estate
$_-shy $_--shy $_-shy $_-shy
Machinery amp equipment Capital turnover years
LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985
Labor Force Months Age
Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired
Total
My Farm Total Operators
11 4 2 6 2
18 43
44 44 32
+ 12 shy
+ 12 shy+ 12 shy
Years of gf Educ
Value of Labor amp Mgmt
14 13 13
$17283 6574 2261
358 Yorker Equivalent 142 OperatorManager Equiv
___ Yorker Equivalent OperatorManager Equiv
Labor Efficiency
Average Total Per Yorker Total
My Farm Per Yorker
Cows average number Milk sold pounds Tillable acres
95 1399978
407
26 390692
114 York units 1105 308
Average My Eatm Per Per Per Per
Labor Costs Total Cow Iil Acre Iotal Cow Til Acre
Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $
Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691
Total Less Int Paid $164775 $_--shy
Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy
- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp
family expenditures 10708 Available for Debt Payments
Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment
amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle
machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy
___ _
19
PROGRESS OF THE FARM BUSINESS
Comparing your business with average data from regional DFBS cooperashytors that participated in both of the last two years is one part of a business checkup It is equally important for you to determine the progress your business has made over the past two or three years and to set targets or goals for the future
PROGRESS OF THE FARM BUSINESS Same 17 Central Plain Dairy Farms 1984 and 1985
Average My Farm Selected Factors 1984 1985 1984 1985 Goal
Size of Business Average number of cows Average number of heifers Milk sold lbs Worker equivalent Total tillable acres
Rates of Production Milk sold per cow 1bs Hay DM per acre tons Corn silage per acre tons
Labor Efficiency Cows per worker Milk sold per worker lbs
Cost Control Grain amp conc purchased
as of milk sales Dairy feed amp crop expo
per cwt milk Labor amp mach costscow
Capital Efficiency Farm capital per cow Real estate per cow Mach amp equip per cow Capital turnover years
Profitability Net farm inc wo apprec Net farm inc wapprec Labor amp mgmt income Rate of return on eq
capital wapprec
Financial Summary Farm net worth Debt to asset ratio Farm debt per cow
Average for the year
89 92 88 89
1340447 1393320 353shy408
15081 31
14
25 379267
17
$439 $1079
$7740 $3749 $1522
30
$12702 $22767 $-7123
-09
$377688 045
$3537
375 409
15135 31 14
25 371552
16
$391 $1094
$7434 $3592 $1492
30
$8617 $3815
$-10616
-62
$362655 046
$3273
$___ $___ $___
$___ $___ $___
$_-shy$_-shy$_-shy
$_-shy$_--shy$_-shy
$_-shy$_-shy$_-shy
-
21
Financial AnalYsis Chart
The farm financial analysis chart 1s designed just like the ~ Business Chart and may be used to measure the financial health of the farm business Most of the financial measures used in the chart are presented on ~ages 7 10 12 and 17 of this publication
FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984
Liguidity ~Reeayent Available for Cash Flow Debt Payments
Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
2
SUMMARY OF THE FARM BUSINESS
Business Characteristics
Finding the right management strategies is an important part of farming Various combinations of farm resources enterprises business arrangements and management techniques are used by the dairy farmers in this region The following table shows important farm business characteristics and the number of farmers reporting these characteristics
BUSINESS CHARACTERISTICS 23 Central Plain Region Dairy Farms 1985
Type of Farm Number Type of Business Number Dairy 14 Single proprietorship 14 Part-time dairy 2 Partnership 9 Dairy cash-crop 5 Corporation o Part-time cash-crop dairy 2 Other o
Type of Ownership Number Type of Barn Number Owner 22 Stanchion 7 Renter 1 Freestall 13
Other 3
Milking System Number Business Record System Number Bucket amp carry o CAMIS 5 Dumping station 2 Account Book 8 Pipeline 8 Agrifax (mail-in only) 7 Herringbone parlor 12 On-Farm Computer I Other parlor 1 Other 2
Dairy Records Service Number Number DHIC 21 Other 1 OS 1 None o
Milk Diyersion Prosram Participants Number 4
The averages used in this report were compiled using data from all the participating dairy farms in this region unless noted otherwise There may be regular dairy farms part-time farms dairy cash-crop farms farm renters partnerships and corporations included in the average These specific classifications are used to separate farms in the State Business Summary
A part-time farm has less than 12 months of labor from all operators
A dairy cash-crop farm has income from crop sales that exceed 10 percent of milk sales
A farm renter owns no farm real estate at the end of the year or owns no tillable land
Milk Diversion Proampram Participants are the farmers that were in the 1984-85 federal milk diversion program These farms have also been included in the regional summary averages
3
Income Statement
The revised accrual income statement begins with an accounting of all farm business expenses
CASH AND ACCRUAL FARM EXPENSES 23 Central Plain Region Dairy Farms 1985
Cash Change in Change in Accrual EXBense Item faid + Inventoo + Acconta fapoundable Ji2Wenses
Cash Baid is the actual amount of money paid out during the year and does not necessarily represent the cost of goods and services actually used
Accrual eXBenses are the costs of inputs actually used in this years production The value of feed and supplies used out of inventory are included as are the costs of inputs purchased but not paid for (net increases in accounts payable) Items paid for and not used (net additions to inventory) are excluded from accrual expenses as are payments made on inputs used in a prior year (net decreases in accounts payable)
4
Worksheets are provided to enable any dairy farmer to compute his or her accrual farm income and compare it with the averages on the opposite page
CASH AND ACCRUAL FARM EXPENSES WORKSHEET
Cash Change in Change in Accrual Expense Item Paid + Inventory + Accounts Payable Expenses
Hired Labor Feed Dairy grain amp cone Dairy roughage Other livestock Machinery Mach hire rentlease Machinery repairsparts Auto expense (fs) Fuel oil amp grease Livestock Replacement livestock Breeding Vet amp medicine Milk marketing Cattle leaserent Other livestock expense Crops Fertilizer amp lime Seeds amp plants Spray other crop expo Real Estate Landjbldgfence repair Taxes Insurance Rent amp lease Other Telephone (fs) Electricity (fs) Interest paid Miscellaneous Total Operating Expansion livestock Machinery depreciation Building depreciation
TOTAL ACCRUAL EXPENSES
$_-- $_-- $_-- $_--shy
$___ $_-- $_-- $_--shy
$ $ $ $
Cash paid is the actual amount of money paid out during the year and does not necessarily represent the cost of goods and services actually used
Accrual expenses are the costs of inputs actually used in this years production Purchased feed and supplies used out of inventory must be included Beginning of year less end of year purchased feed and supply inventory equals the change in inventory to include in accrual expenses Feed supplies and services used but not paid for must be included by adding the net increase in operating accounts payable Increases in operating accounts payable are determined by subtracting the balance at the beginning of the year from the end of year balance
5
CASH AND ACCRUAL FARM RECEIPTS 23 Central Plain Region Dairy Farms 1985
Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other
Total Accrual Receipts
$177 112 11623
2073 3898
12481 6576
148 303
5234
$219448
$1216
-741 100
$ 575
$-423 550
0 0
298 -969
0 0
---22
$-322
$176689 13388
2073 3157
12879 5607
148 303
5456
$219700
Cash receipts includes the gross value of milk checks received during the year plus all other payments received for the sale of farm products services and government programs
Accrual receipts represent the value of all farm commodities produced and services actually provided by the farmer during the year Increases in liveshystock inventory caused by herd growth andor quality are included as accrual receipts Decreases in inventory caused by herd reduction are deducted Changes in inventories of crops grown are accounted for in accrual receipts Changes in accounts receivable include the January milk check for this Decemshybers marketings compared with the previous Januarys check and other delayed payments
Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other
Total Accrual Receipts
$_-- $_-shy
$_-- $_-shy
To calculate the change in inventory to be included in the above worksheet subtract the beginning of year values from the end of year values excluding appreciation Th~ changes in inventories caused by declining prices must be excluded from the calculation of accrual receipts Changes in accounts receivable are also determined by subtracting beginning of year balances from end of year balances
----_ _--shy
6
Profitability Analysis
Farm ownersoperators contribute labor management and capital to their businesses and the best combination of these resources produces optimum profits Farm profits can be measured as the return to all family resources or as the return to one or more individual resources such as labor and management
Net farm income is the total combined return to the farm operator(s) and other unpaid family members for their labor management and equity capital It is the farm familys net annual return from working managing financing and owning the farm business This is not a measure of cash available from the years business operation Cash flow is evaluated later in this report
Net farm income is computed with and without appreciation Appreciashytion represents the change in livestock machinery and real estate inventory values caused by changes in prices during the year Appreciation is a major factor contributing to changes in farm net worth and must be included in the profitability analysis
NET FARM INCOME 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Total accrual receipts Appreciation Livestock
Machinery Real Estate
Total Including Appreciation Total accrual expenses Net Farm Income (with appreciation) Net Farm Income (without appreciation)
$219700 -7658 5072
-114 $217000
211545 $ 5455 $ 8155
$_--shy
$_-shy
$_-shy$_-shy
Return to operators) labor management and equity capital measures the total business profits for the farm operators It is calculated by deducting a charge for unpaid family labor from net farm income Operator(s) labor is not included in unpaid family labor Return to operator(s) labor manageshyment and equity capital has been compiled with and without appreciation Appreciation is considered an important part of the return to ownership of farm assets
RETURN TO OPERATOR(S) LABOR MANAGEMENT AND EQUITY 23 Central Plain Region Dairy Farms 1985
Item
Av~uage Without With Wprec Wprec
My Farm Without With Wprec Apprec
Net farm income $8155 $5455 $_-shy $_-shyFamily labor unpaid
Labor and manaampement income is the share of net farm income without appreciashytion returned to the operator(s) labor and management Appreciation is not included as part of the return to labor and management Labor and management income is determined by deducting the cost of using equity capital at a real interest rate of five percent from the return to operator(s) labor manageshyment and equity capital excluding appreciation The interest charge reflects the long-term average rate of return that a farmer might expect to earn in comparable risk investments in a low inflation economy
Labor and manaampement income per operator measures the return to each operators labor and management
LABOR AND MANAGEMENT INCOME 23 Central Plain Region Dairy Farms 1985
Item Averaampe My Farm
Return to operator(s) labor management amp equity without appreciation
Real interest 5 on $338140 equity capital
Labor amp Management Income (142 operators)
Labor amp Management Income per Operator
$ 7055 $_-shy
16907
$-9852
$-6954
$_-shy
$_--shy
Return on equity capital measures the net return remaining for the farmers equity or owned capital after a charge has been made for the owner-operators labor and management The earnings or amount of net farm income allocated to labor and management is the opportunity cost or value of operator(s) labor and management estimated by the cooperators Return on equity capital is calculated with and without appreciation The rate of return on equity capital is determined by dividing the amount returned by the end of year farm net worth or equity capital
RETURN ON EQUITY CAPITAL 23 Central Plain Region Dairy Farms 1985
Item Averaampe My Farm
Return to operator(s) labor management amp equity capital with appreciation
Value of operator(s) labor amp management
Return on equity capital with appreciation
Rate of return on equity capital with appreciation
Return on equity capital without appreciation
Rate of return without appreciation
$ 4355
26118
$-21763
-64
$-19063
-56
$_--shy
$_-shy
$_-shy
8
Farm and Family Fipancial Status
Evaluating the financial status of the farm business and the farm family is an important part of business analysis The first step is to recognize all the assets and liabilities that make up the balance sheet The second step is to analyze your filled out balance sheet by evaluating changes made during the year
1985 FARM BUSINESS amp NONFARM BALANCE SHEET 23 Central Plain Region Dairy Farms 1985
Farm Liabilities Farm Ass~tsect JSn 1 Dec 31 ~ Net W0Ith JSn 1 Dilc 31
Total Farm Assets $656953 $637122 Total Farm Liab $299804 $298981 FARM NET WORTH $357149 $338140
Nonfarm Liabilities NonfSI Assect~tsect Jm 1 D~pound n ~ N~t i2Ith Jm 1 Qec 31
Personal cash chkg amp savings $ 505
Cash value life ins 5331 $ 692
6058
Nonfarm Uab NOHfARM HiT iQRTH
IfARM amp6QHFARM
$ 0 ~17lJZ Jan 1
$ 0 ~18JIZ Qec ~l
Nonfarm real estate 1063 451 ITotal Assets $674090 $655439 Auto (personal sh) Stocks ampbonds
2861 1611
3087 2034
ITotal Liabilities I
2998Q4 98981
Household furn 5365 5674 I All other Ql 321 ITOTAL FARM amp NON-
Total Nonfarm $ 17137 $ 18317 I FARM NET WORTH $374286 $356457
Financial lease obligations are included in the balance sheet The present values of all future payments are listed as liabilities since the farmer (lessee) is committed to make the payments The present values are also listed as assets representing the future value the item has to the business
9
1985 FARM BUSINESS amp NONFARM BALANCE SHEET
Farm Assets Jan 1 Dec 31 Farm Liabilities amp Net Worth Jan 1 Dec 31
Current Farm cash checking amp savings
Accounts rec Feed amp supplies
Current Accounts payable Operating debt Short-term
Nonfarm Liabilities Nonfarm Assets Jan 1 Dec 31 ampNet Worth Jan 1 Dec 31
Nonfarm Liab Personal cash
amp savings chkg
Cash value life ins
Nonfarm real est Auto (pers share) Stocks ampbonds
Total Nonfarm Liabilities
Household furn All other Nonfarm
Total Nonfarm Net Worth
TOTAL FARM ~ NONFARM Jan 1 Dec 31
Total Farm amp Nonfarm Assets Less Total Farm amp Nonfarm Liabilities Farm amp Nonfarm Net Worth
10
Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed
BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309
Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047
long-term 058 intermediatecurrent 036
Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59
Intermediate amp current debt
Current amp inter 1iab as a of total debt 41
Farm Debt Levels Total farm debt Long-term debt
Per Cow $3082
1830
Per Tillable Acre Owned
$1220 725
Per Cow $_-shy
1252 496
$_-shy$_-shy
----_ ---_ ---_
Per Tillable Acre Owned $_--shy
Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these assets used on the balance sheet and the changes that occur from the beginning to end of year Changes in the livestock inventory are included in the dairy analysis
FARM INVENTORY BALANCE 23 Central Plain Region Dairy Farms 1985
Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg
Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy
$1330 land and $4097 buildings andor depreciable improvements
11
Cash Flow Summary and Analysis
Completing an annual cash flow summary and analysis is important to determine how well the cash generated by the business plus that brought in from outside met the annual cash needs of the business and the farm family Understanding last years cash flow is the first step toward planning and managing cash flow for the current and future years
The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end When all the cash inflows and outflows are correct the statement will balance If the imbalance (error) amount is positive recorded cash inflows exceed outflows by this amount If it is negative cash outflows are too high in relation to inflows
ANNUAL CASH FLOW STATEMENT 23 Central Plain Region Dairy Farms 1985
Item Average My Farm Cash Inflows
Beginning farm cash checking amp savings
Cash farm receipts
Sale of assets Machinery
Real estate
Money borrowed (intermediate amp long-term)
Money borrowed (short-term)
Increase in operating debt
Nonfarm income
Money borrowed - nonfarm
Total
Cash Outflows
Cash farm expenses
Capital purchases Expansion livestock
Machinery
Real estate
Principal payments (intermediate amp long-term)
Principal payments (short-term)
Decrease in operating debt
Nonfarm debt payments
Personal withdrawals amp family expo
Ending farm cash checking amp savings
Total
Imbalance (error)
$ 2675
219448
214
7363
24469
2485
750
1461
0
$258865
$182243
918
11654
5427
27561
620
0
0
10708
1734
$240860
$ 18005
$
12
Repayment Analysis
The second step of cash flow planning is to compare and evaluate debt payments planned and made last year and estimate the payments required in the current year It is helpful to compare and evaluate by using debt payments per unit of production and receiptdebt payment ratios
FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986
Debt Payments
Avetaamp~ 1985 Payments
Planned Made Planned
1986
My Farm 1985 Payments
Planned Made Planned
1986
Long-term IntermShort-Operating (net
redu
(net reduction)
ediate-term term
ction Accounts payable
$20431 30095 9705
0
6294
$28583 29330 1004
0
3548
$17021 27543
3490
3769
2112
$_-- $_-- $_-shy
Total $66526 $62465 $53934 $ $_-- $_-shy
Per cow Per cwt Percen
1985 milk t of total
$723 $477
$679 $448
$ $_-shy$_-_$_-shy
1985 receipts Percent of 1985
29 27
milk receipts 38 35
The Cash Flow Covetaampe Ratio measures the ability of the farm business to meet its planned debt payment schedule The ratio shows the percentage of planned payments that could have been made with last years available cash flow report
Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments
CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985
(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077
Personal withdrawals and family expenditures less nonfarm income If family withdrawals are excluded the cash flow coverage ratio will be incorrect
------
13
ANALYSIS OF THE FARM BUSINESS
The farm business has been divided into three parts indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency
to allow a m and the
more factors
Cropping Program Analysis
The cropping program is an important part of the dairy farm business and sometimes it is overlooked and neglected A complete evaluation of available land resources how they are being used how well crops are producing and what it costs to produce them is required to evaluate alternative cropping and feed purchasing choices
LAND RESOURCES AND CROP PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Land Tillable Nonti1lable Other nontillable
Total
Crop Yields Hay crop Corn silage
Other forage Total forage Corn grain Oats Wheat Other crops Tillable pasture Idle
Total Tillable Acres
~ Rented Total 245 163 407
20 7 26 90 -1Q 100
355 180 533
fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn
47 tn DM 2 14 12 tn DM
23 205 35 tn DM 22 124 806 bu 13 46 807 bu
9 36 626 bu 8 42 6 19
12 45 407
Rented
~ frodLAcre tn DM tn tn DM tn DM tn DM bu bu bu
Average crop acres and yields compiled for the region are for the number of farms reporting each crop Yields of forage crops have been converted to tons of dry matter using dry matter coefficients reported by the farmers Grain production has been converted to bushels of dry grain equivalent based on dry matter information provided
The following measures of crop management measure how efficiently the land resource is being used and how well total forage requirements are being met
CROP MANAGEMENT FACTORS 23 Central Plain Region Dairy Farms 1985
Item My Farm
Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow
431 217 760
14
Cropping Program Analysis (continued)
A substantial number of cooperators have allocated crop expenses to hay crop corn and other crop production This additional data has been compiled to show the traditional crop expenses per acre and per production unit for these crops Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed
to equal one ton of
CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops
Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres
Corn grain converted to silage equivalent using 588 bushels - one ton silage as fed
Most machinery costs are associated with crop production and should be analyzed with the crop enterprise Total machinery expenses include the major fixed costs (interest and depreciation) as well as the accrual operating costs Although machinery costs have not been allocated to individual crops they are shown per total tillable acre
ACCRUAL MACHINERY EXPENSES 23 Central Plain Region Dairy Farms 1985
My Farm Machinery Total Per Til Total Per Til
Expense Item Expenses Acre Expenses Acre
Fuel oil amp grease Machinery repairs amp parts
$ 9606 12071
$2358 2963
$_-shy $_-shy
Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919
Total $51364 $12607 $_-shy $_--shy
15
Dairy Program Analysis
Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business Changes in dairy herd size and market values that occur during the year are identified in the table below The change in inventory value without appreciation is attributed to physical changes in herd size and quality This real increase in inventory has been included as an accrual farm receipt on page 5
DAIRY HERD INVENTORY 23 Central Plain Region Dairy Farms 1985
pairy Cows Heifers Item Number Value Number Value
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
92
96 97 95
$79625 3763
-4784 $78604
89
87
88
$42800 -2548 -2757
$37495
My Farm
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
$_--shy
$_--shy
$_--shy
$_--shy
Total milk sold and milk sold per cow are extremely valuable measures of productivity on the dairy farm These measures of milk output are based on pounds of milk marketed during the year
MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item
Total milk sold lbs
Average
1399978
My Farm
Milk sold per cow lbs 14811
Average milk plant test percent butterfat 365
16
The cost of producing milk has been compiled using the whole farm method and is featured in the following table Accrual receipts from milk sales can be compared with the accrual costs of producing milk per cow and per hundredweight of milk Using the whole farm method operating costs of producing milk are estimated by deducting nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation
ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt
Accrual Costs of Producing Milk Operating costs Total costs withshy
$140178 $1483 $1001 $_-shy $_-shy $_-shy
out op(s) labor mgmt amp capital
Total Costs $169633 $212658
$1795 $2250
$1212 $1519
$_-shy$_-shy
$_-shy$_-shy
$_-shy$_-shy
The accrual operating expenses most commonly associated with the dairy enterprise are listed in the table below Evaluating these costs per unit of production enables the comparison of different size dairy farms
DAIRY RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt
Purchased dairy grain amp concentrates
Purchased dairy roughage Total Purchased
Dairy Feed Purchased grain amp conc as of milk receipts
as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense
$308 ---12
$208 JLU
$ $_-shy
$339 $229 $ $_--shy
$571 16
$386 $ -- $_-shy
$31 41
101 2
81
3U $021 027 068 001 055
$ $_-shy
17
Capital and Labor Efficiency Analysis
Capital efficiency factors measure how intensively the capital is being used in the farm business Measures of labor efficiency are key indicators of managements success
CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985
Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned
Farm capital Real estate Machinery amp equipment Capital turnover years
$180569
36469
$6845 3280 1383
295
$1588
321
$2641 1265
My Farm Farm capital Real estate
$_-shy $_--shy $_-shy $_-shy
Machinery amp equipment Capital turnover years
LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985
Labor Force Months Age
Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired
Total
My Farm Total Operators
11 4 2 6 2
18 43
44 44 32
+ 12 shy
+ 12 shy+ 12 shy
Years of gf Educ
Value of Labor amp Mgmt
14 13 13
$17283 6574 2261
358 Yorker Equivalent 142 OperatorManager Equiv
___ Yorker Equivalent OperatorManager Equiv
Labor Efficiency
Average Total Per Yorker Total
My Farm Per Yorker
Cows average number Milk sold pounds Tillable acres
95 1399978
407
26 390692
114 York units 1105 308
Average My Eatm Per Per Per Per
Labor Costs Total Cow Iil Acre Iotal Cow Til Acre
Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $
Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691
Total Less Int Paid $164775 $_--shy
Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy
- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp
family expenditures 10708 Available for Debt Payments
Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment
amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle
machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy
___ _
19
PROGRESS OF THE FARM BUSINESS
Comparing your business with average data from regional DFBS cooperashytors that participated in both of the last two years is one part of a business checkup It is equally important for you to determine the progress your business has made over the past two or three years and to set targets or goals for the future
PROGRESS OF THE FARM BUSINESS Same 17 Central Plain Dairy Farms 1984 and 1985
Average My Farm Selected Factors 1984 1985 1984 1985 Goal
Size of Business Average number of cows Average number of heifers Milk sold lbs Worker equivalent Total tillable acres
Rates of Production Milk sold per cow 1bs Hay DM per acre tons Corn silage per acre tons
Labor Efficiency Cows per worker Milk sold per worker lbs
Cost Control Grain amp conc purchased
as of milk sales Dairy feed amp crop expo
per cwt milk Labor amp mach costscow
Capital Efficiency Farm capital per cow Real estate per cow Mach amp equip per cow Capital turnover years
Profitability Net farm inc wo apprec Net farm inc wapprec Labor amp mgmt income Rate of return on eq
capital wapprec
Financial Summary Farm net worth Debt to asset ratio Farm debt per cow
Average for the year
89 92 88 89
1340447 1393320 353shy408
15081 31
14
25 379267
17
$439 $1079
$7740 $3749 $1522
30
$12702 $22767 $-7123
-09
$377688 045
$3537
375 409
15135 31 14
25 371552
16
$391 $1094
$7434 $3592 $1492
30
$8617 $3815
$-10616
-62
$362655 046
$3273
$___ $___ $___
$___ $___ $___
$_-shy$_-shy$_-shy
$_-shy$_--shy$_-shy
$_-shy$_-shy$_-shy
-
21
Financial AnalYsis Chart
The farm financial analysis chart 1s designed just like the ~ Business Chart and may be used to measure the financial health of the farm business Most of the financial measures used in the chart are presented on ~ages 7 10 12 and 17 of this publication
FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984
Liguidity ~Reeayent Available for Cash Flow Debt Payments
Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
3
Income Statement
The revised accrual income statement begins with an accounting of all farm business expenses
CASH AND ACCRUAL FARM EXPENSES 23 Central Plain Region Dairy Farms 1985
Cash Change in Change in Accrual EXBense Item faid + Inventoo + Acconta fapoundable Ji2Wenses
Cash Baid is the actual amount of money paid out during the year and does not necessarily represent the cost of goods and services actually used
Accrual eXBenses are the costs of inputs actually used in this years production The value of feed and supplies used out of inventory are included as are the costs of inputs purchased but not paid for (net increases in accounts payable) Items paid for and not used (net additions to inventory) are excluded from accrual expenses as are payments made on inputs used in a prior year (net decreases in accounts payable)
4
Worksheets are provided to enable any dairy farmer to compute his or her accrual farm income and compare it with the averages on the opposite page
CASH AND ACCRUAL FARM EXPENSES WORKSHEET
Cash Change in Change in Accrual Expense Item Paid + Inventory + Accounts Payable Expenses
Hired Labor Feed Dairy grain amp cone Dairy roughage Other livestock Machinery Mach hire rentlease Machinery repairsparts Auto expense (fs) Fuel oil amp grease Livestock Replacement livestock Breeding Vet amp medicine Milk marketing Cattle leaserent Other livestock expense Crops Fertilizer amp lime Seeds amp plants Spray other crop expo Real Estate Landjbldgfence repair Taxes Insurance Rent amp lease Other Telephone (fs) Electricity (fs) Interest paid Miscellaneous Total Operating Expansion livestock Machinery depreciation Building depreciation
TOTAL ACCRUAL EXPENSES
$_-- $_-- $_-- $_--shy
$___ $_-- $_-- $_--shy
$ $ $ $
Cash paid is the actual amount of money paid out during the year and does not necessarily represent the cost of goods and services actually used
Accrual expenses are the costs of inputs actually used in this years production Purchased feed and supplies used out of inventory must be included Beginning of year less end of year purchased feed and supply inventory equals the change in inventory to include in accrual expenses Feed supplies and services used but not paid for must be included by adding the net increase in operating accounts payable Increases in operating accounts payable are determined by subtracting the balance at the beginning of the year from the end of year balance
5
CASH AND ACCRUAL FARM RECEIPTS 23 Central Plain Region Dairy Farms 1985
Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other
Total Accrual Receipts
$177 112 11623
2073 3898
12481 6576
148 303
5234
$219448
$1216
-741 100
$ 575
$-423 550
0 0
298 -969
0 0
---22
$-322
$176689 13388
2073 3157
12879 5607
148 303
5456
$219700
Cash receipts includes the gross value of milk checks received during the year plus all other payments received for the sale of farm products services and government programs
Accrual receipts represent the value of all farm commodities produced and services actually provided by the farmer during the year Increases in liveshystock inventory caused by herd growth andor quality are included as accrual receipts Decreases in inventory caused by herd reduction are deducted Changes in inventories of crops grown are accounted for in accrual receipts Changes in accounts receivable include the January milk check for this Decemshybers marketings compared with the previous Januarys check and other delayed payments
Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other
Total Accrual Receipts
$_-- $_-shy
$_-- $_-shy
To calculate the change in inventory to be included in the above worksheet subtract the beginning of year values from the end of year values excluding appreciation Th~ changes in inventories caused by declining prices must be excluded from the calculation of accrual receipts Changes in accounts receivable are also determined by subtracting beginning of year balances from end of year balances
----_ _--shy
6
Profitability Analysis
Farm ownersoperators contribute labor management and capital to their businesses and the best combination of these resources produces optimum profits Farm profits can be measured as the return to all family resources or as the return to one or more individual resources such as labor and management
Net farm income is the total combined return to the farm operator(s) and other unpaid family members for their labor management and equity capital It is the farm familys net annual return from working managing financing and owning the farm business This is not a measure of cash available from the years business operation Cash flow is evaluated later in this report
Net farm income is computed with and without appreciation Appreciashytion represents the change in livestock machinery and real estate inventory values caused by changes in prices during the year Appreciation is a major factor contributing to changes in farm net worth and must be included in the profitability analysis
NET FARM INCOME 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Total accrual receipts Appreciation Livestock
Machinery Real Estate
Total Including Appreciation Total accrual expenses Net Farm Income (with appreciation) Net Farm Income (without appreciation)
$219700 -7658 5072
-114 $217000
211545 $ 5455 $ 8155
$_--shy
$_-shy
$_-shy$_-shy
Return to operators) labor management and equity capital measures the total business profits for the farm operators It is calculated by deducting a charge for unpaid family labor from net farm income Operator(s) labor is not included in unpaid family labor Return to operator(s) labor manageshyment and equity capital has been compiled with and without appreciation Appreciation is considered an important part of the return to ownership of farm assets
RETURN TO OPERATOR(S) LABOR MANAGEMENT AND EQUITY 23 Central Plain Region Dairy Farms 1985
Item
Av~uage Without With Wprec Wprec
My Farm Without With Wprec Apprec
Net farm income $8155 $5455 $_-shy $_-shyFamily labor unpaid
Labor and manaampement income is the share of net farm income without appreciashytion returned to the operator(s) labor and management Appreciation is not included as part of the return to labor and management Labor and management income is determined by deducting the cost of using equity capital at a real interest rate of five percent from the return to operator(s) labor manageshyment and equity capital excluding appreciation The interest charge reflects the long-term average rate of return that a farmer might expect to earn in comparable risk investments in a low inflation economy
Labor and manaampement income per operator measures the return to each operators labor and management
LABOR AND MANAGEMENT INCOME 23 Central Plain Region Dairy Farms 1985
Item Averaampe My Farm
Return to operator(s) labor management amp equity without appreciation
Real interest 5 on $338140 equity capital
Labor amp Management Income (142 operators)
Labor amp Management Income per Operator
$ 7055 $_-shy
16907
$-9852
$-6954
$_-shy
$_--shy
Return on equity capital measures the net return remaining for the farmers equity or owned capital after a charge has been made for the owner-operators labor and management The earnings or amount of net farm income allocated to labor and management is the opportunity cost or value of operator(s) labor and management estimated by the cooperators Return on equity capital is calculated with and without appreciation The rate of return on equity capital is determined by dividing the amount returned by the end of year farm net worth or equity capital
RETURN ON EQUITY CAPITAL 23 Central Plain Region Dairy Farms 1985
Item Averaampe My Farm
Return to operator(s) labor management amp equity capital with appreciation
Value of operator(s) labor amp management
Return on equity capital with appreciation
Rate of return on equity capital with appreciation
Return on equity capital without appreciation
Rate of return without appreciation
$ 4355
26118
$-21763
-64
$-19063
-56
$_--shy
$_-shy
$_-shy
8
Farm and Family Fipancial Status
Evaluating the financial status of the farm business and the farm family is an important part of business analysis The first step is to recognize all the assets and liabilities that make up the balance sheet The second step is to analyze your filled out balance sheet by evaluating changes made during the year
1985 FARM BUSINESS amp NONFARM BALANCE SHEET 23 Central Plain Region Dairy Farms 1985
Farm Liabilities Farm Ass~tsect JSn 1 Dec 31 ~ Net W0Ith JSn 1 Dilc 31
Total Farm Assets $656953 $637122 Total Farm Liab $299804 $298981 FARM NET WORTH $357149 $338140
Nonfarm Liabilities NonfSI Assect~tsect Jm 1 D~pound n ~ N~t i2Ith Jm 1 Qec 31
Personal cash chkg amp savings $ 505
Cash value life ins 5331 $ 692
6058
Nonfarm Uab NOHfARM HiT iQRTH
IfARM amp6QHFARM
$ 0 ~17lJZ Jan 1
$ 0 ~18JIZ Qec ~l
Nonfarm real estate 1063 451 ITotal Assets $674090 $655439 Auto (personal sh) Stocks ampbonds
2861 1611
3087 2034
ITotal Liabilities I
2998Q4 98981
Household furn 5365 5674 I All other Ql 321 ITOTAL FARM amp NON-
Total Nonfarm $ 17137 $ 18317 I FARM NET WORTH $374286 $356457
Financial lease obligations are included in the balance sheet The present values of all future payments are listed as liabilities since the farmer (lessee) is committed to make the payments The present values are also listed as assets representing the future value the item has to the business
9
1985 FARM BUSINESS amp NONFARM BALANCE SHEET
Farm Assets Jan 1 Dec 31 Farm Liabilities amp Net Worth Jan 1 Dec 31
Current Farm cash checking amp savings
Accounts rec Feed amp supplies
Current Accounts payable Operating debt Short-term
Nonfarm Liabilities Nonfarm Assets Jan 1 Dec 31 ampNet Worth Jan 1 Dec 31
Nonfarm Liab Personal cash
amp savings chkg
Cash value life ins
Nonfarm real est Auto (pers share) Stocks ampbonds
Total Nonfarm Liabilities
Household furn All other Nonfarm
Total Nonfarm Net Worth
TOTAL FARM ~ NONFARM Jan 1 Dec 31
Total Farm amp Nonfarm Assets Less Total Farm amp Nonfarm Liabilities Farm amp Nonfarm Net Worth
10
Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed
BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309
Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047
long-term 058 intermediatecurrent 036
Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59
Intermediate amp current debt
Current amp inter 1iab as a of total debt 41
Farm Debt Levels Total farm debt Long-term debt
Per Cow $3082
1830
Per Tillable Acre Owned
$1220 725
Per Cow $_-shy
1252 496
$_-shy$_-shy
----_ ---_ ---_
Per Tillable Acre Owned $_--shy
Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these assets used on the balance sheet and the changes that occur from the beginning to end of year Changes in the livestock inventory are included in the dairy analysis
FARM INVENTORY BALANCE 23 Central Plain Region Dairy Farms 1985
Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg
Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy
$1330 land and $4097 buildings andor depreciable improvements
11
Cash Flow Summary and Analysis
Completing an annual cash flow summary and analysis is important to determine how well the cash generated by the business plus that brought in from outside met the annual cash needs of the business and the farm family Understanding last years cash flow is the first step toward planning and managing cash flow for the current and future years
The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end When all the cash inflows and outflows are correct the statement will balance If the imbalance (error) amount is positive recorded cash inflows exceed outflows by this amount If it is negative cash outflows are too high in relation to inflows
ANNUAL CASH FLOW STATEMENT 23 Central Plain Region Dairy Farms 1985
Item Average My Farm Cash Inflows
Beginning farm cash checking amp savings
Cash farm receipts
Sale of assets Machinery
Real estate
Money borrowed (intermediate amp long-term)
Money borrowed (short-term)
Increase in operating debt
Nonfarm income
Money borrowed - nonfarm
Total
Cash Outflows
Cash farm expenses
Capital purchases Expansion livestock
Machinery
Real estate
Principal payments (intermediate amp long-term)
Principal payments (short-term)
Decrease in operating debt
Nonfarm debt payments
Personal withdrawals amp family expo
Ending farm cash checking amp savings
Total
Imbalance (error)
$ 2675
219448
214
7363
24469
2485
750
1461
0
$258865
$182243
918
11654
5427
27561
620
0
0
10708
1734
$240860
$ 18005
$
12
Repayment Analysis
The second step of cash flow planning is to compare and evaluate debt payments planned and made last year and estimate the payments required in the current year It is helpful to compare and evaluate by using debt payments per unit of production and receiptdebt payment ratios
FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986
Debt Payments
Avetaamp~ 1985 Payments
Planned Made Planned
1986
My Farm 1985 Payments
Planned Made Planned
1986
Long-term IntermShort-Operating (net
redu
(net reduction)
ediate-term term
ction Accounts payable
$20431 30095 9705
0
6294
$28583 29330 1004
0
3548
$17021 27543
3490
3769
2112
$_-- $_-- $_-shy
Total $66526 $62465 $53934 $ $_-- $_-shy
Per cow Per cwt Percen
1985 milk t of total
$723 $477
$679 $448
$ $_-shy$_-_$_-shy
1985 receipts Percent of 1985
29 27
milk receipts 38 35
The Cash Flow Covetaampe Ratio measures the ability of the farm business to meet its planned debt payment schedule The ratio shows the percentage of planned payments that could have been made with last years available cash flow report
Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments
CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985
(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077
Personal withdrawals and family expenditures less nonfarm income If family withdrawals are excluded the cash flow coverage ratio will be incorrect
------
13
ANALYSIS OF THE FARM BUSINESS
The farm business has been divided into three parts indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency
to allow a m and the
more factors
Cropping Program Analysis
The cropping program is an important part of the dairy farm business and sometimes it is overlooked and neglected A complete evaluation of available land resources how they are being used how well crops are producing and what it costs to produce them is required to evaluate alternative cropping and feed purchasing choices
LAND RESOURCES AND CROP PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Land Tillable Nonti1lable Other nontillable
Total
Crop Yields Hay crop Corn silage
Other forage Total forage Corn grain Oats Wheat Other crops Tillable pasture Idle
Total Tillable Acres
~ Rented Total 245 163 407
20 7 26 90 -1Q 100
355 180 533
fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn
47 tn DM 2 14 12 tn DM
23 205 35 tn DM 22 124 806 bu 13 46 807 bu
9 36 626 bu 8 42 6 19
12 45 407
Rented
~ frodLAcre tn DM tn tn DM tn DM tn DM bu bu bu
Average crop acres and yields compiled for the region are for the number of farms reporting each crop Yields of forage crops have been converted to tons of dry matter using dry matter coefficients reported by the farmers Grain production has been converted to bushels of dry grain equivalent based on dry matter information provided
The following measures of crop management measure how efficiently the land resource is being used and how well total forage requirements are being met
CROP MANAGEMENT FACTORS 23 Central Plain Region Dairy Farms 1985
Item My Farm
Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow
431 217 760
14
Cropping Program Analysis (continued)
A substantial number of cooperators have allocated crop expenses to hay crop corn and other crop production This additional data has been compiled to show the traditional crop expenses per acre and per production unit for these crops Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed
to equal one ton of
CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops
Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres
Corn grain converted to silage equivalent using 588 bushels - one ton silage as fed
Most machinery costs are associated with crop production and should be analyzed with the crop enterprise Total machinery expenses include the major fixed costs (interest and depreciation) as well as the accrual operating costs Although machinery costs have not been allocated to individual crops they are shown per total tillable acre
ACCRUAL MACHINERY EXPENSES 23 Central Plain Region Dairy Farms 1985
My Farm Machinery Total Per Til Total Per Til
Expense Item Expenses Acre Expenses Acre
Fuel oil amp grease Machinery repairs amp parts
$ 9606 12071
$2358 2963
$_-shy $_-shy
Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919
Total $51364 $12607 $_-shy $_--shy
15
Dairy Program Analysis
Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business Changes in dairy herd size and market values that occur during the year are identified in the table below The change in inventory value without appreciation is attributed to physical changes in herd size and quality This real increase in inventory has been included as an accrual farm receipt on page 5
DAIRY HERD INVENTORY 23 Central Plain Region Dairy Farms 1985
pairy Cows Heifers Item Number Value Number Value
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
92
96 97 95
$79625 3763
-4784 $78604
89
87
88
$42800 -2548 -2757
$37495
My Farm
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
$_--shy
$_--shy
$_--shy
$_--shy
Total milk sold and milk sold per cow are extremely valuable measures of productivity on the dairy farm These measures of milk output are based on pounds of milk marketed during the year
MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item
Total milk sold lbs
Average
1399978
My Farm
Milk sold per cow lbs 14811
Average milk plant test percent butterfat 365
16
The cost of producing milk has been compiled using the whole farm method and is featured in the following table Accrual receipts from milk sales can be compared with the accrual costs of producing milk per cow and per hundredweight of milk Using the whole farm method operating costs of producing milk are estimated by deducting nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation
ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt
Accrual Costs of Producing Milk Operating costs Total costs withshy
$140178 $1483 $1001 $_-shy $_-shy $_-shy
out op(s) labor mgmt amp capital
Total Costs $169633 $212658
$1795 $2250
$1212 $1519
$_-shy$_-shy
$_-shy$_-shy
$_-shy$_-shy
The accrual operating expenses most commonly associated with the dairy enterprise are listed in the table below Evaluating these costs per unit of production enables the comparison of different size dairy farms
DAIRY RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt
Purchased dairy grain amp concentrates
Purchased dairy roughage Total Purchased
Dairy Feed Purchased grain amp conc as of milk receipts
as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense
$308 ---12
$208 JLU
$ $_-shy
$339 $229 $ $_--shy
$571 16
$386 $ -- $_-shy
$31 41
101 2
81
3U $021 027 068 001 055
$ $_-shy
17
Capital and Labor Efficiency Analysis
Capital efficiency factors measure how intensively the capital is being used in the farm business Measures of labor efficiency are key indicators of managements success
CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985
Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned
Farm capital Real estate Machinery amp equipment Capital turnover years
$180569
36469
$6845 3280 1383
295
$1588
321
$2641 1265
My Farm Farm capital Real estate
$_-shy $_--shy $_-shy $_-shy
Machinery amp equipment Capital turnover years
LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985
Labor Force Months Age
Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired
Total
My Farm Total Operators
11 4 2 6 2
18 43
44 44 32
+ 12 shy
+ 12 shy+ 12 shy
Years of gf Educ
Value of Labor amp Mgmt
14 13 13
$17283 6574 2261
358 Yorker Equivalent 142 OperatorManager Equiv
___ Yorker Equivalent OperatorManager Equiv
Labor Efficiency
Average Total Per Yorker Total
My Farm Per Yorker
Cows average number Milk sold pounds Tillable acres
95 1399978
407
26 390692
114 York units 1105 308
Average My Eatm Per Per Per Per
Labor Costs Total Cow Iil Acre Iotal Cow Til Acre
Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $
Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691
Total Less Int Paid $164775 $_--shy
Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy
- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp
family expenditures 10708 Available for Debt Payments
Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment
amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle
machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy
___ _
19
PROGRESS OF THE FARM BUSINESS
Comparing your business with average data from regional DFBS cooperashytors that participated in both of the last two years is one part of a business checkup It is equally important for you to determine the progress your business has made over the past two or three years and to set targets or goals for the future
PROGRESS OF THE FARM BUSINESS Same 17 Central Plain Dairy Farms 1984 and 1985
Average My Farm Selected Factors 1984 1985 1984 1985 Goal
Size of Business Average number of cows Average number of heifers Milk sold lbs Worker equivalent Total tillable acres
Rates of Production Milk sold per cow 1bs Hay DM per acre tons Corn silage per acre tons
Labor Efficiency Cows per worker Milk sold per worker lbs
Cost Control Grain amp conc purchased
as of milk sales Dairy feed amp crop expo
per cwt milk Labor amp mach costscow
Capital Efficiency Farm capital per cow Real estate per cow Mach amp equip per cow Capital turnover years
Profitability Net farm inc wo apprec Net farm inc wapprec Labor amp mgmt income Rate of return on eq
capital wapprec
Financial Summary Farm net worth Debt to asset ratio Farm debt per cow
Average for the year
89 92 88 89
1340447 1393320 353shy408
15081 31
14
25 379267
17
$439 $1079
$7740 $3749 $1522
30
$12702 $22767 $-7123
-09
$377688 045
$3537
375 409
15135 31 14
25 371552
16
$391 $1094
$7434 $3592 $1492
30
$8617 $3815
$-10616
-62
$362655 046
$3273
$___ $___ $___
$___ $___ $___
$_-shy$_-shy$_-shy
$_-shy$_--shy$_-shy
$_-shy$_-shy$_-shy
-
21
Financial AnalYsis Chart
The farm financial analysis chart 1s designed just like the ~ Business Chart and may be used to measure the financial health of the farm business Most of the financial measures used in the chart are presented on ~ages 7 10 12 and 17 of this publication
FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984
Liguidity ~Reeayent Available for Cash Flow Debt Payments
Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
4
Worksheets are provided to enable any dairy farmer to compute his or her accrual farm income and compare it with the averages on the opposite page
CASH AND ACCRUAL FARM EXPENSES WORKSHEET
Cash Change in Change in Accrual Expense Item Paid + Inventory + Accounts Payable Expenses
Hired Labor Feed Dairy grain amp cone Dairy roughage Other livestock Machinery Mach hire rentlease Machinery repairsparts Auto expense (fs) Fuel oil amp grease Livestock Replacement livestock Breeding Vet amp medicine Milk marketing Cattle leaserent Other livestock expense Crops Fertilizer amp lime Seeds amp plants Spray other crop expo Real Estate Landjbldgfence repair Taxes Insurance Rent amp lease Other Telephone (fs) Electricity (fs) Interest paid Miscellaneous Total Operating Expansion livestock Machinery depreciation Building depreciation
TOTAL ACCRUAL EXPENSES
$_-- $_-- $_-- $_--shy
$___ $_-- $_-- $_--shy
$ $ $ $
Cash paid is the actual amount of money paid out during the year and does not necessarily represent the cost of goods and services actually used
Accrual expenses are the costs of inputs actually used in this years production Purchased feed and supplies used out of inventory must be included Beginning of year less end of year purchased feed and supply inventory equals the change in inventory to include in accrual expenses Feed supplies and services used but not paid for must be included by adding the net increase in operating accounts payable Increases in operating accounts payable are determined by subtracting the balance at the beginning of the year from the end of year balance
5
CASH AND ACCRUAL FARM RECEIPTS 23 Central Plain Region Dairy Farms 1985
Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other
Total Accrual Receipts
$177 112 11623
2073 3898
12481 6576
148 303
5234
$219448
$1216
-741 100
$ 575
$-423 550
0 0
298 -969
0 0
---22
$-322
$176689 13388
2073 3157
12879 5607
148 303
5456
$219700
Cash receipts includes the gross value of milk checks received during the year plus all other payments received for the sale of farm products services and government programs
Accrual receipts represent the value of all farm commodities produced and services actually provided by the farmer during the year Increases in liveshystock inventory caused by herd growth andor quality are included as accrual receipts Decreases in inventory caused by herd reduction are deducted Changes in inventories of crops grown are accounted for in accrual receipts Changes in accounts receivable include the January milk check for this Decemshybers marketings compared with the previous Januarys check and other delayed payments
Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other
Total Accrual Receipts
$_-- $_-shy
$_-- $_-shy
To calculate the change in inventory to be included in the above worksheet subtract the beginning of year values from the end of year values excluding appreciation Th~ changes in inventories caused by declining prices must be excluded from the calculation of accrual receipts Changes in accounts receivable are also determined by subtracting beginning of year balances from end of year balances
----_ _--shy
6
Profitability Analysis
Farm ownersoperators contribute labor management and capital to their businesses and the best combination of these resources produces optimum profits Farm profits can be measured as the return to all family resources or as the return to one or more individual resources such as labor and management
Net farm income is the total combined return to the farm operator(s) and other unpaid family members for their labor management and equity capital It is the farm familys net annual return from working managing financing and owning the farm business This is not a measure of cash available from the years business operation Cash flow is evaluated later in this report
Net farm income is computed with and without appreciation Appreciashytion represents the change in livestock machinery and real estate inventory values caused by changes in prices during the year Appreciation is a major factor contributing to changes in farm net worth and must be included in the profitability analysis
NET FARM INCOME 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Total accrual receipts Appreciation Livestock
Machinery Real Estate
Total Including Appreciation Total accrual expenses Net Farm Income (with appreciation) Net Farm Income (without appreciation)
$219700 -7658 5072
-114 $217000
211545 $ 5455 $ 8155
$_--shy
$_-shy
$_-shy$_-shy
Return to operators) labor management and equity capital measures the total business profits for the farm operators It is calculated by deducting a charge for unpaid family labor from net farm income Operator(s) labor is not included in unpaid family labor Return to operator(s) labor manageshyment and equity capital has been compiled with and without appreciation Appreciation is considered an important part of the return to ownership of farm assets
RETURN TO OPERATOR(S) LABOR MANAGEMENT AND EQUITY 23 Central Plain Region Dairy Farms 1985
Item
Av~uage Without With Wprec Wprec
My Farm Without With Wprec Apprec
Net farm income $8155 $5455 $_-shy $_-shyFamily labor unpaid
Labor and manaampement income is the share of net farm income without appreciashytion returned to the operator(s) labor and management Appreciation is not included as part of the return to labor and management Labor and management income is determined by deducting the cost of using equity capital at a real interest rate of five percent from the return to operator(s) labor manageshyment and equity capital excluding appreciation The interest charge reflects the long-term average rate of return that a farmer might expect to earn in comparable risk investments in a low inflation economy
Labor and manaampement income per operator measures the return to each operators labor and management
LABOR AND MANAGEMENT INCOME 23 Central Plain Region Dairy Farms 1985
Item Averaampe My Farm
Return to operator(s) labor management amp equity without appreciation
Real interest 5 on $338140 equity capital
Labor amp Management Income (142 operators)
Labor amp Management Income per Operator
$ 7055 $_-shy
16907
$-9852
$-6954
$_-shy
$_--shy
Return on equity capital measures the net return remaining for the farmers equity or owned capital after a charge has been made for the owner-operators labor and management The earnings or amount of net farm income allocated to labor and management is the opportunity cost or value of operator(s) labor and management estimated by the cooperators Return on equity capital is calculated with and without appreciation The rate of return on equity capital is determined by dividing the amount returned by the end of year farm net worth or equity capital
RETURN ON EQUITY CAPITAL 23 Central Plain Region Dairy Farms 1985
Item Averaampe My Farm
Return to operator(s) labor management amp equity capital with appreciation
Value of operator(s) labor amp management
Return on equity capital with appreciation
Rate of return on equity capital with appreciation
Return on equity capital without appreciation
Rate of return without appreciation
$ 4355
26118
$-21763
-64
$-19063
-56
$_--shy
$_-shy
$_-shy
8
Farm and Family Fipancial Status
Evaluating the financial status of the farm business and the farm family is an important part of business analysis The first step is to recognize all the assets and liabilities that make up the balance sheet The second step is to analyze your filled out balance sheet by evaluating changes made during the year
1985 FARM BUSINESS amp NONFARM BALANCE SHEET 23 Central Plain Region Dairy Farms 1985
Farm Liabilities Farm Ass~tsect JSn 1 Dec 31 ~ Net W0Ith JSn 1 Dilc 31
Total Farm Assets $656953 $637122 Total Farm Liab $299804 $298981 FARM NET WORTH $357149 $338140
Nonfarm Liabilities NonfSI Assect~tsect Jm 1 D~pound n ~ N~t i2Ith Jm 1 Qec 31
Personal cash chkg amp savings $ 505
Cash value life ins 5331 $ 692
6058
Nonfarm Uab NOHfARM HiT iQRTH
IfARM amp6QHFARM
$ 0 ~17lJZ Jan 1
$ 0 ~18JIZ Qec ~l
Nonfarm real estate 1063 451 ITotal Assets $674090 $655439 Auto (personal sh) Stocks ampbonds
2861 1611
3087 2034
ITotal Liabilities I
2998Q4 98981
Household furn 5365 5674 I All other Ql 321 ITOTAL FARM amp NON-
Total Nonfarm $ 17137 $ 18317 I FARM NET WORTH $374286 $356457
Financial lease obligations are included in the balance sheet The present values of all future payments are listed as liabilities since the farmer (lessee) is committed to make the payments The present values are also listed as assets representing the future value the item has to the business
9
1985 FARM BUSINESS amp NONFARM BALANCE SHEET
Farm Assets Jan 1 Dec 31 Farm Liabilities amp Net Worth Jan 1 Dec 31
Current Farm cash checking amp savings
Accounts rec Feed amp supplies
Current Accounts payable Operating debt Short-term
Nonfarm Liabilities Nonfarm Assets Jan 1 Dec 31 ampNet Worth Jan 1 Dec 31
Nonfarm Liab Personal cash
amp savings chkg
Cash value life ins
Nonfarm real est Auto (pers share) Stocks ampbonds
Total Nonfarm Liabilities
Household furn All other Nonfarm
Total Nonfarm Net Worth
TOTAL FARM ~ NONFARM Jan 1 Dec 31
Total Farm amp Nonfarm Assets Less Total Farm amp Nonfarm Liabilities Farm amp Nonfarm Net Worth
10
Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed
BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309
Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047
long-term 058 intermediatecurrent 036
Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59
Intermediate amp current debt
Current amp inter 1iab as a of total debt 41
Farm Debt Levels Total farm debt Long-term debt
Per Cow $3082
1830
Per Tillable Acre Owned
$1220 725
Per Cow $_-shy
1252 496
$_-shy$_-shy
----_ ---_ ---_
Per Tillable Acre Owned $_--shy
Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these assets used on the balance sheet and the changes that occur from the beginning to end of year Changes in the livestock inventory are included in the dairy analysis
FARM INVENTORY BALANCE 23 Central Plain Region Dairy Farms 1985
Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg
Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy
$1330 land and $4097 buildings andor depreciable improvements
11
Cash Flow Summary and Analysis
Completing an annual cash flow summary and analysis is important to determine how well the cash generated by the business plus that brought in from outside met the annual cash needs of the business and the farm family Understanding last years cash flow is the first step toward planning and managing cash flow for the current and future years
The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end When all the cash inflows and outflows are correct the statement will balance If the imbalance (error) amount is positive recorded cash inflows exceed outflows by this amount If it is negative cash outflows are too high in relation to inflows
ANNUAL CASH FLOW STATEMENT 23 Central Plain Region Dairy Farms 1985
Item Average My Farm Cash Inflows
Beginning farm cash checking amp savings
Cash farm receipts
Sale of assets Machinery
Real estate
Money borrowed (intermediate amp long-term)
Money borrowed (short-term)
Increase in operating debt
Nonfarm income
Money borrowed - nonfarm
Total
Cash Outflows
Cash farm expenses
Capital purchases Expansion livestock
Machinery
Real estate
Principal payments (intermediate amp long-term)
Principal payments (short-term)
Decrease in operating debt
Nonfarm debt payments
Personal withdrawals amp family expo
Ending farm cash checking amp savings
Total
Imbalance (error)
$ 2675
219448
214
7363
24469
2485
750
1461
0
$258865
$182243
918
11654
5427
27561
620
0
0
10708
1734
$240860
$ 18005
$
12
Repayment Analysis
The second step of cash flow planning is to compare and evaluate debt payments planned and made last year and estimate the payments required in the current year It is helpful to compare and evaluate by using debt payments per unit of production and receiptdebt payment ratios
FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986
Debt Payments
Avetaamp~ 1985 Payments
Planned Made Planned
1986
My Farm 1985 Payments
Planned Made Planned
1986
Long-term IntermShort-Operating (net
redu
(net reduction)
ediate-term term
ction Accounts payable
$20431 30095 9705
0
6294
$28583 29330 1004
0
3548
$17021 27543
3490
3769
2112
$_-- $_-- $_-shy
Total $66526 $62465 $53934 $ $_-- $_-shy
Per cow Per cwt Percen
1985 milk t of total
$723 $477
$679 $448
$ $_-shy$_-_$_-shy
1985 receipts Percent of 1985
29 27
milk receipts 38 35
The Cash Flow Covetaampe Ratio measures the ability of the farm business to meet its planned debt payment schedule The ratio shows the percentage of planned payments that could have been made with last years available cash flow report
Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments
CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985
(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077
Personal withdrawals and family expenditures less nonfarm income If family withdrawals are excluded the cash flow coverage ratio will be incorrect
------
13
ANALYSIS OF THE FARM BUSINESS
The farm business has been divided into three parts indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency
to allow a m and the
more factors
Cropping Program Analysis
The cropping program is an important part of the dairy farm business and sometimes it is overlooked and neglected A complete evaluation of available land resources how they are being used how well crops are producing and what it costs to produce them is required to evaluate alternative cropping and feed purchasing choices
LAND RESOURCES AND CROP PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Land Tillable Nonti1lable Other nontillable
Total
Crop Yields Hay crop Corn silage
Other forage Total forage Corn grain Oats Wheat Other crops Tillable pasture Idle
Total Tillable Acres
~ Rented Total 245 163 407
20 7 26 90 -1Q 100
355 180 533
fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn
47 tn DM 2 14 12 tn DM
23 205 35 tn DM 22 124 806 bu 13 46 807 bu
9 36 626 bu 8 42 6 19
12 45 407
Rented
~ frodLAcre tn DM tn tn DM tn DM tn DM bu bu bu
Average crop acres and yields compiled for the region are for the number of farms reporting each crop Yields of forage crops have been converted to tons of dry matter using dry matter coefficients reported by the farmers Grain production has been converted to bushels of dry grain equivalent based on dry matter information provided
The following measures of crop management measure how efficiently the land resource is being used and how well total forage requirements are being met
CROP MANAGEMENT FACTORS 23 Central Plain Region Dairy Farms 1985
Item My Farm
Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow
431 217 760
14
Cropping Program Analysis (continued)
A substantial number of cooperators have allocated crop expenses to hay crop corn and other crop production This additional data has been compiled to show the traditional crop expenses per acre and per production unit for these crops Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed
to equal one ton of
CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops
Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres
Corn grain converted to silage equivalent using 588 bushels - one ton silage as fed
Most machinery costs are associated with crop production and should be analyzed with the crop enterprise Total machinery expenses include the major fixed costs (interest and depreciation) as well as the accrual operating costs Although machinery costs have not been allocated to individual crops they are shown per total tillable acre
ACCRUAL MACHINERY EXPENSES 23 Central Plain Region Dairy Farms 1985
My Farm Machinery Total Per Til Total Per Til
Expense Item Expenses Acre Expenses Acre
Fuel oil amp grease Machinery repairs amp parts
$ 9606 12071
$2358 2963
$_-shy $_-shy
Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919
Total $51364 $12607 $_-shy $_--shy
15
Dairy Program Analysis
Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business Changes in dairy herd size and market values that occur during the year are identified in the table below The change in inventory value without appreciation is attributed to physical changes in herd size and quality This real increase in inventory has been included as an accrual farm receipt on page 5
DAIRY HERD INVENTORY 23 Central Plain Region Dairy Farms 1985
pairy Cows Heifers Item Number Value Number Value
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
92
96 97 95
$79625 3763
-4784 $78604
89
87
88
$42800 -2548 -2757
$37495
My Farm
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
$_--shy
$_--shy
$_--shy
$_--shy
Total milk sold and milk sold per cow are extremely valuable measures of productivity on the dairy farm These measures of milk output are based on pounds of milk marketed during the year
MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item
Total milk sold lbs
Average
1399978
My Farm
Milk sold per cow lbs 14811
Average milk plant test percent butterfat 365
16
The cost of producing milk has been compiled using the whole farm method and is featured in the following table Accrual receipts from milk sales can be compared with the accrual costs of producing milk per cow and per hundredweight of milk Using the whole farm method operating costs of producing milk are estimated by deducting nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation
ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt
Accrual Costs of Producing Milk Operating costs Total costs withshy
$140178 $1483 $1001 $_-shy $_-shy $_-shy
out op(s) labor mgmt amp capital
Total Costs $169633 $212658
$1795 $2250
$1212 $1519
$_-shy$_-shy
$_-shy$_-shy
$_-shy$_-shy
The accrual operating expenses most commonly associated with the dairy enterprise are listed in the table below Evaluating these costs per unit of production enables the comparison of different size dairy farms
DAIRY RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt
Purchased dairy grain amp concentrates
Purchased dairy roughage Total Purchased
Dairy Feed Purchased grain amp conc as of milk receipts
as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense
$308 ---12
$208 JLU
$ $_-shy
$339 $229 $ $_--shy
$571 16
$386 $ -- $_-shy
$31 41
101 2
81
3U $021 027 068 001 055
$ $_-shy
17
Capital and Labor Efficiency Analysis
Capital efficiency factors measure how intensively the capital is being used in the farm business Measures of labor efficiency are key indicators of managements success
CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985
Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned
Farm capital Real estate Machinery amp equipment Capital turnover years
$180569
36469
$6845 3280 1383
295
$1588
321
$2641 1265
My Farm Farm capital Real estate
$_-shy $_--shy $_-shy $_-shy
Machinery amp equipment Capital turnover years
LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985
Labor Force Months Age
Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired
Total
My Farm Total Operators
11 4 2 6 2
18 43
44 44 32
+ 12 shy
+ 12 shy+ 12 shy
Years of gf Educ
Value of Labor amp Mgmt
14 13 13
$17283 6574 2261
358 Yorker Equivalent 142 OperatorManager Equiv
___ Yorker Equivalent OperatorManager Equiv
Labor Efficiency
Average Total Per Yorker Total
My Farm Per Yorker
Cows average number Milk sold pounds Tillable acres
95 1399978
407
26 390692
114 York units 1105 308
Average My Eatm Per Per Per Per
Labor Costs Total Cow Iil Acre Iotal Cow Til Acre
Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $
Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691
Total Less Int Paid $164775 $_--shy
Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy
- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp
family expenditures 10708 Available for Debt Payments
Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment
amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle
machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy
___ _
19
PROGRESS OF THE FARM BUSINESS
Comparing your business with average data from regional DFBS cooperashytors that participated in both of the last two years is one part of a business checkup It is equally important for you to determine the progress your business has made over the past two or three years and to set targets or goals for the future
PROGRESS OF THE FARM BUSINESS Same 17 Central Plain Dairy Farms 1984 and 1985
Average My Farm Selected Factors 1984 1985 1984 1985 Goal
Size of Business Average number of cows Average number of heifers Milk sold lbs Worker equivalent Total tillable acres
Rates of Production Milk sold per cow 1bs Hay DM per acre tons Corn silage per acre tons
Labor Efficiency Cows per worker Milk sold per worker lbs
Cost Control Grain amp conc purchased
as of milk sales Dairy feed amp crop expo
per cwt milk Labor amp mach costscow
Capital Efficiency Farm capital per cow Real estate per cow Mach amp equip per cow Capital turnover years
Profitability Net farm inc wo apprec Net farm inc wapprec Labor amp mgmt income Rate of return on eq
capital wapprec
Financial Summary Farm net worth Debt to asset ratio Farm debt per cow
Average for the year
89 92 88 89
1340447 1393320 353shy408
15081 31
14
25 379267
17
$439 $1079
$7740 $3749 $1522
30
$12702 $22767 $-7123
-09
$377688 045
$3537
375 409
15135 31 14
25 371552
16
$391 $1094
$7434 $3592 $1492
30
$8617 $3815
$-10616
-62
$362655 046
$3273
$___ $___ $___
$___ $___ $___
$_-shy$_-shy$_-shy
$_-shy$_--shy$_-shy
$_-shy$_-shy$_-shy
-
21
Financial AnalYsis Chart
The farm financial analysis chart 1s designed just like the ~ Business Chart and may be used to measure the financial health of the farm business Most of the financial measures used in the chart are presented on ~ages 7 10 12 and 17 of this publication
FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984
Liguidity ~Reeayent Available for Cash Flow Debt Payments
Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
5
CASH AND ACCRUAL FARM RECEIPTS 23 Central Plain Region Dairy Farms 1985
Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other
Total Accrual Receipts
$177 112 11623
2073 3898
12481 6576
148 303
5234
$219448
$1216
-741 100
$ 575
$-423 550
0 0
298 -969
0 0
---22
$-322
$176689 13388
2073 3157
12879 5607
148 303
5456
$219700
Cash receipts includes the gross value of milk checks received during the year plus all other payments received for the sale of farm products services and government programs
Accrual receipts represent the value of all farm commodities produced and services actually provided by the farmer during the year Increases in liveshystock inventory caused by herd growth andor quality are included as accrual receipts Decreases in inventory caused by herd reduction are deducted Changes in inventories of crops grown are accounted for in accrual receipts Changes in accounts receivable include the January milk check for this Decemshybers marketings compared with the previous Januarys check and other delayed payments
Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other
Total Accrual Receipts
$_-- $_-shy
$_-- $_-shy
To calculate the change in inventory to be included in the above worksheet subtract the beginning of year values from the end of year values excluding appreciation Th~ changes in inventories caused by declining prices must be excluded from the calculation of accrual receipts Changes in accounts receivable are also determined by subtracting beginning of year balances from end of year balances
----_ _--shy
6
Profitability Analysis
Farm ownersoperators contribute labor management and capital to their businesses and the best combination of these resources produces optimum profits Farm profits can be measured as the return to all family resources or as the return to one or more individual resources such as labor and management
Net farm income is the total combined return to the farm operator(s) and other unpaid family members for their labor management and equity capital It is the farm familys net annual return from working managing financing and owning the farm business This is not a measure of cash available from the years business operation Cash flow is evaluated later in this report
Net farm income is computed with and without appreciation Appreciashytion represents the change in livestock machinery and real estate inventory values caused by changes in prices during the year Appreciation is a major factor contributing to changes in farm net worth and must be included in the profitability analysis
NET FARM INCOME 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Total accrual receipts Appreciation Livestock
Machinery Real Estate
Total Including Appreciation Total accrual expenses Net Farm Income (with appreciation) Net Farm Income (without appreciation)
$219700 -7658 5072
-114 $217000
211545 $ 5455 $ 8155
$_--shy
$_-shy
$_-shy$_-shy
Return to operators) labor management and equity capital measures the total business profits for the farm operators It is calculated by deducting a charge for unpaid family labor from net farm income Operator(s) labor is not included in unpaid family labor Return to operator(s) labor manageshyment and equity capital has been compiled with and without appreciation Appreciation is considered an important part of the return to ownership of farm assets
RETURN TO OPERATOR(S) LABOR MANAGEMENT AND EQUITY 23 Central Plain Region Dairy Farms 1985
Item
Av~uage Without With Wprec Wprec
My Farm Without With Wprec Apprec
Net farm income $8155 $5455 $_-shy $_-shyFamily labor unpaid
Labor and manaampement income is the share of net farm income without appreciashytion returned to the operator(s) labor and management Appreciation is not included as part of the return to labor and management Labor and management income is determined by deducting the cost of using equity capital at a real interest rate of five percent from the return to operator(s) labor manageshyment and equity capital excluding appreciation The interest charge reflects the long-term average rate of return that a farmer might expect to earn in comparable risk investments in a low inflation economy
Labor and manaampement income per operator measures the return to each operators labor and management
LABOR AND MANAGEMENT INCOME 23 Central Plain Region Dairy Farms 1985
Item Averaampe My Farm
Return to operator(s) labor management amp equity without appreciation
Real interest 5 on $338140 equity capital
Labor amp Management Income (142 operators)
Labor amp Management Income per Operator
$ 7055 $_-shy
16907
$-9852
$-6954
$_-shy
$_--shy
Return on equity capital measures the net return remaining for the farmers equity or owned capital after a charge has been made for the owner-operators labor and management The earnings or amount of net farm income allocated to labor and management is the opportunity cost or value of operator(s) labor and management estimated by the cooperators Return on equity capital is calculated with and without appreciation The rate of return on equity capital is determined by dividing the amount returned by the end of year farm net worth or equity capital
RETURN ON EQUITY CAPITAL 23 Central Plain Region Dairy Farms 1985
Item Averaampe My Farm
Return to operator(s) labor management amp equity capital with appreciation
Value of operator(s) labor amp management
Return on equity capital with appreciation
Rate of return on equity capital with appreciation
Return on equity capital without appreciation
Rate of return without appreciation
$ 4355
26118
$-21763
-64
$-19063
-56
$_--shy
$_-shy
$_-shy
8
Farm and Family Fipancial Status
Evaluating the financial status of the farm business and the farm family is an important part of business analysis The first step is to recognize all the assets and liabilities that make up the balance sheet The second step is to analyze your filled out balance sheet by evaluating changes made during the year
1985 FARM BUSINESS amp NONFARM BALANCE SHEET 23 Central Plain Region Dairy Farms 1985
Farm Liabilities Farm Ass~tsect JSn 1 Dec 31 ~ Net W0Ith JSn 1 Dilc 31
Total Farm Assets $656953 $637122 Total Farm Liab $299804 $298981 FARM NET WORTH $357149 $338140
Nonfarm Liabilities NonfSI Assect~tsect Jm 1 D~pound n ~ N~t i2Ith Jm 1 Qec 31
Personal cash chkg amp savings $ 505
Cash value life ins 5331 $ 692
6058
Nonfarm Uab NOHfARM HiT iQRTH
IfARM amp6QHFARM
$ 0 ~17lJZ Jan 1
$ 0 ~18JIZ Qec ~l
Nonfarm real estate 1063 451 ITotal Assets $674090 $655439 Auto (personal sh) Stocks ampbonds
2861 1611
3087 2034
ITotal Liabilities I
2998Q4 98981
Household furn 5365 5674 I All other Ql 321 ITOTAL FARM amp NON-
Total Nonfarm $ 17137 $ 18317 I FARM NET WORTH $374286 $356457
Financial lease obligations are included in the balance sheet The present values of all future payments are listed as liabilities since the farmer (lessee) is committed to make the payments The present values are also listed as assets representing the future value the item has to the business
9
1985 FARM BUSINESS amp NONFARM BALANCE SHEET
Farm Assets Jan 1 Dec 31 Farm Liabilities amp Net Worth Jan 1 Dec 31
Current Farm cash checking amp savings
Accounts rec Feed amp supplies
Current Accounts payable Operating debt Short-term
Nonfarm Liabilities Nonfarm Assets Jan 1 Dec 31 ampNet Worth Jan 1 Dec 31
Nonfarm Liab Personal cash
amp savings chkg
Cash value life ins
Nonfarm real est Auto (pers share) Stocks ampbonds
Total Nonfarm Liabilities
Household furn All other Nonfarm
Total Nonfarm Net Worth
TOTAL FARM ~ NONFARM Jan 1 Dec 31
Total Farm amp Nonfarm Assets Less Total Farm amp Nonfarm Liabilities Farm amp Nonfarm Net Worth
10
Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed
BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309
Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047
long-term 058 intermediatecurrent 036
Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59
Intermediate amp current debt
Current amp inter 1iab as a of total debt 41
Farm Debt Levels Total farm debt Long-term debt
Per Cow $3082
1830
Per Tillable Acre Owned
$1220 725
Per Cow $_-shy
1252 496
$_-shy$_-shy
----_ ---_ ---_
Per Tillable Acre Owned $_--shy
Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these assets used on the balance sheet and the changes that occur from the beginning to end of year Changes in the livestock inventory are included in the dairy analysis
FARM INVENTORY BALANCE 23 Central Plain Region Dairy Farms 1985
Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg
Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy
$1330 land and $4097 buildings andor depreciable improvements
11
Cash Flow Summary and Analysis
Completing an annual cash flow summary and analysis is important to determine how well the cash generated by the business plus that brought in from outside met the annual cash needs of the business and the farm family Understanding last years cash flow is the first step toward planning and managing cash flow for the current and future years
The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end When all the cash inflows and outflows are correct the statement will balance If the imbalance (error) amount is positive recorded cash inflows exceed outflows by this amount If it is negative cash outflows are too high in relation to inflows
ANNUAL CASH FLOW STATEMENT 23 Central Plain Region Dairy Farms 1985
Item Average My Farm Cash Inflows
Beginning farm cash checking amp savings
Cash farm receipts
Sale of assets Machinery
Real estate
Money borrowed (intermediate amp long-term)
Money borrowed (short-term)
Increase in operating debt
Nonfarm income
Money borrowed - nonfarm
Total
Cash Outflows
Cash farm expenses
Capital purchases Expansion livestock
Machinery
Real estate
Principal payments (intermediate amp long-term)
Principal payments (short-term)
Decrease in operating debt
Nonfarm debt payments
Personal withdrawals amp family expo
Ending farm cash checking amp savings
Total
Imbalance (error)
$ 2675
219448
214
7363
24469
2485
750
1461
0
$258865
$182243
918
11654
5427
27561
620
0
0
10708
1734
$240860
$ 18005
$
12
Repayment Analysis
The second step of cash flow planning is to compare and evaluate debt payments planned and made last year and estimate the payments required in the current year It is helpful to compare and evaluate by using debt payments per unit of production and receiptdebt payment ratios
FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986
Debt Payments
Avetaamp~ 1985 Payments
Planned Made Planned
1986
My Farm 1985 Payments
Planned Made Planned
1986
Long-term IntermShort-Operating (net
redu
(net reduction)
ediate-term term
ction Accounts payable
$20431 30095 9705
0
6294
$28583 29330 1004
0
3548
$17021 27543
3490
3769
2112
$_-- $_-- $_-shy
Total $66526 $62465 $53934 $ $_-- $_-shy
Per cow Per cwt Percen
1985 milk t of total
$723 $477
$679 $448
$ $_-shy$_-_$_-shy
1985 receipts Percent of 1985
29 27
milk receipts 38 35
The Cash Flow Covetaampe Ratio measures the ability of the farm business to meet its planned debt payment schedule The ratio shows the percentage of planned payments that could have been made with last years available cash flow report
Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments
CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985
(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077
Personal withdrawals and family expenditures less nonfarm income If family withdrawals are excluded the cash flow coverage ratio will be incorrect
------
13
ANALYSIS OF THE FARM BUSINESS
The farm business has been divided into three parts indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency
to allow a m and the
more factors
Cropping Program Analysis
The cropping program is an important part of the dairy farm business and sometimes it is overlooked and neglected A complete evaluation of available land resources how they are being used how well crops are producing and what it costs to produce them is required to evaluate alternative cropping and feed purchasing choices
LAND RESOURCES AND CROP PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Land Tillable Nonti1lable Other nontillable
Total
Crop Yields Hay crop Corn silage
Other forage Total forage Corn grain Oats Wheat Other crops Tillable pasture Idle
Total Tillable Acres
~ Rented Total 245 163 407
20 7 26 90 -1Q 100
355 180 533
fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn
47 tn DM 2 14 12 tn DM
23 205 35 tn DM 22 124 806 bu 13 46 807 bu
9 36 626 bu 8 42 6 19
12 45 407
Rented
~ frodLAcre tn DM tn tn DM tn DM tn DM bu bu bu
Average crop acres and yields compiled for the region are for the number of farms reporting each crop Yields of forage crops have been converted to tons of dry matter using dry matter coefficients reported by the farmers Grain production has been converted to bushels of dry grain equivalent based on dry matter information provided
The following measures of crop management measure how efficiently the land resource is being used and how well total forage requirements are being met
CROP MANAGEMENT FACTORS 23 Central Plain Region Dairy Farms 1985
Item My Farm
Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow
431 217 760
14
Cropping Program Analysis (continued)
A substantial number of cooperators have allocated crop expenses to hay crop corn and other crop production This additional data has been compiled to show the traditional crop expenses per acre and per production unit for these crops Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed
to equal one ton of
CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops
Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres
Corn grain converted to silage equivalent using 588 bushels - one ton silage as fed
Most machinery costs are associated with crop production and should be analyzed with the crop enterprise Total machinery expenses include the major fixed costs (interest and depreciation) as well as the accrual operating costs Although machinery costs have not been allocated to individual crops they are shown per total tillable acre
ACCRUAL MACHINERY EXPENSES 23 Central Plain Region Dairy Farms 1985
My Farm Machinery Total Per Til Total Per Til
Expense Item Expenses Acre Expenses Acre
Fuel oil amp grease Machinery repairs amp parts
$ 9606 12071
$2358 2963
$_-shy $_-shy
Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919
Total $51364 $12607 $_-shy $_--shy
15
Dairy Program Analysis
Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business Changes in dairy herd size and market values that occur during the year are identified in the table below The change in inventory value without appreciation is attributed to physical changes in herd size and quality This real increase in inventory has been included as an accrual farm receipt on page 5
DAIRY HERD INVENTORY 23 Central Plain Region Dairy Farms 1985
pairy Cows Heifers Item Number Value Number Value
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
92
96 97 95
$79625 3763
-4784 $78604
89
87
88
$42800 -2548 -2757
$37495
My Farm
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
$_--shy
$_--shy
$_--shy
$_--shy
Total milk sold and milk sold per cow are extremely valuable measures of productivity on the dairy farm These measures of milk output are based on pounds of milk marketed during the year
MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item
Total milk sold lbs
Average
1399978
My Farm
Milk sold per cow lbs 14811
Average milk plant test percent butterfat 365
16
The cost of producing milk has been compiled using the whole farm method and is featured in the following table Accrual receipts from milk sales can be compared with the accrual costs of producing milk per cow and per hundredweight of milk Using the whole farm method operating costs of producing milk are estimated by deducting nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation
ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt
Accrual Costs of Producing Milk Operating costs Total costs withshy
$140178 $1483 $1001 $_-shy $_-shy $_-shy
out op(s) labor mgmt amp capital
Total Costs $169633 $212658
$1795 $2250
$1212 $1519
$_-shy$_-shy
$_-shy$_-shy
$_-shy$_-shy
The accrual operating expenses most commonly associated with the dairy enterprise are listed in the table below Evaluating these costs per unit of production enables the comparison of different size dairy farms
DAIRY RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt
Purchased dairy grain amp concentrates
Purchased dairy roughage Total Purchased
Dairy Feed Purchased grain amp conc as of milk receipts
as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense
$308 ---12
$208 JLU
$ $_-shy
$339 $229 $ $_--shy
$571 16
$386 $ -- $_-shy
$31 41
101 2
81
3U $021 027 068 001 055
$ $_-shy
17
Capital and Labor Efficiency Analysis
Capital efficiency factors measure how intensively the capital is being used in the farm business Measures of labor efficiency are key indicators of managements success
CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985
Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned
Farm capital Real estate Machinery amp equipment Capital turnover years
$180569
36469
$6845 3280 1383
295
$1588
321
$2641 1265
My Farm Farm capital Real estate
$_-shy $_--shy $_-shy $_-shy
Machinery amp equipment Capital turnover years
LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985
Labor Force Months Age
Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired
Total
My Farm Total Operators
11 4 2 6 2
18 43
44 44 32
+ 12 shy
+ 12 shy+ 12 shy
Years of gf Educ
Value of Labor amp Mgmt
14 13 13
$17283 6574 2261
358 Yorker Equivalent 142 OperatorManager Equiv
___ Yorker Equivalent OperatorManager Equiv
Labor Efficiency
Average Total Per Yorker Total
My Farm Per Yorker
Cows average number Milk sold pounds Tillable acres
95 1399978
407
26 390692
114 York units 1105 308
Average My Eatm Per Per Per Per
Labor Costs Total Cow Iil Acre Iotal Cow Til Acre
Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $
Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691
Total Less Int Paid $164775 $_--shy
Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy
- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp
family expenditures 10708 Available for Debt Payments
Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment
amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle
machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy
___ _
19
PROGRESS OF THE FARM BUSINESS
Comparing your business with average data from regional DFBS cooperashytors that participated in both of the last two years is one part of a business checkup It is equally important for you to determine the progress your business has made over the past two or three years and to set targets or goals for the future
PROGRESS OF THE FARM BUSINESS Same 17 Central Plain Dairy Farms 1984 and 1985
Average My Farm Selected Factors 1984 1985 1984 1985 Goal
Size of Business Average number of cows Average number of heifers Milk sold lbs Worker equivalent Total tillable acres
Rates of Production Milk sold per cow 1bs Hay DM per acre tons Corn silage per acre tons
Labor Efficiency Cows per worker Milk sold per worker lbs
Cost Control Grain amp conc purchased
as of milk sales Dairy feed amp crop expo
per cwt milk Labor amp mach costscow
Capital Efficiency Farm capital per cow Real estate per cow Mach amp equip per cow Capital turnover years
Profitability Net farm inc wo apprec Net farm inc wapprec Labor amp mgmt income Rate of return on eq
capital wapprec
Financial Summary Farm net worth Debt to asset ratio Farm debt per cow
Average for the year
89 92 88 89
1340447 1393320 353shy408
15081 31
14
25 379267
17
$439 $1079
$7740 $3749 $1522
30
$12702 $22767 $-7123
-09
$377688 045
$3537
375 409
15135 31 14
25 371552
16
$391 $1094
$7434 $3592 $1492
30
$8617 $3815
$-10616
-62
$362655 046
$3273
$___ $___ $___
$___ $___ $___
$_-shy$_-shy$_-shy
$_-shy$_--shy$_-shy
$_-shy$_-shy$_-shy
-
21
Financial AnalYsis Chart
The farm financial analysis chart 1s designed just like the ~ Business Chart and may be used to measure the financial health of the farm business Most of the financial measures used in the chart are presented on ~ages 7 10 12 and 17 of this publication
FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984
Liguidity ~Reeayent Available for Cash Flow Debt Payments
Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
6
Profitability Analysis
Farm ownersoperators contribute labor management and capital to their businesses and the best combination of these resources produces optimum profits Farm profits can be measured as the return to all family resources or as the return to one or more individual resources such as labor and management
Net farm income is the total combined return to the farm operator(s) and other unpaid family members for their labor management and equity capital It is the farm familys net annual return from working managing financing and owning the farm business This is not a measure of cash available from the years business operation Cash flow is evaluated later in this report
Net farm income is computed with and without appreciation Appreciashytion represents the change in livestock machinery and real estate inventory values caused by changes in prices during the year Appreciation is a major factor contributing to changes in farm net worth and must be included in the profitability analysis
NET FARM INCOME 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Total accrual receipts Appreciation Livestock
Machinery Real Estate
Total Including Appreciation Total accrual expenses Net Farm Income (with appreciation) Net Farm Income (without appreciation)
$219700 -7658 5072
-114 $217000
211545 $ 5455 $ 8155
$_--shy
$_-shy
$_-shy$_-shy
Return to operators) labor management and equity capital measures the total business profits for the farm operators It is calculated by deducting a charge for unpaid family labor from net farm income Operator(s) labor is not included in unpaid family labor Return to operator(s) labor manageshyment and equity capital has been compiled with and without appreciation Appreciation is considered an important part of the return to ownership of farm assets
RETURN TO OPERATOR(S) LABOR MANAGEMENT AND EQUITY 23 Central Plain Region Dairy Farms 1985
Item
Av~uage Without With Wprec Wprec
My Farm Without With Wprec Apprec
Net farm income $8155 $5455 $_-shy $_-shyFamily labor unpaid
Labor and manaampement income is the share of net farm income without appreciashytion returned to the operator(s) labor and management Appreciation is not included as part of the return to labor and management Labor and management income is determined by deducting the cost of using equity capital at a real interest rate of five percent from the return to operator(s) labor manageshyment and equity capital excluding appreciation The interest charge reflects the long-term average rate of return that a farmer might expect to earn in comparable risk investments in a low inflation economy
Labor and manaampement income per operator measures the return to each operators labor and management
LABOR AND MANAGEMENT INCOME 23 Central Plain Region Dairy Farms 1985
Item Averaampe My Farm
Return to operator(s) labor management amp equity without appreciation
Real interest 5 on $338140 equity capital
Labor amp Management Income (142 operators)
Labor amp Management Income per Operator
$ 7055 $_-shy
16907
$-9852
$-6954
$_-shy
$_--shy
Return on equity capital measures the net return remaining for the farmers equity or owned capital after a charge has been made for the owner-operators labor and management The earnings or amount of net farm income allocated to labor and management is the opportunity cost or value of operator(s) labor and management estimated by the cooperators Return on equity capital is calculated with and without appreciation The rate of return on equity capital is determined by dividing the amount returned by the end of year farm net worth or equity capital
RETURN ON EQUITY CAPITAL 23 Central Plain Region Dairy Farms 1985
Item Averaampe My Farm
Return to operator(s) labor management amp equity capital with appreciation
Value of operator(s) labor amp management
Return on equity capital with appreciation
Rate of return on equity capital with appreciation
Return on equity capital without appreciation
Rate of return without appreciation
$ 4355
26118
$-21763
-64
$-19063
-56
$_--shy
$_-shy
$_-shy
8
Farm and Family Fipancial Status
Evaluating the financial status of the farm business and the farm family is an important part of business analysis The first step is to recognize all the assets and liabilities that make up the balance sheet The second step is to analyze your filled out balance sheet by evaluating changes made during the year
1985 FARM BUSINESS amp NONFARM BALANCE SHEET 23 Central Plain Region Dairy Farms 1985
Farm Liabilities Farm Ass~tsect JSn 1 Dec 31 ~ Net W0Ith JSn 1 Dilc 31
Total Farm Assets $656953 $637122 Total Farm Liab $299804 $298981 FARM NET WORTH $357149 $338140
Nonfarm Liabilities NonfSI Assect~tsect Jm 1 D~pound n ~ N~t i2Ith Jm 1 Qec 31
Personal cash chkg amp savings $ 505
Cash value life ins 5331 $ 692
6058
Nonfarm Uab NOHfARM HiT iQRTH
IfARM amp6QHFARM
$ 0 ~17lJZ Jan 1
$ 0 ~18JIZ Qec ~l
Nonfarm real estate 1063 451 ITotal Assets $674090 $655439 Auto (personal sh) Stocks ampbonds
2861 1611
3087 2034
ITotal Liabilities I
2998Q4 98981
Household furn 5365 5674 I All other Ql 321 ITOTAL FARM amp NON-
Total Nonfarm $ 17137 $ 18317 I FARM NET WORTH $374286 $356457
Financial lease obligations are included in the balance sheet The present values of all future payments are listed as liabilities since the farmer (lessee) is committed to make the payments The present values are also listed as assets representing the future value the item has to the business
9
1985 FARM BUSINESS amp NONFARM BALANCE SHEET
Farm Assets Jan 1 Dec 31 Farm Liabilities amp Net Worth Jan 1 Dec 31
Current Farm cash checking amp savings
Accounts rec Feed amp supplies
Current Accounts payable Operating debt Short-term
Nonfarm Liabilities Nonfarm Assets Jan 1 Dec 31 ampNet Worth Jan 1 Dec 31
Nonfarm Liab Personal cash
amp savings chkg
Cash value life ins
Nonfarm real est Auto (pers share) Stocks ampbonds
Total Nonfarm Liabilities
Household furn All other Nonfarm
Total Nonfarm Net Worth
TOTAL FARM ~ NONFARM Jan 1 Dec 31
Total Farm amp Nonfarm Assets Less Total Farm amp Nonfarm Liabilities Farm amp Nonfarm Net Worth
10
Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed
BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309
Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047
long-term 058 intermediatecurrent 036
Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59
Intermediate amp current debt
Current amp inter 1iab as a of total debt 41
Farm Debt Levels Total farm debt Long-term debt
Per Cow $3082
1830
Per Tillable Acre Owned
$1220 725
Per Cow $_-shy
1252 496
$_-shy$_-shy
----_ ---_ ---_
Per Tillable Acre Owned $_--shy
Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these assets used on the balance sheet and the changes that occur from the beginning to end of year Changes in the livestock inventory are included in the dairy analysis
FARM INVENTORY BALANCE 23 Central Plain Region Dairy Farms 1985
Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg
Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy
$1330 land and $4097 buildings andor depreciable improvements
11
Cash Flow Summary and Analysis
Completing an annual cash flow summary and analysis is important to determine how well the cash generated by the business plus that brought in from outside met the annual cash needs of the business and the farm family Understanding last years cash flow is the first step toward planning and managing cash flow for the current and future years
The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end When all the cash inflows and outflows are correct the statement will balance If the imbalance (error) amount is positive recorded cash inflows exceed outflows by this amount If it is negative cash outflows are too high in relation to inflows
ANNUAL CASH FLOW STATEMENT 23 Central Plain Region Dairy Farms 1985
Item Average My Farm Cash Inflows
Beginning farm cash checking amp savings
Cash farm receipts
Sale of assets Machinery
Real estate
Money borrowed (intermediate amp long-term)
Money borrowed (short-term)
Increase in operating debt
Nonfarm income
Money borrowed - nonfarm
Total
Cash Outflows
Cash farm expenses
Capital purchases Expansion livestock
Machinery
Real estate
Principal payments (intermediate amp long-term)
Principal payments (short-term)
Decrease in operating debt
Nonfarm debt payments
Personal withdrawals amp family expo
Ending farm cash checking amp savings
Total
Imbalance (error)
$ 2675
219448
214
7363
24469
2485
750
1461
0
$258865
$182243
918
11654
5427
27561
620
0
0
10708
1734
$240860
$ 18005
$
12
Repayment Analysis
The second step of cash flow planning is to compare and evaluate debt payments planned and made last year and estimate the payments required in the current year It is helpful to compare and evaluate by using debt payments per unit of production and receiptdebt payment ratios
FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986
Debt Payments
Avetaamp~ 1985 Payments
Planned Made Planned
1986
My Farm 1985 Payments
Planned Made Planned
1986
Long-term IntermShort-Operating (net
redu
(net reduction)
ediate-term term
ction Accounts payable
$20431 30095 9705
0
6294
$28583 29330 1004
0
3548
$17021 27543
3490
3769
2112
$_-- $_-- $_-shy
Total $66526 $62465 $53934 $ $_-- $_-shy
Per cow Per cwt Percen
1985 milk t of total
$723 $477
$679 $448
$ $_-shy$_-_$_-shy
1985 receipts Percent of 1985
29 27
milk receipts 38 35
The Cash Flow Covetaampe Ratio measures the ability of the farm business to meet its planned debt payment schedule The ratio shows the percentage of planned payments that could have been made with last years available cash flow report
Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments
CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985
(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077
Personal withdrawals and family expenditures less nonfarm income If family withdrawals are excluded the cash flow coverage ratio will be incorrect
------
13
ANALYSIS OF THE FARM BUSINESS
The farm business has been divided into three parts indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency
to allow a m and the
more factors
Cropping Program Analysis
The cropping program is an important part of the dairy farm business and sometimes it is overlooked and neglected A complete evaluation of available land resources how they are being used how well crops are producing and what it costs to produce them is required to evaluate alternative cropping and feed purchasing choices
LAND RESOURCES AND CROP PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Land Tillable Nonti1lable Other nontillable
Total
Crop Yields Hay crop Corn silage
Other forage Total forage Corn grain Oats Wheat Other crops Tillable pasture Idle
Total Tillable Acres
~ Rented Total 245 163 407
20 7 26 90 -1Q 100
355 180 533
fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn
47 tn DM 2 14 12 tn DM
23 205 35 tn DM 22 124 806 bu 13 46 807 bu
9 36 626 bu 8 42 6 19
12 45 407
Rented
~ frodLAcre tn DM tn tn DM tn DM tn DM bu bu bu
Average crop acres and yields compiled for the region are for the number of farms reporting each crop Yields of forage crops have been converted to tons of dry matter using dry matter coefficients reported by the farmers Grain production has been converted to bushels of dry grain equivalent based on dry matter information provided
The following measures of crop management measure how efficiently the land resource is being used and how well total forage requirements are being met
CROP MANAGEMENT FACTORS 23 Central Plain Region Dairy Farms 1985
Item My Farm
Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow
431 217 760
14
Cropping Program Analysis (continued)
A substantial number of cooperators have allocated crop expenses to hay crop corn and other crop production This additional data has been compiled to show the traditional crop expenses per acre and per production unit for these crops Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed
to equal one ton of
CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops
Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres
Corn grain converted to silage equivalent using 588 bushels - one ton silage as fed
Most machinery costs are associated with crop production and should be analyzed with the crop enterprise Total machinery expenses include the major fixed costs (interest and depreciation) as well as the accrual operating costs Although machinery costs have not been allocated to individual crops they are shown per total tillable acre
ACCRUAL MACHINERY EXPENSES 23 Central Plain Region Dairy Farms 1985
My Farm Machinery Total Per Til Total Per Til
Expense Item Expenses Acre Expenses Acre
Fuel oil amp grease Machinery repairs amp parts
$ 9606 12071
$2358 2963
$_-shy $_-shy
Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919
Total $51364 $12607 $_-shy $_--shy
15
Dairy Program Analysis
Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business Changes in dairy herd size and market values that occur during the year are identified in the table below The change in inventory value without appreciation is attributed to physical changes in herd size and quality This real increase in inventory has been included as an accrual farm receipt on page 5
DAIRY HERD INVENTORY 23 Central Plain Region Dairy Farms 1985
pairy Cows Heifers Item Number Value Number Value
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
92
96 97 95
$79625 3763
-4784 $78604
89
87
88
$42800 -2548 -2757
$37495
My Farm
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
$_--shy
$_--shy
$_--shy
$_--shy
Total milk sold and milk sold per cow are extremely valuable measures of productivity on the dairy farm These measures of milk output are based on pounds of milk marketed during the year
MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item
Total milk sold lbs
Average
1399978
My Farm
Milk sold per cow lbs 14811
Average milk plant test percent butterfat 365
16
The cost of producing milk has been compiled using the whole farm method and is featured in the following table Accrual receipts from milk sales can be compared with the accrual costs of producing milk per cow and per hundredweight of milk Using the whole farm method operating costs of producing milk are estimated by deducting nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation
ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt
Accrual Costs of Producing Milk Operating costs Total costs withshy
$140178 $1483 $1001 $_-shy $_-shy $_-shy
out op(s) labor mgmt amp capital
Total Costs $169633 $212658
$1795 $2250
$1212 $1519
$_-shy$_-shy
$_-shy$_-shy
$_-shy$_-shy
The accrual operating expenses most commonly associated with the dairy enterprise are listed in the table below Evaluating these costs per unit of production enables the comparison of different size dairy farms
DAIRY RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt
Purchased dairy grain amp concentrates
Purchased dairy roughage Total Purchased
Dairy Feed Purchased grain amp conc as of milk receipts
as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense
$308 ---12
$208 JLU
$ $_-shy
$339 $229 $ $_--shy
$571 16
$386 $ -- $_-shy
$31 41
101 2
81
3U $021 027 068 001 055
$ $_-shy
17
Capital and Labor Efficiency Analysis
Capital efficiency factors measure how intensively the capital is being used in the farm business Measures of labor efficiency are key indicators of managements success
CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985
Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned
Farm capital Real estate Machinery amp equipment Capital turnover years
$180569
36469
$6845 3280 1383
295
$1588
321
$2641 1265
My Farm Farm capital Real estate
$_-shy $_--shy $_-shy $_-shy
Machinery amp equipment Capital turnover years
LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985
Labor Force Months Age
Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired
Total
My Farm Total Operators
11 4 2 6 2
18 43
44 44 32
+ 12 shy
+ 12 shy+ 12 shy
Years of gf Educ
Value of Labor amp Mgmt
14 13 13
$17283 6574 2261
358 Yorker Equivalent 142 OperatorManager Equiv
___ Yorker Equivalent OperatorManager Equiv
Labor Efficiency
Average Total Per Yorker Total
My Farm Per Yorker
Cows average number Milk sold pounds Tillable acres
95 1399978
407
26 390692
114 York units 1105 308
Average My Eatm Per Per Per Per
Labor Costs Total Cow Iil Acre Iotal Cow Til Acre
Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $
Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691
Total Less Int Paid $164775 $_--shy
Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy
- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp
family expenditures 10708 Available for Debt Payments
Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment
amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle
machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy
___ _
19
PROGRESS OF THE FARM BUSINESS
Comparing your business with average data from regional DFBS cooperashytors that participated in both of the last two years is one part of a business checkup It is equally important for you to determine the progress your business has made over the past two or three years and to set targets or goals for the future
PROGRESS OF THE FARM BUSINESS Same 17 Central Plain Dairy Farms 1984 and 1985
Average My Farm Selected Factors 1984 1985 1984 1985 Goal
Size of Business Average number of cows Average number of heifers Milk sold lbs Worker equivalent Total tillable acres
Rates of Production Milk sold per cow 1bs Hay DM per acre tons Corn silage per acre tons
Labor Efficiency Cows per worker Milk sold per worker lbs
Cost Control Grain amp conc purchased
as of milk sales Dairy feed amp crop expo
per cwt milk Labor amp mach costscow
Capital Efficiency Farm capital per cow Real estate per cow Mach amp equip per cow Capital turnover years
Profitability Net farm inc wo apprec Net farm inc wapprec Labor amp mgmt income Rate of return on eq
capital wapprec
Financial Summary Farm net worth Debt to asset ratio Farm debt per cow
Average for the year
89 92 88 89
1340447 1393320 353shy408
15081 31
14
25 379267
17
$439 $1079
$7740 $3749 $1522
30
$12702 $22767 $-7123
-09
$377688 045
$3537
375 409
15135 31 14
25 371552
16
$391 $1094
$7434 $3592 $1492
30
$8617 $3815
$-10616
-62
$362655 046
$3273
$___ $___ $___
$___ $___ $___
$_-shy$_-shy$_-shy
$_-shy$_--shy$_-shy
$_-shy$_-shy$_-shy
-
21
Financial AnalYsis Chart
The farm financial analysis chart 1s designed just like the ~ Business Chart and may be used to measure the financial health of the farm business Most of the financial measures used in the chart are presented on ~ages 7 10 12 and 17 of this publication
FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984
Liguidity ~Reeayent Available for Cash Flow Debt Payments
Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
7
Labor and manaampement income is the share of net farm income without appreciashytion returned to the operator(s) labor and management Appreciation is not included as part of the return to labor and management Labor and management income is determined by deducting the cost of using equity capital at a real interest rate of five percent from the return to operator(s) labor manageshyment and equity capital excluding appreciation The interest charge reflects the long-term average rate of return that a farmer might expect to earn in comparable risk investments in a low inflation economy
Labor and manaampement income per operator measures the return to each operators labor and management
LABOR AND MANAGEMENT INCOME 23 Central Plain Region Dairy Farms 1985
Item Averaampe My Farm
Return to operator(s) labor management amp equity without appreciation
Real interest 5 on $338140 equity capital
Labor amp Management Income (142 operators)
Labor amp Management Income per Operator
$ 7055 $_-shy
16907
$-9852
$-6954
$_-shy
$_--shy
Return on equity capital measures the net return remaining for the farmers equity or owned capital after a charge has been made for the owner-operators labor and management The earnings or amount of net farm income allocated to labor and management is the opportunity cost or value of operator(s) labor and management estimated by the cooperators Return on equity capital is calculated with and without appreciation The rate of return on equity capital is determined by dividing the amount returned by the end of year farm net worth or equity capital
RETURN ON EQUITY CAPITAL 23 Central Plain Region Dairy Farms 1985
Item Averaampe My Farm
Return to operator(s) labor management amp equity capital with appreciation
Value of operator(s) labor amp management
Return on equity capital with appreciation
Rate of return on equity capital with appreciation
Return on equity capital without appreciation
Rate of return without appreciation
$ 4355
26118
$-21763
-64
$-19063
-56
$_--shy
$_-shy
$_-shy
8
Farm and Family Fipancial Status
Evaluating the financial status of the farm business and the farm family is an important part of business analysis The first step is to recognize all the assets and liabilities that make up the balance sheet The second step is to analyze your filled out balance sheet by evaluating changes made during the year
1985 FARM BUSINESS amp NONFARM BALANCE SHEET 23 Central Plain Region Dairy Farms 1985
Farm Liabilities Farm Ass~tsect JSn 1 Dec 31 ~ Net W0Ith JSn 1 Dilc 31
Total Farm Assets $656953 $637122 Total Farm Liab $299804 $298981 FARM NET WORTH $357149 $338140
Nonfarm Liabilities NonfSI Assect~tsect Jm 1 D~pound n ~ N~t i2Ith Jm 1 Qec 31
Personal cash chkg amp savings $ 505
Cash value life ins 5331 $ 692
6058
Nonfarm Uab NOHfARM HiT iQRTH
IfARM amp6QHFARM
$ 0 ~17lJZ Jan 1
$ 0 ~18JIZ Qec ~l
Nonfarm real estate 1063 451 ITotal Assets $674090 $655439 Auto (personal sh) Stocks ampbonds
2861 1611
3087 2034
ITotal Liabilities I
2998Q4 98981
Household furn 5365 5674 I All other Ql 321 ITOTAL FARM amp NON-
Total Nonfarm $ 17137 $ 18317 I FARM NET WORTH $374286 $356457
Financial lease obligations are included in the balance sheet The present values of all future payments are listed as liabilities since the farmer (lessee) is committed to make the payments The present values are also listed as assets representing the future value the item has to the business
9
1985 FARM BUSINESS amp NONFARM BALANCE SHEET
Farm Assets Jan 1 Dec 31 Farm Liabilities amp Net Worth Jan 1 Dec 31
Current Farm cash checking amp savings
Accounts rec Feed amp supplies
Current Accounts payable Operating debt Short-term
Nonfarm Liabilities Nonfarm Assets Jan 1 Dec 31 ampNet Worth Jan 1 Dec 31
Nonfarm Liab Personal cash
amp savings chkg
Cash value life ins
Nonfarm real est Auto (pers share) Stocks ampbonds
Total Nonfarm Liabilities
Household furn All other Nonfarm
Total Nonfarm Net Worth
TOTAL FARM ~ NONFARM Jan 1 Dec 31
Total Farm amp Nonfarm Assets Less Total Farm amp Nonfarm Liabilities Farm amp Nonfarm Net Worth
10
Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed
BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309
Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047
long-term 058 intermediatecurrent 036
Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59
Intermediate amp current debt
Current amp inter 1iab as a of total debt 41
Farm Debt Levels Total farm debt Long-term debt
Per Cow $3082
1830
Per Tillable Acre Owned
$1220 725
Per Cow $_-shy
1252 496
$_-shy$_-shy
----_ ---_ ---_
Per Tillable Acre Owned $_--shy
Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these assets used on the balance sheet and the changes that occur from the beginning to end of year Changes in the livestock inventory are included in the dairy analysis
FARM INVENTORY BALANCE 23 Central Plain Region Dairy Farms 1985
Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg
Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy
$1330 land and $4097 buildings andor depreciable improvements
11
Cash Flow Summary and Analysis
Completing an annual cash flow summary and analysis is important to determine how well the cash generated by the business plus that brought in from outside met the annual cash needs of the business and the farm family Understanding last years cash flow is the first step toward planning and managing cash flow for the current and future years
The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end When all the cash inflows and outflows are correct the statement will balance If the imbalance (error) amount is positive recorded cash inflows exceed outflows by this amount If it is negative cash outflows are too high in relation to inflows
ANNUAL CASH FLOW STATEMENT 23 Central Plain Region Dairy Farms 1985
Item Average My Farm Cash Inflows
Beginning farm cash checking amp savings
Cash farm receipts
Sale of assets Machinery
Real estate
Money borrowed (intermediate amp long-term)
Money borrowed (short-term)
Increase in operating debt
Nonfarm income
Money borrowed - nonfarm
Total
Cash Outflows
Cash farm expenses
Capital purchases Expansion livestock
Machinery
Real estate
Principal payments (intermediate amp long-term)
Principal payments (short-term)
Decrease in operating debt
Nonfarm debt payments
Personal withdrawals amp family expo
Ending farm cash checking amp savings
Total
Imbalance (error)
$ 2675
219448
214
7363
24469
2485
750
1461
0
$258865
$182243
918
11654
5427
27561
620
0
0
10708
1734
$240860
$ 18005
$
12
Repayment Analysis
The second step of cash flow planning is to compare and evaluate debt payments planned and made last year and estimate the payments required in the current year It is helpful to compare and evaluate by using debt payments per unit of production and receiptdebt payment ratios
FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986
Debt Payments
Avetaamp~ 1985 Payments
Planned Made Planned
1986
My Farm 1985 Payments
Planned Made Planned
1986
Long-term IntermShort-Operating (net
redu
(net reduction)
ediate-term term
ction Accounts payable
$20431 30095 9705
0
6294
$28583 29330 1004
0
3548
$17021 27543
3490
3769
2112
$_-- $_-- $_-shy
Total $66526 $62465 $53934 $ $_-- $_-shy
Per cow Per cwt Percen
1985 milk t of total
$723 $477
$679 $448
$ $_-shy$_-_$_-shy
1985 receipts Percent of 1985
29 27
milk receipts 38 35
The Cash Flow Covetaampe Ratio measures the ability of the farm business to meet its planned debt payment schedule The ratio shows the percentage of planned payments that could have been made with last years available cash flow report
Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments
CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985
(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077
Personal withdrawals and family expenditures less nonfarm income If family withdrawals are excluded the cash flow coverage ratio will be incorrect
------
13
ANALYSIS OF THE FARM BUSINESS
The farm business has been divided into three parts indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency
to allow a m and the
more factors
Cropping Program Analysis
The cropping program is an important part of the dairy farm business and sometimes it is overlooked and neglected A complete evaluation of available land resources how they are being used how well crops are producing and what it costs to produce them is required to evaluate alternative cropping and feed purchasing choices
LAND RESOURCES AND CROP PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Land Tillable Nonti1lable Other nontillable
Total
Crop Yields Hay crop Corn silage
Other forage Total forage Corn grain Oats Wheat Other crops Tillable pasture Idle
Total Tillable Acres
~ Rented Total 245 163 407
20 7 26 90 -1Q 100
355 180 533
fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn
47 tn DM 2 14 12 tn DM
23 205 35 tn DM 22 124 806 bu 13 46 807 bu
9 36 626 bu 8 42 6 19
12 45 407
Rented
~ frodLAcre tn DM tn tn DM tn DM tn DM bu bu bu
Average crop acres and yields compiled for the region are for the number of farms reporting each crop Yields of forage crops have been converted to tons of dry matter using dry matter coefficients reported by the farmers Grain production has been converted to bushels of dry grain equivalent based on dry matter information provided
The following measures of crop management measure how efficiently the land resource is being used and how well total forage requirements are being met
CROP MANAGEMENT FACTORS 23 Central Plain Region Dairy Farms 1985
Item My Farm
Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow
431 217 760
14
Cropping Program Analysis (continued)
A substantial number of cooperators have allocated crop expenses to hay crop corn and other crop production This additional data has been compiled to show the traditional crop expenses per acre and per production unit for these crops Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed
to equal one ton of
CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops
Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres
Corn grain converted to silage equivalent using 588 bushels - one ton silage as fed
Most machinery costs are associated with crop production and should be analyzed with the crop enterprise Total machinery expenses include the major fixed costs (interest and depreciation) as well as the accrual operating costs Although machinery costs have not been allocated to individual crops they are shown per total tillable acre
ACCRUAL MACHINERY EXPENSES 23 Central Plain Region Dairy Farms 1985
My Farm Machinery Total Per Til Total Per Til
Expense Item Expenses Acre Expenses Acre
Fuel oil amp grease Machinery repairs amp parts
$ 9606 12071
$2358 2963
$_-shy $_-shy
Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919
Total $51364 $12607 $_-shy $_--shy
15
Dairy Program Analysis
Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business Changes in dairy herd size and market values that occur during the year are identified in the table below The change in inventory value without appreciation is attributed to physical changes in herd size and quality This real increase in inventory has been included as an accrual farm receipt on page 5
DAIRY HERD INVENTORY 23 Central Plain Region Dairy Farms 1985
pairy Cows Heifers Item Number Value Number Value
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
92
96 97 95
$79625 3763
-4784 $78604
89
87
88
$42800 -2548 -2757
$37495
My Farm
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
$_--shy
$_--shy
$_--shy
$_--shy
Total milk sold and milk sold per cow are extremely valuable measures of productivity on the dairy farm These measures of milk output are based on pounds of milk marketed during the year
MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item
Total milk sold lbs
Average
1399978
My Farm
Milk sold per cow lbs 14811
Average milk plant test percent butterfat 365
16
The cost of producing milk has been compiled using the whole farm method and is featured in the following table Accrual receipts from milk sales can be compared with the accrual costs of producing milk per cow and per hundredweight of milk Using the whole farm method operating costs of producing milk are estimated by deducting nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation
ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt
Accrual Costs of Producing Milk Operating costs Total costs withshy
$140178 $1483 $1001 $_-shy $_-shy $_-shy
out op(s) labor mgmt amp capital
Total Costs $169633 $212658
$1795 $2250
$1212 $1519
$_-shy$_-shy
$_-shy$_-shy
$_-shy$_-shy
The accrual operating expenses most commonly associated with the dairy enterprise are listed in the table below Evaluating these costs per unit of production enables the comparison of different size dairy farms
DAIRY RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt
Purchased dairy grain amp concentrates
Purchased dairy roughage Total Purchased
Dairy Feed Purchased grain amp conc as of milk receipts
as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense
$308 ---12
$208 JLU
$ $_-shy
$339 $229 $ $_--shy
$571 16
$386 $ -- $_-shy
$31 41
101 2
81
3U $021 027 068 001 055
$ $_-shy
17
Capital and Labor Efficiency Analysis
Capital efficiency factors measure how intensively the capital is being used in the farm business Measures of labor efficiency are key indicators of managements success
CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985
Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned
Farm capital Real estate Machinery amp equipment Capital turnover years
$180569
36469
$6845 3280 1383
295
$1588
321
$2641 1265
My Farm Farm capital Real estate
$_-shy $_--shy $_-shy $_-shy
Machinery amp equipment Capital turnover years
LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985
Labor Force Months Age
Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired
Total
My Farm Total Operators
11 4 2 6 2
18 43
44 44 32
+ 12 shy
+ 12 shy+ 12 shy
Years of gf Educ
Value of Labor amp Mgmt
14 13 13
$17283 6574 2261
358 Yorker Equivalent 142 OperatorManager Equiv
___ Yorker Equivalent OperatorManager Equiv
Labor Efficiency
Average Total Per Yorker Total
My Farm Per Yorker
Cows average number Milk sold pounds Tillable acres
95 1399978
407
26 390692
114 York units 1105 308
Average My Eatm Per Per Per Per
Labor Costs Total Cow Iil Acre Iotal Cow Til Acre
Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $
Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691
Total Less Int Paid $164775 $_--shy
Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy
- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp
family expenditures 10708 Available for Debt Payments
Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment
amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle
machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy
___ _
19
PROGRESS OF THE FARM BUSINESS
Comparing your business with average data from regional DFBS cooperashytors that participated in both of the last two years is one part of a business checkup It is equally important for you to determine the progress your business has made over the past two or three years and to set targets or goals for the future
PROGRESS OF THE FARM BUSINESS Same 17 Central Plain Dairy Farms 1984 and 1985
Average My Farm Selected Factors 1984 1985 1984 1985 Goal
Size of Business Average number of cows Average number of heifers Milk sold lbs Worker equivalent Total tillable acres
Rates of Production Milk sold per cow 1bs Hay DM per acre tons Corn silage per acre tons
Labor Efficiency Cows per worker Milk sold per worker lbs
Cost Control Grain amp conc purchased
as of milk sales Dairy feed amp crop expo
per cwt milk Labor amp mach costscow
Capital Efficiency Farm capital per cow Real estate per cow Mach amp equip per cow Capital turnover years
Profitability Net farm inc wo apprec Net farm inc wapprec Labor amp mgmt income Rate of return on eq
capital wapprec
Financial Summary Farm net worth Debt to asset ratio Farm debt per cow
Average for the year
89 92 88 89
1340447 1393320 353shy408
15081 31
14
25 379267
17
$439 $1079
$7740 $3749 $1522
30
$12702 $22767 $-7123
-09
$377688 045
$3537
375 409
15135 31 14
25 371552
16
$391 $1094
$7434 $3592 $1492
30
$8617 $3815
$-10616
-62
$362655 046
$3273
$___ $___ $___
$___ $___ $___
$_-shy$_-shy$_-shy
$_-shy$_--shy$_-shy
$_-shy$_-shy$_-shy
-
21
Financial AnalYsis Chart
The farm financial analysis chart 1s designed just like the ~ Business Chart and may be used to measure the financial health of the farm business Most of the financial measures used in the chart are presented on ~ages 7 10 12 and 17 of this publication
FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984
Liguidity ~Reeayent Available for Cash Flow Debt Payments
Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
8
Farm and Family Fipancial Status
Evaluating the financial status of the farm business and the farm family is an important part of business analysis The first step is to recognize all the assets and liabilities that make up the balance sheet The second step is to analyze your filled out balance sheet by evaluating changes made during the year
1985 FARM BUSINESS amp NONFARM BALANCE SHEET 23 Central Plain Region Dairy Farms 1985
Farm Liabilities Farm Ass~tsect JSn 1 Dec 31 ~ Net W0Ith JSn 1 Dilc 31
Total Farm Assets $656953 $637122 Total Farm Liab $299804 $298981 FARM NET WORTH $357149 $338140
Nonfarm Liabilities NonfSI Assect~tsect Jm 1 D~pound n ~ N~t i2Ith Jm 1 Qec 31
Personal cash chkg amp savings $ 505
Cash value life ins 5331 $ 692
6058
Nonfarm Uab NOHfARM HiT iQRTH
IfARM amp6QHFARM
$ 0 ~17lJZ Jan 1
$ 0 ~18JIZ Qec ~l
Nonfarm real estate 1063 451 ITotal Assets $674090 $655439 Auto (personal sh) Stocks ampbonds
2861 1611
3087 2034
ITotal Liabilities I
2998Q4 98981
Household furn 5365 5674 I All other Ql 321 ITOTAL FARM amp NON-
Total Nonfarm $ 17137 $ 18317 I FARM NET WORTH $374286 $356457
Financial lease obligations are included in the balance sheet The present values of all future payments are listed as liabilities since the farmer (lessee) is committed to make the payments The present values are also listed as assets representing the future value the item has to the business
9
1985 FARM BUSINESS amp NONFARM BALANCE SHEET
Farm Assets Jan 1 Dec 31 Farm Liabilities amp Net Worth Jan 1 Dec 31
Current Farm cash checking amp savings
Accounts rec Feed amp supplies
Current Accounts payable Operating debt Short-term
Nonfarm Liabilities Nonfarm Assets Jan 1 Dec 31 ampNet Worth Jan 1 Dec 31
Nonfarm Liab Personal cash
amp savings chkg
Cash value life ins
Nonfarm real est Auto (pers share) Stocks ampbonds
Total Nonfarm Liabilities
Household furn All other Nonfarm
Total Nonfarm Net Worth
TOTAL FARM ~ NONFARM Jan 1 Dec 31
Total Farm amp Nonfarm Assets Less Total Farm amp Nonfarm Liabilities Farm amp Nonfarm Net Worth
10
Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed
BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309
Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047
long-term 058 intermediatecurrent 036
Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59
Intermediate amp current debt
Current amp inter 1iab as a of total debt 41
Farm Debt Levels Total farm debt Long-term debt
Per Cow $3082
1830
Per Tillable Acre Owned
$1220 725
Per Cow $_-shy
1252 496
$_-shy$_-shy
----_ ---_ ---_
Per Tillable Acre Owned $_--shy
Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these assets used on the balance sheet and the changes that occur from the beginning to end of year Changes in the livestock inventory are included in the dairy analysis
FARM INVENTORY BALANCE 23 Central Plain Region Dairy Farms 1985
Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg
Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy
$1330 land and $4097 buildings andor depreciable improvements
11
Cash Flow Summary and Analysis
Completing an annual cash flow summary and analysis is important to determine how well the cash generated by the business plus that brought in from outside met the annual cash needs of the business and the farm family Understanding last years cash flow is the first step toward planning and managing cash flow for the current and future years
The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end When all the cash inflows and outflows are correct the statement will balance If the imbalance (error) amount is positive recorded cash inflows exceed outflows by this amount If it is negative cash outflows are too high in relation to inflows
ANNUAL CASH FLOW STATEMENT 23 Central Plain Region Dairy Farms 1985
Item Average My Farm Cash Inflows
Beginning farm cash checking amp savings
Cash farm receipts
Sale of assets Machinery
Real estate
Money borrowed (intermediate amp long-term)
Money borrowed (short-term)
Increase in operating debt
Nonfarm income
Money borrowed - nonfarm
Total
Cash Outflows
Cash farm expenses
Capital purchases Expansion livestock
Machinery
Real estate
Principal payments (intermediate amp long-term)
Principal payments (short-term)
Decrease in operating debt
Nonfarm debt payments
Personal withdrawals amp family expo
Ending farm cash checking amp savings
Total
Imbalance (error)
$ 2675
219448
214
7363
24469
2485
750
1461
0
$258865
$182243
918
11654
5427
27561
620
0
0
10708
1734
$240860
$ 18005
$
12
Repayment Analysis
The second step of cash flow planning is to compare and evaluate debt payments planned and made last year and estimate the payments required in the current year It is helpful to compare and evaluate by using debt payments per unit of production and receiptdebt payment ratios
FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986
Debt Payments
Avetaamp~ 1985 Payments
Planned Made Planned
1986
My Farm 1985 Payments
Planned Made Planned
1986
Long-term IntermShort-Operating (net
redu
(net reduction)
ediate-term term
ction Accounts payable
$20431 30095 9705
0
6294
$28583 29330 1004
0
3548
$17021 27543
3490
3769
2112
$_-- $_-- $_-shy
Total $66526 $62465 $53934 $ $_-- $_-shy
Per cow Per cwt Percen
1985 milk t of total
$723 $477
$679 $448
$ $_-shy$_-_$_-shy
1985 receipts Percent of 1985
29 27
milk receipts 38 35
The Cash Flow Covetaampe Ratio measures the ability of the farm business to meet its planned debt payment schedule The ratio shows the percentage of planned payments that could have been made with last years available cash flow report
Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments
CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985
(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077
Personal withdrawals and family expenditures less nonfarm income If family withdrawals are excluded the cash flow coverage ratio will be incorrect
------
13
ANALYSIS OF THE FARM BUSINESS
The farm business has been divided into three parts indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency
to allow a m and the
more factors
Cropping Program Analysis
The cropping program is an important part of the dairy farm business and sometimes it is overlooked and neglected A complete evaluation of available land resources how they are being used how well crops are producing and what it costs to produce them is required to evaluate alternative cropping and feed purchasing choices
LAND RESOURCES AND CROP PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Land Tillable Nonti1lable Other nontillable
Total
Crop Yields Hay crop Corn silage
Other forage Total forage Corn grain Oats Wheat Other crops Tillable pasture Idle
Total Tillable Acres
~ Rented Total 245 163 407
20 7 26 90 -1Q 100
355 180 533
fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn
47 tn DM 2 14 12 tn DM
23 205 35 tn DM 22 124 806 bu 13 46 807 bu
9 36 626 bu 8 42 6 19
12 45 407
Rented
~ frodLAcre tn DM tn tn DM tn DM tn DM bu bu bu
Average crop acres and yields compiled for the region are for the number of farms reporting each crop Yields of forage crops have been converted to tons of dry matter using dry matter coefficients reported by the farmers Grain production has been converted to bushels of dry grain equivalent based on dry matter information provided
The following measures of crop management measure how efficiently the land resource is being used and how well total forage requirements are being met
CROP MANAGEMENT FACTORS 23 Central Plain Region Dairy Farms 1985
Item My Farm
Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow
431 217 760
14
Cropping Program Analysis (continued)
A substantial number of cooperators have allocated crop expenses to hay crop corn and other crop production This additional data has been compiled to show the traditional crop expenses per acre and per production unit for these crops Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed
to equal one ton of
CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops
Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres
Corn grain converted to silage equivalent using 588 bushels - one ton silage as fed
Most machinery costs are associated with crop production and should be analyzed with the crop enterprise Total machinery expenses include the major fixed costs (interest and depreciation) as well as the accrual operating costs Although machinery costs have not been allocated to individual crops they are shown per total tillable acre
ACCRUAL MACHINERY EXPENSES 23 Central Plain Region Dairy Farms 1985
My Farm Machinery Total Per Til Total Per Til
Expense Item Expenses Acre Expenses Acre
Fuel oil amp grease Machinery repairs amp parts
$ 9606 12071
$2358 2963
$_-shy $_-shy
Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919
Total $51364 $12607 $_-shy $_--shy
15
Dairy Program Analysis
Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business Changes in dairy herd size and market values that occur during the year are identified in the table below The change in inventory value without appreciation is attributed to physical changes in herd size and quality This real increase in inventory has been included as an accrual farm receipt on page 5
DAIRY HERD INVENTORY 23 Central Plain Region Dairy Farms 1985
pairy Cows Heifers Item Number Value Number Value
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
92
96 97 95
$79625 3763
-4784 $78604
89
87
88
$42800 -2548 -2757
$37495
My Farm
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
$_--shy
$_--shy
$_--shy
$_--shy
Total milk sold and milk sold per cow are extremely valuable measures of productivity on the dairy farm These measures of milk output are based on pounds of milk marketed during the year
MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item
Total milk sold lbs
Average
1399978
My Farm
Milk sold per cow lbs 14811
Average milk plant test percent butterfat 365
16
The cost of producing milk has been compiled using the whole farm method and is featured in the following table Accrual receipts from milk sales can be compared with the accrual costs of producing milk per cow and per hundredweight of milk Using the whole farm method operating costs of producing milk are estimated by deducting nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation
ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt
Accrual Costs of Producing Milk Operating costs Total costs withshy
$140178 $1483 $1001 $_-shy $_-shy $_-shy
out op(s) labor mgmt amp capital
Total Costs $169633 $212658
$1795 $2250
$1212 $1519
$_-shy$_-shy
$_-shy$_-shy
$_-shy$_-shy
The accrual operating expenses most commonly associated with the dairy enterprise are listed in the table below Evaluating these costs per unit of production enables the comparison of different size dairy farms
DAIRY RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt
Purchased dairy grain amp concentrates
Purchased dairy roughage Total Purchased
Dairy Feed Purchased grain amp conc as of milk receipts
as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense
$308 ---12
$208 JLU
$ $_-shy
$339 $229 $ $_--shy
$571 16
$386 $ -- $_-shy
$31 41
101 2
81
3U $021 027 068 001 055
$ $_-shy
17
Capital and Labor Efficiency Analysis
Capital efficiency factors measure how intensively the capital is being used in the farm business Measures of labor efficiency are key indicators of managements success
CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985
Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned
Farm capital Real estate Machinery amp equipment Capital turnover years
$180569
36469
$6845 3280 1383
295
$1588
321
$2641 1265
My Farm Farm capital Real estate
$_-shy $_--shy $_-shy $_-shy
Machinery amp equipment Capital turnover years
LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985
Labor Force Months Age
Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired
Total
My Farm Total Operators
11 4 2 6 2
18 43
44 44 32
+ 12 shy
+ 12 shy+ 12 shy
Years of gf Educ
Value of Labor amp Mgmt
14 13 13
$17283 6574 2261
358 Yorker Equivalent 142 OperatorManager Equiv
___ Yorker Equivalent OperatorManager Equiv
Labor Efficiency
Average Total Per Yorker Total
My Farm Per Yorker
Cows average number Milk sold pounds Tillable acres
95 1399978
407
26 390692
114 York units 1105 308
Average My Eatm Per Per Per Per
Labor Costs Total Cow Iil Acre Iotal Cow Til Acre
Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $
Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691
Total Less Int Paid $164775 $_--shy
Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy
- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp
family expenditures 10708 Available for Debt Payments
Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment
amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle
machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy
___ _
19
PROGRESS OF THE FARM BUSINESS
Comparing your business with average data from regional DFBS cooperashytors that participated in both of the last two years is one part of a business checkup It is equally important for you to determine the progress your business has made over the past two or three years and to set targets or goals for the future
PROGRESS OF THE FARM BUSINESS Same 17 Central Plain Dairy Farms 1984 and 1985
Average My Farm Selected Factors 1984 1985 1984 1985 Goal
Size of Business Average number of cows Average number of heifers Milk sold lbs Worker equivalent Total tillable acres
Rates of Production Milk sold per cow 1bs Hay DM per acre tons Corn silage per acre tons
Labor Efficiency Cows per worker Milk sold per worker lbs
Cost Control Grain amp conc purchased
as of milk sales Dairy feed amp crop expo
per cwt milk Labor amp mach costscow
Capital Efficiency Farm capital per cow Real estate per cow Mach amp equip per cow Capital turnover years
Profitability Net farm inc wo apprec Net farm inc wapprec Labor amp mgmt income Rate of return on eq
capital wapprec
Financial Summary Farm net worth Debt to asset ratio Farm debt per cow
Average for the year
89 92 88 89
1340447 1393320 353shy408
15081 31
14
25 379267
17
$439 $1079
$7740 $3749 $1522
30
$12702 $22767 $-7123
-09
$377688 045
$3537
375 409
15135 31 14
25 371552
16
$391 $1094
$7434 $3592 $1492
30
$8617 $3815
$-10616
-62
$362655 046
$3273
$___ $___ $___
$___ $___ $___
$_-shy$_-shy$_-shy
$_-shy$_--shy$_-shy
$_-shy$_-shy$_-shy
-
21
Financial AnalYsis Chart
The farm financial analysis chart 1s designed just like the ~ Business Chart and may be used to measure the financial health of the farm business Most of the financial measures used in the chart are presented on ~ages 7 10 12 and 17 of this publication
FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984
Liguidity ~Reeayent Available for Cash Flow Debt Payments
Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
9
1985 FARM BUSINESS amp NONFARM BALANCE SHEET
Farm Assets Jan 1 Dec 31 Farm Liabilities amp Net Worth Jan 1 Dec 31
Current Farm cash checking amp savings
Accounts rec Feed amp supplies
Current Accounts payable Operating debt Short-term
Nonfarm Liabilities Nonfarm Assets Jan 1 Dec 31 ampNet Worth Jan 1 Dec 31
Nonfarm Liab Personal cash
amp savings chkg
Cash value life ins
Nonfarm real est Auto (pers share) Stocks ampbonds
Total Nonfarm Liabilities
Household furn All other Nonfarm
Total Nonfarm Net Worth
TOTAL FARM ~ NONFARM Jan 1 Dec 31
Total Farm amp Nonfarm Assets Less Total Farm amp Nonfarm Liabilities Farm amp Nonfarm Net Worth
10
Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed
BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309
Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047
long-term 058 intermediatecurrent 036
Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59
Intermediate amp current debt
Current amp inter 1iab as a of total debt 41
Farm Debt Levels Total farm debt Long-term debt
Per Cow $3082
1830
Per Tillable Acre Owned
$1220 725
Per Cow $_-shy
1252 496
$_-shy$_-shy
----_ ---_ ---_
Per Tillable Acre Owned $_--shy
Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these assets used on the balance sheet and the changes that occur from the beginning to end of year Changes in the livestock inventory are included in the dairy analysis
FARM INVENTORY BALANCE 23 Central Plain Region Dairy Farms 1985
Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg
Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy
$1330 land and $4097 buildings andor depreciable improvements
11
Cash Flow Summary and Analysis
Completing an annual cash flow summary and analysis is important to determine how well the cash generated by the business plus that brought in from outside met the annual cash needs of the business and the farm family Understanding last years cash flow is the first step toward planning and managing cash flow for the current and future years
The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end When all the cash inflows and outflows are correct the statement will balance If the imbalance (error) amount is positive recorded cash inflows exceed outflows by this amount If it is negative cash outflows are too high in relation to inflows
ANNUAL CASH FLOW STATEMENT 23 Central Plain Region Dairy Farms 1985
Item Average My Farm Cash Inflows
Beginning farm cash checking amp savings
Cash farm receipts
Sale of assets Machinery
Real estate
Money borrowed (intermediate amp long-term)
Money borrowed (short-term)
Increase in operating debt
Nonfarm income
Money borrowed - nonfarm
Total
Cash Outflows
Cash farm expenses
Capital purchases Expansion livestock
Machinery
Real estate
Principal payments (intermediate amp long-term)
Principal payments (short-term)
Decrease in operating debt
Nonfarm debt payments
Personal withdrawals amp family expo
Ending farm cash checking amp savings
Total
Imbalance (error)
$ 2675
219448
214
7363
24469
2485
750
1461
0
$258865
$182243
918
11654
5427
27561
620
0
0
10708
1734
$240860
$ 18005
$
12
Repayment Analysis
The second step of cash flow planning is to compare and evaluate debt payments planned and made last year and estimate the payments required in the current year It is helpful to compare and evaluate by using debt payments per unit of production and receiptdebt payment ratios
FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986
Debt Payments
Avetaamp~ 1985 Payments
Planned Made Planned
1986
My Farm 1985 Payments
Planned Made Planned
1986
Long-term IntermShort-Operating (net
redu
(net reduction)
ediate-term term
ction Accounts payable
$20431 30095 9705
0
6294
$28583 29330 1004
0
3548
$17021 27543
3490
3769
2112
$_-- $_-- $_-shy
Total $66526 $62465 $53934 $ $_-- $_-shy
Per cow Per cwt Percen
1985 milk t of total
$723 $477
$679 $448
$ $_-shy$_-_$_-shy
1985 receipts Percent of 1985
29 27
milk receipts 38 35
The Cash Flow Covetaampe Ratio measures the ability of the farm business to meet its planned debt payment schedule The ratio shows the percentage of planned payments that could have been made with last years available cash flow report
Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments
CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985
(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077
Personal withdrawals and family expenditures less nonfarm income If family withdrawals are excluded the cash flow coverage ratio will be incorrect
------
13
ANALYSIS OF THE FARM BUSINESS
The farm business has been divided into three parts indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency
to allow a m and the
more factors
Cropping Program Analysis
The cropping program is an important part of the dairy farm business and sometimes it is overlooked and neglected A complete evaluation of available land resources how they are being used how well crops are producing and what it costs to produce them is required to evaluate alternative cropping and feed purchasing choices
LAND RESOURCES AND CROP PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Land Tillable Nonti1lable Other nontillable
Total
Crop Yields Hay crop Corn silage
Other forage Total forage Corn grain Oats Wheat Other crops Tillable pasture Idle
Total Tillable Acres
~ Rented Total 245 163 407
20 7 26 90 -1Q 100
355 180 533
fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn
47 tn DM 2 14 12 tn DM
23 205 35 tn DM 22 124 806 bu 13 46 807 bu
9 36 626 bu 8 42 6 19
12 45 407
Rented
~ frodLAcre tn DM tn tn DM tn DM tn DM bu bu bu
Average crop acres and yields compiled for the region are for the number of farms reporting each crop Yields of forage crops have been converted to tons of dry matter using dry matter coefficients reported by the farmers Grain production has been converted to bushels of dry grain equivalent based on dry matter information provided
The following measures of crop management measure how efficiently the land resource is being used and how well total forage requirements are being met
CROP MANAGEMENT FACTORS 23 Central Plain Region Dairy Farms 1985
Item My Farm
Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow
431 217 760
14
Cropping Program Analysis (continued)
A substantial number of cooperators have allocated crop expenses to hay crop corn and other crop production This additional data has been compiled to show the traditional crop expenses per acre and per production unit for these crops Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed
to equal one ton of
CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops
Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres
Corn grain converted to silage equivalent using 588 bushels - one ton silage as fed
Most machinery costs are associated with crop production and should be analyzed with the crop enterprise Total machinery expenses include the major fixed costs (interest and depreciation) as well as the accrual operating costs Although machinery costs have not been allocated to individual crops they are shown per total tillable acre
ACCRUAL MACHINERY EXPENSES 23 Central Plain Region Dairy Farms 1985
My Farm Machinery Total Per Til Total Per Til
Expense Item Expenses Acre Expenses Acre
Fuel oil amp grease Machinery repairs amp parts
$ 9606 12071
$2358 2963
$_-shy $_-shy
Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919
Total $51364 $12607 $_-shy $_--shy
15
Dairy Program Analysis
Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business Changes in dairy herd size and market values that occur during the year are identified in the table below The change in inventory value without appreciation is attributed to physical changes in herd size and quality This real increase in inventory has been included as an accrual farm receipt on page 5
DAIRY HERD INVENTORY 23 Central Plain Region Dairy Farms 1985
pairy Cows Heifers Item Number Value Number Value
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
92
96 97 95
$79625 3763
-4784 $78604
89
87
88
$42800 -2548 -2757
$37495
My Farm
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
$_--shy
$_--shy
$_--shy
$_--shy
Total milk sold and milk sold per cow are extremely valuable measures of productivity on the dairy farm These measures of milk output are based on pounds of milk marketed during the year
MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item
Total milk sold lbs
Average
1399978
My Farm
Milk sold per cow lbs 14811
Average milk plant test percent butterfat 365
16
The cost of producing milk has been compiled using the whole farm method and is featured in the following table Accrual receipts from milk sales can be compared with the accrual costs of producing milk per cow and per hundredweight of milk Using the whole farm method operating costs of producing milk are estimated by deducting nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation
ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt
Accrual Costs of Producing Milk Operating costs Total costs withshy
$140178 $1483 $1001 $_-shy $_-shy $_-shy
out op(s) labor mgmt amp capital
Total Costs $169633 $212658
$1795 $2250
$1212 $1519
$_-shy$_-shy
$_-shy$_-shy
$_-shy$_-shy
The accrual operating expenses most commonly associated with the dairy enterprise are listed in the table below Evaluating these costs per unit of production enables the comparison of different size dairy farms
DAIRY RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt
Purchased dairy grain amp concentrates
Purchased dairy roughage Total Purchased
Dairy Feed Purchased grain amp conc as of milk receipts
as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense
$308 ---12
$208 JLU
$ $_-shy
$339 $229 $ $_--shy
$571 16
$386 $ -- $_-shy
$31 41
101 2
81
3U $021 027 068 001 055
$ $_-shy
17
Capital and Labor Efficiency Analysis
Capital efficiency factors measure how intensively the capital is being used in the farm business Measures of labor efficiency are key indicators of managements success
CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985
Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned
Farm capital Real estate Machinery amp equipment Capital turnover years
$180569
36469
$6845 3280 1383
295
$1588
321
$2641 1265
My Farm Farm capital Real estate
$_-shy $_--shy $_-shy $_-shy
Machinery amp equipment Capital turnover years
LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985
Labor Force Months Age
Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired
Total
My Farm Total Operators
11 4 2 6 2
18 43
44 44 32
+ 12 shy
+ 12 shy+ 12 shy
Years of gf Educ
Value of Labor amp Mgmt
14 13 13
$17283 6574 2261
358 Yorker Equivalent 142 OperatorManager Equiv
___ Yorker Equivalent OperatorManager Equiv
Labor Efficiency
Average Total Per Yorker Total
My Farm Per Yorker
Cows average number Milk sold pounds Tillable acres
95 1399978
407
26 390692
114 York units 1105 308
Average My Eatm Per Per Per Per
Labor Costs Total Cow Iil Acre Iotal Cow Til Acre
Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $
Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691
Total Less Int Paid $164775 $_--shy
Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy
- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp
family expenditures 10708 Available for Debt Payments
Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment
amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle
machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy
___ _
19
PROGRESS OF THE FARM BUSINESS
Comparing your business with average data from regional DFBS cooperashytors that participated in both of the last two years is one part of a business checkup It is equally important for you to determine the progress your business has made over the past two or three years and to set targets or goals for the future
PROGRESS OF THE FARM BUSINESS Same 17 Central Plain Dairy Farms 1984 and 1985
Average My Farm Selected Factors 1984 1985 1984 1985 Goal
Size of Business Average number of cows Average number of heifers Milk sold lbs Worker equivalent Total tillable acres
Rates of Production Milk sold per cow 1bs Hay DM per acre tons Corn silage per acre tons
Labor Efficiency Cows per worker Milk sold per worker lbs
Cost Control Grain amp conc purchased
as of milk sales Dairy feed amp crop expo
per cwt milk Labor amp mach costscow
Capital Efficiency Farm capital per cow Real estate per cow Mach amp equip per cow Capital turnover years
Profitability Net farm inc wo apprec Net farm inc wapprec Labor amp mgmt income Rate of return on eq
capital wapprec
Financial Summary Farm net worth Debt to asset ratio Farm debt per cow
Average for the year
89 92 88 89
1340447 1393320 353shy408
15081 31
14
25 379267
17
$439 $1079
$7740 $3749 $1522
30
$12702 $22767 $-7123
-09
$377688 045
$3537
375 409
15135 31 14
25 371552
16
$391 $1094
$7434 $3592 $1492
30
$8617 $3815
$-10616
-62
$362655 046
$3273
$___ $___ $___
$___ $___ $___
$_-shy$_-shy$_-shy
$_-shy$_--shy$_-shy
$_-shy$_-shy$_-shy
-
21
Financial AnalYsis Chart
The farm financial analysis chart 1s designed just like the ~ Business Chart and may be used to measure the financial health of the farm business Most of the financial measures used in the chart are presented on ~ages 7 10 12 and 17 of this publication
FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984
Liguidity ~Reeayent Available for Cash Flow Debt Payments
Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
10
Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed
BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309
Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047
long-term 058 intermediatecurrent 036
Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59
Intermediate amp current debt
Current amp inter 1iab as a of total debt 41
Farm Debt Levels Total farm debt Long-term debt
Per Cow $3082
1830
Per Tillable Acre Owned
$1220 725
Per Cow $_-shy
1252 496
$_-shy$_-shy
----_ ---_ ---_
Per Tillable Acre Owned $_--shy
Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these assets used on the balance sheet and the changes that occur from the beginning to end of year Changes in the livestock inventory are included in the dairy analysis
FARM INVENTORY BALANCE 23 Central Plain Region Dairy Farms 1985
Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg
Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy
$1330 land and $4097 buildings andor depreciable improvements
11
Cash Flow Summary and Analysis
Completing an annual cash flow summary and analysis is important to determine how well the cash generated by the business plus that brought in from outside met the annual cash needs of the business and the farm family Understanding last years cash flow is the first step toward planning and managing cash flow for the current and future years
The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end When all the cash inflows and outflows are correct the statement will balance If the imbalance (error) amount is positive recorded cash inflows exceed outflows by this amount If it is negative cash outflows are too high in relation to inflows
ANNUAL CASH FLOW STATEMENT 23 Central Plain Region Dairy Farms 1985
Item Average My Farm Cash Inflows
Beginning farm cash checking amp savings
Cash farm receipts
Sale of assets Machinery
Real estate
Money borrowed (intermediate amp long-term)
Money borrowed (short-term)
Increase in operating debt
Nonfarm income
Money borrowed - nonfarm
Total
Cash Outflows
Cash farm expenses
Capital purchases Expansion livestock
Machinery
Real estate
Principal payments (intermediate amp long-term)
Principal payments (short-term)
Decrease in operating debt
Nonfarm debt payments
Personal withdrawals amp family expo
Ending farm cash checking amp savings
Total
Imbalance (error)
$ 2675
219448
214
7363
24469
2485
750
1461
0
$258865
$182243
918
11654
5427
27561
620
0
0
10708
1734
$240860
$ 18005
$
12
Repayment Analysis
The second step of cash flow planning is to compare and evaluate debt payments planned and made last year and estimate the payments required in the current year It is helpful to compare and evaluate by using debt payments per unit of production and receiptdebt payment ratios
FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986
Debt Payments
Avetaamp~ 1985 Payments
Planned Made Planned
1986
My Farm 1985 Payments
Planned Made Planned
1986
Long-term IntermShort-Operating (net
redu
(net reduction)
ediate-term term
ction Accounts payable
$20431 30095 9705
0
6294
$28583 29330 1004
0
3548
$17021 27543
3490
3769
2112
$_-- $_-- $_-shy
Total $66526 $62465 $53934 $ $_-- $_-shy
Per cow Per cwt Percen
1985 milk t of total
$723 $477
$679 $448
$ $_-shy$_-_$_-shy
1985 receipts Percent of 1985
29 27
milk receipts 38 35
The Cash Flow Covetaampe Ratio measures the ability of the farm business to meet its planned debt payment schedule The ratio shows the percentage of planned payments that could have been made with last years available cash flow report
Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments
CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985
(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077
Personal withdrawals and family expenditures less nonfarm income If family withdrawals are excluded the cash flow coverage ratio will be incorrect
------
13
ANALYSIS OF THE FARM BUSINESS
The farm business has been divided into three parts indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency
to allow a m and the
more factors
Cropping Program Analysis
The cropping program is an important part of the dairy farm business and sometimes it is overlooked and neglected A complete evaluation of available land resources how they are being used how well crops are producing and what it costs to produce them is required to evaluate alternative cropping and feed purchasing choices
LAND RESOURCES AND CROP PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Land Tillable Nonti1lable Other nontillable
Total
Crop Yields Hay crop Corn silage
Other forage Total forage Corn grain Oats Wheat Other crops Tillable pasture Idle
Total Tillable Acres
~ Rented Total 245 163 407
20 7 26 90 -1Q 100
355 180 533
fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn
47 tn DM 2 14 12 tn DM
23 205 35 tn DM 22 124 806 bu 13 46 807 bu
9 36 626 bu 8 42 6 19
12 45 407
Rented
~ frodLAcre tn DM tn tn DM tn DM tn DM bu bu bu
Average crop acres and yields compiled for the region are for the number of farms reporting each crop Yields of forage crops have been converted to tons of dry matter using dry matter coefficients reported by the farmers Grain production has been converted to bushels of dry grain equivalent based on dry matter information provided
The following measures of crop management measure how efficiently the land resource is being used and how well total forage requirements are being met
CROP MANAGEMENT FACTORS 23 Central Plain Region Dairy Farms 1985
Item My Farm
Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow
431 217 760
14
Cropping Program Analysis (continued)
A substantial number of cooperators have allocated crop expenses to hay crop corn and other crop production This additional data has been compiled to show the traditional crop expenses per acre and per production unit for these crops Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed
to equal one ton of
CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops
Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres
Corn grain converted to silage equivalent using 588 bushels - one ton silage as fed
Most machinery costs are associated with crop production and should be analyzed with the crop enterprise Total machinery expenses include the major fixed costs (interest and depreciation) as well as the accrual operating costs Although machinery costs have not been allocated to individual crops they are shown per total tillable acre
ACCRUAL MACHINERY EXPENSES 23 Central Plain Region Dairy Farms 1985
My Farm Machinery Total Per Til Total Per Til
Expense Item Expenses Acre Expenses Acre
Fuel oil amp grease Machinery repairs amp parts
$ 9606 12071
$2358 2963
$_-shy $_-shy
Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919
Total $51364 $12607 $_-shy $_--shy
15
Dairy Program Analysis
Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business Changes in dairy herd size and market values that occur during the year are identified in the table below The change in inventory value without appreciation is attributed to physical changes in herd size and quality This real increase in inventory has been included as an accrual farm receipt on page 5
DAIRY HERD INVENTORY 23 Central Plain Region Dairy Farms 1985
pairy Cows Heifers Item Number Value Number Value
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
92
96 97 95
$79625 3763
-4784 $78604
89
87
88
$42800 -2548 -2757
$37495
My Farm
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
$_--shy
$_--shy
$_--shy
$_--shy
Total milk sold and milk sold per cow are extremely valuable measures of productivity on the dairy farm These measures of milk output are based on pounds of milk marketed during the year
MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item
Total milk sold lbs
Average
1399978
My Farm
Milk sold per cow lbs 14811
Average milk plant test percent butterfat 365
16
The cost of producing milk has been compiled using the whole farm method and is featured in the following table Accrual receipts from milk sales can be compared with the accrual costs of producing milk per cow and per hundredweight of milk Using the whole farm method operating costs of producing milk are estimated by deducting nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation
ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt
Accrual Costs of Producing Milk Operating costs Total costs withshy
$140178 $1483 $1001 $_-shy $_-shy $_-shy
out op(s) labor mgmt amp capital
Total Costs $169633 $212658
$1795 $2250
$1212 $1519
$_-shy$_-shy
$_-shy$_-shy
$_-shy$_-shy
The accrual operating expenses most commonly associated with the dairy enterprise are listed in the table below Evaluating these costs per unit of production enables the comparison of different size dairy farms
DAIRY RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt
Purchased dairy grain amp concentrates
Purchased dairy roughage Total Purchased
Dairy Feed Purchased grain amp conc as of milk receipts
as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense
$308 ---12
$208 JLU
$ $_-shy
$339 $229 $ $_--shy
$571 16
$386 $ -- $_-shy
$31 41
101 2
81
3U $021 027 068 001 055
$ $_-shy
17
Capital and Labor Efficiency Analysis
Capital efficiency factors measure how intensively the capital is being used in the farm business Measures of labor efficiency are key indicators of managements success
CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985
Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned
Farm capital Real estate Machinery amp equipment Capital turnover years
$180569
36469
$6845 3280 1383
295
$1588
321
$2641 1265
My Farm Farm capital Real estate
$_-shy $_--shy $_-shy $_-shy
Machinery amp equipment Capital turnover years
LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985
Labor Force Months Age
Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired
Total
My Farm Total Operators
11 4 2 6 2
18 43
44 44 32
+ 12 shy
+ 12 shy+ 12 shy
Years of gf Educ
Value of Labor amp Mgmt
14 13 13
$17283 6574 2261
358 Yorker Equivalent 142 OperatorManager Equiv
___ Yorker Equivalent OperatorManager Equiv
Labor Efficiency
Average Total Per Yorker Total
My Farm Per Yorker
Cows average number Milk sold pounds Tillable acres
95 1399978
407
26 390692
114 York units 1105 308
Average My Eatm Per Per Per Per
Labor Costs Total Cow Iil Acre Iotal Cow Til Acre
Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $
Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691
Total Less Int Paid $164775 $_--shy
Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy
- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp
family expenditures 10708 Available for Debt Payments
Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment
amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle
machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy
___ _
19
PROGRESS OF THE FARM BUSINESS
Comparing your business with average data from regional DFBS cooperashytors that participated in both of the last two years is one part of a business checkup It is equally important for you to determine the progress your business has made over the past two or three years and to set targets or goals for the future
PROGRESS OF THE FARM BUSINESS Same 17 Central Plain Dairy Farms 1984 and 1985
Average My Farm Selected Factors 1984 1985 1984 1985 Goal
Size of Business Average number of cows Average number of heifers Milk sold lbs Worker equivalent Total tillable acres
Rates of Production Milk sold per cow 1bs Hay DM per acre tons Corn silage per acre tons
Labor Efficiency Cows per worker Milk sold per worker lbs
Cost Control Grain amp conc purchased
as of milk sales Dairy feed amp crop expo
per cwt milk Labor amp mach costscow
Capital Efficiency Farm capital per cow Real estate per cow Mach amp equip per cow Capital turnover years
Profitability Net farm inc wo apprec Net farm inc wapprec Labor amp mgmt income Rate of return on eq
capital wapprec
Financial Summary Farm net worth Debt to asset ratio Farm debt per cow
Average for the year
89 92 88 89
1340447 1393320 353shy408
15081 31
14
25 379267
17
$439 $1079
$7740 $3749 $1522
30
$12702 $22767 $-7123
-09
$377688 045
$3537
375 409
15135 31 14
25 371552
16
$391 $1094
$7434 $3592 $1492
30
$8617 $3815
$-10616
-62
$362655 046
$3273
$___ $___ $___
$___ $___ $___
$_-shy$_-shy$_-shy
$_-shy$_--shy$_-shy
$_-shy$_-shy$_-shy
-
21
Financial AnalYsis Chart
The farm financial analysis chart 1s designed just like the ~ Business Chart and may be used to measure the financial health of the farm business Most of the financial measures used in the chart are presented on ~ages 7 10 12 and 17 of this publication
FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984
Liguidity ~Reeayent Available for Cash Flow Debt Payments
Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
11
Cash Flow Summary and Analysis
Completing an annual cash flow summary and analysis is important to determine how well the cash generated by the business plus that brought in from outside met the annual cash needs of the business and the farm family Understanding last years cash flow is the first step toward planning and managing cash flow for the current and future years
The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end When all the cash inflows and outflows are correct the statement will balance If the imbalance (error) amount is positive recorded cash inflows exceed outflows by this amount If it is negative cash outflows are too high in relation to inflows
ANNUAL CASH FLOW STATEMENT 23 Central Plain Region Dairy Farms 1985
Item Average My Farm Cash Inflows
Beginning farm cash checking amp savings
Cash farm receipts
Sale of assets Machinery
Real estate
Money borrowed (intermediate amp long-term)
Money borrowed (short-term)
Increase in operating debt
Nonfarm income
Money borrowed - nonfarm
Total
Cash Outflows
Cash farm expenses
Capital purchases Expansion livestock
Machinery
Real estate
Principal payments (intermediate amp long-term)
Principal payments (short-term)
Decrease in operating debt
Nonfarm debt payments
Personal withdrawals amp family expo
Ending farm cash checking amp savings
Total
Imbalance (error)
$ 2675
219448
214
7363
24469
2485
750
1461
0
$258865
$182243
918
11654
5427
27561
620
0
0
10708
1734
$240860
$ 18005
$
12
Repayment Analysis
The second step of cash flow planning is to compare and evaluate debt payments planned and made last year and estimate the payments required in the current year It is helpful to compare and evaluate by using debt payments per unit of production and receiptdebt payment ratios
FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986
Debt Payments
Avetaamp~ 1985 Payments
Planned Made Planned
1986
My Farm 1985 Payments
Planned Made Planned
1986
Long-term IntermShort-Operating (net
redu
(net reduction)
ediate-term term
ction Accounts payable
$20431 30095 9705
0
6294
$28583 29330 1004
0
3548
$17021 27543
3490
3769
2112
$_-- $_-- $_-shy
Total $66526 $62465 $53934 $ $_-- $_-shy
Per cow Per cwt Percen
1985 milk t of total
$723 $477
$679 $448
$ $_-shy$_-_$_-shy
1985 receipts Percent of 1985
29 27
milk receipts 38 35
The Cash Flow Covetaampe Ratio measures the ability of the farm business to meet its planned debt payment schedule The ratio shows the percentage of planned payments that could have been made with last years available cash flow report
Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments
CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985
(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077
Personal withdrawals and family expenditures less nonfarm income If family withdrawals are excluded the cash flow coverage ratio will be incorrect
------
13
ANALYSIS OF THE FARM BUSINESS
The farm business has been divided into three parts indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency
to allow a m and the
more factors
Cropping Program Analysis
The cropping program is an important part of the dairy farm business and sometimes it is overlooked and neglected A complete evaluation of available land resources how they are being used how well crops are producing and what it costs to produce them is required to evaluate alternative cropping and feed purchasing choices
LAND RESOURCES AND CROP PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Land Tillable Nonti1lable Other nontillable
Total
Crop Yields Hay crop Corn silage
Other forage Total forage Corn grain Oats Wheat Other crops Tillable pasture Idle
Total Tillable Acres
~ Rented Total 245 163 407
20 7 26 90 -1Q 100
355 180 533
fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn
47 tn DM 2 14 12 tn DM
23 205 35 tn DM 22 124 806 bu 13 46 807 bu
9 36 626 bu 8 42 6 19
12 45 407
Rented
~ frodLAcre tn DM tn tn DM tn DM tn DM bu bu bu
Average crop acres and yields compiled for the region are for the number of farms reporting each crop Yields of forage crops have been converted to tons of dry matter using dry matter coefficients reported by the farmers Grain production has been converted to bushels of dry grain equivalent based on dry matter information provided
The following measures of crop management measure how efficiently the land resource is being used and how well total forage requirements are being met
CROP MANAGEMENT FACTORS 23 Central Plain Region Dairy Farms 1985
Item My Farm
Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow
431 217 760
14
Cropping Program Analysis (continued)
A substantial number of cooperators have allocated crop expenses to hay crop corn and other crop production This additional data has been compiled to show the traditional crop expenses per acre and per production unit for these crops Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed
to equal one ton of
CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops
Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres
Corn grain converted to silage equivalent using 588 bushels - one ton silage as fed
Most machinery costs are associated with crop production and should be analyzed with the crop enterprise Total machinery expenses include the major fixed costs (interest and depreciation) as well as the accrual operating costs Although machinery costs have not been allocated to individual crops they are shown per total tillable acre
ACCRUAL MACHINERY EXPENSES 23 Central Plain Region Dairy Farms 1985
My Farm Machinery Total Per Til Total Per Til
Expense Item Expenses Acre Expenses Acre
Fuel oil amp grease Machinery repairs amp parts
$ 9606 12071
$2358 2963
$_-shy $_-shy
Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919
Total $51364 $12607 $_-shy $_--shy
15
Dairy Program Analysis
Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business Changes in dairy herd size and market values that occur during the year are identified in the table below The change in inventory value without appreciation is attributed to physical changes in herd size and quality This real increase in inventory has been included as an accrual farm receipt on page 5
DAIRY HERD INVENTORY 23 Central Plain Region Dairy Farms 1985
pairy Cows Heifers Item Number Value Number Value
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
92
96 97 95
$79625 3763
-4784 $78604
89
87
88
$42800 -2548 -2757
$37495
My Farm
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
$_--shy
$_--shy
$_--shy
$_--shy
Total milk sold and milk sold per cow are extremely valuable measures of productivity on the dairy farm These measures of milk output are based on pounds of milk marketed during the year
MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item
Total milk sold lbs
Average
1399978
My Farm
Milk sold per cow lbs 14811
Average milk plant test percent butterfat 365
16
The cost of producing milk has been compiled using the whole farm method and is featured in the following table Accrual receipts from milk sales can be compared with the accrual costs of producing milk per cow and per hundredweight of milk Using the whole farm method operating costs of producing milk are estimated by deducting nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation
ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt
Accrual Costs of Producing Milk Operating costs Total costs withshy
$140178 $1483 $1001 $_-shy $_-shy $_-shy
out op(s) labor mgmt amp capital
Total Costs $169633 $212658
$1795 $2250
$1212 $1519
$_-shy$_-shy
$_-shy$_-shy
$_-shy$_-shy
The accrual operating expenses most commonly associated with the dairy enterprise are listed in the table below Evaluating these costs per unit of production enables the comparison of different size dairy farms
DAIRY RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt
Purchased dairy grain amp concentrates
Purchased dairy roughage Total Purchased
Dairy Feed Purchased grain amp conc as of milk receipts
as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense
$308 ---12
$208 JLU
$ $_-shy
$339 $229 $ $_--shy
$571 16
$386 $ -- $_-shy
$31 41
101 2
81
3U $021 027 068 001 055
$ $_-shy
17
Capital and Labor Efficiency Analysis
Capital efficiency factors measure how intensively the capital is being used in the farm business Measures of labor efficiency are key indicators of managements success
CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985
Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned
Farm capital Real estate Machinery amp equipment Capital turnover years
$180569
36469
$6845 3280 1383
295
$1588
321
$2641 1265
My Farm Farm capital Real estate
$_-shy $_--shy $_-shy $_-shy
Machinery amp equipment Capital turnover years
LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985
Labor Force Months Age
Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired
Total
My Farm Total Operators
11 4 2 6 2
18 43
44 44 32
+ 12 shy
+ 12 shy+ 12 shy
Years of gf Educ
Value of Labor amp Mgmt
14 13 13
$17283 6574 2261
358 Yorker Equivalent 142 OperatorManager Equiv
___ Yorker Equivalent OperatorManager Equiv
Labor Efficiency
Average Total Per Yorker Total
My Farm Per Yorker
Cows average number Milk sold pounds Tillable acres
95 1399978
407
26 390692
114 York units 1105 308
Average My Eatm Per Per Per Per
Labor Costs Total Cow Iil Acre Iotal Cow Til Acre
Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $
Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691
Total Less Int Paid $164775 $_--shy
Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy
- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp
family expenditures 10708 Available for Debt Payments
Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment
amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle
machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy
___ _
19
PROGRESS OF THE FARM BUSINESS
Comparing your business with average data from regional DFBS cooperashytors that participated in both of the last two years is one part of a business checkup It is equally important for you to determine the progress your business has made over the past two or three years and to set targets or goals for the future
PROGRESS OF THE FARM BUSINESS Same 17 Central Plain Dairy Farms 1984 and 1985
Average My Farm Selected Factors 1984 1985 1984 1985 Goal
Size of Business Average number of cows Average number of heifers Milk sold lbs Worker equivalent Total tillable acres
Rates of Production Milk sold per cow 1bs Hay DM per acre tons Corn silage per acre tons
Labor Efficiency Cows per worker Milk sold per worker lbs
Cost Control Grain amp conc purchased
as of milk sales Dairy feed amp crop expo
per cwt milk Labor amp mach costscow
Capital Efficiency Farm capital per cow Real estate per cow Mach amp equip per cow Capital turnover years
Profitability Net farm inc wo apprec Net farm inc wapprec Labor amp mgmt income Rate of return on eq
capital wapprec
Financial Summary Farm net worth Debt to asset ratio Farm debt per cow
Average for the year
89 92 88 89
1340447 1393320 353shy408
15081 31
14
25 379267
17
$439 $1079
$7740 $3749 $1522
30
$12702 $22767 $-7123
-09
$377688 045
$3537
375 409
15135 31 14
25 371552
16
$391 $1094
$7434 $3592 $1492
30
$8617 $3815
$-10616
-62
$362655 046
$3273
$___ $___ $___
$___ $___ $___
$_-shy$_-shy$_-shy
$_-shy$_--shy$_-shy
$_-shy$_-shy$_-shy
-
21
Financial AnalYsis Chart
The farm financial analysis chart 1s designed just like the ~ Business Chart and may be used to measure the financial health of the farm business Most of the financial measures used in the chart are presented on ~ages 7 10 12 and 17 of this publication
FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984
Liguidity ~Reeayent Available for Cash Flow Debt Payments
Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
12
Repayment Analysis
The second step of cash flow planning is to compare and evaluate debt payments planned and made last year and estimate the payments required in the current year It is helpful to compare and evaluate by using debt payments per unit of production and receiptdebt payment ratios
FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986
Debt Payments
Avetaamp~ 1985 Payments
Planned Made Planned
1986
My Farm 1985 Payments
Planned Made Planned
1986
Long-term IntermShort-Operating (net
redu
(net reduction)
ediate-term term
ction Accounts payable
$20431 30095 9705
0
6294
$28583 29330 1004
0
3548
$17021 27543
3490
3769
2112
$_-- $_-- $_-shy
Total $66526 $62465 $53934 $ $_-- $_-shy
Per cow Per cwt Percen
1985 milk t of total
$723 $477
$679 $448
$ $_-shy$_-_$_-shy
1985 receipts Percent of 1985
29 27
milk receipts 38 35
The Cash Flow Covetaampe Ratio measures the ability of the farm business to meet its planned debt payment schedule The ratio shows the percentage of planned payments that could have been made with last years available cash flow report
Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments
CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985
(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077
Personal withdrawals and family expenditures less nonfarm income If family withdrawals are excluded the cash flow coverage ratio will be incorrect
------
13
ANALYSIS OF THE FARM BUSINESS
The farm business has been divided into three parts indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency
to allow a m and the
more factors
Cropping Program Analysis
The cropping program is an important part of the dairy farm business and sometimes it is overlooked and neglected A complete evaluation of available land resources how they are being used how well crops are producing and what it costs to produce them is required to evaluate alternative cropping and feed purchasing choices
LAND RESOURCES AND CROP PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Land Tillable Nonti1lable Other nontillable
Total
Crop Yields Hay crop Corn silage
Other forage Total forage Corn grain Oats Wheat Other crops Tillable pasture Idle
Total Tillable Acres
~ Rented Total 245 163 407
20 7 26 90 -1Q 100
355 180 533
fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn
47 tn DM 2 14 12 tn DM
23 205 35 tn DM 22 124 806 bu 13 46 807 bu
9 36 626 bu 8 42 6 19
12 45 407
Rented
~ frodLAcre tn DM tn tn DM tn DM tn DM bu bu bu
Average crop acres and yields compiled for the region are for the number of farms reporting each crop Yields of forage crops have been converted to tons of dry matter using dry matter coefficients reported by the farmers Grain production has been converted to bushels of dry grain equivalent based on dry matter information provided
The following measures of crop management measure how efficiently the land resource is being used and how well total forage requirements are being met
CROP MANAGEMENT FACTORS 23 Central Plain Region Dairy Farms 1985
Item My Farm
Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow
431 217 760
14
Cropping Program Analysis (continued)
A substantial number of cooperators have allocated crop expenses to hay crop corn and other crop production This additional data has been compiled to show the traditional crop expenses per acre and per production unit for these crops Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed
to equal one ton of
CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops
Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres
Corn grain converted to silage equivalent using 588 bushels - one ton silage as fed
Most machinery costs are associated with crop production and should be analyzed with the crop enterprise Total machinery expenses include the major fixed costs (interest and depreciation) as well as the accrual operating costs Although machinery costs have not been allocated to individual crops they are shown per total tillable acre
ACCRUAL MACHINERY EXPENSES 23 Central Plain Region Dairy Farms 1985
My Farm Machinery Total Per Til Total Per Til
Expense Item Expenses Acre Expenses Acre
Fuel oil amp grease Machinery repairs amp parts
$ 9606 12071
$2358 2963
$_-shy $_-shy
Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919
Total $51364 $12607 $_-shy $_--shy
15
Dairy Program Analysis
Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business Changes in dairy herd size and market values that occur during the year are identified in the table below The change in inventory value without appreciation is attributed to physical changes in herd size and quality This real increase in inventory has been included as an accrual farm receipt on page 5
DAIRY HERD INVENTORY 23 Central Plain Region Dairy Farms 1985
pairy Cows Heifers Item Number Value Number Value
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
92
96 97 95
$79625 3763
-4784 $78604
89
87
88
$42800 -2548 -2757
$37495
My Farm
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
$_--shy
$_--shy
$_--shy
$_--shy
Total milk sold and milk sold per cow are extremely valuable measures of productivity on the dairy farm These measures of milk output are based on pounds of milk marketed during the year
MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item
Total milk sold lbs
Average
1399978
My Farm
Milk sold per cow lbs 14811
Average milk plant test percent butterfat 365
16
The cost of producing milk has been compiled using the whole farm method and is featured in the following table Accrual receipts from milk sales can be compared with the accrual costs of producing milk per cow and per hundredweight of milk Using the whole farm method operating costs of producing milk are estimated by deducting nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation
ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt
Accrual Costs of Producing Milk Operating costs Total costs withshy
$140178 $1483 $1001 $_-shy $_-shy $_-shy
out op(s) labor mgmt amp capital
Total Costs $169633 $212658
$1795 $2250
$1212 $1519
$_-shy$_-shy
$_-shy$_-shy
$_-shy$_-shy
The accrual operating expenses most commonly associated with the dairy enterprise are listed in the table below Evaluating these costs per unit of production enables the comparison of different size dairy farms
DAIRY RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt
Purchased dairy grain amp concentrates
Purchased dairy roughage Total Purchased
Dairy Feed Purchased grain amp conc as of milk receipts
as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense
$308 ---12
$208 JLU
$ $_-shy
$339 $229 $ $_--shy
$571 16
$386 $ -- $_-shy
$31 41
101 2
81
3U $021 027 068 001 055
$ $_-shy
17
Capital and Labor Efficiency Analysis
Capital efficiency factors measure how intensively the capital is being used in the farm business Measures of labor efficiency are key indicators of managements success
CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985
Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned
Farm capital Real estate Machinery amp equipment Capital turnover years
$180569
36469
$6845 3280 1383
295
$1588
321
$2641 1265
My Farm Farm capital Real estate
$_-shy $_--shy $_-shy $_-shy
Machinery amp equipment Capital turnover years
LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985
Labor Force Months Age
Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired
Total
My Farm Total Operators
11 4 2 6 2
18 43
44 44 32
+ 12 shy
+ 12 shy+ 12 shy
Years of gf Educ
Value of Labor amp Mgmt
14 13 13
$17283 6574 2261
358 Yorker Equivalent 142 OperatorManager Equiv
___ Yorker Equivalent OperatorManager Equiv
Labor Efficiency
Average Total Per Yorker Total
My Farm Per Yorker
Cows average number Milk sold pounds Tillable acres
95 1399978
407
26 390692
114 York units 1105 308
Average My Eatm Per Per Per Per
Labor Costs Total Cow Iil Acre Iotal Cow Til Acre
Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $
Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691
Total Less Int Paid $164775 $_--shy
Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy
- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp
family expenditures 10708 Available for Debt Payments
Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment
amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle
machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy
___ _
19
PROGRESS OF THE FARM BUSINESS
Comparing your business with average data from regional DFBS cooperashytors that participated in both of the last two years is one part of a business checkup It is equally important for you to determine the progress your business has made over the past two or three years and to set targets or goals for the future
PROGRESS OF THE FARM BUSINESS Same 17 Central Plain Dairy Farms 1984 and 1985
Average My Farm Selected Factors 1984 1985 1984 1985 Goal
Size of Business Average number of cows Average number of heifers Milk sold lbs Worker equivalent Total tillable acres
Rates of Production Milk sold per cow 1bs Hay DM per acre tons Corn silage per acre tons
Labor Efficiency Cows per worker Milk sold per worker lbs
Cost Control Grain amp conc purchased
as of milk sales Dairy feed amp crop expo
per cwt milk Labor amp mach costscow
Capital Efficiency Farm capital per cow Real estate per cow Mach amp equip per cow Capital turnover years
Profitability Net farm inc wo apprec Net farm inc wapprec Labor amp mgmt income Rate of return on eq
capital wapprec
Financial Summary Farm net worth Debt to asset ratio Farm debt per cow
Average for the year
89 92 88 89
1340447 1393320 353shy408
15081 31
14
25 379267
17
$439 $1079
$7740 $3749 $1522
30
$12702 $22767 $-7123
-09
$377688 045
$3537
375 409
15135 31 14
25 371552
16
$391 $1094
$7434 $3592 $1492
30
$8617 $3815
$-10616
-62
$362655 046
$3273
$___ $___ $___
$___ $___ $___
$_-shy$_-shy$_-shy
$_-shy$_--shy$_-shy
$_-shy$_-shy$_-shy
-
21
Financial AnalYsis Chart
The farm financial analysis chart 1s designed just like the ~ Business Chart and may be used to measure the financial health of the farm business Most of the financial measures used in the chart are presented on ~ages 7 10 12 and 17 of this publication
FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984
Liguidity ~Reeayent Available for Cash Flow Debt Payments
Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
------
13
ANALYSIS OF THE FARM BUSINESS
The farm business has been divided into three parts indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency
to allow a m and the
more factors
Cropping Program Analysis
The cropping program is an important part of the dairy farm business and sometimes it is overlooked and neglected A complete evaluation of available land resources how they are being used how well crops are producing and what it costs to produce them is required to evaluate alternative cropping and feed purchasing choices
LAND RESOURCES AND CROP PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item Average My Farm
Land Tillable Nonti1lable Other nontillable
Total
Crop Yields Hay crop Corn silage
Other forage Total forage Corn grain Oats Wheat Other crops Tillable pasture Idle
Total Tillable Acres
~ Rented Total 245 163 407
20 7 26 90 -1Q 100
355 180 533
fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn
47 tn DM 2 14 12 tn DM
23 205 35 tn DM 22 124 806 bu 13 46 807 bu
9 36 626 bu 8 42 6 19
12 45 407
Rented
~ frodLAcre tn DM tn tn DM tn DM tn DM bu bu bu
Average crop acres and yields compiled for the region are for the number of farms reporting each crop Yields of forage crops have been converted to tons of dry matter using dry matter coefficients reported by the farmers Grain production has been converted to bushels of dry grain equivalent based on dry matter information provided
The following measures of crop management measure how efficiently the land resource is being used and how well total forage requirements are being met
CROP MANAGEMENT FACTORS 23 Central Plain Region Dairy Farms 1985
Item My Farm
Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow
431 217 760
14
Cropping Program Analysis (continued)
A substantial number of cooperators have allocated crop expenses to hay crop corn and other crop production This additional data has been compiled to show the traditional crop expenses per acre and per production unit for these crops Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed
to equal one ton of
CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops
Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres
Corn grain converted to silage equivalent using 588 bushels - one ton silage as fed
Most machinery costs are associated with crop production and should be analyzed with the crop enterprise Total machinery expenses include the major fixed costs (interest and depreciation) as well as the accrual operating costs Although machinery costs have not been allocated to individual crops they are shown per total tillable acre
ACCRUAL MACHINERY EXPENSES 23 Central Plain Region Dairy Farms 1985
My Farm Machinery Total Per Til Total Per Til
Expense Item Expenses Acre Expenses Acre
Fuel oil amp grease Machinery repairs amp parts
$ 9606 12071
$2358 2963
$_-shy $_-shy
Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919
Total $51364 $12607 $_-shy $_--shy
15
Dairy Program Analysis
Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business Changes in dairy herd size and market values that occur during the year are identified in the table below The change in inventory value without appreciation is attributed to physical changes in herd size and quality This real increase in inventory has been included as an accrual farm receipt on page 5
DAIRY HERD INVENTORY 23 Central Plain Region Dairy Farms 1985
pairy Cows Heifers Item Number Value Number Value
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
92
96 97 95
$79625 3763
-4784 $78604
89
87
88
$42800 -2548 -2757
$37495
My Farm
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
$_--shy
$_--shy
$_--shy
$_--shy
Total milk sold and milk sold per cow are extremely valuable measures of productivity on the dairy farm These measures of milk output are based on pounds of milk marketed during the year
MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item
Total milk sold lbs
Average
1399978
My Farm
Milk sold per cow lbs 14811
Average milk plant test percent butterfat 365
16
The cost of producing milk has been compiled using the whole farm method and is featured in the following table Accrual receipts from milk sales can be compared with the accrual costs of producing milk per cow and per hundredweight of milk Using the whole farm method operating costs of producing milk are estimated by deducting nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation
ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt
Accrual Costs of Producing Milk Operating costs Total costs withshy
$140178 $1483 $1001 $_-shy $_-shy $_-shy
out op(s) labor mgmt amp capital
Total Costs $169633 $212658
$1795 $2250
$1212 $1519
$_-shy$_-shy
$_-shy$_-shy
$_-shy$_-shy
The accrual operating expenses most commonly associated with the dairy enterprise are listed in the table below Evaluating these costs per unit of production enables the comparison of different size dairy farms
DAIRY RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt
Purchased dairy grain amp concentrates
Purchased dairy roughage Total Purchased
Dairy Feed Purchased grain amp conc as of milk receipts
as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense
$308 ---12
$208 JLU
$ $_-shy
$339 $229 $ $_--shy
$571 16
$386 $ -- $_-shy
$31 41
101 2
81
3U $021 027 068 001 055
$ $_-shy
17
Capital and Labor Efficiency Analysis
Capital efficiency factors measure how intensively the capital is being used in the farm business Measures of labor efficiency are key indicators of managements success
CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985
Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned
Farm capital Real estate Machinery amp equipment Capital turnover years
$180569
36469
$6845 3280 1383
295
$1588
321
$2641 1265
My Farm Farm capital Real estate
$_-shy $_--shy $_-shy $_-shy
Machinery amp equipment Capital turnover years
LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985
Labor Force Months Age
Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired
Total
My Farm Total Operators
11 4 2 6 2
18 43
44 44 32
+ 12 shy
+ 12 shy+ 12 shy
Years of gf Educ
Value of Labor amp Mgmt
14 13 13
$17283 6574 2261
358 Yorker Equivalent 142 OperatorManager Equiv
___ Yorker Equivalent OperatorManager Equiv
Labor Efficiency
Average Total Per Yorker Total
My Farm Per Yorker
Cows average number Milk sold pounds Tillable acres
95 1399978
407
26 390692
114 York units 1105 308
Average My Eatm Per Per Per Per
Labor Costs Total Cow Iil Acre Iotal Cow Til Acre
Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $
Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691
Total Less Int Paid $164775 $_--shy
Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy
- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp
family expenditures 10708 Available for Debt Payments
Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment
amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle
machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy
___ _
19
PROGRESS OF THE FARM BUSINESS
Comparing your business with average data from regional DFBS cooperashytors that participated in both of the last two years is one part of a business checkup It is equally important for you to determine the progress your business has made over the past two or three years and to set targets or goals for the future
PROGRESS OF THE FARM BUSINESS Same 17 Central Plain Dairy Farms 1984 and 1985
Average My Farm Selected Factors 1984 1985 1984 1985 Goal
Size of Business Average number of cows Average number of heifers Milk sold lbs Worker equivalent Total tillable acres
Rates of Production Milk sold per cow 1bs Hay DM per acre tons Corn silage per acre tons
Labor Efficiency Cows per worker Milk sold per worker lbs
Cost Control Grain amp conc purchased
as of milk sales Dairy feed amp crop expo
per cwt milk Labor amp mach costscow
Capital Efficiency Farm capital per cow Real estate per cow Mach amp equip per cow Capital turnover years
Profitability Net farm inc wo apprec Net farm inc wapprec Labor amp mgmt income Rate of return on eq
capital wapprec
Financial Summary Farm net worth Debt to asset ratio Farm debt per cow
Average for the year
89 92 88 89
1340447 1393320 353shy408
15081 31
14
25 379267
17
$439 $1079
$7740 $3749 $1522
30
$12702 $22767 $-7123
-09
$377688 045
$3537
375 409
15135 31 14
25 371552
16
$391 $1094
$7434 $3592 $1492
30
$8617 $3815
$-10616
-62
$362655 046
$3273
$___ $___ $___
$___ $___ $___
$_-shy$_-shy$_-shy
$_-shy$_--shy$_-shy
$_-shy$_-shy$_-shy
-
21
Financial AnalYsis Chart
The farm financial analysis chart 1s designed just like the ~ Business Chart and may be used to measure the financial health of the farm business Most of the financial measures used in the chart are presented on ~ages 7 10 12 and 17 of this publication
FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984
Liguidity ~Reeayent Available for Cash Flow Debt Payments
Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
14
Cropping Program Analysis (continued)
A substantial number of cooperators have allocated crop expenses to hay crop corn and other crop production This additional data has been compiled to show the traditional crop expenses per acre and per production unit for these crops Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed
to equal one ton of
CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops
Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres
Corn grain converted to silage equivalent using 588 bushels - one ton silage as fed
Most machinery costs are associated with crop production and should be analyzed with the crop enterprise Total machinery expenses include the major fixed costs (interest and depreciation) as well as the accrual operating costs Although machinery costs have not been allocated to individual crops they are shown per total tillable acre
ACCRUAL MACHINERY EXPENSES 23 Central Plain Region Dairy Farms 1985
My Farm Machinery Total Per Til Total Per Til
Expense Item Expenses Acre Expenses Acre
Fuel oil amp grease Machinery repairs amp parts
$ 9606 12071
$2358 2963
$_-shy $_-shy
Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919
Total $51364 $12607 $_-shy $_--shy
15
Dairy Program Analysis
Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business Changes in dairy herd size and market values that occur during the year are identified in the table below The change in inventory value without appreciation is attributed to physical changes in herd size and quality This real increase in inventory has been included as an accrual farm receipt on page 5
DAIRY HERD INVENTORY 23 Central Plain Region Dairy Farms 1985
pairy Cows Heifers Item Number Value Number Value
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
92
96 97 95
$79625 3763
-4784 $78604
89
87
88
$42800 -2548 -2757
$37495
My Farm
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
$_--shy
$_--shy
$_--shy
$_--shy
Total milk sold and milk sold per cow are extremely valuable measures of productivity on the dairy farm These measures of milk output are based on pounds of milk marketed during the year
MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item
Total milk sold lbs
Average
1399978
My Farm
Milk sold per cow lbs 14811
Average milk plant test percent butterfat 365
16
The cost of producing milk has been compiled using the whole farm method and is featured in the following table Accrual receipts from milk sales can be compared with the accrual costs of producing milk per cow and per hundredweight of milk Using the whole farm method operating costs of producing milk are estimated by deducting nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation
ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt
Accrual Costs of Producing Milk Operating costs Total costs withshy
$140178 $1483 $1001 $_-shy $_-shy $_-shy
out op(s) labor mgmt amp capital
Total Costs $169633 $212658
$1795 $2250
$1212 $1519
$_-shy$_-shy
$_-shy$_-shy
$_-shy$_-shy
The accrual operating expenses most commonly associated with the dairy enterprise are listed in the table below Evaluating these costs per unit of production enables the comparison of different size dairy farms
DAIRY RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt
Purchased dairy grain amp concentrates
Purchased dairy roughage Total Purchased
Dairy Feed Purchased grain amp conc as of milk receipts
as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense
$308 ---12
$208 JLU
$ $_-shy
$339 $229 $ $_--shy
$571 16
$386 $ -- $_-shy
$31 41
101 2
81
3U $021 027 068 001 055
$ $_-shy
17
Capital and Labor Efficiency Analysis
Capital efficiency factors measure how intensively the capital is being used in the farm business Measures of labor efficiency are key indicators of managements success
CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985
Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned
Farm capital Real estate Machinery amp equipment Capital turnover years
$180569
36469
$6845 3280 1383
295
$1588
321
$2641 1265
My Farm Farm capital Real estate
$_-shy $_--shy $_-shy $_-shy
Machinery amp equipment Capital turnover years
LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985
Labor Force Months Age
Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired
Total
My Farm Total Operators
11 4 2 6 2
18 43
44 44 32
+ 12 shy
+ 12 shy+ 12 shy
Years of gf Educ
Value of Labor amp Mgmt
14 13 13
$17283 6574 2261
358 Yorker Equivalent 142 OperatorManager Equiv
___ Yorker Equivalent OperatorManager Equiv
Labor Efficiency
Average Total Per Yorker Total
My Farm Per Yorker
Cows average number Milk sold pounds Tillable acres
95 1399978
407
26 390692
114 York units 1105 308
Average My Eatm Per Per Per Per
Labor Costs Total Cow Iil Acre Iotal Cow Til Acre
Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $
Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691
Total Less Int Paid $164775 $_--shy
Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy
- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp
family expenditures 10708 Available for Debt Payments
Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment
amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle
machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy
___ _
19
PROGRESS OF THE FARM BUSINESS
Comparing your business with average data from regional DFBS cooperashytors that participated in both of the last two years is one part of a business checkup It is equally important for you to determine the progress your business has made over the past two or three years and to set targets or goals for the future
PROGRESS OF THE FARM BUSINESS Same 17 Central Plain Dairy Farms 1984 and 1985
Average My Farm Selected Factors 1984 1985 1984 1985 Goal
Size of Business Average number of cows Average number of heifers Milk sold lbs Worker equivalent Total tillable acres
Rates of Production Milk sold per cow 1bs Hay DM per acre tons Corn silage per acre tons
Labor Efficiency Cows per worker Milk sold per worker lbs
Cost Control Grain amp conc purchased
as of milk sales Dairy feed amp crop expo
per cwt milk Labor amp mach costscow
Capital Efficiency Farm capital per cow Real estate per cow Mach amp equip per cow Capital turnover years
Profitability Net farm inc wo apprec Net farm inc wapprec Labor amp mgmt income Rate of return on eq
capital wapprec
Financial Summary Farm net worth Debt to asset ratio Farm debt per cow
Average for the year
89 92 88 89
1340447 1393320 353shy408
15081 31
14
25 379267
17
$439 $1079
$7740 $3749 $1522
30
$12702 $22767 $-7123
-09
$377688 045
$3537
375 409
15135 31 14
25 371552
16
$391 $1094
$7434 $3592 $1492
30
$8617 $3815
$-10616
-62
$362655 046
$3273
$___ $___ $___
$___ $___ $___
$_-shy$_-shy$_-shy
$_-shy$_--shy$_-shy
$_-shy$_-shy$_-shy
-
21
Financial AnalYsis Chart
The farm financial analysis chart 1s designed just like the ~ Business Chart and may be used to measure the financial health of the farm business Most of the financial measures used in the chart are presented on ~ages 7 10 12 and 17 of this publication
FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984
Liguidity ~Reeayent Available for Cash Flow Debt Payments
Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
15
Dairy Program Analysis
Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business Changes in dairy herd size and market values that occur during the year are identified in the table below The change in inventory value without appreciation is attributed to physical changes in herd size and quality This real increase in inventory has been included as an accrual farm receipt on page 5
DAIRY HERD INVENTORY 23 Central Plain Region Dairy Farms 1985
pairy Cows Heifers Item Number Value Number Value
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
92
96 97 95
$79625 3763
-4784 $78604
89
87
88
$42800 -2548 -2757
$37495
My Farm
Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number
$_--shy
$_--shy
$_--shy
$_--shy
Total milk sold and milk sold per cow are extremely valuable measures of productivity on the dairy farm These measures of milk output are based on pounds of milk marketed during the year
MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985
Item
Total milk sold lbs
Average
1399978
My Farm
Milk sold per cow lbs 14811
Average milk plant test percent butterfat 365
16
The cost of producing milk has been compiled using the whole farm method and is featured in the following table Accrual receipts from milk sales can be compared with the accrual costs of producing milk per cow and per hundredweight of milk Using the whole farm method operating costs of producing milk are estimated by deducting nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation
ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt
Accrual Costs of Producing Milk Operating costs Total costs withshy
$140178 $1483 $1001 $_-shy $_-shy $_-shy
out op(s) labor mgmt amp capital
Total Costs $169633 $212658
$1795 $2250
$1212 $1519
$_-shy$_-shy
$_-shy$_-shy
$_-shy$_-shy
The accrual operating expenses most commonly associated with the dairy enterprise are listed in the table below Evaluating these costs per unit of production enables the comparison of different size dairy farms
DAIRY RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt
Purchased dairy grain amp concentrates
Purchased dairy roughage Total Purchased
Dairy Feed Purchased grain amp conc as of milk receipts
as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense
$308 ---12
$208 JLU
$ $_-shy
$339 $229 $ $_--shy
$571 16
$386 $ -- $_-shy
$31 41
101 2
81
3U $021 027 068 001 055
$ $_-shy
17
Capital and Labor Efficiency Analysis
Capital efficiency factors measure how intensively the capital is being used in the farm business Measures of labor efficiency are key indicators of managements success
CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985
Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned
Farm capital Real estate Machinery amp equipment Capital turnover years
$180569
36469
$6845 3280 1383
295
$1588
321
$2641 1265
My Farm Farm capital Real estate
$_-shy $_--shy $_-shy $_-shy
Machinery amp equipment Capital turnover years
LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985
Labor Force Months Age
Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired
Total
My Farm Total Operators
11 4 2 6 2
18 43
44 44 32
+ 12 shy
+ 12 shy+ 12 shy
Years of gf Educ
Value of Labor amp Mgmt
14 13 13
$17283 6574 2261
358 Yorker Equivalent 142 OperatorManager Equiv
___ Yorker Equivalent OperatorManager Equiv
Labor Efficiency
Average Total Per Yorker Total
My Farm Per Yorker
Cows average number Milk sold pounds Tillable acres
95 1399978
407
26 390692
114 York units 1105 308
Average My Eatm Per Per Per Per
Labor Costs Total Cow Iil Acre Iotal Cow Til Acre
Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $
Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691
Total Less Int Paid $164775 $_--shy
Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy
- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp
family expenditures 10708 Available for Debt Payments
Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment
amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle
machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy
___ _
19
PROGRESS OF THE FARM BUSINESS
Comparing your business with average data from regional DFBS cooperashytors that participated in both of the last two years is one part of a business checkup It is equally important for you to determine the progress your business has made over the past two or three years and to set targets or goals for the future
PROGRESS OF THE FARM BUSINESS Same 17 Central Plain Dairy Farms 1984 and 1985
Average My Farm Selected Factors 1984 1985 1984 1985 Goal
Size of Business Average number of cows Average number of heifers Milk sold lbs Worker equivalent Total tillable acres
Rates of Production Milk sold per cow 1bs Hay DM per acre tons Corn silage per acre tons
Labor Efficiency Cows per worker Milk sold per worker lbs
Cost Control Grain amp conc purchased
as of milk sales Dairy feed amp crop expo
per cwt milk Labor amp mach costscow
Capital Efficiency Farm capital per cow Real estate per cow Mach amp equip per cow Capital turnover years
Profitability Net farm inc wo apprec Net farm inc wapprec Labor amp mgmt income Rate of return on eq
capital wapprec
Financial Summary Farm net worth Debt to asset ratio Farm debt per cow
Average for the year
89 92 88 89
1340447 1393320 353shy408
15081 31
14
25 379267
17
$439 $1079
$7740 $3749 $1522
30
$12702 $22767 $-7123
-09
$377688 045
$3537
375 409
15135 31 14
25 371552
16
$391 $1094
$7434 $3592 $1492
30
$8617 $3815
$-10616
-62
$362655 046
$3273
$___ $___ $___
$___ $___ $___
$_-shy$_-shy$_-shy
$_-shy$_--shy$_-shy
$_-shy$_-shy$_-shy
-
21
Financial AnalYsis Chart
The farm financial analysis chart 1s designed just like the ~ Business Chart and may be used to measure the financial health of the farm business Most of the financial measures used in the chart are presented on ~ages 7 10 12 and 17 of this publication
FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984
Liguidity ~Reeayent Available for Cash Flow Debt Payments
Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
16
The cost of producing milk has been compiled using the whole farm method and is featured in the following table Accrual receipts from milk sales can be compared with the accrual costs of producing milk per cow and per hundredweight of milk Using the whole farm method operating costs of producing milk are estimated by deducting nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation
ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt
Accrual Costs of Producing Milk Operating costs Total costs withshy
$140178 $1483 $1001 $_-shy $_-shy $_-shy
out op(s) labor mgmt amp capital
Total Costs $169633 $212658
$1795 $2250
$1212 $1519
$_-shy$_-shy
$_-shy$_-shy
$_-shy$_-shy
The accrual operating expenses most commonly associated with the dairy enterprise are listed in the table below Evaluating these costs per unit of production enables the comparison of different size dairy farms
DAIRY RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985
Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt
Purchased dairy grain amp concentrates
Purchased dairy roughage Total Purchased
Dairy Feed Purchased grain amp conc as of milk receipts
as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense
$308 ---12
$208 JLU
$ $_-shy
$339 $229 $ $_--shy
$571 16
$386 $ -- $_-shy
$31 41
101 2
81
3U $021 027 068 001 055
$ $_-shy
17
Capital and Labor Efficiency Analysis
Capital efficiency factors measure how intensively the capital is being used in the farm business Measures of labor efficiency are key indicators of managements success
CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985
Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned
Farm capital Real estate Machinery amp equipment Capital turnover years
$180569
36469
$6845 3280 1383
295
$1588
321
$2641 1265
My Farm Farm capital Real estate
$_-shy $_--shy $_-shy $_-shy
Machinery amp equipment Capital turnover years
LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985
Labor Force Months Age
Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired
Total
My Farm Total Operators
11 4 2 6 2
18 43
44 44 32
+ 12 shy
+ 12 shy+ 12 shy
Years of gf Educ
Value of Labor amp Mgmt
14 13 13
$17283 6574 2261
358 Yorker Equivalent 142 OperatorManager Equiv
___ Yorker Equivalent OperatorManager Equiv
Labor Efficiency
Average Total Per Yorker Total
My Farm Per Yorker
Cows average number Milk sold pounds Tillable acres
95 1399978
407
26 390692
114 York units 1105 308
Average My Eatm Per Per Per Per
Labor Costs Total Cow Iil Acre Iotal Cow Til Acre
Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $
Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691
Total Less Int Paid $164775 $_--shy
Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy
- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp
family expenditures 10708 Available for Debt Payments
Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment
amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle
machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy
___ _
19
PROGRESS OF THE FARM BUSINESS
Comparing your business with average data from regional DFBS cooperashytors that participated in both of the last two years is one part of a business checkup It is equally important for you to determine the progress your business has made over the past two or three years and to set targets or goals for the future
PROGRESS OF THE FARM BUSINESS Same 17 Central Plain Dairy Farms 1984 and 1985
Average My Farm Selected Factors 1984 1985 1984 1985 Goal
Size of Business Average number of cows Average number of heifers Milk sold lbs Worker equivalent Total tillable acres
Rates of Production Milk sold per cow 1bs Hay DM per acre tons Corn silage per acre tons
Labor Efficiency Cows per worker Milk sold per worker lbs
Cost Control Grain amp conc purchased
as of milk sales Dairy feed amp crop expo
per cwt milk Labor amp mach costscow
Capital Efficiency Farm capital per cow Real estate per cow Mach amp equip per cow Capital turnover years
Profitability Net farm inc wo apprec Net farm inc wapprec Labor amp mgmt income Rate of return on eq
capital wapprec
Financial Summary Farm net worth Debt to asset ratio Farm debt per cow
Average for the year
89 92 88 89
1340447 1393320 353shy408
15081 31
14
25 379267
17
$439 $1079
$7740 $3749 $1522
30
$12702 $22767 $-7123
-09
$377688 045
$3537
375 409
15135 31 14
25 371552
16
$391 $1094
$7434 $3592 $1492
30
$8617 $3815
$-10616
-62
$362655 046
$3273
$___ $___ $___
$___ $___ $___
$_-shy$_-shy$_-shy
$_-shy$_--shy$_-shy
$_-shy$_-shy$_-shy
-
21
Financial AnalYsis Chart
The farm financial analysis chart 1s designed just like the ~ Business Chart and may be used to measure the financial health of the farm business Most of the financial measures used in the chart are presented on ~ages 7 10 12 and 17 of this publication
FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984
Liguidity ~Reeayent Available for Cash Flow Debt Payments
Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
17
Capital and Labor Efficiency Analysis
Capital efficiency factors measure how intensively the capital is being used in the farm business Measures of labor efficiency are key indicators of managements success
CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985
Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned
Farm capital Real estate Machinery amp equipment Capital turnover years
$180569
36469
$6845 3280 1383
295
$1588
321
$2641 1265
My Farm Farm capital Real estate
$_-shy $_--shy $_-shy $_-shy
Machinery amp equipment Capital turnover years
LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985
Labor Force Months Age
Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired
Total
My Farm Total Operators
11 4 2 6 2
18 43
44 44 32
+ 12 shy
+ 12 shy+ 12 shy
Years of gf Educ
Value of Labor amp Mgmt
14 13 13
$17283 6574 2261
358 Yorker Equivalent 142 OperatorManager Equiv
___ Yorker Equivalent OperatorManager Equiv
Labor Efficiency
Average Total Per Yorker Total
My Farm Per Yorker
Cows average number Milk sold pounds Tillable acres
95 1399978
407
26 390692
114 York units 1105 308
Average My Eatm Per Per Per Per
Labor Costs Total Cow Iil Acre Iotal Cow Til Acre
Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $
Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691
Total Less Int Paid $164775 $_--shy
Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy
- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp
family expenditures 10708 Available for Debt Payments
Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment
amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle
machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy
___ _
19
PROGRESS OF THE FARM BUSINESS
Comparing your business with average data from regional DFBS cooperashytors that participated in both of the last two years is one part of a business checkup It is equally important for you to determine the progress your business has made over the past two or three years and to set targets or goals for the future
PROGRESS OF THE FARM BUSINESS Same 17 Central Plain Dairy Farms 1984 and 1985
Average My Farm Selected Factors 1984 1985 1984 1985 Goal
Size of Business Average number of cows Average number of heifers Milk sold lbs Worker equivalent Total tillable acres
Rates of Production Milk sold per cow 1bs Hay DM per acre tons Corn silage per acre tons
Labor Efficiency Cows per worker Milk sold per worker lbs
Cost Control Grain amp conc purchased
as of milk sales Dairy feed amp crop expo
per cwt milk Labor amp mach costscow
Capital Efficiency Farm capital per cow Real estate per cow Mach amp equip per cow Capital turnover years
Profitability Net farm inc wo apprec Net farm inc wapprec Labor amp mgmt income Rate of return on eq
capital wapprec
Financial Summary Farm net worth Debt to asset ratio Farm debt per cow
Average for the year
89 92 88 89
1340447 1393320 353shy408
15081 31
14
25 379267
17
$439 $1079
$7740 $3749 $1522
30
$12702 $22767 $-7123
-09
$377688 045
$3537
375 409
15135 31 14
25 371552
16
$391 $1094
$7434 $3592 $1492
30
$8617 $3815
$-10616
-62
$362655 046
$3273
$___ $___ $___
$___ $___ $___
$_-shy$_-shy$_-shy
$_-shy$_--shy$_-shy
$_-shy$_-shy$_-shy
-
21
Financial AnalYsis Chart
The farm financial analysis chart 1s designed just like the ~ Business Chart and may be used to measure the financial health of the farm business Most of the financial measures used in the chart are presented on ~ages 7 10 12 and 17 of this publication
FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984
Liguidity ~Reeayent Available for Cash Flow Debt Payments
Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
18
ANNUAL CASH FLOW WORKSHEEET
Regional Hy Farm Expected 1986 Item Average Total Per Cow Change Projection
(per cow) Average number of cows 95 Accrual Oper Receipts Milk Dairy cattle
Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691
Total Less Int Paid $164775 $_--shy
Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy
- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp
family expenditures 10708 Available for Debt Payments
Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment
amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle
machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy
___ _
19
PROGRESS OF THE FARM BUSINESS
Comparing your business with average data from regional DFBS cooperashytors that participated in both of the last two years is one part of a business checkup It is equally important for you to determine the progress your business has made over the past two or three years and to set targets or goals for the future
PROGRESS OF THE FARM BUSINESS Same 17 Central Plain Dairy Farms 1984 and 1985
Average My Farm Selected Factors 1984 1985 1984 1985 Goal
Size of Business Average number of cows Average number of heifers Milk sold lbs Worker equivalent Total tillable acres
Rates of Production Milk sold per cow 1bs Hay DM per acre tons Corn silage per acre tons
Labor Efficiency Cows per worker Milk sold per worker lbs
Cost Control Grain amp conc purchased
as of milk sales Dairy feed amp crop expo
per cwt milk Labor amp mach costscow
Capital Efficiency Farm capital per cow Real estate per cow Mach amp equip per cow Capital turnover years
Profitability Net farm inc wo apprec Net farm inc wapprec Labor amp mgmt income Rate of return on eq
capital wapprec
Financial Summary Farm net worth Debt to asset ratio Farm debt per cow
Average for the year
89 92 88 89
1340447 1393320 353shy408
15081 31
14
25 379267
17
$439 $1079
$7740 $3749 $1522
30
$12702 $22767 $-7123
-09
$377688 045
$3537
375 409
15135 31 14
25 371552
16
$391 $1094
$7434 $3592 $1492
30
$8617 $3815
$-10616
-62
$362655 046
$3273
$___ $___ $___
$___ $___ $___
$_-shy$_-shy$_-shy
$_-shy$_--shy$_-shy
$_-shy$_-shy$_-shy
-
21
Financial AnalYsis Chart
The farm financial analysis chart 1s designed just like the ~ Business Chart and may be used to measure the financial health of the farm business Most of the financial measures used in the chart are presented on ~ages 7 10 12 and 17 of this publication
FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984
Liguidity ~Reeayent Available for Cash Flow Debt Payments
Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
___ _
19
PROGRESS OF THE FARM BUSINESS
Comparing your business with average data from regional DFBS cooperashytors that participated in both of the last two years is one part of a business checkup It is equally important for you to determine the progress your business has made over the past two or three years and to set targets or goals for the future
PROGRESS OF THE FARM BUSINESS Same 17 Central Plain Dairy Farms 1984 and 1985
Average My Farm Selected Factors 1984 1985 1984 1985 Goal
Size of Business Average number of cows Average number of heifers Milk sold lbs Worker equivalent Total tillable acres
Rates of Production Milk sold per cow 1bs Hay DM per acre tons Corn silage per acre tons
Labor Efficiency Cows per worker Milk sold per worker lbs
Cost Control Grain amp conc purchased
as of milk sales Dairy feed amp crop expo
per cwt milk Labor amp mach costscow
Capital Efficiency Farm capital per cow Real estate per cow Mach amp equip per cow Capital turnover years
Profitability Net farm inc wo apprec Net farm inc wapprec Labor amp mgmt income Rate of return on eq
capital wapprec
Financial Summary Farm net worth Debt to asset ratio Farm debt per cow
Average for the year
89 92 88 89
1340447 1393320 353shy408
15081 31
14
25 379267
17
$439 $1079
$7740 $3749 $1522
30
$12702 $22767 $-7123
-09
$377688 045
$3537
375 409
15135 31 14
25 371552
16
$391 $1094
$7434 $3592 $1492
30
$8617 $3815
$-10616
-62
$362655 046
$3273
$___ $___ $___
$___ $___ $___
$_-shy$_-shy$_-shy
$_-shy$_--shy$_-shy
$_-shy$_-shy$_-shy
-
21
Financial AnalYsis Chart
The farm financial analysis chart 1s designed just like the ~ Business Chart and may be used to measure the financial health of the farm business Most of the financial measures used in the chart are presented on ~ages 7 10 12 and 17 of this publication
FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984
Liguidity ~Reeayent Available for Cash Flow Debt Payments
Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
21
Financial AnalYsis Chart
The farm financial analysis chart 1s designed just like the ~ Business Chart and may be used to measure the financial health of the farm business Most of the financial measures used in the chart are presented on ~ages 7 10 12 and 17 of this publication
FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984
Liguidity ~Reeayent Available for Cash Flow Debt Payments
Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
22
FARM BUSINESS SUMMARY BY HERD SIZE 458 New York Dairy Farms 1984
Less than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Ca~ita1 Investment (end of year) Livestock Feed amp supplies Machinery amp equipment Land amp buildings
$ 39803 11239 40402
120967
$ 58991 17653 53984
142160
$ 81180 26056 76669
193710
$100136 34432 97951
225287
TOTAL INVESTMENT $212411 $272788 $377615 $457806
Receipts Milk sales $ 58562 $ 89405 $123086 $155027 Dairy cattle sold Other livestock sales
4531 1004
5287 1626
8630 2110
10295 1890
Crop sales Miscellaneous receipts
Total Cash Receipts Increase in livestock Increase in feed amp supplies Appreciation
425 3Zn
$ 68313 -589 501
1609
738 3291
$101047 687
10 3371
1411 5448
$140685 889
2085 6243
2271 5640
$175123 3018
435 5188
TOTAL FARM RECEIPTS $ 69834 $105115 $149902 $183764 TOTAL FARM REC EXCL APPREC $ 68225 $101744 $143659 $178576
Expenses Hired labor Dairy grain amp concentrate Other feed
$ 2503 16993
1632
$ 5326 23274 1422
$ 8539 30095 2227
$ 13584 36692
1486 Machine hire Machinery repairAuto expense (farm share) Gas amp oil
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
23
FARM BUSINESS SUMMARY BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
24
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows
Number of farms 45 100 94 64
Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)
Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495
Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298
Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30
Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238
Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25
Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53
Average of all farms
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
25
SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984
85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows
Number of farms 43 56 25 16
Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)
Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571
Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
26
FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 458 New York Dairy Farms January I 1985
Less Than 40 to 55 to 70 to 85 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows 99 Cows
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
27
FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 458 New York Dairy Farms January I 1985
Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other
$166776 (0)
60934 135106
(703) 348754
(684) 14180 23033 5401
$754184 3921 3560 5664 7632 1817 8148
$ 223343 (0)
81393 184455 (1250) 415970
(0) 28568 31420 4236
$ 969385 8721 6789 8108
13880 3173 7340
$ 317 993 (0)
113736 196961 (6015) 581058
(0) 32536 50181 9H1
$1301582 3796 3796 2455
0 1063 1019
$ 470722 (0)
189321 260222
(694) 879980
(0) 41442 76619
6807 $1925113
9126 9126 4079 6867
667 4411
Total Nonfarm Assets TOTAL ASSETS
$ 30742 $784926
$ 48000 $1017385
$ 16029 $ 27500 $1317611 $19523613
Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts
Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH
$164375 116134
1387 7550
10893 $300339
742 $301081 $453845 $483845
$218110 135883
1250 10275 12494
$378012 l51B
$379590 $591373 $637795
$272541 228449
6015 5801
15108 $528514
250 $528764 $773068 $788847
$399185 298210
694 13752 22605
$734446 400
$734846 $1190667 $1217767
Financial H~Asures Percent equity Farm debt per cow Available for debt service
amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate
amp short-term Cash flow coverage ratio
62 $2384
$79761 $67136
$531 26
047
031 078
63 $2160
$103180 $92504
$526 27
052
027 076
60 $2259
$150134 $118968
$508 34
047
033 094
62 $1918
$277674 $186887
$488 22
045
030 118
-
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986
28
MEASURE YOUR PERFORMANCE
After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement
The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business
STRONG POINTS AVERAGE
NEED IMPROVEMENT
After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration
Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress
1 Do livestock number labor force and crop acres make up a well balanced unit of resources
2 Have rates of production shown a steady increase
3 When will milk output per worker reach 700000 pounds
4 Have some costs of production declined over the last two years
5 Is net farm income improving fast enough to meet your needs
6 Is growth in net worth keeping up with increased capital investment
7 Have you reached the business goals set for 1985 and have you set new goals for 1986