JUNE 19 6
E.B.96-12
OUTHEASTERN
NEW YO K REGION
1995
ULSTER
\
(
I
l\\ SJ:---­
IVAN
I
'''-...,
ORANGE
Robert A. Milligan
Linda D. Putnam
Paul Cero aletti
Stephen E. Hadcock
La yR. Hulle
M ·ane Kiraly
C II n A. McKeon
Department of Agricultural Resource, and Managerial Economics
Coil e or Agriculture and Life Sciences
Cornell University, Ithaca, New York 14853-7801
-
It IS
e Policy of Cornell University actively to upport
uality
of educ tional and employment oppo nity. N pe on shall
denied admi ion to any educauon program or activity or e
denied employment on the basis of any Ie ally pr hibited
iscrimination involving, but not limited to, such factor
race,
color,
, religion, national or ethnic ngin. sex, ag or
ndicap. The Umversity is committed to e maintenance f
affirmative acuon programs whicb will assure the continuation of
such equality of opportunity.
1995 DAIRY FARM BUSINESS SUMMARY
Southeastern New York Region
Table of Contents
INTRODUCfION
1
Prognull Objectives
1
Fonnat Features
1
SUMMARY AND ANALYSIS OF THE 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 THE FARM BUSINESS
21
Progress of the Fann Business
21
Regional Fann Business Chart
22
New York State Farm Business Chart
23
. Financial Analysis Chart
25
Comparisons by Type of Bam and Herd Size
26
Herd Size Comparisons
26
IDENTIFY AND SET GOALS
32
GLOSSARY AND LOCATION OF COMMON TERMS
.34
INDEX
37
-
1995 DAIRY FARM BUSINESS SUMMAR)'
SOUTHEASTERN NEW YORK REGION
INTRODUCTION
Dairy farm managers throughout New York State have been participating in Cornell Cooperative Extension's
farm business summary and ~alysis program since the early 1950's. Managers of each participating farm business re­
ceive 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 Southeastern New York Region for 1995.
Program Objective
The primary objective of the dairy farm business summary, DFBS, is to help farm managers improve the business
and financial management of their business through appropriate use of historical farm data and the application of .modern
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 Southeastern Region of New York State, with the number of participating farms in parentheses, is comprised of
Delaware (21), Columbia (6), Sullivan (11), Orange (9), and Ulster (1) counties. This report was written by Robert A.
Milligan, Professor, Agricultural Economics. Linda D. Putnam was in charge of data analysis. Melody Clark prepared
the publication. Farm business data were collected by Cooperative Extension Educators Steve Hadcock, Colleen McKeon,
Larry Hulle, Paul Cerosaletti and Mariane Kiraly.
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
48 Southeastern New York Region Dairy Farms, 1995
Type of Farm
Dairy
Part-time dairy
Dairy cash-crop
Part-time cash-crop dairy
Number
47
0
I
0
Type of Ownership
Owner
Renter
Number
32
16
TyPe of Business
Sole Proprietorship
Partnership
Corporation
Number
36
II
I
Type of Barn
Stanchion or Tie-Stall
Freestall
Combination
Number
38
10
0
Milking Frequency
2 times per day
3 times per day
Other
Number
47
I
0
Milking System
Bucket & carry
Dumping station
Pipeline
Herringbone parlor
Other parlor
Number
0
2
34
10
2
Production Records
DHIC
Owner-Sampler
Other
None
Number
30
5
2
II
bST Usage
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
6
2
0
0
40
Business Record System
Account Book
Agrifax (mail-in only)
On-farm computer
Other
Number
30
6
8
4
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
48 Southeastern New York Region Dairy Fanns, 1995
Expense Item
Hired Labor
Feed
Dairy grain & concentrate
Dairy roughage
Nondairy
Machinery
Machinery hire, rent & lease
Machinery repairs & fann 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 (fann share)
Interest paid
Miscellaneous
Total Operating
Expansion livestock
Machinery depreciation
Building depreciation
TOTAL ACCRUAL EXPENSES
Cash
Paid
$ 13,173
Change in
Inventory
or Prepaid
Expense
$
67
55,415
2,123
252
-312
405
-2
2,015
10,253
5,062
-18
-8
o
o
3,689
2,722
4,655
11,807
1,026
3,965
«
Change in
Accounts
Payable
$
0
«
o
o
o
2,015
10,642
5,102
«
-81
-27
-158
«
-2
o
o
o
o
-8
80
«
«
92
4,945
-11
128
5,944
2,274
3,253
564
485
57
-72
108
2,278
6,353
7,418
202
100
o
«
«
3,915
7,460
10,646
2,559
o
o
o
«
«
«
$173,294
3,858
$
o
347
-2,064
-173
2,423
4,189
7,245
o
3,915
7,467
10,442
2,583
-204
$
«
o
92
5,084
-8
-21
1,593
3,608
2,664
4,491
11,805
1,034
3,885
5,308
1,897
3,188
7
-45
Accrual
Expenses
$ 13,106
56,636
1,768
254
371
32
6
o
=
909
50
o
31
o
$
+
-858
o
$ 170,843
3,858
11,034
4,220
$ 189,955
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 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.
­
4
CASH AND ACCRUAL FARM RECEIPTS
48 Southeastern New York Region Dairy Farms, 1995
Receipt Item
Milk sales
Dairy cattle
Dairy calves
Other livestock
Crops
Government receipts
Custom machine work
Gas tax refund
Other
Less nonfarm noncash capital**
Total Receipts
Cash
Receipts
+
$ 188,343
10,528
2,373
512
1,721
2,883
254
113
2,838
Change in
Inventory
$
$
1,638
0
0
0
249
168
-17
0
0
$
2,038
6,111
96
-3,108
0*
(-)
$ 209,565
Change in
Accounts
Receivable
+
$
0**
3,099
Accrual
Receipts
=
$
(-)
$
189,981
16,639
2,373
608
-1,138
3,051
237
113
2,838
0
214,702
*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 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 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. Payments
in January for milk produced in December 1995 compared to January 1995 payments for milk produced in 1994 is in­
cluded 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, 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 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
48 Southeastern New York Region Dairy Farms, 1995
Item
Total
Average
Per Cow
$ 214,702
-987
2,740
3,197
-81
$ 219,571
- 189,955
$ 29,616
$ 24,747
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
$--­
$--­
$ 348
$ 291
$--­
$--­
$--­
$--­
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
48 Southeastern New York Region Dairy Farms, 1995
2000
•
•
1500
~
0
~ 'g
•
-. 1000
c
0
0
g
-~
~
....
il)
Z
.~
§:
500
e<:l
~
'-"
0
~
-500
~
•
..
..
• • • ~ • t·
• •• ••• • • ,
• •
•
•
• •
•
•
'.
•
•
••
•
-
-1000
7000
9000
11000
15000
13000
17000
Pounds Milk Sold Per Cow
19000
21000
23000
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 owner­
ship 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 income excluding appreciation. The interest charge of five percent reflects the long-term average rate of retum
above inflation that a farmer might expect to earn in comparable risk investments.
LABOR AND MANAGEMENT INCOME
48 Southeastern New York Region Dairy Farms, 1995
Item
Average
My Farm
Net farm income without appreciation
$24,747
Family labor unpaid @ $1,450 per month
- 6,569
Interest on $355,990 average equity capital @ 5% real rate
-17,800
Labor & Management Income per farm (1.33 Operators/farm)
$
378
$---­
Labor & Management Income per OperatorlManager
$
284
$---­
$---­
Labor and management income per operator averaged $284 on these 48 farms in 1995. The range in labor and
management income per operator was from about $-82,000 to more than $90,000. Returns to labor and management were
negative on 51 % of the farms. Labor and mangement income per operator was between $0 and $20,000 on 31 % of the
farms while 18% showed labor and management incomes of $20,000 or more per operator.
Distribution of Labor & Management Incomes per Operator
48 Southeastern New York Dairy Farms, 1995
25
25
20
en
~
....o
15
....
=
~
10
­
5
.'
o
<-30
-30 to -10
-10 to 0
oto 10
10 to 20
Labor & Management Income (thousand dollars)
20 to 30
>30
7
Return on equity capital measures the net return remaining for the farmer's equity or owned capital after a charge has
been made for the owner-operator's labor and management. The earnings or amount of net farm income allocated to labor
and management is the opportunity cost of operators' labor and management estimated by the cooperators. Return on
equity capital is calculated 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 inter­
est paid to the return on equity capital and then dividing by average farm assets to calculate the rate of return on total
capital.
.
RETURN ON EQUITY CAPITAL AND RETURN ON TOTAL CAPITAL
48 Southeastern New York Region Dairy Farms, 1995
Average
Item
Net farm income with appreciation
$
29,616
Family labor unpaid @$1,450permonth
6,569
Value of operators' labor & management
27,513
My Farm
$---­
Return on equity capital with appreciation
$
-4,466
$---­
Interest paid
+
10,442
+---­
Return on total capital with appreciation
$
5,976
$---­
Return on equity capital without appreciation
$
-9,335
$---­
Return on total capital without appreciation
$
1,107
$---­
Rate of return on average equity capital:
with appreciation
-1.3%
----_%
without appreciation
-2.6%
----_%
with appreciation
1.2%
---_%
without appreciation
0.2%
---_%
Rate of return on average total capital:
Farm and Family Financial Status
The ftrSt 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, liabili­
ties, and net worth and changes that occurred during the year.
Financial lease obligations are included in the balance sheet. The present value of all future payments is listed as a liabil­
ity since the farmer is committed to make the payments by signing the lease. The present value is also listed as an asset.
representing the future value the item has to the business. For 1995, lease payments were discounted by 9.25 percent to
obtain their present value.
Advanced government receipts are included as current liabilities. Government payments received in 1995 that are for
participation in the 1996 program are the end year balance and payments received in 1994 for participation in the 1995
program are the beginning year balance.
Current Portion or principal due in the next year for intermediate and long term debt is induded as a current liability.
­
8
1995 FARM BUSINESS & NONFARM BALANCE SHEET
48 Southeastern New York Region Dairy Farms, 1995
Current
Farm cash, checking
& savings
AccOlmts 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
$
5,020
$
15,272
1,727
43,737
$
65,756
84,711
0
36,483
2,322
109,730
398
2,035
2,962
$ 238,641
$
Long Term
Land & buildings:
owned
leased
Total Long Term
$ 180,014
0
$ 180,014
Total Farm Assets
$ 484,411
5,766
17,310
1,894
42,057
$
67,027
$
89,266
0
37,185
2,285
114,039
287
2,250
2,279
$ 247,591
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
Jan. 1
$
6,651
5,164
1,712
0
Dec. 31
$
5,793
7,322
2,559
0
8,651
5,095
$ 27,273
$
9,435
4,788
29,897
$ 37,045
$
34,524
398
2,035
$ 39,478
$
287
2,250
37,061
$ 65,521
$
71,632
$ 183,813
0
$ 183,813
Long Term
Structured debt
>10 years
Financial lease
(structures)
Total Long Term
0
$ 65,521
$
0
71,632
$ 498,431
Total Farm Liab.
FARM NET WORTH
$132,272
$ 352,139
$ 138,590
$ 359,841
Nonfarm Assets, Liabilities & Net Worth (Average of 33 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
8,989
4,838
96,814
3,448
7,925
7,985
3.494
$ 133,492
$
Dec. 31
9,339
4,262
96,430
3,021
9,579
8,470
4,074
$ 135,175
Liabilities & Net Worth
Nonfarm Liabilities
$
NONFARM NET WORTH
$124,676
Jan. 1
8,816
$
Dec. 31
8,212
$
Farm & Nonfarm Assets, Liabilities, and Net Worth*
Jan. 1
$ 126,962
Dec. 31
$617,903
$ 633,606
Total Assets
141,088
146,802
Total Liabilities
$476,815
$ 486,804
TOTAL FARM & NONFARM NET WORTH
*Assumes that average nonfarm assets and liabilities for the nonreporting farms were the same as for those reporting.
-
9
The following condensed balance sheet, including deferred taxes, contains average data from only those farmers who
elected to provide the additional 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.
CONDENSED BALANCE SHEET INCLUDING DEFERRED TAXES
December 31, 1995
11 New York Dairy Farms, 1995
Liabilities & Net Worth
Assets
Current debts & payables
$
Current deferred taxes
Total Current Assets
$
128,267
76,367
Total Current Liabilities
$
171,574
Intermediate debts & leases
$
132,835
124,500
Intermediate deferred taxes
Total Inter. Assets
$
470,523
Total Intermediate Liabilities
Long term debts & leases
$
257,335
$
142,392
68,412
Long term deferred taxes
Total Long Term Assets
$
427,795
TOTAL FARM ASSETS
$
1,026,585
$
210,804
TOTAL FARM LIABILITIES
$
639,713
Farm Net Worth
$
386,872
Total Long Term Liab.
Percent Equity (Farm)
Nonfarm debts
38%
$
$
TOTAL ASSETS
$
49,423
1,076,008
55
12,287
Nonfarm deferred taxes
Total Nonfarm Assets
95,207
Total Nonfarm Liabilities
$
12,842
TOTAL LIABILITIES
$
652,555
Total Net Worth
$
423,453
Percent Equity (Total)
39%
­
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
ability.
BALANCESHEETANALYS~
48 Southeastern New York Region Dairy Farms, 1995
Average
Item
Financial Ratios - Farm:
Percent equity
Debt/asset ratio: total
long-term
intermediatelcurrent
72%
%
0.28
0.39
0.21
Farm Debt Analysis:
Accounts payable as % of total debt
Long-term liabilities as a % of total debt
Current & inter. liabilities as a % of total debt
Farm Debt Levels:
Total farm debt
Long-term debt
Intermediate & long term
Intermediate & current debt
My Farm
$
4%
52%
%
%
48%
%
Per Tillable
Acre Owned
$
1,952
1,009
1,531
943
Per Cow
1,575
814
1,235
761
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
48 Southeastern New York Region Dairy Farms, 1995
Average of Region' s Farms
Machinery & Equipment
Real Estate
$
180,014
$
109,730
Item
Value beginning of year
Purchases
Gift & inheritance
Lost capital
Sales
Depreciation
$
+
11,115*
833
5,332
1,794
4,220
$
+
12,942
317
656
11,034
Net investment
Appreciation
=
+
602
3,197
+
1,569
2,740
Value end of year
$
183,813
$
114,039
*$0 land and $11,115 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)
48 Southeastern New York Region Dairy Farms, 1995
Item
My Farm
Average
Beginning of year farm net worth
$ 352,139
$--­
Net farm income wlo appreciation
+Nonfarm cash income
-Personal withdrawals & family
expenditures excluding
nonfarm borrowings
RETAINED EARNINGS
$ 24,747
+ 5,528
Nonfarm noncash transfers to farm
+Cash used in business
from nonfarm capital
-Note or mortgage from farm
real estate sold (nonfarm)
CONlRIBUTEDIWITHDRAWN CAPITAL
$
1,151
$--­
+
5,855
+--­
Appreciation
-Lost capital
CHANGE IN VALUAnON EQUITY
-
$--­
+--­
27,542
+$
2,733
+$--­
1.238
+$
$
5,768
4,869
5.332
+$--­
$--­
-463
+$--­
IMBALANCFlERROR
338
-$--­
End of year net worth*
=$ 359,841
Cbange in net worth wlappreciation
+$
$
7,702
=$--­
$--­
Change in Net Worth
Without appreciation
With appreciation
*May not add due to rounding.
$ 2,833
$ 7,702
$----­
$----­
-
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. You should be aware that all profitability measures may be affected by this
error.
ANNUAL CASH FLOW STATEMENT
48 Southeastern New York 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 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
$
$
209,565
173,294
656
556
826
$
3,858
12,942
11,115
224
$
36,272
$
-22,084
5,528
27,612
$
$
$
$
2,038
$
28,139
$
14,188
$
-26,101
$
12,997
$
-746
$
338
24,396
2,977
2,158
5,855
70
$
35,456
$
22,459
20,329
2,130
o
$
5,020
5.766
-
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
+ oilier 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 Analysk
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 37 Southeastern New York Region Dairy Farms, 1994 & 1995
Debt Payments
Average
1995 Payments
Made
Planned
8,420
12,186
1,836
Long term
Intermediate term
Short term
Operating (net
reduction)
Accounts payable
(net reduction)
Total
$
186
$ 25,687
Per cow
Per cwt 1995 milk
Percent of total
1995 farm receipts
Percent of 1995
milk receipts
$
$
9,356
16,090
3,142
$ 9,078
12,424
1,879
0
3,208
$
940
29,528
663
$ 27,252
$
$
383
2.23
$
3,058
334
1.94
My Farm
1995 Payments
Planned
Made
Planned
1996
13%
15%
15%
17%
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 37 Southeastern New York 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
Debt Payments Planned for 1995
(B)
$
195,774
157,251
9,430
23,354
$
$
24,599
$
$
25,687
0.96
$
=
(as of December 31, 1994)
(AlB)
=Cash Flow Coverage Ratio for 1995
*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 cwl 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
My Farm
Regional Average
Per Cow/
Per Cow
PerCwt.
PerCwt.
85
14,258
$ 2,235.07
195.75
27.92
7.15
-13.38
73.40
$ 2,525.91
$
$
$
154.19
666.31
20.80
2.99
23.71
125.20
60.02
42.45
31.34
52.84
138.88
12.16
45.71
0.00
1.08
59.81
62.44
22.33
37.52
28.51
49.28
85.24
46.06
87.85
30.39
$ 1,887.05
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
- Farm debt payments
Available for Farm Investment
- Capital purchases
Additional Capital Needed
*Includes change in advance government receipts.
interest account payable.
$
$
$
$
$
$
$
$
Total
54,303
3,099
2,038
1,593
-654
46,919
22,014
24,905
33.451
-8,546
28,139
Expected
Change
1996
Projection
13.32
1.17
0.17
0.04
-0.08
0.44
15.06
$
$
$
$
0.92
3.97
0.12
0.02
0.14
0.75
0.36
0.25
0.19
0.31
0.83
0.07
0.27
0.00
0.01
0.36
0.37
0.13
0.22
0.17
0.29
0.51
0.28
0.52
0.18
11.25
$
$
$
$
$
$
$
$
$
$
$
**Includes change in prepaid expenses.
$
$
***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
48 Southeastern New York 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
71
44
57
172
Rented
170
36
27
233
Farms
47
40
Acres*
158
2
47
9
4
0
2
9
4
48
21
213
130
10
0
64
Total
241
80
84
405
Owned
Prod/Acre
2.23 tn DM
11.54 tn
4.00 tn DM
2.17 tn DM
2.65 tn DM
78.36 bu
66.25 bu
0.00 bu
Rented
Acres
Total
Prod/Acre
tnDM
tn
tnDM
tnDM
tnDM
bu
bu
bu
11
27
21
241
*This column represents the average acreage for the farms producing that crop. Average acreages including those farms
not producing were hay crop 155, com silage 53, com grain 24, oats 1, tillable pasture 5, and idle 2.
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 fanners. 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
48 Southeastern New York Region Dairy Fanns, 1995
Item
Total tillable acres per cow
Total forage acres per cow
Harvested forage dry matter, tons per cow
Average
2.84
2.46
6.51
MyFann
-
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 9 farms in the region.
CROP RELATED ACCRUAL EXPENSES
Southeastern New York Region Dairy Farms Reporting, 1995
Item
No. of farms
reporting
Ave. number
of acres
Fert. & lime
Seeds & plants
Spray & other
crop expo
TOTAL
All
Corn
Per
Acre
Total
Per
Till.
Acre
48
241
$ 22.02
7.88
Corn
Silage
Per
TonDM
Corn
Grain
Per Dry
Sh. Bu.
Pasture
Per
Acre
Per
TonDM
12
10
$
Per
Till
Acre
Hay Crop
71
43.00
18.51
$ 11.00
4.73
24.14
85.65
6.18
$ 21.91
$
$
Per
Total
Acre
4
128
$
0.39
0.17
$ IO.3Q
3.61
0.22
0.78
3.54
$ 17.54
$
4.95
1.72
5
$ 159.15
4.70
1.69
8.36
$
$
13.23
$ 43.13
$
$-­
$-­
$
$
$
$
$
$
$-­
$-­
$
$
$
$
$
$
0.00
163.85
$
98
8.14
0.24
0.00
8.38
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
48 Southeastern New York Region Dairy Farms, 1995
Average
Machinery
Expense
Fuel, oil & grease
Mach. repair & vehicle expo
Machine hire, rent & lease
Interest (5%)
Depreciation
Total
My Farm
Per Till.
Acre
Total
Expenses
$
$
5,102
10,642
2,015
5,594
11,034
34,387
$
$
21.17
44.16
8.36
23.21
45.78
142.69
Total
Expenses
Per Till.
Acre
$
$
$
$
-
18
Dairy Analysis
Analysis of the dairy enterprise can reveal strengths and weaknesses of the dairy farm business. Infonnation on
this page should be used in conjunction with DHI and other dairy production infonnation. 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 appre­
ciation 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
48 Southeastern New York Region Dairy Farms, 1995
Dairy Cows
Item
Beg. year (owned)
No.
82
+ Change w/o apprec.
+ Appreciation
End year (owned)
End including leased
Average number
88
88
85
Value
$ 84,711
5,299
-744
$ 89,266
No.
Bred
Value
No.
22
$
19,038
-564
143
18,617
22
$
65
(all age groups)
,I
Heifer
Open
Value
21
$
23
$
12,284
580
-227
12,637
No.
Calves
Value
20
$
23
$
5,160
797
-26
5,931
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
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
48 Southeastern New York Region Dairy Farms, 1995
Item
Total milk sold, Ibs.
Milk sold per cow, Ibs.
Average
My Farm
1,425,790
16,778
"
Average milk plant test, percent butterfat
3.67%
-
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 PROFITABILITY
48 Southeastern New York 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
My Farm
Per Cow
Total
PerCwt
PerCwt
$ 149,980
$
1,764
$
10.52
$
$
$
$ 165,234
$ 217,116
$
$
1,944
2,554
$
$
11.59
15.23
$
$
$
$
$
$
$ 189,981
$
2,235
$
13.32
$
$
$
$
24,747
$
291
$
1.74
$
$
$
$
29,616
$
348
$
2.08
$
$
$
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
48 Southeastern New York Region Dairy Farms, 1995
My Farm
Average
Per Cow
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
PerCwt
Per Cow
PerCwt
$
666
21
$
3.97
0.12
$
$
$
687
$
4.09
$
$
$
809
30%
$
4.83
$
%
$
$
31
53
139
12
46
0
1
60
0.19
0.31
0.83
0.07
0.27
0.00
0.01
0.36
$
%
$
36%
$
-
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
. 48 Southeastern New York Region Dairy Farms, 1995
Per
Worker
$ 190,784
Item
Farm capital
Real estate
Machinery & equipment
Asset turnover ratio
Per Tillable
Acre
$ 2,039
Per
Cow
$ 5,781
2,140
1,320
43,570
Per Tillable
Acre Owned
$ 6,921
2,562
466
0.45
My Farm
Farm capital
Real estate
Machinery & equipment
Asset turnover ratio
$
$
$
$
LABOR FORCE INVENTORY AND ANALYSIS
48 Southeastern New York 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
85
1,425,790
241
886
$
24,679
$
$
$
6,569
13,106
44,354
34,387
78,741
/12 = 2.58 Worker Equivalent
1.42 Operator/Manager Equivalent
/12 = _ _ Worker Equivalent
/12Operator/Manager Equivalent
My Farm
Average
Per Worker
Total
Per Worker
33
553,533
94
344
Average
Per
Cow
Total
Value of
Labor & Mgmt
$ 21,352
5,015
1,146
Years
of Educ.
13
14
13
Age
45
42
30
Months
13.06
3.21
0.75
3.74
4.53
5.62
30.91
Labor Force
Operator number 1
Operator number 2
Operator number 3
Family paid
Family unpaid
Hired
Total
$
290
$
$
$
154
522
405
926
Per
Cwt
$
1.73
$
$
$
0.46
0.92
3.11
2.41
5.52
77
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 37 Southeastern New York Region Dairy Farms, 1994 & 1995
Average of 37 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
Corn silage per acre, tons
Labor Efticiency
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 Efticiency**
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
74
55
1,305,580
2.30
202
77
56
1,322,864
2.44
208
17,675
2.74
17
17,150
2.21
13
32
567,841
32
542,313
30%
My Farm
1995
1994
%
30%
Goal
%
%
$
$
5.19
1,002
$
$
4.76
962
$
$
$
$
$
$
$
9.96
$
10.52
$
$
$
$
$
5,987
1,442
0.49
$
$
6,141
1,452
0.42
$
$
$
$
$
$
$
$
32,574
38,504
$
$
21,888
26,249
$
$
$
$
$
$
$
6,616
$
-2,605
$
$
$
*Farms participating both years.
**Average for the year.
1.54%
-2.40%
%
%
%
2.96%
0.18%
%
%
%
$ 347,217
0.24
1,478
$
$
$
359,338
0.25
1,472
$
$
$
$
$
$
­
22
Regional Fann Business Chart
The Fann 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 fanns 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
48 Southeastern New York Region Dairy Fanns, 1995
Worker
Equiv­
alent
(11)*
4.66
2.76
2.19
1.78
1.29
Size of Business
Pounds
No.
Milk.
of
Cows
Sold
Pounds
Milk. Sold
Per Cow
Rate of Production
Tons
Tons Com
Hay Crop
Silage
DMJAcre
Per Acre
(11)
(11)
(10)
(9)
183
82
61
52
39
3,001,593
1,507,329
1,056,873
835,437
584,558
20,619
18,688
17,139
14,810
12,665
3.69
2.52
2.07
1.82
1.15
Labor Efficiency
Cows
Pounds
Per
Milk. Sold
Worker
Per Worker
(9)
(11)
(11)
20.9
15.9
13.4
10.1
6.8
55
35
30
25
19
894,667
590,400
502,629
408,914
318,546
Cost Control
Labor &
Machinery
Costs per Cow
Feed & Crop
Expenses
Per Cow
Feed & Crop
Expenses Per
Cwt. Milk
Grain
Bought
Per Cow
% Grain is
of Milk.
Receipts
Machinery
Costs
Per Cow
(10)
(10)
(11)
(11)
(10)
(10)
21%
27
30
33
39
$217
326
405
466
617
$692
796
942
1,146
1,426
$555
665
776
893
1,057
$3.50
4.30
4.74
5.14
5.88
$479
557
625
757
898
Value and Cost of Production
Total Cost
Milk.
Oper. Cost
Milk.
Production
Receipts
PerCwt.
PerCwt.
Per Cow
NetFann
Income
w/Apprec.
Prof! tability
Net Fann
Inc. w/o
Apprec.
Labor &
Mgt. Inc.
Per Oper.
Change in
Net Worth
w/Apprec.
(10)
(10)
(10)
(3)
(3)
(3)
(6)
$2,718
2,483
2,280
1,971
1,632
$7.59
9.60
10.65
11.29
13.30
$12.81
14.48
15.56
16.62
21.57
$83,775
35,921
23,414
11,014
-12,063
$78,758
32,055
18,284
5,019
-16,463
$35,543
6,168
-807
-16,505
-47,700
$58,674
20,511
6,418
-9,390
-44,639
*Page number of the participant's DFBS where the factor is located.
-
23
New York State Farm Business Charts
The Farm Business Chart is a tool which can be used in analyzing a business by drawing a line through the fig­
ure in each column which represents the current level of management performance. The figure at the top of each column
is the average of the top 10 percent of the 321 farms for that factor. The other figures in each column are the average for
the second 10 percent, third 10 percent, etc. Each column of the chart is independent of the others. The farms which are
in the top 10 percent for one factor would not necessarily be the same farms which make up the top 10 percent for any
other factor.
The cost control factors are ranked from low to high, but the lowest cost is not necessarily the most profitable. In
some cases, the "best" management position is somewhere near the middle or average. Many things affect the level of
costs, and must be taken into account when analyzing the factors.
FARM BUSINESS CHART FOR FARM MANAGEMENT COOPERATORS
321 New York Dairy Farms, 1994
Worker
Equivalent
(11)*
Size of Business
Pounds
No.
Milk
of
Sold
Cows
(11)
(11)
12.0
5.9
4.5
3.7
3.2
560
222
159
125
109
12,116,804
4,628,175
3,097,796
2,407,393
2,051,070
Pounds
Milk Sold
Per Cow
(10)
23,770
21,769
20,968
20,229
19,422
Rates of Production
Tons
Tons Com
Hay Crop
Silage
DMlAcre
Per Acre
(9)
(9)
5.2
4.0
3.6
3.2
3.0
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(11)
23
20
18
18
16
56
46
41
37
34
1,112,817
898,663
805,930
717,932
652,910
--------------------------------------------_ .. --------------------- .. _--- ... -------------------------------------------------------------------------------­
2.8
2.5
2.2
1.9
1.4
Grain
Bought
Per Cow
(10)
93
75
63
51
40
1,715,708
1,352,622
1,137,044
888,899
655,673
% Grain is
of Milk
Receipts
(10)
$390
525
577
646
700
16%
22
24
26
28
740
786
846
918
1,030
29
31
32
35
40
18,856
18,020
17,044
15,864
13,700
2.8
2.5
2.1
1.9
1.4
16
15
14
13
10
Cost Control
Machinery
Labor &
Machinery
Costs
Per Cow
Costs Per Cow
(11)
(11)
32
30
27
24
20
603,031
552,825
491,227
433,739
335,490
Feed & Crop
Expenses
Per Cow
(10)
Feed & Crop
Expenses per
Cwt. Milk
(10)
$268
326
362
401
436
$677
814
878
938
998
$557
686
747
800
851
$3.27
3.86
4.12
4.35
4.53
471
508
548
618
762
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
*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, 1994
Milk
Receipts
Per Cow
(10)
Milk
Receipts
PerCwt
(10)
$3,237
2,932
2,800
2,7('1)
2,612
2,514
2,408
2,285
2,101
1,823
Total
(3)
Oper. Cost
Milk
Per Cow
(10)
Oper. Cost
Milk
PerCwt
(10)
Total Cost
Production
Per Cow
(10)
$14.37
14.01
13.73
13.53
13.41
$1,157
1,490
1,658
1,777
1,878
$6.99
8.63
9.22
9.68
10.00
$2,036
2,332
2,505
2,639
2,765
$11.93
12.83
13.49
13.96
14.33
13.28
13.15
13.06
12.96
12.52
1,999
2,123
2,233
2,414
2,676
10.47
10.82
11.28
11.86
13.34
2,859
2,948
3,063
3,186
3,584
14.71
15.18
15.84
16.85
19.32
Net Farm Income
Witllout Appreciation
Per
As % of Total
Cow
Accrual Receipts
(3)
(10)
$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,('1)3
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
Witll 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
51,1('1)
$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 witll freestall barns and 180 cows or less and more tllan 180 cows, and farms
witll conventional barns with 60 cows or less and more tllan 60 cows are shown on pages 28-31.
Financial Analysis Chart
The farm financial analysis chart on page 25 is designed just like tlle Farm Business Chart and may be used to
assess tlle financial healtll of tlle farm business. Most of tlle financial measures used in tlle 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)
Debt Payments
Available for
Cash Flow
Coverage
as Percent
Debt Service
Per Cow
Ratio
of Milk Sales
(12)
(8)
(8)
Planned Debt
Payments
Per Cow
(8)*
$43
204
283
332
396
$804
615
538
475
424
4.63
452
507
562
636
796
387
322
243
189
0
0.87
0.74
0.61
0.41
-0.08
1.66
1.35
1.15
1.00
Solvency
Leverge
Ratio**
Percent
Equity
Debt!Asset Ratio
Long
Current &
Tenn
Intennediate
(5)
1,191
1,727
2,069
18
20
23
26
35
2,387
2,694
3,015
3,510
4,398
(3)
21%
10
8
5
3
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
Efficiency (Capital)
Machinery
Real Estate
Investment
Investment
Per Cow
Per Cow
$74
669
Profitability
Percent Rate of Return with
appreciation on:
Equity
Total Capital
(5)
99%
91
82
74
69
(5)
5%
9
12
14
16
(5)
0.01
0.10
0.22
0.34
0.45
Debt
Per Cow
1
0
-2
-6
-22
(3)
13%
9
7
6
4
3
2
0
-1
-6
(11)
(11)
(11)
Total Fann
Assets
Per Cow
(11)
.75
.60
.55
.50
.47
$1,152
1,924
2,232
2,491
2,764
$571
751
902
1,040
1,167
$4,262
5,128
5,569
5,948
6,368
$182,925
63,674
41,117
29,544
20,624
.43
.39
.36
.32
.25
3,033
3,377
4,026
4,698
6,692
1,290
1,443
1,683
1,969
2,703
6,842
7,447
8,055
8,891
11,657
14,936
8,501
1,168
-10,157
-40,417
Asset
Turnover
(ratio)
*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.
Change in
Net Worth
w/Appreciation
(6)
-
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 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 four groups of dairy farms. The average size
of farms in the four groups ranges from 48 cows on the small conventional farms to 397 cows on the large freestall farms.
The large freestall farms averaged the highest milk output per cow and per worker, the lowest total costs of pro­
duction and investment per cow, and the greatest returns to labor, management and capital. The small freestall farms
showed average profits somewhat higher than the large conventional farm businesses.
Farm business charts have been computed for each of the four housing and herd size categories and are on pages
28-31. By comparing the farm's performance on the most appropriate business chart, a farm manager will be better able
to evaluate his or her business performance.
Herd Size Comparisons
A detailed comparison of profitability, financial situation and business analysis factors across herd sizes is con­
tained on pages 42-51 of the 1994 State Summary*. As herd size increases, the average profitability generally increases
(pages 44-45). Net farm income without appreciation was $216,491 per farm for the 300 or more herd size group and
$13,630 per farm for those with less than 40 cows. This relationship generally holds for all measures of profitability in­
cluding rate of return on capital.
Farm net worth increases rapidly as herd size increases (pages 46-49)*, even though percent equity was higher
on the smaller farms. The group with less than 40 cows demonstrated the strongest ability to make debt payments.
Crop yields showed little relationship to herd size, but fertilizer and lime expenses, and machinery cost per tilla­
ble acre generally increased as herd size increased (pages 50-51)*. The farms with 300 and more cows per farm averaged
23 percent more milk sold per cow than the smallest farms. All of the groups with 85 or more cows averaged above
19,000 pounds of milk sold per cow while the farms smaller than 85 cows averaged 17,700 pounds of milk sold per cow.
Farm capital per worker increased, and farm capital per cow decreased as herd size increased. Milk sold per worker in­
creased dramatically as herd size increased, ranging from 335,069 pounds at the lowest herd size category up to 1,023,849
pounds at the largest size category.
*Smith, Stuart E, Wayne A. Knoblauch, and Linda D. Putnam, Dairy Farm Managment Business Summary, New York,
1994, Department of Agricultural, Resource, and Managerial Economics, Cornell University, R.B. 95-03, August 1995.
27
SELECfED BUSINESS FACTORS BY TYPE OF BARN AND HERD SIZE
Farms with:
Item
299 New York Dairy Farms, 1994
Conventional
>60 Cows
<=60 Cows
Number of farms
Freestall
<=180 Cows
>180 Cows
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, bushels/acre
Forage DM per cow, tons
Tillable acres/cow
Fert. & lime exp.ltillable acre
Total machinery costs
Machinery cost/tillable acre
168
63
109
26
2.3
15.3
93
8.1
3.5
$17.07
$22,500
$134
279
105
156
56
2.8
15.9
63
8.6
3.2
$23.51
$40,129
$144
368
149
185
87
2.8
16.2
44
8.5
3.1
$23.47
$57,579
$156
816
347
350
309
3.5
16.6
74
7.3
2.1
$29.43
$158,497
$194
Dairy Analysis
Number of cows
Number of heifers
Milk sold, lbs.
Milk sold/cow, Ibs.
Operating cost of prod. milk/cwl
Total cost of prod. milk/cwl
Price/cwl milk sold
Purchased dairy feed/cow
Purchased dairy feed/cwt. milk
Purchased 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%
Capital Efficiency
Farm capital/worker
Farm capital/cow
Farm capital/tillable acre owned
Real estate/cow
Machinery investment/cow
Asset turnover ratio
Labor Efficiency
Worker equivalent
Operator/manager equivalent
Milk sold/worker, lbs.
Cows/worker
Labor cost/cow
Labor cost/tillable acre
Profitability & Balance Sheet Analysis
Net farm income (without appreciation)
Labor & mgmt. income/operator
Return on all capital with appreciation
Farm debt/cow
Percent equity
*Average of all farms, not only those reporting data.
$146,748
$46,382
8.3%
$2,502
56%
-
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)*
Size of Business
Pounds
No.
Milk
of
Sold'
Cows
(11)
(11)
Pounds
Milk Sold
Per Cow
(10)
2.87
2.45
2.08
2.00
1.97
60
57
54
51
49
1,207,610
1,041,959
956,111
878,296
842,902
21,897
20,349
19,576
18,797
17,788
1.73
1.52
1.43
1.30
1.12
46
44
42
40
33
786,474
724,587
682,846
629,613
512,941
17,019
16,251
15,493
14,166
11,923
Grain
Bought
Per Cow
(10)
$371
472
526
558
594
649
707
756
840
977
% Grain is
of Milk
Receipts
(10)
16%
21
24
25
27
28
30
33
36
42
Machinery
Costs
Per Cow
(11)
Rates of Production
Tons
Tons Corn
Hay Crop
Silage
Per Acre
DMlAcre
(9)
(9)
4.3
3.6
3.2
2.8
2.4
2.1
2.0
1.9
1.6
1.2
Cost Control
Labor &
Machinery
Costs Per Cow
(11)
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(11)
23
20
18
18
16
43
35
31
29
27
722,584
626,587
568,551
494,509
460,752
15
14
13
11
8
25
23
22
20
16
445,006
416,992
376,560
321,752
250,079
Feed & Crop
Expenses
Per Cow
(10)
Feed & Crop
Expenses Per
Cwt. Milk
(10)
$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
Oper. Cost
Total Cost
Milk
Production
Receipts
Milk
PerCwt
PerCwt
Per Cow
(10)
(10)
(10)
Profitability
Net Farm Income
Without Appreciation
Per Cow
Total
(3)
(10)
Labor &
Mgmt. Inc.
PerQper.
(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
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
1,594
*Page number of the participant's DFBS where the factor is located.
1
-335
-
29
FARM BUSINESS CHART FOR LARGE CONVENTIONAL STALL DAIRY FARMS
71 Conventional Stall Dairy Farms with More Than 60 Cows, New York, 1994
Worker
Equivalent
(11)*
4.69
3.57
3.10
2.84
2.65
Size of Business
No.
Pounds
of
M.ilk
Cows
Sold
(11)
(11)
133
108
97
91
81
Pounds
Milk Sold
Per Cow
(10)
22,189
20,323
19,731
19,070
18,843
2,488,241
2,024,167
1,858,587
1,640,996
1,514,509
Rates of Production
Tons
Tons Corn
Silage
Hay Crop
DM/Acre
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
2.0
15,388
13,835
1.5
Cost Control
Machinery
Labor &
Machinery
Costs
Per Cow
Costs Per Cow
(11)
(11)
$272
331
367
397
425
15
15
13
12
9
30
28
26
24
21
Feed & Crop
Expenses
Per Cow
(10)
$725
831
877
945
978
$467
651
713
762
819
532,500
500,895
455,380
424,899
375,069
Feed & Crop
Expenses Per
Cwt. Milk
(10)
$2.89
3.66
4.01
4.32
4.55
---------------------------------------------------------------_._-----------------------------------------------------------------------------_ ...... _--­
734
760
824
907
1,028
30
32
33
36
41
459
494
539
624
710
Value and Cost of Production
Oper. Cost
Total Cost
Milk
Milk
Production
Receipts
PerCwt.
Per Cow
PerCwt.
(10)
(10)
(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
1,031
1,077
1,142
1,264
1,386
876
925
978
1,077
1,224
Profitability
Net Farm Income
Without Appreciation
Per Cow
Total
(3)
(10)
$79,785
56,214
45,816
37,113
31,998
$963
662
538
469
401
4.78
4.99
5.20
5.52
6.59
Labor &
Mgmt. Inc.
Per Oper.
(3)
$28,947
20,229
16,010
12,516
7,265
Change in
NewWortb
w/Apprec.
(6)
$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
*Page number of the participant's DFBS where the factor is located.
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
­
30
FARM BUSINESS CHART FOR SMALL FREESTALL DAIRY FARMS
96 Freestall Bam Dairy Farms with 180 or Less Cows, New York, 1994
Worker
Equivalent
(11)*
Size of Business
Pounds
No.
of
Milk
Sold
Cows
(11)
(11)
5.37
4.44
4.01
3.58
3.38
174
157
138
125
119
3,614,047
3,072,976
2,638,806
2,446,302
2,258,914
3.11
2.90
2.51
2.23
1.63
112
105
96
78
55
2,092,444
1,936,985
1,767,311
1,390,495
971,149
Grain
Bought
Per Cow
(10)
$409
535
565
633
681
% Grain is
of Milk
Receipts
(10)
16%
21
23
26
28
Pounds
Milk Sold
Per Cow
(10)
23,575
21,582
20,823
19,939
19,272
Rates of Production
Tons
Tons Corn
Hay Crop
Silage
Per Acre
DM/Acre
(9)
(9)
5.5
3.8
3.5
3.1
2.9
18,731
2.8
17,842
2.5
2.1
17,144
16,361
1.8
14,507
1.4
Cost Control
Machinery
Labor &
Costs
Machinery
Per Cow
Costs Per Cow
(11)
(11)
$277
335
374
415
456
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(11)
24
20
18
17
16
55
49
42
38
35
1,012,453
857,659
803,445
738,212
680,046
15
15
14
13
33
31
29
27
22
624,360
592,821
561,754
513,673
405,611
II
Feed & Crop
Expenses
Per Cow
(10)
$673
771
855
908
969
$610
718
762
799
830
Feed & Crop
Expenses Per
Cwt. Milk
(10)
$3.25
3.83
4.12
4.35
4.55
-------------------------------------------------------------------------------------------------------------------------------------------------------
708
761
828
931
1,036
29
31
32
35
39
485
528
592
670
799
Value and Cost of Production
Total Cost
Milk
Oper. Cost
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 Farnls wit.h More Than 180 Cows, New York, 1994
Worker
Equivalent
(11)*
20.63
11.96
10.13
8.52
7.38
Size of Business
Pounds
No.
Milk
of
Cows
Sold
(11)
(11)
1,088
539
420
365
311
Pounds
Milk Sold
Per Cow
(10)
23,351,762
11,657,338
9,575,213
7,921,542
6,515,416
24,801
23,472
22,655
21,928
21,395
Rates of Production
Tons
Tons Com
Hay Crop
Silage
DM/Acre
Per Acre
(9)
(9)
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(11)
22
20
19
18
16
5.5
4.4
4.1
3.7
3.5
65
53
47
46
44
1,306,713
1,093,175
1,011,822
964,401
933,249
------------------------------------------------------------------ ........ _-_ .. __ ... ------------------------------------------------------------------------­
6.76
6.03
5.39
4.88
3.79
243
234
225
213
192
5,612,972
4,922,221
4,551,060
4,167,979
3,391,553
Grain
Bought
Per Cow
(10)
% Grain is
of Milk
Receipts
(10)
$535
688
728
750
782
21%
24
25
27
27
804
847
881
928
1,012
28
29
31
32
35
20,967
3.2
20,780
3.1
20,134
2.8
18,893
2.4
15,710
1.6
Cost Control
Machinery
Labor &
Machinery
Costs
Per Cow
Costs Per Cow
(11)
(11)
$8.83
9.72
10.00
10.33
10.66
42
40
37
35
30
Feed & Crop
Expenses
Per Cow
(10)
901,922
850,753
813,336
717,586
616,668
Feed & Crop
Expenses Per
Cwt. Milk
(10)
$233
295
330
357
386
$606
755
858
895
943
$706
871
895
917
954
$3.84
4.05
4.24
4.40
4.51
426
468
514
547
614
982
1,039
1,110
1,158
1,324
986
1,019
1,053
1,102
1,208
4.65
4.74
4.85
5.12
5.62
Value and Cost of Production
Milk
Oper. Cost
Total Cost
Production
Receipts
Milk
PerCwt
Per Cow
PerCwt.
(10)
(10)
(10)
$3,443
3,188
3,073
2,969
2,889
15
15
15
14
12
$11.90
12.25
12.51
12.91
13.38
Profitability
Net Faml Income
Wit.hout Appreciation
Total
Per Cow
(3)
(10)
$507,138
230,200
159,773
126,018
112,980
$668
548
448
405
373
Labor &
Mgmt. Inc.
PerOper.
(3)
Change in
New Wort.h
$289,802
99,946
68,360
44,867
28,779
$432,825
135,938
103,969
73,654
59,734
w/Apprec.
(6)
-------------------------_ .. _--------------------------------_ ......... _------------------------------------------------------------------------------------­
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
­
p.
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 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
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
How
When
Who is Responsible
Summarize Your Business Perfonnance
The Fann Business and Financial Analysis Charts on pages 22-25 can be used to help identify strengths and
weaknesses of your fann business. Identify three major strengths and three areas of your fann business that need im­
provement
Strengths:
_
Needs improvement:
_
-
34
GLOSSARY AND LOCATION OF COMMON TERMS
Accounts Payable - Open accounts or bills owed to feed and supply fIrms, cattle dealers, veterinarians and other
providers of 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 op­
erating 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 efflcient 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,
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)
-
35
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.
Expansion Livestock - Purchased dairy cattle and other livestock that cause an increase in herd size from the be­
ginning to the end of the year.
Fann Debt Payments as 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.
Fann Debt Payments Per Cow - Planned or scheduled debt payments per cow represent the repayment plan sched­
uled at the beginning of the year divided by the average number of cows for the year. This measure of repayment
ability is used in the Financial Analysis Chart.
Financial Lease - A long-tenn non-cancellable contract giving the lessee use of an asset in exchange for a series of
lease payments. The tenn 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, DHlC, registration fees and transfers.
Part·Time Cash·Crop Dairy (farm) - Operating and managing this farm is not a full-time occupation, crop sales
exceed 10 percent of accrual milk receipts and cropland is owned.
Part·Time Dairy (farm) - Dairy farming is the primary enterprise, cropland is owned but operating and managing
this farm is not a full-time occupation for one or more people.
Personal Withdrawals and Family Expenditures Including Nonfarm Debt Payments - All the money removed
from the farm business for personal or nonfarm use including family living expenses, health and life insurance, in­
come taxes, nonfarm debt payments, and investments.
ProfitabUity - 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.
-
36
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.
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 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 enter­
prise cost accounts. All non-milk receipts are assigned a cost equal to their sale value and deducted from total farm
expenses to determine the costs of producing milk.
-
37
INDEX
Page(s)
Page(s)
Accounts Payable
3.8
Financial Analysis Cbart
Accounts Receivable
4.8
Financial Lease
Accrual Expenses
:
Accrual Receipts
Acreage
3.5
Income Statement
4.5
Inflows
16
25
8
2
12
Labor & Mgmt. Income
6
6
Advanced Government Receipts
7.8
Labor & Mgmt. Income Per Oper.
Age
20
Labor Efficiency
20
Amount Available for Debt Service
14
Land Resources
16
Annual Casb Flow Statement
12
Liquidity
10
Lost Capital
10
Appreciation
5.11.18
20
Asset Turnover Ratio
Macbinery Expenses
3.17
Balance Sbeet
8
Milking Frequency
Barn Type
2
Milk Production
18
bST Usage
2
Milking System
2
Business Type
2
Money Borrowed
20
Net Farm Income
Capital Efficiency
,
Casb From Nonfarm Capital Used in
the Business
Casb Flow Coverage Ratio
Casb Paid
Casb Receipts
Net Investment
2
12
5
10
12
Net Worth
14
Nwnber of Cows
18
Operating Costs of Prod. Milk
19
2
4.12
8
Opportunity Cost
6
Cbange in Accounts Payable
3
Other Livestock Expenses
3
Cbange in Accounts Receivable
4
Outflows
Cbange in Inventory
Cbange in Net Worth
Crop Expenses
CroplDairy Ratios
Current Portion
Dairy (farm)
Dairy Casb-Crop (farm)
2.3
11
3.17
Part-Time Casb -Crop Dairy (farm)
Part-Time Dairy (farm)
Percent Equity
16
Personal Withdrawals and Family Expenditures
7.8
Including Nonfarm Debt Payments
2
2
Principal Payments
Profitability
12
2
2
9.10
12
12
4
Debt per Cow
10
Purcbased Inputs Cost
Debt to Asset Ratios
10
Receipts
4
Record System
2
Deferred Taxes
Depreciation
9
3.10
Repayment Analysis
Dry Matter
16
Replacement Livestock
Education
20
Retained Earnings
Equity Capital
Expansion Livestock
Expenses
Farm Business Cbart
7
3.12
3
Farm Debt Payments Per Cow
14
3
11
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
22-25.28-31
Farm Debt Payments as Percent
of Milk Sales
22.23
-
38
NOTES
-
OTHER A.R. .E. EXTENSION BULLETINS
Dairy Farm Business Summ ry
Wester a d Central Plain Region
1995
Wayne A. Knoblauch
Stuart F. Smith
Linda D. Putnam
Jason Karszes
Michael stratton
ames Hilson
David Th rp
George Allh s n
Dairy Fa
Business Sum ary
Norther Hudson Region 995
Stuart F. Smith
Linda D. Putnam
Cathy s. W'ckswat
Sandra Buxton
D vid . Wood
No. 96-08
New Yor Larg Herd Farms, 300 Cows
or Larger 1995
Jason Kar zes
stuart F. smit
Linda D. Putnam
No. 96-09
Dairy Farm Busines Summary
We tern and Central Plateau Region
1995
Wayne A. Knob1a ch
Carl A. crispell
Joan S. Petzen
James W. Grace
G raId A. Le 1
An rew N. Dufresne
Linda D. Putnam
Dairy Far Busin 55 u mary
Northern New York Region 1995
Stuar F. Smith
Linda D. Putnam
Patricia Beyer
Anita Deming
Trent Teeger trom
George Yarnall
D iry a
B siness Summary
central Valleys Region
99
E
• 96-06
o. 96­
To.
7
96-10
N . 96-11
Y L. LaDue
stuart F. Smi h
Ka en Livingston
J me A. Hilson
A. Edwar Staehr
Thomas eeks
Jac ueline M. Hi1 s
Ch rles Z. Radick
Lind D. Putnam