MAY 1993
A.E. Ext. 93-6
ORTHE N
NEW YORK
REGIO
..
en
.•
'
Stuart F. SmIth
Linda D. Putnam
Patricia A. Beyer
J. Russell Coombe
LouAnne F. King
George O. Yarnall
Department of Agricultural Economics
College of Agriculture and Life Sciences
Cornell University, Ithaca, New York 14853-7801
".
It is the policy of Cornell University actively to support equality
of educational and employment opportunity. No person shall
be denied admission to any educational program or acti ity or
be denied employment on the basis of any leg lIy prohibited
discrimination involving, but not limited to, such factors as race,
color, creed, religion, national or ethnic origin, sex. age or
handicap. The University is committed to the maintenance of
affirmative action programs which will assure the continuation
of such equality of opportunity,
"
'.
1992 DAIRY FARM BUSINESS SUMMARY
,.
NORTHERN NEW YORK
Table of Contents
Page
INTRODUCTION
;
Program Objectives
1
Format Features
1
SUMMARY AND ANALYSIS OF THE FARM BUSINESS
•
1
2
Business Characteristics
2
Income Statement
2
Profitability Analysis
4
Farm and Family Financial Status
7
Statement of Owner Equity
10
Cash Flow Statement
11
Repayment Analysis
13
Cropping Analysis
15
Dairy Analysis
17
Capital and Labor Efficiency Analysis
19
COMPARATIVE ANALYSIS OF THE FARM BUSINESS
20
Progress of the Farm Business
20
Regional Farm Business Chart
21
New York State Farm Business Charts
22
Financial Analysis Chart
24
Comparisons by Type of Barn and Herd Size
25
Herd Size Comparisons
25
IDENTIFY AND SET GOALS
31
GLOSSARY AND LOCATION OF COMMON TERMS
33
INDEX
36
1992 DAIRY FARM BUSINESS SUMMARY
NORTHERN NEV YORK*
INTRODUCTION
Dairy farmers throughout New York State have been participating in
Cornell Cooperative Extension's farm business summary and analysis program
since the early 1950's. Managers of each participating farm business
receive a comprehensive summary and analysis of the farm business. The
information in this report represents an average of the data submitted from
dairy farms in the Western Plain Region for 1992.
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. In short, DFBS
identifies business and financial information farmers need and demonstrates
how it should be used in identifying and evaluating strengths and
weaknesses of the farm business.
Format Features
This regional report follows the same general format as in the 1992
DFBS printout 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 cash flow summary including debt repayment ability;
(4) an analysis of crop acreage. yields, and expenses;
(5) an analysis of dairy livestock numbers, production. and expenses; and
(6) a capital and labor efficiency analysis.
Micro DFBS, a computer program which enables Cooperative Extension
agents and specialists to calculate and print individual farm business
reports in their offices, is now being used by the dairy farm management
field staff for nearly 100 percent of the farms cooperating. This
innovative approach provides faster processing of farm record data and
increased use of the DFBS in farm management programs.
*Northern New York, with the number of participating farms in parentheses,
is comprised of Franklin (29), Jefferson (21), Lewis (13), and St.
Lawrence (14) Counties. This report was written by Stuart F. Smith,
Senior Extension Associate, Farm Management. Linda Putnam was in charge
of data preparation. Karen Herzog and Beverly Carcelli prepared the
publication. Farm business data were collected by Cooperative Extension
agents Russell Coombe, George Yarnall, Pat Beyer, and LouAnne King.
2
SUMMARY AND ANALYSIS OF THE FARM BUSINESS
Business Characteristics
Planning optimal management strategies is a crucial component of operat­
ing 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
77 Northern New York Dairy Farms, 1992
Type of Farm
Number
Dairy
77
o
Part-time dairy
o
Dairy cash-crop
Part-time cash-crop dairy
0
Type of Ownership
Owner
Renter
Number
72
Type of Business
Single proprietorship
Partnership
Corporation
Number
Business Record System
ELFAC I I
Account Book
Agrifax (mail-in only)
On-Farm Computer
Other
Number
5
65
11
1
o
45
3
17
12
Type of Barn
Stanchion/Tie-Stall
Freesta11
Combination
Number
51
23
3
Milking Sys tem
Bucket & carry
Dumping station
Pipeline
Herringbone parlor
Other parlor
Number
Milking Frequency
2x/day
3x/day
Other
Number
61
14
2
Production Records
DHIC
Owner-Sampler
Other
None
Number
60
o
4
49
20
4
9
4
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,
partnerships, and corporations included in the average. Average data for
these specific types of farms are presented in the State Business Summary.
Income Statement
In order for an income statement to accurately measure farm income, it
must include cash transactions and accrual adjustments (changes in accounts
payable, accounts receivable, inventories, and prepaid expenses).
Cash paid is the actual cash outlay during the year and does not necessarily
represent the cost of goods and services actually used in 1992.
Change in inventory: Increases in inventories of supplies and other purchased
inputs are subtracted in computing accrual expenses because they represent an
increase in 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
77 Northern New York Dairy Farms, 1992
Change in
Inventory
Change in
Cash
or Prepaid
Accounts
Paid +
Payable
Expense* +
$23,615
$0 «
$-36
..
Expense Item
Hired Labor
Feed
Dairy grain & conc.
Dairy roughage
Nondairy
Machinery
Mach. hire, rent/lease
Machinery repairs/parts
Auto expo (farm share)
Fuel, oil & grease
Livestock
Replacement livestock
Breeding
Vet & medicine
Milk marketing
Cattle lease/rent
Other livestock expense
Crops
Fertilizer & lime
Seeds & plants
Spray, other crop expo
Real Estate
Landjb1dg./fence repair
Taxes
Rent & lease
Other
Insurance
Telephone (farm share)
Electricity (farm share)
Interest paid
Miscellaneous
Total Operating
Expansion livestock
Machinery depreciation
Building depreciation
TOTAL ACCRUAL EXPENSES
64,742
1,966
117
3,252
13,651
1,320
5,243
-65
-128
Accrual
Expenses
$23,579
-41
-188
64,636
1,650
120
19
-28
-204
118
-64
3,224
13,466
1,320
5,297
o
3
o«
o«
o«
o
2,906
2,874
4,963
6,898
62
11,813
-42
-23
44
-21
38
-24
-169
4,837
2,859
3,395
-24
26
-193
75
-55
4,888
2,830
3,202
4,190
6,146
3 ,511
22
5
4,217
6,319
3,473
4,446
638
6,273
15,499
3,717
$198,933
2,671
o«
o«
o
o
o
«
«
177
-43
o«
o«
o«
o«
30
-4
5
17
$-293
o«
2
38
o
11
$-429
o
2,950
2,811
4,978
6,898
62
11,620
4,476
640
6,311
15,499
3,745
$198,211
2,671
13,752
6,443
$221,077
Change in prepaid expenses (noted above by «) is a net change in non-inven­
tory expenses that have been paid in advance of their use, for example, 1993
rent paid in 1992. If 1992 funds used to prepay 1993 rent exceeded the
amount of 1992 rent prepaid in 1991, the amount of this excess is entered as
a negative number to exclude it from 1992 accrual rental expenses. The
excess prepaid rent should be charged against the future year's business
operation. A decrease in prepaid rent is added to accrual expenses because
it represents use of resources 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 and a decrease is subtracted when calculating accrual
expenses.
Accrual expenses are the costs of inputs actually used in this~ year's produc­
tion. They are the total of cash paid, as well as changes in inventory,
prepaid expenses, and accounts payable.
4
CASH AND ACCRUAL FARM RECEIPTS
77 Northern New York Dairy Farms, 1992
Change in
Cash
Change in
Accounts
Receipts + Inventory + Receivable
Receipt Item
Milk sales
$224,268
$-819
15,227
$4,509
Dairy cattle
57
Dairy calves
3,689
-4
Other livestock
728
170
-64
Crops
2,200
2,785
-47
Government receipts
1,737
15
0*
Custom machine work
588
-7
Gas tax refund
-1
74
Other
2,245
32
Less nonfarm noncash cap.**
( -)
--183
­
Total Receipts
$250,756
$7,281
$-838
Accrual
Receipts
$223,449
19,793
3,685
834
4,938
1,752
581
73
2,277
(-)
183
$257,199
*Change in advanced government receipts.
**Gifts or inheritances of cattle or crops included in inventory.
Cash receipts include the gross value of milk checks received during the year
plus all other payments received from the sale of farm products, services,
and government programs. Nonfarm income is not included in calculating farm
profitability.
Changes in inventory of assets produced by the business are calculated by
subtracting beginning of year values from end of year values excluding appre­
ciation. Increases in livestock inventory caused by herd growth and/or qual­
ity are added, and decreases caused by herd reduction and/or quality are
subtracted. Changes in inventories of crops grown are also included. An
annual increase in advanced government receipts is subtracted from cash
income because it represents income received in 1992 for the 1993 crop year
in excess of funds earned for 1992. Likewise, a decrease is added to cash
government receipts because it represents funds earned for 1992 but received
in 1991.
Changes in accounts receivable are calculated by subtracting beginning year
balances from end year balances. The January 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 business during the year.
Profitability Analysis
Farm operators contribute labor, management, and equity capital to
their businesses and the combination of these resources selected determines
profitability. Operators are the individuals who are integrally involved in
the operation and management of the farm business. They are not limited to
those who are the owner of a sole proprietorship or are formally a member of
the partnership or corporation. 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.
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 business. This is not a measure of cash available from the year's
business operation. Cash flow is evaluated later in this report.
•
Net farm income is computed both with and without appreciation. Appreciation
represents the change in values caused by annual changes in prices of live­
stock, 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
77 Northern New York Dairy Farms, 1992
Item
My Farm
Avera~e
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)
$257,199
585
1,727
4,226
58
$263,795
- 221,077
$42,718
$36,122
$---­
$--­
$--­
$--­
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
77 Northern N_ York Fann.. 1882
,...
c:
o
1;
l
Q.
Q.
~
o
o
0.15
o
o
0
C
~7
0
J:'O
,.
o c:0
o
0
..
0
0
o
00
• :J
EO
05
-0.15
u
.!:
-1
.
1
z
13
HI
17
1i
(Thou.and.)
Pound. Uilk Sold lI.r Cow
21
23
211
6
Return to operators' labor. management. and equity capital measures the total
net farm income for the farm operator(s). It is calculated by deducting a
charge for unpaid family labor from net farm income. Operators' labor is not
included in unpaid family labor. Return to operators' labor, management, and
equity capital has been calculated both with and without appreciation.
Appreciation is an important part of the return to ownership of farm assets.
RETURN TO OPERATORS' LABOR, MANAGEMENT, AND EQUITY
77 Northern New York Dairy Farms, 1992
Average
With
Without
Apprec.
Apprec.
Item
Net farm income
Family labor unpaid
@ $1,350 per month
Return to operators' labor,
management, & equity
$ 42,718
$36,122
- 4,590
- 4,590
$ 38,128
$ 31,532
My Farm
With
Without
Apprec.
Apprec.
$---­
$---­
$--­
Labor and management income is the return which farm operators receive for
their labor and management used in operating the farm business. Appreciation
is not included as part of the return to labor and management because it
results from ownership of assets rather than management of the farm business.
Labor and management income is calculated by deducting the opportunity cost
of using equity capital, at a real interest rate of five percent, from the
return to operators' labor, management, and equity capital 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
77 Northern New York Dairy Farms, 1992
Item
Return to operators' labor, management,
& equity without appreciation
Real interest @ 5% on $310,525
average equity capital
Labor & Management Income
Labor & Management Income per
1. 25 Operator
Average
My Farm
$ 31,532
$--­
- 15,526
$ 16,006
$--­
$ 12,805
$---­
7
Return on equity capital measures the net return rema~n~ng for the farmer's
equity or owned capital after a charge has been made for the operator's labor
and management. The earnings or amount of net farm income allocated to labor
and management is the opportunity cost of operators' labor and management
estimated by the cooperators. Return on equity capital is calculated with
and without appreciation. The rate of return on equity capital is determined
by dividing the amount returned by the average farm net worth or equity
capital. Return on total capital is calculated by adding interest paid to
the return on equity capital and then dividing by average farm assets to
calculate the rate of return on total capital.
RETURN ON EQUITY CAPITAL AND RETURN ON TOTAL CAPITAL
77 Northern New York Dairy Farms, 1992
Item
Return to operators' labor, management,
& equity capital with appreciation
Value of operators' labor & management
Return on equity capital with appreciation
Interest paid
Return on total capital with appreciation
Return on equity capital without appreciation
Return on total capital without appreciation
Rate of return on average equity capital:
with appreciation
without appreciation
Rate of return on average total capital:
with appreciation
without appreciation
Avera~e
$ 38,128
- 27.806
$ 10.322
$ 15,499
$ 25,821
$ 3,726
$ 19,225
My Farm
$---­
$---­
$--­
$---­
$--­
$---­
3.3%
1. 2%
---_%
---_%
4.9%
3.6%
---_%
---_%
Farm and Family Financial Status
The first step in evaluating the financial position of the farm is to
construct a balance sheet which identifies all the assets and liabilities of
the business. The second step is to evaluate the relationship between
assets. liabilities. and net worth and changes that occurred during the year.
Financial lease obligations are included in the balance sheet. The present
value of all future payments is listed as a liability 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 1992. leases were discounted by 8.5 percent.
Advanced ~overnment receipts are included as current liabilities. Government
payments received in 1992 that are for participation in the 1993 program are
the end year balance and payments received in 1991 for participation in the
1992 program are the beginning year balance.
8
1992 FARM BUSINESS & NONFARM BALANCE SHEET
77 Northern New York Dairy Farms, 1992
Farm Assets
Jan. 1
Current
Farm cash, checking
& savings
$3,527
Accounts rec.
17,434
Prepaid expo
51
Feed & supplies
40,317
Total
$61,329
Intermediate
Dairy cows:
owned
$93,383
58
leased
40,705
Heifers
Bulls/other 1vstk.
769
105,478
Mach./eq. owned
3,254
Mach./eq. leased
Farm Credit stock
587
Other stock/cert.
1,873
Total
Long-Term
Landjbuildings:
owned
leased
Total
Total Farm
Assets
$246,107
Dec. 31
$4,168
16,596
49
43,395
$64,208
$97,271
o
41,916
934
109,964
3,042
603
1,932
Farm Liabilities
& Net Worth
Jan. 1
Current
Accounts payable
$5,626
Operating debt
4,954
Short-term
1,846
Advanced govt. rec.
o
--­
Total
Intermediate
Structured debt
1-10 years
Financial lease
(cattle/mach.)
Farm Credit stock
Dec. 31
$5,196
4,716
1,663
o
$12,426
$11,575
$98,016
$96,665
3,312
587
3,042
603
Total
$101,915
$100,310
Long Term
Structured debt
>10 yrs
Financial lease
(structures)
$104,426
$103,295
1,727
1,220
Total
Total Farm Liab.
FARM NET WORTH
$106,153
$220,494
$301,043
$104,515
$255,662
$212,374
1,727
$215,317
1,220
$214,101
$521,537
$216,537
$536,407
$216,400
$320,007
Nonfarm Assets, Liabilities & Net Worth (Average of 43 farms reporting)
Liabilities
Assets
Jan. 1
Dec. 31
& Net Worth
Jan. 1
Dec. 31
Personal cash, chkg.
& savings
$6,720
Cash value life ins.
8,727
Nonfarm real estate
10,651
Auto (personal sh.)
5,684
Stocks & bonds
7,524
12,219
Household furn.
2,540
All other
Total Nonfarm
$54,066
Nonfarm Liab.
$6,336
9,361
10,535
5,995
8,523
12,144
6,635
$59,528
NONFARM NET WORTH
Farm & Nonfarm Assets, Liabilities, & Net Worth*
$4,211
$4,100
$49,855
$55,428
Jan. 1
Dec. 31
Total Assets
$575,603
$595,935
Total Liabilities
224,705
220,500
TOTAL FARM & NONFARM NET WORTH
$350,898
$375,435
*Assumes that average nonfarm assets and liabilities for the nonreporting
farms were the same as for those reporting.
9
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 dividing 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.
BALANCE SHEET ANALYSIS
77 Northern New York Dairy Farms, 1992
Average
Item
Financial Ratios - Farm:
Percent equity
Debt/asset ratio: total
long-term
intermediate/current
Farm Debt Analysis:
Accounts payable as % of total debt
Long-term liabilities as a % of total debt
Current & inter. liab. as a % of total debt
Farm Debt Levels:
Total farm debt
Long-term debt
Intermediate & current debt
Per Cow
$2,378
1,149
1,230
My Farm
60%
.40
.48
.35
---_%
2%
48%
52%
----_%
----_%
----_%
Per Tillable
Acre Owned
$1,209
584
625
Per Cow
Per Tillable
Acre Owned
$---
$---­
Farm inventory balance is an accounting of the value of assets used on the
balance sheet and the changes that occur from the beginning to end of year.
Changes in the livestock inventory are included in the dairy analysis. Net
investment indicates whether the capital stock is being expanded (positive)
or depleted (negative).
FARM INVENTORY BALANCE
77 Northern New York Dairy Farms, 1992
Average of Region/s Farms
Real Estate
Machinery & Equipment
Item
$212,374
Value beg. of year
Purchases
Gift/inheritance
Lost capital
Net saJ.es
Depreciation
+
$9,055*
357
2,969
1,284
6,443
$105,478
+
$17,405
0
895
13,752
Net investment
Appreciation
+
-1,284
4,226
Value end of year
$215,317
*$922 land and $8,133 buildings and/or depreciable improvements.
+
2,758
1,727
$109,964
10
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 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) and (3) increases or decreases in the value
(price) of assets owned by the business (called change in valuation equity).
The change in farm net worth without appreciation is an excellent indicator
of farm generated financial progress.
STATEMENT OF OWNER EQUITY (RECONCILIATION)
77 Northern New York Dairy Farms, 1992
Item
Avera&e
Beginning of year farm
net worth
Net farm income w/o apprec. $ 36,122
+ 9,280
+Nonfarm cash income
-Personal withdrawals & family
expenditures excluding non­
farm borrowings
- 30,352
RETAINED EARNINGS
Nonfarm noncash transfers to
farm
$
+Cash used in business from
nonfarm capital
+
-Note/mortgage from farm real
estate sold (nonfarm)
CONTRIBUTEDjWITHDRAWN CAPITAL
Appreciation
-Lost capital
CHANGE IN VALUATION EQUITY
IMBALANCE/ERROR
$
End of year farm net worth*
Change in net worth with apprec.
Chan&e in Net Worth
Without appreciation
With appreciation
*May not add due to rounding.
My Farm
$ 301,043
$
$
+
+$
15,050
+$
540
$
1,289
+
312
+$
1,517
6,596
2.969
+$
$
+$
-$
3,627
1, 230
+$
-$
=$ 320,007
$ 18,964
=$
$
$ 12,368
$ 18,964
$---­
$--­
11
Cash Flow Statement
Completing an annual cash flow statement is an important step in
understanding the sources and uses of funds for the business. Understanding
last year's cash flow is the first step toward planning and managing cash
flow for the current and future years.
The annual cash flow statement is structured to show net cash provided
by operating activities, investing activities, financing activities and from
reserves. All cash inflows and outflows including beginning and end balances
are included. Therefore the sum of net cash provided from all four
activities should be zero. Any imbalance is the error from incorrect
accounting of cash inflows/outflows.
ANNUAL CASH FLOW STATEMENT
77 Northern New York Dairy Farms, 1992
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
Average
$ 250,756
198,933
$
$
51,822
9,280
30.546
$ -21.266
$
Net Provided by Operating Activities
Cash Flow From Investing Activities
Sale of assets: Machinery
+ real estate
+ other stock/cert.
Total asset sales
Capital purchases: expansion livestock
+ machinery
+ real estate
+ other stock/cert.
- Total invested in farm assets
$
895
972
69
$
$
1,936
2,671
17,405
9,055
70
$
29,201
$- 27,265
Net Provided by Investment Activities
Cash Flow From Financing Activities
Money borrowed (inter. & long-term)
+ Money borrowed (short-term)
+ Increase in operating debt
+ Cash from nonfarm cap. used in business
+ Money borrowed - nonfarm
Cash inflow from financing
Principal payments (inter. & 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)
30,556
$
24,676
1,623
o
1,289
194
$
$
27,782
$
29.202
27,158
1,806
283
$
$
-1,420
3,527
4,168
$_----=-6:<.. .:4=1
$
1,230
12
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
My Farm
$--­
$--­
$--­
$---­
Net Provided by Operating Activities
Cash Flow From Investing Activities
Sale of assets: Machinery
+ real estate
+ other stock/cert.
Total asset sales
Capital purchases: expansion livestock
+ machinery
+ real estate
+ other stock/cert.
- Total invested in farm assets
$---­
$--­
$---­
$---­
$---­
Net Provided by Investment Activities
Cash Flow From Financing Activities
Money borrowed (inter. & long-term)
+ Money borrowed (short-term)
+ Increase in operating debt
+ Cash from nonfarm cap. used in business
+ Money borrowed - nonfarm
Cash inflow from financing
Principal payments (inter. & 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)
$--­
$---­
$---­
$
13
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 1993. The cash flow projection
worksheet on the next page can be used to estimate repayment ability, which
can then be compared to planned 1993 debt payments shown below.
FARM DEBT PAYMENTS PLANNED
Same 64 Northern New York Dairy Farms, 1991 and 1992
Debt Payments
Long-term
Intermediate-term
Short-term
Operating (net
reduction)
Accounts payable
(net reduction)
Total
Per cow
Per cwt. 1992 milk
Percent of total
1992 receipts
Percent of 1992
milk receipts
Average
1992 Payments
Planned
Made
Planned
1993
$14,332
24,532
1,363
$17,405
26,496
2,123
$13,272
26,345
1,125
1,694
180
1,710
1,013
$42,934
257
$46,461
241
$42,692
$472
$2.50
$511
$2.70
16%
18%
19%
20%
My Farm
1992 Payments
Planned
Made
planned
1993
$--- $--- $--­
$--- $--- $--­
$--­ $--­
$--- $--­
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 1992 (as of December 31, 1991) that could have been made
with the amount available for debt service in 1992. Farmers who did not
participate in DFBS in 1991 have their 1992 cash flow coverage ratio based on
planned debt payments for 1993.
CASH FLOY COVERAGE RATIO
Same 64 Northern New York Dairy Farms, 1991 and 1992
Item
Cash farm receipts
- Cash farm expenses
+ Interest paid
- Net personal withdrawals from farm**
(A)
(B)
Amount Available for Debt Service
Debt Payments Planned for 1992
(as of December 31, 1991)
(A + B) = Cash Flow Coverage Ratio for 1992
Average
My Farm
$258,116
204,187
15,779
21,028
$---­
$48,680
$---­
$42,934
1.13
$---­
**Persona1 withdrawals and family expenditures less nonfarm income and
nonfarm money borrowed. If family withdrawals are excluded, or
inaccurately included, the cash flow coverage ratio will be incorrect.
14
ANNUAL CASH FLOW WORKSHEET
Item
Regional
Average
(per cow)
89.1
My Farm
Total
Per Cow
1993
Expected
Change Projection
Average number of cows
Accrual Oper. Receipts
Milk
Dairy cattle
Dairy calves
Other livestock
Crops
Misc. receipts
Total
$2,507.85
222.14
41. 36
9.37
55.41
52.56
$2,888.68
$
_
$----­
$---­
$
_
$----­
$---­
Accrual Oper. Expenses
Hired labor
Dairy grain & conc.
Dairy roughage
Nondairy feed
Mach. hire/rent/lease
Mach. rpr./parts & auto
Fuel, oil & grease
Replacement lvstk.
Breeding
Vet & medicine
Milk marketing
Cattle lease
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 Int. Paid
$264.64
725.43
18.52
1.35
36.20
165.95
59.46
33.11
31.55
55.87
77.42
.70
130.42
54.86
31.75
35.95
47.33
70.92
38.98
50.24
78.00
42.04
$2,050.69
$
$- - ­
$---­
Net Accrual Operating Income
(without interest paid)
Change in lvstk./crop inv.*
Change in accts. rec.
+ Change in feed/supply inv.**
+ Change in accts. payable***
NET CASH FLOW
- Net personal withdrawals from
farm (see footnote on pg. 13)
Available for Farm Debt
Payments & Investments
- Farm debt payments
Available for Farm Investment
- Capital purchases: cattle,
machinery & improvements
Additional Capital Needed
(total)
$74,669
7,281
-838
-293
-429
$67,504
----$------­
$
__
$---­
$- - - ­
$---­
$
$
$
$
21,072
$46,432
44,523
$1,909
$29,201
$
*Includes change in advance government receipts.
**Includes change in prepaid expenses.
***Excludes change in interest account payable.
$
15
Cropping Analysis
The cropping program is an important part of the dairy farm business
and often represents opportunities for improved management. 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
77 Northern New York Dairy Farms, 1992
Item
Average
Land
Tillable
Nontillab1e
Other nonti11ab1e
Total
Owned
179
41
103
322
Farms
76
62
Crop Yields
Hay crop
Corn silage
Other forage
Total forage
Corn grain
Oats
Wheat
Other crops
Tillable pasture
Idle
Total Tillable Acres
14
76
14
8
2
11
20
22
76
Rented
83
10
14
107
My Farm
Total
261
50
118
429
Acres* Prod/Acre
153
2.78 tn
14.83 tn
77
4.87 tn
25
1. 33 tn
220
3.32 tn
73.90 bu
101
52.47 bu
35
19
26.53 bu
43
35
22
265
Owned
Acres
DM
DM
DM
DM
Rented
Total
Prod/Acre
tn DM
tn
tn DM
tn DM
tn DM
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
151, corn silage 62, corn grain 18, oats 4, tillable pasture 9, and idle 6.
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.
CROP/DAIRY RATIOS
77 Northern New York Dairy Farms, 1992
Item
Total tillable acres per cow
Total forage acres per cow
Harvested forage dry matter, tons per cow
Average
2.93
2.45
8.10
My Farm
16
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.
CROP RELATED ACCRUAL EXPENSES
Northern New York Farms Reporting, 1992
Item
Total
Per
Till.
Acre
Number of farms
reporting
Average number
of acres
Fertilizer & lime
Seeds & plants
Spray & other crop
expense
Total
Hay Crop
Per
Per
Acre
Ton DM
Corn
Grain
Per Dry
Shell Bu.
12
24
77
Corn
Silage
Per Ton
DM
All
Corn
Per
Acre
261
$18.73
10.84
$10.91
6.26
$4.46
2.56
81
$38.36
25.93
$8.56
5.79
$.46
.31
12.27
$41.84
3.53
$20.70
1.44
$8.46
47.00
$111.29
10.49
$24.84
.56
$1. 33
$- - ­
140
My Farm:
Fertilizer & lime $
Seeds & plants
Spray & other crop
expense
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. Although machinery costs have not been a llocated to
individual crops, they are shown below per total tillable acre.
ACCRUAL MACHINERY EXPENSES
77 Northern New York Dairy Farms, 1992
Machinery
Expense Item
Average
Total
Per Til.
Expenses
Acre
Fuel, oil & grease
Machinery repairs & parts
Machine hire, rent & lease
Auto expense (farm share)
Interest (5%)
Depreciation
Total
$5,298
13,466
3,224
1,320
5,386
13,752
$42,447
$20.30
51. 59
12.36
5.06
20.64
52.69
$162.63
My Farm
Total
Per Til.
Expenses
Acre
$---­
$---­
$--­
$---­
17
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 DHI and other dairy production
information. Changes in dairy herd size and market values that occur during
the year are identified in the table below. The change in inventory value
without 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
77 Northern New York Dairy Farms, 1992
Dairy Cows
Bred
No. Value
Heifers
Open
No. Value
Calves
No. Value
Item
No.
Value
Beg. year (owned)
+ Change wlo apprcc.
+ Appreciation
End year (owned)
End incl. leased
Average number
89
$93,383
3,191
697
25
$21,406
1,347
46
25
$13 ,127
-128
-114
22
$6,172
98
-38
91
$97,271
26
$22,799
25
$12,885
23
$6,232
91
89
73 (all age groups)
My Farm:
Beg. of year (owned)
+ Change wlo apprec.
+ Appreciation
End of 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.
HILK PRODUCTION
77 Northern New York Farms, 1992
Item
Total milk sold, lbs.
Milk sold per cow, lbs.
Average milk plant test, percent butterfat
Average
1,672,086
18,763
3.68
My Farm
18
The cost of producing milk has been compiled using the whole farm method and
is featured in the following table. Accrual receipts from milk sales can be
compared with the accrual costs of producing milk per cow and per
hundredweight of milk. Using the whole farm method, operating costs of
producing milk are estimated by deducting nonmilk accrual receipts from total
accrual operating expenses including expansion livestock purchased. 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. Total costs without operator's labor, management, and
capital are the operating costs plus depreciation and unpaid family labor.
ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK
77 Northern New York Dairy Farms, 1992
Item
Accrual Costs of
Producing Milk
Operating costs
Total costs wlo
opers' labor,
mgmt. & capital
Total Costs
Accrual Receipts
From Milk
Total
Average
Per Cow
Per Cwt.
Total
My Farm
Per Cow
Per Cwt.
$167,131
$1,876
$10.00
$
$
$
$191,916
$235,248
$2,154
$2,640
$11.48
$14.07
$
$
$
$
$
$
$223,449
$2,508
$13.36
$
$
$
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
77 Northern New York Dairy Farms, 1992
Average
Item
Purchased dairy grain
& concentrates
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
Cattle lease
Other livestock expense
My Farm
Per Cow
Per Cwt.
Per Cow
$725
19
$3.87
.10
$
$
$744
$3.96
$
$
$4.62
$
$.17
.30
.41
0.00
.69
$
29%
$867
%
35%
$32
56
77
1
130
Per Cwt.
$
%
$
19
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
77 Northern New York Dairy Farms, 1992
Per
Worker
Item
Farm capital
Real estate
Machinery & equipment
Asset turnover ratio
My Farm:
Farm capital
Real estate
Machinery & equipment
Asset turnover ratio
$192,174
40,278
Per
Cow
Per Tillable
Acre
Per Tillable
Acre Owned
$5,937
2,417
1,244
$2,027
$2,955
1,203
425
.50
$--­
$--­
$--­
$--­
LABOR FORCE INVENTORY AND ANALYSIS
77 Northern New York Dairy Farms, 1992
Labor Force
Operator number 1
Operator number 2
Operator number 3
Family paid
Family unpaid
Hired
Total
Months
11.75
2.75
.47
2.22
3.40
12.44
33.04
My Farm: Total
Operator's
Labor
Efficiency
Cows, average number
Milk sold, pounds
Tillable acres
Work units
Labor Costs
Value of operator(s)
labor ($1,350/mo.)
Family unpaid
($1,350/mo.)
Hired
Total Labor
Machinery Cost
Total Labor & Mach.
"T
+
Total
Value of
Labor & Mgmt.
$22,687
4,301
818
12
2.75 Worker Equivalent
1.25 Operator/Manager Equiv.
12
12
Worker Equivalent
______ Operator/Manager Equiv.
Average
Per Worker
89
1,672,086
261
950
Total
Years
of Educ.
14
14
14
Age
43
40
34
Total
My Farm
Per Worker
32
607,464
95
345
Average
Per
Per
Cow
Til. Acre
Total
My Farm
Per
Per
Cow
Til. Acre
$20,210
$227
$77 .43
$
$
$
4,590
23,579
$48,379
$42,447
$90,826
52
265
$543
$476
$1,019
17.59
90.34
$185.36
$162.63
$347.99
$
$
$
$
$
$
$
$
$
20
COMPARATIVE ANALYSIS OF THE FARM BUSINESS
Progress of the Farm Business
Comparing your business with average data from regional DFBS coopera­
tors that participated in both of the last two years is one part of a
business checkup. It is equally important for you to determine the progress
your business has made over the past two or three years and to set targets or
goals for the future.
PROGRESS OF THE FARM BUSINESS
Same 64 Northern New York Dairy Farms, 1991 and 1992
Selected Factors
Average of 64 Farms*
1991
1992
Size of Business
91
Average number of cows
87
Average number of heifers
75
76
Milk sold, 1bs.
1,568,010 1,718,391
Worker equivalent
2.83
2.77
Total tillable acres
261
266
Rates of Production
Milk sold per cow, 1bs.
18,095
18,809
Hay DM per acre, tons
2.58
2.78
Corn silage per acre, tons
15
15
Labor Efficiency
31
33
Cows per worker
553,754
620,492
Milk sold/worker, 1bs.
Cost Control
Grain & conc. purchased
30%
as % of milk sales
29%
Dairy feed & crop expo
per cwt. milk
$4.70
$4.62
Labor & mach. costs/cow
$983
$1,011
Operating cost of pro­
ducing cwt of milk
$ 9.94
$ 10.05
Capital Efficiency**
Farm capital per cow
$5,956
$5,897
Mach. & equip. per cow
$1,267
$1,229
Asset turnover ratio
.47
.50
Profitability
Net farm inc w/o apprec
$25,165
$35,831
Net farm inc. w/apprec.
$33,817
$41,986
Labor & mgt. income
per operator
$4,744
$12,722
Rate of return on eq.
capital w/apprec.
1%
3%
Rate of return on all
4%
5%
capital w/apprec.
1991
---_%
My Farm
1992
--_%
Goal
---_%
$---­
$--­
$---­
$--­
$---­
$--­
$---­
$--­
$---­
$---­
$---­
$--­
$---­
$--­
$---­
$--­
$---­
$--­
$--­
$--­
$---­
---_%
--_%
--_%
---_%
--_%
--_%
Financial Summary
Farm net worth, end year $308,163
Debt to asset ratio
.42
Farm debt per cow
$2,422
$326,014
.40
$2,364
*Farms participating both years.
**Average for the year.
$---­
$--­
$--­
$--­
$---­
$---­
21
Regional Farm Business Chart
The Farm Business Chart is a tool which can be used in analyzing your
business. Compare your business by drawing a line through or near the figure in
each column which represents your current level of performance. The five
figures in each column represent the average of each 20 percent or quinti1e of
farms included in the regional summary.
FARM BUSINESS CHART FOR FARM MANAGEMENT COOPERATORS
77 Northern New York Dairy Farms, 1992
Size of Business
Pounds
No.
Worker
Milk
Equiv­
of
Cows
Sold
alent
(11)*
(11)
5.32
2.88
2.25
1. 94
1.19
183
97
67
55
37
Rates of Production
Tons Corn
Pounds
Tons
Milk Sold Hay Crop Silage
Per Cow
OM/Acre Per Acre
(10)
(9)
(9)
22,199
19,534
18,082
16,687
13,374
4.4
3.0
2.4
2.0
1.6
19
17
15
13
8
(11)
3,724,603
1,833,333
1,128,039
903,115
623,756
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(11)
49
35
29
27
21
893,582
651,592
551,998
459,177
338,452
Cost Control
Grain
Bought
Per Cow
(10)
$ 426
604
702
821
990
of Milk
Receipts
Machinery
Costs
Per Cow
Labor &
Machinery
Costs Per Cow
Feed & Crop
Expenses
Per Cow
Feed & Crop
Expenses Per
Cwt. Milk
(10)
(11)
(11)
(10)
(10)
21%
26
29
32
40
$ 273
536
730
855
976
1,163
$ 3.50
% Grain is
387
459
538
684
Value and Cost of Production
Total Cost
Milk
Oper. Cost
Production
Receipts
Milk
Per Cwt.
Per Cow
Per Cwt.
$
725
901
1,009
1,130
1,379
Net Farm
Income
w/Apprec.
4.23
4.63
5.15
6.08
Profi tabili ty
Net Farm
Labor &
Mgt. Inc.
Inc. w/o
Per Oper.
Apprec.
(10)
(10)
$ 2,965
$ 7.60
$ 12.17
$ 115,863
$ 105,432
$ 47,163
2,601
2,407
2,186
1,767
8.96
9.80
10.90
13 .12
13.43
14.36
16.00
18.85
48,908
30,767
17 , 331
-4,572
42,217
25,872
10,997
-8,922
19,792
8,341
-3,483
-24,740
(10)
(3)
$
(3)
Change in
Net Worth
w/Apprec.
(3)
*Page number of the participant's DFBS where the factor is located.
(6)
$
74,510
26,270
12,804
2,255
-25,194
22
New York State Farm Business Charts
The Farm Business Chart is a tool which can be used in analyzing a
business by drawing a line through the figure in each column which represents
the current level of management performance. The figure at the top of each
column is the average of the top 10 percent of the 407 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 facto~.
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
407 New York Dairy Farms, 1991
Size of Business
Worker
Pounds
No.
Equivof
Milk
alent
Cows
Sold
(11)*
(11)
(11)
Rates of Production
Pounds
Tons
Tons Corn
Milk Sold Hay Crop Silage
Per Cow
DM/Acre Per Acre
(10)
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(9)
(9)
(11)
6,870,298
22,184
8.8
360
4.4
21
50
900,171
3,036,923
20,340
3.4
18
41
4.8
167
733,337
2,195,234
19,365
16
37
3.8
122
2.9
649,588
3.2
100
18,651
15
33
593,922
1,826,683
2.6
84
1,498,642
14
31
550,266
2.9
17,985
2.3
------------------------------------------------------------------------------14
504,178
29
2.6
73
1,259,510
17,277
2.1
62
1,039,997
16,617
465,990
2.3
1.9
13
27
918,621
15,757
417,823
25
2.0
55
1.7
11
14,697
47
765,395
1.4
10
23
367,451
1.8
556,444
37
12,063
1.0
272,888
1.3
7
18
Cost Control
Machinery
Labor &
Costs
Machinery
Per Cow
Costs Per Cow
Grain
Bought
Per Cow
% Grain is
of Milk
Receipts
(10)
(10)
(11)
$ 340
459
527
577
624
16%
21
24
26
28
$234
318
360
389
417
674
726
787
850
996
31
33
35
37
43
454
488
534
596
763
Feed & Crop
Expenses
Per Cow
(11)
$
649
781
839
902
961
1,018
1,070
1,129
1,222
1,489
$
Feed & Crop
Expenses Per
Cwt. Milk
(10)
(10)
468
599
673
732
784
$2.95
3.62
4.01
4.26
4.48
829
885
951
1,029
1,180
4.76
5.02
5.27
5.68
6.67
*Page number of the participant's DFBS where the factor is located.
23
FARM BUSINESS CHART FOR FARM
MANAGEMENT COOPERATORS
407 New York Dairy Farms, 1991
Milk
Receipts
Per Cow
Milk
Receipts
Per Cwt.
(10)
(10)
$2,878
2,630
2,497
2,395
2,298
2,206
2,111
1,992
1,852
1.552
Oper. Cost
Milk
Per Cow
Oper. Cost
Milk
Per Cwt.
Total Cost
Production
Per Cow
(10)
(10)
(10)
(10)
$14.17
13.40
13 .21
13.02
12.84
$1,044
1,368
1,541
1,642
1,738
$ 6.81
8.33
8.98
9.62
10.05
$1,903
2,197
2,360
2,489
2,589
$11.87
12.92
13 .60
14.14
14.61
12.69
12.57
12.43
12.25
11.60
1,840
1,945
2,055
2,183
2,480
10.46
10.88
11.34
12.03
13.88
2,680
2,810
2,945
3,149
3.578
15.24
15.88
16.77
17.94
21.49
Total Cost
Production
Per Cwt.
Profitability
Net Farm Income
Without
With
Appreciation
Appreciation
(3)
(3)
Return to Operator's Labor,
Management. & Equity Capital
With
Without
Appreciation
Appreciation
(3)
(3)
Labor &
Management Income
Per
Per
Operator
Farm
(3)
(3)
$176,029
75,394
52,358
40,222
32,278
$133,540
54,218
38,884
28,608
22,880
$174,444
72,052
49,622
37,513
29,348
$131,468
52,232
35,612
26,402
19,817
$83,710
25,627
14,522
6,953
292
$52,031
18,117
11,194
5,181
205
25,325
18,399
9,333
383
-22,307
16,746
9,151
1,400
-6,922
-37,575
21,423
13,682
5,351
-4,921
-28,088
12,846
5,173
-3,002
-12,177
-44,465
-5,953
-12,873
-20,114
-32,052
-76,192
-4,644
-11,042
-17,922
-28,881
-65,860
Farm Business Charts for farms with freesta11 barns and 120 cows or less
and more than 120 cows, and farms with conventional barns with 60 cows or less
and more than 60 cows are shown on pages 27-30.
Financial Analysis Chart
The farm financial analysis chart on page 24 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, 9, 13, and 19 of this publication. References to DBFS output page numbers
for participating dairy farmers are provided in the table headings.
24
FINANCIAL ANALYSIS CHART
407 New York Dairy Farms, 1991
Planned Debt
Payments
Per Cow
(8)*
Available for
Debt Service
Per Cow
(12)
$ 50
205
295
372
678
866
0.02
0.11
0.23
0.33
0.44
0.57
0.73
0.98
1. 26
2.62
Asset
Turnover
Ratio
(11)
0.63
0.52
0.47
0.43
0.41
0.38
0.35
0.32
0.29
0.22
Debt Payments
as Percent
of Milk Sales
(8)
(8)
$786
608
513
452
397
351
292
227
122
-96
446
502
551
607
Leverage
Ratio**
Liquidity (repayment)
Cash Flow
Coverage
Ratio
2.97
1. 39
1.14
0.97
0.85
0.74
0.63
0.48
0.28
-0.29
Solvency
Debt/Asset Ratio
Percent
Current &
Long
Term
Equity
Intermediate
Debt
Per Cow
(5)
$
6%
11
15
18
20
22
25
28
32
41
Profi tabili ty
Percent Rate of Return with
appreciation on:
Equity
Investment***
(5)
(5)
(5)
(3)
(3)
98%
90
81
75
68
63
57
50
45
0.01
0.06
0.12
0.20
0.27
0.32
0.38
0.45
0.54
0.76
0.00
0.00
0.06
0.19
0.30
0.41
0.49
0.59
15%
12%
7
8
6
4
3
2
30
0.72
1.02
Efficiency (Capital)
Real Estate
Machinery
Investment
Investment
Per Cow
Per Cow
(11)
(11)
$1,408
2,046
2,342
2,677
3,002
3,342
3,694
4,087
4,760
6,672
$
564
818
962
1,095
1,243
1,355
1,551
1,768
2,058
2,735
106
692
1,259
1,665
2,094
2,457
2,820
3,267
3,698
4,687
5
2
1
-1
-4
-7
-12
-28
o
-2
-4
-9
Total Farm
Assets
Per Cow
(11)
Change in
Net Worth
w/Appreciation
(11)
$ 4,354
5,293
5,847
6,269
6,646
7,016
7,527
8,210
9,140
11,260
$105,575
38,311
24,223
16,153
10,535
5,620
-436
-7,282
-16,030
-57,840
*Page number of the participant's DFBS where the factor is located.
**Do11ars of debt per dollar of equity, computed by dividing total liabilities
by total equity.
***Return on all farm capital (no deduction for interest paid) divided by total
farm assets.
25
Comparisons 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 used has as many of the same physical
characteristics as possible as the farm being analyzed. To assist in this
endeavor, dairy farms in the 1991 State Summary* have been divided into those
with freestall and those with conventional housing. Within each group is a
further classification by size of the dairy herd.
The table on page 26 shows the average values for the resulting four
groups of dairy farms. Within each housing type, the larger herd size had the
higher rate of milk sold per cow but the greatest difference was between the
conventional and freestall farms. The total cost of producing milk was lower
on the larger farms while labor efficiency was greater. Profitability was
higher on the larger farms as well as the freestall farms. Note the
similarity of resource use and management performance between the large
conventional and small freestall farms.
Farm business charts have been computed for each of the four housing and
herd size categories. References to DFBS output page numbers of participating
dairy farmers are provided in the table headings. From these charts on pages
27-30, the range in size of business, rates of production, labor efficiency,
value and cost of producing milk, and profitability can be observed. The
range in every category of business performance is tremendous.
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. Farm managers should remember, however, that their competition
is not limited to the other farms in their own barn type and herd size
category. They should observe how their management performance compares with
farms in other categories as well.
Herd Size Comparisons
A detailed comparison of profitability, financial situation, and business
analysis factors across herd sizes is contained on pages 42-49 of the 1991
State Summary.* As herd size increases, the average profitability generally
increases (pages 42-43). Net farm income without appreciation was $136,656
per farm for the 300 or more herd size group and $2,303 per farm for those
with less than 40 cows. This relationship generally holds for all measures of
profitability including rate of return on capital.
Farm net worth increases rapidly as herd size increases (pages 44-47),
even though percent equity was higher on the smaller farms. The moderate size
herd groups demonstrated the strongest ability to make debt payments.
Crop yields showed little relationship to herd size, but fertilizer and
lime expenses, and machinery cost per tillable acre generally increased as
herd size increased (pages 48-49). Milk sold per cow increased as herd size
increased, ranging from 16,211 pounds on the farms with less than 40 cows to
19,134 pounds on farms with 300 or more cows. Farm capital per worker
increased, and farm capital per cow decreased as herd size increased. Milk
sold per worker increased dramatically as herd size increased, ranging from
328,553 pounds at the lowest herd size category up to 864,343 pounds at the
largest size category.
*Smith, Stuart F., Wayne A. Knoblauch, and Linda D. Putnam, Dairy Farm
Management Business Summary, New York, 1991, Department of Agricultural
Economics, Cornell University, A.E. Res. 92-6, August 1992.
26
SELECTED BUSINESS FACTORS BY TYPE OF BARN
AND HERD SIZE
373 New York Dairy Farms, 1991
Farms with:
Item
Number of farms
Cropping Program Analysis
Total Tillable acres
Tillable acres rented*
Hay crop acres*
Corn silage acres*
Hay crop. tons DM/acre
Corn silage, tons/acre
Oats. bushels/acre
Forage DM per cow, tons
Tillable acres/cow
Fert. & lime exp. /til. acre
Total machinery costs
Machinery cost/tillable acre
Conventional
<60 Cows
>60 Cows
101
122
162
52
106
28
2.0
13.1
48.7
7.2
3.4
$18.38
$21,629
$134
Dairy Analysis
Number of cows
47
37
Number of heifers
Milk sold, lbs.
797,052
Milk sold/cow, lbs.
16,824
Operating cost of prod. milk/cwt.
$9.86
Total cost of prod. milk/cwt.
$16.36
Price/cwt. milk sold
$12.58
Purchased dairy feed/cow
$652
Purchased dairy feed/cwt. milk
$3.88
Pure. grain & cone. as % milkrec.
30%
Pure. feed & crop exp./cwt. milk
$4.56
Freestall
<120 Cows
>120 Cows
66
84
277
97
168
53
2.3
13.6
47.0
7.4
3.2
$22.77
$36.112
$130
288
103
150
71
2.4
13.9
55.4
8.3
3.3
$27.18
$43,948
$153
658
269
273
229
2.6
13.6
52.4
7.2
2.6
$26.03
$106,964
$163
87
70
1,481,199
17,082
$10.42
$14.96
$12.85
$668
$3.91
30%
$4.67
87
76
1,562,487
18,022
$10.05
$14.98
$12.93
$687
$3.81
29%
$4.75
250
206
4,707,816
18,812
$10.55
$13.89
$13 .10
$726
$3.86
29%
$4.65
Capital Efficiency
Farm capital/worker
Farm capital/cow
Farm capital/til. acre owned
Real estate/cow
Machinery investment/cow
Asset turnover ratio
$181,301
$7,585
$3,269
$3,883
$1,491
.39
$208,892
$6,903
$3,307
$3,187
$1,383
.43
$226,807
$7,325
$3,433
$3,370
$1,523
.44
$246,252
$6,296
$4,049
$2,808
$1,083
.55
Labor Efficiency
Worker equivalent
Operator/manager equivalent
Milk sold/worker, lbs.
Cows/worker
Labor cost/cow
Labor cost/tillable acre
1. 98
1.19
401,914
24
$609
$178
2.87
1. 34
516,996
30
$508
$159
2.80
1. 36
558,026
31
$519
$156
6.40
1. 63
736,003
39
$541
$206
$19,495
$-2,907
2.6%
$2,239
67%
$22,444
$-1,172
2.6%
$2,524
65%
$58,491
$4,891
6.1%
$2,437
60%
Profitability & Balance Sheet Analysis
Net farm income (w/o apprec.)
$10,935
Labor & mgmt. income/operator
$-5,520
Return on all capital w/apprec.
-0.7%
Farm debt/cow
$2,159
Percent equity
71%
*Average of all farms, not only those reporting data.
27
FARM BUSINESS CHART FOR SMALL CONVENTIONAL STALL DAIRY FARMS
122 Conventional Stall Dairy Farms with 60 or Less Cows, New York, 1991
Size of Business
Worker
Pounds
No.
Equivof
Milk
alent
Cows
Sold
(11)
(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)
3.1
2.6
2.3
2.1
2.0
60
57
55
53
50
1,161,296
1,006,402
947,762
890,831
822,459
21,471
19,284
18,742
17,979
17,196
3.4
2.8
2.6
2.4
2.1
20
18
16
15
14
40
32
28
27
25
661,204
550,224
494,803
462,890
433,585
1.9
1.7
1.5
1.4
1.1
46
43
41
37
31
760,538
702,257
646,896
564,752
419,523
16,335
15,668
15,116
14,129
11,178
1.8
1.7
1.5
1.3
1.0
13
12
11
9
7
24
22
21
18
14
401,914
369,641
328,322
283,503
214,463
Cost Control
Machinery
Labor &
Costs
Machinery
Per Cow
Costs Per Cow
(11)
(11)
Grain
Bought
Per Cow
(10)
% Grain is
of Milk
Receipts
(10)
$341
455
520
546
595
17%
22
25
28
29
$212
297
355
390
412
32
34
35
38
43
451
484
530
614
808
644
686
752
816
926
Value and Cost of Production
Total Cost
Oper. Cost
Milk
Production
Receipts
Milk
Per Cwt.
Per Cwt.
Per Cow
(10)
(10)
(10)
$
632
819
920
971
1,023
1,080
1,136
1,209
1,326
1,615
Feed & Crop
Expenses
Per Cow
(10)
Feed & Crop
Expenses Per
Cwt. Milk
(10)
438
573
632
690
735
$2.93
3.57
4.00
4.20
4.41
779
822
894
957
1,134
4.57
4.98
5.16
5.61
6.56
$
Profitability
Net Farm Income
Labor &.
With
Without
Mgmt. Inc.
Apprec.
Apprec.
Per Oper.
(3)
(3)
(3)
Change in
Net Worth
w/Apprec.
(6)
$42,465
$12.23
$53,078
$19,889
$30,248
$2,740
$ 6.42
13.68
36,007
27,726
9,709
17,867
7.90
2,489
14.61
29,496
22,409
4,709
13,846
8.56
2,353
15.21
17,446
625
9.26
23,712
9,309
2,277
12,439
6,461
15.81
19,116
-3,791
9.72
2,166
-------------------------------------------------------------------------------16.45
13,857
8,394
3,784
10.04
- 7,738
2,040
7,625
4,234
10.44
17.16
-12,141
-351
1,948
3,156
-1,971
-16,055
-4,980
17.80
11.06
1,852
11.92
19.22
-1,875
-6,070
-22,626
-10,842
1,714
-21. 744
-25,962
13.99
25.01
-16.933
-38.727
1. 383
*Page number of the participant's DFBS where the factor is located.
28
FARM BUSINESS CHART FOR LARGE CONVENTIONAL STALL DAIRY FARMS
101 Conventional Stall Dairy Farms with More Than 60 Cows, New York, 1991
Size of Business
Worker
No.
Pounds
of
EquivMilk
Cows
alent
Sold
(11)
(11)
(11)*
4.6
3.6
3.2
3.0
2.9
142
109
97
87
82
2,453,279
2,007,656
1,739,966
1,562,748
1,436,342
Rates of Production
Pounds
Tons
Tons Corn
Milk Sold Hay Crop Silage
Per Cow
DM/Acre Per Acre
(10)
(9)
(9)
21,818
19,722
18,796
18,310
17,780
4.5
3.5
2.9
2.6
2.4
Labor Efficiency
Cows
Pounds
Milk Sold
Per
Worker
Per Worker
(11)
(11)
20
18
16
15
15
873,548
684,468
598,951
560,716
523,504
49
40
34
32
31
--------------------------------------------------------------------------------
2.7
2.5
2.4
2.1
1.6
77
73
68
64
62
1,346,317
1,246,501
1,105,390
993,013
823,566
17,148
16,384
15,123
13,510
11.607
14
12
10
9
6
2.1
1.9
1.7
1.5
1.1
Cost Control
Machinery
Labor &
Costs
Machinery
Per Cow
Costs Per Cow
(11)
(11)
Grain
Bought
Per Cow
(10)
% Grain is
of Milk
Receipts
(10)
$ 309
422
491
543
606
15%
21
24
25
28
$222
296
351
370
390
650
707
782
861
1.026
31
33
35
38
45
426
456
490
554
645
Value and Cost of Production
Oper. Cost
Total Cost
Milk
Milk
Production
Receipts
Per Cow
Per Cwt.
Per Cwt.
(10)
(10)
(10)
$
636
740
799
837
886
493,477
455,675
416,880
377 , 657
327.086
29
28
26
24
21
Feed & Crop
Expenses
Per Cow
(10)
Feed & Crop
Expenses Per
Cwt. Milk
(10)
434
547
640
694
767
$2.91
3.53
3.90
4.19
4.44
821
850
915
1,005
1.178
4.70
4.97
5.27
5.62
6.68
$
928
993
1,062
1,136
1.306
Profitability
Net Farm Income
Labor &.
With
Without
Mgmt. Inc.
Apprec.
Apprec.
Per Oper.
(3)
(3)
(3)
Change in
Net Worth
w/Apprec.
(6)
$2,867
2,510
2,442
2,344
2,242
$ 7.21
8.54
9.14
9.75
10.15
$12.27
13.22
13.71
14.12
14.49
$95,623
59,028
45,692
37,975
31,274
$66,317
47,527
34,267
27,772
22,916
$24,217
15,711
10,979
6,367
1,175
$79,568
36,142
24,998
17,567
12,531
2,148
2,051
1,938
1,761
1,523
10.60
11.00
11.37
12.22
13.87
14.84
15.31
16.14
17.71
19.66
24,354
18,295
8,667
-2,600
-19,012
17,174
9,265
1,122
-9,656
-26,407
- 3,736
-10,773
-19,843
-33,574
-50,112
6,901
-1,326
-9,415
-18,321
-36,366
*Page number of the participant's DFBS where the factor is located.
"
29
FARM BUSINESS CHART FOR SMALL FREESTALL DAIRY FARMS
66 Freesta11 Barn Dairy Farms with 120 or Less Cows, New York, 1991
Size of Business
Pounds
Worker
No.
Milk
Equivof
Cows
Sold
alent
(11)
(11)
(11)*
Rates of Production
Pounds
Tons
Tons Corn
Milk Sold Hay Crop Silage
Per Cow
DM/Acre Per Acre
(9)
(10)
(9)
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(11)
4.4
4.0
114
2,208,962
22,859
20
48
828,128
20,423
108
1,993,141
3.6
18
38
3.6
700,061
1,890,636
19,598
3.4
102
3.1
16
36
639,501
1,801,092
18,714
95
15
34
3.1
2.7
595,425
18,040
15
32
89
1,671,062
2.3
2.8
574,105
-------------------------------------------------------------------------------1,458,043
14
2.6
82
17,311
2.1
31
537,744
16,780
14
2.4
78
1,290,108
2.0
29
508,421
16,382
1,173,974
1.9
13
26
490,526
2.2
73
63
1,012,572
15,235
1.6
11
25
2.0
423,955
52
850.607
12.679
8
20
1.6
1.1
341.458
Grain
Bought
Per Cow
(10)
% Grain is
of Milk
Receipts
(10)
Cost Control
Machinery
Labor &
Costs
Machinery
Per Cow
Costs Per Cow
(11)
(11)
$ 304
454
535
576
611
14%
20
23
25
27
$257
341
380
407
441
682
743
812
882
1.003
30
33
36
38
40
492
520
567
649
876
Value and Cost of Production
Milk
Oper. Cost
Total Cost
Receipts
Milk
Production
Per Cwt.
Per Cwt.
Per Cow
(10)
(10)
(10)
$2,927
2,667
2,527
2,425
2,296
<.
$ 7.48
8.47
9.22
9.66
9.99
$12.08
12.94
13.56
14.17
14.75
$
689
809
848
887
921
1,001
1,064
1,114
1,238
1.565
Feed & Crop
Expenses
Per Cow
(10)
Feed & Crop
Expenses Per
Cwt. Milk
(10)
511
628
705
744
781
$2.96
3.57
4.03
4.28
4.57
858
938
1,022
1,075
1. 235
4.95
5.23
5.49
5.81
6.80
$
Profitability
Net Farm Income
Labor &.
With
Without
Mgmt. Inc.
Apprec.
Apprec.
Per Oper.
(3)
(3)
(3)
$82,214
57,671
45,031
39,035
34,718
$66,646
46,073
37,230
29,014
23,021
$29,929
15,194
9,298
4,126
-567
Change in
Net Worth
w/Apprec.
(6)
$69,398
36,752
24,657
15,276
9,326
-------------------------------_.----------------------------------------------­
2,231
2,158
2,085
1,993
1,755
10.31
10.64
11.16
11.61
12.67
15.53
15.96
16.57
17.45
19.25
28,021
20,709
11,223
4,475
-10,343
17,945
9,787
1,964
-4,068
-17,325
-4,155
-10,866
-18,096
-26,046
-41,780
*Page number of the participant's DFBS where the factor is located.
3,405
-2,955
-8,018
-14,391
-38,262
30
FARM BUSINESS CHART FOR LARGE FREESTALL DAIRY FARMS
84 Freesta11 Barn Dairy Farms with More Than 120 Cows, New York, 1991
Size of Business
Worker
No.
Pounds
Milk
of
EquivCows
Sold
alent
(11)
(11)
(11)*
Rates of Production
Pounds
Tons
Tons Corn
Milk Sold Hay Crop Silage
DM/Acre Per Acre
Per Cow
(10)
(9)
(9)
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(11)
15.3
687 13,384,842
18
56
22,407
4.2
1,003,143
6,283,512
46
328
21,089
3.4
17
872,694
7.9
4,743,201
15
44
6.8
253
20,463
3.1
809,299
4,020,615
15
40
6.1
211
19,950
2.8
754,498
195
3,591,100
18,918
5.5
2.6
14
38
706,657
-------------------------------------------------------------------------------183
3,322,631
18,193
13
36
663,402
5.1
2.3
3,100,997
17,466
640,597
34
4.6
171
2.1
12
153
2,875,093
16,810
12
32
603,479
4.3
1.9
138
2,514,339
16,123
1.8
10
30
547,129
3.9
14,028
125
2,041,714
1.1
7
27
474,745
3.1
Cost Control
Machinery
Labor &
Costs
Machinery
Per Cow
Costs Per Cow
(11)
(11)
Grain
Bought
Per Cow
(10)
% Grain is
of Milk
Receipts
(10)
$ 401
502
592
635
679
16%
22
25
27
28
$258
333
359
391
420
29
31
33
35
42
456
481
528
592
700
712
747
800
853
997
Value and Cost of Production
Oper. Cost
Total Cost
Milk
Milk
Production
Receipts
Per Cwt.
Per Cow
Per Cwt.
(10)
(10)
(10)
$
642
781
840
915
965
1,010
1,057
1,093
1,166
1,328
Feed & Crop
Expenses
Per Cow
(10)
Feed & Crop
Expenses Per
Cwt. Milk
(10)
545
677
758
809
838
$2.91
3.75
4.08
4.40
4.59
892
933
976
1,033
1,159
4.78
4.90
5.16
5.59
6.57
$
Profitability
Net Farm Income
Labor &.
Without
With
Mgmt. Inc.
Per Oper.
Apprec.
Apprec.
(3)
(3)
(3)
Change in
Net Worth
w/Apprec.
(6)
$11.43
$115,674
$192,536
$ 6.81
$331,877 $255,187
$2,921
8.41
12.12
175,987
127,746
42,826
90,274
2,754
51,012
12.77
114,944
90,074
22,567
2,667
9.13
13,025
35,705
9.99
13.20
89,770
58,939
2,578
45,653
3,039
21,327
2,459
10.47
13.57
69,743
-------------------------------------------------------------------------------11,395
10.74
14.04
34,538
-3,324
2,376
56,700
14.38
45,465
25,844
2,802
11.00
-12,124
2,276
2,185
11.53
15.09
29,906
13,628
-23,811
-9,084
2,118
16,185
-18,515
-44,840
-27,592
15.95
12.21
1,850
14.16
18.92
-40,501
-85,430
-137,414
-147,251
*Page number of the participant's DFBS where the factor is located.
31
IDENTIFY AND SET GOALS
If businesses are to be successful, they must have direction. Written
goals help provide businesses with an identifiable direction over both the long
and the short term. Goal setting is as important on a dairy farm as it is in
other businesses. Written goals are a tool which farm operators can use to
ensure that the business continues to move in the proper direction. Goals
should be SMART:
l.
Goals should be Specific.
2.
Goals should be Measurable.
3.
Goals should be Achievable but challenging.
4.
Goals should be Rewarding.
5.
You 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
32
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 21-24 and 27-30
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
improvement.
Strengths :
_
Need Improvement:
__
.
33
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 11)
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 moderate investments
per cow imply efficient use of capital.
Cash From Nonfarm Capital Used in the Business - Transfers of money from nonfarm
savings or investments to the farm business where it is used to pay
operating expenses, make debt payments and/or capital purchases.
Cash Flow Coverage Ratio - (defined on page 13)
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)
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 9)
34
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 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 13.
Farm Debt PaYments Per Cow - Planned or scheduled debt payments per cow
represent the repayment plan scheduled at the beginning of the year
divided by the average number of cows for the year. This measure of
repayment ability is used in the Financial Analysis Chart.
Financial Lease - A long-term non-cancellable contract giving the lessee use of
an asset in exchange for a series of lease payments. The term of a
financial lease usually covers a major portion of the economic life of the
asset. The lease is a substitute for purchase. The lessor retains
ownership of the asset.
Income Statement - A complete and accurate account of farm business receipts and
expenses used to measure 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 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.
equity the owner has in owned assets.
It is the
Operating Costs of Producing Milk - (defined on page 18)
Opportunity Cost - 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;
bedding, DHIC, milk house and parlor supplies, livestock board,
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.
35
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 costs including the
opportunity costs of the owner/manager's labor, management, and equity
capital.
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 Capital - (defined on page 7)
Return on Total Capital - (defined on page 7)
Return to Operators' Labor. Management. and Equity Capital - (defined on page 6)
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 18)
Whole Farm Method - A procedure
dairy farms without using
are assigned a cost equal
expenses to determine the
used to calculate costs of producing milk on
enterprise cost accounts. All non-milk receipts
to their sale value and deducted from total farm
costs of producing milk.
36
INDEX
Page(s)
3,8
Accounts Payable
.
4,8
Accounts Receivable
.
3,5
Accrual Expenses
.
4,5
Accrual Receipts
.
15
Acreage
.
Advanced Government
7,8
Receipts
.
19
Age
.
Amount Available
13
for Debt Service
.
Annual Cash Flow
11
Statement
.
Appreciation
,. 5,10,17
20
Asset Turnover Ratio
.
8
Balance Sheet
.
2
Barn Type
.
2
Business Type
.
Capital Efficiency
.
19
Cash From Nonfarm
Capital Used in
11
the Business
.
13
Cash Flow Coverage Ratio
.
2
Cash Paid
.
4,11
Cash Receipts
.
Change in Accounts
3
Payable
.
Change in Accounts
Receivable
4
Change in Inventory........
2,3
Change in Net Worth........
10
Crop Expenses
3,16
Crop/Dairy Ratios.
15
Dairy (farm)
2
Dairy Cash-Crop (farm)
2
Debt Per Cow...............
9
Debt to Asset Ratios
9
Depreciation
3,9
15
Dry Matter.................
Education
19
Equity Capital
7
Expansion Livestock........
3,11
Expenses
3
Farm Business Chart
21,22,
....................... 23,24,27
....................... 28,29,30
Farm Debt Payments
as Percent of
12
Milk Sales
.
Farm Debt Payments
12
Per Cow
.
Page(s)
Financial Analysis Chart
Financial Lease
Income Statement
Inflows
Labor and Management
Income
Labor and Management
Income Per Operator
Labor Efficiency
Land Resources
Liquidity
Lost Capital
Machinery Expenses
Milking Frequency
Milk Production
Milking System
Money Borrowed
Net Farm Income
Net Investment
Net Worth
Number of Cows
Operating Costs of
Producing Milk
Opportunity Cost
Other Livestock Expenses
Outflows
Part-Time Cash-Crop
Dairy (farm)
Part-Time Dairy (farm)
Personal Withdrawals and
Family Expenditures
Including Nonfarm
Debt Payments
Principal Payments
Profitability
Receipts
Record System
Repayment Analysis
Replacement Livestock
Return on Equity Capital
Return on Total Capital
Return to Operator's
Labor, Management,
and Equity Capital
Solvency
Total Costs of
Producing Milk
Whole Farm Method
Worker Equivalent
Yields Per Acre
23
.
.
.
8
2
11
.
6
.
, ..
.
.
.
.
.
.
.
.
.
.
.
.
6
19
15
9
9
3,16
2
17
2
11
5
9
8
17
.
.
.
.
18
.
.
2
2
.
.
.
.
.
.
.
.
11
11
4
4
2
13
3
7
7
.
.
6
9
.
.
.
.
18
18
19
15
6
3
11
..
THER AGRICULTURAL ECONOMICS EXTENSION
PUBLICATIONS
No. 92-22
Annual Cost of Investment in a
Durable Asset sing resent Value
Analysis
John Brake
No. 92-23
Beef F rID Business Summary 1991
Northeast Beef Farm Business
Sum ry
Caroline Nowak
Rasm ssen
anny G. Fox
stuart F. smith
Ted C. Perry
No. 92-24
ew York Economic Handbook 1993
Agricultu al situation and 0 tlook
Ag Ec Staff
No. 93-01
The Cornell Program on Dairy
Markets and Policy
Summary 0 Activities, 1989 to 1992
Andrew M. Novakovic
o. 93-02
MIcro DFBS A Guide to Processi g
Dairy arm Business Summaries in
County and Regional Extension
Offices for Micro DFBS 2.7
Linda Putnam
Wayne Knoblauch
Stuart smith
No. 93-03
Fruit Farm Business Summary Lake
Ontario Region New York 1991
Gerald B. White
Aliso M. DeMarree
Linda D. Putnam
No. 93-04
Cooperative Development and
Fun tions in Specialty Crop
Ind stries with Case Studies of
the U.S. Tart Cherry and Farm­
Raised Catfish Industries
Cecile Murphy
Lois Schertz Willett
Dair Farm Business Summary
Western Plain Region 1992
Stuart F. smith
Linda D. Putnam
George Allhusen
Ja on Karszes
David Thorp
.
•
o. 93-05
••