MAY 1993
A.E. Ext. 93-7
AS R
PLATEAU
REG ON
a:
en
en
en
J
..
en
Robert A. Milligan
Linda D. Putnam
Carl Crispell
Gerald A. LeClar
A. Edward Staehr
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 employrTlent opportunity. No person shall
be denied admission to any educational program or ctivity or
be denied employment on the basis of any legally prohibited
discrimination involving, but not limited to, such factors as race,
color, creed, religion. national or ethnic origin, sex. age or
handicap. The University is committed to the maintenance of
affirmative action programs which will assure the continuation
of such equality of opportunity.
1992 DAIRY FARM BUSINESS SUMMARY
EASTERN PLATEAU REGION
Table of Contents
INTRODUCTION
1
Program Objectives
1
Format 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
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
Progress of the Farm Business
20
_
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
EASTERN PLATEAU REGION*
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 Eastern Plateau 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. In short, DFBS identifies business and financial information
needed in identifying and evaluating strengths and weaknesses of the farm
business. This information also can be used to establish goals that will
enable the business to better meet its objectives.
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.
*This summary was prepared by Linda D. Putnam and Robert A. Milligan,
Department of Agricultural Economics, New York State College of
Agriculture and Life Science, Cornell University, in cooperation with
Cooperative Extension Agents Jerry LeClar and Ed Staehr, and area
Extension Specialist Carl Crispell. The Eastern Plateau Region is
comprised of Broome, Chemung, Chenango, Cortland, Delaware, Otsego,
Schuyler, Tioga, and Tompkins Counties.
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
78 Eastern Plateau Region Dairy Farms, 1992
Number
Type of Farm
Dairy
77
Part-time dairy
o
Dairy cash-crop
1
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 II
Account Book
Agrifax (mail-in only)
On-Farm Computer
Other
6
Type of Barn
Stanchion/Tie-Stall
Freestall
Combination
Number
53
18
Milking Sys tem
Bucket & carry
Dumping station
Pipeline
Herringbone parlor
Other parlor
Number
Milking Frequency
2x/day
3x/day
Other
Number
Production Records
DHIC
Owner-Sampler
Other
None
Number
7
1
1
53
16
7
56
22
o
Number
3
26
12
16
21
65
12
1
56
12
2
8
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
78 Eastern Plateau Region Dairy Farms, 1992
Change in
Inventory
Change in
Cash
or Prepaid
Accounts
Paid +
Expense* +
Payable
$25,315
$0 «
$-359
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
"
66,058
529
5
1,701
13,211
856
6,112
1,615
3,737
4,924
13,650
506
11,957
-1,098
9
291
-13
65,251
525
5
-9
1,692
13,287
856
6,162
o
o
o«
-39
115
66
-16
o«
o«
-92
-22
o«
o«
o
103
-32
72
2
o
-42
24
6,941
3,925
3,772
104
-352
-94
53
3,889
7,153
5,204
-11
4,366
741
7,049
15,982
2,870
$212,068
2,679
-4
16
3
3
«
o«
154
23
o«
o«
o
13
«
o«
-19
$-1,574
o«
Accrual
Expenses
$24,956
7
29
14
8
$481
o
1,718
3,613
4,974
13,652
506
11,939
7,098
3,569
3,694
3,895
7,296
5,227
4,366
748
7,091
15,996
2,859
$210,975
2,679
15,652
6,514
$235,820
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
78 Eastern Plateau Region Dairy Farms, 1992
Change in
Change in
Accounts
Cash
Receipts + Inventory + Receivable
Receipt Item
Milk sales
$235,710
$-1,493
Dairy cattle
14,475
$6,841
10
Dairy calves
4,107
o
Other livestock
521
-63
Crops
2,436
4,252
161
Government receipts
1,884
58
0*
Custom machine work
815
-72
Gas tax refund
6
161
6
Other
3,050
Less nonfarm noncash cap.**
(-)
26
Total Receipts
$263,159
$11,004
$-1,324
°
Accrual
Receipts
$234,217
21,326
4,107
458
6,849
1,942
743
167
3,056
(-)
26
$272,839
*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
78 Eastern Plateau Region Dairy Farms, 1992
Average
My Farm
$272,839
2,466
2,831
10,444
39
$288,619
- 235,820
$52,799
$37,019
$---­
Item
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)
$--­
$---­
$--­
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.
2
Net Farm Income/Cow and Milk/Cow
715 Ea.t.m Plat.au Dairy "arm., 1ii2
--­
r-
t
l.6t
I
1.8
o
0
::; ~
0.8
0.6
0.4
t
II"
~
r
I
0.2
L
- 0 . 4 - - J ..
10
0
o
o
o
o 0
&
o
o
o
o
0
eP
o
0
00
0
I'
dlJB
0
t:I:I
o
0
I'
0
0
0
---"",g~-
14
o
ogo
o
Q:fl o
0
o
~ •. .....J....--L.. __.L_.-l.
12
0
~
o
0
o
o
o
o
o
o
o
o
o
o
Oi-r----­
-0.2
o
o
0
0
o~
____
0
o
.-l...
--J... _--.J.......J..._
16
18
(Thou.and.)
Pound. UUk Sold P.r Cow
I
_-l...
20
-J
J. . ._--!_._. .L- __ ..J...
22
24
_J
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
78 Eastern Plateau Region 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
$ 52,799
$37,019
- 4,685
- 4,685
$ 48,114
$ 32,334
My Farm
Without
With
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
78 Eastern Plateau Region Dairy Farms, 1992
Item
Return to operators' labor, management,
& equity without appreciation
Real interest @ 5% on $460,688
average equity capital
Labor & Management Income
Labor & Management Income per
1. 32 Operator
Average
My Farm
$ 32,334
$---­
- 23,034
$ 9,300
$---­
$
$---­
7,045
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
78 Eastern Plateau Region 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
Average
$ 48,114
- 29,262
$ 18,852
$ 15,996
$ 34,848
$ 3,072
$ 19,068
4,1%
My Farm
$--­
$--­
$---­
$---­
$--­
$---­
0,7%
---_%
---_%
5.3%
2,9%
---_%
- - - -%
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 th~ 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 government 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
78 Eastern Plateau Region Dairy Farms, 1992
Farm Liabilities
Jan. 1
Farm Assets
Current
Farm cash, checking
& savings
$6,487
19,208
Accounts rec.
28
Prepaid exp.
51,765
Feed & supplies
Total
$77 ,488
Intermediate
Dairy cows:
$95,676
owned
149
leased
38,866
Heifers
1,568
Bulls/other 1vstk.
130,122
Mach./eq. owned
967
Mach./eq. leased
590
Farm Credit stock
Other stock/cert.
2,287
Total
$270,225
Dec. 31
$5,687
17,884
26
57,593
$81,190
$101,821
o
42,028
1,505
133,844
966
640
3,267
& Net Worth
Jan. 1
Dec. 31
Current
Accounts payable
$5,275
Operating debt
7,858
2,722
Short-term
o
Advanced govt. rec.
$5,756
7,470
2,365
$15,855
$15,591
$89,676
$95,512
1,116
590
966
640
Total
$91,382
$97,118
$86,029
$98,970
441
214
$86,470
$99,184
$193,707
$446,416
$211,893
$474,959
--­
Total
Intermediate
Structured debt
1-10 years
Financial lease
(cattle/mach. )
Farm Credit stock
o
$284,071
Long-Term
Land/buildings:
owned
leased
$291,969
441
$321,377
214
Long Term
Structured debt
>10 yrs
Financial lease
(structures)
Total
$292,410
$321,591
Total
Total Farm
Assets
$640,123
$686,852
Total Farm Liab.
FARM NET WORTH
Nonfarm Assets, Liabilities & Net Worth (Average of 48 farms reporting)
Liabilities
Assets
Jan. 1
Dec. 31
& Net Worth
Jan. 1
Dec. 31
Personal cash, chkg.
& savings
$3,893
Cash value life ins. 11,802
14,533
Nonfarm real estate
3,304
Auto (personal sh.)
10,027
Stocks & bonds
Household furn.
10,408
All other
2,703
Total Nonfarm
$56,671
Nonfarm Liab.
$4,399
14,194
14,533
3,782
10,798
10,565
1,946
$60,217
NONFARM NET WORTH
Farm & Nonfarm Assets. Liabilities. & Net Worth*
$5,102
$4,367
$51,569
$55,850
Jan. 1
Dec. 31
Total Assets
$696,794
$747,069
Total Liabilities
198,809
216,260
TOTAL FARM & NONFARM NET WORTH
$497,985
$530,809
*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
78 Eastern Plateau Region Dairy Farms, 1992
Item
Average
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
$2,230
1,044
1,186
My Farm
69%
.31
.31
.31
----_%
3%
47%
53%
----_%
----_%
---_%
Per Tillable
Acre Owned
$1,350
632
718
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
78 Eastern Plateau Region Dairy Farms, 1992
Item
Average of Region's Farms
Real Estate
Machinery & Equipment
Value beg. of year
Purchases
Gift/inheritance
Lost capital
Net sales
Depreciation
$291,969
$24,525*
5,976
+
4,042
981
6,514
$130,122
$16,733
300
+
491
15,652
18,964
Net investment
Appreciation
+ 10,444
+
Value end of year
$321,377
$133,844
*$12,863 land and $11,662 buildings and/or depreciable improvements.
890
2,831
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)
78 Eastern Plateau Region Dairy Farms, 1992
Item
Average
Beginning of year farm
net worth
Net farm income w/o apprec. $ 37,019
+ 3,834
+Nonfarm cash income
-Personal withdrawals & family
expenditures excluding non­
farm borrowings
- 30.742
RETAINED EARNINGS
Nonfarm noncash transfers to
farm
$
+Cash used in business from
nonfarm capital
+
-Note/mortgage from farm real
estate sold (nonfarm)
CONTRIBUTED/WITHDRAWN CAPITAL
Appreciation
-Lost capital
CHANGE IN VALUATION EQUITY
IMBALANCE/ERROR
*May not add due to rounding.
$ 446,416
$
$
+
+$
10,111
+$
6,301
$
1,099
+
192
7,208
+$
$ 15,780
4.042
End of year farm net worth*
Change in net worth with apprec.
Change in Net Worth
Without appreciation
With appreciation
My Farm
+$
$
11,738
519
+$
-$
=$ 474,959
$ 28,543
=$
$
+$
-$
$ 12,763
$ 28,543
$--­
$---­
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 activiti~s 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
78 Eastern Plateau Region 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
$ 263,159
212,068
$
$
51,095
3,834
30,870
$ -27,036
Net Provided by Operating Activities
Cash Flow From Investing Activities
Sale of assets: Machinery
+ real estate
+ other stock/cert.
Total asset sales
$
$
491
788
°
Capital purchases: expansion livestock
+ machinery
+ real estate
+ other stock/cert.
- Total invested in farm assets
$
$
1,279
$
44,878
2,679
16,733
24,525
941
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)
24,059
$ -43,599
$
51,647
1,492
°
1,099
128
$
$
54,366
$
35,107
32,870
1,849
388
$
$
19,259
6,487
5,687
$_---"8=0=0
$
519
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 68 Eastern Plateau Region 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
$12,748
22,004
1,701
$19,355
26,718
2,100
$13,425
26,015
1,207
417
506
1,119
40
$36,909
0
$48,679
979
$42,745
$406
$2.19
$535
$2.88
14%
18%
16%
21%
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 FLOW COVERAGE RATIO
Same 68 Eastern Plateau Region 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
$259,368
208,524
15,349
27,387
$---­
$38,806
$---­
$36,909
1.05
$---­
**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)
92.2
My Farm
Total
Per Cow
Expected
1993
Change Projection
Average number of cows
Accrual Oper. Receipts
Milk
Dairy cattle
Dairy calves
Other livestock
Crops
Misc. receipts
Total
$2,540.31
231. 30
44.54
97
74.28
64.10
$2,959.51
$
_
$--­
$---­
$
_
$--­
$---­
Accrual Oper. Expenses
Hired labor
Dairy grain & cone.
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
$270.66
707.71
5.69
.05
18.35
153.39
66.83
18.62
39.19
53.95
148.07
5.49
129.49
77.00
38.70
40.07
42.25
79.13
56.69
47.35
85.01
31.01
$2,114.70
$
$
$---­
'L
Net Accrual Operating Income
(total)
(without interest paid)
$77,890
Change in lvstk./crop inv.*
11,004
Change in accts. rec.
-1,324
+ Change in feed/supply inv.**
-1,574
+ Change in accts. payable***
467
NET CASH FLOW
$67,103
- Net personal withdrawals from
farm (see footnote on pg. 13) 26,908
Available for Farm Debt
Payments & Investments
$40,195
50,269
- Farm debt payments
Available for Farm Investment
$-10,074
- Capital purchases: cattle,
machinery & improvements
$44,878
Additional Capital Needed
_
$---­
$
$
_
_
$---­
$---­
$
$
$
$
$
$
*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 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
78 Eastern Plateau Region Dairy Farms, 1992
Item
Average
Owned
157
65
98
320
Land
Tillable
Nontil1ab1e
Other nonti11ab1e
Total
Crop Yields
Hay crop
Corn silage
Farms
78
74
Other forage
Total forage
Corn grain
Oats
Wheat
Other crops
Tillable pasture
Idle
Total Tillable Acres
5
78
31
9
1
5
25
20
78
Rented
115
18
15
148
My Farm
Total
272
83
113
468
Acres* Prod/Acre
159
2.61 tn
62
15.11 tn
4.95 tn
40
2.43 tn
220
3.24 tn
84
90.49 bu
61.21 bu
35
19
47.11 bu
18
19
30
272
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
159, corn silage 58, corn grain 33, oats 4, tillable pasture 6, and idle 8.
Average crop acres and yields compiled for the region are for the farms
reporting each crop. Yields of forage crops have been converted to tons of
dry matter using dry matter coefficients reported by the farmers. Grain
production has been converted to bushels of dry grain equivalent based on dry
matter information provided.
The following crop/dairy ratios indicate the relationship between
forage production, forage production resources, and the dairy herd.
CROP/DAIRY RATIOS
78 Eastern Plateau Region Dairy Farms, 1992
Item
Total tillable acres per cow
Total forage acres per cow
Harvested forage dry matter, tons per cow
Average
2.95
2.39
7.73
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
Eastern Plateau Region Farms Reporting, 1992
Total
Per
Till.
Acre
Item
Number of farms
reporting
Average number
of acres
Fertilizer & lime
Seeds & plants
Spray & other crop
expense
Total
Hay Crop
Per
Per
Acre
Ton OM
All
Corn
Per
Acre
22
78
Corn
Silage
Per Ton
OM
Corn
Grain
Per Dry
Shell Bu.
21
272
$26.10
13.12
$22.70
7.94
153
$8.64
3.02
108
$45.30
26.25
$8.73
5.06
$.47
.27
13.58
$52.80
6.87
$37.51
2.61
$14.27
36.60
$108.15
7.05
$20.84
.38
$1.12
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 allocated to
individual crops, they are shown below per total tillable acre.
ACCRUAL MACHINERY EXPENSES
78 Eastern Plateau Region 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
$6,162
13,287
1,692
856
6,599
15,652
$44,248
$22.65
48.85
6.22
3.15
24.26
57.54
$162.68
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
78 Eastern Plateau Region Dairy Farms, 1992
Dairy Cows
Item
Beg. year (owned)
Heifers
Open
No. Value
Calves
No. Value
No.
Value
92
$95,676
4,663
1,482
24
$20,018
1,140
353
25
$12,662
301
456
23
$6,187
737
174
95
95
92
$101,821
24
$21,511
25
$13,419
24
$7,098
+ Change w/o apprec.
+ Appreciation
End year (owned)
End incl. leased
Average number
Bred
No. Value
73 (all age groups)
My Farm:
Beg. of year (owned)
$- - ­
$-­
$- - ­
$
$-­
$-­
$- - ­
$-­
+ Change w/o 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.
MILK PRODUCTION
78 Eastern Plateau Region Farms, 1992
Item
Total milk sold, 1bs.
Milk sold per cow, 1bs.
Average milk plant test, percent butterfat
Average
1,709,282
18,533
3.72
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 nonmi1k 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
78 Eastern Plateau Region Dairy Farms, 1992
Item
Accrual Costs of
Producing Milk
Operating costs
Total costs w/o
opers' labor,
mgmt. & capital
Total Costs
Accrual Receipts
From Milk
Average
Per Cow
Total
Per Cwt.
Total
My Farm
Per Cow
Per Cwt.
$175,032
$1,898
$10.24
$
$
$
$201,883
$254,179
$2,190
$2,757
$11.81
$14.87
$
$
$
$
$
$
$234,217
$2,540
$13.70
$
$
$
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
78 Eastern Plateau Region 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
Per Cow
My Farm
Per Cwt.
Per Cow
Per Cwt.
$708
6
$3.82
.03
$
$
$713
$3.85
$
$
$4.69
$
$.21
.29
.80
.03
.70
$
28%
$869
%
34%
$39
54
148
5
129
$
%
$
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.
Item
CAPITAL EFFICIENCY
78 Eastern Plateau Region Dairy Farms, 1992
Per Tillable
Per
Per
Worker
Cow
Acre
Farm capital
Real estate
Machinery & equipment
Asset turnover ratio
My Farm:
Farm capital
Real estate
Machinery & equipment
Asset turnover ratio
$223,896
$7,196
3,330
1,442
$2,439
$---­
$---­
44,864
Per Tillable
Acre Owned
$4,226
1,955
489
.44
$----
$---­
LABOR FORCE INVENTORY AND ANALYSIS
78 Eastern Plateau Region Dairy Farms, 1992
Labor Force
Operator number 1
Operator number 2
Operator number 3
Family paid
Family unpaid
Hired
Total
Months
11.77
3.24
.77
4.32
3.47
11.99
35.56
My Farm: Total
Operator's
Labor
Efficiency
Cows, average number
Milk sold, pounds
Tillable acres
Work units
Labor Costs
Value of operator(s)
labor ($1,350/mo.)
Family unpaid
($l,350/mo.)
Hired
Total Labor
Machinery Cost
Total Labor & Mach.
+
12
+
12
+ 12
Total
Total
14
14
14
2.96 Worker Equivalent
1.32 Operator/Manager Equiv.
______ Worker Equivalent
Operator/Manager Equiv.
Average
Per Worker
92
1,709,282
272
965
Value of
Labor & Mgmt.
$22,389
5,357
1,516
Years
of Educ.
Age
45
41
33
Total
My Farm
Per Worker
31
576,802
92
326
Average
Per
Per
Cow
Til. Acre
Total
My Farm
Per
Per
Cow
Til. Acre
$21,303
$231
$78.32
$
$
$
4,685
24,955
$50,943
$44,248
$95,191
51
271
$553
$480
$1,032
17.22
91. 75
$187.29
$162.68
$349.97
$
$
$
$
$
$
$
$
$
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 can be helpful to
establishing your goals in 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 68 Eastern Plateau Region Dairy Farms, 1991 and 1992
Selected Factors
Average of 68 Farms*
1991
1992
Size of Business
91
Average number of cows
87
74
Average number of heifers
71
Milk sold, 1bs.
1,591,009 1,689,007
Worker equivalent
2.84
3.00
Total tillable acres
268
267
Rates of Production
Milk sold per cow, 1bs.
18,211
18,606
Hay DM per acre, tons
2.41
2.64
16
Corn silage per acre, tons
14
Labor Efficiency
30
Cows per worker
31
559,722
563,566
Milk sold/worker, 1bs.
Cost Control
Grain & conc. purchased
28%
as % of milk sales
29%
Dairy feed & crop expo
per cwt. milk
$4.61
$4.72
Labor & mach. costs/cow
$1,008
$1,039
Operating cost of pro­
ducing cwt of milk
$10.02
$ 10.27
Capital Efficiency**
Farm capital per cow
$7,069
$6,983
$1,426
$1,437
Mach. & equip. per cow
Asset turnover ratio
.42
.44
Profitability
$35,196
Net farm inc w/o apprec
$26,521
$39,542
Net farm inc. w/apprec.
$51,724
Labor & mgt. income
per operator
$1,369
$6,818
Rate of return on eq.
capital w/apprec.
2%
4%
Rate of return on all
4%
5%
capital w/apprec.
1991
---_%
My Farm
1992
---_%
Goal
---_%
$---­
$--­
$---­ $---­
$--­ $--­
$---­
$--­
$---­ $---­
$--­ $--­
$--­
$---­
$--­ $--­
$---­ $---­
$---­
$---­ $---­
---_%
---_%
---_%
---_%
--_%
--_%
Financial Summary
Farm net worth, end year $436,056
Debt to asset ratio
.30
Farm debt per cow
$2,057
$457,221
.31
$2,209
*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 quintile of
farms included in the regional summary. Use this information to identify
business areas where more challenging goals are needed.
FARM BUSINESS CHART FOR FARM MANAGEMENT COOPERATORS
78 Eastern Plateau Region Dairy Farms, 1992
Rates of Production
Pounds
Tons
Tons Corn
Milk Sold Hay Crop Silage
Per Cow
DM/Acre Per Acre
Size of Business
Pounds
Worker
No.
Milk
of
Equiv­
Sold
alent
Cows
(11)*
( 11)
5.2
3.3
2.6
2.1
1.4
192
97
72
54
41
( 11)
3,710,644
1,759,983
1,320,258
957,597
687,058
(10)
(9)
22,030
20,140
18,443
16,953
13 ,439
4.2
2.9
2.6
2.2
1.6
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(9)
( 11)
(11)
46
33
29
25
20
21
17
15
13
8
868,759
624,958
534,245
431,892
327,737
Cost Control
Grain
Bought
Per Cow
(10)
$ 384
578
692
793
997
% Grain is
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)
17%
24
28
31
38
$ 279
548
718
827
940
1,165
$ 3.36
391
453
527
723
Value and Cost of Production
Oper. Cost
Total Cost
Milk
Production
Receipts
Milk
Per Cwt.
Per Cwt.
Per Cow
$
711
907
1,040
1,164
1,400
Net Farm
Income
w/Apprec.
(10)
(10)
$ 3,010
$ 7.10
$ 12.94
$ 116,495
2,731
2,504
2,307
1,821
9.02
9.98
10.94
12.21
13.95
14.94
16.08
18.97
64,714
41,653
26,896
9,960
(10)
$
4.12
4.53
4.94
6.05
Profitability
Net Farm
Labor &
Inc. w/o
Mgt. Inc.
Apprec.
Per Oper.
(3)
(3)
$
84,801
48,410
31,091
18,450
-1,189
Change in
Net Worth
w/Apprec.
(3)
$ 40,716
16,891
7,931
-2,915
-32,780
*Page number of the participant's DFBS where the factor is located.
(6)
$
98,875
33,985
16,614
3,016
-14,034
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 factor.
The cost control factors are ranked from low to high, but the lowest cost
is not necessarily the most profitable. Many things affect the level of costs
in your business, and must be taken into account when establishing your goals.
FARM BUSINESS CHART FOR FARM MANAGEMENT COOPERATORS
407 New York Dairy Farms, 1991
Size of Business
Pounds
No.
Worker
Milk
Equivof
Sold
alent
Cows
(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
(9)
(9)
(11)
(11)
360
6,870,298
22,184
4.4
21
50
8.8
900,171
20,340
167
3,036,923
18
41
733,337
4.8
3.4
19,365
37
3.8
122
2,195,234
16
649,588
2.9
3.2
1,826,683
18,651
33
100
2.6
15
593,922
2.9
84
1,498,642
17,985
2.3
14
31
550,266
------------------------------------------------------------------------------17,277
29
2.6
1,259,510
2.1
14
504,178
73
2.3
62
1,039,997
16,617
13
27
465,990
1.9
25
417,823
2.0
918,621
15,757
11
55
1.7
14,697
367,451
23
1.8
47
765,395
1.4
10
556,444
12,063
1.0
272,888
18
1.3
37
7
Cost Control
Labor &
Machinery
Machinery
Costs
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
(10)
$
Feed & Crop
Expenses Per
Cwt. Milk
(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.
Oper. Cost
Milk
Per Cow
Oper. Cost
Milk
Per Cwt.
Total Cost
Production
Per Cow
(10)
(10)
Total Cost
Production
Per Cwt.
(10)
(10)
(10)
$2,878
2,630
2,497
2,395
2,298
$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
2,206
2,111
1,992
1,852
1.552
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
(10)
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
Farm
Operator
(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
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)
2.97
1. 39
1.14
0.97
0.85
0.74
0.63
0.48
0.28
-0.29
6%
11
15
18
20
22
25
28
32
41
$786
608
513
452
397
351
292
227
122
-96
205
295
372
446
502
551
607
678
866
Leverage
Ratio**
Liquidity (repayment)
Cash Flow
Coverage
Ratio
Solvency
Debt/Asset Ratio
Percent
Current &
Long
Intermediate
Equity
Term
(5)
(5)
(5)
98%
90
81
75
68
63
57
50
45
30
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
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
Debt
Per Cow
(5)
$
106
692
1,259
1,665
2,094
2,457
2,820
3,267
3,698
4,687
Profitability
Percent Rate of Return with
appreciation on:
Equity
Investment***
(3)
(3)
15%
7
5
2
1
-1
-4
-7
-12
-28
12%
8
6
4
3
2
0
-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 before establishing business goals.
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
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
$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
1. 98
1.19
2.87
2.80
6.40
1. 34
1. 36
1. 63
401,914
24
$609
$178
516,996
30
$508
$159
558,026
31
$519
$156
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%
Dairy Analysis
47
Number of cows
37
Number of heifers
Milk sold, 1bs.
797,052
Milk sold/cow, 1bs.
16,824
Operating cost of prod. mi1k/cwt.
$9.86
$16.36
Total cost of prod. mi1k/cwt.
Price/cwt. milk sold
$12.58
Purchased dairy feed/cow
$652
Purchased dairy feed/cwt. milk
$3.88
Pure. grain & cone. as % milk rec.
30%
Pure. feed & crop exp./cwt. milk
$4.56
Capital Efficiency
Farm capital/worker
Farm capital/cow
Farm capital/til. acre owned
Real estate/cow
Machinery investment/cow
Asset turnover ratio
Labor Efficiency
Worker equivalent
Operator/manager equivalent
Milk sold/worker, 1bs.
Cows/worker
Labor cost/cow
Labor cost/tillable acre
Freesta11
<120 Cows
>120 Cows
66
84
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%
$2,159
Farm debt/cow
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
No.
Pounds
Equiv­
of
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
(9)
(9)
(10)
Labor Efficiency
Cows
Pounds
Milk Sold
Per
Per Worker
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
Grain
Bought
Per Cow
(10)
% Grain is
of Milk
Receipts
(10)
$341
455
520
546
595
17%
22
25
28
29
644
686
752
816
926
32
34
35
38
43
Cost Control
Machinery
Labor &
Costs
Machinery
Per Cow
Costs Per Cow
(11)
(11)
$212
297
355
390
412
451
484
530
614
808
Value and Cost of Production
Total Cost
Oper. Cost
Milk
Production
Milk
Receipts
Per Cwt.
Per Cwt.
Per Cow
(10)
(10)
(10)
$2,740
2,489
2,353
2,277
2,166
$ 6.42
7.90
8.56
9.26
9.72
$12.23
13.68
14.61
15.21
15.81
$
632
819
920
971
1,023
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
$
1,080
1,136
1,209
1,326
1,615
Profitability
Net Farm Income
Labor &.
Without
Wi th
Mgmt. Inc.
Apprec.
Apprec.
Per Oper.
(3)
(3)
(3)
$53,078
36,007
29,496
23,712
19,116
$42,465
27,726
22,409
17,446
12,439
$19,889
9,709
4,709
625
-3,791
Change in
Net Worth
w/Apprec.
(6)
$30,248
17,867
13,846
9,309
6,461
--------------------------------------------------------------------------------
"
2,040
1,948
1,852
1,714
1.383
10.04
10.44
11.06
11.92
13.99
16.45
17.16
17.80
19.22
25.01
13,857
7,625
3,156
-1,875
-16.933
8,394
4,234
-1,971
-6,070
- 21. 744
-7,738
-12,141
-16,055
-22,626
-38.727
*Page number of the participant's DFBS where the factor is located.
3,784
-351
-4,980
-10,842
-25.962
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
Pounds
No.
of
EquivMilk
Cows
Sold
alent
(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
DM/Acre Per Acre
Per Cow
(10)
(9)
(9)
21,818
19,722
18,796
18,310
17,780
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(11)
20
18
16
15
15
4.5
3.5
2.9
2.6
2.4
49
40
34
32
31
•
873,548
684,468
598,951
560,716
523,504
-------------------------------------------------------------------------------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
2.1
1.9
1.7
1.5
1.1
14
12
10
9
6
Cost Control
Labor &
Machinery
Costs
Machinery
Costs Per Cow
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 Cwt.
Per Cwt.
Per Cow
(10)
(10)
(10)
$
636
740
799
837
886
29
28
26
24
21
493,477
455,675
416,880
377 , 657
327,086
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
$
928
993
1,062
1,136
1,306
821
850
915
1,005
1.178
Profi tabili ty
Net Farm Income
Labor &.
With
Without
Mgmt. Inc.
Apprec.
Apprec.
Per Oper.
(3)
(3)
(3)
4.70
4.97
5.27
5.62
6.68
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
No.
Pounds
Worker
of
Milk
Equiv­
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)
(9)
(10)
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(11)
4.0
3.6
3.4
3.1
2.8
114
108
102
95
89
2,208,962
1,993,141
1,890,636
1,801,092
1,671,062
22,859
20,423
19,598
18,714
18,040
4.4
3.6
3.1
2.7
2.3
20
18
16
15
15
48
38
36
34
32
828,128
700,061
639,501
595,425
574,105
2.6
2.4
2.2
2.0
1.6
82
78
73
63
52
1,458,043
1,290,108
1,173,974
1,012,572
850.607
17,311
16,780
16,382
15,235
12.679
2.1
2.0
1.9
1.6
1.1
14
14
13
11
31
29
26
25
20
537,744
508,421
490,526
423,955
341. 458
Grain
Bought
Per Cow
(10)
% Grain is
of Milk
Receipts
(10)
8
Cost Control
Machinery
Labor &
Costs
Machinery
Per Cow
Costs Per Cow
(11)
(11)
Feed & Crop
Expenses
Per Cow
(10)
Feed & Crop
Expenses Per
Cwt. Milk
(10)
$ 689
14%
$ 304
$257
$ 511
$2.96
20
3.57
454
341
809
628
380
23
535
848
4.03
705
407
25
4.28
576
887
744
27
441
611
921
4.57
781
-------------------------------------------------------------------------------30
492
1,001
858
682
4.95
520
743
33
1,064
938
5.23
1,022
812
36
567
1,114
5.49
38
649
1,238
1,075
5.81
882
1,003
40
1.565
1. 235
6.80
876
Value and Cost of Production
Milk
Oper. Cost
Total Cost
Milk
Production
Receipts
Per Cwt.
Per Cow
Per Cwt.
(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
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
Pounds
Worker
No.
of
Milk
EquivSold
alent
Cows
(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)
15.3
687 13,384,842
22,407
4.2
18
56
1,003,143
7.9
328
6,283,512
21,089
3.4
17
46
872,694
6.8
253
4,743,201
20,463
3.1
15
44
809,299
6.1
211
4,020,615
19,950
15
2.8
754,498
40
195
3,591,100
18,918
14
5.5
2.6
38
706,657
-------------------------------------------------------------------------------183
3,322,631
18,193
2.3
5.1
13
36
663,402
171
3,100,997
17,466
12
4.6
2.1
640,597
34
4.3
153
2,875,093
16,810
12
1.9
603,479
32
2,514,339
16,123
10
3.9
138
1.8
547,129
30
3.1
125
2,041,714
14,028
1.1
7
27
474,745
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
Total Cost
Milk
Oper. Cost
Milk
Production
Receipts
Per Cow
Per Cwt.
Per Cwt.
(10)
(10)
(10)
$2,921
2,754
2,667
2,578
2,459
$ 6.81
8.41
9.13
9.99
10.47
$11.43
12.12
12.77
13.20
13.57
$
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
Labor &.
Net Farm Income
With
Without
Mgmt. Inc.
Apprec.
Apprec.
Per Oper.
(3)
(3)
(3)
$331,877
175,987
114,944
89,770
69,743
$255,187
127,746
90,074
58,939
45,653
$115,674
42,826
22,567
13,025
3,039
Change in
Net Worth
w/Apprec.
(6)
$192,536
90,274
51,012
35,705
21,327
-------------------------------------------------------------------------------2,376
2,276
2,185
2,118
1,850
10.74
11.00
11.53
12.21
14.16
14.04
14.38
15.09
15.95
18.92
56,700
45,465
29,906
16,185
-40,501
34,538
25,844
13,628
-18,515
-85,430
-3,324
-12,124
-23,811
-44,840
-137,414
*Page number of the participant's DFBS where the factor is located.
11,395
2,802
-9,084
-27,592
-147,251
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
How
When
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 hisfher 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.
1
3S
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)
Accounts Payable
.
3,8
Accounts Receivable
.
4,8
Accrual Expenses
.
3,5
Accrual Receipts
.
4,5
15
Acreage
.
Advanced Government
Receipts
.
7,8
19
Age
.
Amount Available
for Debt Service
.
13
Annual Cash Flow
Statement
,.
11
Appreciation
. 5,10,17
Asset Turnover Ratio
.
20
Balance Sheet
.
8
Barn Type
.
2
Business Type
.
2
Capital Efficiency
.
19
Cash From Nonfarm
Capital Used in
the Business
.
11
Cash Flow Coverage Ratio
.
13
2
Cash Paid
.
Cash Receipts
.
4,11
Change in Accounts
Payable
.
3
Change in Accounts
Receivable
4
2,3
Change in Inventory........
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
Dry Matter.....
15
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
Milk Sales
.
12
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
11
.
.
2
2
.
.
.
.
.
.
.
.
11
11
4
4
2
13
3
7
7
.
.
6
9
.
.
.
.
18
18
19
15
6
3
1
OTHER AGRICULTURAL ECONOMICS EXTENSION PUBLICATIONS
No. 92-24
New York Economic Handbook 1993
Agricultural situation and Outlook
Ag Ec Staff
No. 93-01
The Cornell Program on Dairy
Markets and Policy
Summary of Activities l 1989 to 1992
Andrew M. Novakov'c
No. 93-02
MIcro DFBS A Guide to Processing
Dairy Farm 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
Alison M. DeMarree
Linda D. Putnam
Cooperative Development and
Functions in Specialty Crop
Industries with Case Studies of
the U.S. Tart Cherry and Farm­
Raised Catfish Industries
Cecile Murphy
Lois Schertz Willett
No. 93-05
Dairy Farm Business Summary
western Plain Region 1992
Stuart F. Smith
Linda D. Putnam
George Allhusen
Jason Karszes
David Thorp
No. 93-06
Dairy Farm Business Summary
Northern New York Region 1992
Stuart F. smith
Linda D. Putnam
Patricia A. Beyer
J. Russell Coombe
LouAn e F. King
George O. Yarnall
.
•
o. 93-04
••