1987 DAIRY FARM BUSINESS SUMMARY
EASTERN PLATEAU REGION
Table of Contents
INTRODUCTION ...............•...........................................
1
Program Objective .................................................
1
Format Features
1
SUMMARY AND ANALYSIS OF THE FARM BUSINESS .................. ...... ......
2
Business Characteristics .........••...............................
2
Income Statement ..................................................
3
Profitability Analysis ......•....•........................•.......
6
Farm and Family Financial Status ................ ..................
8
Cash Flow Statement ...............................................
11
Repayment Analysis ................................................
12
Cropping Program Analysis .. ~ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..
14
Dairy Program Analysis ............................................
16
Capital and Labor Efficiency Analysis .............................
18
COMPARATIVE ANALYSIS OF THE FARM BUSINESS .......•......................
19
Progress of the Farm Business .•...................................
19
Farm Business Chart.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..
20
Financial Analysis Chart ..........................................
22
Comparisons by Type of Barn and Herd Size .........................
23
Herd Size Comparisons .............................................
23
IDENTIFY AND SET GOALS .................................................
37
INTRODUCTION
Dairy farmers throughout the State have been participating in Cornell
Cooperative Extension's farm business summary and analysis program since the
early 1950's. Each participating farmer receives a comprehensive business
summary and analysis of his or her farm business. The information in this
report represents an average of the data submitted from farms in the Eastern
Plateau Region.*
Program Objective
The primary objective of the dairy farm business summary. DFBS, is to
help farm managers improve the financial management of their farm business
through appropriate use of historical farm data and the application of mode~n
farm business analysis techniques. In short, DFBS identifies the business
and financial information farmers need and demonstrates how it should be used
in identifying and evaluating the strengths and weaknesses of the farm
business.
Format Features
This regional report follows the same general format as in the 1987
DFBS printout received by all participating dairy farmers. Worksheets have
been included to give non·DFBS participants an opportunity to summarize their
businesses. The analysis tables include an open column or section labeled ~
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.
This report features:
(1) an income statement including accrual accounting for farm business
expenses and receipts, as well as measures of profitability with and
without appreciation,
(2) a complete balance sheet including financial ratios,
(3) a cash flow summaIY including debt repayment ability,
(4) a cropping program analysis,
(5) a dairy program analysis, and
(6) 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 more than 70 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 Sciences, Cornell University, in cooperation with Cooperative
Extension Agents Carl Crispell, Dean Frazier, and Jerry LeClar, and Farm
Consultant Charles Radick. The Eastern Plateau Region is comprised of
Broome, Chemung, Chenango, Delaware, Otsego, Schuyler, Tioga, and Tompkins
Counties.
2
SUMMARY AND ANALYSIS OF THE FARM BUSINESS
Business Characteristics
Finding the right management strategies is an important part 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 farmers reporting these characteristics.
BUSINESS CHARACTERISTICS
88 Eastern Plateau Region Dairy Farms, 1987
T:lRe of Farm
Dairy
Part-time dairy
Dairy cash-crop
Part-time cash-crop dairy
Number
88
0
0
0
type of ~y§1ness
Single proprietorship
Partnership
Corporation
Number
59
29
0
T:;me of Ownershin
Owner
Renter
Humber
80
8
T:;me of Blm
Stanchion/Tie-Stall
Frees tall
Combination
Number
64
22
2
Milking S:)!:liit~m
Bucket & carry
Dumping station
Pipeline
Herringbone parlor
Other parlor
Number
0
5
57
23
3
Business Record S:)!:§tem
ELFAC
Account Book
Agrifax (mail-in only)
On-Farm Computer
Other
Number
9
39
9
4
27
P[oductign Reco[g§
DHIC
Owner-Sampler
Numb~[
Other
None
Number
1
8
68
11
The averages used in this report were compiled using data from all the
participating dairy farms in this region unless noted otherwise. There may
be regular dairy farms, part-time farms, dairy cash-crop farms, farm renters,
partnerships, and corporations included in the average. Dai[:y: Termination
Program na[ticinants who sold their cows in 1987 are not included in the
report. These specific classifications are used to separate farms in the
State Business Summary.
A part-time farm has less than six months of labor from all operators and
total labor is less than 12 months.
Adair:)!: cash-crop farm has accrual receipts from crop sales that exceed 10
percent of accrual milk sales. These farms were summarized using 1986 data
in Knoblauch, Wayne A. and Linda D. Putnam, Dai[:y: Farm Business Summlr:)!:. New
York Dair:)!:-Cash Crop Summa[:y:. 1986, Cornell University, Department of
Agricultural Economics, A.E. Ext. 87-20, August 1987.
A farm
renter does not own farm real estate at the end of the year or does
not own tillable land. These farms were summarized using 1986 data in
Putnam, Linda D. and Stuart F. Smith, Dairy Firm Business Summl[:)!:. Eastern
New York Rente[ Summar:)!:. 1986, Cornell University, Department of Agricultural
Economics, A.E. Ext. 87-19, August 1987.
3
Income Statement
The accrual income statement begins with an accounting of all farm
business expenses.
CASH AND ACCRUAL FARM EXPENSES
88 Eastern Plateau Region Dairy Farms, 1987
Expense Item
Cash
Paid
Change in
Inventory
or Prepaid
Change in
Expense* + Accounts Payable
+
Hired Labor
$ 17,786
Feed
Dairy grain & conc.
46,640
Dairy roughage
1,002
Other livestock
980
Machinery
Mach. hire, rent/lease
1,473
Machinery repairs/parts
10,128
Auto expo (farm share)
636
Fuel, oil & grease
4,924
Livestock
Replacement livestock
1,674
Breeding
2,997
Vet & medicine
3,669
Milk marketing
9,424
Cattle lease/rent
235
Other livestock expense
7,177
$
o
$
-1,309
-1
-7
-50
$ 17,736
337
10
45,668
1,011
973
1,478
10,270
633
4,967
o
o
5
-53
195
-8
51
o
20
41
-2
7
o
Accrual
- Expenses
-3
-1
-164
1,694
3,036
3,654
9,424
235
7,012
34
-40
-14
30
7,559
2,540
2,744
-24
101
2,531
4,933
3,130
3,461
-22
o
o
o
o
.Q!:QP.§.
Fertilizer & lime
7,565
Seeds & plants
2,552
Spray, other crop expo
2,790
Real Estate
Land/bldg./fence repair
2,599
Taxes
4,832
Insurance
3,135
Rent & lease
3,491
Other
Telephone (farm share)
649
Electricity (farm share)
5,586
Interest paid
14,255
Miscellaneous
1.737
Total Operating
$157,936
Expansion livestock
833
Machinery depreciation
Building depreciation
TOTAL ACCRUAL EXPENSES
2
-76
-44
o
o
o
-5
-30
o
o
o
-10
153
$ -1,291
-42
377
o
5
o
$
o
639
5,591
14,255
1.848
$157,022
833
13,102
6.052
$177,009
Cash paid is the actual amount of money paid out during the year and does not
necessarily represent the cost of goods and services actually used.
Change in inventory: An increase in inventory is subtracted in computing
accrual expenses because it represents purchased inputs not actually used
during the year. A decrease in inventory is added to expenses because it
represents the cost of inputs purchased in a prior year and used this year.
4
Changes in prepaid expenses apply to non-inventory categories. Include any
expenses that have been paid for in advance of their use, for example, 1988
rent paid in 1987. A positive change is the amount the prepayment account
~eclined from beginning to end year, a negative change indicates an increase
in the account.
Change in accounts payable: An increase in payables is added and a decrease
is subtracted when calculating accrual expenses.
Accrual expenses are the costs of inputs actually used in this year's
production.
Worksheets are provided to enable any dairy farmer to compute his or
her accrual farm expenses and compare them with the averages on the previous
page.
CASH AND ACCRUAL FARM EXPENSES WORKSHEET
Expense Item
Hired Labor
~
Cash
Paid +
$_--
Dairy grain & conc.
Dairy roughage
Other livestock
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
Land/bldg./fence repair
Taxes
Insurance
Rent & lease
Q..tllitt:
Telephone (farm share)
Electricity (farm share)
Interest paid
Miscellaneous
Total Operating
$_ __
Expansion livestock
Machinery depreciation
Building depreciation
TOTAL ACCRUAL EXPENSES
Change in
Inventory
or Prepaid
Change in
Expense + Accounts Payable
$_--
$_-­
$_--
$_--
Accrual
- Expenses
$_-­
$
5
CASH AND ACCRUAL FARM RECEIPTS
88 Eastern Plateau Region Dairy Farms, 1987
Receipt Item
Cash
Receipts
Change in
+ Inventory +
$177,554
Milk sales
13,624
Dairy cattle
$
3,025
Dairy calves
86
Other livestock
Crops
1,301
3,531
Government receipts
Custom machine work
628
77
Gas tax refund
Other
l.830
(-)
Less nonfarm noncash cap.**
Total Accrual Receipts
$201,657
$
Change in
Accounts
Receivable
$
416
-3
0
0
-106
10
-101
7
$
223
2,141
-3
923
-106*
21
2,899
Accrual
Receipts
$177,970
15,762
3,025
83
2,119
3,435
527
84
1,830
(-)
57
$204,778
*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.
Chanies in inventory are calculated by subtracting beginning of year values
from end of year values excludini appreciation. Increases in livestock in­
ventory caused by herd growth and/or quality are added and decreases caused
by herd reduction and for quality are subtracted. Changes in inventories of
crops grown are also calculated. Changes in advanced government receipts are
calculated by subtracting the end year balance from the beginning year bal­
ance (balances are listed with the current liabilities on the Balance Sheet).
Chanies 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 farmer during the year.
CASH AND ACCRUAL FARM RECEIPT WORKSHEET
Receipt Item
Cash
Receipts
Milk sales
Dairy cattle
Dairy calves
Other livestock
Crops
Government receipts
Custom machine work
Gas tax refund
Other
Less gifts of cattle & crops
Total Accrual Receipts
$_____________
+
Change in
Inventory
+
Change in
Accounts
Receivable
Accrual
Receipts
$_-­
$_-­
(-)--­
(-)--­
$_-­
$_-­
6
Profitability Analysis
Farm owners/operators contribute labor, management, and capital to
their businesses and the best combination of these resources maximizes
income. 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.
Net farm income is the total combined 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 FLB and PCA). Appreciation is a major factor contributing to changes in
farm net worth and must be included for a complete profitability analysis.
NET FARM INCOME
88 Eastern Plateau Region Dairy Farms, 1987
Average
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)
My Farm
$204,778
5,620
2,529
12,169
386
$225,481
-177.009
$ 48,472
$ 27,768
$_-­
$_-­
$_-­
$_-­
Return to operators' labor. management. and equity capital measures the total
business profits 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 considered an important part of the return to ownership of
farm assets.
RETURN TO OPERATORS' lABOR, MANAGEMENT, AND EQUITY
88 Eastern Plateau Region Dairy Farms, 1987
Av~rag~
Item
Net farm income
Family labor unpaid
@ $650 per month
Return to operators' labor,
management, & equity
With
Apprec.
Without
Apprec.
$ 48,472
$ 27,768
1,312
1.315
$ 47,157
$ 26,453
My Farm
With
Without
Apprec.
Apprec.
$_-­
$_-­
$_-­
$_-­
7
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 MANAGEMENT INCOME
88 Eastern Plateau Region Dairy Farms, 1987
Item
Averase
Return to operators' labor, management,
& equity without appreciation
Real interest @ 5% on $325,815
average equity capital
Labor & Management Income
Labor & Management Income per
1.28 OperatorfManager
My Farm
$ 26,453
$_-­
- 16.291
$ 10,162
$_-­
$
$_--­
7,939
Return on eguity capital measures the net return remaining for the farmer's
equity or owned capital after a charge has been made for the owner-operator's
labor and management. The earnings or amount of net farm income allocated to
labor and management is the opportunity cost of operators' labor and
management estimated by the cooperators. Return on equity capital is
calculated with and without appreciation. The rate of return on equity
capital is determined by dividing the amount returned by the average farm net
worth or equity capital. Return on total capital is calculated by adding
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
88 Eastern Plateau Region Dairy Farms, 1987
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
$
$
$
$
$
$
47,157
23,172
23,985
14,255
38,240
3,281
17,536
My
Farm
$_-­
$_-­
$_--­
$_-­
$_-­
$_-­
7.4%
1.0%
---_%
---_%
7.6%
3,5%
--_%
---_%
8
Farm and Family Financial Status
The first step in evaluating the financial status of the farm is to
construct a balance sheet which identifies all the assets and liabilities of
the business. The second step is to evaluate the relationship between
assets, liabilities, and net worth and changes that occurred during the year.
1987 FARM BUSINESS & NONFARM BALANCE SHEET
88 Eastern Plateau Region Dairy Farms, 1987
Farm Liabilities
Farm Assets
Jan. 1
Current
Farm cash, checking
& savings
$ 4,190
15,928
Accounts rec.
Prepaid expo
o
38.492
Feed & supplies
Total
$ 58,610
Intermediate
Dairy cows:
owned
$ 75,415
leased
856
Heifers
29,059
Bulls/other lvstk.
574
Mach./eq. owned
91,723
Mach./eq. leased
978
3,584
FLB/PCA stock
Other stock/cert.
979
Total
$203,168
Long-Term
Landjbuildings :
owned
$229,295
leased
1.086
Total
$230,381
Total Farm Assets $492,159
Dec. 31
$
6,186
16,156
o
40.706
$ 63,048
$ 79,924
753
32,304
579
95,017
599
3,643
934
$213,753
$240,275
829
$241,104
$517,905
(Average for 57 farms reporting)
Nonfarm Assets*
Jan. 1
Dec. 31
& Net Worth
Jan. 1
Current
Accounts payable $ 3,573
Oper~ting debt
2,477
Short-term
2,481
Advanced govt. rec. _ _~O
Total
Intermediate
Structured debt
1-10 years
Financial lease
(cattle/mach. )
FLB/PCA stock
$
8,530
Dec. 31
$
3,937
2,463
2,209
106
$
8,715
$ 69,015
$ 70,226
1,834
3.584
1,352
3.643
$ 74,433
$ 75,221
$ 96,282
$ 93,337
1.086
$ 97,368
829
$ 94,166
$180,331
$311,828
$178,102
$339,803
Nonfarm Liabilities*
& Net Worth
Jan. 1
Dec. 31
Total
Long Term
Structured debt
~10 yrs
Financial lease
(structures)
Total
Total Farm Liab.
FARM NET WORTH
Personal cash, chkg.
Nonfarm Liab.
$ 4,171 $ 4,477
& savings
$ 3,747 $ 4,780
NONFARM NET WORTH $ 40,027 $ 45,302
Cash value life ins.
5,514
5,978
Nonfarm real estate
8,061
9,535
Jan, 1
Dec. 31
FARM &~ONFARM*
Auto (personal sh.)
3,111
3,223
Total Assets
$536,357 $567,684
Stocks & bonds
5,250
5,917
Total Liabilities 184,502
182.579
Household furn.
9,588
9,572
All other
8.927
10.773
TOTAL FARM & NONTotal Nonfarm $ 44,198 $ 49,779
FARM NET WORTH $351,855 $385,105
*Assumes that average nonfarm assets and liabilities for the nonreporting
farms were the same as for those reporting.
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.
9
Advanced government receipts are included as current liabilities.
Government payments received in 1987 that are for participation in the 1988
program are the end year balance and payments received in 1986 for
participation in the 1987 program are the beginning year balance.
Date ____________________________
1987 FARM BUSINESS & NONFARM BALANCE SHEET
Jan, 1
lam A§§ets
Current
Farm cash, checking
& savings
Accounts rec.
Prepaid expense
Feed & supplies
Total
Dec, 31
Farm Liabilities
&Het Worth
Jan, 1
Dec, 31
Nonfarm Liabilities
Jan, 1
fa HGt Worth
Nonfarm Liab.:
Dec. 31
S;;uttGnt
Accounts payable
Operating debt:
Short Term:
Adv. govt. rec.
Total
I ntl rme Sl1ate
IntGD!!edlAtG
Dairy cows:
owned
leased
Heifers
Bulls/other lvstk.
Mach./eq. owned
Mach./eq. leased
FLB/PCA stock
Other stock/cert.
Total
Financial lease
(cattle/mach. )
FLB/PCA stock
Total
L2n&-Ilm
Lon&-Ietm
Land/buildings:
owned
leased
Financial lease
(structures)
Total
Total Farm Liab.
FARM NET WORTH
Total
Total Farm Assets
HQnfi&m Asset§
Jan. 1
Personal cash, chkg.
& savings
Cash val. life ins.
Nonfarm real est.
Auto (pres. share)
Stocks & bonds
Household fum.
All other
Total Nonfarm
Dec. J1
TOTAL FARM fa HQlEARM
Total Farm & Nonfarm Assets
Less Total Farm & Nonfarm Liabilities
Farm & Nonfarm Net Worth
Total Nonfarm
Liabilities
Nonfarm
Net Worth
Ji&n. 1
DIC, 31
10
Balance sheet analysis requires an examination of financial and debt ratios
measuring levels of debt. Percent equity is calculated by dividing end of
year net worth by end of year assets. The debt to asset ratio is compiled by
dividing liabilities by assets. Low debt to asset ratios reflect strength in
solvency and the potential capacity to borrow. Debt levels per unit of
production include some old standards that are still useful if used with
measures of cash flow and repayment ability. The change in farm net worth
without appreciation is an excellent indicator of financial progress.
BALANCE SHEET ANALYSIS
88 Eastern Plateau Region Dairy Farms, 1987
Average
Item
Financial Ratios - Farm:
Percent equity
Debt/asset ratio: total
long-term
intermediate/current
Change in Net Worth:
Without appreciation
With appreciation
Farm Debt Analysis:
Accounts payable as % of total debt
Long-term liabilities as a % of total debt
Current & inter. 1iab. as a % of total debt
Farm Debt Levels:
Per Cow
Total farm debt
$ 1,979
Long-term debt
1,046
Intermediate & current debt
933
My Farm
66%
0.34
0.39
0.30
$
7,271
27,975
$_-­
$_-­
----,
----,
2,
53%
47%
Per Tillable
Acre Owned
$ 1,127
596
531
---_%
Per Tillable
Acre Owned
$_--­
Per Cow
$_-
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
88 Eastern Plateau Region Dairy Farms, 1987
Item
Value beg. of year
Purchases
$
Gift/inheritance +
Lost capital
Sales
Depreciation
Net investment
Appreciation
Value end of year
Avg. of Regional Farms
LL
Mach. LEg.
$229,295
7,784*
18
1,134
1,176
6,052
$ 91,723
$ 14,330
+
18
My Farm
LL
$
Mach, LEg
I
$
$
+
482
- 13.102
-560
+ 11,538**
$240,275
764
+ 2.529
$ 95,017
-+---+---$_--
-+- - ­
+--­
$_-­
*$ 2,081 land and $ 5,703 buildings and/or depreciable improvements.
**Exc1udes $631 of appreciation on assets sold during the year.
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 compare all the cash inflows
with all the cash outflows for the year. A complete list of cash inflows and
cash outflows are identified in the following table. By definition, total
cash inflows must equal total cash outflows when beginning and ending
balances are included. Any imbalance is, therefore, the error from incorrect
accounting of cash inflows and cash outflows.
ANNUAL CASH FLOW STATEMENT
88 Eastern Plateau Region Dairy Farms, 1987
Item
Cash Inflows
Beginning farm cash, checking & savings
Cash farm receipts
Sale of assets: Machinery
Real estate
Other stock & certificate
Money borrowed (intermediate & long-term)
Money borrowed (short-term)
Increase in operating debt
Nonfarm income
Cash from nonfarm capital used in the business
Money borrowed - nonfarm
Total
Cash Outflows
Cash farm expenses
Capital purchases: Expansion livestock
Machinery
Real estate
Other stock & certificate
Principal payments (intermediate & long-term)
Principal payments (short-term)
Decrease in operating debt
Nonfarm debt payments
Personal withdrawals & family expenditures
Ending farm cash, checking & savings
Total
Imbalance (error)
Averase
$
4,190
201,657
482
685
593
22,096
1,913
0
4,472
2,466
126
$239,280
$157,936
833
14,330
7,784
162
23,830
2,184
15
746
20,157
6,186
$234,162
$ 5,118
My Farm
$_--­
$_--­
$_--­
$_--­
$_--­
12
Repayment Analysis
The second step in 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 1988. The cash flow projection
worksheet on the next page can be used to estimate repayment ability, which
can then be compared to planned 1988 debt payments shown below.
FARM DEBT PAYMENTS PlANNED
Same 68 Eastern Plateau Region Dairy Farms, 1987 & 1988
-
Debt Payments
Long-term
Intermediate-term
Short-term
Operating (net
reduction)
Accounts payable
(net reduction)
Total
Averas;e
1981 Paym~mts
Planned
Made
Planned
1988
$ 10,256
19,553
1,858
$ 13,741
25,698
2,088
727
0
378
287
121
186
$ 32,682
$ 41,654
$ 31,017
Per cow
$
Per cwt. 1987 milk $
Percent of total
1987 receipts
Percent of 1987
milk receipts
376
2.32
$
$
$
9,996
19,156
1,301
480
2.96
16%
20%
18%
23%
My Farm
1987 Payments
Made
Planned
Planned
1988
$
$
$
$
.$
$
$
$
$
$
The cash flow coverase ratio measures the ability of the farm business to
meet its planned debt payment schedule. The ratio shows the percentage of
planned payments that could have been made with last year's available cash
flow. Farmers that did not participate in DFBS last year will find in their
report a cash flow coverage ratio based on planned debt payments for 1988.
CASH FLOW COVERAGE RATIO
Same 68 Eastern Plateau Region Dairy Farms, 1987
Item
Cash farm receipts
- Cash farm expenses
+ Interest paid
- Net personal withdrawals from farm*
(A) - Amount Available for Debt Service
(B) - Debt Payments Planned for 1987
(as of December 31, 1986)
(A + B) - Cash Flow Coverage Ratio for 1987
Average
My Farm
$204,927
158,794
14,031
15.975
$ 44,189
$_--­
$_--­
$ 32,682
$_--­
1.35
*Personal withdrawals and family expenditures less nonfarm income and nonfarm
money borrowed. If family withdrawals are excluded the cash flow coverage
ratio will be incorrect.
13
ANNUAL CASH FLOW WORKSHEET
Item
Average number of cows
Accrual Oper. Receipts
Milk
Dairy cattle
Dairy calves
Other livestock
Crops
Misc. receipts
Total
Accrual Oper. Expenses
Hired labor
Dairy grain & conc.
Dairy roughage
Other lvstk. feed
Mach. hire/rent/lease
Mach. rpr./parts & auto
Fuel, oil & grease
Replacement lvstk.
Breeding
Vet & medicine
Milk marketing
Cattle lease
Other lvstk. expo
Fertilizer & lime
Seeds & plants
Spray/other crop exp.
Land, bldg.,fence repair
Taxes
Insurance
Real est. rent/lease
Utilities
Miscellaneous
Total Less Int. Paid
Regional
Average
(per cow)
86
$
2,077
184
35
Per Cow
1988
Expected
Chanse Projection
$_ __
$_--
---_$_--­
$_ __
$_-
---_$_--­
$_ __
$_-
---_$_--­
My Farm
Total
1
$
$
25
69
2,390
207
533
12
11
17
127
58
20
35
43
110
3
$
Net Accrual Operatins Income
(without interest paid)
- Change in lvstk./crop inv.
- Change in accts. rec.
+ Change in feed/supply inv.
+ Change in accts. payable*
NET CASH FLOW
- Net personal 'withdrawals &
family expenditures
Available for Farm Debt
Payments & Investments
- Farm debt payments
Available for Farm Investment
- Capital purchases: cattle,
machinery & improvements
Additional Capital Needed
82
88
30
32
30
58
37
40
73
22
1,666
(total)
$ 62,067
2,898
223
-1,291
381
$ 58,037
$_--­
$_ __
$_--­
$_ __
$_--­
$
$
$
$
$
$
14.2:29
$ 43,078
40.153
$ 2,925
$ 23,109
*Excludes change in interest account payable.
14
Cropping Program Analysis
The cropping program is an important part of the dairy farm business
and sometimes it is overlooked and neglected. A complete evaluation of
available land resources, how they are being used, how well crops are
producing and what it costs to produce them, is required to evaluate
alternative cropping and feed purchasing choices.
LAND RESOURCES AND CROP PRODUCTION
88 Eastern Plateau Region Dairy Farms, 1987
My Farm
Average
Item
Owned
158
66
97
321
Land
Tillable
Nontillable
Other nontillable
Total
Crop Yields
Hay crop
Corn silage
Other forage
Total forage
Corn grain
Oats
Wheat
Other crops
Tillable pasture
Idle
Total Tillable Acres
R~nteg
96
20
l§
133
Farms
86
82
Acres
139
58
5
86
47
17
2
5
28
33
86
16
195
57
30
37
27
41
Iotal
254
86
llJ
453
frodLAcre
2.60 tn
16.86 tn
5.45 tn
1.89 tn
3.40 tn
114.14 bu
61. 57 bu
41.26 bu
Owned
Rented
Acres
DM
-----
DM
DM
DM
-----
-----
Iotal
ProdLAcre
DM
--- tn
tn
tn DM
tn DM
tn DM
bu
--- bu
bu
---
---------
31
254
Average crop acres and yields compiled for the region are for the
number of 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 measures of crop management measure how efficiently the
land resource is being used and how well total forage requirements are being
met.
CROP MANAGEMENT FACTORS
88 Eastern Plateau Region Dairy Farms, 1987
Item
Total tillable acres per cow
Total forage acres per cow
Harvested forage dry matter, tons per cow
Average
2.96
2.22
7.55
My Farm
15
Cropping Program Analysis (continued)
A substantial number of cooperators have allocated crop expenses to hay
crop, corn, and other crop production. 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 Dairy Farms, 1987
Total
Per
Till.
Acre
Item
Number of farms
reporting
Average number
of acres
Fertilizer & lime $
Seeds & plants
Spray & other crop
expense
Total
$
Hi'!Y
Per
Acre
Per
Ton DM
47
86
Corn
Silage
Per Ton
DM
All
Corn
Per
Acte
~:[QP
Corn
Grain
Per Dry
Shell Bu.
47
254
29.78 $
10.01
131
12.18 $
3.94
4.69
1.52
10,81
50.60 $
3.29
19.41 $
1.27
7.47
$
$
87
25.80 $
11.35
4.74
2.08
14,51
51.65 $
2,66
9.48
$
$
0.23
0.10
Q.13
0.45
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
88 Eastern Plateau Region Dairy Farms, 1987
Machinery
Expense Item
Fuel, oil & grease
Machinery repairs & parts
Machine hire, rent & lease
Auto expense (farm share)
Interest (5%)
Depreciation
Total
Aver§.ge
Total
Per Til.
Expenses
Acta
$ 4,967
10,270
1,478
633
4,669
13.102
$ 35,121
$ 19.57
40.46
5.82
2.50
18.39
My Fa:[m
Total
Per Til.
Expenses
Acre
$_--­
$_-­
$_-­
$_-­
~1.62
$ 138.36
16
Dairy Program Analysis
Analysis of the dairy enterprise can tell 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. This increase in inventory is included as an accrual farm receipt
when calculating profitability without appreciation impacts.
DAIRY HERD INVENTORY
88 Eastern Plateau Region Dairy Farms, 1987
Dairy Cows
Value
Heife);:s
ORen
No. Value
Calves
No. Value
29 $16,335
173
l,427
26 $17,935
23 $ 9,082
503
633
24 $10,218
16 $ 3,641
362
147
19 $ 4,150
~red
Item
No.
Value
Beg. year (owned)
+ Change wjo apprec.
+ Appreciation
End year (owned)
End incl. leased
Average number
86
$75,415
1,105
3,404
$79,924
88
90
86
No.
65 (all age groups)
My Farm:
Beg. of year (owned)
+ Change wjo 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 productivity 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 rolling herd average on the test date nearest
December 31.
MILK PRODUCTION
88 Eastern Plateau Region Dairy Farms, 1987
Item
Total milk sold, 1bs.
Milk sold per cow, 1bs.
Average milk plant test, percent butterfat
Average
1,386,641
16,181
3.53
My Farm
17
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, Qperating cQsts of
producing milk are estimated by deducting nonmilk accrual receipts from total
accrual operating expenses. Total costs of producing milk include the
operating costs plus expansion livestock purchased, depreciation on machinery
and buildings, the value of operators' labor and management, and the interest
charge for using equity capital. Note that the cost of labor, management,
and equity capital has been excluded in the intermediate calculation.
ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK
88 Eastern Plateau Region Dairy Farms, 1987
Hx Firm
Av~rale
Item
Accrual ~osti of
P);:Qducing Milk
Operating costs
Total costs w/o
opers' labor,
mgmt. & capital
Total Costs
A&crual Receipts
[);:om Milk
Totll
Per Cow
Per Cwt.
Totll
Per CQw
Per Cwt.
$131,048
$
1,529
$
9.45
$
$
$
$151,517
$190,980
$
$
1,768
2,229
$
$
10.93
13.77
$
$
$
$
$
$
$177,970
$
2,077
$
12.83
$
$
$
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
88 Eastern Plateau Region Dairy Farms, 1987
M:£ [am
Ave);:ag~
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
Pe);: Cow
$
533
545
$
695
$
35
43
110
3
82
Per Cwt.
$
3.29
Q,07
$
$
$
3.37
$
$
$
4.29
$
--% $
$
0.22
0.26
0.68
0.02
0.51
$
--% $
--..ll
$
Per CQw
Pe);: Cwt.
26%
33%
18
Capital and Labor Efficiency Analysis
Capital efficiency factors measure how intensively the capital is being
used in the farm business. Measures of labor efficiency are key indicators
of management's success in generating products per unit of labor input.
CAPITAL EFFICIENCY
88 Eastern Plateau Region Dairy Farms, 1987
Per
Worktn;;:
$176,770
Item
Farm capital
Real estate
Machinery & equipment
Capital turnover, years
Per
Q2!f
5,893
2,751
1,099
$
32,957
Per Tillable
A~te
$
1,990
Per Tillable
A~te Owned
$ 3,196
1,492
371
2.24
My Farm:
Farm capital
Real estate
Machinery & equipment
Capital turnover, years
$
$
$
$
LABOR FORCE INVENTORY AND ANALYSIS
88 Eastern Plateau Region Dairy Farms, 1987
Labor Fotce
Months
Age
Years of
of Educ.
12
44
33
55
14
14
14
Operator number 1
Operator number 2
Operator number 3
Family paid
Family unpaid
Hired
Total
3
o
2
12
34
+ 12 ­
+ 12 ­
Labor
Efficiency
Total
2.86 Worker Equivalent
1.28 Operator/Manager Equiv.
+ 12 ­
Operator's
___ Worker Equivalent
Operator/Manager Equiv.
Averase
Per Wotker
Total
Per
Qow
Per
TU. Acre
162
15
-'.Q1
$ 384
$ 410
$ 794
$54.59
5.18
T2 ta l
13,858
1,315
lZ.Z~6
32,910
35,121
68,030
$
My Farm
Per Worker
30
485,347
89
309
86
1,386,641
254
882
Avet5!g~
l,&b2:t Q2st/i
Value of operator(s)
labor ($900/mo.)
$
Family unpd.($650/mo.)
Hired
Total Labor
$
Machinery Cost
$
Total Labor & Mach.
$
$ 17 ,682
5,035
455
5
My Farm: Total
Cows, average number
Milk sold, pounds
Tillable acres
Work units
Value of
Labor & Mgrnt.
.22....U
$129.65
$138.36
$268.00
12t5!1
My Farm
Per
Per
Iil. Acre
Q2!f
$
$
$
$
$
$
$
$
$
$
$
$
19
COMPARATIVE ANALYSIS OF THE FARM BUSINESS
Progress of the Farm Business
Comparing your business with average data from regional DFBS coopera­
tors that participated in both of the last two years is one part of a
business checkup. It is equally important for you to determine the progress
your business has made over the past two or three years and to set targets or
goals for the future.
PROGRESS OF THE FARM BUSINESS
Same 68 Eastern Plateau Region Dairy Farms, 1986 & 1987
Average
1986
1987
Selected Factors
Farm
1987
My
1986
Goal
Size of Business
Average number of cows
85
87
Average number of heifers
66
67
Milk sold, 1bs.
1,372,106 1,408,515
Worker equivalent
2.86
2.86
Total tillable acres
256
252
Rates of Production
Milk sold per cow, 1bs.
Hay DM per acre, tons
Corn silage per acre, tons
Labor Efficiency
Cows per worker
Milk sold/worker, 1bs.
CQntro1
Grain & conc. purchased
as % of milk sales
Dairy feed & crop expo
per cwt. milk
Labor & mach. costs/cow
16,201
2.56
15
16,220
2.55
17
30
479,914
30
491,805
~Qst
25%
25%
--_%
--_%
--_%
$
$
4.17
773
$
$
4.25
797
$
$
$_-_$_-­
$
$_-­
$
$
5,634
1,125
2.23
$
$
5,814
1,142
2.19
$
$
$_-­ $_-­
$_-- $_-­
$ 30,923
$ 53,579
$ 13,102
$
$
$
$_-_$_-­
$
$_-­
$
$_-­
~ARitA1
Efficiency*
Farm capital per cow
Mach. & equip. per cow
Capital turnover, years
frofitability
Net farm inc. w/o apprec.
Net farm inc. w/apprec.
Labor & mgmt. income
Rate of return on eq.
capital w/apprec.
Rate of return on all
capital w/apprec.
financ1Al SummAIY
Farm net worth, end year
Debt to asset ratio
Farm debt per cow
*Average for the year.
$ 23,368
$ 39,444
$ 6,632
4.71%
8.77%
--_%
--_%
--_%
6.25%
8.46%
--_%
----,
--_%
$308,232
0.36
$ 2,043
$342,075
0.34
$ 1,937
$
$_--_$_--­
$
$
$_-­
20
Farm Business Chart
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 414 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
is not necessarily the most profitable.
position is somewhere near the middle or
of costs, and must be taken into account
from low to high, but the lowest cost
In some cases, the "best" management
average. Many things affect the level
when analyzing the factors.
References to DFBS output page numbers for participating dairy farmers are
provided in the table headings.
FARM BUSINESS CHART FOR FARM MANAGEMENT COOPERATORS
414 New York Dairy Farms, 1986
Size of Business
Worker
No.
Pounds
Equiv­
of
Milk
Cows
alent
Sold
(DFBS
pg. 10)
(10)
(10)
R§!tes of Production
Pounds
Tons
Tons Corn
Milk Sold Hay Crop Silage
Per Cow
DMLAcre Per Acre
(9)
(8)
(8)
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(10)
(10)
5,067,341
19,686
4.6
21
48
767,478
2,199,034
18,065
3.7
18
614,002
38
1,711,440
17,165
3.3
17
34
545,894
1,394,330
16,585
3.0
32
499,543
15
1,214,123
15,981
2.7
462,369
15
29
------------_ .. _----------------------------------------------------------------­
1,053,490
2.5
68
15,498
14
432,308
2.5
27
2.3
896,427
59
15,025
2.3
13
26
402,824
779,541
2.0
52
14,393
24
2.1
12
358,752
45
671,587
13,423
1.9
1.8
10
21
304,576
1.4
34
468,617
11,150
1.4
6
16
230,949
7.4
4.2
3.5
3.1
2.8
Grain
Bought
Per Cow
(9)
286
137
106
88
77
% Feed is
of Milk
Receipts
(9)
Cost Control
Machinery
Labor &
Costs
Machinery
Per Cow
Costs Per Cow
(10)
(10)
Feed & Crop
Expenses
Per Cow
(9)
Feed & Crop
Expenses Per
Cwt, Milk
(9)
$188
10%
$197
$352
$2.44
$ 496
449
3.00
15
262
599
290
3.36
310
663
502
354
18
3.59
712
550
402
21
351
384
757
590
3.83
445
23
-------------------------------------------------------------------------------4.04 .
632
483
25
411
805
4.28
682
441
868
528
27
4.50
481
916
728
573
29
794
4.85
542
1,007
31
629
5.86
936
1,201
712
765
37
21
The next section of the Farm Business Chart provides for comparative
analysis of the value of production as measured by milk receipts per cow and
dairy receipts per hundredweight of milk sold and the costs of production. The
final or profitability section shows the variation in farm income by decile and
enables a dairy farmer to determine where he or she ranks by using several
measures of farm profitability. Remember that each column is independently
established and the farms making up the top decile in the first column will not
necessarily be on the top of any other column. The dairy farmer who ranks at or
near the top of most of these columns is in a very enviable position.
FARM BUSINESS CHART FOR FARM
MANAGEMENT COOPERATORS
414 New York Dairy Farms, 1986
Milk
Receipts
Per Cow
(9)
Dairy
Receipts
f~I: Cwt,
(9)
$2,747
2,518
2,401
2,293
2,189
$15.65
14.69
14.30
14.01
13.82
2,115
2,026
1,932
1,812
1,517
13.57
13.36
13.11
12.80
12.10
Oper. Cost
Milk
Per Cow
(9)
Oper. Cost
Milk
f~r Cwt,
(9)
922
1,149
1,274
1,368
1,445
$ 6.41
7.69
8.29
8.80
9.26
$1,678
1,920
2,026
2,124
2,218
$11.39
12.48
13.19
13.69
14.04
1,533
1,599
1,693
1,798
2,039
9.59
10.12
10.64
11.20
13.18
2,308
2,415
2,522
2,671
3,026
14.54
15.23
15.97
16.98
20.35
$
Total Cost
Production
Per Cow
(9)
Total Cost
Production
Per Cwt.
(9)
Profitability
Net Farm Income
With
Without
ARRrec;!,ation
ARRreciat;!,on
(3)
(3)
Return to Operator's Labor,
Management, ~ Eguit~ QaRital
With
Without
ARRreciation
ARRre~lation
(3)
(3)
Labor &
Management In~ol1!e
Per
Per
F~rm
°Rerator
(3)
(3)
$157,944
72,699
51,682
40,559
33,904
$112,483
46,862
33,290
25,457
19,749
$157,154
70,487
49,335
39,083
32,076
$111,814
44,957
31,000
23,381
17,627
$72,075
25,129
15,514
9,128
4,136
$50,073
18,115
12,290
7,659
3,599
26,429
19,844
14,690
6,680
-13,617
15,395
10,520
4,432
-3,173
-23,915
23,588
18,127
12,898
4,611
-15,804
13,469
8,427
2,090
-5,189
-25,722
21
-4,171
-9,752
-20,244
-44,712
-24
-3,475
-8,829
-16,770
-39,924
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 discussed in the section on pages 23-28.
22
Financial Analysis Chart
The farm financial analysis chart is designed just like the Farm Business
Chart and may be used to measure the financial health of the farm business.
Most of the financial measures used in the chart are presented on pages 7, 10,
13, and 18 of this publication. References to DFBS output page numbers for
participating dairy farmers are provided in the table headings.
FINANCIAL ANALYSIS CHART
414 New York Dairy Farms, 1986
Debt Payments
Made Per Cow
(DFBS pg. 7)
$
Liguidity (re~avment)
Cash Flow
Debt Payments
Coverage
as Percent
Ratio
of Milk Recei~ts
(7)
48
204
291
367
426
488
578
670
804
1,525
Percent
~guity
(DFBS
pg. 5)
98%
88
79
73
65
58
52
46
37
15
(11)
(7)
4.68
1. 99
1. 56
1. 31
1.16
1.02
0.89
0.76
0.53
0.02
2%
10
15
19
22
25
29
35
42
78
Solvency
DebtLAsset Ratio
Current &
Long
Intermediate
Term
Available for
Debt Service
Per Cow
$984
726
635
571
522
461
400
336
244
76
Debt
Per Cow
(5)
$
136
705
1,249
1,670
2,036
2,402
2,751
3,053
3,567
4,482
Efficiency & Profitability
Total
Capital
Rate of
Farm Cap.
Turnover
Return on
Per Cow
(years)
Eguity Ca~.
(5)
(5)
(10)
(10)
(3)
0.01
0.07
0.14
0.20
0.26
0.32
0.39
0.47
0.56
0.88
0.00
0.02
0.15
0.30
0.38
0.48
0.60
0.71
0.86
1. 33
$3,753
4,529
4,963
5,276
5,620
5,901
6,322
6,945
7,751
9,489
1. 52
1. 88
2.06
2.20
2.34
2.50
2.68
2.90
3.19
4.39
38%
12
8
5
3
1
-1
-4
-9
-45
Summarize Your Business Performance
The Farm Business and Financial Analysis Charts 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:
23
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 have as many of the same physical
characteristics as possible as the farm being analyzed. To assist in this
endeavor, dairy farms in the 1986 State Summaryl 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 24 shows the average values for the resulting four
groups of dairy farms. Within each housing type, the larger herd size has the
highest crop yields and pounds of milk sold per cow. The cost of producing milk
was lower on the larger farms and labor efficiency greater. Profitability was
also greater on the larger farms within each housing type.
Farm business charts have been computed for each of the four housing and
herd size categories. From these charts on pages 25-28 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 29-36. As herd size
increases, the average profitability also increases (pages 29-30). Net farm
income without appreciation was $123,246 per farm for the 250 or more herd size
group and $6,845 per farm for those with less than 40 cows. This relationship
holds for all measures of profitability including rate of return on equity
capital.
As herd sizes increase above 55 cows, percent equity decreases (pages 31­
34). However, farm net worth increases substantially as herd size increases.
The average net worth for all size farms increased during 1986.
Crop yields increased as herd size increased, but fertilizer and lime
expenses and machinery cost per tillable acre also increased (pages 35-36).
Milk sold per cow also increased as herd size increased, ranging from 14,525
pounds on the farms with less than 40 cows to 18,593 pounds on farms with 250 or
more cows. Farm capital per worker increased as herd size increased, while farm
capital per cow decreased as herd size increased. Cows per worker increased
dramatically as herd size increased, ranging from 20 at the lowest herd size
category up to 41 at the largest size category.
lSmith, Stuart F., Wayne A. Knoblauch, and Linda D. Putnam, Dairy Farm
Management Business Slwmary. New York. 1986, Department of Agricultural
Economics, Cornell University, A.E. Res. 87-20, July 1987.
24
SELECTED BUSINESS FACTORS BY TYPE OF BARN
AND HERD SIZE
414 New York Dairy Farms, 1986
Farms with:
Item
Number of farms
Cropp ina Proaram 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
146
124
71
73
157
51
96
27
2.3
12.3
56.1
7.2
3.4
$19.90
$17,584
$112
274
97
155
48
2.7
13.7
70.4
7.9
3.4
$22.75
$33,257
$121
273
99
139
62
2.8
14.0
68.7
7.8
3.1
$28.70
$41,281
$151
588
205
243
181
3.2
15.2
56.5
7.8
2.7
$31.11
$83,046
$141
81
68
1,286,440
15,802
$9.33
$14.37
$12.53
$459
$2.91
23%
$3.79
88
73
1,388,642
15,866
$9.36
$14.22
$12.84
$459
$2.89
22%
$3.94
222
182
3,787,019
17,093
$9.60
$12.96
$12.72
$548
$3.21
24%
$4.12
$137,144
6,020
2,614
3,109
1,147
2.57
$173,780
6,233
2,867
3,066
1,223
2.52
$183,971
5,970
2,986
2,749
1,214
2.37
$204,899
5,355
3,098
2,424
869
2.05
2.02
1.15
345,644
23
240
$417
$122
2.92
1.33
440,562
28
299
$381
$113
2.84
1.41
488,958
5.79
1.47
654,062
38
399
$385
$145
$19,138
$455
$2,090
66%
$24,475
$4,275
$2,050
65%
Dairy Analysis
Number of cows
46
35
Number of heifers
Milk sold, lbs.
698,200
Milk sold/cow, lbs.
15,171
Operating cost of prod. milk/cwt.
$9.51
Total cost of prod. milk/cwt.
$15.38
Price/cwt. milk sold
$12.47
Purchased dairy feed/cow
$499
Purchased dairy feed/cwt. milk
$3.29
Purc. grain & conc. as % milk rec.
25%
Purc. feed & crop exp./cwt. milk
$4.05
Capital Efficiency
Farm capital/worker
Farm capital/cow
Farm capital/til. acre owned
Real estate/cow
Machinery investment/cow
Capital turnover, years
Labor Efficiency
Worker equivalent
Operator/manager equivalent
Milk sold/worker, lbs.
Cows/worker
Work units/worker
Labor cost/cow
Labor cost/tillable acre
Freesta11
$120 Cows
>120 Cows
Profitability & Balance Sheet Analysis
Net farm income (w/o apprec.)
$9,341
Labor & mgmt. income/operator
$·999
Farm debt/cow
$2,428
Percent equity
59%
*Average of all farms, not only those reporting data.
31
328
$361
$116
$60,243
$16,090
$2,145
60%
25
FARM BUSINESS CHART FOR SMALL CONVENTIONAL STALL DAIRY FARMS
146 Conventional Stall Dairy Farms with 60 or Less Cows, New York, 1986
Size of Business
'Worker
No.
Pounds
Milk
Equiv­
of
Sold
alent
Cowl
(DFBS
(10)
(10)
pg. 10)
Lab2[
Cows
Per
Rates of Pt2dyctlon
Tons
Tons Corn
Pounds
Milk Sold Hay Crop Silage
Per Q2W
DHLAcre Per Acre
'Work~t
(9)
(8)
(10)
3.1
2.6
2.3
2.2
2.0
58
55
54
51
49
1,007,751
873,140
832,613
787,319
740,807
18,878
17,368
16,639
16,037
15,438
4.1
3.3
2.9
2.6
2.4
(8)
20
17
16
15
14
2.0
1.9
1.7
1.5
1.2
47
44
41
36
28
700,379
653,090
580,976
501,065
352,058
15,034
14,416
13,938
12,992
10,736
2.2
2.1
1.9
1.6
1.1
12
10
8
5
34
30
27
26
25
Efficienc~
Pounds
Milk Sold
Per 'Worker
(10)
544,485
459,871
428,718
404,025
375,361
------------------------------------------------_ ........... _----------------------­
Cost Control
Machinery
Labor &
Costs
Machinery
Per Cow
Costs Per Cow
(10)
(10)
Grain
Bought
Per Cow
(9)
% Feed is
of Milk
$189
320
386
422
459
11%
17
22
24
25
$177
249
285
323
365
488
532
580
631
765
27
29
30
32
38
397
429
464
522
648
Rec~iRts
(9)
23
21
20
18
14
13
343,283
316,418
286,500
255,798
192,273
Feed & Crop
Expenses
Per Cow
(9)
Feed & Crop
Expenses Per
Cwt, Milk
(9)
$520
611
666
734
785
$338
455
503
535
580
$2.51
3.15
3.44
3.70
3.86
827
884
916
1,000
1,176
611
661
721
783
954
4.05
4.28
4.59
4.97
6.06
------------------------_ ... _-------------------------------------------------_ ...... ­
Valye and Q2St 2I ~[2duction
Milk
Oper. Cost
Total Cost
Receipts
Production
Milk
Per Cow
Per Cwt,
Per Cwt.
(9)
(9)
(9)
Profita12ilit~
Net Farm Income
'With
'Without
ARRrec,
ARRrec.
(3)
(3)
Labo[ &Mmt. Income
Per Farm
Per ORer.
(3)
(3)
$2,709
2,425
2,294
2,188
2,101
$ 6.23
7.49
8.11
8.67
9.26
$11.98
13.42
13.84
14.32
15.16
$60,893
35,933
29,970
25,464
20,230
$35,087
24,247
18,994
14,971
11,729
$22,396
12,646
7,722
4,609
1,702
$17,562
10,953
6,887
4,089
1,658
2,000
1,937
1,853
1,740
1,403
9.87
10.47
10.92
11.50
13.36
15.63
16.12
17.10
18.57
21.95
16,582
12,687
7,202
-257
-12,299
8,614
5,490
814
-3,988
-18,796
-1,464
-5,240
-8,463
-15,131
-28,918
-1,401
-4,394
-8,524
-14,528
-26,431
26
FARM BUSINESS CHART FOR LARGE CONVENTIONAL STALL DAIRY FARMS
124 Conventional Stall Dairy Farms with More Than 60 Cows, New York, 1986
Size of Business
Pounds
Worker
No.
of
Milk
Equiv­
Sold
alent
Cows
(DFBS
(10)
(10)
pg. 10)
4.7
3.7
3.4
3.1
3.0
124
99
90
85
79
2,093,475
1,649,764
1,441,447
1,317,509
1,251,151
2.8
2.5
2.4
2.1
1.8
76
72
68
65
62
1,206,039
1,147,970
1,074,750
967,717
810,022
Rates of Production
Tons
Tons Corn
Pounds
Milk Sold Hay Crop Silage
Per Cow
DMLAcre Per Acre
Labor Efficlenc;:l
Pounds
Cows
Per
Milk Sold
Worker
Per Worker
(9)
(8)
(8)
(10)
(10)
19.571
18,016
17,121
16,694
16,141
4.8
3.6
3.3
3.0
2.8
22
19
17
16
15
44
37
34
31
29
652,718
571,684
530,017
496,060
471,986
--------------------------------------------------------------------------------
Grain
Bought
fer Cow
(9)
% Feed is
of Milk
Recei:gts
(9)
$186
269
333
380
429
10%
14
17
21
22
15,667
15,233
14,662
13,618
11,546
2.6
2.4
2.2
2.0
1.5
14
13
12
10
6
Cost Control
Labor &
Machinery
Machinery
Costs
Per Cow
Costs Per Cow
(10)
(10)
$191
259
317
353
381
28
26
25
22
18
446,181
425,808
396,893
346,946
256,917
Feed & Crop
Expenses
fer Cow
(9)
Feed & Crop
Expenses Per
Cwt. Milk
(9)
$342
428
487
528
579
$2.32
2.91
3.29
3.43
3.65
$476
554
625
704
750
------------~------~---.------------------------------ ----------------------_._-
473
512
557
624
761
24
26
27
30
37
409
456
504
556
713
Value and Cost of Production
Milk
Oper. Cost
Total Cost
Receipts
Milk
Production
Per Cow
Per Cwt.
Per Cwt.
(9)
(9)
(9)
800
877
950
1,050
1,219
624
671
713
773
897
3.95
4.21
4.41
4.65
5.52
Profitabilit;:l
Net Farm Income
With
Without
Labor & Mgmt. Income
A:g:grec.
A:g:grec,
fer [arm
fer O:ger.
(3)
(3)
(3)
(3)
$2,661
2,517
2,406
2,311
2,201
$6.53
7.83
8.31
8.68
9.14
$11.61
12.60
13.14
13.67
14.11
$137,617
60,290
49,563
42,248
37,685
$61,175
39,547
32,130
27,056
21,315
$40,774
21,148
14,942
9,103
3,905
$27,242
16,925
11,965
7,194
3,225
2,124
2,041
1,936
1,835
1,594
9.46
9,86
10.41
10.87
13.21
14.43
14.81
15.66
16.56
19.48
31,717
23,127
17,079
12,251
-8,813
18,215
14,332
7,417
-2,565
-20,714
283
-4,262
-12,508
-20,966
-44,612
175
-3,498
-9.625
-16,753
-42,011
27
FARM BUSINESS CHART FOR SMALL FREESTALL DAIRY FARMS
71 Freesta11 Barn Dairy Farms with 120 or Less Cows, New York, 1986
Size of ~u§ine§s
Worker
No.
Pounds
Equivof
Milk
Cows
Sold
alent
(DFBS
pg. 10)
(10)
(10)
4.3
3.5
3.3
3.0
2.8
117
110
105
97
91
1,964,379
1,842,322
1,711,514
1,588,855
1,453,928
Rates of Production
Tons Corn
Pounds
Tons
Milk Sold Hay Crop Silage
Per Cow
QMlAcre Per Acre
Labor
Cows
Per
Wotker
(9)
(8)
(8)
(10)
(10)
19,630
18,599
17,868
16,927
16,098
4.5
3.9
3.5
3.0
2.7
21
19
17
16
15
52
40
36
33
31
746,199
621,768
565,788
530,646
506,808
Efficienc~
Pounds
Milk Sold
Per Worker
----------------------------------------------------------.-------------------_.
2.7
2.6
2.3
2.1
1.7
86
82
74
67
52
1,350,208
1,277,728
1,094,868
975,911
721,949
Grain
Bought
Per Cow
(9)
% Feed is
of Milk
Recei]2ts
(9)
$183
291
321
377
423
9%
14
17
19
22
15,704
15,246
14,733
13,879
10,706
2.5
2.4
2.3
1.9
1.4
14
14
13
11
7
Cost Control
Machinery
Labor &
Costs
Machinery
Per Cgw
Costs fet Cow
(10)
(10)
$239
309
354
393
422
29
29
27
25
21
484,530
454,169
422,903
394,665
304,171
Feed & Crop
Expenses
Pet Cow
(9)
Feed & Crop
Expenses Per
Cwt. Milk
(9)
$383
449
509
577
607
$2.40
2.85
3.35
3.69
3.90
$546
653
682
712
759
-------------------------------------------------------------------------------489
534
551
597
735
24
26
28
30
35
453
488
532
648
891
Vg,lue and Cg§t of ftodyction
Milk
Oper. Cost
Total Cost
Receipts
Production
Milk
Per Cow
Per Qwt.
fer Cwt,
(9)
(9)
(9)
$2,763
2,517
2,456
2,349
2,247
$ 6.52
7.84
8.22
8.83
9.26
$11.16
12.33
13.18
13.70
14.00
822
885
940
1,084
1,323
652
693
719
797
935
4.06
4.33
4.53
5.09
6.15
ProfitAbi1it~
Net [arm Income
Without
With
A]2]2rec,
A]2]2rec,
(3)
(3)
$119,436
75,141
58,064
45,183
40,801
$85,723
51,430
39,357
34,141
25,936
Labor §5 Mgmt. Income
Per [Arm
fer ORer.
(3)
(3)
$56,843
29,843
19,804
14,167
7,804
$31,786
19,619
14,086
9,502
6,962
-------.----------------------------------------------.------------------_.----­
2,179
2,113
2,041
1,932
1,494
9.55
10.11
10.62
11.55
13.08
14.48
14.97
15.79
16.77
19.53
34,830
27,277
19,458
11,308
-6,377
20,431
14,804
8,785
-531
-27,829
2,896
-1,786
-5,399
-16,982
-46,468
2,591
-1,478
-4,633
-13,373
-39,164
\
28
FARM BUSINESS CHART FOR LARGE FREESTALL DAIRY FARMS
73 Freesta11 Barn Dairy Farms with More Than 120 Cows, New York, 1986
Size of Business
No.
Pounds
Worker
of
Milk
Equiv­
Cows
Sold
alent
(DFBS
pg. 10)
(10)
(10)
Rates of Production
Tons Corn
Pounds
Tons
Milk Sold Hay Crop Silage
Per Cow
DM/Acre Per Acre
(9)
(8)
(8)
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
(10)
(10)
13.3
7.6
6.7
6.0
5.3
540
311
254
226
194
10,200,698
5,862,327
4,456,278
3,713,183
3,138,231
20,554
19,208
17,921
17 ,284
16,825
5.1
4.0
3.7
3.4
3.3
20
18
17
16
16
59
46
43
40
39
926,835
821,108
728,084
678,995
644,490
4.9
4.4
4.0
3.6
3.0
173
156
145
132
122
2,616,444
2,458,443
2,327,342
2,099,647
1,739,656
16,360
15,867
15,350
14,395
12,476
3.1
3.0
2.7
2.4
1.9
15
15
13
12
37
35
33
31
27
611,932
565,128
541,569
476,755
415,285
9
Cost Control
Machinery
Labor &
Costs
Machinery
Per Cow
Costs Per Cow
(10)
(10)
Feed & Crop
Expenses
Per Cow
Feed & Crop
Expenses Per
Cwt. Milk
Grain
Bought
Per Cow
% Feed is
(9)
(9)
$216
322
389
425
463
12%
16
19
20
23
$229
284
338
380
397
$500
627
683
715
747
$401
505
564
609
658
$2.71
3.15
3.47
3.73
4.04
522
578
622
680
776
25
27
29
31
35
411
429
446
775
830
887
929
1,033
690
741
797
848
955
4.24
4.40
4.61
of Milk
Receipts
491
590
Value and Cost of Production
Milk
Oper. Cost
Total Cost
Receipts
Milk
Production
Per Cow
Per Cwt.
Per Cwt.
(9)
(9)
(9)
(9)
(9)
4.91
5.67
Profitability
Net Farm Income
With
Without
Labor & Mgmt. Income
Apprec.
Apprec.
Per Farm
Per Oper.
(3)
(3)
(3)
(3)
$2,900
2,631
2,554
2,424
2,350
$ 6.73
8.21
9.03
9.30
9.47
$10.94
11.91
12.38
12.81
13.21
$277,840
144,680
111,557
94,081
79,443
$227,537
122,770
89,415
67,102
55,090
$163,935
71,851
47,475
36,270
21,997
$122,334
48,890
35,630
23,042
16,870
2,257
2,169
2,104
1,977
1,756
9.79
10.13
10.55
11.16
12.73
13.53
13.78
14.18
15.16
16.90
70,133
54,017
40,369
26,284
-15,577
44,237
27,750
20,173
5,277
-30,415
13,125
122
-11,512
-30,939
-60,131
10,248
-210
-8,932
-20,499
-57,094
--
29
FARM BUSINESS SUMMARY BY HERD SIZE
414 New York Dairy Farms, 1986
Item
Farm Size:
Number of farms
ACCRUAL EX~E~SES
Hired labor
Dairy grain & concentrate
Dairy roughage
Other livestock feed
Machine hire/rent/lease
Machine repairs/parts
Auto expense (farm share)
Fuel, oil & grease
Replacement livestock
Breeding
Veterinary & medicine
Milk marketing
Cattle lease/rent
Other livestock expense
Fertilizer & lime
Seeds & plants
Spray & other crop expense
Land/bui1ding/fence repair
Taxes & insurance
Telephone & electricity
Interest paid
Misc. (including rent)
Total Operating Expenses
Expansion livestock
Machinery depreciation
Building depreciation
Total Accrual Expenses
AC~RUAL RECEIPTS
Milk sales
Dairy cattle
Dairy calves
Other livestock
Crops
Misc. receipts
Total Accrual Receipts
fROFITABILIII ANALISIS
Net farm income (w/o apprec.)
Net farm income (w/apprec.)
Labor & mgmt. income
Number of operators
Labor & mgmt. inc./oper.
Rate of return on equity
capital (w/o apprec.)
Rate of return on equity
capital (w/apprec.)
40 to
54 Cows
55 to
69 Cows
70 to
84 Cows
32
87
76
60
46
$ 2,783
14,087
948
863
739
2,846
641
1,496
1,061
1,077
974
4,828
48
2,119
1,456
873
533
1,113
3,743
2,543
6,487
1.2 82
$52,847
456
4,657
$
$60,530
$ 5,555
23,314
1,261
271
948
3,908
456
2,355
1,279
1,372
1,702
6,606
16
3,969
3,135
1,171
898
1,154
4,807
3,414
10,078
2.374
$80,043
283
7,458
3.140
$91,524
9,003
28,109
1,229
548
1,326
5,511
449
3,319
1,143
2,053
2,840
7,792
43
4,968
4,782
1,865
1,710
1,509
6,408
4,225
10,104
4.28Z
$103,223
664
10,906
5,Q19
$119,812
$ 14,979
34,369
1,062
603
1,419
7,365
477
4,251
812
2,303
2,826
10,424
2
6,070
6,506
2,889
2,448
1,683
7,257
5,328
13,570
5.26Z
$131,910
474
13,388
6.469
$152,241
$ 16,565
38,303
1,191
1,326
2,711
10,511
771
5,833
1,946
2,303
3,997
11,482
10
6,814
7,355
3,272
2,683
2,523
9,077
6,122
17,334
6.298
$159,127
985
16,449
8.182
$184,743
$58,125
5,294
971
454
1,144
1.381
$67,375
$89,125
6,411
1,295
200
197
1.940
$99,168
$121,096
9,025
1,674
317
86
3.118
$135,976
$149,343
10,559
1,837
235
1,724
4,143
$167,841
$180,096
14,433
2,357
156
1,582
5.480
$204,104
$6,845
$14,484
$-2,533
1.00
$-2,533
$7,644
$17,774
$-2,450
1.13
$-2,168
$16,164
$25,724
$1,797
1.32
$1,361
$15,600
$31,524
$-1,674
1.22
$-1,372
$19,361
$40,888
$518
1.37
$378
Less than
40 Cows
2.~70
85 to
99 Cows
-8.8%
-8.6%
-3.7%
-2.8%
-2.1%
-3.2%
-2.1%
0.1%
2.5%
4.2%
30
FARM BUSINESS SUMMARY BY HERD SIZE
414 New York Dairy Farms, 1986
Item
Farm Size;
100 to
149 Cows
150 to
199 Cows
200 to
249 Cows
250 or
More Cows
10
62
22
ACCRUAL EXPENSES
Hired labor
Dairy grain & concentrate
Dairy roughage
Other livestock feed
Machine hire/rent/lease
Machine repairs/parts
Auto expense (farm share)
Fuel, oil & grease
Replacement livestock
Breeding
Veterinary & medicine
Milk marketing
Cattle lease/rent
Other livestock expense
Fertilizer & lime
Seeds & plants
Spray & other crop expense
Landjbui1ding/fence repair
Taxes & insurance
Telephone & electricity
Interest paid
Misc. (including rent)
Total Operating Expenses
Expansion livestock
Machinery depreciation
Building depreciation
Total Accrual Expenses
$ 23,213
53,781
1,576
1,066
2,622
13,261
558
6,944
1,996
3,629
4,985
16,715
65
10,053
10,159
4,438
4,358
2,954
10,320
7,271
21,682
6,999
$208,645
582
20,893
9,226
$239,346
$ 46,159
77,088
1,573
1,162
2,627
15,449
550
11,345
7,347
4,076
6,909
22,704
598
13,968
13,391
6,510
5,755
2,912
14,487
9,442
34,929
10,459
$309,440
2,139
26,190
15,992
$353,761
$ 68,294 $
122,806
5,901
1,900
4,523
27,760
262
12,368
7,535
7,832
12,373
28,678
ACCRUAL RECEIPTS
Milk sales
Dairy cattle
Dairy calves
Other livestock
Crops
Mise, receipts
Total Accrual Receipts
$245,627
18,626
3,038
345
3,668
7,122
$278,426
$334,063
28,784
3,468
1,275
5,490
14,311
$387,391
$474,437 $ 902,482
42,300
77,186
4,742
9,618
9.333
877
4,850
16,858
25.621
24,628
$561,283 $1,031,649
$39,080
$65,839
$14,011
1. 56
$8,981
$33,630
$58,481
$5,359
1.45
$3,696
Number of farms
PROFITABILITY ANALYSIS
Net farm income (w/o apprec.)
Net farm income (w/apprec.)
Labor & mgmt. income
Number of operators
Labor & mgmt. inc./oper.
Rate of return on equity
capital (w/o apprec.)
Rate of return on equity
capital (w/apprec.)
o
19
145,034
224,158
11,045
754
4,140
41,273
1,383
18,665
4,336
12,224
23,522
56,326
499
37,792
30,533
13,922
14,950
12,813
25,083
20,281
78,770
18,995
20,410
7,633
8,207
5,095
20,465
12,178
42,595
22 . 781 _--=.2~9 2::.=2~8
$458,591 $ 806,731
2,297
12,572
37,063
52,995
20. 451 _---=:3~6-'-'.1~0=5
$518,402 $ 908,403
,L..!,'
$42,881
$65,595
$7,205
1. 50
$4,803
$123,246
$163,623
$65,171
1.54
$42,319
1. 5%
0.7%
1.8%
7.1%
7.3%
5.3%
5.1%
10.6%
31
FARM FAMILY FINANCIAL SITUATION BY HERD SIZE
414 New York Dairy Farms, 1986
Farms with:
Item
55 to 22 Cows
Jan. 1.
De", 31
1,938
7,038
16,819
50,999
54,251
1,522
1,637
147,042
$281,246
$
2,701
7,400
16,887
54,104
54,042
1,645
1,879
15Q,445
$289,103
$
5,478
2,977
1,956
2,398
2,262
8,936
$
$
~.10:2
5,390
3,252
1,964
2,906
3,430
9,139
2.182
$ 40,812
$ 27,113
$ 28,865
$ 54,925
$ 58,908
$261,425
$308,359
$317,968
$427,157
$440,241
2,224
811
1,406
20,413
$
$
4,389
963
1,704
43,747
78,938
$129,741
1.083
$
3,650
1,468
1,420
44,828
ZZ ,843
$129,208
1.917
$
than 40 ~ows
Jan, 1
Ilsu;,. 31
ASSETS
Farm cash/chkg./sav. $ 1,986
Accounts receivable
4,661
Feed & supplies
10,565
35,537
Livestock*
Machinery & equipment* 40,675
893
FLB & PCA stock
1,697
Coop stocks & cert.
116,480
Land & bui1dings*
$212,494
Total Farm Assets
Pers. cash/chkg./sav.$ 7,733
Cash value of life ins. 2,634
Nonfarm real estate
15,208
1,866
Auto (personal share)
Stocks & bonds
866
8,083
Household furnishings
All other
824
Total Nonfarm
Assets**
$ 37,285
Total Farm & Nonfarm
Assets
$249,779
LIABILIIIES
Accounts payable
Operating debt
Short term
Intermediate***
Long term*
Total Farm Liab.
Tot. Nonfarm Liab.**
Total Farm & Nonfarm
Liabilities
Farm Net Worth
(Equity Capital)
Farm & Nonfarm
Net Worth
40 to :24 Cows
Jan, 1
Dec, 31
Les~
2,198
4,646
11,503
37,823
41,786
874
1,905
119,878
$220,613
$
7,940
2,007
19,250
1,923
773
8,167
Z:22
$
$
$
2,526
10,126
25,547
72,821
76,061
1,584
2,951
18Q.616
$372,232
$
3,408
10,700
25,019
74,528
76,061
1,560
2,984
181,073
$381,333
4,292
3,476
18,045
2,870
17,622
6,732
1.889
$
4,848
3,842
17,580
3,669
19,198
7,755
2.01:2
2,287
597
1,638
20,880
56,147
$ 81,550
1,354
$
$ 78,423
281
3,367
1,315
1,106
43,165
8Q,763
$129,716
1,046
$ 82,904
$ 79,404
$130,762
$130,824
$131,125
$130,685
$130,944
$142,190
$151,530
$159,362
$243,024
$252,682
$166,875
$182,021
$177,597
$187,144
$296,032
$309,556
$
5~,569
FINANCIAL MEASURES
Less than 40 Cows
Percent equity
64%
Debt/asset ratio-long term
0.45
0.25
Debt/asset ratio-inter. & current
$11,246
Change in net worth with apprec.
Total farm debt per cow
$2,376
Debt payments made per cow
$600
33%
Debt payments as % of milk sales
Amount avail. for debt service
$15,290
Cash flow coverage ratio for 1986
1.25
4Q to 54 Cows
55%
0.52
0.37
$7,832
$2,703
$526
28%
$22,426
1.04
4,504
1,366
1,738
43,302
77,741
$128,651
2.034
55 to 69 Cows
66%
0.42
0.26
$9,658
$2,075
$446
22%
$32,964
1. 33
*Inc1udes discounted lease payments.
**Average of farms reporting nonfarm assets and liabilities for 1986.
***Inc1udes FLB/PCA stock and discounted lease payments for cattle and
machinery.
32
FARM FAMILY FINANCIAL SITUATION BY HERD SIZE
414 New York Dairy Farms, 1986
Farms with:
Item
ASSETS
Farm cash/chkg./savings
Accounts receivable
Feed & supplies
Livestock*
Machinery & equipment*
FLB & PCA stock
Coop stocks & cert.
Land & bui1dings*
Total Farm Assets
Pers. cash/chkg./savings
Cash value of life ins.
Nonfarm real estate
Auto (personal share)
Stocks & bonds
Household furnishings
All other
Total Nonfarm Assets**
Total Farm & Nonfarm
Assets
LIABILITIES
Accounts payable
Operating debt
Short term
Intermediate***
Long term*
Total Farm Liab.
Total Nonfarm Liab.**
Total Farm & Nonfarm
Liabilities
Farm Net Worth
(Equity Capital)
Farm & Nonfarm Net Worth
70 to 8{t Cows
Jan. 1
Dec. 31
$
3,624
13,182
32,473
86,471
92 ,371
3,140
3,587
226,185
$461,034
$
4,311
13,731
33,003
91,004
93,896
3,362
4,016
232,659
$475,981
$ 11,952
4,330
8,671
3,198
4,062
9,168
4,362
$ 45,745
$ 12,071
4,257
8,474
3,312
4,383
9,259
3,032
$ 44,789
$506,779
$
5,836
1,932
1,955
55,996
98,649
$164,368
1.213
a:2 to 99 Cows
Jan. 1
Dec. 31
$
4,152
15,052
41,277
104,001
116,081
3,246
4,055
244,511
$532,375
$
$
5,906
3,120
3,577
2,175
3,912
7,281
4,423
$ 30,394
$
$520,770
$562,769
$589,953
$
6,211
1,840
2,047
57,039
94,722
$161,859
800
$
5,443
3,774
827
78,119
113,871
$202,034
115
$
$165,581
$162,659
$202,149
$203,122
$296,666
$341,198
$314,122
$358,111
$330,342
$360,620
$353,039
$386,831
FINANCIAL MEASURES
Percent equity
Debt/asset ratio-long term
Debt/asset ratio-inter. & current
Change in net worth with apprec.
Total farm debt per cow
Debt payments made per cow
Debt payments as % of milk sales
Amount avail. for debt service
Cash flow coverage ratio for 1986
70 to 8{t Cows
66%
0.41
0.28
$17,456
$2,102
$484
24%
$34,979
1.12
4,674
16,928
41,802
109,208
117,533
2,959
5,362
257,618
$556,084
6,958
3,430
3,423
2,536
4,181
7,788
5,554
$ 33,869
5,899
3,883
1,540
80,681
111,042
$203,045
77
a5 to 99 Cows
63%
0.43
0.31
$22,698
$2,207
$465
23%
$42,858
1.18
*Inc1udes discounted lease payments.
**Average of farms reporting nonfarm assets and liabilities for 1986.
***Includes FLB/PCA stock and discounted lease payments for cattle and
machinery.
33
FARM FAMILY FINANCIAL SITUATION BY HERD SIZE
414 New York Dairy Farms, 1986
Farms with:
Item
ASSETS
Farm cash/chkg./savings
Accounts receivable
Feed & supplies
Livestock*
Machinery & equipment*
FLB & PCA stock
Coop stocks & cert.
Land & bui1dings*
Total Farm Assets
Pers. cash/chkg./savings
Cash value of life ins.
Nonfarm real estate
Auto (personal share)
Stocks & bonds
Household furnishings
All other
Total Nonfarm Assets**
Total Farm & Nonfarm
Assets
LIABILITIES
Accounts payable
Operating debt
Short term
Intermediate***
Long term*
Total Farm Liab.
Total Nonfarm Liab.**
Total Farm & Nonfarm
Liabilities
Farm Net Worth
(Equity Capital)
Farm & Nonfarm Net Worth
100 to 149 Cows
Dec. 31
Jan. 1
150 to 199 Cows
Dec. 31
Jan. 1
5,440
20,835
58,288
142,725
128,625
5,968
9,312
322,502
$693,695
$
6,624
22,677
60,473
147,952
127,761
6,358
9,610
343,761
$725,216
$
$
4,272
4,278
9,270
2,762
6,834
8,716
3,265
$ 39,398
$
4,744
4,382
11,871
3,248
7,596
8,689
3,429
$ 43,960
$
7,433
6,743
26,500
4,370
12,388
14,790
5,050
$ 77 ,274
$
$733,093
$769,176
$976,483
$1,025,212
5,090
4,056
3,768
99,966
137,951
$250,831
1,546
$
5,192
3,204
4,257
96,334
132,876
$241,863
2,545
$ 13,306
9,115
3,209
181,693
161,152
$368,475
11,759
$
$252,377
$244,408
$380,234
$
388,963
$442,864
$480,716
$483,354
$524,768
$530,734
$596,249
$
$
555,477
636,249
$
FINANCIAL MEASURES
Percent equity
Debt/asset ratio-long term
Debt/asset ratio-inter. & current
Change in net worth with apprec.
Total farm debt per cow
Debt payments made per cow
Debt payments as % of milk sales
Amount avail. for debt service
Cash flow coverage ratio for 1986
100 to 149 Cows
67%
0.39
0.29
$40,489
$1,982
$532
26%
$62,953
1.20
3,576
27,738
73,223
188,540
167,695
11,845
9,224
417,368
$899,209
4,521
33,021
74,490
199,263
172,506
11,879
10,601
427,326
$933,607
$
$
$
7,561
8,120
26,000
4,780
12,524
14,850
17,770
$ 91,605
15,005
8,569
6,496
179,730
168,331
378,130
10,833
150 to 199 Cows
59%
0.39
0.41
$24,743
$2,136
$536
28%
$81,720
1.04
*Inc1udes discounted lease payments.
**Average of farms reporting nonfarm assets and liabilities for 1986.
***Inc1udes FLB/PCA stock and discounted lease payments for cattle and
machinery.
34
FARM FAMILY FINANCIAL SITUATION BY HERD SIZE
414 New York Dairy Farms, 1986
200 to 249 Cows
Jan. 1
Dec. 31
Farms with:
Item
ASSETS
Farm cash/chkg./savings
Accounts receivable
Feed & supplies
Livestock*
Machinery & equipment*
FLB & PCA stock
Coop stocks & cert.
Land & bui1dings*
Total Farm Assets
Pers. cash/chkg./savings
Cash value of life ins.
Nonfarm real estate
Auto (personal share)
Stocks & bonds
Household furnishings
All other
Total Nonfarm Assets**
Total Farm & Nonfarm
Assets
LIABILITIES
Accounts payable
Operating debt
Short term
Intermediate***
Long term*
Total Farm Liab.
Total Nonfarm Liab.**
Total Farm & Nonfarm
Liabilities
Farm Net Worth
(Equity Capital)
Farm & Nonfarm Net Worth
$
5,182
47,222
110,301
272 ,218
203,740
14,501
21,898
486,214
$1,161,276
$
$
7,629
17,877
17,429
5,429
3,643
6,714
10,493
69,213
$
5,285
48,353
112,044
280,550
207,527
14,456
29,283
495.339
$1,192,837
$
$
8,086
6,118
17,429
7,357
5,286
7,714
17.023
69,012
More than 250 Cows
Jan. 1
Dec. 31
$
3,098
77,139
197,236
442,895
265,465
15,298
32,024
882.690
$1,915,845
$
$
1,741
4,170
5,889
1,046
7,208
4,000
14.377
38,430
$
5,509
88,644
207,932
466,645
274,285
14,356
53,851
934.130
$2,045,352
$
$
3,824
4,166
5,889
1,889
8,332
4,000
12.205
40,305
$1,230,489
$1,261,849
$1,954,275
$2,085,657
$
$
9,132
5,947
7,172
243,542
215.211
481,004
2.217
$
$
15,482
27,204
12,870
364,772
380.025
800,354
$
$
15,676
6,258
2,925
215,166
232.444
472,468
$
23,393
50,242
13,488
349,232
428.144
864,499
$
472,468
$
483,221
$
800,354
$
864,499
$
$
688,808
758,021
$
$
711,833
778,628
$l,115,49l
$1,153,921
o
FINANCIAL MEASURES
Percent equity
Debt/asset ratio-long term
Debt/asset ratio-inter. & current
Change in net worth with apprec.
Total farm debt per cow
Debt payments made per cow
Debt payments as % of milk sales
Amount avail. for debt service
Cash flow coverage ratio for 1986
$
200 to 249 Cows
60%
0.43
0.38
$23,026
$2,073
$638
30%
$96,415
0,98
o
o
$1,180,853
$1,221,158
More than 250 Cows
58%
0.46
0.39
$65,361
$2,194
$769
33%
$206,413
1. 25
*Inc1udes discounted lease payments.
**Average of farms reporting nonfarm assets and liabilities for 1986.
***Inc1udes FLB/PCA stock and discounted lease payments for cattle and
machinery,
35
SELECTED BUSINESS FACTORS BY HERD SIZE
414 New York Dairy Farms, 1986
Farms with:
Item
Number of farms
Cro~~ing Progr§m Ana1xsis
Total Tillable acres
Tillable acres rented*
Hay crop acres*
Corn silage acres*
Hay crop, tons OM/acre
Corn silage, tons/acre
Oats, bushels/acre
Forage DM per cow, tons
Tillable acres/cow
Fert. & lime exp./ti1. acre
Total machinery costs
Machinery cost/tillable acre
40 to
54 Cows
55 to
69 Cows
70 to
84 Cows
85 to
99 Cows
32
87
76
60
46
117
28
76
14
2.1
11.8
43.3
6.9
3.6
$12.43
$12,414
$106
162
58
100
30
2.2
12.3
60.5
7.4
3.4
$19.38
$17,793
$110
198
62
110
38
2.6
13.1
67.1
7.6
3.3
$24.13
$25,291
$128
266
301
114
168
56
2.7
13.7
64.4
8.0
3.3
$24.42
$42,081
$140
47
36
716,437
15,180
$9.77
$15.40
$12.44
$521
$3.43
61
76
90
50
62
73
966,374 1,185,995 1,430,399
15,825
15,605
15,840
$9.14
$9.56
$9.45
$14.57
$14.75
$14.29
$12.59
$12.59
$12.53
$480
$466
$437
$3.04
$2.76
$2.99
Less than
40 Cows
Dairx Ana1:lsis
Number of cows
32
Number of heifers
25
Milk sold, 1bs.
470,234
14,525
Milk sold/cow, 1bs.
Operating cost of prod. mi1k/cwt. $9.27
Total cost of prod. mi1k/cwt.
$16.34
Price/cwt. milk sold
$12.36
Purchased dairy feed/cow
$464
Purchased dairy feed/cwt. milk
$3.20
Purchased grain & conc. as %
of milk receipts
24%
Purchased feed & crop
expense/cwt. milk
$3.81
26%
23%
91
148
48
2.6
13.6
70.1
8.0
3.5
$24.42
$31,515
$118
23%
21%
$4.16
$3.90
$3.99
$3.69
Ca~1ta1 Efficien~:l
Farm capital/worker
Farm capital/cow
Farm capital/til. acre owned
Real estate/cow
Machinery investment/cow
Capital turnover, years
$128,138
6,689
2,433
3,650
1,274
2.89
$141,878
6,042
2,742
3,152
1,147
2.61
$155,055
6,170
2,750
3,011
1,246
2.59
$163,243
6,165
2,677
3,019
1,225
2.55
$184,485
6,027
2,910
2,780
1,293
2.41
Labor Efflcienc:l
Worker equivalent
Operator/manager equivalent
Milk sold/worker, 1bs.
Cows/worker
Work units/worker
Labor cost/cow
Labor cost/tillable acre
1.69
1.00
278,245
20
204
$480
$133
2.01
1.13
356,436
23
247
$411
$120
2.43
1. 32
397,685
25
266
$400
$123
2.87
1.22
413,239
26
287
$388
$111
2.95
1.37
484,881
*Average of all farms, not only those reporting data.
31
327
$357
$107
36
SELECTED BUSINESS FACTORS BY HERD SIZE
414 New York Dairy Farms, 1986
Farms with:
Item
Nwnber of farms
Cro~~ing Program Ana1~sis
Total tillable acres
Tillable acres rented*
Hay crop acres*
Corn silage acres*
Hay crop, tons OM/acre
Corn silage, tons/acre
Oats, bushels/acre
Forage OM per cow, tons
Tillable acres/cow
Fert. & lime exp./til. acre
Total machinery costs
Machinery cost/tillable acre
100 to
149 Cows
150 to
199 Cows
200 to
249 Cows
250 or
More Cows
62
22
10
19
364
126
180
81
3.0
14.5
67.4
7.9
3.1
$27.87
$50,654
$139
506
202
228
129
2.9
13.8
55.4
7.6
3.0
$26.45
$64,609
$128
678
271
268
158
3.1
15.5
50.0
7.4
3.0
$30.13
$92,196
$136
839
267
310
351
3.5
16.1
57.5
7.8
2.2
$36.38
$131,927
$157
119
172
139
102
1,917 ,759 . 2,608,718
16,055
15,199
$9.17
$9.82
$13.65
$13.71
$12.81
$12.81
$463
$458
$2.89
$3.02
226
176
3,744,053
16,552
$9.93
$13.26
$12.67
$569
$3.44
382
314
7,104,584
18,593
$9.54
$12.37
$12.70
$616
$3.31
Dair~ Anal~sis
Nwnber of cows
Nwnber of heifers
Milk sold, 1bs.
Milk sold/cow, 1bs.
Operating cost of prod. mi1k/cwt.
Total cost of prod. mi1k/cwt.
Price/cwt. milk sold
Purchased dairy feed/cow
Purchased dairy feed/cwt. milk
Purchased grain & cone. as %
of milk receipts
Purchased feed & crop
expense/cwt. milk
22%
23%
26%
25%
$3.87
$4.00
$4.41
$4.15
CaRital Efficienc~
Farm capital/worker
Farm capital/cow
Farm capital/til. acre owned
Real estate/cow
Machinery investment/cow
Capital turnover, years
$198,727
5,939
2,968
2,789
1,073
2.32
$196,654
5,339
3,014
2,461
991
2.22
$201,206
5,204
2,943
2,170
909
2.02
$211,602
5,183
3,463
2,371
706
1.85
Labor Effic1~n~~
Worker equivalent
Operator/manager equivalent
Milk sold/worker, lbs.
Cows/worker
Work units/worker
Labor cost/cow
Labor cost/tillable acre
3.57
1.56
537,187
33
355
$343
$113
4.66
1.45
559,824
37
385
$362
$123
5.85
1. 50
640,009
39
407
$372
$124
9.36
1. 54
759,037
41
422
$423
$192
*Average of all farms, not only those reporting data.
IDENTIFY AND SET GOALS
If businesses are to be successful, they must have direction. Yritten
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. Yritten goals are a tool which farm operators can use to
ensure that the business continues to move in the proper direction.
1.
Goals should be specific.
2.
Goals should be realistic and achievable.
3.
The achievement of the goal should be verifiable.
4.
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 long and short range goals when looking
at the future of your farm business.
A suggested format for writing out your goals is as follows:
a.
Begin with a general philosophy statement which incorporates both
business and family goals.
b.
Identify 4-6 long range goals.
c.
Identify specific short range goals for a given time period (i.e., one
year).
Yorksheet for Setting Goals
I.
General Philosophy and Objectives
38
Worksheet for Setting Goals (continued)
II. Long Range Goals (require two or more years to achieve)
III.
What
Short Range Goals (possible to achieve in one or two years).
How
IWhen
NOTE: Once long and short range goals have been identified, it is helpful to
rank them in order of priority.
Prepared by T.R. Maloney, Extension Associate, Cornell University