JUNE 1996
E.B.96·10
NORTHERN
NEW YORK
REGION
1995
CLINTON (
ST. LAWRENCE
ESSEX
Stuart F. Smith
Linda D. Putnam
Patricia Beyer
Anita Deming
Trent Teegerstrom
George Yarnall
Department of Agricultural, Resource, and Managerial Economics
College of Agriculture and Life Sciences
Cornell University, Ithaca, New York 14853-7801
-
.'
It is the Policy of Cornell University actively to support equality
of educational and employment opportunity. No person shall be
denied admission to any educational program or activity or be
denied employment on the basis of any legally prohibited
discrimination involving, but not limited to, such factors as race,
color, creed, religion, national or ethnic origin, sex, age or
handicap. The University is committed to the maintenance of
affirmative action programs which will assure the continuation of
such equality of opportunity.
-..
1995 DAIRY FARM BUSINESS SUMMARY
NORTHERN NEW YORK REGION
Table of Contents
INTR.ODUCfION ...........•................................................................................................................................. 1
PrograDl Objectives
1
FOfDlat Features
1
SUMMARY AND ANALYSIS OF TlIE FARM BUSINESS
2
Business Characteristics
2
Income Statement.
2
Profitability Analysis
4
FafDl and FaDlily Financial Status
7
Statement of Owner Equity
11
Cash Flow Statement.
12
Repayment Analysis
14
Cropping Analysis
16
Dairy Analysis
18
Capital and Labor Efficiency Analysis
20
COMPARATIVE ANALYSIS OF TIlE FARM BUSINESS
21
Progress of the FafDl Business
21
Regional FafDl Business Chart
22
New York State FafDl Business Chart
23
. Financial Analysis Chart
25
Comparisons by Type of Barn and Herd Size
26
Herd Size Comparisons
26
IDENTIFY AND SET GOALS
32
GLOSSARY AND LOCATION OF COMMON lERMS
34
INDEX
37
-
1995 DAIRY FARM BUSINESS SU~RY
NORTHERN NEW YORK REGION
INTRODUCfION
Dairy farmers throughout New York State have been participating in Cornell Cooperative Extension's farm busi­
ness summary and analysis program since the early 1950's. Managers of each participating farm business receive a com­
prehensive summary and analysis of the farm business. The information in this report represents an average of the data
submitted from dairy farms in the Northern New York Region for 1995.
Program Objective
The primary objective of the dairy farm business summary, DFBS, is to help farm managers improve the business
and financial management of their business through appropriate use of historical farm data and the application of modem
farm business analysis techniques. This information can also be used to establish goals that will enable the business to
better meet its objectives. In short, DFBS provides business and financial information needed in identifying and evaluat­
ing strengths and weaknesses of the farm business.
Fonnat Features
This regional report follows the same general format as in the 1995 DFBS individual farm report received by all
participating dairy farmers. The analysis tables have an open column or section labeled My Farm. It may be used by any
dairy farm manager who wants to compare his or her business with the average data of this region. A DFBS Data Check­
in Form can be used by non-DFBS participants to summarize their businesses.
This report features:
(1)
an income statement including accrual adjustments for farm business expenses and receipts, as well as measures of
profitability with and without appreciation,
(2) a complete balance sheet with analytical ratios;
(3) a statement of owner equity which shows the sources of the change in owner equity during the year;
(4) a cash flow statement and debt repayment ability analysis;
(5) an analysis of crop acreage. yields. and expenses;
(6)
an analysis of daily livestock numbers. production. and expenses; and
(7)
a capital and labor efficiency analysis.
-
*Northern New York, with the number of participating farms in parentheses, is comprised of Clinton (7), Essex (6),
Franklin (5), Jefferson (13), Lewis (11) and St. Lawrence (8) counties. This report was written by Stuart F. Smith, Senior
Extension Associate, Farm Management. Linda Putnam was in charge of data analysis. Melody Clark prepared the pub­
lication. Farm business data were collected by Cooperative Extension agents George Yarnall, Pat Beyer, Anita Deming,
and Trent Teegerstrom.
2
SUMMARY AND ANALYSIS OF THE FARM BUSINESS
Business Characteristics
Planning the optimal management strategies is a crucial component of operating a successful farm. 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 farms with
each characteristic.
BUSINESS CHARACfERISTICS
50 Northern New York Region Dairy Farms, 1995
TrpeofFarm
Dairy
Part-time dairy
Dairy cash-crop
Part-time cash-crop dairy
Number
47
0
3
0
Type of Ownership
Owner
Renter
Number
43
7
Type of Business
Single Proprietorship
Partnership
Corporation
Number
37
12
1
Type of Barn
Stanchion or Tie-Stall
Freestall
Combination
Number
23
23
4
Milking Frequency
2 times per day
3 times per day
Other
Number
41
7
2
Milking System
Bucket & carry
Dumping station
Pipeline
Herringbone parlor
Other parlor
Number
1
2
23
18
6
Production Records
DHiC
Owner-Sampler
Other
None
Number
34
6
4
6
bSTUsage
Used on <25% of herd
Used on 25-75% of herd
Used on >75% of herd
Stopped using in 1995
Not used in 1995
Number
8
11
1
3
27
Business Record System
Account Book
Agrifax (mail-in only)
On-farm computer
Other
Number
12
3
26
9
The averages used in this report were compiled using data from all the participating dairy farms in this region
unless noted otherwise. There are full-time dairy farms, part-time farms, dairy cash-crop farms, farm renters, partner­
ships, and corporations included in the average. Average data for these specific types of farms are presented in the State
Business Summary.
Income Statement
In order for an income statement to accurately measure farm income, it must include cash transactions and ac­
crual adjustments (changes in accounts payable, accounts receivable, inventories, and prepaid expenses).
Cash paid is the actual cash outlay during the year and does not necessarily represent the cost of goods and services ac­
tually used in 1995.
Chan~e in inventory: Increases in inventories of supplies and other purchased inputs are subtracted in computing accrual
expenses because they represent purchased inputs not actually used during the year. Decreases in purchased inventories
are added to expenses because they represent inputs purchased in a prior year and used this year.
­
3
CASH AND ACCRUAL FARM EXPENSES
50 Northern New York Region Dairy Farms, 1995
Expense Item
Hired Labor
Cash
Paid
$ 24,916
Change in
Inventory
or Prepaid
Expense
$
0
+
«
Change in
Accounts
Payable
$
-5
=
Accrual
Expenses
$ 24,911
~
Dairy grain & concentrate
Dairy roughage
Nondairy
Machinery
Machinery hire, rent & lease
Machinery repairs & farm vehicle expo
Fuel, oil & grease
Livestock
Replacement livestock
Breeding
Veterinary & medicine
Milk marketing
Bedding
Milking supplies
Cattle lease & rent
Custom boarding
Other livestock expense
Crops
Fertilizer & lime
Seeds & plants
Spray. other crop expense
Real Estate
Land, building & fence repair
Taxes
Rent & lease
Other
Insurance
Utilities (farm share)
Interest paid
Miscellaneous
Total Operating
Expansion livestock
Machinery depreciation
Building depreciation
TOTAL ACCRUAL EXPENSES
70,465
2,134
28
709
107
1
5,826
14,889
6,001
0
19
-17
1,236
3,680
6,626
11,865
819
6,996
0
2,458
6.678
0
-25
1
0
38
26
0
0
-8
7,407
4.646
4,277
203
121
-46
4,880
6,781
6,508
92
0
0
5,501
8,181
19,288
3,139
-11
0
0
26
$235,225
$ 2,082
$
1,236
0
1,829
-52
0
71,585
1,975
27
«
428
345
41
6,254
15,215
6,059
«
0
-13
29
22
32
44
0
88
0
1,236
3,692
6,654
11,887
813
7,014
0
2,546
6,686
-117
12
4
7,087
4,537
4,327
11
287
48
4,799
7,068
6,556
-84
5,428
8,143
19,299
3,225
«
«
«
«
«
«
«
«
«
-38
11
112
$ 3,034
-80
$ 237,023
$
2,002
16.575
7,989
$ 263,589
Change in prepaid expenses (noted above by «) is a net change in non-inventory expenses that have been paid in ad­
vance of their use. If 1995 funds used to prepay 1996 leases exceed the amount of 1995 leases pr~paid in 1994, the
amount of this excess is excluded from 1995 accrual lease expenses. The excess prepaid lease is charged against the fu­
ture year's business operation. A decrease in prepaid lease is added to accrual expenses because it represents use of re­
sources during this year that were paid for in past years.
Change in accounts payable: An increase in accounts payable from beginning to end of year is added when calculating
accrual expenses because these expenses were incurred (resources used) in 1995 but not paid for. A decrease is subtracted
because the resource was used before 1995.
Accrual expenses are the costs of inputs actually used in this year's production. They are the cash paid, less changes in
inventory and prepaid expenses. plus accounts payable.
­
4
CASH AND ACCRUAL FARM RECEIPTS
50 Northern New York Region Dairy Farms, 1995
Receipt Item
Milk sales
Dairy cattle
Dairy calves
Other livestock
Crops
Government receipts
Custom machine work
Gas tax refund
Other
Less nonfarm noncash capital**
Total Receipts
Cash
Receipts
Change in
Inventory
+
$ 261,095
10,314
3,184
345
4,345
2,770
1,741
180
2,863
$
$
2,919
0
0
-57
487
-156
22
23
-42
$
3,196
6,234
416
5,368
23
(-)
$ 286,837
Change in
Accounts
Receivable
+
$
0
12,041
=
Accrual
Receipts
$
(-)
$
264,014
16,548
3,184
704
10,200
2,637
1,763
203
2,821
0
302,074
*Change in advanced government receipts.
**Gifts or inheritances of cattle or crops included in inventory.
Cash receipts include the gross value of milk checks received during the year plus all other payments received from the
sale of farm products, services, and government programs. Nonfarm income is not included in calculating farm profit­
ability.
Changes in inventory of assets produced by the business are calculated by subtracting beginning of year values from end of
year values excluding mmreciation. Increases in livestock inventory caused by herd growth and/or quality are added, and
decreases caused by herd reduction and/or quality are subtracted. Changes in inventories of crops grown are also in­
cluded. An annual increase in advanced government receipts is subtracted from cash income because it represents income
received in 1995 for the 1996 crop year in excess of funds earned for 1995. Likewise, a decrease is added to cash gov­
ernment receipts because it represents funds earned for 1995 but received in 1994.
Changes in accounts receivable are calculated by subtracting beginning year balances from end year balances. The Janu­
ary milk check for this December's marketings compared with the previous January's check is included as a change in
accounts receivable.
Accrual receipts represent the value of all farm commodities produced and services actually generated by the farm busi­
ness during the year,
ProntablUty Analysis
Farm operators· contribute labor, management. and equity capital to their businesses and the combination of
these resources, and the other resources used in the business, determines profitability. Farm profitability 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.
• Operators are the individuals who are integrally involved in the operation and management of the farm business. They
are not limited to those who are the owner of a sole proprietorship or are formally a member of the parmership or corpo­
ration.
5
Net farm income is the return to the farm operators and other unpaid family members for their labor, management, and
equity capital. It is the farm family's net annual return from working, managing, financing, and owning the farm busi­
ness. This is not a measure of cash available from the year's business operation. Cash now is evaluated later in this re­
port.
Net farm income is computed both with and without appreciation. Appreciation represents the change in values caused by
annual changes in prices of livestock, machinery, real estate inventory, and stocks and certificates (other than Farm
Credit). Appreciation is a major factor contributing to changes in farm net worth and must be included for a complete
profitability analysis.
NET FARM INCOME
50 Northern New York Region Dairy Farms, 1995
Average
Per Cow
Total
Item
$ 302,074
-958
2,762
7,176
-137
$ 310,917
- 263,589
$ 47,328
$ 38,485
Total accrual receipts
Appreciation: Livestock
Machinery
Real Estate
Other Stock & Certificates
Total Including Appreciation
Total accrual expenses
Net Farm Income (with appreciation)
Net Farm Income (without appreciation)
Total
My Farm
Per Cow
$--­
$--­
$ 438
$ 356
$--­
$--­
$--­
$--­
The chart below shows the relationship between net farm income per cow (with appreciation) and pounds of milk
sold per cow. Generally, farms with a higher production per cow have higher profitability per cow.
Net Farm Income/Cow & Milk/Cow
50 Northern New York Farms, 1995
1000 - . - - - - - - - - - - - - - - . - - - - - - - - - - - - - - - - - - - - - - ,
~
i§
o
u
800
600
• •
~
al
CIS
~ ~
•
•
•
200
, •••
'a) '-"
~.
,
t
•
~:••
•• ••
~
••
c .~ 400
88::
.
••
• ...
•
••
:#
.
•
•
0 +----------4-----.----1f-------.-t---------+----------1
•
•
-200
•
-400
§
V)
-~
~
Pounds Milk Sold Per Cow
§
V)
§
V)
N
~
~
-
6
Labor and management income is the return which farm operators receive for their labor and management used in operat­
ing the farm business. Appreciation is not included as part of the return to labor and management because it results from
ownership of assets rather than management of the farm business. Labor and management income is calculated by de­
ducting a charge for family labor unpaid and the opportunity cost of using equity capital, at a real interest rate of five per­
cent, from net farm income excluding appreciation. The interest charge of five percent reflects the long-term average rate
of return above inflation that a farmer might expect to earn in comparable risk investments.
LABOR AND MANAGEMENT INCOME
50 Northern New York Region Dairy Farms, 1995
Item
Average
My Farm
Net farm income without appreciation
$ 38,485
Family labor unpaid @ $1,450 per month
- 4,742
Interest on $438,441 average equity capital @ 5% real rate
- 21.922
Labor & Management Income per farm (1.14 Operators/farm)
$ 11,821
$---­
Labor & Management Income per OperatorlManager
$ 10,369
$---­
$---­
Labor and management income per operator averaged $10,369 on these 50 farms in 1995. The range in labor
and management income per operator was from less than $-64,600 to more than $69,300. Returns to labor and manage­
ment were negative on 30% of the farms. Labor and mangement income per operator ranged from $0 to $20,000 on 42%
of the farms while 28% showed labor and management incomes of $20,000 or more per operator.
Distribution of Labor & Management Incomes per Operator
50 Northern New York Dairy Farms, 1995
<-30
-30 to -10
-10 to 0
oto 10
10 to 20
Income (thousand dollars)
20 to 30
>30
7
Return on equity capital measures the net return remaining for the farmer's equity or owned capital after a charge has
been made for the owner-operator's labor and management. The earnings or amount of net farm income allocated to labor
and management is the opportunity cost of operators' labor and management estimated by the cooperators. Return on
equity capital is calculated wi~ and without appreciation. The rate of return on equity capital is determined by dividing
the amount rewrned by the average farm net worth or equity capital. Return on total capital is calculated by adding inter­
est paid to the return on equity capital and then dividing by average farm assets to calculate the rate of return on total
capital.
RETURN ON EQUITY CAPITAL AND RETURN ON TOTAL CAPITAL
50 Northern New York Region Dairy Farms, 1995
Item
Net farm income with appreciation
Average
$
47,328
Family labor unpaid @$1,450 per month
4,742
Value of operators' labor & management
35,185
My Farm
$---­
RebJrn on equity capital with appreciation
$
7,401
Interest paid
+
19.299
+---­
Return on total capital with appreciation
$
26,700
$---­
RebJrn on equity capital without appreciation
$
-1,442
$---­
Rewrn on total capital without appreciation
$
17,857
$---­
$---­
Rate of rebJrn on average equity capital:
1.7%
----_%
-0.3%
----_%
with appreciation
3.9%
----_%
without appreciation
2.6%·
---_%
with appreciation
without appreciation
Rate of return on average total capital:
Farm and Family Financial Status
The first step in evaluating the financial position of the farm is to construct a balance sheet which identifies all
the assets and liabilities of the business. The second step is to evaluate the relationship between assets, liabilities, and net
worth and changes that occurred during the year.
Financial lease obligations are included in the balance sheet. The present value of all future payments is listed as a liabil­
ity since the farmer is committed to make the payments by signing the lease. The present value is also listed as an asset,
representing the future value the item has to the business. For 1995, lease payments were discounted by 9.25 percent to
obtain their present value.
Advanced government receipts are included as current liabilities. Government payments received in 1995 that are for
participation in the 1996 program are the end year balance and payments received in 1994 for participation in the 1995
program are the beginning year balance.
Current Portion or principal due in the next year for intermediate and long term debt is included as a current liability.
-
8
1995 FARM BUSINESS & NONFARM BALANCE SHEET
50 Northern New York Region Dairy Farms, 1995
Current
Farm cash, checking
& savings
Accounts receivable
Prepaid expenses
Feed & supplies
Total Current
Intermediate
Dairy cows:
owned
leased
Heifers
Bulls & other livestock
Mach. & equip, owned
Mach. & equip. leased
Farm Credit stock
Other stock/certificate
Total Intermediate
Dec. 31
Jan. 1
Farm Assets
$
8,889
$
23,417
113
61,902
20,220
124
55,287
$
84,520
$ 106,944
0
51,779
684
143,144
5,358
2,738
3,093
$ 313,740
Long Term
Land & buildings:
owned
leased
Total Long Term
$ 268,124
10,123
$ 278,247
Total Farm Assets
$ 676,507
9,234
$
94,666
$ 114,055
0
49,924
1,120
142,508
5,048
2,593
2,868
$ 318,116
Farm Liabilities
& Net Worth
Current
Accounts payable
Operating debt
Short Term
Advanced govt. receipts
Current Portion:
Intermediate
Long Term
Total Current
Intennediate
Structured debt
1-10 years
Financial lease
(cattle/machinery)
Farm Credit stock
Total Intermediate
Dec. 31
Jan. 1
$
8,613
7,108
2,232
23
$
11,568
5,604
5,229
0
19,346
6,030
$ 43,352
20,395
4,907
$ 47,703
$ 90,476
$
87,428
5,358
2,738
$ 98,572
$
5,048
2,593
95,069
93,237
$ 95,916
$
$ 271,564
9,042
$ 280,606
LongTenn
Structured debt
>10 years
Financial lease
(structures)
Total Long Term
10,123
$106,039
9,042
$ 102,279
$ 693,388
Total Farm Liab.
FARM NEf WORTH
$ 247,963
$428,544
$ 245,051
$ 448,337
Nonfarm Assets, Liabilities & Net Worth (Average of 26 farms reporting)
Assets
Personal cash, checking
& savings
Cash value life insurance
Nonfarm real estate
Auto (personal share)
Stocks & bonds
Household furnishings
All other nonfarm assets
Total Nonfarm Assets
Jan. 1
$
$
7,967
5,229
6,346
6,099
4,795
9,904
7,448
47,788
Dec. 31
$
$
7,778
6,331
6,885
7,279
6,234
10,058
7,238
51,801
Farm & Nonfarm Assets, Liabilities, and Net Worth*
Liabilities & Net Worth
Nonfarm Liabilities
$
Jan. 1
3,762
$
Dec. 31
4,402
NONFARM NET WORTH
$ 44,026
$
47,399
Jan. 1
Dec. 31
$724,295
$ 745,189
Total Assets
251,725
249.453
Total Liabilities
$472,570
$ 495,736
TOTAL FARM & NONFARM NET WORTH
*Assumes that average nonfarm assets and liabilities for the nonreporting farms were the same as for those reporting.
-
9
The following condensed balance sheet, including deferred taxes, contains average data from only those farmers who
elected to provide the additional infonnation required to compute deferred taxes.
Deferred taxes represent an eSt!Jnate of the taxes that would be paid if the farm were sold at year end fair market values
and date on the balance sheet. Accuracy is dependent on the accuracy of the market values and the tax basis data pro­
vided. Any tax liability for assets other than livestock, machinery, land, buildings and nonfarm assets is excluded. It is
assumed that all gain on purchased livestock and machinery is ordinary gain and that listed market values are net of sell­
ing costs. The effects of investment tax credit carryover and recapture, carryover of operating losses, alternative minimum
taxes and other than average exemptions and deductions are excluded because they have only minor influence on the taxes
of most farms. However, they could be important
CONDENSED BALANCE SHEET INCLUDING DEFERRED TAXES
December 31, 1995
10 New York Dairy Farms, 1995
Liabilities & Net Worth
Assets
Current debts & payables
$
Current deferred taxes
Total Current Assets
$
140,077
83,864
Total Current Liabilities
$
184,729
Intennediate debts & leases
$
144,152
Intennediate deferred taxes
Total Inter. Assets
$
508,605
Total Intennediate Liabilities
Long tenn debts & leases
134.145
$
278,297
$
151,600
Long tenn deferred taxes
Total Long Tenn Assets
$
458,074
TOTAL FARM ASSETS
$
1,106,756
73,307
$
224,907
TOTAL FARM LIABILITIES
$
687,933
Farm Net Worth
$
418,822
Total Long Tenn Liab.
Percent Equity (Farm)
Nonfann debts
38%
$
$
52,854
TOTAL ASSETS
$
1,159,610
610
13,010
Nonfarm deferred taxes
Total Nonfarm Assets
100,865
Total Nonfarm Liabilities
$
13,620
TOTAL LIABILITIES
$
701,553
Total Net Worth
$
458,057
Percent Equity (rotal)
40%
-
10
Balance sheet analysis involves examination of relative asset and debt levels for the business. Percent equity is calculated
by dividing end of year net worth by end of year assets and multiplying by 100. The debt to asset ratio is compiled by di­
viding liabilities by assets. Low debt to asset ratios reflect business solvency and the potential capacity to borrow. Debt
levels per productive unit represe~t old standards that are still useful if used with measures of cash flow and repayment
ability.
BALANCE SHEET ANALYSIS
50 Northern New York Region Dairy Farms, 1995
Average
Item
Financial Ratios - Farm:
Percent equity
Debt/asset ratio: total
long-term
intermediate/current
Farm Debt Analysis:
Accounts payable as % of total debt
Long-term liabilities as a % of total debt
Current & inter. liabilities as a % of total debt
Farm Debt Levels:
Total farm debt
Long-term debt
Intermediate & long term
Intermediate & current debt
$
65%
0.35
0.36
0.35
%
5%
42%
58%
%
%
Per Tillable
Acre Owned
$
1,290
538
1,039
751
Per Cow
2,188
913
1,762
1,275
My Farm
%
Per Cow
$---­
Per Tillable
AereOwned
$---­
Farm inventorY balance is an accounting of the value of 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. Net investment indi­
cates whether the capital stock is being expanded (positive) or depleted (negative).
FARM INVENTORY BALANCE
50 Northern New York Region Dairy Farms, 1995
Average of Region's Farms
Real Estate
Machinery & Equipment
$
268,124
$
143,144
Item
Value beginning of year
Purchases
Gift & inheritance
Lost capital
Sales
Depreciation
$
+
$
7,520*
0
3,071
196
7,989
+
13,803
30
656
16,575
=
=
Net investment
Appreciation
+
-3,736
7.176
+
-3,398
2.762
Value end of year
$
271,564
$
142,508
*$700 land and $6,820 buildings and/or depreciable improvements.
-
11
The Statement of Owner EQuity has two purposes. It allows (1) verification that the accrual income statement and market
value balance sheet are interrelated and consistent (in accountants terms, they reconcile) and (2) identification of the
causes of change in equity that occurred on the farm during the year. The Statement of Owner Equity allows you to de­
termine to what degree the change in equity was caused by (1) earnings from the business, and nonfarm income, in excess
of withdrawals being retained in the business (called retained earnings), (2) outside capital being invested in the business
or farm capital being removed from the business (called contributed/withdrawn capital) and (3) increases or decreases in
the value (price) of assets owned by the business (called change in valuation equity).
Retained earnings is an excellent indicator of farm generated financial progress.
STATEMENT OF OWNER EQUITY (RECONCILIATION)
50 Northern New York Region Dairy Farms, 1995
Average
Item
$ 428,544
Beginning of year farm net worth
Net farm income w/o appreciation
+Nonfarm cash income
-Personal withdrawals & family
expenditures excluding
nonfarm borrowings
RETAINED EARNINGS
Nonfarm noncash transfers to farm
+Cash used in business
from nonfarm capital
-Note or mortgage from farm
real estate sold (nonfarm)
$ 38,485
6,108
$--­
$--­
+
+--­
- 32.044
+ $ 12,549
$
30
+
1,567
+$--­
$--­
+--­
0
CONTRIBUfEDIWITHDRAWN CAPITAL
Appreciation
-Lost capital
CHANGE IN VALUATION EQUITY
My Farm
+$
$
1,597
8,843
3,071
+$--­
$--­
+$
5,772
+$---
IMBALANCElERROR
126
-$--­
End of year net worth*
=$ 448,337
=$--­
$ 19,793
$--­
Change in net worth w/appreciation
Change in Net Worth
Without appreciation
With appreciation
*May not add due to rounding.
$
$
10,950
19,793
$----­
$----­
12
Cash Flow Statement
Completing an annual cash flow statement is an important step in understanding the sources and uses of funds
for the business. Understanding last year's cash flow is the ftrst step toward planning and managing cash flow for the
current and future years.
The annual cash flow statement is structured to show net cash provided by operating activities, investing activi­
ties, fmancing activities and from reserves. All cash inflows and outflows, including beginning and end balances, are
included. Therefore, the sum of net cash provided from all four activities should be zero. Any imbalance is the error from
incorrect accounting of cash inflows/outflows.
-'
ANNUAL CASH FLOW STATEMENT
50 Northern New York Region Dairy Farms, 1995
Item
Cash Flow from Operating Activities
Cash farm receipts
Cash farm expenses
= Net cash farm income
+
=
Nonfann income
Personal withdrawals & family expenses
including nonfann debt payments
Net cash nonfann income
Net Provided by Operating Activities
Cash Flow From Investing Activities
machinery
Sale of assets:
+ real estate
+ other stock & cert
Total
asset
sales
=
expansion livestock
Capital purchases:
+ machinery
+ real estate
+ other stock& cert
Total invested in farm assets
= Net Provided by InvesbDent Activities
Average
$
$
286,837
235,225
$
51,613
$
-26.734
6,108
32842
$
656
196
141
$
2,082
13,803
7,520
53
$
993
$
23,458
$
24,879
$
-22,465
$
-1,943
$
-345
$
126
Cash Flow From Financing Activities
+
+
+
+
=
Money borrowed (intennediate & long tenn)
Money borrowed (short tenn)
Increase in operating debt
Cash from nonfarm capital used in business
Money borrowed - nonfarm
Cash inflow from ftnancing
$
Principal payments (intermediate & long term)
$
+ Principal payments (short term)
+ Decrease in operating debt
=
Cash outflow for ftnancing
Net Provided by Financing Activities
28,753
6,420
0
1,567
798
$
37,538
$
39,481
34,554
3,423
1,504
Cash Flow From Reserves
=
Beginning farm cash, checking & savings
Ending farm cash, checking & savings
Net Provided from Reserves
Imbalance (error)
$
8,889
9234
-
13
ANNUAL CASH FLOW STATEMENT
Item
Cash Flow from Operating Activities
Cash farm receipts
Cash farm expenses
= Net cash farm income
+
=
Nonfarm income
Personal withdrawals & family expenses
including nonfarm debt payments
Net cash nonfarm income
Net Provided by Operating Activities
Cash Flow From Investing Activities
machinery
Sale of assets:
+ real estate
+ other stock & cert
= Total asset sales
Capital purchases:
expansion livestock
+ machinery
+ real estate
+ other stock & cert
Total invested in farm assets
= Net Provided by Investment Activities
Cash Flow From Financing Activities
Money borrowed (intermediate & long term)
+ Money borrowed (short term)
+ Increase in operating debt
+ Cash from nonfarm capital used in business
+ Money borrowed - nonfarm
= Cash inflow from financing
Principal payments (intermediate & long term)
+ Principal payments (short term)
+ Decrease in operating debt
$---­
$---­
$---­
$---­
$---­
$---­
$---­
Cash outflow for financing
Net Provided by Financing Acti vities
$---­
Cash Flow From Reserves
Beginning farm cash, checking & savings
Ending farm cash, checking & savings
= Net Provided from Reserves
$---­
=
Imbalance (error)
$---­
$---­
$---­
14
Repayment Analysb
A valuable use of cash flow analysis is to compare the debt payments planned for the last year with the amount
actually paid. The measures liste4 below provide a number of different perspectives on the repayment performance of the
business. However, the critical question to many farmers and lenders is whether planned payments can be made in 1996.
The cash flow projection worksheet on the next page can be used to estimate repayment ability, which can then be com­
pared to planned 1996 debt payments shown below.
FARM DEBT PAYMENTS PLANNED
Same 29 Northern New York Region Dairy Farms, 1994 & 1995
Debt Payments
Long term
Intermediate term
Short term
Operating (net
reduction)
Accounts payable
(net reduction)
Total
Per cow
Per cwt 1995 milk
Percent of total
1995 farm receipts
Percent of 1995
milk receipts
Average
1995 Payments
Planned
Made
$ 12,260
28,572
865
$
3,675
15,775
43,621
2,099
$ 12,629
28,560
3,064
1,829
628
2,779
$ 47,660
1.409
$ 46,781
$
0
63,324
$
$
$
$
565
2.92
418
2.16
15%
20%
17%
23%
My Farm
1995 Payments
Planned
Made
Planned
1996
Planned
1996
$--­
$--­
$--­
$---­
$--­
$--­
$--­
$---­
$--­
$--­
The cash flow coverage ratio measures the ability of the farm business to meet its planned debt payment schedule.
The ratio shows the percentage of payments planned for 1995 (as of December 31, 1994) that could have been made with
the amount available for debt service in 1995. Farmers who did not participate in DFBS in 1994 have their 1995 cash
flow coverage ratio based on pianned debt payments for 1996.
CASH FLOW COVERAGE RATIO
Same 29 Northern New York Region Dairy Farms, 1994 & 1995
Item
My Farm
Average
.Cash farm receipts
Cash farm expenses
+ Interest paid
Net personal withdrawals from farm*
$
304,860
247,608
18,787
31,508
$
= Amount Available for Debt Service
= Debt Payments Planned for 1995
(as of December 31, 1994)
(AlB) =Cash Flow Coverage Ratio for 1995
$
44,531
$
$
46,781
0.95
$
-
-
(A)
(B)
*Personal withdrawals and family expenditures less nonfarm income and nonfarm money borrowed. If family withdraw­
als are excluded, or inaccurately included, the cash flow coverage ratio will be incorrect
Item
Average no. of cows
Total cwt of milk sold
Accrual Oper. Receipts
Milk
Dairy cattle
Dairy calves
Other livestock
Crops
Misc. Receipts
Total
Accrual Operating Expenses
I-lired labor
Dairy grain & concentrate
Dairy roughage
Nondairy feed
Mach. hire, rent & lease
Mach. repair & vehicle expo
Fuel, oil & grease
Replacement livestock
Breeding
Vet & medicine
Milk marketing
Bedding
Milking supplies
Cattle lease
Custom boarding
Other livestock expo
Fertilizer & lime
Seeds & plants
Spray & other crop expo
Land, bldg., fence repair
Taxes
Real estate rent & lease
Insurance
Utilities
MisceUaneous
Total Less Interest Paid
15
ANNUAL CASH FLOW WORKSHEET
My Farm
Regional Average
Per Cowl
PerCwt
Per Cow
PerCwt
108
20,442
$ 2,444.57
$
153.22
29.48
6.52
94.44
68.74
$ 2,796.97
$
$
$
230.66
662.82
18.29
0.25
57.91
140.89
56.10
11.44
34.19
61.61
110.06
7.53
64.94
0.00
23.57
61.91
65.62
42.01
40.06
44.43
65.44
60.70
50.25
75.40
29.86
$ 2,015.94
$
Expected
Change
1996
Projection
12.92
0.81
0.16
0.03
0.50
0.36
14.78
$
$
$
$
1.22
3.50
0.10
0.00
0.31
0.74
0.30
0.06
0.18
0.32
0.58
0.04
0.34
0.00
0.12
0.33
0.35
0.22
0.21
0.23
0.35
0.32
0.27
0.40
0.16
10.65
$
$
$
$
Total
Net Accrual Operating Income
(without interest paid)
$ 84,352
$
12,041
- Change in livestock & crop invent.*
3,196
- Change in accounts receivable
1,236
- Change in feed & supply inventory**
+ Change in accounts payable***
3.023
NET CASH FLOW
$ 70,902
$
$ 25.936
- Net family withdrawals
$
Available for Farm
$ 44,966
57.956
- Farm debt payments
$ -12,990
Available for Farm Investment
$
$ 23,458
- Capital purchases
$
Additional Capital Needed
*Includes change in advance government receipts. **Includes change in prepaid expenses.
interest account payable.
$
$
$
$
***Excludes change in
16
Cropping Analysm
1be cropping program is an important part of the dairy farm business and often represents opportunities for im­
proved productivity and profitability. A complete evaluation of what the available land resources are, how they are being
used, how well crops are producing, and what it costs to produce them is important to evaluating alternative cropping and
feed purchasing alternatives.
LAND RESOURCES AND CROP PRODUCfION
50 Northern New York Region Dairy Farms, 1995
.IdImt
~
Tillable
Nontillable
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
My Farm
Average
Item
190
53
124
367
.Em:m£
Rented
143
20
4
167
50
44
Acres'"
187
81
12
50
27
3
0
10
21
12
50
26
264
68
31
0
50
36
23
333
Owned
Total
333
73
Rented
Total
--
128
534
ProdIAcre
2.83 to DM
15.45 tn
5.25 to DM
1.27 to DM
3.45 to DM
122 bu
59 bu
Obu
Acres
Prod/Acre
toDM
tn
toDM
toDM
toDM
bu
bu
bu
"'This column represents the average acreage for the farms producing that crop. Average acreages including those farms
not producing were hay crop 187, corn silage 71, corn grain 37, oats 2, tillable pasture 15, and idle 5.
Average crop acres and yields compiled for the region are for the 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 crop/dairy ratios indicate the relationship between forage production, forage production resources,
and the dairy herd.
CROPIDAIRY RATIOS
50 Northern New York Region Dairy Farms, 1995
Item
Total tillable acres per cow
Total forage acres per cow
Harvested forage dry matter, tons per cow
Average
3.08
2.44
8.43
My Farm
17
Cropping Analysk (continued)
A number of cooperators have allocated crop expenses among the hay crop, com, and other crops produced.
Fertilizer and lime, seeds and plants, and spray and other crop expenses have been computed per acre and per production
unit for hay and com. Addition~ expense items such as fuels, labor, and machinery repairs are not included. Rotational
grazing was used on 15 farms in the region.
CROP RELATED ACCRUAL EXPENSES
50 Northern New York Region Dairy Farms Reporting, 1995
Total
Per
. Till.
Acre
Item
No. of farms
reporting
Ave. number
of acres
Fert. & lime
Seeds & plants
Spray & other
cropexp.
TOTAL
Com
Grain
Per Dry
Sh. Bu.
Pasture
Hay Crop
$
Per
Till
Acre
Per
TonDM
Per
Acre
19
50
333
$ 21.28
13.62
Com
Silage
Per
TonDM
All
Com
Per
Acre
19
135
40.44
25.33
$
33.45
99.22
6.43
$ 19.08
$
7.78
4.87
$
Per
Total
Acre
5
199
$
0.36
0.23
$ 12.68
6.95
0.30
0.89
1.43
$ 21.06
$
4.71
2.58
$
28
17.84
5.33
$
12.99
$ 47.89
$
$
$-­
$
$
$
$
$
$
$-­
$-­
$
$
$
$
$
$
0.53
7.82
$
0.00
23.17
$
195
2.53
0.75
0.00
3.28
My Farm
Fert. & lime
Seeds & plants
Spray & other
crop expo
TOTAL
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. Al­
though machinery costs have not been allocated to individual crops, they are shown below per total tillable acre.
ACCRUAL MACHINERY EXPENSES
50 Northern New York Region Dairy Farms, 1995
Average
Fuel, oil & grease
Mach. repair & vehicle expo
Machine hire, rent & lease
Interest (5%)
Depreciation
Total
My Farm
Total
Expenses
Machinery
Expense
$
$
6,059
15,216
6,254
7,141
16.575
51,245
Per Till.
Acre
$
$
18.20
45.69
18.78
21.45
49.77
153.89
Total
Expenses
Per Till.
Acre
$
$
$
$
-
18
Dairy Analys~
Analysis of the dairy enterprise can reveal a great deal about the strengths and weaknesses of the dairy farm
business. Information on this pa~e should be used in conjunction with Dill and other dairy production information.
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. Any change in inventory is
included as an accrual farm receipt when calculating all of the profitability measures on pages 6 and 7.
DAIRY HERD INVENTORY
50 Northern New York Region Dairy Farms, 1995
Dairy Cows
Item
Beg. year (owned)
No.
105
+ Change w/o apprec.
+ Appreciation
End year (owned)
End including leased
Average number
112
112
108
Value
$106,944
7,540
-429
$114,055
No.
Bred
Value
No.
27,710
217
-312
27,615
30
$
30
$
82
(all age groups)
Heifer
Open
Value
31
$
30
$
17,612
-1,455
-283
15,874
Calves
No.
Value
23
$
24
$
6,457
-68
46
6,435
My Farm:
Beg. year (owned)
_ _ $_ _
--$--
--$--
--$-­
_ _ $_ _ --$--
--$--
--$-­
+ Change w/o apprec.
+ Appreciation
End year (owned)
End including leased
Average number
_ _ (all age groups)
Total milk sold and milk sold per cow are extremely valuable measures of size and productivity, respectively, on
the dairy farm. These measures of milk output are based on pounds of milk marketed during the year. Farm managers on
Dill should compare milk sold per cow with their rolling herd average on the test date nearest December 31 to see how
close the Dill estimate of milk produced is to actual milk sales.
MILK PRODUCTION
50 Northern New York Region Dairy Farms, 1995
Item
Total milk sold, Ibs.
Milk sold per cow, Ibs.
Average milk plant test, percent butterfat
Average
My Farm
2,044,177
18,931
3.65%
-
19
The cost of producing milk has been compiled using the whole farm method and is featured in the following table. Ac­
crual 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, QPCrating costs of producing milk are estimated by deducting nonmilk accrual
receipts from total accrual operating expenses including expansion livestock purchased. Purchased inputs cost of Produc­
int: milk are the operating costs plus depreciation. Total costs of producint: milk include the operating costs of producing
milk plus depreciation on machinery and buildings, the value of unpaid family labor, the value of operators' labor and
management, and the interest charge for using equity capital.
ACCRUAL RECEIPTS FROM DAIRY, COSTS OF PRODUCING MILK,
AND PROFITABll..ITY
50 Northern New York Region Dairy Farms, 1995
Accrual Cost of
Producint: Milk
Operating costs
Purchased inputs
costs
Total Costs
Accrual Receipts
From Milk
Net Farm Income
without Apprec.
Net Farm Income
with Apprec.
Average
Per Cow
Total
Item
PerCwt
My Farm
Per Cow
Total
PerCwt
$ 200,965
$
1,861
$
9.83
$
$
$
$ 225,529
$ 287,378
$
$
2,088
2,661
$
$
11.03
14.06
$
$
$
$
$
$
$ 264,014
$
2,445
$
12.92
$
$
$
$
38,485
$
356
$
1.88
$
$
$
$
47,328
$
438
$
2.32
$
$
$
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 an evaluation of the dairy enterprise.
DAIRY RELATED ACCRUAL EXPENSES
50 Northern New York Region Dairy Farms, 1995
Average
Item
Purchased dairy grain
& concentrate
Purchased dairy roughage
Total Purchased
Dairy Feed
Purchased grain & conc.
as % of milk receipts
Purchased feed & crop expo
Purchased feed & crop expo
as % of milk receipts
Breeding
Veterinary & medicine
Milk marketing
Bedding
Milking supplies
Cattle lease
Custom boarding
Other livestock expense
My Farm
PerCwt
Per Cow
Per Cow
PerCwt
$
663
18
$
3.50
0.10
$
$
$
681
$
3.60
$
$
$
829
27%
--
$
4.38
$
$
0.18
0.33
0.58
0.04
0.34
0.00
0.12
0.33
$
34%
$
34
62
110
8
65
0
24
62
%
$
%
$
20
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 management's success in generating products per unit of labor input
CAPITAL EFFICIENCY
50 Northern New York Region Dairy Farms, 1995
Per
Worker
$ 220,548
Item
Farm capital
Real estate
Machinery & equipment
Assettumoverratio
Per
Cow
$ 6,342
2,587
1,371
47,664
Per Tillable
Acre Owned
$ 3,605
1,471
Per Tillable
Acre
$ 2,057
445
\.­
0.45
My Farm
Farm capital
Real estate
Machinery & equipment
Assettumoverratio
$
$
$
$
LABOR FORCE INVENTORY AND ANALYSIS
50 Northern New York Region Dairy Farms, 1995
Value of
Labor & Mgmt
$ 24,740
9,125
1,320
112 = 3.11 Worker Equivalent
1.54 OperatorlManager Equivalent
112 = _ _ Worker Equivalent
112­
OperatorlManager Equivalent
My Farm
Average
Total
Per Worker
Total
Per Worker
108
35
2,044,177
658,209
333
107
1,126
363
My Farm: Total
Operator's
Labor
Efficiency
Cows, average number
Milk sold, pounds
Ttllable acres
Work units
Labor Costs
Value of operator(s)
labor ($1,450/mo.)
Family unpaid
($1,450/mo.)
Hired
Total Labor
Machinery Cost
Total Labor & Mach.
Years
of Educ.
13
13
14
Age
47
41
34
Months
12.65
5.14
0.72
2.65
3.27
12.84
37.27
Labor Force
Operator number 1
Operator number 2
Operator number 3
Family paid
Family unpaid
Hired
Total
Average
Per
Cow
Total
$
26,840
4,742
24,911
$ 56,493
$ 51.245
$ 107,738
$
249
$
$
$
44
231
524
474
998
Per
Cwt
$
1.31
$
$
$
0.23
1.22
2.76
2.51
5.27
My Farm
Per
Cow
Total
Per
Cwt
$---­
$
$
$._--­
$,--­
$
$
$
$
$
$
$
r_
21
COMPARATIVE ANALYSIS OF THE FARM BUSINESS
Progress or the Farm Business
Comparing your business with average data from regional DFBS cooperators that participated in both of the last
two years can be helpful to establishing your goals for these parameters. It is equally important for you to determine the
progress your business has made over the past two or three years, to compare this progress to your goals, and to set goals
for the future.
PROGRESS OF THE FARM BUSINESS
Same 29 Northern New York Region Dairy Farms, 1994 & 1995
Average of 29 Farms*
1994
1995
Selected Factors
Size of Business
Average number of cows
Average number of heifers
Milk sold, Ibs.
Worker equivalent
Total tillable acres
Rates of Production
Milk sold per cow, Ibs.
Hay DM per acre, tons
Com silage per acre, tons
Labor Efficiency
Cows per worker
Milk sold/worker, Ibs.
Cost Control
Grain & cone. purchased
as % of milk sales
Dairy feed & crop expo
per cwt. milk
Labor & mach. costs/cow
Operating cost of producing
cwt. of milk
Capital Efficiency**
Farm capital per cow
Mach. & equip. per cow
Asset turnover ratio
Profitability
Net farm income w/o apprec.
Net farm income w/apprec.
Labor & mgt. income
per operator/manager
Rate of return on equity
capital w/appreciation
Rate of return on all
capital w/appreciation
Financial Summary
Farm net worth, end year
Debt to asset ratio
Farm debt per cow
*Farms participating both years.
**Average for the year.
107
91
2,041,645
3.10
348
112
90
2,166,093
3.25
347
19,105
2.87
16
19,412
2.84
16
34
657,598
34
665,589
%
27%
28%
My Farm
1995
1994
Goal
%
%
$
$
4.60
1,026
$
$
4.40
1,011
$
$
$
$
$
$
$
9.86
$
9.61
$
$
$
$
$
6,390
1,437
0.47
$
$
6,374
1,420
0.46
$
$
$
$
$
$
$
$
46,049
57,501
$
$
44,845
54,658
$
$
$
$
$
$
$
13,274
$
10,627
$
$
$
4.09%
2.58%
%
%
%
5.06%
4.38%
%
%
%
$ 454,711
0.35
$
2,225
$
$
482.653
0.33
2,057
$
$
$
$
$
$
-
22
Regional Fann Business Chart
The Farm Business Chart is a tool which can be used in analyzing your business. Compare your business by
drawing a line through or near the figure in each column which represents your current level of performance. The five
figures in each column represent the average of each 20 percent or quintile of farms included in the regional summary.
Use this information to identify busmess areas where more challenging goals are needed.
FARM BUSINESS CHART FOR FARM MANAGEMENT COOPERATORS
50 Northern New York Region Dairy Farms, 1995
*Page number of the participant's DFBS where the factor is located.
23
New York State Farm Business Charts
The Farm Business Chart is a tool which can be used in analyzing a business by drawing a line through the fig­
ure in each column which represents the current level of management performance. The figure at the top of each column
is the average of the top 10 percent of the 321 farms for that factor. The other figures in each column are the average for
the second 10 percent. third 10 percent. etc. Each column of the chart is independent of the others. The farms which are
in the top 10 percent for one factor would not necessarily be the same farms which make up the top 10 percent for any
other factor.
The cost control factors are ranked from low to high, but the lowest cost is not necessarily the most profitable. In
some cases, the "best" management position is somewhere near the middle or average. Many things affect the level of
costs, and must be taken into account when analyzing the factors.
FARM BUSINESS CHART FOR FARM MANAGEMENT COOPERATORS
321 New York Dairy Farms, 1994
Worker
Equivalent
(11)*
Size of Business
No.
Pounds
Milk
of
Cows
Sold
(11)
(11)
Pounds
Milk Sold
Per Cow
(10)
Rates of Production
Tons
Tons Corn
Hay Crop
Silage
DM/Acre
Per Acre
(9)
(9)
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(11)
12.0
5.9
4.5
3.7
3.2
560
222
159
125
109
12,116,804
4,628,175
3,097,796
2,407,393
2,051,070
23,770
21,769
20,968
20,229
19,422
5.2
4.0
3.6
3.2
3.0
23
20
18
18
16
56
46
41
37
34
1,112,817
898,663
805,930
717,932
652,910
2.8
2.5
2.2
1.9
1.4
93
75
63
51
40
1,715,708
1,352,622
1,137,044
888,899
655,673
18,856
18,020
17,044
15,864
13,700
2.8
2.5
2.1
1.9
1.4
16
15
14
13
10
32
30
27
24
20
603,031
552,825
491,227
433,739
335,490
Grain
Bought
Per Cow
(10)
$390
525
577
646
700
% Grain is
of Milk
Receipts
(10)
16%
22
24
26
28
Cost Control
Machinery
Labor &
Costs
Machinery
Per Cow
Costs Per Cow
(11)
(11)
$268
326
362
401
436
$677
814
878
938
998
Feed & Crop
Expenses
Per Cow
(10)
Feed & Crop
Expenses per
Cwt. Milk
(10)
$557
686
747
800
851
$3.27
3.86
4.12
4.35
4.53
-----------_ .. -------------------------------------------------------------------------------------------------------------------------------------------­
740
786
846
918
1,030
29
31
32
35
40
471
508
548
618
762
*Page number of the participant's DFBS where the factor is located.
1,062
1,119
1,192
1,295
1,536
898
955
1,016
1,092
1,239
4.72
4.90
5.17
5.46
6.35
­
24
FARM BUSINESS CHART FOR
FARM MANAGEMENT COOPERATORS
321 New York Dairy Farms, 1994
Milk
Receipts
Per Cow
(10)
Milk
Receipts
PerCwt
(10)
$3,237
2,932
2,800
2,700
2,612
2,514
2,408
2,285
2,101
1,823
Total
(3)
Oper. Cost
Milk
Per Cow
(10)
Oper. Cost
Milk
PerCwt
(10)
Total Cost
Production
Per Cow
(10)
$14.37
14.01
13.73
13.53
13.41
$1,157
1,490
1,658
1,777
1,878
$6.99
8.63
9.22
9.68
10.00
$2,036
2,332
2,505
2,639
2,765
$11.93
12.83
13.49
13.96
14.33
13.28
13.15
13.06
12.96
12.52
1,999
2,123
2,233
2,414
2,676
10.47
10.82
11.28
11.86
13.34
2,859
2,948
3,063
3,186
3,584
14.71
15.18
15.84
16.85
19.32
Net Farm Income
Without Appreciation
Per
As % of Total
Cow
Accrual Receipts
(10)
(3)
$239,265
92,824
69,505
53,962
40,913
$933
674
562
477
407
30.1%
21.6
18.6
16.2
14.0
31,003
23,412
16,656
6,546
-19,060
351
280
198
74
-207
12.0
9.4
7.0
2.6
-9.3
Profitability
Net Farm Income
With Appreciation
Per
Total
Cow
(10)
(3)
Total Cost
Production
PerCwt
(10)
Labor &
Management Income
Per
Per
Farm
Operator
(3)
(3)
$279,148
110,046
79,444
63,874
51,100
$1,059
776
649
566
486
$161,912
52,012
34,836
22,844
14,533
$117,425
32,058
21,472
15,807
10,440
38,382
29,118
21,263
11,292
-13,065
428
349
244
143
-137
7,210
-687
-8,059
-19,089
-49,541
5,358
-562
-6,460
-16,158
-43,229
Farm Business Charts for farms with freestall barns and 180 cows or less and more than 180 cows, and farms
with conventional barns with 60 cows or less and more than 60 cows are shown on pages 28-31.
Financial Analysis Chart
The farm financial analysis chart on page 25 is designed just like the Farm Business Chart and may be used to
assess the financial health of the farm business. Most of the financial measures used in the chart are defined on pages 6,
10, 14 and 20 of this publication. References to DFBS output page numbers for participating dairy farmers are provided
in the table headings.
'­
25
FINANCIAL ANAYLSIS CHART
321 New York Dairy Farms, 1994
Liquidity (repayment)
Available for
CashAow
Debt Payments
Coverage
as Percent
De~t Service
Per Cow
of Milk Sales
Ratio
(12)
(8)
(8)
Planned Debt
Payments
Per Cow
(8)*
$43
204
283
332
396
$804
615
538
475
424
4.63
452
507
562
636
796
387
322
243
189
0
0.87
0.74
0.61
0.41
-0.08
1.66
1.35
1.15
1.00
Solvency
Leverge
Ratio**
Percent
Equity
DebtJAsset Ratio
Long
Current &
Intermediate
Term
(5)
1,191
1,727
2,069
18
20
23
26
35
2,387
2,694
3,015
3,510
4,398
(3)
0.00
0.00
21%
10
8
5
3
0.01
0.10
0.17
0.24
0.30
0.12
0.23
0.58
0.74
0.92
1.20
3.54
64
57
53
45
31
0.37
0.43
0.49
0.58
0.81
0.33
0.41
0.52
0.64
0.91
om
Efficiency (Capital)
Real Estate
Machinery
Investment
Investment
Per Cow
Per Cow
$74
669
Profitability
Percent Rate of Return with
appreciation on:
Equity
Total Capital
(5)
99%
91
82
74
69
Asset
Turnover
(ratio)
5%
9
12
14
16
(5)
0.01
0.10
0.22
0.34
0.45
Debt
Per Cow
(5)
1
0
-2
-6
-22
(3)
13%
9
7
6
4
3
2
0
-1
-6
Total Farm
Assets
Per Cow
Change in
Net Worth
wiAppreciation
(11)
(11)
(11)
(11)
(6)
.75
.55
.50
.47
$1,152
1,924
2,232
2,491
2,764
$571
751
902
1,040
1,167
$4,262
5,128
5,569
5,948
6,368
$182,925
63,674
41,117
29,544
20,624
.43
.39
.36
.32
.25
3,033
3,377
4,026
4,698
6,692
1,290
1,443
1,683
1,969
2,703
6,842
7,447
8,055
8,891
11,657
14,936
8,501
1,168
-10,157
-40,417
.60
*Page number of the participant's DFBS where the factor is located.
**Dollars of debt per dollar of equity, computed by dividing total liabilities by total equity.
-
26
Comparison by Type of Barn and Herd Size
When analyzing a dairy farm business by comparing it to a group of farms, it is important that the group of farms
have used as many of the same physical characteristics as possible as the farm being analyzed. To assist in this endeavor,
dairy farms in the summary have been divided into those with freestall and those with conventional housing. Conven­
tional housing includes stanchion and ties tall barns. Within each group, is a further classification by size of the dairy
herd.
The table on page 27 includes the average values for the resulting four groups of dairy farms. The average size
of farms in the four groups ranges from 48 cows on the small conventional farms to 397 cows on the large freestall farms.
The large freestall farms averaged the highest milk output per cow and per worker, the lowest total costs of pro­
duction and investment per cow, and the greatest returns to labor, management and capital. The small freestall farms
showed average profits somewhat higher than the large conventional farm businesses.
Farm business charts have been computed for each of the four housing and herd size categories and are on pages
28-31. By comparing the farm's performance on the most appropriate business chart, a farm manager will be better able
to evaluate his or her business performance.
Herd Size Comparisons
A detailed comparison of profitability, financial situation and business analysis factors across herd sizes is con­
tained on pages 42-51 of the 1994 State Summary*. As herd size increases, the average profitability generally increases
(pages 44-45). Net farm income without appreciation was $216,491 per farm for the 300 or more herd size group and
$13,630 per farm for those with less than 40 cows. This relationship generally holds for all measures of profitability in­
cluding rate of return on capital.
Farm net worth increases rapidly as herd size increases (pages 46-49)*, even though percent equity was higher
on the smaller farms. The group with less than 40 cows demonstrated the strongest ability to make debt payments.
Crop yields showed little relationship to herd size, but fertilizer and lime expenses, and machinery cost per tilla­
ble acre generally increased as herd size increased (pages 50-51)*. The farms with 300 and more cows per farm averaged
23 percent more milk sold per cow than the smallest farms. All of the groups with 85 or more cows averaged above
19,000 pounds of milk sold per cow while the farms smaller than 85 cows averaged 17,700 pounds of milk sold per cow.
Farm capital per worker increased, and farm capital per cow decreased as herd size increased. Milk sold per worker in­
creased dramatically as herd size increased, ranging from 335,069 pounds at the lowest herd size category up to 1,023,849
pounds at the largest size category.
'­
*Smith, Stuart E, Wayne A. Knoblauch, and Linda D. Putnam, Dairy Farm Managment Business Summary, New York,
1994, Department of Agricultural, Resource, and Managerial Economics, Cornell University, R.B. 95-03, August 1995.
Item
27
SELECTED BUSINESS FACfORS BY TYPE OF BARN AND HERD SIZE
299 New York Dairy Farms, 1994
Farms with:
Conventional
Freesta11
>60 Cows
<=60 Cows
<=180 Cows
>180 Cows
Number of farms
69
71
96
63
CroWing Program Analysis
Total Tillable acres
Tillable acres rented*
Hay crop acres*
Corn silage acres*
Hay crop, tons DM/acre
Corn silage, tons/acre
Oats, bushels/acre
Forage DM per cow, tons
Tillable acres/cow
Fert. & lime exp.ltillable acre
Total machinery costs
Machinery cost/tillable acre
168
63
109
26
2.3
15.3
93
8.1
3.5
$17.07
$22,500
$134
279
105
156
56
2.8
15.9
63
8.6
3.2
$23.51
$40,129
$144
368
149
185
87
2.8
16.2
44
8.5
3.1
$23.47
$57,579
$156
816
347
350
309
3.5
16.6
74
7.3
2.1
$29.43
$158,497
$194
Dairy Analysis
Number of cows
Number of heifers
Milk sold, lbs.
Milk soldlcow, lbs.
Operating cost of prod. milklcwt
Total cost of prod. milklcwt
Pricelcwt milk sold
Purchased dairy feed/cow
Purchased dairy feedlcwt. milk
Purchased grain & cone. as % of milk receipts
Pure. feed & crop exp.lcwt. milk
48
38
830,876
17,389
$9.79
$15.99
$13.33
$682
$3.92
28%
$4.64
87
69
1,574,371
18,208
$10.26
$14.91
$13.39
$704
$3.87
28%
$4.69
117
94
2,248,212
19,173
$10.40
$14.58
$13.43
$746
$3.89
28%
$4.72
397
296
8,485,502
21,367
$10.67
$13.19
$13.48
$824
$3.86
28%
$4.51
$200,704
$7,801
$3,518
$3,937
$1,517
0.35
$213,506
$6,977
$3,449
$3,229
$1,359
0.41
$246,293
$7,050
$3,776
$3,144
$1,411
0.44
$260,060
$5,774
$4,889
$2,533
$916
0.58
1.86
1.19
447,198
26
$663
$189
2.83
1.39
556,953
30
$553
$171
3.36
1.53
669,602
35
$536
$171
8.82
1.74
962,391
45
$556
$271
$18,839
$574
0.4%
$2,025
74%
$31,295
$4,422
2.6%
$1,952
72%
$41,444
$6,083
3.8%
$2,286
67%
$146,748
$46,382
8.3%
$2,502
56%
Capital Efficiency
Farm capital/worker
Farm capital/cow
Farm capital/tillable acre owned
Real estate/cow
Machinery investment/cow
Asset turnover ratio
Labor Efficiency
Worker equivalent
Operatorlmanager equivalent
Milk soldlworker, lbs.
Cows/worker
Labor cost/cow
Labor cost/tilJable acre
Profitability & Balance Sheet Analysis
Net farm income (without appreciation)
Labor & mgmt. income/operator
Return on all capital with appreciation
Farm debt/cow
Percent equity
*Average of all farms, not only those reporting data
­
28
FARM BUSINESS CHAR.T FOR. SMALL CONVENTIONAL STALL DAIRY FARMS
69 Conventional Stall Dairy Farms with 60 or Less Cows, New York, 1994
Worker
Equivalent
(11)*
Size of Business
No.
Pounds
Milk
of
Cows
Sold
(11)
(11)
Pounds
Milk Sold
Per Cow
(10)
2.87
2.45
2.08
2.00
1.97
60
57
54
51
49
1,207,610
1,041,959
956,111
878,296
842,902
21,897
20,349
19,576
18,797
17,788
1.73
1.52
1.43
1.30
1.12
46
44
42
40
33
786,474
724,587
682,846
629,613
512,941
17,019
16,251
15,493
14,166
11,923
Grain
Bought
Per Cow
(10)
$371
472
526
558
594
% Grain is
of Milk
Receipts
(10)
16%
21
24
25
27
Machinery
Costs
Per Cow
(11)
$278
318
366
414
443
Rates of Production
Tons
Tons Com
Hay Crop
Silage
DM/Acre
Per Acre
(9)
(9)
4.3
3.6
3.2
2.8
2.4
2.1
2.0
1.9
1.6
1.2
Cost Control
Labor &
Machinery
Costs Per Cow
(11)
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(11)
23
20
18
18
16
43
35
31
29
27
722,584
626,587
568,551
494,509
460,752
15
14
13
11
8
25
23
22
20
16
445,006
416,992
376,560
321,752
250,079
Feed & Crop
Expenses
Per Cow
(10)
Feed & Crop
Expenses Per
Cwt. Milk
(10)
$506
618
667
701
747
$3.17
3.74
3.96
4.14
4.36
$715
853
935
1,025
1,082
-------------- ... -------------------------------------------------------------------------------------------------------------------------------------­
649
707
756
840
977
28
30
33
36
42
475
505
539
591
831
Value and Cost of Production
Milk
Oper. Cost
Total Cost
Milk
Receipts
Production
PerCwt
PerCwt
Per Cow
(10)
(10)
(10)
1,132
1,200
1,298
1,401
1,817
792
837
900
1,021
1,214
Profitability
Net Farm Income
Without Appreciation
Total
Per Cow
(3)
(10)
4.60
4.94
5.30
5.57
6.50
Labor &
Mgmt. Inc.
PerOper.
Change in
New Worth
w/Apprec.
(3)
(6)
$2,925
2,714
2,610
2,522
2,390
$5.82
7.67
8.60
9.14
9.43
$12.53
13.97
14.47
14.89
15.36
$48,399
37,980
28,428
23,201
20,798
$1,005
790
623
480
413
$25,239
14,750
10,716
5,469
1,841
$43,090
26,488
19,929
16,186
12,027
2,246
2,141
2,056
1,895
1,594
9.84
10.65
11.13
11.63
13.63
15.86
16.51
17.33
18.26
23.01
16,706
13,819
8,453
52
-14,172
363
296
166
-1,561
-4,656
-8,365
-18,289
-31,199
8,102
2,548
-93
-7,737
-13,856
*Page number of the participant's DFBS where the factor is located.
1
-335
'­
29
FARM BUSINESS CHART FOR LARGE CONVENTIONAL STALL DAIRY FARMS
71 Conventional Stall Dairy Farms with More Than 60 Cows, New York, 1994
Worker
Equivalent
(11)*
~sofProduction
Size of Business
No.
Pounds
Milk
of
Sold
Cows
(11)
(11)
Pounds
Milk Sold
Per Cow
(10)
Tons
Hay Crop
DM/Acre
(9)
Tons Com
Silage
Per Acre
(9)
5.1
3.9
3.5
3.1
2.9
24
20
18
17
16
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(11)
•
4.69
3.57
3.10
2.84
2.65
133
108
97
91
81
2,488,241
2,024,167
1,858,587
1,640,996
1,514,509
22,189
20,323
19,731
19,070
18,843
48
39
36
33
32
916,052
693,816
651,968
615,426
582,121
------------------------------------------------------ ... ----------------------------------------------------------------------------------------------­
2.53
2.48
2.28
2.08
1.78
Grain
Bought
Per Cow
(10)
$301
462
546
624
672
1,367,445
1,283,594
1,234,765
1,155,076
1,045,775
77
72
68
66
63
% Grain is
of Milk
Receipts
(10)
14%
19
22
26
28
18,327
2.7
17,406
2.4
16,563
2.2
2.0
15,388
13,835
1.5
Cost Control
Machinery
Labor &
Machinery
Costs
Per Cow
Costs Per Cow
(11)
(11)
$272
331
367
397
425
15
15
13
12
9
30
28
26
24
21
Feed & Crop
Expenses
Per Cow
(10)
$725
831
877
945
978
$467
651
713
762
819
532,500
500,895
455,380
424,899
375,069
Feed & Crop
Expenses Per
Cwt. Milk
(10)
$2.89
3.66
4.01
4.32
4.55
-----------------------------------------------------------------------------------------------------------------------------------------------------734
760
824
907
1,028
30
32
33
36
41
459
494
539
624
710
Value and Cost of Production
Milk
Oper. Cost
Total Cost
Receipts
Milk
Production
PerCwt
Per Cow
PerCwt
(10)
(10)
(10)
1,031
1,077
1,142
1,264
1,386
876
925
978
1,077
1,224
Profitability
Net Farm Income
Without Appreciation
Per Cow
Total
(3)
(10)
Labor &
Mgmt. Inc.
PerOper.
(3)
4.78
4.99
5.20
5.52
6.59
Change in
New Worth
w/Apprec.
(6)
$3,018
2,742
2,643
2,563
2,517
$6.59
8.57
8.99
9.61
10.09
$12.25
13.35
13.79
14.19
14.64
$79,785
56,214
45,816
37,113
31,998
$963
662
538
469
401
$28,947
20,229
16,010
12,516
7,265
$70,776
33,799
21,384
16,067
12,983
2,445
2,350
2,210
2,016
1,816
10.55
10.89
11.22
11.76
13.36
15.00
15.37
15.92
16.80
18.03
27,327
23,653
20,396
6,705
-22,986
341
247
203
91
-271
3,312
-3,056
-10,172
-16,348
-40,921
7,707
3,124
-5,502
-16,437
-39,771
*Page number of the participant's DFBS where the factor is located.
30
FARM BUSINESS CHART FOR SMALL FREESTALL DAIRY FARMS
96 Freestall Barn Dairy Farms with 180 or Less Cows, New York, 1994
Worker
Equivalent
(11)*
Size of Business
Pounds
No.
Milk
of
Cows
Sold
(11)
(11)
5.37
4.44
4.01
3.58
3.38
174
157
138
125
119
3,614,047
3,072,976
2,638,806
2,446,302
2,258,914
3.11
2.90
2.51
2.23
1.63
112
105
96
78
55
2,092,444
1,936,985
1,767,311
1,390,495
971,149
Grain
Bought
Per Cow
(10)
$409
535
565
633
681
% Grain is
of Milk
Receipts
(10)
16%
21
23
26
28
Pounds
Milk Sold
Per Cow
(10)
23,575
21,582
20,823
19,939
19,272
Rates of Production
Tons
Tons Com
Hay Crop
Silage
OM/Acre
Per Acre
(9)
(9)
5.5
3.8
3.5
3.1
2.9
18,731
2.8
17,842
2.5
17,144
2.1
16,361
1.8
14,507
1.4
Cost Control
Machinery
Labor &
Costs
Machinery
Per Cow
Costs Per Cow
(11)
(11)
$277
335
374
415
456
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(11)
24
20
18
17
16
55
49
42
38
35
1,012,453
857,659
803,445
738,212
680,046
15
15
14
13
11
33
31
29
27
22
624,360
592,821
561,754
513,673
405,611
Feed & Crop
Expenses
Per Cow
(10)
$673
771
855
908
969
$610
718
762
799
830
Feed & Crop
Expenses Per
Cwt. Milk
(10)
$3.25
3.83
4.12
4.35
4.55
----------------------------------------------------------------------------------_ .... _---------------------------------------- .. _----------------------­
708
761
828
931
1,036
29
31
32
35
39
485
528
592
670
799
Value and Cost of Production
Total Cost
Milk
Oper. Cost
Milk
Receipts
Production
PerCwt
PerCwt
Per Cow
(10)
(10)
(10)
1,052
1,139
1,196
1,299
1,521
870
933
1,011
1,090
1,212
Profitability
Net Farm Income
Without Appreciation
Per Cow
Total
(3)
(10)
Labor &
Mgmt. Inc.
Per Oper.
(3)
4.73
4.95
5.20
5.42
6.21
Change in
New Worth
w/Apprec.
(6)
$3,179
2,893
2,777
2,695
2,589
$7.55
8.72
9.29
9.69
9.86
$11.98
12.70
13.30
13.69
14.10
$106,326
75,881
67,616
55,575
47,285
$891
674
586
512
410
$51,358
30,690
22,390
16,320
9,432
$82,133
60,699
46,520
37,968
28,369
2,478
2,388
2,321
2,201
1,927
10.21
10.55
11.24
11.94
13.53
14.58
15.18
15.91
16.77
18.49
34,062
24,908
14,979
1,574
-29,062
303
228
134
15
-226
2,313
-3,360
-11,679
-19,757
-55,063
19,485
11,255
1,005
-17,501
-53,185
*Page number of the participant's DFBS where the factor is located.
31
FARM BUSINESS CHART FOR LARGE FREESTALL DAIRY FARMS
63 Freestall Barn Dairy Farms with More Than 180 Cows, New York, 1994
Worker
Equivalent
(11)*
Size of Business
Pounds
No.
Milk
of
Sold
Cows
(11)
(11)
20.63
11.96
10.13
8.52
7.38
1,088
539
420
365
311
23,351,762
11,657,338
9,575,213
7,921,542
6,515,416
6.76
6.03
5.39
4.88
3.79
243
234
225
213
192
5,612,972
4,922,221
4,551,060
4,167,979
3,391,553
Grain
Bought
Per Cow
(10)
% Grain is
of Milk
Receipts
(10)
$535
688
728
750
782
21%
24
25
27
27
804
847
881
928
1,012
28
29
31
32
35
Pounds
Milk Sold
Per Cow
(10)
24,801
23,472
22,655
21,928
21,395
$8.83
9.72
10.00
10.33
10.66
5.5
4.4
4.1
3.7
3.5
20,967
3.2
20,780
3.1
20,134
2.8
18,893
2.4
15,710
1.6
Cost Control
Machinery
Labor &
Machinery
Costs
Per Cow
Costs Per Cow
(11)
(11)
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(11)
22
20
19
18
16
65
53
47
46
44
1,306,713
1,093,175
1,011,822
964,401
933,249
15
15
15
14
12
42
40
37
35
30
901,922
850,753
813,336
717,586
616,668
Feed & Crop
Expenses
Per Cow
(10)
Feed & Crop
Expenses Per
Cwt. Milk
(10)
$233
295
330
357
386
$606
755
858
895
943
$706
871
895
917
954
$3.84
4.05
4.24
4.40
4.51
426
468
514
547
614
982
1,039
1,110
1,158
1,324
986
1,019
1,053
1,102
1,208
4.65
4.74
4.85
5.12
5.62
Value and Cost of Production
Milk
Oper. Cost
Total Cost
Receipts
Milk
Production
PerCwt
PerCwt
Per Cow
(10)
(10)
(10)
$3,443
3,188
3,073
2,969
2,889
Rates of Production
Tons
Tons Com
Hay Crop
Silage
DMlAcre
Per Acre
(9)
(9)
$11.90
12.25
12.51
12.91
13.38
Profitability
Net Farm Income
Without Appreciation
Total
Per Cow
(3)
(10)
$507,138
230,200
159,773
126,018
112,980
$668
548
448
405
373
Labor &
Mgmt. Inc.
PerQper.
(3)
Change in
New Worth
w/ApPCec.
(6)
$289,802
99,946
68,360
44,867
28,779
$432,825
135,938
103,969
73,654
59,734
-----------------------------------------------------------------------------------------------------------------------------------------------------2,831
2,760
2,676
2,529
2,109
10.84
11.10
11.58
11.96
12.82
13.84
14.02
14.30
14.62
15.69
98,201
82,247
65,473
21,692
-12,379
*Page number of the participant's DFBS where the factor is located.
335
312
236
90
-58
19,135
13,143
4,724
-8,715
-50,954
37,055
23,094
10,247
-13,935
-49,453
32
IDENTIFY AND SET GOALS
If businesses are to be successful, they must have direction. Written goals help provide businesses with an iden­
tifiable direction over both the 100'Ig and short term. Goal setting is as important on a dairy farm as it is in other busi­
nesses. Written goals are a tool which farm operators can use to ensure that the business continues to move in the proper
direction. Goals should be SMART:
1. Goals should be Specific.
2.
Goals should be Measurable.
3.
Goals should be Achievable but challenging.
4.
Goals should be Rewarding.
5.
Goals should designate a Time when each goal wiII be achieved.
Goal setting on a dairy farm does not have to be a complex process. In many cases it provides a process for
writing down and agreeing on goals that you have already given some thought to. It is also important to remember that
once you write out your goals they are not cast in concrete. If a change takes place which has a major impact on the farm
business, the goals should be reworked to accommodate that change. Refer to your goals as often as necessary to keep the
farm business progressing.
It is important to identify both objectives (long-range) and goals (short-range) when looking at the future of your
farm business.
A suggested format for writing out your goals is as follows:
a.
Begin with a mission statement which describes why the business exists based on the preferences and
values of the owners.
b.
Identify 4-6 objectives.
c.
Identify SMART goals.
Worksheet for Setting Goals
I.
Mission and Objectives
33
Worksheet for Setting Goals (Continued)
II. Goals
What
When
How
Who is Responsible
Summarize Your Business Performance
The Farm Business and Financial Analysis Charts on pages 22-25 can be used to help identify strengths and
weaknesses of your farm business. Identify three major strengths and three areas of your farm business that need im­
provement
Strengths:,
_
Needs improvement:
_
34
GLOSSARY AND LOCATION OF COMMON TERMS
Accounts Payable - Open accounts or bills owed to feed and supply firms, cattle dealers, veterinarians and other
providers of fann services and supplies.
Accounts Receivable - Outstanding receipts from items sold or sales proceeds not yet received, such as the payment
for December milk sales received in January.
Accrual Expenses - (defined on page 3)
Accrual Receipts - (defined on page 4)
Annual Cash Flow Statement - (defined on page 12)
Appreciation - (defined on page 5)
Asset Turnover Ratio - The ratio of total fann income to total fann assets, calculated by dividing total accrual op­
erating receipts plus appreciation by average total fann assets.
Balance Sheet - A "snapshot" of the business financial position at a given point in time, usually December 31. The
balance sheet equates the value of assets to liabilities plus net worth.
Capital Efficiency - The amount of capital invested per production unit. Relatively high investments per worker
with low to moderate investments per cow imply efftcient use of capital.
Cash From Nonfarm Capital Used In the Business - Transfers of money from nonfann savings or investments to
the fann business where it is used to pay operating expenses, make debt payments and/or capital purchases.
Cash Flow Coverage Ratio - (defined on page 14)
Cash Paid - (defined on page 2)
Cash Receipts - (defined on page 4)
Change In Accounts Payable - (defined on page 3)
Change In Accounts Receivable - (defined on page 4)
Change In Inventory - (defined on page 2)
Current Portion - (defined on page 7)
Dairy (farm) - A fann business where dairy fanning is the primary enterprise, operating and managing this fann is a
full-time occupation for one or more people and cropland is owned.
Dairy Cash-Crop (farm) - Operating and managing this fann is the full-time occupation of one or more people,
cropland is owned but crop sales exceed 10 percent of accrual milk receipts.
Debt Per Cow - Total end-of-year debt divided by end-of-year number of cows.
Debt to Asset Ratios - (defined on page 10)
Deferred Taxes· (defined on page 9)
Dry Matter - The amount or proportion of dry material that remains after all water is removed. Commonly used to
measure dry matter percent and tons of dry matter in feed.
Equity Capital - The fann operator/manager's owned capital or fann net worth.
35
Expansion Livestock - Purchased dairy cattle and other livestock that cause an increase in herd size from the be­
ginning to the end of the year.
Fann Debt Payments as Perc~nt of Milk Sales - Amount of milk income committed to debt repayment. calculated
by dividing planned debt payments by total milk receipts. A reliable measure of repayment ability, see page 14.
Fann Debt Payments Per Cow - Planned or scheduled debt payments per cow represent the repayment plan sched­
uled at the beginning of the year divided by the average number of cows for the year. This measure of repayment
ability is used in the Financial Analysis Chart.
Financial Lease - A long-term non-cancellable contract giving the lessee use of an asset in exchange for a series of
lease payments. The term of a financial lease usually covers a major portion of the economic life of the asset. The
lease is a substitute for purchase. The lessor retains ownership of the asset
Income Statement - A complete and accurate account of farm business receipts and expenses used to measure profit­
ability over a period of time such as one year or one month.
Labor and Management Income - (defined on page 6)
Labor and Management Income Per Operator - The return to the owner/manager's labor and management per
full-time operator.
Labor Efficiency - Production capacity and output per worker.
Liquidity - Ability of business to generate cash to make debt payments or to convert assets to cash.
Net Fann Income - (defined on page 5)
Net Worth - The value of assets less liabilities equal net worth. It is the equity the owner has in owned assets.
Operating Costs of Producing Milk - (defined on page 19)
Opportunity Costs - The cost or charge made for using a resource based on its value in its most likely alternative
use. The opportunity cost of a farmer's labor and management is the value he/she would receive if employed in
his/her most qualified alternative position.
Other Livestock Expenses - All other dairy herd and livestock expenses not included in more specific categories.
Other livestock expenses include; bST, DHlC, registration fees and transfers.
Part-Time Cash-Crop Dairy (farm) - Operating and managing this farm is not a full-time occupation, crop sales
exceed 10 percent of accrual milk receipts and cropland is owned.
Part-Time Dairy (farm) - Dairy farming is the primary enterprise, cropland is owned but operating and managing
this farm is not a full-time occupation for one or more people.
Personal Withdrawals and Family Expenditures Including Nonfarm Debt Payments - All the money removed
from the farm business for personal or nonfarm use including family living expenses, health and life insurance, in­
come taxes, nonfarm debt payments, and investments.
ProntabUity - The return or net income the owner/manager receives for using one or more of his or her resources in
the farm business. True "economic profit" is what remains after deducting all the costs including the opportunity
costs of the owner/manager's labor, management. and equity capital.
Purchased Inputs Cost of Producing Milk - (defined on page 19)
Repayment Analysis - An evaluation of the business' ability to make planned debt payments.
-
36
Replacement Livestock - Dairy cattle and other livestock purchased to replace those that were culled or sold from
the herd during the year.
Return on Equity Capital - (defined on page 7)
Return on Total Capital - (defined on page 7)
Solvency - The extent or ability of assets to cover or pay liabilities. Debt/asset and leverage ratios are common
measures of solvency.
Total Costs of Producing Milk - (defined on page 19)
Whole Fa"" Method - A procedure used to calculate costs of producing milk on dairy farms without using enter­
prise cost accounts. All non-milk receipts are assigned a cost equal to their sale value and deducted from total farm
expenses to determine the costs of producing milk.
-
37
INDEX
~
Accounts Payable
,
3.8
Financial Analysis Chart
4.8
Financial Lease
Accrual Expenses
3.5
Income Statement
Accrual Receipts
4.5
Inflows
Accounts Receivable
Acreage
16
~
25
8
2
12
Labor & Mgmt. Income
6
6
Advanced Government Receipts
7.8
Labor & Mgmt. Income Per Opec
Age
20
Labor Efficiency
20
Amount Available for Debt Service
14
Land Resources
16
Annual Cash Flow Statement
12
Liquidity
10
Lost Capital
10
Appreciation
Asset Turnover Ratio
5.11.18
20
Machinery Expenses
Balance Sheet
8
Milking Frequency
Barn Type
2
Milk Production
bSTUsage
2
Milking System
Business Type
2
Money Borrowed
20
Net Farm Income
Capital Efficiency
Cash From Nonfarm Capital Used in
the Business
Cash Flow Coverage Ratio
Cash Paid
Cash Receipts
3,17
2
18
,
Net Investment
2
12
5
10
12
Net Worth
14
Number of Cows
18
Operating Costs of Prod. Milk
19
2
4.12
8
Opportunity Cost
6
Change in Accounts Payable
3
Other Livestock Expenses
3
Change in Accounts Receivable
4
Outflows
Change in Inventory
2.3
Change in Net Worth
11
Crop Expenses
3.17
CroplDairy Ratios
16
Current Portion
7,8
Dairy (farm)
Dairy Cash-Crop (farm)
12
Part-Time Cash-Crop Dairy (farm)
2
Part-Time Dairy (farm)
2
Percent Equity
9,10
Personal Withdrawals and Family Expenditures
Including Nonfarm Debt Payments
2
Principal Payments
2
Profitability
12
12
4
Debt per Cow
10
Purchased Inputs Cost
Debt to Asset Ratios
10
Receipts
4
Record System
2
Deferred Taxes
Depreciation
9
3,10
Repayment Analysis
Dry Matter
16
Replacement Li vestock
Education
20
Retained Earnings
Equity Capital
Expansion Livestock
Expenses
Farm Business Chart
Farm Debt Payments Per Cow
14
3
11
7
Return on Equity Capital
7
3,12
Return on Total Capital
7
3
Solvency
10
Total Costs of Producing Milk
19
Whole Farm Method
19
13
Worker Equi valent
20
13
Yields Per Acre
16
22-25.28-31
Farm Debt Payments as Percent
of Milk Sales
22,23
­
38
NOTES
--
OTHER AoRoMoEo EXTENSION BULLETINS
No. 96-03
The Return of Agricultural Lands to
Forest Changing Land Use in the
Twentieth Century
Bernard F. Stanton
Nelson L. Bills
No. 96-04
DFBS Expert System For Analyzing
Dairy Farm Businesses Users' Guide
for Version 6.0
Linda D. Putnam
Stuart F. Smith
No. 96-05
What's In Store for Home Shopping?
Kristen Park
Debra Perosio
Gene A. German
Edward W. McLaughlin
No. 96-06
Dairy Farm Business Summary
Western and Central Plain Region
1995
Wayne A. Knoblauch
Stuart F. Smith
Linda D. Putnam
Jason Karszes
Michael Stratton
James Hilson
David Thorp
George Allhusen
No. 96-07
Dairy Farm Business Summary
Northern Hudson Region 1995
Stuart F. Smith
Linda D. Putnam
Cathy S. Wickswat
Sandra Buxton
David R. Wood
No. 96-08
New York Large Herd Farms, 300 Cows
or Larger 1995
Jason Karszes
Stuart F. Smith
Linda D. Putnam
No. 96-09
Dairy Farm Business Summary
Western and Central Plateau Region
1995
Wayne A. Knoblauch
Carl A. Crispell
Joan S. Petzen
James W. Grace
Gerald A. LeClar
Andrew N. Dufresne
Linda D. Putnam
-