May 1996
E.B.96-07
NORTHERN
HUDSON
REGION
1995
!
GREENE
Stuart F. Smith
Linda D. Putnanl
Cathy S. Wickswat
Sandra Buxton
David R. Wood
Department of Agricultural, Resource, and Managerial Economics
CoUege of Agriculture and Life Sciences
CorneD University, Ithaca, New York 14853·7801
It is the Policy of Cornell University actively to support equality
of educational and employment opportunity. No person hall 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, uch factors as race,
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handicap. The University is conunitted 10 the maintenance of
affirmative action programs which will assure the continuation of
such equality of opportunity.
1995 DAIRY FARM BUSINESS SUMMARY
Northern Hudson Region
Table of Contents
INIRODUCfION
1
Prognun Objectives
1
Fonnat Features................
1
SUMMARY AND ANALYSIS OF TIIE FARM BUSINESS
2
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
18
Capital and Labor Efficiency Analysis
20
COMPARATIVE ANALYSIS OF TIIE FARM BUSINESS
21
Progress of the Farm Business
21
Regional Farm Business Chart
22
New York State Farm 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 HUDSON REGION
INTRODUCTION
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 Hudson 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.
Format 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 dairy livestock numbers. production. and expenses; and
(7)
a capital and labor efficiency analysis.
*The Northern Hudson Region of New York State, with the number of participating farms in parentheses, is comprised of
Albany (4), Saratoga (13), Schenectady (4), Rensselaer (21), Washington (15), and Greene (1) counties. This report was
written by Stuart F. Smith, Senior Extension Associate, Farm Management. Linda D. Putnam was in charge of data
preparation. Melody Clark prepared the publication. Farm business data were collected by Cooperative Extension Agents
Cathy Wickswat, Sandra Buxton, and David Wood.
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 CHARACTERISTICS
58 Northern Hudson Region Dairy Farms, 1995
Type of Farm
Dairy
Part-time dairy
Dairy cash-crop
Part-time cash-crop dairy
Number
54
0
4
0
Type of Ownership
Owner
Renter
Number
51
7
Type of Business
Single Proprietorship
Partnership
Corporation
Number
33
21
4
Type of Bam
Stanchionffie-S tall
Freestall
Combination
Number
19
35
4
Milking Frequency
2x/day
3x/day
Other
Number
44
12
2
Milking System
Bucket & carry
Dumping station
Pipeline
Herringbone parlor
Other parlor
Number
0
0
20
34
4
Production Records
DHIC
Owner-Sampler
Other
None
Number
45
5
3
5
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
9
28
0
0
21
Business Record System
Account Book
Agrifax (mail-in only)
On-farm computer
Other
Number
12
11
17
18
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.
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
58 Northern Hudson Region Dairy Farms, 1995
Expense Item
Hired Labor
Feed
Dairy grain & concentrate
Dairy roughage
Nondairy
Machinery
Machinery hire, rentlIease
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
Landlbuilding/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
$ 48,397
Change in
Inventory
or Prepaid
Expense
$
-41 «
98,722
2,856
21
+
Change in
Accounts
Payable
$
-44
334
91
1288
o
173
-1
99,676
2,769
21
-51
23
-1
3,445
21,449
10,055
o
0«
2,190
4,890
12,916
29,803
3,816
10,701
128
1,545
9,410
Accrual
Expenses
$ 48,394
4
o
0«
3,496
21,599
10,055
=
-2
-23
2,190
5,039
12,973
29,694
3,810
10,457
128
1,545
9,389
12,293
6,134
6,395
-291
534
77
-1,044
-94
97
11,540
5,506
6,415
4,725
8,188
7,702
-5
37
-273
-50
4,767
7,915
7,650
29
4,749
11,394
21,132
4,607
-182
87
0«
24
50
o
o
0«
0«
0«
2
«
0«
0«
0«
4,720
11,391
21,109
4,502
$ 347,704
$
4,125
-33
144
-109
18
-194
3
23
96
-9
$
841
0«
$
-154
o
$ 346,709
$
4,125
$ 14,869
$
8,462
$ 374,165
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 prepaid 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.
­
CASH AND ACCRUAL FARM RECEIPTS
58 Northern Hudson 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
+
$ 363,312
17,056
3,357
554
5,104
6,229
686
207
3,357
$
$
2,901
-155
0
0
-30
-190
8
0
23
$
2,557
11,839
919
-858
22
(-)
$ 399,862
Change in
Accounts
Receivable
+
$
0
11,922
Accrual
Receipts
=
$
(-)
$
366,213
28,740
3,357
1,473
4,216
6,061
694
207
3,380
0
414,341
*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 apj?reciation. 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.
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, detennines 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 fonnally a member of the partnership 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 flow 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
58 Northern Hudson Region Dairy Farms, 1995
Total
Item
Average
Per Cow
$ 414,341
-8,202
2,076
4,710
473
$ 413,398
- 374,165
$ 39,233
$ 40,176
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 (w/o appreciation)
Total
My Farm
Per Cow
$--­
$--­
$ 298
$ 305
$--­
$--­
$--­
$--­
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/Cowand Milk/Cow
58 Northem Hudson Farm;, 1995
•
1000
800
~
600
0
u
200
~
0
E ~
-200
\I.o,-,
-400
II)
E .~
8
.5 !S.
~}
~
~
• •
400
&'2
.g
• •
•••
...
\
-600
-800
•
-1000
~
-
§
<'l
§
'<t"
•
.:
•
• • •• • •• •• •• •
••
•
• • • • ••••• •
• •.. :
••
:
•
~
-
§
00
• •
~
<'l
Pounds Milk Sold Per Cow
§
~
§
'<t"
<'l
~
<'l
§
00
<'l
-
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
58 Northern Hudson Region Dairy Farms, 1995
Item
Average
Net farm income without appreciation
$ 40,176
Family labor unpaid
@
$---­
- 3,639
$1,450 per month
Interest on $641,808 average equity capital
My Farm
@
-32,090
5% real rate
Labor & Management Income per farm (1.53 Operators/farm)
$ 4,447
$---­
Labor & Management Income per OperatorlManager
$ 2,907
$---­
Labor and management income per operator averaged $2,907 on these 58 farms in 1995. The range in labor and
management income per operator was from less than $-62,000 to more than $63,000. Returns to labor and management
were negative on 43% of the fanns. Labor and mangement income per operator ranged from $0 to $20,000 on 31 % of the
farms while 26% showed labor and mangement incomes of $20,000 or more per operator.
Distribution of Labor & Management Incomes per Operator
58 Northern Hudson Region Dairy Fanns, 1995
19
20
18
16
'"
14
~
12
~
8
'­
0
....I:: 10
0..
6
-
4
2
0
<-30
-30 to-lO
-10 to 0
oto 10
Income (thousand dollars)
10 to 20
20 to 30
>30
7
Return on equity capital measures the net return remaining for the fanner'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 fann 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 fann 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 fann assets to calculate the rate of return on total
capital.
RETURN ON EQUITY CAPITAL AND RETURN ON TOTAL CAPITAL
58 Northern Hudson Region Dairy Fanns, 1995
Average
Item
Net fann income with appreciation
$
39,233
Family labor unpaid @$1,450 per month
3,639
Value of operators' labor & management
31.209
MyFann
$---­
Return on equity capital with appreciation
$
4,385
Interest paid
+
21.132
+---­
Return on total capital with appreciation
$
25,517
$---­
Return on equity capital without appreciation
$
5,328
$---­
Return on total capital without appreciation
$
26,460
$---­
$---­
Rate of return on average equity capital:
with appreciation
0.7%
---_%
without appreciation
0.8%
----_%
with appreciation
2.8%
----_%
without appreciation
2.9%
---_%
Rate of return on average total capital:
Farm and Family Financial Status
The ftrst step in evaluating the ftnancial position of the fann is to construct a balance sheet which identiftes 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 fanner 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.
­
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
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
6 New York Dairy Farms, 1995
Liabilities & Net Worth
Assets
Current debts & payables
$
Current deferred taxes
Total Current Assets
$
155,248
43.461
Total Current Liabilities
$
162,311
Intermediate debts & leases
$
158,238
Intermediate deferred taxes
Total Inter. Assets
$
612,205
Total Intermediate Liabilities
Long term debts & leases
175.448
$
333,686
$
162,640
Long term deferred taxes
Total Long Term Assets
$
537.541
TOTAL FARM ASSETS
$
1,304,993
98.241
$
260,881
TOTAL FARM LIABILITIES
$
756,877
Farm Net Worth
$
548,116
Total Long Term Liab.
Percent Equity (Farm)
Nonfarm debts
42%
$
$
65,961
TOTAL ASSETS
$
1,370,954
1,017
16,719
Nonfarm deferred taxes
Total Nonfarm Assets
118,850
Total Nonfarm Liabilities
$
17.735
TOTAL LIABILITIES
$
774,612
Total Net Worth
$
596,342
Percent Equity (Total)
44%
•
10
Balance sbeet 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 casb flow and repayment
ability.
BALANCESHEETANALYS~
58 Northern Hudson Region Dairy Farms, 1995
Average
Item
My Farm
Financial Ratios - Farm:
Percent equity
Debt/asset ratio: total
long-term
intermediate/current
70%
.30
.24
.34
%
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
4%
37%
63%
%
Farm Debt Levels:
Total farm debt
Long-term debt
Intermediate & long term
Intermediate & current debt
$
Per Tillable
Acre Owned
$
1,395
515
1,124
879
Per Cow
2,005
741
1,616
1,265
%
%
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 indi­
cates whether the capital stock is being expanded (positive) or depleted (negative).
FARM INVENTORY BALANCE
58 Northern Hudson Region Dairy Farms, 1995
Average of Region's Farms
Real Estate
Machinery & Equipment
$
415,091
$
150,950
Item
Value beginning of year
Purchases
Gift/inheritance
Lost capital
Sales
Depreciation
$
+
13,692
0
2,843
2,333
8.462
$
+
17,150
0
1,111
14,869
Net investment
Appreciation
+
54
4,710
+
1,170
2.076
Value end of year
$
419,855
$
154,196
=
*$3,353 land and $10,339 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)
58 Northern Hudson Region Dairy Farms, 1995
My Farm
Average
Item
$ 634,769
Beginning of year farm net worth
Net farm income w/o appreciation
+Nonfarm cash income
-Personal withdrawals & family
expenditures excluding
nonfarm borrowings
RETAINED EARNINGS
$ 40,176
+ 8,823
Nonfarm noncash transfers to farm
+Cash used in business
from nonfarm capital
-Note/mortgage from farm
real estate sold (nonfarm)
CONIRIBUIEDIWITHDRAWN CAPITAL
$
0
+
5,673
Appreciation
-Lost capital
CHANGE IN VALUATION EQUIlY
$
-
$--­
$--­
+--­
36,004
+ $ 12,995
+$--­
$--­
+--­
0
+$
5,673
-943
2,843
+$--­
$--­
+$
-3,786
IMBALANCElERROR
829
End of year net worth*
= $ 648,847
$ 14,078
Change in net worth w/appreciation
+$---
-$--­
=$--­
$--­
Change in Net Worth
Without appreciation
With appreciation
*May not add due to rounding.
$
$
15,021
14,078
$----­
$----­
-
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 activi­
ties, 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.
ANNUAL CASH FLOW STATEMENT
58 Northern Hudson Region Dairy Farms, 1995
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 stocklcert.
= Total asset sales
expansion livestock
Capital purchases:
+ machinery
+ real estate
+ other stocklcert.
Total invested in fann 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
$
$
399,862
347,704
1,111
2,333
289
$
4,125
17,150
13,692
1,080
$
52,160
$
-27,363
8,823
36,186
$
$
$
$
3,733
$
36,047
$
24,797
$
-32,314
$
7,939
$
407
$
829
43,989
2,935
303
5,673
182
$
53,082
$
45,143
41,449
3,694
0
$
7,001
6,594
-
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 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 com­
pared to planned 1996 debt payments shown below.
FARM DEBT PAYMENTS PLANNED
Same 45 Northern Hudson Region Dairy Farms, 1994 & 1995
Debt Payments
Average
1995 Payments
Planned
Made
Long term
Intermediate term
Short term
Operating (net
reduction)
Accounts payable
(net reduction)
Total
$ 13,424
32,607
1,385
Per cow
Per cwt 1995 milk
Percent of total
1995 farm receipts
Percent of 1995
milk receipts
$
$
$
1,691
14,580
53,392
4,362
$ 15,426
36,758
886
130
809
440
$ 54319
617
$ 49,724
$
296
72760
360
1.72
$
$
527
2.52
11%
16%
13%
19%
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 planned debt payments for 1996.
CASH FLOW COVERAGE RATIO
Same 45 Northern Hudson Region Dairy Farms, 1994 & 1995
My Farm
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 1995
(as of December 31,1994)
(AlB) = Cash Flow Coverage Ratio for 1995
$
-
$
$
427,611
372,126
22,278
28.964
48,799
$
49,724
0.98
$
$
*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
Hired labor
Dairy grain & concentrate
Dairy roughage
Nondairy feed
Mach.hke/rentnease
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
My Farm
Regional Average
Per Cow/
Per Cow
PerCwt
PerCwt
131.7
27,027
$
$
$
2,781
218
25
11
32
79
3,146
$
367
757
21
0
26
163
76
17
38
99
225
29
79
1
12
71
88
42
49
36
$
$
60
$
58
36
87
35
2,472
$
13.55
1.06
0.12
0.05
0.16
0.38
15.32
1996
Projection
Expected
Change
$
$
$
$
$
$
$
$
1.79
3.69
0.10
0.00
0.13
0.79
0.37
0.08
0.19
0.48
1.10
0.14
0.39
0.00
0.06
0.35
0.43
0.20
0.24
0.18
0.29
0.28
0.18
0.42
0.17
12.05
Total
Net Accrual Operating Income
(without interest paid)
$ 88,766
$
11,922
- Change in livestock/crop inventory*
2,557
- Change in accounts receivable
841
- Change in feed/supply inventory**
-177
+ Change in accounts payable***
NEf CASH FLOW
$ 73,269
$
$ 27.181
- Net family withdrawals
46,088
Available for Farm
$
- Farm debt payments
65.526
Available for Farm Invesunent
$ -19,438
$
$ 36,047
- Capital purchases
$
Additional Capital Needed
*Includes change in advance government receipts. **Includes change in prepaid expenses.
interest account payable.
$
$
$
$
***Excludes change 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
58 Northern Hudson Region Dairy Farms, 1995
Land
Tillable
Nontillable
Other nontillable
Total
Crop Yields
Hay crop
Com silage
Other forage
Total forage
Com grain
Oats
Wheat
Other crops
Tillable pasture
Idle
Total Tillable Acres
My Farm
Average
Item
Owned
197
47
94
338
Rented
189
18
13
220
Farms
55
55
Acres*
207
131
4
55
29
3
2
5
10
13
58
41
341
89
30
28
25
36
36
386
Owned
Total
386
65
107
558
Rented
Total
---
Prod/Acre
2.4 to DM
13.1 tn
4.6 to DM
1.1 to DM
3.1 to DM
90 bu
56 bu
54 bu
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 196, com silage 124, com grain 44, oats 2, tillable pasture 6, and idle 8.
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
58 Northern Hudson Region Dairy Farms, 1995
Item
Total tillable acres per cow
Total forage acres per cow
Harvested forage dry matter, tons per cow
Average
2.93
2.45
7.71
My Farm
-
17
Cropping Analysis (continued)
A number of cooperators have allocated crop expenses among the hay crop, corn, 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 corn. Additional expense items such as fuels, labor, and machinery repairs are not included. Rotational
grazing was used on three farms in the region.
CROP RELATED ACCRUAL EXPENSES
58 Northern Hudson Region Dairy Farms Reporting, 1995
Item
No. of farms reporting
Ave. Number of acres
Fert./lime
Seeds/plants
Spray/other
crop expo
TOTAL
Total
Per
Till.
Acre
58
386
$ 29.90
14.26
All
Corn
Per
Acre
Corn
Silage
Per
TonDM
Corn
Grain
Per Dry
Sh. Bu.
19
191
51.63
23.34
$ 10.95
4.95
16.62
$ 60.78
35.80
$ 110.77
7.59
$ 23.49
$
Fert./lime
$--­
$--­
$--­
Seeds/plants
Spray/other
crop expo
TOTAL
$--­
$--­
$--­
$
Hay Crop
Per
Acre
Total
Acre
19
207
$
0.51
0.23
$ 18.48
9.79
$
0.36
1.10
5.20
$ 33.47
2.11
$ 13.58
$--­
$--­
$-­
$--­
$--­
$-­
7.50
3.97
My Farm
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
58 Northern Hudson Region Dairy Farms, 1995
Average
Machinery
Expense
Fuel, oil & grease
Mach. repair & vehicle expo
Machine hire, rent & lease
Interest (5%)
Depreciation
Total
My Farm
Total
Expenses
$
$
10,055
21,450
3,445
7,629
14,869
57,448
Per Till.
Acre
$
$
26.05
55.57
8.92
19.76
38.52
148.83
Per Till.
Acre
Total
Expenses
$
$
$
$
­
18
Dairy Analysis
Analysis of the dairy enterprise can reveal a great deal about the strengths and weaknesses of the dairy farm
business. Information on this page 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
58 Nonhero Hudson Region Dairy Farms, 1995
Heifer
Open
Value
No.
Dairy Cows
Item
Beg. year (owned)
No.
Value
127
$140,683
11,152
-5,796
$146,039
+ Change w/o apprec.
+ Appreciation
End year (owned)
End including leased
Average number
137
137
132
Bred
No.
Value
39
40
105
$ 37,319
614
-1.523
$ 36,410
32
31
$ 18,489
-672
-655
$ 17,162
No.
32
34
Calves
Value
$
9,847
745
-318
$ 10,274
(all age groups)
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
58 Nonhero Hudson Region Dairy Farms, 1995
Item
Total milk sold, lbs.
Milk sold per cow, lbs.
Average milk plant test, percent butterfat
Average
My Farm
2,702,741
20,521
3.73%
-
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, 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 produc­
ing milk are the operating costs plus depreciation. Total costs of producing 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
58 Northern Hudson Region Dairy Farms, 1995
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
$ 302,706
$ 2,298
$ 11.20
$
$
$
$ 326,037
$ 392,975
$ 2,476
$ 2,984
$ 12.06
$ 14.54
$
$
$
$
$
$
$ 366,213
$ 2,781
$ 13.55
$
$
$
$
40,176
$
305
$
1.49
$
$
$
$
39,233
$
298
$
1.45
$
$
$
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
58 Northern Hudson Region Dairy Farms, 1995
My Farm
Average
Item
Purchased dairy grain
& concentrate
Purchased dairy roughage
Total Purchased
Dairy Feed
Purchased grain & cone.
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
PerCwt
$
757
21
$ 3.69
778
$
Per Cow
$
$
$ 3.79
$
$
$ 4.66
$
$ 0.19
0.48
1.10
0.14
0.39
0.00
0.06
0.35
$
.10
27%
$ 956
34%
$
38
99
225
29
79
1
12
71
PerCwt
--­
%
$
--­
%
$
-
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
58 Northern Hudson Region Dairy Farms, 1995
Per Tillable
Acre
$ 2,372
Per
Cow
$ 6,952
3,171
1,174
Per
Worker
$ 220,664
Item
Farm capital
Real estate
Machinery & equipment
Asset turnover ratio
37,257
Per Tillable
Acre Owned
$ 4,648
2,120
401
0.45
My Farm
Farm capital
Real estate
Machinery & equipment
Asset turnover ratio
$
$
$
$
LABOR FORCE INVENTORY AND ANALYSIS
58 Northern Hudson Region Dairy Farms, 1995
My Farm: Total
Operator's
Labor
Efficiency
Cows, average number
Milk sold, pounds
Tillable acres
Work units
Labor Costs
Value of operator(s)
labor ($1,450/mo.)
Family unpaid
($1,450/mo.)
Hired
Total Labor
Machinery Cost
Total Labor & Mach.
Total
132
2,702,741
386
1,387
$
28,826
3,640
48,394
$ 80,860
$ 57,448
$ 138,307
Value of
Labor & Mgmt
$ 20,760
7,776
2,673
/12 = 4.15WorkerEquivalent
1.53 OperatorlManager Equivalent
/12 = _ _ Worker Equivalent
/12OperatorlManager Eguivalent
Average
My Farm
Per Worker
Total
Per Worker
32
651,357
93
334
Average
Per
Cow
Total
Years
of Educ.
13
14
14
Age
48
41
40
Months
13.48
5.00
1.40
5.93
2.51
21.47
49.79
Labor Force
Operator number 1
Operator number 2
Operator number 3
Family paid
Family unpaid
Hired
Total
$
219
$
$
$
28
367
614
436
1,050
Per
Cwt
$
1.07
$
$
$
0.13
1.79
2.99
2.13
5.12
My Farm
Per
Cow
Total
$
$
Per
Cwt
$
-­
-­
$
$
$
$
$ -­
$
$
$
$
•
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 45 Northern Hudson Region Dairy Farms, 1994 & 1995
Average of 45 Farms*
1994
1995
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
Com silage per acre, tons
Labor Efficiency
Cows per worker
Milk: sold/worker, lbs.
Cost Control
Grain & conc. 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.
131
106
2,669,868
3.99
393
138
112
2,892,128
4.42
401
20,433
2.75
16
20,900
2.15
13
33
668,286
31
655,069
28%
My Farm
1995
1994
%
27%
Goal
%
%
$
$
4.92
1,078
$
$
4.63
1,077
$
$
$
$
$
$
$
11.31
$
11.12
$
$
$
$
$
7,360
1,231
$
$
7,060
1,201
$
$
$
$
$
$
.46
.46
$
$
49,776
55,134
$
$
43,998
42,869
$
$
$
$
$
$
$
6,452
$
3,793
$
$
$
2.66%
.97%
%
%
%
3.79%
2.97%
%
%
%
$ 699,860
.29
2,078
$
$
$
697,695
.29
2,014
$
$
$
$
$
$
•
~
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 business areas where more cba11enging goals are needed.
FARM BUSINESS CHART FOR FARM MANAGEMENT COOPERATORS
58 Northern Hudson Region Dairy Farms, 1995
Worker
Equiv­
alent
Size of Business
Pounds
No.
of
Milk
Cows
Sold
Pounds
Milk Sold
Per Cow
Rate of Production
Tons Corn
Tons
Hay Crop
Silage
Per Acre
DMlAcre
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)*
(11)
(11)
(10)
(9)
(9)
(11)
(11)
8.23
4.52
3.33
2.59
1.74
286
146
103
65
45
6,497,070
2,863,870
1,895,133
1,160,518
810,944
23,629
20,690
19,280
18,214
15,023
3.5
2.7
2.3
1.8
1.3
18
15
13
11
9
47
35
29
26
19
925,927
689,414
570,322
476,314
341,582
Cost Control
Labor &
Machinery
Costs per Cow
Feed & Crop
Expenses
Per Cow
Grain
Bought
Per Cow
% Grain is
of Milk
Receipts
Machinery
Costs
Per Cow
(10)
(10)
(11)
(11)
(10)
(10)
19%
24
27
29
34
$258
348
430
517
667
$724
899
1,033
1,188
1,558
$624
824
895
1,008
1,189
$3.61
4.24
4.62
4.95
6.02
$429
591
711
804
950
Value and Cost of Production
Total Cost
Milk
Oper. Cost
Receipts
Production
Milk
PerCwl
Per Cow
PerCwl
(10)
(10)
(10)
$3,241
2,793
2,563
2,422
2,021
$8.78
10.32
10.83
11.92
13.92
$13.29
13.87
14.50
15.79
19.43
Feed & Crop
Expenses Per
Cwt. Milk
Net Farm
Income
w/Apprec.
Profitability
Net Farm
Inc. w/o
Apprec.
Labor &
Mgl Inc.
Per Oper.
Change in
Net Worth
w/Apprec.
(3)
(3)
(3)
(6)
$34,435
15,516
1,252
-16,769
-42,151
$87,024
18,219
5,123
-10,367
-35,804
$124,981
46,957
27,645
11,311
-22,151
*Page number of the participant's DFBS where the factor is located.
$124,255
48,643
31,220
7,775
-18,593
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 perfonnance. 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
Size of Business
No.
Pounds
Worker
Equiv­
of
Milk
alent
Cows
Sold
(11)*
(11)
(11)
Rates of Production
Pounds
Tons
Tons Corn
Milk Sold
Hay Crop
Silage
Per Cow
DMlAcre
Per Acre
(10)
(9)
(9)
Labor Efficiency
Pounds
Cows
Per
Milk Sold
Worker
Per Worker
(11)
(11)
12,116,804
23,770
23
1,112,817
5.2
12.0
560
56
4,628,175
21,769
4.0
20
898,663
5.9
222
46
3,097,796
20,968
3.6
18
41
805,930
4.5
159
2,407,393
20,229
3.2
717,932
125
18
37
3.7
2,051,070
19,422
3.0
34
652,910
3.2
16
109
----------------------------------------------------------------------------------------------------------------------------------------------------- .. --­
1,715,708
2.8
2.8
18,856
16
32
603,031
93
1,352,622
18,020
2.5
552,825
2.5
75
15
30
1,137,044
17,044
14
491,227
2.2
2.1
27
63
15,864
51
888,899
13
24
433,739
1.9
1.9
13,700
10
20
335,490
40
655,673
1.4
1.4
Grain
Bought
Per Cow
(10)
% Grain is
of Milk
Receipts
(10)
16%
22
24
26
28
$390
525
577
646
700
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
29
31
32
35
40
846
918
1,030
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
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
Milk
Receipts
Per Cow
(10)
Milk
Receipts
PerCwt
(10)
$3,237
2,932
2,800
2,709
2,612
2,514
2,408
2,285
2,101
1,823
Total
(3)
Net Farm Income
Without Appreciation
As % of Total
Per
Accrual Receipts
Cow
(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
31,093
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
(3)
(10)
Total Cost
Production
PerCwt
(10)
Labor &
Management Income
Per
Per
Farm
Operator
(3)
(3)
$279,148
110,046
79,444
63,874
51,109
$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
Debt Service
as Percent
Coverage
Per Cow
Ratio
of Milk Sales
(12)
(8)
(8)
Planned Debt
Payments
Per Cow
(8)*
Debt
Per Cow
(5)
$43
204
283
332
396
$804
615
538
475
424
4.63
1.66
1.35
1.15
1.00
9
12
14
16
$74
669
1,191
1,727
2,069
452
507
562
636
796
387
322
243
189
0
0.87
0.74
0.61
0.41
-0.08
18
20
23
26
35
2,387
2,694
3,015
3,510
4,398
Solvency
Leverge
Ratio**
Percent
Equity
(5)
Debt!Asset Ratio
Current &
Long
Intermediate
Term
(5)
(5)
0.01
0.10
0.22
0.34
0.45
99%
91
82
74
69
0.01
0.10
0.17
0.24
0.30
0.00
0.00
0.01
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
Asset
Turnover
(ratio)
(II)
.75
.60
.55
.50
.47
Efficiency (Capital)
Real Estate
Machinery
Investment
Investment
Per Cow
Per Cow
(II)
(11)
$1,152
1,924
2,232
2,491
2,764
$571
751
902
1,040
1,167
5%
Profitability
Percent Rate of Return with
appreciation on:
Equity
Total Capital
(3)
(3)
21%
10
8
5
3
1
0
-2
-6
-22
13%
9
7
6
4
3
2
0
-1
-6
Total Farm
ASsets
Per Cow
(11)
Change in
Net Worth
w/Appreciation
(6)
$4,262
5,128
5,569
5,948
6,368
$182,925
63,674
41,117
29,544
20,624
6,842
.43
3,033
1,290
7,447
.39
3,377
1,443
8,055
1,683
.36
4,026
8,891
.32
4,698
1,969
11,657
.25
6,692
2,703
*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.
14,936
8,501
1,168
-10,157
-40,417
-
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 tiesta1l 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 Managmem Business Summary, New York,
1994, Department of Agricultural, Resource, and Managerial Economics, Cornell University, R.B. 95-03, August 1995.
Item
27
SELECI'ED BUSINESS FACTORS BY TYPE OF BARN AND HERD SIZE
299 New York Dairy Farms, 1994
Farms with:
Conventional
Freestall
>60 Cows
<=60 Cows
<=180 Cows
>180 Cows
Number of fanns
69
71
96
63
Cropping Program Analysis
Total Tillable acres
Tillable acres rented*
Hay crop acres*
Com silage acres*
Hay crop, tons DM/acre
Com silage, tons/acre
Oats, busbels/acre
Forage DM per cow, tons
Tillable acres/cow
Fert. & lime exp.ltillable acre
Total macbinery costs
Macbinery 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 beifers
Milk sold, lbs.
Milk sold/cow, Ibs.
Operating cost of prod. milk/cwl
Total cost of prod. milk/cwl
Price/cwl milk sold
Purcbased dairy feed/cow
Purcbased dairy feed/cwt. milk
Purcbased grain & conc. as % of milk receipts
Purc. 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
Macbinery investment/cow
Asset turnover ratio
Labor Efficiency
Worker equivalent
Operator/manager equivalent
Milk sold/worker, lbs.
Cows/worker
Labor cost/cow
Labor cost/tillable acre
Profitability & Balance Sbeet 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 CHART FOR SMALL CONVENTIONAL STALL DAIRY FARMS
69 Conventional Stall Dairy Farms with 60 or Less Cows, New York, 1994
Worker
Equivalent
(11)*
2.87
2.45
2.08
2.00
1.97
Size of Business
Pounds
No.
of
Milk
Cows
Sold
(11)
(11)
60
57
54
51
49
Pounds
Milk Sold
Per Cow
(10)
21,897
20,349
19,576
18,797
17,788
1,207,610
1,041,959
956,111
878,296
842,902
Rates of Production
Tons
Tons Corn
Silage
Hay Crop
DMlAcre
Per Acre
(9)
(9)
4.3
3.6
3.2
2.8
2.4
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
----------------------------------------------------------------------------------------------------------------------------------------------------1.73
1.52
1.43
1.30
1.12
Grain
Bought
Per Cow
(10)
$371
472
526
558
594
649
707
756
840
977
46
44
42
40
33
786,474
724,587
682,846
629,613
512,941
% Grain is
of Milk
Receipts
(10)
16%
21
24
25
27
28
30
33
36
42
17,019
16,251
15,493
14,166
11,923
Machinery
Costs
Per Cow
(11)
2.1
2.0
1.9
1.6
1.2
Cost Control
Labor &
Machinery
Costs Per Cow
(11)
25
23
22
20
16
15
14
13
11
8
445,006
416,992
376,560
321,752
250,079
Feed & Crop
Expenses
Per Cow
(10)
Feed & Crop
Expenses Per
Cwt. Milk
(10)
$278
318
366
414
443
$715
853
935
1,025
1,082
$506
618
667
701
747
$3.17
3.74
3.96
4.14
4.36
475
505
539
591
831
1,132
1,200
1,298
1,401
1,817
792
837
900
1,021
1,214
4.60
4.94
5.30
5.57
6.50
Value and Cost of Production
Total Cost
Milk
Oper. Cost
Receipts
Milk
Production
PerCwt
PerCwt
Per Cow
(10)
(10)
(10)
Profitability
Net Farm Income
Without Appreciation
Per Cow
Total
(3)
(10)
Labor &
Mgmt. Inc.
Per Oper.
(3)
Change in
New Worth
w/Apprec.
(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
Equiv­
alent
(11)*
4.69
3.57
3.10
2.84
2.65
Size of Business
No.
Pounds
Milk
of
Cows
Sold
(11)
(11)
133
108
97
91
81
Pounds
Milk Sold
Per Cow
(10)
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
Rates of Production
Tons
Tons Com
Hay Crop
Silage
DMlAcre
Per Acre
(9)
(9)
5.1
3.9
3.5
3.1
2.9
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(11)
24
20
18
17
16
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
15,388
2.0
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
1,031
1,077
1,142
1,264
1,386
876
925
978
1,077
1,224
4.78
4.99
5.20
5.52
6.59
Value and Cost of Production
Milk
Oper. Cost
Total Cost
Receipts
Milk
Production
PerCwt
Per Cow
PerCwt
(10)
(10)
(10)
Profitability
Net Farm Income
Without Appreciation
Total
Per Cow
(3)
(10)
$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
Labor &
Mgmt. Inc.
PerQper.
(3)
Change in
New Worth
w/Apprec.
(6)
,.,
*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
Equiv­
alent
(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
Rates of Production
Pounds
Tons
Tons Com
Milk Sold
Hay Crop
Silage
Per Cow
DMlAcre
Per Acre
(10)
(9)
(9)
Size of Business
Pounds
No.
Milk
of
Cows
Sold
(11)
(11)
% Grain is
of Milk
Receipts
(10)
16%
21
23
26
28
23,575
21,582
20,823
19,939
19,272
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
Labor &
Machinery
Machinery
Costs
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
Milk
Oper. Cost
Total Cost
Receipts
Milk
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
Total
Per Cow
(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 Fanns with More Than 180 Cows, New York, 1994
Worker
Equivalent
(11)*
Size of Business
No.
Pounds
of
Milk
Cows
Sold
(11)
(11)
Rates of Production
Pounds
Tons
Tons Corn
Milk Sold
Hay Crop
Silage
Per Cow
DM/Acre
Per Acre
(10)
(9)
(9)
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(11)
23,351,762
24,801
22
1,306,713
5.5
65
11,657,338
23,472
4.4
20
1,093,175
53
9,575,213
22,655
4.1
19
1,011,822
47
7,921,542
21,928
3.7
18
46
964,401
6,515,416
21,395
3.5
16
44
933,249
.. _-------------------------------_ .. _... _-----_ ........ _---------------------------------------------------- ...... -_ ...... -----------------------------------------­
5,612,972
20,967
243
3.2
42
901,922
6.76
15
4,922,221
234
20,780
3.1
40
850,753
6.03
15
225
4,551,060
20,134
37
813,336
2.8
5.39
15
4,167,979
213
18,893
35
717,586
4.88
2.4
14
192
3,391,553
15,710
12
616,668
3.79
1.6
30
Cost Control
Feed & Crop
Grain
% Grain is
Machinery
Labor &
Feed & Crop
Bought
of Milk
Machinery
Expenses
Expenses Per
Costs
Per Cow
Receipts
Per Cow
Costs Per Cow
Per Cow
Cwt. Milk
(11)
(10)
(10)
(11)
(10)
(10)
20.63
11.96
10.13
8.52
7.38
1,088
539
420
365
311
$535
688
728
750
782
21%
24
25
27
27
804
847
881
928
1,012
28
29
31
32
35
$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
Total Cost
Milk
Oper. Cost
Production
Receipts
Milk
PerCwt
PerCwt.
Per Cow
(10)
(10)
(10)
$3,443
3,188
3,073
2,969
2,889
$8.83
9.72
10.00
10.33
10.66
$11.90
12.25
12.51
12.91
13.38
Profitability
Net Fann 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.
Per Oper.
(3)
Change in
New Worth
w/Apprec.
(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 long 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 will 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 rums, cattle dealers, veterinarians and other providers 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 operating 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.
Capital Efficiency - The amount of capital invested per production unit. Relatively high investments per worker with low to mod­
erate 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 busi­
ness 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 oc­
cupation 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, 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 farm operator/manager's owned capital or farm net worth.
-
35
Expansion Livestock - Purchased dairy cattle and other livestock that cause an increase in herd size from the beginning 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.
Fa"" Debt Payments Per Cow - Planned or scheduled debt payments per cow represent the repayment plan scheduled at the be­
ginning 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.
Financiai 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 profitability 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 opera­
tor.
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 Fa"" 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 oppor­
tunity 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 Cash-Crop Dairy (farm) - Operating and managing this farm is not a full-time occupation, crop sales exceed 10 per­
cent 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, 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)
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 Capltal- (defined on page 7)
Return on Total Capltal- (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 sol- ,
vency.
Total Costs ofProduclng Milk - (defined on page 19)
Whole Farm Method - A procedure used to calculate costs of producing milk on dairy farms without using enterprise cost ac­
counts. 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
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
16
Acreage
Advanced Government Receipts
7.8
25
12
Labor & Mgmt. Income
6
Labor & Mgmt. Income Per Oper
6
Age
20
Labor Efficiency
20
Amount Available for Debt Service
14
Land Resources
16
Annual Cash Row Statement
12
Liquidity
10
Lost Capital
10
.5.11.18
Appreciation
20
Asset Turnover Ratio
Machinery Expenses
3,17
Balance Sheet
8
Milking Frequency
Barn Type
2
Milk Production
18
bST Usage
2
Milking System
2
2
Money Borrowed
12
20
Net Farm Income
5
Business Type
Capital Efficiency
Cash From Nonfarm Capital Used in
the Business
Cash Row Coverage Ratio
Cash Paid
Net Investment
10
12
Net Worth
14
Number of Cows
18
Operating Costs of Prod. Milk
19
2
4.12
Cash Receipts
2
8
Opportunity Cost
6
3
Change in Accounts Payable
3
Other Livestock Expenses
Change in Accounts Receivable
4
Outflows
Change in Inventory
2.3
Change in Net Worth
11
3,17
Crop Expenses
16
CroplDairy Ratios
7.8
Current Portion
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
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
,
9
Depreciation
3,10
Repayment Analysis
Dry Matter
16
Replacement Livestock
Education
20
Retained Earnings
Equity Capital
7
Expansion Livestock
3,12
Expenses
Farm Debt Payments Per Cow
Return on Equity Capital
7
Return on Total Capital
7
Total Costs of Producing Milk
19
Whole Farm Method
19
13
Worker Equivalent
20
13
Yields Per Acre
22-25.28-31
:
3
11
10
Farm Debt Payments as Percent
of Milk Sales
14
Solvency
3
Farm Business Chart
22.23
_
~
16
-
38
NOTES
•
OTHER AoRoMoEo EXTENSION BULLETINS
No. 95-23
New York Economic Handbook 1996
Agricultural Situation and outlook
A.R.M.E. Staff
No. 95-24
Bee Economics A Computer Model for
Economic Analysis of Beekeep~ng
Operations
Lois Schertz Willett
Nicholas W.
Calderone
Malcome T. Sanford
No. 96-01
Fruit Farm Business Summary Lake
ontario Region New York 1994
Gerald B. White
Alison M. DeMarree
Linda D. Putnam
No. 96-02
Micro DFBS A Guide to Processing
Dairy Farm Business Summaries in
County and Regional Extension
Offices for Micro DFBS Version 3.2
Linda D. Putnam
Wayne A. Knoblauch
Stuart F. smith
No. 96-03
The Return of Agricultural Lands to
Forest Changing and 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
­