JUNE 1997
E.B.97-06
WE TE
AND
CENTRAL PLATEAU
EGlON
1996
z
Wayne . Knoblauch
Linda D. Putnam
CIA. Crispell
Joa . Petzen
James W. Grace
Andrew N. Dufr 11
Greg Alb ech
Depar m nt of Agri ultur 1 R sou ' ,and Managerial Economics
College of gricullure and Life ciences
Corn 11 Univer 'ty, fth ca, New York 14853-' 01
It i the Policy of Cornell Univ ity actively to sup rt Uallty
of educabonal and employment opportunity. No person shall be
derued admission to any educational program or activity or be
denied employment on the basI of any legally prohibited
tors as race.,
discrimmation involving. but not limited to. uch
color, creed. religron. natJonal or ethnic origin. sex. ge or
handicap. The Univ ity is comnlltted to the maintenance of
affirmative action programs which will assure th continuation of
such equality of opportunity.
-
1996 DAIRY FARM BUSINESS SUMMARY
Western and Central Plateau
Table of Contents
INTRODUCTION
1
Program Objectives
1
Format Features
1
SUMMARY AND ANALYSIS OF THE FARM BUSINESS
Business Characteristics
2
Income Statement
2
Profitability Analysis
4
Farm and Family Financial Status
·
7
Statement of Owner Equity
11
Cash Flow Statement
12
Repayment Analysis
14
Cropping Analysis
16
Dairy Analysis
Capital and Labor Efficiency Analysis
COMPARATIVE ANALYSIS OF THE FARM BUSINESS
I
2
,
18
20
21
Progress of the Farm Business
21
Regional Farm Business Chart
22
New York State Farm Business Chart
23
.Financial Analysis Chart
2S
Comparisons by Type of Barn and Herd Size
26
Herd Size Comparisons
26
IDENTIFY AND SET GOALS
33
GLOSSARY AND LOCATION OF COMMON TERMS
3S
INDEX
38
-
1996 DAIRY FARM BUSINESS SUMMARY
WESTERN AND CENTRAL PLATEAU REGION*
INTRODUCTION
Dairy farm managers throughout New Yark State have been participating in Cornell Cooperative Extension's farm
business summary and analysis program since the early 1950's. Managers of each participating farm business receive a
comprehensive summary and analysis of the farm business. The information in this report represents an average of the data
submitted from dairy farms in the Western & Central Plateau Region for 1996.
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 modern
farm business analysis techniques. This information can also be used to establish goals that will enable the business to bet­
ter meet its objectives. In short, DFBS provides business and financial information needed in identifying and evaluating
strengths and weaknesses of the farm business.
Format Features
This regional report follows the same general format as in the 1996 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:
(I)
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 dairy livestock numbers, production, and expenses; and
(7)
a capital and labor efficiency analysis.
*This summary was prepared by Wayne A. Knoblauch, Department of Agricultural, Resource, and Managerial Economics,
College of Agriculture and Life Sciences, Cornell University, in cooperation with Cooperative Extension Agents Carl Cris­
pell, lo.an Petzen, lim Grace, Andrew Dufresne; and Program Assistant Greg Albrecht. The Western and Central Plateau
region, with the number of participating farms in parentheses, is comprised of Allegany (12), Cattaraugus (3), Chautauqua
(5), Steuben (19), Chemung (3), Schuyler (2), Tioga (5), Tompkins (6), Cortland (9) and Broome (0) Counties. Linda Put­
nam was in charge of data analysis. Melody Clark prepared the publication.
-
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 com­
binations 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 char­
acteristic.
BUSINESS CHARACTERISTICS
64 Western & Central Plateau Region Dairy Farms, 1996
Type of Farm
Dairy
Part-time dairy
Dairy cash-crop
Number
64
0
0
Type of Ownership
Owner
Renter
Number
56
8
Type of Business
Sole Proprietorship
Partnership
Corporation
Number
49
13
2
Type of Barn
Stanchion or Tie-Stall
Freestall
Combination
Number
34
27
3
Milking Frequency
2 times per day
3 times per day
Other
Number
54
5
5
Milking System
Bucket & carry
Dumping station
Pipeline
Herringbone parlor
Other parlor .
Number
1
3
34
21
5
Production Records
DHIC
Owner-Sampler
Other
None
Number
47
4
6
7
bST Usage
Used on <25% of herd
Used on 25-75% of herd
Used on >75% of herd
Stopped using in 1996
Not used in 1996
Number
6
12
3
2
41
Business Record System
Account Book
Agrifax (mail-in only)
On-farm computer
Other
Number
28
5
23
8
The averages used in this report were compiled using data from all the participating dairy farms in this region un­
less noted otherwise. There are full-time dairy farms, part-time farms, dairy cash-crop farms, farm renters, partnerships, 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 accrual
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 actually
used in 1996.
Change 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
64 Western & Central Plateau Region Dairy Fanns, 1996
Expense Item
Hired Labor
Feed
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
Cash
Paid
$ 28,014
Change in
Inventory
or Prepaid
Expense
$
36
95,134
3,974
260
189
379
-19
4,889
16,294
6,664
15
51
+
«
Change in
Accounts
Payable
$
13
-3,135
35
o
«
o
=
Accrual
Expenses
$ 27,991
o
91,811
3,630
279
93
329
-14
4,981
16,609
6,599
o
«
3,136
3,445
6,639
9,418
1,797
7,974
142
1,571
5,506
-12
9
3,136
3,300
6,157
9,418
1,734
7,532
142
1,571
5,526
5,924
4,386
4,481
179
430
268
-52
54
-96
5,693
4,010
4,117
4,962
7,132
6,870
-2
43
39
-637
-193
5,003
6,452
6,677
4,583
8,250
16,151
4,002
-10
-27
69
4,566
8,319
16,151
3,963
$ 261,298
1,046
6
20
-140
-463
o
o
o
«
63
29
-113
o
o
o
«
«
o
«
«
o
«
o
o
«
«
o
19
$
-20
1,683
o
«
$ -4,248
64
$ 255,368
1,110
12,950
9,483
$ 278,911
Change in prepaid expenses (noted above by «) is a net change in non-inventory expenses that have been paid in advance
of their use. For example, prepaid lease expense on the beginning of year balance sheet represents last year's payment for
use of the asset during this year. End of year prepaid expense represents payments made this year for next year's use of the
asset. Adding payments made last year for this year's use of the asset, and subtracting payments made this year for next
year's use of the asset is accomplished by subtracting the difference.
Change in accounts payable: An increase in accounts payable from beginning to end of year is added when calculating ac­
crual expenses because these expenses were incurred (resources used) in 1996 but not paid for. A decrease is subtracted
because it represents payment for resources used before 1996.
Accrual expenses are an estimate of 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.
.
'.
~."
:
¥,
%J:ii~
-
4
CASH AND ACCRUAL FARM RECEIPTS
64 Western & Central Plateau Region Dairy Farms, 1996
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
+
Change in
Accounts
Receivable
+
$
$ 282,129
9,628
1,663
253
1,770
4,216
260
122
2,797
$
7,311
Accrual
Receipts
=
-783
79
$
°°
90
8,105
-59 *
318
333
12
°
-3
(-)
$ 302,837
$
109 **
15,338
(-)
$
-43
$
281,346
17,018
1,663
344
10,193
4,490
272
122
2,794
109
318,133
*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 profitability.
Changes in inventory of assets produced by the busines~ are calculated by subtracting beginning of year values from end of
year values excluding appreciation. 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 included.
An increase in advanced government receipts is subtracted from cash income because it represents income received in 1996
for the 1997 crop year in excess of funds earned for 1996. Likewise, a decrease is added to cash government receipts be­
cause it represents funds earned for 1996 but received in 1995.
Changes in accounts receivable are calculated by subtracting beginning year balances from end year balances. Payments in
January for milk produced in December 1996 compared to January 1996 payments for milk produced in 1995 are included
as a change in accounts receivable.
Accrual receipts represent the value of all farm commodities produced and services actually generated by the farm business
during the year.
Profitability 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.
These measures should be considered estimates as they include inventory values that are only estimates and they
include an unknown degree of error stemming from cash flow imbalances.
* 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 partnership or corporation.
5
Net farm income is the return to the farm operators and other unpaid family members for their labor, management, and eq­
uity capital. It is the farm family's net annual return from working, managing, and financing the farm business. This is not a
measure of cash available from the year's business operation. Cash flow is evaluated later in this report.
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
64 Western & Central Plateau Region Dairy Farms, 1996
Item
Total
Average
Per Cow
$ 318,133
1,221
893
7,654
552
$ 328,453
278,911
$ 49,542
$ 39,222
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
$--­
$--­
$
$
481
381
$--­
$--­
$--­
$--­
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 AND MILK/COW
64 Western & Central Plateau Farms, 1996
C
.S 2000
-
a
•
•
••
•• •••
•• •
• •
••• •.#•
•
•• .. •• $ ......
.....
• • ••• •
ell
'0
41
Q.
1500
I:U
~
'-'
~
."...
•
1000
Q
U
"al
e
Q
500
....c
v
e
"'"
•
0
I:U
~
.....
41
Z
~
-500
0
8
V)
0
0
0
0
.....
0
0
0
V)
.....
80
80
V)
§
C'l
C'l
c<)
0
Pounds Milk Sold Per Cow
pz
• •
-
6
Labor and management income is the return which farm operators receive for their labor and management used in 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 deducting a charge for
family labor unpaid and the opportunity cost of using equity capital, at a real interest rate of five percent, from net farm in­
come excluding appreciation. The interest charge of five percent reflects the long-term average rate of return above infla­
tion that a farmer might expect to earn in comparable risk investments.
LABOR AND MANAGEMENT INCOME
64 Western & Central Plateau Region Dairy Farms, 1996
Average
Item
$
Net farm income without appreciation
Family labor unpaid
@
$1,500 per month
Interest on $408,519 average equity capital
My Farm
39,222
$---­
4,050
@
20,426
5% real rate
Labor & Management Income per farm (1.46 Operators/farm)
Labor & Management Income per OperatorlManager
$
14,746
$---­
$
10,100
$---­
Labor and management income per operator averaged $10,100 on these 64 farms in 1996. The range in labor and
management income per operator was from about $-50,000 to more than $115,000. Returns to labor and management were
negative on 37% of the farms. Labor and management income per operator was between $0 and $20,000 on 30% of the
farms while 33% showed labor and management incomes of $20,000 or more per operator.
DISTRIBUTION OF LABOR & MANAGEMENT INCOME PER OPERATOR
64 Western & Central Plateau Region Dairy Farms, 1996
16
16
16
14
12
'" 10
~
~
.....
0
i::
8
~
...
u
~
~
6
4
.­
I
2
0
<-20
-20 to-lO
-10 to 0
o to 10
10 to 20
20 to 30
Labor and Management Income (thousand dollars)
30 to 40
>40
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 with and without appreciation. The rate of return on equity capital is determined by dividing the
amount returned by the average farm net worth or equity capital. Return on total capital is calculated by adding interest 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
64 Western & Central Plateau Region Dairy Farms, 1996
Item
Net farm income with appreciation
My Farm
Average
$
49,542
Family labor unpaid @$1,500 per month
4,050
Value of operators' labor & management
35,084
$---­
Return on equity capital with appreciation
$
10,408
$
Interest paid
+
16,151
+---­
Return on total capital with appreciation
$
26,559
$--­
Return on equity capital without appreciation
$
35,084
$---­
Return on total capital without appreciation
$
16,239
$---­
Rate of return on average equity capital:
with appreciation
2.55%
---_%
without appreciation
0.02%
---_%
with appreciation
4.29%
---_%
without appreciation
2.62%
---_%
Rate of return on average total capital:
Fann and Family Financial Status
The first step in evaluating the financial position of the farm is to construct a balance sheet which identifies and
values 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 liability
since the farmer is committed to make the payments by signing the lease. The present value is also listed as an asset, repre­
senting the future value the item has to the business. For 1996, lease payments were discounted by 8.75 percent to obtain
their present value.
Advanced government receipts are included as current liabilities. Government payments received in 1996 that are for par­
ticipation in the 1997 program are the end year balance and payments received in 1995 for participation in the 1996 pro­
gram 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
1996 FARM BUSINESS & NONFARM BALANCE SHEET
64 Western & Central Plateau Region Dairy Farms, 1996
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
$
4,821
$
19,369
86
51,729
19,412
17
42,012
$
66,262
$ 104,670
9
44,353
1,301
106,039
1,986
1,981
3,457
$ 263,796
5,530
$
76,714
$ 109,254
20
48,292
1,399
112,027
1,682
1,658
4,067
$ 278,399
Farm Liabilities
& Net Worth
Current
Accounts payable
Operating debt
Short Term
Advanced govt. receipts
Current Portion:
Intermediate
Long Term
Total Current
Intermediate
Structured debt
1-10 years
Financial lease
(cattle/machinery)
Farm Credit stock
Total Intermediate
Long Term
Land & buildings:
owned
leased
Total Long Term
$ 264,102
9,420
$ 273,522
$ 271,922
8,036
$ 279,958
Long Term
Structured debt
>10 years
Financial lease
(structures)
Total Long Term
Total Farm Assets
$ 603,580
$ 635,071
Total Farm Liab.
FARM NET WORTH
Jan. 1
Dec. 31
..
$ 13,755
4,777
183
49
$
9,571
7,091
626
108
16,313
5,992
$ 41,070
$
18,283
7,597
43,275
$ 66,046
$
70,736
1,995
1,981
$ 70,022
$
1,702
1,658
74,096
$ 87,594
$
88,101
9,420
$ 97,014
$
8,036
96,137
$ 208,106
$ 395,474
$ 213,508
$ 421,563
Nonfarm Assets, Liabilities & Net Worth (Average of 43 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
$
$
2,158
4,878
8,884
3,694
9,948
10,674
3,695
43,931
Dec. 31
$
$
2,250
4,803
9,570
4,608
11,655
11,158
5,435
49,479
Farm & Nonfarm Assets, Liabilities, and Net Worth*
Liabilities & Net Worth
Nonfarm Liabilities
$
Jan. 1
6,973
$
Dec. 31
7,651
NONFARM NET WORTH
$ 36,958
$
41,828
Jan. 1
Dec. 31
Total Assets
$647,511
$ 684,550
Total Liabilities
215,079
221,159
TOTAL FARM & NONFARM NET WORTH
$ 432,432
$ 463,391
*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 information required to compute deferred taxes.
Deferred taxes represent an estimate of the taxes that would be paid if the farm were sold at year end fair market values on
the date of the balance sheet. Accuracy is dependent on the accuracy of the market values and the tax basis data provided.
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 selling 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. The dramatic impact of including deferred taxes is clear. Total liabilities were increased 42 percent on these 11
farms by including deferred taxes.
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 represent old standards that are still useful if used with measures of cash flow and repayment abil­
ity.
BALANCE SHEET ANALYSIS
64 Western & Central Plateau Region Dairy Farms, 1996
Average
Item
Financial Ratios - Farm:
Percent equity
Debt/asset ratio: total
long-tenn
intennediate/current
Farm Debt Analysis:
Accounts payable as % of total debt
Long-tenn 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
Intennediate & current debt
$
66%
0.34
0.34
0.33
%
4%
45%
55%
%
%
%
Per Tillable
Acre Owned
$
1,199
540
956
659
Per Cow
2,033
916
1,621
1,118
My Farm
Per Cow
$---­
Per Tillable
Acre Owned
$---­
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 indicates
whether the capital stock is being expanded (positive) or depleted (negative).
FARM INVENTORY BALANCE
64 Western & Central Plateau Region Dairy Farms, 1996
Item
Real Estate
Value beginning of year
$
Average of Region's Farms
Machinery & Equipment
264,102
$
106,039
Purchases
Gift & inheritance
Lost capital
Sales
Depreciation
Net investment
Appreciation
Value end of year
*$2,309 land and $12,132 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 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 determine 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) , (3) increases or decreases in the value (price) of assets
owned by the business (called change in valuation equity), and (4) the error in the business cash flow accounting.
Retained earnings is an excellent indicator of farm generated financial progress.
STATEMENT OF OWNER EQUITY (RECONCILIATION)
64 Western & Central Plateau Region Dairy Farms, 1996
Average
Item
My Farm
$ 395,474
Beginning of year farm net worth
$--­
Net farm income without appreciation
+Nonfarm cash income
-Personal withdrawals & family
expenditures excluding
nonfarm borrowings
RETAINED EARNINGS
$ 39,222
Nonfarm noncash transfers to farm
+Cash used in business
from nonfarm capital
-Note or mortgage from farm
real estate sold (nonfarm)
CONTRIBUTED/WITHDRAWN CAPITAL
$
122
$--­
+
272
+---­
Appreciation
-Lost capital
CHANGE IN VALVAnON EQUITY
$ 10,320
3,130
+
9,331
-
29,138
$--­
+---­
+$ 19,415
+$--­
781
+$
-387
+$--­
$--­
+$
7,190
+$--­
IMBALANCElERROR
- $
129
-$--­
End of year net worth*
= $ 421,563
Change in net worth w/appreciation
$ 26,089
=$--­
$--­
Change in Net Worth
Without appreciation
With appreciation
*May not add due to rounding.
$
$
15,769
26,089
$----­
$----­
-
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 first 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 activities,
financing 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. You should be aware that all profitability measures may be affected by this error.
or
"
ANNUAL CASH FLOW STATEMENT
64 Western & Central Plateau Region Dairy Farms, 1996
Item
Cash Flow from Operating Activities
Cash farm receipts
Cash farm expenses
= Net cash farm income
=
Personal withdrawals & family expenses
including nonfarm debt payments
Nonfarm income
Net cash withdrawals from the farm
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 Activities
Cash Flow From Reserves
Beginning farm cash, checking & savings
Ending farm cash, checking & savings
= Net Provided from Reserves
Imbalance (error)
Average
$
$
302,837
261,298
678
881
1
$
1,046
18,710
14,441
59
$
41,539
$
21,204
30,535
9.331
$
$
$
$
1,560
$
34,256
$
20,335
$
-32,696
$
13,194
$
-709
$
124
43,292
575
2,314
272
1,397
$
47,850
$
34,656
34,522
134
0
$
4,821
5,530
'-­
13
ANNUAL CASH FLOW STATEMENT
Item
Cash Flow from Operating Activities
Cash farm receipts
Cash farm expenses
= Net cash farm income
Personal withdrawals & family expenses
including nonfarm debt payments
Nonfarm income
Net cash withdrawals from the farm
= Net Provided by Operating Activities
Cash Flow From Investing Activities
Sale of assets:
machinery
+ 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 Activities
Cash Flow From Reserves
Beginning farm cash, checking & savings
Ending farm cash, checking & savings
= Net Provided from Reserves
Imbalance (error)
$---­
$
$---­
$---­
$
$---­
$
$---­
$---­
$---­
$---­
$
-
14
Repayment Analysis
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 listed 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 compared
to planned 1997 debt payments shown below.
FARM DEBT PAYMENTS PLANNED
Same 49 Western & Central Plateau Region Dairy Farms, 1995 & 1996
Debt Payments
Average
1996 Payments
Planned
Made
Long term
Intermediate term
Short term
Operating (net
reduction)
Accounts payable
(net reduction)
Total
$ 13,811
23,473
268
Per cow
Per cwt. 1996 milk
Percent of total
1996 farm receipts
Percent of 1996
milk receipts
$
$
$
0
My Farm
1996 Payments
Planned
Made
Planned
1997
24,394
30,413
171
$ 7,556
18,899
441
0
3,970
3,127
$ 33,993
0
$ 37,552
$
4,857
59,835
332
2
$
$
530
3
11%
17%
12%
19%
Planned
1997
$--­
$--­
$
$---­
$--­
$
$---­
$--­
$--­
$--­
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 1996 (as of December 31, 1995) that could have been made with
the amount available for debt service in 1996. Farmers who did not participate in DFBS in 1995 have their 1996 cash flow
coverage ratio based on planned debt payments for 1997.
CASH FLOW COVERAGE RATIO
Same 49 Western & Central Plateau Region Dairy Farms, 1995 & 1996
Average
Item
Cash farm receipts
Cash farm expenses
+ Interest paid
Net personal withdrawals from farm*
(A) = Amount Available for Debt Service
(B) = Debt Payments Planned for 1996
(as of December 31, 1995)
(AlB) = Cash Flow Coverage Ratio for 1996
My Farm
$
336,783
288,477
17,749
21,418
$
$
44,637
$
$
37,552
1.19
$
*Persona1 withdrawals and family expenditures less nonfarm income and nonfarm money borrowed. If family withdrawals
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
Hired 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
Miscellaneous
Total Less Interest Paid
15
ANNUAL CASH FLOW WORKSHEET
MyFann
Regional Average
Per Cowl
Per Cwt.
PerCwt.
Per Cow
103
19,194
$
$
$
$
2,732
165
16
3
99
75
3,089
$
272
891
35
3
48
161
64
30
32
60
91
17
73
1
15
54
55
39
40
49
63
65
44
81
38
2,322
$
Net Accrual Operating Income
(without interest paid)
- Change in livestock & crop invent.*
- Change in accounts receivable
- Change in feed & supply inventory**
+ Change in accounts payable***
NET CASH FLOW
- Net family withdrawals
Available for Farm
- Fann debt payments
Available for Fann Investment
- Capital purchases
Additional Capital Needed
*Includes change in advance government receipts.
terest account payable.
$
$
1997
Projection
14.66
0.89
0.09
0.02
0.53
0.40
16.57
$
$
$
$
1.46
4.78
0.19
0.01
0.26
0.87
0.34
0.16
0.17
0.32
0.49
0.09
0.39
0.01
0.08
0.29
0.30
0.21
0.21
0.26
0.34
0.35
0.24
0.43
0.21
12.46
$
$
$
$
Total
79,025
$
15,338
-43
1,683
-4,248
$ 57,799
$
$ 19,807
$ 37,992
$
54,172
$ -16,180
$
$ 34,256
$ 50,436
$
**Includes change in prepaid expenses.
$
Expected
Change
$
$
$
$
***Excludes change in in­
-
16
Cropping Analysis
The 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 PRODUCTION
64 Western & Central Plateau Region Dairy Farms, 1996
Average
Item
Land
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
Owned
178
48
~
335
Farms
61
54
7
61
26
8
3
14
32
18
64
Rented
132
11
__
7
150
Acres*
176
83
23
252
67
33
51
30
43
27
310
My Farm
Total
310
59
Owned
-----l1.Q
485
Prod/Acre
2.35 tn DM
16.10 tn
5.03 tn DM
1.48 tn DM
3.12 tn DM
115.00 bu
45.24 bu
45.10 bu
Prod/Acre
tnDM
tn
tnDM
tnDM
tnDM
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 168, corn silage 70, corn grain 27, oats 4, tillable pasture 22, and idle 7.
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
64 Western & Central Plateau Region Dairy Farms, 1996
Item
Total tillable acres per cow
Total forage acres per cow
Harvested forage dry matter, tons per cow
Average
3.01
2.34
7.28
My Farm
,
17
Cropping Analysis (continued)
A number of cooperators have allocated crop expenses among the hay crop, corn, and other crops produced. Fer­
tilizer and lime, seeds and plants, and spray and other crop expenses have been computed per acre and per production unit
for hay and corn. Additional expense items such as fuels, labor, and machinery repairs are not included. Rotational grazing
was used on 33 farms in the region.
CROP RELATED ACCRUAL EXPENSES
Western & Central Plateau Region Dairy Farms Reporting, 1996
Item
No. of farms
reporting
Ave. number
of acres
Fert. & lime
Seeds & plants
Spray & other
crop expo
TOTAL
Total
Per
Till.
Acre
All
Corn
Per
Acre
Corn
Silage
Per
TonDM
Corn
Grain
Per Dry
Sh. Bu.
Pasture
Hay Crop
Per
Acre
16
64
Per
TonDM
14
310
$ 18.36
12.94
$
13.28
$ 44.58
50.66
$ 114.05
10.62
$ 23.90
$
$-­
$
$
$
$-­
$
$
89
36.70
26.69
Per
Till
Acre
$
7.69
5.59
$
Per
Total
. Acre
11
0.31
0.23
177
$ 13.56
$
7.33
0.43
0.97
6.78
$ 27.67
$
$
$
$
$
$
$
$
$
6.09
3.29
3.05
12.43
$
$
31
49.21
5.30
$
83
18.20
1.96
7.91
62.42
0.27
$ 20.43
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
64 Western & Central Plateau Region Dairy Farms, 1996
Average
Machinery
Expense
Fuel, oil & grease
Mach. repair & vehicle expo
Machine hire, rent & lease
Interest (5%)
Depreciation
Total
$
$
6,599
16,609
4,981
5,543
12,950
46,682
My Farm
Per Till.
Acre
Total
Expenses
$
$
21.29
53.58
16.07
17.88
41.77
150.59
Total
Expenses
$
Per Till.
Acre
$
­
$
$
18
Dairy Analysis
Analysis of the dairy enterprise can reveal strengths and weaknesses of the dairy farm business. Information on
this page should be used in conjunction with DHI 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 apprecia­
tion is attributed to physical changes in herd size and quality. Any change in inventory is included as an accrual farm re­
ceipt when calculating all of the profitability measures on pages 6 and 7.
DAIRY HERD INVENTORY
64 Western & Central Plateau Region Dairy Farms, 1996
Dairy Cows
Item
No.
Beg. year (owned)
+ Change wlo apprec.
+ Appreciation
End year (owned)
End including leased
Average number
102
105
105
103
Value
$ 104,670
3,584
1,000
$ 109,254
No.
Bred
Value
No.
27
$
23,616
2,619
228
26,463
30
$
83
(all age groups)
Heifer
Open
Value
29
$
31
$
14,964
916
-4
15,876
No.
25
25
Calves
Value
$
$
5,773
192
-12
5,953
My Farm:
Beg. year (owned)
+ Change wlo 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
DHI should compare milk sold per cow with their rolling herd average on the test date nearest December 31 to see how
close the DHI estimate of milk produced is to actual milk sales.
MILK PRODUCTION
64 Western & Central Plateau Region Dairy Farms, 1996
Item
Total milk sold, lbs.
Milk sold per cow, lbs.
Average milk plant test, percent butterfat
Average
1,919,392
18,641
3.70%
My Farm
19
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 including expansion livestock purchased. Purchased inputs cost of producing milk are the
operating costs plus depreciation. Total costs of producing milk include the operating costs of producing milk plus depre­
ciation 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 PROFITABILITY
64 Western & Central Plateau Region Dairy Farms, 1996
Item
Accrual Cost of
Producing 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
PerCwt.
My Farm
Per Cow
Total
PerCwt.
$ 219,691
$
2,133
$
11.45
$
$
$
$ 242,124
$ 301,684
$
$
2,351
2,929
$
$
12.61
15.72
$
$
$
$
$
$
$ 281,346
$
2,732
$
14.66
$
$
$
$
49,542
$
481
$
2.58
$
$
$
$
39,222
$
381
$
2.04
$
$
$
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
64 Western & Central Plateau Region Dairy Farms, 1996
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
Per Cow
My Farm
Per Cwt.
Per Cow
Per Cwt.
$
891
35
$
4.78
0.19
$
$
$
927
$
4.97
$
$
$
1,061
33%
$
5.69
$
%
$
$
32
60
91
17
73
1
15
54
0.17
0.32
0.49
0.09
0.39
0.01
0.08
0.29
$
%
$
39%
$
20
Capital and Labor Efficiency Analysis
Capital efficiency factors measure how intensively the capital is being used in the farm business. Measures of la­
bor efficiency are key indicators of management's success in generating products per unit of labor input.
CAPITAL EFFICIENCY
64 Western & Central Plateau Region Dairy Farms, 1996
Item
Farm capital
Real estate
Machinery & equipment
Asset turnover ratio
Per
Worker
195,371
$
$
34,974
Per
Cow
6,013
2,687
1,076
$
Per Tillable
Acre
1,998
Per Tillable
Acre Owned
3,479
$
1,555
358
0.53
MyFarm
Farm capital
Real estate
Machinery & equipment
Asset turnover ratio
$
$
$
$
LABOR FORCE INVENTORY AND ANALYSIS
64 Western & Central Plateau Region Dairy Farms, 1996
Age
44
40
45
40
Months
14.3
3.5
0.7
0.2
2.9
2.7
13.6
38.0
Labor Force
Operator number 1
Operator number 2
Operator number 3
Operator number 4
Family paid
Family unpaid
Hired
Total
112
Years
of Educ.
14
14
13
16
Value of
Labor & Mgmt.
25,931
6,684
2,000
469
=3.17 Worker Equivalent
1.46 OperatorlManager Equivalent
My Farm: Total
Operator's
Labor
Efficiency
Cows, average number
Milk sold, pounds
Tillable acres
Work units
Labor Costs
Value of operator(s)
labor ($1,500/mo.)
Family unpaid
($1,500/mo.)
Hired
Total Labor
Machinery Cost
Total Labor & Mach.
Total
103
1,919,392
310
1,077
Average
Per
Cow
Total
$
28,050
4,050
27,991
$ 60,091
$ 46,682
$ 106,773
/12 = _ _ Worker Equivalent
OperatorlManager Equivalent
/12 =
Average
My Farm
Per Worker
Total
Per Worker
32
605,486
98
340
$
272
$
$
$
39
272
583
453
1,037
Per
Cwt.
My Farm
Per
Cow
Total
Per
Cwt.
$
1.46
$._--­
$
$
$
$
$
0.21
1.46
3.13
2.43
5.56
$---­
$--­
$
$
$
$
$
$
$
-
21
COMPARATIVE ANALYSIS OF THE FARM BUSINESS
Progress of 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 49 Western & Central Plateau Region Dairy Farms, 1995 & 1996
Average of 49 Farms*
1995
1996
Selected Factors
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, lbs.
Hay DM per acre, tons
Corn silage per acre, tons
Labor Efficiency
Cows per worker
Milk sold/worker, lbs.
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.
105
88
1,984,484
3.37
308
113
92
2,133,743
3.32
325
18,978
2.3
13
18,863
2.5
16
31
588,868
34
642,694
32%
29%
My Farm
1996
1995
%
Goal
%
%
$
$
4.55
1,028
$
$
5.65
1,032
$
$
$
$
$
$
$
10.37
$
11.37
$
$
$
$
$
6,137
1,100
0.47
$
$
6,038
1,058
0.53
$
$
$
$
$
$
$
$
28,492
43,822
$
$
45,071
56,006
$
$
$
$
$
$
$
1,939
$
12,543
$
$
$
-2.3%
1.1%
%
%
%
1.1%
3.3%
%
%
%
$ 428,861
0.35
$
2,077
$
$
461,118
0.34
2,074
$
$
$
$
$
$
22
Regional Farm 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 fig­
ures in each column represent the average of each 20 percent or quintile of farms included in the regional summary. Use
this information to identify business areas where more challenging goals are needed.
FARM BUSINESS CHART FOR FARM MANAGEMENT COOPERATORS
64 Western & Central Plateau Region Dairy Farms, 1996
Worker
Equiv­
alent
(11)*
6.48
3.57
2.59
1.99
1.45
Size of Business
No.
Pounds
of
Milk
Cows
Sold
Pounds
Milk Sold
Per Cow
Rate of Production
Tons
Tons Com
Hay Crop
Silage
DMiAcre
Per Acre
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(II)
(11)
(10)
(9)
(9)
(11)
(11)
258
105
5,279,918
1,925,339
1,277,742
838,306
534,156
22,276
19,058
17,130
15,670
12,302
3.3
2.9
2.3
2.0
1.2
20
17
15
14
47
36
30
25
19
933,167
634,327
496,292
414,907
271,230
72
52
39
10
Cost Control
Labor &
Machinery
Costs per Cow
Grain
Bought
Per Cow
% Grain is
of Milk
Receipts
Machinery
Costs
Per Cow
(10)
(10)
(11)
(11 )
(10)
(10)
22%
28
33
36
44
$217
359
437
521
670
$752
922
1,096
1,220
1,393
$704
849
984
1,115
1,278
$4.20
5.19
5.89
6.47
7.45
$526
676
775
942
1,127
Value and Cost of Production
Total Cost
Milk
Oper. Cost
Milk
Production
Receipts
Per Cwt.
Per Cwt.
Per Cow
(10)
(10)
(10)
$3,269
2,795
2,496
2,312
1,755
$8.45
10.20
11.37
12.19
14.68
$13.45
14.92
16.58
17.84
21.58
Feed & Crop
Expenses
Per Cow
Feed & Crop
Expenses Per
Cwt. Milk
Net Farm
Income
w/Apprec.
Profitability
Net Farm
Inc. wlo
Apprec.
Labor &
Mgt. Inc.
Per Oper.
Change in
Net Worth
w/Apprec.
(3)
(3)
(3)
(6)
$59,229
23,248
8,178
-5,553
-24,696
$96,118
38,834
21,578
5,501
-26,199
$146,408
60,631
37,030
20,466
-9,385
*Page number of the participant's DFBS where the factor is located.
$124,599
49,386
27,816
12,579
-11,707
-
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 figure
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 sec­
ond 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, 1995
Size of Business
Pounds
Worker
No.
Equivof
Milk
alent
Cows
Sold
(11)*
(11)
(11)
12.9
6.9
5.2
4.2
3.6
584
252
181
136
114
12,747,839
5,319,020
3,558,382
2,659,236
2,160,673
Rates of Production
Tons
Tons Corn
Pounds
Hay Crop
Silage
Milk Sold
Per Cow
OM/Acre
Per Acre
(10)
(9)
(9)
23,974
21,921
21,104
20,216
19,389
5.2
3.9
3.4
2.9
2.7
Labor Efficiency
Pounds
Cows
Milk Sold
Per
Per Worker
Worker
(11)
(11)
22
19
18
16
15
56
44
40
36
33
1,089,131
901,135
800,305
706,048
635,059
-----------------------------------------------------------------------------------------------------------------------------------------------------------
3.1
2.6
2.2
1.8
1.4
Grain
Bought
Per Cow
(10)
$362
498
566
616
661
707
755
805
868
985
95
73
62
50
37
1,740,922
1,368,629
1,106,737
833,091
570,337
% Grain is
of Milk
Receipts
(10)
16%
21
24
26
27
29
30
32
34
39
18,797
18,104
17,095
15,706
13,082
2.4
2.2
1.9
1.6
1.1
14
13
12
10
7
Cost Control
Machinery
Labor &
Machinery
Costs
Per Cow
Costs Per Cow
(11)
(11 )
30
29
26
23
17
Feed & Crop
Expenses
Per Cow
(10)
579,646
533,945
464,985
394,437
279,221
Feed & Crop
Expenses Per
Cwt. Milk
(10)
$215
294
337
366
397
$669
806
866
923
971
$497
639
713
784
843
$2.93
3.65
3.97
4.19
4.41
429
466
510
564
726
1,027
1,105
1,182
1,254
1,492
883
919
974
1,052
1,204
4.60
4.79
5.03
5.34
6.15
*Page number of the participant's DFBS where the factor is located.
24
FARM BUSINESS CHART FOR
FARM MANAGEMENT COOPERATORS
321 New York Dairy Farms, 1995
Milk
Receipts
Per Cow
(10)
Milk
Receipts
Per Cwt.
(10)
Oper. Cost
Milk
Per Cow
(10)
Oper. Cost
Milk
Per Cwt.
(10)
Total Cost
Production
Per Cow
(10)
Total Cost
Production
Per Cwt.
(10)
$3,161
2,870
2,727
2,618
2,526
$13.95
13.55
13.33
13.15
13.02
$1,156
1,515
1,667
1,803
1,933
$7.16
8.79
9.39
9.80
10.18
$2,062
2,316
2,491
2,624
2,739
$11.75
12.79
13.28
13.82
14.19
2,447
2,349
2,231
2,032
1,684
12.90
12.81
12.69
12.55
12.13
2,051
2,149
2,269
2,390
2,680
10.54
10.99
11.36
12.08
13.43
2,840
2,928
3,040
3,222
3,646
14.63
15.28
16.05
17.07
20.60
Net Farm Income
Without Appreciation
As % of Total
Per
Cow
Total
Accrual Receipts
(3)
(10)
(3)
$241,346
95,284
63,686
45,922
34,731
$881
601
488
403
346
28.8%
20.9
16.9
14.4
11.9
24,327
15,103
8,344
-3,725
-25,068
263
183
94
-45
-302
10.0
6.8
3.6
-1.4
-14.0
Profitability
Net Farm Income
With Appreciation
Per
Total
Cow
(3)
(10)
Labor &
Management Income
Per
Per
Farm
Operator
(3)
(3)
$304,248
106,273
71,128
51,234
38,124
$992
663
551
459
385
$154,049
53,202
30,669
18,768
9,393
$104,666
31,707
20,493
12,917
6,876
30,424
20,465
12,249
-225
-21,201
318
226
137
-9
-284
1,424
-7,053
-16,985
-28,613
-57,804
875
-5,443
-12,785
-26,054
-52,230
Farm Business Charts for farms with frees tall barns and 150 cows or less, 151-300 cows, and more than 300 cows;
and farms with conventional barns with 60 cows or less and more than 60 cows are shown on pages 28-32.
Financial Analysis Chart
The farm financial analysis chart on page 25 is designed just like the Farm Business Chart and may be used to as­
sess 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 ANALYSIS CHART
321 New York Dairy Farms, 1995
Planned Debt
Payments
Per Cow
(8)*
Available for
Debt Service
Per Cow
(12)
Liquidity (repayment)
Cash Flow
Coverage
Ratio
(8)
$49
210
288
344
409
$800
589
526
472
421
2.94
1.50
1.22
1.06
0.92
5%
10
12
14
17
$181
811
1,430
1,761
2,107
470
511
568
640
842
367
305
234
144
-124
0.83
0.72
0.53
0.30
-0.36
18
21
23
27
38
2,454
2,726
3,051
3,476
4,330
Solvency
Leverage
Ratio**
Debt!Asset Ratio
Current &
Long
Intermediate
Term
(5)
(5)
Percent
Equity
(5)
0.03
0.14
0.26
0.37
0.49
97%
88
79
73
67
0.02
0.10
0.17
0.25
0.33
0.00
0.00
0.07
0.19
0.28
0.65
0.82
0.99
1.31
3.52
61
54
50
43
30
0.39
0.45
0.52
0.61
0.89
0.37
0.43
0.55
0.66
0.87
Asset
Turnover
(ratio)
(11)
.71
.58
.54
.50
.45
Efficiency (Capital)
Real Estate
Machinery
Investment
Investment
Per Cow
Per Cow
(11)
(11)
$1,330
1,932
2,197
2,466
2,749
$503
724
865
981
1,098
Debt Payments
as Percent
of Milk Sales
(8)
Debt Per
Cow
(5)
Profitability
Percent Rate of Return with
appreciation on:
Investment**
Equity
(3)
(3)
22%
8
5
3
1
-1
-3
-6
-11
-35
Total Farm
Assets
Per Cow
(11)
$4,207
5,131
5,548
5,904
6,350
.41
3,040
1,243
6,746
.38
3,455
1,393
7,239
.34
3,899
1,595
7,880
.30
4,480
1,913
8,673
6,579
2,653
.21
11,340
*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.
13%
8
6
5
3
2
0
-2
-4
-9
Change in
Net Worth
wiAppreciation
(6)
$194,829
62,523
36,676
22,792
12,932
6,448
356
-7,042
-18,529
-52,292
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. Conventional
housing includes stanchion and tiestall 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 five groups of dairy farms. The average size of
farms in the five groups ranges from 45 cows on the small conventional farms to 573 cows on the largest freestall farms.
The largest freestall farms averaged the highest milk output per cow and per worker, the lowest total cost of pro­
duction and investment per cow, and the greatest returns to labor, management and capital. The smaller freestall farms
showed average profits somewhat higher than the large conventional farm businesses.
Farm business charts have been computed for each of the five housing and herd size categories and are on pages
28-32. 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 1995 State Summary*. As herd size increases, the average profitability generally increases
(pages 44-45)*. Net farm income without appreciation averaged $7,400 per farm for the less than 40 cow farms and
$202,491 per farm for those with 300 cows and over. 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 more than 300 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 tillable
acre generally increased as herd size increased (pages 50-51)*. The farms with 300 and more cows per farm averaged 36
percent more milk sold per cow than the smallest farms. All of the groups with 70 or more cows averaged above 18,000
pounds of milk sold per cow while the farms smaller than 70 cows averaged 16,800 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 increased
dramatically as herd size increased, ranging from 328,467 pounds at the lowest herd size category up to 984,168 pounds at
the largest size category.
-
,
*Smith, Stuart F., Wayne A. Knoblauch, and Linda D. Putnam, Dairy Farm Managment Business Summary, New York,
1995, Department of Agricultural, Resource, and Managerial Economics, Cornell University, R.B. 96-11, August 1996.
Item
27
SELECTED BUSINESS FACTORS BY TYPE OF BARN AND HERD SIZE
294 New York Dairy Farms, 1995
Conventional
Freestall
>60 Cows
151-300 Cows
Farms with:
<= 60 Cows
<=150 Cows
67
>300 Cows
68
69
56
34
275
100
163
55
2.5
13.3
66
7.8
3.3
$21.13
$37,128
$135
328
136
171
77
2.7
14.4
58
7.9
3.0
$25.44
$48,984
$151
525
243
242
164
3.0
14.8
44
7.1
2.4
$26.72
$90,300
$172
1,110
473
453
444
3.4
17.3
54
7.3
1.9
$29.61
$201,266
$181
84
69
1,563,428
18,518
$10.23
$14.86
$13.01
$660
$3.56
27%
$4.34
107
82
2,027,572
18,970
$10.54
$14.74
$13.13
$700
$3.69
27%
$4.59
216
164
4,438,075
20,589
$10.76
$13.67
$13.12
$807
$3.92
29%
$4.60
573
423
12,493,862
21,796
$10.25
$12.64
$12.99
$775
$3.55
27%
$4.19
$181,342
$7,733
$3,775
$4,063
$1,466
0.32
$204,518
$7,190
$3,468
$3,317
$1,450
0.38
$233,993
$7,016
$3,906
$3,158
$1,419
0.41
$230,331
$5,920
$4,526
$2,503
$986
0.53
$258,006
$5,657
$5,083
$2,436
$853
0.59
Labor Efficiency
Worker equivalent
Operator/manager equivalent
Milk sold/worker, lbs.
Cows/worker
Labor cost/cow
Labor cost/tillable acre
1.94
1.17
392,608
23
$707
$215
2.97
1.33
526,924
28
$584
$179
3.21
1.56
632,592
33
$553
$182
5.54
1.73
800,951
39
$520
$214
12.57
2.17
994,087
46
$580
$299
Profitability & Balance Sheet Analysis
Net farm income (without appreciation)
Labor & management income/operator
Rate Return on all capital with appreciation
Farm debt/cow
Percent equity
$10,662
$-6,342
-2.3%
$2,138
71%
$27,053
$43
1.3%
$1,853
73%
$29,071
$860
2.4%
$2,405
65%
$62,427
$13,170
5.2%
$2,407
58%
Number of farms
Cropping 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
149
56
97
24
1.9
12.9
48
6.5
3.3
$16.62
$19,975
$134
Dairy Analysis
Number of cows
Number of heifers
Milk sold, lbs.
Milk sold/cow, lbs.
Operating cost of prod. milk/cwt.
Total cost of prod. milk/cwt.
Price/cwt. milk sold
Purchased dairy feed/cow
Purchased dairy feedlcwt. milk
Purchased grain & cone. as % milk rec.
Purchased feed & crop exp./cwt. milk
45
34
760,125
16,731
$10.20
$16.84
$12.91
$652
$3.89
29%
$4.56
Capital Efficiency
Farm capital/worker
Farm capital/cow
Farm capital/tillable acre owned
Real estate/cow
Machinery investment/cow
Asset turnover ratio
*Average of all farms, not only those reporting data.
$206,228
$54,041
9.4%
$2,518
54%
28
FARM BUSINESS CHART FOR SMALL CONVENTIONAL STALL DAIRY FARMS
67 Conventional Stall Dairy Farms with 60 or Less Cows, New York, 1995
Worker
Equivalent
(11)*
3.20
2.57
2.11
2.00
1.87
Size of Business
Pounds
No.
Milk
of
Cows
Sold
(11)
(11)
58
55
52
50
46
Pounds
Milk Sold
Per Cow
(10)
1,116,570
982,835
889,183
818,832
762,063
21,502
19,540
18,817
18,148
17,422
Rates of Production
Tons
Tons Corn
Hay Crop
Silage
DM/Acre
Per Acre
(9)
(9)
3.5
2.9
2.5
2.3
2.0
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(11)
21
18
16
14
13
39
32
30
28
25
670,470
563,955
508,822
454,017
419,654
-----------------------------------------------------------------------------------------------------------------------------------------------------------
1.72
1.57
1.50
1.37
1.20
Grain
Bought
Per Cow
(10)
$278
416
487
520
566
626
677
734
811
992
720,796
669,529
597,559
535,110
402,284
44
42
39
36
28
% Grain is
of Milk
Receipts
(10)
15%
20
23
26
28
29
30
32
36
44
16,469
15,382
14,539
13,368
10,304
Machinery
Costs
Per Cow
(11)
1.8
1.7
1.3
1.2
0.9
Cost Control
Labor &
Machinery
Costs Per Cow
(11)
12
11
10
8
5
22
21
19
17
14
Feed & Crop
Expenses
Per Cow
(10)
373,175
346,465
312,103
262,792
189,393
Feed & Crop
Expenses Per
Cwt. Milk
(10)
$201
293
325
366
402
$755
881
962
1,024
1,102
$358
514
588
640
706
$2.57
3.29
3.79
4.05
4.30
422
455
502
600
818
1,172
1,221
1,277
1,417
1,724
778
849
899
971
1,200
4.61
4.90
5.14
5.76
6.56
Value and Cost of Production
Milk
Oper. Cost
Total Cost
Receipts
Milk
Production
Per Cow
Per Cwt.
Per Cwt.
(10)
(10)
(10)
Profitability
Net Farm Income
Without Appreciation
Total
Per Cow
(3)
(10)
Labor &
Mgmt. Inc.
Per Oper.
(3)
Change in
Net Worth
w/Apprec.
(6)
$2,775
2,555
2,450
2,348
2,268
$6.35
7.91
8.67
9.30
9.93
$12.93
14.15
14.80
15.41
15.73
$40,149
26,289
21,507
15,826
11,631
$898
605
428
333
270
$19,515
8,128
6,050
1,532
-2,987
$39,912
19,432
11,943
8,794
5,960
2,110
1,992
1,851
1,712
1,280
10.38
10.79
11.55
12.53
13.81
16.26
17.19
18.71
20.45
25.49
9,116
5,005
-4,188
-9,409
-18,464
208
112
-94
-228
-479
-6,640
-12,236
-21,253
-27,862
-44,633
1,696
-5,207
-9,317
-18,815
-30,642
*Page number of the participant's DFBS where the factor is located.
-
29
FARM BUSINESS CHART FOR LARGE CONVENTIONAL STALL DAIRY FARMS
68 Conventional Stall Dairy Farms with More Than 60 Cows, New York, 1995
Worker
Equivalent
(11)*
Size of Business
Pounds
No.
Milk
of
Sold
Cows
(11)
(11)
Pounds
Milk Sold
Per Cow
(10)
4.92
3.89
3.42
3.06
2.90
136
107
98
87
78
2,430,052
2,056,068
1,801,505
1,648,270
1,504,222
22,384
20,798
20,239
19,664
18,979
2.58
2.49
2.35
2.12
1.65
74
68
65
64
62
1,400,199
1,298,599
1,235,093
1,158,481
957,357
18,582
17,925
16,883
15,411
14,147
Grain
Bought
Per Cow
(10)
% Grain is
of Milk
Receipts
(10)
Machinery
Costs
Per Cow
(11)
Rates of Production
Tons
Tons Corn
Hay Crop
Silage
DM/Acre
Per Acre
(9)
(9)
4.9
3.6
3.1
2.8
2.4
2.2
2.0
1.9
1.7
1.3
Cost Control
Labor &
Machinery
Costs Per Cow
(11)
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(11)
22
18
16
15
14
49
37
33
31
29
853,220
687,405
618,788
578,386
557,226
13
12
11
9
6
28
27
24
21
17
531,807
500,757
446,692
399,585
298,742
Feed & Crop
Expenses
Per Cow
(10)
Feed & Crop
Expenses Per
Cwt. Milk
(10)
$335
435
490
558
598
14%
18
21
23
26
$212
315
344
374
404
$683
844
884
930
969
$505
594
640
684
749
$2.79
3.23
3.56
3.98
4.23
656
693
764
846
1,022
28
31
31
34
39
441
491
523
563
684
1,027
1,121
1,182
1,268
1,415
832
878
932
1,014
1,214
4.43
4.63
4.83
5.29
6.36
Value and Cost of Production
Total Cost
Milk
Oper. Cost
Milk
Production
Receipts
Per Cow
Per Cwt.
Per Cwt.
(10)
(10)
(10)
$2,926
2,693
2,613
2,534
2,465
$6.79
8.17
9.18
9.58
9.89
$12.40
13.11
13.47
13.89
14.34
Profitability
Net Farm Income
Without Appreciation
Total
Per Cow
(3)
(10)
$87,656
53,325
42,377
35,885
28,572
$1,006
646
517
423
356
Labor &
Mgmt. Inc.
Per Oper.
(3)
$32,253
19,865
14,407
9,185
3,870
Change in
Net Worth
w/Apprec.
(6)
$70,650
39,931
24,514
14,916
8,131
------------------------------------------------------------------------------------------------------------------------------------------------------------
2,404
2,320
2,176
2,030
1,882
10.25
10.83
11.27
12.00
13.71
14.88
15.59
16.38
17.00
18.86
19,770
12,264
5,880
-3,258
-23,460
*Page number of the participant's DFBS where the factor is located.
228
165
72
-46
-314
-3,049
-12,034
-23,384
-31,508
-59,820
1,044
-8,929
-16,430
-26,729
-60,370
30
FARM BUSINESS CHART FOR SMALL FREESTALL DAIRY FARMS
69 Freestall Barn Dairy Farms with 150 or Less Cows, New York, 1995
Worker
Equivalent
(11)*
Size of Business
Pounds
No.
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)
1,025,375
2,957,949
24,252
5.44
21
60
5.1
142
844,297
2,710,333
21,428
18
44
4.35
3.9
134
2,508,000
20,047
41
758,138
3.92
128
3.3
17
2,348,502
19,586
16
37
696,409
2.9
3.48
123
15
2,166,542
19,015
34
650,447
2.8
3.22
114
------------------------------------------------------------------------------------------------------------------------------------------------------------613,804
1,998,898
18,579
2.6
14
32
3.07
107
1,804,910
17,842
100
2.4
13
30
586,143
2.73
1,581,246
16,689
2.1
12
2.32
88
29
538,567
1,265,897
15,793
1.92
480,795
1.7
73
11
26
751,092
12,993
368,345
52
1.1
10
23
1.32
Grain
Bought
Per Cow
(10)
% Grain is
of Milk
Receipts
(10)
Machinery
Costs
Per Cow
(11)
Cost Control
Labor &
Machinery
Costs Per Cow
(11)
Feed & Crop
Expenses
Per Cow
(10)
Feed & Crop
Expenses Per
Cwt. Milk
(10)
16%
$382
$204
$642
$534
$3.04
521
22
293
744
3.88
688
335
829
569
23
729
4.13
25
380
887
600
769
4.31
27
945
823
625
421
4.51
------------------------------------------------------------------------------------------------------------------------------------------------------------661
451
1,000
28
868
4.73
1,095
706
29
499
899
4.86
1,178
5.09
31
563
965
748
1,245
834
33
611
1,051
5.35
1,443
1,211
975
37
766
6.02
Value and Cost of Production
Oper. Cost
Total Cost
Milk
Milk
Production
Receipts
Per Cwt.
Per Cwt.
Per Cow
(10)
(10)
(10)
Profitability
Net Farm Income
Without Appreciation
Total
Per Cow
(3)
(10)
Labor &
Mgmt. Inc.
Per Oper.
(3)
Change in
Net Worth
w/Apprec.
(6)
$3,157
2,781
2,638
2,559
2,492
$7.66
8.88
9.41
9.84
10.11
$11.63
13.19
14.00
14.16
14.42
$88,760
62,353
52,706
42,686
35,777
$772
609
500
401
354
$49,497
23,550
13,528
9,448
4,789
$65,163
38,389
27,797
19,229
10,890
2,428
2,327
2,232
2,078
1,732
10.61
11.12
11.56
12.33
13.51
14.77
15.32
16.18
17.08
18.43
25,901
11,541
-358
-10,185
-26,410
272
116
-1
-97
-305
-1,925
-9,176
-17,625
-29,406
-45,511
4,352
552
-5,069
-18,255
-44,000
*Page number of the participant's DFBS where the factor is located.
100...
31
FARM BUSINESS CHART FOR MEDIUM FREESTALL DAIRY FARMS
56 Freestall Barn Dairy Farms with 151-300 Cows, New York, 1995
Size of Business
Worker
No.
Pounds
Milk
Equivof
alent
Sold
Cows
(11)
(11)
(11)*
8.11
7.01
6.26
5.84
5.61
290
254
241
231
219
6,658,798
5,713,413
5,114,805
4,601,857
4,282,657
Rates of Production
Pounds
Tons
Tons Corn
Hay Crop
Silage
Milk Sold
Per Cow
DM/Acre
Per Acre
(10)
(9)
(9)
24,927
23,249
22,243
21,310
20,808
5.2
4.1
3.6
3.3
2.9
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(11)
22
19
18
16
15
56
51
49
42
39
1,108,890
1,010,447
941,529
886,593
820,679
-------------------------------------------------------------------------------------------------------------------------------------------------------------
3,983,158
3,743,536
3,502,068
3,239,384
2,795,824
19,804
18,853
18,118
17,306
15,997
Grain
Bought
Per Cow
(10)
% Grain is
of Milk
Receipts
(10)
Cost Control
Machinery
Labor &
Machinery
Costs
Per Cow
Costs Per Cow
(11)
(11)
$494
618
668
716
745
19%
23
25
26
28
5.26
4.82
4.25
3.96
3.36
201
189
179
166
159
36
35
33
30
27
Feed & Crop
Expenses
Per Cow
(10)
775,036
725,997
666,957
614,691
525,722
Feed & Crop
Expenses Per
Cwt. Milk
(10)
$217
262
331
362
386
$635
721
788
820
881
$630
794
839
876
902
$3.30
3.75
4.03
4.24
4.55
423
466
494
536
654
942
994
1,070
1,142
1,310
935
974
1,054
1,106
1,192
4.68
4.87
5.19
5.34
5.83
30
30
32
34
37
786
826
856
897
973
14
13
12
10
3
2.7
2.5
2.2
1.7
1.2
Value and Cost of Production
Milk
Oper. Cost
Total Cost
Receipts
Milk
Production
Per Cow
Per Cwt.
Per Cwt.
(10)
(10)
(10)
Profitability
Net Farm Income
Without Apprec.
Total
Per Cow
(3)
(10)
Labor &
Mgmt. Inc.
Per Oper.
(3)
Change in
Net Worth
w/Apprec.
(6)
$3,331
3,069
2,970
2,788
2,669
$7.96
9.50
9.87
10.31
10.57
$10.95
12.48
12.90
13.05
13.46
$186,160
121,682
92,523
77,745
53,375
$864
536
433
355
277
$95,164
50,181
28,686
22,827
14,847
$144,572
108,786
66,921
40,000
22,733
2,558
2,475
2,375
2,271
2,086
10.89
11.23
11.63
12.07
12.91
13.92
14.16
14.54
15.16
16.22
38,496
27,801
14,994
5,641
-33,266
194
125
72
33
-154
2,857
-4,795
-10,777
-26,567
-62,013
7,412
-2,413
-9,829
-37,956
-83,503
*Page number of the participant's DFBS where the factor is located.
32
FARM BUSINESS CHART FOR LARGE FREESTALL DAIRY FARMS
34 Freestall Barn Dairy Farms with 300 or More Cows, New York, 1995
Worker
Equiv­
alent
(11)*
Size of Business
Pounds
No.
Milk
of
Sold
Cows
(11)
(11)
1,474
726
586
476
426
26.37
15.65
13.90
11.56
9.83
Pounds
Milk Sold
Per Cow
(10)
31,629,692
16,568,552
12,395,786
10,646,886
9,473,879
24,975
23,563
22,714
21,776
21,582
Rates of Production
Tons
Tons Corn
Hay Crop
Silage
OM/Acre
Per Acre
(9)
(9)
5.6
4.5
3.8
3.5
3.3
Labor Efficiency
Cows
Pounds
Milk Sold
Per
Worker
Per Worker
(11)
(11)
22
21
19
18
18
59
50
47
44
43
1,315,065
1,108,188
1,027,822
961,574
941,375
-----------------------------------------------------------------------------------------------------------------------------------------------------------
9.36
9.06
8.66
8.24
7.35
8,803,496
8,131,190
7,243,944
6,726,055
6,230,654
399
363
338
316
305
Grain
Bought
Per Cow
(10)
$548
621
652
691
742
775
807
837
882
919
21,380
21,238
20,638
19,753
18,841
% Grain is
of Milk
Receipts
(10)
Machinery
Costs
Per Cow
(11)
20%
22
24
25
26
$239
261
298
320
339
357
368
396
463
576
27
28
29
31
32
Value and Cost of Production
Milk
Oper. Cost
Total Cost
Receipts
Milk
Production
Per Cow
Per Cwt.
PerCwt.
(10)
(10)
(10)
$3,347
3,085
2,943
2,862
2,800
$7.91
9.29
9.46
9.88
10.10
$11.08
11.72
12.13
12.42
12.53
2.8
2.6
2.5
2.3
1.9
Cost Control
Labor &
Machinery
Costs Per Cow
(11)
17
16
13
12
10
42
40
38
37
32
921,860
857,407
821,803
738,236
687,101
Feed & Crop
Expenses
Per Cow
(10)
Feed & Crop
Expenses Per
Cwt. Milk
(10)
$723
819
850
883
916
$725
807
848
880
905
$3.45
3.73
3.91
3.97
4.13
940
975
1,019
1,097
1,178
940
962
997
1,041
1,144
4.36
4.46
4.55
4.76
5.16
Profitability
Net Farm Income
Without Appreciation
Per Cow
Total
(3)
(10)
$498,538
355,590
255,215
210,999
163,907
$761
561
453
413
369
Labor &
Mgmt. Inc.
Per Oper.
(3)
$285,694
125,530
87,171
67,983
44,335
Change in
Net Worth
w/Apprec.
(6)
$521,948
241,267
173,734
134,882
111,353
------------------------------------------------------------------------------------------------------------------------------------------------------------
2,774
2,731
2,627
2,556
2,454
10.19
10.54
10.93
11.16
11.60
12.69
12.96
13.25
13.55
14.31
139,850
122,533
101,876
67,632
-18,932
*Page number of the participant's DFBS where the factor is located.
356
281
201
165
-48
33,198
25,289
19,665
8,585
-53,540
85,990
41,489
29,751
-3,450
-67,952
­
33
IDENTIFY AND SET GOALS
If businesses are to be successful, they must have direction. Written goals help provide businesses with an identifi­
able direction over both the long and short term. Goal setting is as important on a dairy farm as it is in other businesses.
Written goals are a tool which farm operators can use to ensure that the business continues to move in the desired 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 be Timed with a designated date by which the goal will be achieved.
Goal setting on a dairy farm should be 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 val­
ues of the owners.
b.
Identify 4-6 objectives.
c.
Identify SMART goals.
Worksheet for Setting Goals
I.
Mission and Objectives
-
[.
I.
34
Worksheet for Setting Goals (Continued)
II. Goals
What
How
When
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 weak­
nesses of your farm business. Identify three major strengths and three areas of your farm business that need improvement.
Strengths:
_
Needs improvement
_
-
35
GLOSSARY AND LOCATION OF COMMON TERMS
Accounts Payable - Open accounts or bills owed to feed and supply firms, cattle dealers, veterinarians and other pro­
viders of farm 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 farm income to total farm assets, calculated by dividing total accrual oper­
ating receipts plus appreciation by average total farm 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.
bST Usage - An estimate of the percentage of herd, on average, that was injected with bovine somatotropin during the
year.
Capital Efficiency - The amount of capital invested per production unit. Relatively high investments per worker with
low to moderate investments per cow imply efficient use of capital.
Cash From Nonfarm Capital Used in the Business - Transfers of money from nonfarm savings or investments to the
farm 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 farm business where dairy farming is the primary enterprise, operating and managing this farm is a
full-time occupation for one or more people and cropland is owned.
Dairy Cash-Crop (farm) - Operating and managing this farm is the full-time occupation of one or more people, crop­
land 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.
-
36
Equity Capital - The farm operator/manager's owned capital or farm net worth.
Expansion Livestock - Purchased dairy cattle and other livestock that cause an increase in herd size from the begin­
ning to the end of the year.
Farm Debt Payments as Percent 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.
Farm 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 abil­
ity 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 Farm 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, DHIC, registration fees and transfers.
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, income
taxes, nonfarm debt payments, and investments.
Profitability - 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)
Renter - Farm business owner/operator owns no tillable land and commonly rents all other farm real estate.
Repayment Analysis - An evaluation of the business' ability to make planned debt payments.
=
-
37
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 meas­
ures of solvency.
Total Costs of Producing Milk - (defined on page 19)
Whole Farm Method - A procedure used to calculate costs of producing milk on dairy farms without using enterprise
cost accounts. All non-milk receipts are assigned a cost equal to their sale value and deducted from total farm ex­
penses to determine the costs of producing milk.
-
38
INDEX
Page(s)
Page(s)
Accounts Payable
3,8
Financial Analysis Chart
Accounts Receivable
4,8
Financial Lease
8
Accrual Expenses
3,5
Income Statement..
2
Accrual Receipts
4,5
Inflows
Acreage
16
25
12
Labor & Mgmt. Income
6
6
Advanced Government Receipts
7,8
Labor & Mgmt. Income Per Oper.
Age
20
Labor Efficiency
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
20
3,17
Balance Sheet
8
Milking Frequency
Barn Type
2
Milk Production
' 18
bSTUsage
2
Milking System
2
2
Money Borrowed
12
20
Net Farm Income
5
Business Type
Capital Efficiency
Net Investment
Cash From Nonfarm Capital Used in
the Business
Cash Flow Coverage Ratio
Cash Paid
Cash Receipts
Change in Accounts Payable
Change in Accounts Receivable
Change in Inventory
Change in Net Worth
Crop Expenses
CroplDairy Ratios
Current Portion
2
10
12
Net Worth
14
Number of Cows
18
Operating Costs of Prod. Milk
19
2
4,12
3
.4
2,3
11
3, 17
16
7,8
Opportunity Cost.
Other Livestock Expenses
Outflows
Part-Time Cash-Crop Dairy (farm)
Part-Time Dairy (farm)
Percent Equity
8
6
3
12
2
2
9,10
Personal Withdrawals and Family Expenditures
Including Nonfarm Debt Payments
Dairy (farm)
2
Principal Payments
Dairy Cash-Crop (farm)
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
22,23
14
Dry Matter
16
Replacement Livestock
Education
20
Retained Earnings..................................................... 11
Equity Capital
Expansion Livestock
Expenses
Farm Business Chart
7
3, 12
3
of Milk Sales
Return on Equity CapitaL
7
Return on Total CapitaL
7
Solvency
10
Total Costs of Producing Milk
19
Whole Farm Method
19
13
Worker Equivalent
20
13
Yields Per Acre
16
22-25,28-32
Farm Debt Payments as Percent
Farm Debt Payments Per Cow
3
,
.
BULLBTINS
No. 96-17
Income Tax Myths, Truths, and
Examples concerning Farm Property
Dispositions
stuart smith
No. 96-18
Farm Income Tax Management and
Reporting Reference M nual
stuart F. Smith
Charles H.
Cuykendall
No. 96-19
New York Economic Handbook 1997
Agribusinss Economic Outlook
Conference
A.R.M.E. Staff
No. 96­ 0
Supermarket Development in China
Gene German
Jane Wu
Ming Li Chai
No. 97-01
Changing Patterns of Frui an
Vegetable roduction in New Y rk
State, 1970-94
Kr'sten Park
Edward W. McLaughlin
craig Kreider
No. 97-02
Micro DFBS A Guide to Processing
Dairy Farm Business ummaries in
County and Regional Extension
Offices for Micro OFBS Version 4.0
Linda D. Putnam
Wayne A. Knoblauch
stuart F. Smith
No. 97-0
Labor Productivities and Costs in
35 of the Best Fluid Milk Plants in
the u.S.
Eri M. Erba
Richard D. Aplin
Mark w. Stephenson
No. 97-04
Frui t Farm Business Summary Lake
ontario Region New York 1995
Gerald B White
Alsion DeMarree
Linda O. Putnam
No. 97-05
Dairy Farm Business Summary
Western and Central Plain Reg'on
1996
Wayne A. Knoblauch
Linda o. Putnam
Jason Karszes
Michael Stratton
Charles Mentis
George Allhusen