JUNE 1993
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CENTRAL NEW YORK
AND
CENTRAL PLAIN
REGIONS
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Wayne A. Knoblauch
Linda D. Putnam
George Allhusen
June C. Grabemeyer
James A. Hilson
Jacqueline M. Mlerek
'.
Department of Agricultural Economics
COllege of Agriculture and Life Sciences
COmell University. Ithaca. New York 14853-7801
•
h 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 activity or
be denied e"",'oyment 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 continl:lation
of such equality of opportunity.
..
1992 DAIRY FARM BUSINESS SUMMARY
CENTRAL NEW' YORK AND CENTRAL PlAIN REGIONS
Table of Contents
~
INTRODUCTION
1
Program Obj ectives
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
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 FARK BUSINESS SOHKAllY
Central Rev York and Central Plain Regions*
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 Central New York and Central Plain Regions for 1992.
Prosram Ob'ective
The primary obj ective 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.
*This summary was prepared by Wayne A. Knoblauch and Linda D. Putnam,
Department of Agricultural Economics, Cornell University, in cooperation
with Cooperative Extension Specialist George Allhusen from the Central
Plain Region and Cooperative Extension Agents June Grabemeyer, Jim Hilson,
and Jacqueline Mierek in the Central New York Region. The two regions are
similar in many respects and were combined to incr~ase the number of
summaries which comprise a region. The counties included are Seneca,
Wayne, Yates, and Ontario in the Central Plain Region; and Cayuga,
Madison, Onondaga, and Oswego in the Central New York Region.
2
SUHMAllY AND ANALYSIS OF THE FARH BUSINESS
Business Cbaracteristics
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
38 Central New York and Central Plain Region Dairy Farms, 1992
Number
Type of Farm
Dairy
37
Part-time dairy
0
1
Dairy cash-crop
Part-time cash-crop dairy
0
Type of Ownership
Owner
Renter
Number
31
7
Type of Business
Single proprietorship
Partnership
Corporation
Number
22
14
2
Business Record System
ELFAC II
Account Book
Agrifax (mail-in only)
On-Farm Computer
Other
Number
2
7
7
19
3
Type of Barn
Stanchion/Tie-Stall
Freestall
Combination
Number
Milking System
Bucket & carry
Dumping station
Pipeline
Herringbone parlor
Other parlor
Number
0
1
18
Milking Freguency
2x/day
3x/day
Other
Number
27
8
3
Production Records
DHIC
Owner-Sampler
Other
None
Number
32
0
17
20
1
17
2
6
0
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.
Cbanie in inventory: Increases in inventories of supplies and other purchased
inputs are subtracted in computing accrual expenses becaus~ 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 FAlUI EXPENSES
38 Central New York and Central Plain Region Dairy Farms, 1992
Change in
Inventory
Change in
Cash
or Prepaid
Accounts
Accrual
Expense Item
Paid +
Expense* +
Payable - Expenses
Hired Labor
$57,429
$0 «
$554
$57,983
lwt
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
~
Fertilizer & lime
Seeds & plants
Spray, other crop expo
Real Estate
Land/bldg./fence repair
Taxes
Rent & lease
~
Insurance
Telephone (farm share)
Electricity (farm share)
Interest paid
Miscellaneous
Total Operating
Expansion livestock
Machinery depreciation
Building depreciation
TOTAL ACCRUAL EXPENSES
99,621
4,636
223
8,790
22,836
1,007
10,022
1,029
-377
-4
o«
-35
o«
76
o«
1,952
o
o
102,602
4,259
219
436
252
-57
-Ill
9,226
23,053
950
9,987
o
12,868
5,343
11,907
11,970
1,578
21,107
12,868
5,265
11,635
11,966
1,578
20,975
31
11
47
261
4
151
-19
11,682
6,625
6,655
-225
118
-77
199
7,509
8,780
10,720
-17
165
80
5,123
822
9,228
22,466
4,872
$363,333
15,371
o«
o«
o«
o
-8
15
32 «
-33
o«
o«
o«
-7
15
0«
57
29
$742
o«
-8
o
$3,794
o
11,656
6,735
6,593
7,657
8,860
10,719
5,116
837
9,220
22,523
4,901
$367,869
15,371
19,383
16,395
$419,018
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'. business
operation. A decrease in prepaid rent i. 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 PARK RECEIPTS
38 Central New York and Central Plain Region Dairy Farms, 1992
Change in
Change in
Accounts
Accrual
Cash
Receipt Item
Receipts + Inventory + ReceivAble
Receipts
Milk sales
$403,105
$-2,632
$400,473
Dairy cattle
23,516
$19,090
18
42,624
Dairy calves
7,399
7,399
o
Other livestock
1,875
368
2,243
o
Crops
7,987
1,157
244
9,388
Government receipts
3,441
348
3,789
0*
Custom machine work
560
10
570
Gas tax refund
389
389
o
Other
6,229
141
6,370
(-)
0
Less nonfarm noncash cap.**
(-)
0
Total Receipts
$454,501
$20,615
$-1,871
$473,245
*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
aarketings 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
aembers 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 FABH INCOME
38 Central New York and Central Plain Region Dairy Farms, 1992
Item
Average
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)
My Farm
$473,245
3,528
7,025
19,887
$--­
-646
$503,039
- 419,018
$84,021
$54,227
$--­
$--­
$--­
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.
,,.a.. ...
,...
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~
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'.4 ...
1.3 f­
1.2 ...
1.1 ...
1 f­
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0.7
0..
0 ••
0.4
0.3
0.2
0.1 ,...
0
-0.1
-0.2 f-0.3
-0.4
-
-
­
-
-
-
Net Farm Income/Cow and M'ilk/Cow
311
central NY/central
PkIIn I"a....., , ••2
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13
1.
,
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17
,
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cn--->
....... IIIk SoIcI .... Cow
2'
I
23
21
,
6
Return to operators' labor. manasement. 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," HANAGEHENT, AND EQUITY
38 Central New York and Central Plain Region Dairy Farms, 1992
Ayerase
With
Without
Apprec.
Apprec.
Item
Net farm income
Family labor unpaid
@ $1,350 per month
Return to operators' labor,
management, & equity
$ 84,021
$54,227
-4.226
- 4.226
$ 79,795
$ 50,001
My Farm
With
Apprec.
Without
Apprec.
$--­
$--­
$--­
Labor and manasement 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 HANAGEHENT INCOME
38 Central New York and Central Plain Region Dairy Farms, 1992
Item
Return to operators' labor, management,
& equity without appreciation
Real interest @ 5\ on $587,998
average equity capital
Labor & Management Income
Labor & Management Income per
1.41 Operator
Averase
My Farm
$
50,001
$
$
- 29,400
20,601
$
$
14,611
$
7
Return on equity capital measures the net return remaining for the farmer's
equity or owned capital after a charge has been made for the 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.
llETURN ON EQUITY CAPITAL AND RETURN ON TOTAL CAPITAL
38 Central New York and Central Plain 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
$ 79,795
-36.594
$ 43,201
$ 22,523
$ 65,724
$ 13,407
$ 35,930
7.4'
2.3'
6.8'
3.7'
tlY Farm
$--­
$--­
$--­
$--­
$--­
$--­
----,
----,
---'
----,
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 seco~d 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 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 FARH BUSINESS & NONFARM BALANCE SHEET
38 Central New York and Central Plain Region Dairy Farms, 1992
Jan. 1
Farm Assets
Current
Farm cash, checking
& savings
$4,863
Accounts rec.
32,081
Prepaid exp.
46
Feed & supplies
89,164
Total
$126,154
Intermediate
Dairy cows:
owned
$143,280
leased
1,189
62,824
Heifers
2,510
Bulls/other 1vstk.
174,667
Kach./eq. owned
3,078
Kach./eq. leased
3,608
Farm Credit stock
7,057
Other stock/cert.
Total
Long-Term
Landjbuildings :
owned
leased
Total
Total Farm
Assets
$398,213
$390,603
159
--­
Dec. 31
$6,794
30,210
14
89,614
$126,632
$159,754
1,026
68,871
2,975
187,798
2,535
4,226
7,096
Farm Liabilities
& Net Worth
Jan. 1
Current
Accounts payable
$13,377
22,658
Operating debt
Short-term
7,998
Advanced govt. rec.
o
--­
Total
$44,033
Intermediate
Structured debt
1-10 years
$131,059
Financial lease
(cattle/mach. )
4,267
Farm Credit stock
3,608
Total
Dec. 31
$17,171
29,433
9,092
o
$55,696
$152,568
3,561
4,226
$138,934
$160,355
Long Term
Structured debt
>10 yrs
Financial lease
(structures)
$161,782
$184,008
159
322
Total
Total Farm Liab.
FARM NET WORTH
$161,941
$344,908
$570,221
$184,330
$400,381
$605,774
$434,281
$444,920
322
$390,762
$445,242
$915,129 $1,006,155
Nonfarm Assets, Liabilities & Net Worth (Average of 24 farms reporting)
Liabilities
Assets
Jan. 1
Dec. 31
& Net Worth
Jan. 1
Dec. 31
Personal cash, chkg.
& savings
$1,362
3,388
Cash value life ins.
14,208
Nonfarm real estate
3,673
Auto (personal sh.)
4,117
Stocks & bonds
7,167
Household fum.
20,092
All other
$54,007
Total Nonfarm
Nonfarm Liab.
$1,609
4,468
17,958
3,509
4,231
7,938
20,677
$60,390
NONFARM NET WORTH
Farm & Nonfarm Assets. Liabilities. & Net Worth*
$1,125
$3,792
$52,882
$56,598
Jan. 1
Dec. 31
Total Assets
$969,136
$1,066,545
." 346,033
404,173
Total Liabilities
TOTAL FARM & NONFARM NET WORTH
$623,103
$662,372
*48sumes that average nonfarm assets and liabilities for the nonreportlng
farms were the same as for those repo~ting.
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
38 Central New York and Central Plain Region Dairy Farms, 1992
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
$2,397
1,104
1,294
Average
My Farm
60%
.40
.41
.39
---_%
4%
46%
54%
---_%
---_%
---_%
Per Tillable
Acre Owned
$1,576
726
851
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).
FARH INVENTORY BALANCE
38 Central New York and Central Plain Region Dairy Farms, 1992
Average of Region's Farms
Real Estate
Machinery & Equipment
Item
$390,603
Value beg. of year
Purchases
Gift/inheritance
Lost capital
Net sales
Depreciation
+
$61,144*
2,296
9,037
3,578
16,395
$174,667
+
$26,017
250
778
19,383
Net investment
Appreciation
34,430
+ 19,887
+
Value end of year
$444,920
$187,798
*$9,983 land and $51,161 buildings and/or depreciable improvements.
6,106
7,025
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)
38 Central New York and Central Plain Region Dairy Farms, 1992
Average
Item
Beginning of year farm
net worth
Net farm income w/o apprec. $ 54,227
+Nonfarm cash income
+ 3,510
-Personal withdrawals & family
expenditures excluding non­
farm borrowings
- 53.449
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
Change in Net ~orth
appreciation
~ith appreciation
*May not add due to rounding.
$570,221
$--­
$--­
+---­
+$
4,288
+$---­
2,546
$--­
4,006
+- - - -
0
+$
6,552
$ 29,794
9,037
End of year farm net worth*
Change in net worth with apprec.
~ithout
My Farm
+$---­
$--­
+$ 20,757
-$ -3.953
+$---­
-$605,774
$ 35,553
-$--­
$--­
$ 5,759
$ 35,553
-$--­
$--­
$---­
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
38 Central New York and Central Plain 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
- 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 fin~ncing
- 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)
12
ANNUAL CASH FLOW STATEHENT
Item
My Farm
Cash Flow from Operating Activities
Cash farm receipts
- Cash farm expenses
Net cash farm income
Nonfarm income
- Personal withdrawals/family expenses
including nonfarm debt payments
+ Net cash nonfarm income
$--­
$--­
$--­
$--­
- Net Provided by Operating Activities
Cash Flow From Investing Activities
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
Imbala~ce
(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 33 Central New York and Central Plain 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
$18,186
38,529
4,555
$25,700
52,958
5,769
$23,661
51,937
7,256
5,838
0
5,412
3,116
$70,224
0
$84,427
5,252
$93,518
$416
$2.18
$500
$2.62
14%
17%
16%
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 FLOW COVERAGE RATIO
Same 33 Central New York and Central Plain Region Dairy Farms, 1991 and 1992
Average
My Farm
Cash farm receipts
Cash farm expenses
+ Interest paid
- Net personal withdrawals from farm**
$486,243
388,598
23,748
52,293
$---­
(A) - Amount Available for Debt Service
(B) - Debt Payments Planned for 1992
(as of December 31, 1991)
(A + B) - Cash Flow Coverage Ratio for 1992
$69,100
$---­
$70,224
.98
$---­
Item
**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
Avera&e
(per cow)
156.9
My Farm
Total
Per Cow
Average number of cows
Accrual Oper. Receipts
_
$2,552.41 $
Milk
$--­
271.66
Dairy cattle
Dairy calves
47.16
Other livestock
14.30
Crops
59.84
Misc. receipts
70.86
$3,016.23 $
_
Total
$-­
Accrual Oper. Expenses
Hired labor
$369.56 $
$
Dairy grain & conc.
653.93
Dairy roughage
27.14
Nondairy feed
1.40
Mach. hire/rent/lease
58.80
Mach. rpr./parts & auto
152.97
Fuel, oil & grease
63.65
Replacement lvstk.
82.01
Breeding
34.05
Vet & medicine
75.89
Milk marketing
76.29
Cattle lease
10.06
Other livestock expo
134.53
Fertilizer & lime
74.29
Seeds & plants
42.93
Spray/other crop expo
42.02
Land, bldg. ,fence repair
48.81
Taxes
56.47
Real estate rent/lease
68.32
Insurance
32.61
Utilities
64.10
Miscellaneous
31.23
Total Less Int. Paid
$2,201.06
Net Accrual Operatin& Income
(total)
(without interest paid)
$127,901 $
_
- Change in lvstk./crop inv.*
20,615
- Change in accts. rec.
-1,871
+ Change in feed/supply inv.**
742
+ Change in accts. payable***
3,737
NET CASH FLOW
$113,636 $_. ___
- Net personal withdrawals from
farm (see footnote on pg. 13) 49,939
Available for Farm Debt
Payments & Investments
$63,697 $
78,749
- Farm debt payments
Available for Farm Investment
$-15,052 $
- Capital purchases: cattle,
$103,246
machinery & improvements
Additional Capital Needed
$
*Includes change in advance government receipts.
**Includes change in prepaid expenses.
***Excludes change in interest account payable.
--­
Expected
1993
Chan&e Projection
----$---­
----$---­
----$---­
$---­
$---­
$---­
$
$
$
15
CrOpP1ni 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
38 Central New York and Central Plain Region Dairy Farms, 1992
Item
Averase
.l.&.ns!
Tillable
Nonti11ab1e
Other nonti11ab1e
Total
Crop Yields
Hay crop
Corn silage
Other forage
Total forage
Corn grain
Oats
Wheat
Other crops
Tillable pasture
Idle
Total Tillable Acres
~
254
14
73
341
Farms
35
33
3
35
26
12
7
3
17
15
35
Rented
175
13
16
204
~*
177
139
24
310
150
27
46
29
26
26
466
My Farm
Total
429
28
89
546
Prod/Acre
3.37 tn
14.94 tn
4.82 tn
2.83 tn
3.83 tn
82.94 bu
73.83 bu
48.82 bu
~
Rented
-------
Acres
DM
DM
DM
DM
~
--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
163, corn silage 120, corn grain 103, oats 8, tillable pasture 12, and idle
10.
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
38 Central New York and Central Plain Region Dairy Farms, 1992
Item
Total tillable acres per cow
Total forage acres per cow
Harvested forage dry matter, tons per cow
My Farm
2.73
1.82
6.97
16
CrQPping 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
Central New York and Central Plain Region Dairy 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 DM
38
Corn
Silage
Per Ton
DM
All
Corn
Per
Acre
24
Corn
Grain
Per Dry
Shell Bu,
24
429
$27,17
15,70
$15,17
8.10
194
$4.99
2.67
277
$44.10
22.72
$9.11
4.70
$.54
.28
15.37
$58.24
3.96
$27.23
1.30
$8.96
24.89
$91.71
5.14
$18.95
.30
$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 KACHlNERY EXPENSES
38 Central New York and Central Plain Region Dairy Farms, 1992
Machinery
Expense Item
Total
Expenses
Per Til.
Acre
Fuel, oil & grease
Machinery repairs & parts
Machine hire, rent & lease
Auto expense (farm share)
Interest (5%)
Depreciation
Total
$9,987
23,052
9,226
949
9,.062
19,383
$71,659
$23.28
53.73
21.51
2.21
21.12
45.18
$167.04
My Farm
Total
Per Til.
Expenses
Acre
$--­
$--­
$--­
$--­
17
Dairy Malya is
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 inc+uded as an accrual farm receipt when
calculating all of the profitability measures on pages 6 and 7.
DAIRY HERD INVENTORY
38 Central New York and Central Plain Region Dairy Farms, 1992
Daity Cows
No.
Item
Beg. year (owned)
+ Change w/o apprec.
+ Appreciation
End year (owned)
End incl. leased
Average number
My
147
162
167
157
Value
$143,280
15,101
1,373
$159,754
Bred
No. Value
50
54
$37,449
2,567
1,303
$41,319
Heifers
Qpen
No. Value
38
37
$18,804
-267
40
$18,577
Calves
No. Value
27
33
$6,571
1,690
714
$8,975
123 (all age groups)
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.
HILK PRODUCTION
38 Central New York and Central Plain Region Dairy Farms, 1992
Item
Total milk sold, 1bs.
Milk sold per cow, 1bs.
Average milk plant test, percent butterfat
Average
3,004,723
19,151
3.66
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. ~
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 KILK
38 Central New York and Central Plain Region Dairy Farms, 1992
Average
Per Cow
Total
Item
ACCrual Costs of
Producing Milk
Operating costs
Total costs w/o
opers' labor,
mgmt. & capital
Total Costs
Accrual Receipts
From Milk
Farm
Per Cow
Per Cwt.
My
Per Cwt.
Total
$310,468
$1,979
$10.33
$
$
$
$350,472
$416,466
$2,234
$2,654
$11.66
$13.86
$
$
$
$
$
$
$400,473
$2,552
$13.33
$
$
$
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
38 Central New York and Central Plain 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
My
Farm
Per Cow
Per Cwt.
Per Cow
$654
27
$3.41
.14
$
$
$681
$3.56
$
$
26%
$840
$4.39
$
$.18
.40
.40
.05
.70
$
33'
$34
76
76
10
135
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.
Item
CAPITAL EFFICIENCY
38 Central New York and Central Plain Region Dairy Farms, 1992
Per
Per
Per Tillable
Per Tillable
Worker
Cow
Acre
Acre Owned
Farm capital
Real estate
Machinery & equipment
Asset turnover ratio
$225,549
$6,123
2,664
1,173
43,211
$2,239
$3,782
1,646
429
.52
My Farm:
Farm capital
Real estate
Machinery & equipment
Asset turnover ratio
$---
$
$--­
$--­
LABOR FORCE INVENTORY AND ANALYSIS
38 Central New York and Central Plain Region Dairy Farms, 1992
Years
Value of
Labor Force
Months
Age
of Educ.
Labor & Mgmt.
14
Operator number 1
11.58
45
$25,742
Operator number 2
39
4.42
14
8,578
.89
Operator number 3
34
15
2,274
Family paid
4.79
Family unpaid
3.13
26,29
Hired
Total
+ 12 ­ 4.26 Worker Equivalent
51.11
1.41 Operator(Manager Equiv.
+ 12 ~
Worker Equivalent
My Farm: Total
Operator's
+ 12 ­
Operator(Manager.Equiv.
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
l'lachinery Cost
Total Labor & Mach.
Average
Total
Per Worker
157
37
3,004,723
705,479
429
101
382
1,625
Total
Average
Per
Per
Cow
Til. Acre
"$22,815
$145
4,226
57,984
$85,025
$71,659
$156,683
27
370
$542
$457
$999
$53.18
Total
My Farm
Per Worker
Farm
Per
Per
Cow
Til. Acre
My
Total
$
$
$
9,85
135.16
$198.19 $
$167.04 "$
$365.23 $
$
$
$
$
$
$
20
COMPARATIVE ANALYSIS OF THE FARK 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 FARK BUSINESS
Same 33 Central New York and Central Plain Region Dairy Farms, 1991 and 1992
Average of 33 Farms*
1991
1992
My Farm
1992
1991
Selected Factors
Size of Business
169
Average number of cows
161
Average number of heifers
121
131
2,988,102 3,223,945
Milk sold, lbs.
Worker equivalent
4.35
4.51
Total tillable acres
447
454
Rates of Production
18,521
19,032
Milk sold per cow, lbs.
Hay DM per acre, tons
3.06
3.09
Corn silage per acre, tons
15
15
Labor Efficiency
37
Cows per worker
38
686,384
Milk sold/worker, lbs.
715,621
Cost Control
Grain & cone. purchased
as , of milk sales
25%
26%
%
Dairy feed & crop expo
per cwt. milk
$4.32
$4.37 $
$
$1,016
Labor & mach. costs/cow
$987 $
$
Operating cost of pro­
ducing cwt of milk
$ 9.78
$ 10.26
. Capi tal Efficiency**
$5,981
$6,055 $
Farm capital per cow
$
Mach. & equip. per cow
$1,200
$1,162 $
$
Asset turnover ratio
.50
.53
Profitability
$59,677 $
Net farm inc w/o apprec
$54,209
$
$81,986
Net farm inc. w/apprec.
$89,862 $
$
Labor & mgt. income
per operator
$14,612
$17,159 $
$
Rate of return on eq.
capital w/apprec.
7'
8'
Rate of return on all
capital w/apprec.
7%
7'
,
,
Financial Summary
Farm net worth, end year $621,716
.37
Debt to asset ratio
Farm debt per cow
$2,164
$650,624 $
.40
$2,349 $
*Farms participating both years.
**Average for the year.
Goal
,
%
$
$
$
$
$
$
,
,
$
,
%
$
$
$
$
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 HANAGEHENT COOPERATORS
38 Central New York and Central Plain Region Dairy Farms, 1992
Size of Business
No.
Pounds
Worker
of
EquivMilk
Cows
Sold
alent
(11)*
(11)
9.7
3.6
3.1
2.5
1.7
408
143
98
69
41
Rates of Produc tion
Pounds
Tons
Tons Corn
Milk Sold Hay Crop Silage
Per Cow
DM/Acre Per Acre
(10)
(9)
(9)
22,440
19,530
18,159
16,879
14,697
4.1
3.4
3.1
2.6
2.2
19
17
15
13
7
(11)
8,172,861
2,585,549
1,799,588
1,296,195
663,159
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(11)
45
40
32
28
19
863,004
742,907
614,283
494,712
326,626
Cost Control
Grain
Bought
Per Cow
(10)
$ 355
486
590
742
931
, 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%
21
24
28
36
$ 227
423
493
561
721
497
699
828
972
1,146
$ 3.10
3.97
4.33
4.93
6.07
Value and Cost of Production
Total Cost
Oper. Cost
Milk
Production
Receipts
Milk
Per Cwt.
Per Cow
Per Cwt.
(10)
$ 2,937
2,619
2,400
2,247
1,934
(10)
(10)
$ 6.83
8.64
10.59
11.64
13.14
$ 11.55
13.58
14.84
16.22
18.86
$
772
912
1,021
1,135
1,460
Net Farm
Income
w!Apprec,
(3)
$ 290,679
63,895
39,654
17,895
-12,316
$
Profitability
Net Farm
Labor &
Inc. w/o
Mgt. Inc.
Apprec.
Per Oper.
(3)
$ 218,272
42,578
19,742
3,694
-29,987
Change in
Net Worth
w!Apprec.
(3)
$ 92,916
14,182
-3,972
-17,807
-53,061
*Page number of the participant's DFBS where the factor is located.
(6)
$
166,182
31,016
14,062
-85
-49,623
­
"
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. 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 HANAGEHENT COOPERATORS
407 New York Dairy Farms. 1991
Size of Business
Pounds
No.
'Worker
of
Milk
Equiv­
Cows
Sold
alent
(11)*
360
167
122
100
84
8.8
4.8
3.8
3.2
2.9
(11)
(11)
6,870,298
3,036,923
2,195,234
1,826,683
1,498,642
Rates of Production
Tons Corn
Pounds
Tons
Milk Sold Hay Crop Silage
Per Cow
DM/Acre Per Acre
(10)
(9)
(9)
22,184
20,340
19,365
18,651
17,985
4.4
3.4
2.9
2.6
2.3
21
18
16
15
14
Labor Efficiency
Cows
Pounds
Per
Milk Sold
'Worker
Per 'Worker
(11)
(11)
50
41
37
33
31
900,171
733,337
649,588
593,922
550,266
------------------------------------------------------------------------------­
73
62
55
47
37
2.6
2.3
2.0
1.8
1.3
1,259,510
1,039,997
918,621
765,395
556,444
17,277
16,617
15,757
14,697
12,063
Cost Control
Machinery
Labor &
Costs
Machinery
Costs Per Cow
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
$
14
13
11
10
7
2.1
1.9
1.7
1.4
1.0
29
27
25
23
18
Feed & Crop
Expenses
Per Cow
(11)
$
649
781
839
902
961
$
504,178
465,990
417,823
··367,451
272,888
Feed & Crop
Expenses Per
Cwt. Milk
(10)
(10)
468
599
673
732
784
$2.95
3.62
4.01
4.26
4.48
.-----------------------------------------------------------------------------.
674
726
787
850
996
31
33
35
37
43
454
488
534
596
763
1,018
1,070
1,129
1.222
1,489
829
885
951
1,029
1,180
*Page number of the participant's DFBS where the factor is located.
4.76
5.02
5.27
5.68
6.67
,.
23
FARM BUSINESS CHART FOR FARM
HANAGEHENT 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
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 CIIAllT
407 New York Dairy Farms, 1991
Planned Debt
Payments
Per Cow
(8)*
Available for
Debt Service
Per Cow
(12)
$786
608
513
452
397
351
292
227
122
-96
$ 50
205
295
372
446
502
551
607
678
866
Leverage
Ratio**
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
Liquidity (repayment)
Cash Flow
Coverage
Ratio
(8)
Debt Payments
as Percent
of Milk Sales
(8)
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
Intermediate
Equity
Term
Debt
Per Cow
(5)
6%
11
15
18
20
22
25
28
32
41
$
Profitability
Percent Rate of Return with
appreciation on:
Equity
Investment***
(5)
(5)
(5)
(3)
(3)
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
15%
12%
0.72
1.02
Efficiency (Capital)
Machinery
Real Estate
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
7
5
2
1
-1
-4
-7
8
6
4
3
2
o
-2
-12
-28
-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 interese 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 BA1lN
AND HERD SIZE
373 Rev York Dairy Farms, 1991
Farms with:
Conyentiona1
Freesta11
Item
<60 Cows
>60 Cows
<120 Cows
>120 Cows
Number of farms
122
84
101
66
Cropp ins Prosram Analysis
Total Tillable acres
162,
277
288
658
Tillable acres rented*
97
52
103
269
Hay crop acres*
106
168
150
273
Com silage acres*
28
53
229
71
Hay crop, tons DM/acre
2.0
2.4
2.6
2.3
Com silage, tons/acre
13.1
13.9
13.6
13.6
Oats, bushels/acre
48.7
47.0
55.4
52.4
Forage DM per cow, tons
7.4
7.2
8.3
7.2
Tillable acres/cow
3.4
3.2
3.3
2.6
Fert. & lime exp./ti1. acre
$18.38
$22.77
$27.18
$26.03
Total machinery costs
$21,629
$36,112
$43,948
$106,964
Machinery cost/tillable acre
$134
$130
$153
$163
Dairy Analysis
Number of cows
47
Number of heifers
37
Milk sold, 1bs.
797,052
Milk sold/cow, 1bs.
16,824
Operating cost of prod. mi1k/cwt.
$9.86
Total cost of prod. mi1k/cwt.
$16.36
Price/cwt. milk sold
$12.58
Purchased dairy feed/cow
$652
Purchased dairy feed/cwt. milk
$3.88
30,
Purc. grain & conc. as , milk rec.
Purc. feed & crop exp./cwt. milk
$4.56
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, 1bs.
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'
$2,159
Farm debt/cow
Percent equity
71'
*Average of all farms, not only those reporting data.
27
PAlUI BUSINESS CHART FOR SHALL CONVENTIONAL STALL DAIRY FARKS
Ne~ York, 1991
122 Conventional Stall Dairy Farms with 60 or Less Cows,
•
Size of Business
Worker
No.
Pounds
Equivof
Milk
alent
Cows
Sold
(11)
(11)
(11)*
1,161,296
60
3.1
2.6
1,006,402
57
947,762
2.3
55
890,831
53
2.1
50
822,459
2.0
Rates of Production
Pounds
Tons
Tons Corn
Milk Sold Hay Crop Silage
Per Cow
PM/Acre Per Acre
(10)
(9)
(9)
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(11)
(11)
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
16,335
15,668
15,116
14,129
11,178
1.8
1.7
1.5
1.3
1.0
13
12
24
22
21
18
14
401,91':­
369,641
328,322
283,503
214,463
._-------------._.---_._-- ... -_. __ .------------------------------._._----._._--­
46
43
41
37
31
1.9
1.7
1.5
1.4
1.1
760,538
702,257
646,896
564,752
419,523
Grain
Bought
Per Cow
(10)
% Grain is
of Milk
Receipts
(10)
$341
455
520
546
595
17%
22
25
28
29
11
9
7
Cost Control
Machinery
Labor &
Costs
Machinery
Per Cow
Costs Per Cow
(11)
(11)
$212
297
355
390
412
$
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
$
---------.---------------------------------------------------------------------­
644
686
752
816
926
32
34
35
38
43
451
484
530
614
808
Value and Cost of Production
Total Cost
Milk
Oper. Cost
Production
Milk
Receipts
Per Cwt,
Per Cwt.
Per Cow
(10)
(10)
(10)
1,080
1,136
1,209
1,326
1,615
779
822
894
957
1,134
ProfitabU ity
Net Farm Income
Labor &.
With
Without Mgmt. Inc.
Apprec,
Apprec.
Per Qper,
(3)
(3)
(3)
4.57
4.98
5.16
5.61
6.56
Change in
Net Worth
wlApprec.
(6)
$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
$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
$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
3,784
-351
-4,980
-10,842
-25,962
.---------_._-------------------- .. ----_.------------------------------_._-----­
*Page number of the participant's DFBS where the factor is located.
28
FARH BUSINESS CHART FOB. LARGE CONVENTIONAL STALL DAIRY FARHS
101 Conventional Stall Dairy Farms vith Hore Than 60 Covs, Hev York, 1991
Size of Business
Worker
Ho.
Pounds
Equivof
Milk
alent
Cows
Sold
(II).
(11)
(11)
Rates of Production
Pounds
Tons
Tons Corn
Milk Sold Hay Crop Silage
Per Cow
PM/Acre Per ACre
(10)
(9)
(9)
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(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
21,818
19,722
18,796
18,310
17,780
4.5
3.5
2.9
2.6
2.4
20
18
16
15
15
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
29
28
26
24
21
493,477
455,675
416,880
377,657
327.086
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
Total Cost
Milk
Oper. Cost
Production
Receipts
Milk
Per
Cwt,
Per Cwt.
Per Cow
(10)
(10)
(10)
Feed & Crop
Expenses
Per Cow
(10)
Feed & Crop
Expenses Per
Cwt, Milk
(10)
636
740
799
837
886
$ 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
4.70
4.97
5.27
5.62
6,68
$
Profitab il i ty
Net Farm Income
Labor &.
With
Without
Mgmt. Inc.
Per Oper.
Apprec,
Apprec,
Change in
Net Worth
w/Apprec,
(3)
(3)
(3)
(6)
$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
17,174
14.84
24,354
2,148
10.60
-3,736
9,265
18,295
15.31
-10,773
2,051
11.00
16.14
8,667
1,122.
-19,843
1,938
11.37
-9,656
17.71
-2,600
-33,574
1,761
12.22
19.66
-19,012
-26,407
-50,112
1,523
13.87
.Page number of the participant's DFBS where the factor is located.
6,901
-1,326
-9,415
-18,321
-36,366
$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
29
IABM BUSINESS CHAllT lOR SHALL nuSTALL DAIRY IABMS
'6 lreestall Barn Dairy larms with 120 or Leas Cows. New York. 1991
Size of Business
Worker
Pounds
No.
Equiv­
Milk
of
alent
Cows
Sold
Rates of Production
Pounds
Tons
Tons Corn
Milk Sold Hay Crop Silage
Per Cow
DMlAcre Per Acre
(10)
(9)
(9)
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
31
29
26
25
20
537,744
508,421
490,526
423,955
341,458
(11)*
Grain
Bought
Per Cow
(10)
$ 304
454
535
576
611
, Grain is
of Milk
Receipts
(10)
14%
20
23
25
27
11
8
Cost Control
Machinery
Labor &
Costs
Machinery
Per Cow
Costs Per Cow
(11)
$257
341
380
407
441
(11)
$
(11)
689
809
848
887
921
(11)
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
$
--------------------------------------------------------------------------------
682
743
812
882
1,003
30
33
36
38
40
492
520
567
649
876
Value and Cost of Production
Total Cost
Milk
Oper. Cost
Production
Receipts
Milk
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
1,001
1,064
1,114
1,238
1. 565
858
938
1,022
1,075
1,235
Profitability
Net Farm Income
Labor &.
Without
With
Mgmt. Inc.
Per Oper.
Apprec.
Apprec.
(3)
(3)
(3)
$82.214
57,671
45,031
39,035
34,718
$66,646
46,073
37.230
29,014
23,021
4.95
5.23
5.49
5.81
6.80
Change in
Net Worth
w/Apprec,
(6)
$29,929
15,194
9,298
4,126
-567
$69,398
36,752
24,657
15,276
9,326
15.53
28,021
17,945
2,231
10.31
-4,155
9,787
15.96
20,709
2,158
-10,866
10.64
1,964·
2,085
11.16
16.57
11,223
-18,096
4,475
17.45
-4,068
11.61
-26,04f:
1,993
-10,343
-17,325
12.67
-41,780
19.25
1,755
*Page number of the participant's DFBS where the factor is located.
3,405
-2,955
-8,018
-14,391
-38,262
30
•
FARK BUSINESS CIWlT FOR LARGE FllEESTALL DAIRY FARKS
84 Freeatall Barn Dairy Farma with Hare Than 120 Cows. Rew York. 1991
Size of Business
Worker
Ro.
Pounds
of
Milk
Equiv­
alent
COWs
Sold
Rates of Production
Pounds
Tons
Tons Com
Milk Sold Hay Crop Silage
Per Cow
PM/here Per Acre
(10)
(9)
(9)
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Per Worker
Worker
(11)*
(11)
(11)
15.3
7.9
6.8
6.1
5.5
687
328
253
211
195
13,384,842
6,283,512
4,743,201
4,020,615
3,591,100
22,407
21,089
20,463
19,950
18,918
4.2
3.4
3.1
2.8
2.6
18
17
15
15
14
56
46
44
40
38
1,003,143
872,694
809,299
754,498
706,657
5.1
4.6
4.3
3.9
3.1
183
171
153
138
125
3,322,631
3,100,997
2,875,093
2,514,339
2,041,714
18,193
17,466
16,810
16,123
14,028
2.3
2.1
1.9
1.8
1.1
13
12
12
10
7
36
34
32
30
27
663,402
640,597
603,479
547,129
474,745
Cost Control
Machinery
Labor &
Costs
Machinery
Per Cow
Costs Per Cow
Grain
Bought
Per Cow
, Grain is
of Milk
Receipts
(10)
(10)
401
502
592
635
679
16%
22
25
27
28
$258
333
359
391
420
712
747
800
853
997
29
31
33
35
42
456
481
528
592
700
$
(11)
Value and Cost of Production
Oper. Cost
Total Cost
Milk
Receipts
Milk
Production
Per Qwt.
Per Cwte
Per Cow
(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
Feed & Crop
Expenses Per
Cwt. Milk
(10)
(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
$
1,010
1,057
1,093
1,166
1,328
(11)
Feed & Crop
Expenses
Per Cow
(11)
$
(11)
Profitability
Net Farm Income
Labor &.
With
Without
Mgmt. Inc.
Apprec.
Apprec.
Per Opere
(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 Achieyable 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
f
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.
pebt to Asset Iatios - (defined on page 9)
34
Dry latter - 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 Ltyestock - Purchased dairy cattle and other livestock that cause an
increase in herd size from the beginning to the end of the year.
lara pebt Payments IS 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.
.
lara pebt 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.
linancial 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 larm Income - (defined on page 5)
Net Worth - The value of assets less liabilities equal net worth.
equity the owner has in owned assets.
It 1s 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 cat~gories. Other livestock expenses include;
bedding, DRIC, 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.
R,payment 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)
leturn
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
IRDU
Pagels)
3,8
Accounts Payable
.
4,8
Accounts Receivable ••......
3,5
Accrual Expenses
.
Accrual Receipts ........•..
4.5
15
Acreage •............•......
Advanced Government
7,8
Receipts
.
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
.
13
Cash Flow Coverage Ratio
2
Cash Paid
.
Cash Receipts
.
4.11
Change in Accounts
Payable
.
3
Change in Accounts
4
Receivable
.
2,3
Change in Inventory
.
10
Change in Net Worth
.
3,16
Crop Expenses
.
15
Crop/Dairy Ratios
.
Dairy (farm)
.
2
Dairy Cash-Crop (farm)
.
2
Debt Per Cow
.
9
Debt to Asset Ratios
9
.
3,9
Depreciation
.
15
Dry Matter
.
19
Education ..••............•..
7
Equity Capital ..•....•.....
3,11
Expansion Livestock ..•..•..
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
Per Cow ..•..............
12
Pagels)
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 Sys tem
.
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
6
3
11
2
2
11
11
4
4
2
13
3
7
7
6
9
18
18
19
15
t
OTHER AGRICULTURAL ECONOMICS EXTENSION PUBLICATIONS
.,
•
•
J
.­
•
.
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, 1989 to 1992
Andrew M. Novakovic
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
No. 93-04
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
LouAnne F. King
George o. Yarnall
No. 93-07
Dairy Farm Business Summary
Eastern Plateau Region 1992
R. A. Milligan
Linda D. Putnam
Carl Crispell
Gerald A. LeClar
A. Edward Staehr