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1986 DAIRY FARM BUSINESS SUMMARY
Eastern Plateau Region*
Introduction
Dairy farmers throughout the State have been participating in New York
Cooperative Extension's farm business summary and analysis program since the
early 1950's. Each participating farmer receives a complete business and
financial summary and analysis of his or her farm business. The information
in this report represents an average of all the data submitted from farms in
the region described at the bottom of this page.
Program Objective
The primary objective of the dairy farm business summary, DFBS, is to
help farmers improve their management skills through appropriate use of
record data and application of modern farm business management decision­
making techniques. In short, DFBS identifies the business and financial
information farmers need and demonstrates how to use it 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 1986
DFBS output 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 farmer who wants to compare his or her
business with the average data of this region.
The summary section of this report features accrual accounting for farm
business expenses and receipts, measures of profitability with and without
appreciation, a complete balance sheet including analysis, and a cash flow
summary and analysis. The farm resources are examined and evaluated in the
analysis section which features crop production costs, cost of producing
milk, and capital and labor efficiency.
Micro DFBS, which allows Cooperative Extension agents and specialists to calculate and print individual farm business reports in their offices, is now being used by more than 70 percent of our dairy farm management field staff. This innovative program provides faster and more accurate processing of farm record data and increased use of 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, Tom Donnelly, and Jerry LeClar. The Eastern
Plateau Region is comprised of Broome, Chemung, Chenango, Delaware, Otsego,
Schuyler, Tioga, and Tompkins Counties.
2
SUMMARY OF THE FARM BUSINESS
Business Characteristics
Finding the right management strategies is an important part of
farming. 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 72 Eastern Plateau Region Datry Farms, 1986 TY:Qe of Farm
Dairy
Part-time dairy
Dairy cash-crop
Part-time cash-crop dairy
Number
68
4
0
0
TY:Qe of Business
Single proprietorship
Partnership
Corporation
Other
Number
51
20
1
0
TY2e of Ownershi:Q
Owner
Renter
Number
63
9
TY:Qe of Barn
Stanchion
Freestall
Other
Number
51
19
2
Milkin~
System
Bucket &. carry
Dumping station
Pipeline
Herringbone parlor
Other parlor
Number
0
5
47
19
1
Business Record System
ELFAC
Account Book
Agrifax (mail- in only)
On-Farm Computer
Other
Number
9
29
12
5
17
Production Records
DHIC
O.S.
Number
54
9
Other
None
Number
4
5
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. These specific
classifications are used to separate farms in the State Business Summary.
A :Qart-time farm has less than six months of labor from all operators and
total labor is less than 12 months.
A dairy cash-cro:Q farm has income from crop sales that exceed 10 percent of
milk sales.
A farm renter owns no farm real estate at the end of the year or owns no
tillable land.
Dairy Termination Program :Qartici2ants that sold their cows in 1986 are not
included in the report.
3
Income Statement
The accrual income statement begins with an accounting of all farm
business expenses.
CASH AND ACCRUAL FARM EXPENSES
72 Eastern Plateau Region Dairy Farms, 1986
EX,Qense Item
Cash
Paid
+
Change in
Inventory:* +
Hired Labor
$ 14,641
Feed
Dairy grain & conc.
41,753 $
1,063
Dairy roughage
Other livestock
793
Machinery:
Mach. hire, rent/lease
1,741
7,317
Machinery repairs/parts
Auto expo (farm share)
552
Fuel, oil & grease
4,832
Livestock
Replacement livestock
2,075
2,742
Breeding
Vet & medicine
3,581
Milk marketing
10,242
Cattle lease/rent
247
Other livestock expense
6,389
Cro,Qs
Fertilizer & lime
7,342
Seeds & plants
2,917
Spray, other crop expo
2,746
Real Estate
Land/bldg./fence repair
1,811
Taxes
1+ , 528
Insurance
3,277
Rent & lease
4,754
Other
Telephone (farm share)
610
Electricity (farm share)
4,975
Interest paid
15,186
Miscellaneous
1,650
Total Operating
$147,764 $
Expansion livestock
413
Machinery depreciation
Building depreciation
Change in
Accounts Pa;:lable
Accrual
- EX,Qenses
44
$ 14,685
-301
-45
35
78
0
0
41,530
1,018
828
-69
40
-30
0
-58
1,781
7,218
552
4,703
27
0
-6
37
0
0
-13
2,075
2,711
3,617
10,242
247
6,403
32
-69
-38
-134
-28
4
7,240
2,820
2,712
-98
52
120
-1
17
1,765
4,648
3,276
4,771
1
11
0
-6
128
0
611
4,986
15,186
1,664
$147,289
413
14,596
7,723
$
-71
-25
-1
20
-603
$
TOTAL ACCRUAL EXPENSES
$170,021
*An increase in inventory is a negative number since it represents purchased
inputs not used and must be subtracted in arriving at accrual expenses.
Cash ,Qaid is the actual amount of money paid out during the year and does not
necessarily represent the cost of goods and services actually used.
Accrual expenses are the costs of inputs actually used in this year's
production. The value of feed and supplies used out of inventory are
included as are the costs of inputs purchased but not paid for (net increases
in accounts payable). Items paid for and not used (net additions to
inventory) are excluded from accrual expenses as are payments made on inputs
used in a prior year (net decreases in accounts payable).
4
Worksheets are provided to enable any dairy farmer to compute his or
her accrual farm expenses and compare it with the averages on the previous
page.
CASH AND ACCRUAL FARM EXPENSES WORKSHEET
Expense Item
Hired Labor
Feed
Dairy grain & cone.
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
Other
Telephone (farm share)
Electricity (farm share)
Interest paid
Miscellaneous
Total Operating
Expansion livestock
Machinery depreciation
Building depreciation
TOTAL ACCRUAL EXPENSES
Cash
Paid
+
Change in
Inventory
+
Change in
Accounts Payable
Accrual
Expenses
$_--
$_-­
$- - - -
$
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 must ·be 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.
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'£
production.
5
CASH AND ACCRUAL FARM RECEIPTS 72 Eastern Plateau Region Dairy Farms, 1986 Cash
Receipts
Receipt Item
+
Milk sales
$163,393
Dairy cattle
10,606
Dairy calves
1,991
Other livestock
274
Crops
1,215
Government receipts
2,113
Custom machine work
465
102
Gas tax refund
1,643
Other
Less nonfarm noncash cap.*
Total Accrual Receipts
Change in
Inventory
+
Change in
Accounts
Receivable
3,687
1,059
-65
243
1,729
221
$
$
o
6
28
-94
o
+
Accrual
Receipts
$164,452
14,229
1,991
523
3,164
2,141
371
102
1,649
o
o
$181,801
$
5,659
$
1,161
$188,621 *Gifts or inheritances of cattle or crops included in inventory or used in
the business.
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.
Accrual receipts represent the value of all farm commodities produced and
services actually provided by the farmer during the year. Increases in live­
stock inventory caused by herd growth and/or quality, are added and decreases
caused by herd reduction are subtracted. Changes in inventories of crops
grown are accounted for in accrual receipts. Changes in accounts receivable
include the January milk check for this December's marketings compared with
the previous January's check, and other delayed payments.
CASH AND ACCRUAL FARM RECEIPT WORKSHEET
Receipt Item
Cash
Receipts
+
Change in
Inventory
Milk sales
$_-­
Dai:~y 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
Accounts
Receivable
Accrual
+ Receipts
$_-­
$_-­
$_--­
To calculate the change in inventory to be included in the above worksheet,
subtract the beginning of year values from the end of year values excluding
appreciation. The changes in inventories caused by changing prices must be
excluded from the calculation of accrual receipts. Changes in accounts
receivable are also determined by subtracting beginning of year balances from
end of year balances.
6
Profitability Analysis
Farm owners/operators contribute labor, management, and capital to
their businesses and the best combination of these resources produces optimum
profits. Farm profits 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 with and without appreciation. Apprecia­
tion represents the change in values caused by changes in prices during the
year of livestock, 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 in the
profitability analysis.
NET FARM INCOME
72 Eastern Plateau Region Dairy Farms, 1986
Item
Total accrual receipts
Appreciation: Livestock
Machinery
Real Estate
Other Stocks/Certificates
Total Including Appreciation Total accrual expenses Net Farm Income (with appreciation) Net Farm Income (without appreciation) Average
My Farm
$188,622
2,079
5,299
9,629
92
$205,721
170,021
35,700
18,601
$-----­
Return to operators' labor, management. and equity capital measures the total
business profits for the farm operators. 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 compiled 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
72 Eastern Plateau Region Dairy Farms, 1986
Item
Net farm income
Family labor unpaid
@ $600 per month
Return to operators' labor,
management, & equity
Average
With
Without
Apprec.
Apprec.
$ 35,700
$ 18,601
2,400
2,400
$ 33,300
$ 16,201
My Farm
With
Without
Apprec.
Apprec.
$-----­
$------­
$------­
$------­
7
Labor and management income is the share of net farm income without apprecia­
tion returned to the operators' labor and management. Appreciation is not
included as part of the return to labor and management.
Labor and management
income is determined by deducti.ng the cost of using equity capital at a real
interest rate of five percent, from the return to operators' labor, manage­
ment, and equity capital excluding appreciation.
The interest charge
reflects the long-term average rate of return that a farmer might expect to
earn in comparable risk investments in a low inflation economy.
Labor and management income per operator measures the return to each
operator's labor and management.
LABOR AND MANAGEMENT INCOME 72 Eastern Plateau Region Dairy Farms, 1986 Item
Average
Return to operators' labor, management,
& equity without appreciation
$ 16,201
Real interest @ 5% on $274,907
average equity capital
- 13,745
Labor
Labor
& Management
Income
& Management
Income per
1.25 Operator/Managers
My Farm
$_-­
$
2,456
$_--­
$
1,965
$_-­
Return on equity capital measures the net return rema1n1ng 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 or value 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 EQUITY CAPITAL 72 Eastern Plateau Region Dairy Farms, 1986 Item
Return to operators' labor, management,
& equity capital with appreciation
Value of operators' labor
& management
Return on equity capital with appreciation
Rate of return on equity capital
with appreciation
Return on equity capital without appreciation
Rate of return without appreciation
Average
My Farm
$ 33,300
$_--­
- 22.898
$ 10,402
3.8%
$ -6,697
-2.4%
$_--­
---_%
$_--­
---_%
8
Farm and Family Financial Status
Evaluating the financial status of the farm business and the farm
family is an important part of business analysis. The first step is to
recognize all the assets and liabilities that make up the balance sheet. The
second step is to analyze your filled out balance sheet by evaluating changes
made during the year.
1986 FARM BUSINESS & NONFARM BALANCE SHEET
72 Eastern Plateau Region Dairy Farms, 1986
Farm Liabilities
Farm Assets
Jan, 1
Current
Farm cash, checking
& savings
$ 3,520
14,492
Accounts rec.
Feed & supplies
37.426
$ 55,438
Total
Intermediate
Dairy cows:
$ 68,211
owned
leased
712
Heifers
26,653
Bulls/other 1vstk.
550
Mach./eq. owned
86,530
Mach./eq. leased
569
FLB/PCA stock
3,424
Coop stock & cert.
1.503
Total
$188,152
Long-Term
Landjbuildings:
owned
$207,672
leased
4.432
Total
$212,104
Total Farm Assets $455,694
Dec. 31
$
3,863
15,652
39,757
$ 59,272
$ 71,936
616
28,643
844
89,118
391
3,308
1.671
$196,527
& Net Worth
Current
Accounts payable
Operating debt
Short-term
Total
Intermediate
Financial lease
(cattle/mach. )
FLB/PCA stock
Total
Long-Term
Jan. 1
$
5,633
3,556
2,914
Dec. 31
$
5,760
3,422
3,2%
$ 12,103
$ 12,417
$ 69,260
$ 67,011
1,281
3,424
1,007
3,308
$ 73,965
$ 71,325
$ 98,907
$ 98,752
$210,222
5,051
$215,273
Financial lease
(structures)
Total
4,432
$103,340
5,051
$103,803
$471,072
Total Farm Liab.
FARM NET WORTH
$189,407
$266.287
$187,545
$283,527
Nonfarm Liabilities
& Net Worth
Jan. 1
Dec. 31
(Average for 53 farms reporting)
Nonfarm Assets
Jan. 1
Dec, 31
Personal cash, chkg.
Nonfarm Liab.
$ 4,378 $ 3,843
& savings
$ 4,1(}6 $ 4,097
NONFARM NET WORTH $ 39,120 $ 44,248
Cash value life ins,
6,079
7,043
Nonfarm real estate
5,142
4,708 IFARM & NONFARM*
Jan. 1
Dec. 31
2,769
3,431 !Total Assets
Auto (personal sh.)
$499,192 $519,163
6,396
Stocks & bonds
6,660 !Total Liabilities 193.785
191,388
11,530
Household furn.
11,739 I
10,412 !TOTAL FARM & NON­
All other
7.477
Total Nonfarm $ 43,498 $ 48,091 ! FARM NET WORTH $305,407 $327,775
*Assumes that average nonfarm assets and liabilities for the nonreporting
farms were the same as for those reporting.
Financial lease obligations are
present values of all future payments
farmer is committed to make them. The
assets, representing the future value
included in the balance sheet. The
are listed as liabilities since the
present values are also listed as
the item has to the business.
9
Date
1986 FARM BUSINESS & NONFARM BALANCE SHEET
Farm Liabilities
Farm Assets
Jan. 1
Dec. 31
Current
Farm cash, checking
& savings
Accounts rec.
Feed & supplies
& Net Worth
Jan. 1
Dec. 31
Nonfarm Liabilities
& Net Worth
Jan. 1
Dec. 31
Current
Accounts payable
Operating debt
Short-term:
Total
Total Intermediate
Dairy cows:
owned
leased
Heifers
Bulls/other lvstk.
Mach./eq. owned
Mach./eq. leased
FLB/PCA stock
Coop stock & cert.
Total
Intermediate Long-Term
Land/buildings:
owned
leased
Long-Term
Financial lease
(cattle/mach.)
FLB/PCA stock
Total
Total
Financial lease
(structures)
Total
Total Farm Liab.
FARM NET WORTH
Total Farm Assets
Nonfarm Assets
Jan. 1
Dec. 31
Nonfarm Liab. :
Personal cash, chkg.
& savings
Cash value
life ins.
Nonfarm real est.
Auto (pers. share)
Stocks & bonds
Household furn.
All other
Total Nonfarm
TOTAL FARM & NONFARM
Total Farm & Nonfarm Assets
Less Total Farm & Nonfarm Liabilities
Farm & Nonfarm Net Worth
Total Nonfarm
Liabilities
Nonfarm
Net Worth
Jan. 1
Dec. 31
10 Balance sheet analysis requires an examination crf financial and debt ratios
and other factors measuring levels of debt. Percent equity is calculated by
dividing net worth by assets. The debt to asset ratio is compil£!d 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 s.tandards that are still useful if used with
measures of cash flow and repayment ability. The change in farm net worth
without appreciation is a crucial indicator of financial health.
BALANCE SHEET ANALYSIS 72 Eastern Plateau Region Dairy Farms, 1986 Item
Average
Financial Ratios - Farm: Percent equity
Debt/asset ratio: total
long-term
intermediate/current
Change in Farm 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. liab. as a % of total debt
Farm Debt Levels:
Per Cow
Total farm debt
$ 2,206
Long-term debt
1,221
Intermediate & current debt
985
My Farm
60%
0.40 0.48
0.33
:% 140
$
$ 17,239
$
$
3%
55%
45'%
Per Tillable
Acre Owned
$ 1,321
Per Cow
731
Per Tillable
Acre Owned
$_--­
590
The 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 72 Eastern Plateau Region Dairy Farms, 1986 Item
Value beg. of year
Purchases
$
Gift/inheritance +
Lost capital
Sales
Depreciation
Net investment
Appreciation
Value end of year
Avg, of Regional Farms
R.E.
Mach. LEg.
$207,672
$ 86,530
6,757*
$ 12,682
0
+
42
925
3,442
839
- 14,596
7,Z23
$+ -5,333
$+ -2,711
+ 7,883**
+ 5,299
$210,222
$ 89,118
My Farm
R.E.
Mach. LEg.
$
$
+
$+
+
$
$+
+
$
* $ 2,387 land and $ 4,370 buildings and/or depreciable improvements.
**Excludes $1,746 of appreciation on assets sold during the year.
11 Cash Flow Summary and Analysis
Completing an annual cash flow summary and analysis is important to
understand 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, the cash inflows and cash outflows when beginning and ending
balances are included, are identical. The imbalance is, therefore, the error
from incorrect accounting of cash inflows and cash outflows.
ANNUAL CASH FLOW STATEMENT 72 Eastern Plateau Region Dairy Farms, 1986 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)
Average
My Farm
3,520
181,801
839
3,523
0
25,551
2,306
0
5,524
423
340
$223,827
$_--­
$147,763
413
12,682
6,757
76
27,955
1,985
134
917
13,772
3,863
$216,317
$ 7,510
$_--­
$
$_--­
$_--­
12 R!!payment Analysis
The second step of cas.hf1ow planning is to compare and evaluate debt
payments 'Planned and.made last year,andestimatethe:paymeutsrequired in
the current year. It is helpful to comparceandcevaluatebyus;illg ;debt
payments per unit of .'Pt:oduction .and reoeiptldebt p:aymentratio:s.
FARM DEBT PAYMENTS PlANNED Same 41 Easte:rnP1ateau Region Dairy Farms, 1Q86&t987 ~;ve:rage
Debt Payments
Long-term
Intermediate-term
Short-term
Operating (net
rceduction)
Accounts 'Payable
(net reduction)
Total
Planned
1987
1986 PJ!YID.euts
Matie
Planned
$ 1:8,844
20,630
2,313
$ 12,056
18,779
2,560
535
684
860
659
979
310
$ 34,471
$ 43,449
11 32,658
$ 11,939
Per cow
$
Per cwt. 1986 milk $
Pe.rcent of total
1986 receipts
Percent of 1986
milk receipts
415
2.67
$
$
24%
21%
27%
Planned
1987
$
$
.$
$
17,.297
2,135
523
3.36
19%
M.yF:ru.;:11\
1986 Payments
Planned
Made
$
.$
$
$- - - ' - $
The Cash Flow Covera&e, Ratio measures the ability.ofthe 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 lasty.ear will find in their
report a cash flow coverage ratio based on planned debt 'Payments for 1987.
CASH FLOW COVERAGE RATIO Same 41 Eastern Plateau Region Dalry Farms, 1'966 Item
My Farm
Cash farm receip,ts $178,,6b6
- Cash farm expenses 143.,623
+ Interest paid - Net 'Personal withdrawals from farm* $_--­
15,526
6,9.26
(A) - Amount Available ,for Debt Service
$ 43,64'3
$- - - - -
(B) .. Debt Payments Planned for 1986
$ 34,471
$_--­
(A + B) ... Cash Flow Cov.erage Ratio for 1986
1.27
*Persona1 withdrawal.:sandfamilyexpendituresless nonfarm income and nonfarm
money borrowed. Tffamily withdrawals are ·8x.elu.iled thecaah flOM coverage
ratio will be incorrect.
13 ANALYSIS OF THE FARM BUSINESS
The farm business has been divided into three parts to allow a more
indepth analysis of the cropping program, the dairy program, and the factors
affecting capital and labor efficiency.
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 72 Eastern Plateau Region Dairy Farms, 1986 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
My Farm
Average
Item
Owned
142
65
99
306
Rented
107
21
16
143
Farms
72
69
Acres
130
56
10
72
38
15
2
4
20
17
72
17
186
69
28
57
32
38
27
249
Owned
Total
249
86
115
449
ProdLAcre
2.60 tn
14.43 tn
4.77 tn
1.56 tn
3.21 tn
106.91 bu
66.26 bu
47.17 bu
Rented
Acres
DM
DM
DM
DM
Total
ProdLAcre
tn DM
- - ­ tn
tn DM
tn DM
tn DM
bu
bu
bu
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
72 Eastern Plateau Region Dairy Farms, 1986
Item
Average
\
Total tillable acres per cow
Total forage acres per cow
Harvested forage dry matter, tons per cow
3.02
2.26
7.26
My Farm
14 Croppin& Program Analysis (continued)
A substantial number of cooperators have allocated crop expenses to hay
crop, corn, and other crop production. This additional data has been
compiled to show the traditional crop expenses per acre and per production
unit for these crops.
CROP RELATED ACCRUAL EXPENSES Eastern Plateau Region Dairy Farms, 1986 Total
Per
Till.
Acre
Item
Number of farms
reporting
Average number
of acres
Fertilizer & lime $
Seeds & plants
Spray & other crop
expense
Total
$
Corn
Hay Crol!
Per
Per
Ton DM
Acre
Other
Crops
Per Acre
38
39
72
Per Ton
Silage
Eguiv.*
Per
Acre
249
29.08 $
11. 33
129
22.86 $
6.56
8.59
2.47
10.90
51. 31 $
7.46
36.88 $
2.80
13.85
$
$
18
89
45.21 $
19.50
2.61
1.13
25.73
90.43 $
1.48
5.22
$
$
19
26.61
20.93
11.27
58.81
My Farm:
Fertilizer & lime $
Seeds & plants
Spray & other crop
expense
Total
$- - ­
$- - ­
$
$
$
$
$- - ­
$
$
$
$
*Corn grain converted to silage equivalent using 5.88 bushels of dry shell
equivalent to equal one ton of corn silage as fed.
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 per total tillable acre.
ACCRUAL MACHINERY EXPENSES
72 Eastern Plateau Region Dairy Farms, 1986
Average
Total
Per Til.
Expenses
Acre
Machinery
Expense Item
Fuel, oil & grease
Machinery repairs & parts
Machine hire, rent & lease
Auto expense (farm share)
Interest (5%)
Depreciation
Total
4,703
7,218
1,781
552
4,391
14,596
$ 33,241
$
18.89
29.00
7.16
2.22
17.64
58,64
$ 133.55
$
My Farm
Total
P~r Til.
Expenses
Acre
$_--­
$- - - ­
$_--­
$_--­
15 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 real increase in inventory has been included as an accrual
farm receipt on page 5.
DAIRY HERD INVENTORY 72 Eastern Plateau Region Dairy Farms, 1986 Dair! Cows
Value
Number
Item
Beginning of year (owned)
+ Change without appreciation
+ Appreciation
End of year (owned)
End including leased
Average number
81
84
85
82
Number
66
$ 68,211
2,830
895
$ 71,936
67
Heifers
Value
$ 26,653
857
1,133
$ 28,643
66
My Farm:
Beginning of year (owned)
+ Change without appreciation
+ Appreciation
End of year (owned)
End including leased
Average number
$_--­
$_--­
$_--­
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
72 Eastern Plateau Region Dairy Farms, 1986
Item
Total milk sold, lbs.
Milk sold per cow, lbs.
Average milk plant test, percent butterfat
Average
1,316,672
15,992
3.68
My Farm
16 The cost of producing milk has been compiled using the whole farm
method, and is featured in the following table. Accrual receipts from milk
sales can be compared with the accrual costs of producing milk per cow and
per hundredweight of milk. Using the whole farm method, operating costs of
producing milk are estimated by deducting nonmi1k accrual receipts from total
accrual operating expenses. 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
72 Eastern Plateau Region Dairy Farms, 1986
Item
Average
Per Cow
Total
Accrual Receipts
$164,452
Milk
14,228
Dairy cattle
Dairy calves
1,991
Total
$180,672
Accrual Costs of
Producing Milk
Operating costs $123,119
Total costs w/o
opers' labor,
mgmt. & capital $148,251
Total Costs
$184,894
Per Cwt.
$
$
1,997
173
24
2,194
$
$
$
$
Total
My Farm
Per Cow
$_-­
$
12.49
1.08
0.15
13.72
1,495
$
9.35
$_-­
1,801
2,246
$
$
11.26
14.04
$_-­
$_-­
Per Cwt.
$_-­
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 the comparison of different size dairy farms.
DAIRY RELATED ACCRUAL EXPENSES 72 Eastern Plateau Region Dairy Farms, 1986 Average
Item
Purchased dairy grain
& concentrates
Purchased dairy roughage
Total Purchased
Dairy Feed
Purchased grain & conc.
as % of milk receipts
Purchased feed & crop expo
Purchased feed & crop expo
as % of milk receipts
Breeding
Veterinary & medicine
Milk marketing
Cattle lease
Other livestock expense
Per Cow
$
504
517
$
672
$
33
44
124
3
78
Per Cow
$
3.15
0.08
$
3.23
$
4.20
$
$
0.21
0.27
0.78
0.02
0.49
$
---ll
$
My Farm Per Cwt.
25%
34%
Per Cwt. - -%
- -%
17
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.
CAPITAL EFFICIENCY
72 Eastern Plateau Region Dairy Farms, 1986
Farm capital
Real estate
Machinery & equipment
Capital turnover, years
My Farm:
Farm capital
Real estate
Machinery & equipment
Capital turnover, years
$163.547
Per Tillable
Acre
Per
Cow
Per
Worker
Item
5,628
2,595
1,073
$
31,166
$
Per Tillable
Acre Owned
$
1,862
3,263
1,505
355
2.25
$
$
$_-­
LABOR FORCE INVENTORY AND ANALYSIS 72 Eastern Plateau Region Dairy Farms, 1986 Labor Force Months
Age
12
43
35
59
Operator number 1
Operator number 2
Operator number 3
Family paid
Family unpaid
Hired
Total
3
<1
10
34 Value of operator(s)
labor ($850/mo.)
$
Family unpd.($600/mo.)
Hired
Total Labor
$
Machinery Cost
$
Total Labor & Mach.
$
$ 17,979
4,530
389
13
+ 12 ...
2.83 Worker Equivalent
1.25 Operator/Manager Equiv.
+ 12 = ______ Worker Equivalent
T
Labor
Efficiency
Labor Costs
14
14
5
4
My Farm: Total
Operator's
Cows, average number
Milk sold, pounds
Tillable acres
Work units
Value of
Labor & Mgmt.
Years of
of Educ.
82
1,316,672
249
861
12,750
2,400
14,685
29,835
33,241
63,076
______ Operator/Manager Equiv.
Average
Per Worker
Total
Total
12 ­
155
29
-ill
$
$
$
362
404
766
My Farm
Per Worker
29
464,708
88
304
Average
Per
Per
Cow
Til. Acre
$
Total
$ 51. 22
9.64
59.00
$119.87
$133.55
$253.42
Total
$
My Farm
Per
Per
Cow
Til. Acre
$
$
$
$
$
$
$
$
18 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. Expense,s
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 expo
Land, bldg.,fence repair
Taxes
Insurance
Real est. rent/lease
Utilities
Miscellaneous
Total Less Int. Paid
Re,gional
,;,Ave:page
(pex cow)
82
$
My Farm
lio.t.alPer Cow
1,-997
173
24
Expec.ted
1987
ChsnleProjection
$_--­
6
38
52
$
2,291
$
178
504
12
10
$_ __
$_-­
$-­
-------- $---------
22
94
57
25
33
44
124
3
$
Net Accrual Operating Income
(without interest paid)
Change in lvstk./crop inv.
- Change in accts. rec.
+ Change in feed/supply inv.
+ Change in accts. payab1e*
NET CASH FLOW
- Net personal withdrawals &
family expenditures
Available for Debt Payments,
Investments & Savings
- Farm Debt Payments
Available for Investment
& Savings
- Capital Purchases: cattle,
machinery & improvements
Additional Capital Needed
78
88
34
33
21
56
40
58
68
20
1,604
(total)
$ 56,519
5,659 1,161 -603
127
$ 49,224
$_--
$_--­
$_ __
$_--­
$------
$-------­
7.908
$ 41,316
45.712
$ -4,396
,$ 19,92·8
*Less change in account,payable£.orint"8:~st.
$
19 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 41 Eastern Plateau Region Dairy Farms, 1985 & 1986
Average
1986
1985
Selected Factors
M)!: FaJ:m
1986
1985
Goal
Size of Business
Average number of cows
81
83
Average number of heifers
62
63
Milk sold, lbs.
1,214,335 1,291,343
Worker equivalent
2.78
2.83
Total tillable acres
240
246
Rates of Production
Milk sold per cow, lbs.
Hay DM per acre, tons
Corn silage per acre, tons
Labor Efficienc)!:
Cows per worker
Milk sold/worker, lbs.
Cost Control
Grain & cone. purchased
as % of milk sales
Dairy feed & crop expo
per cwt. milk
Labor & mach. costs/cow
15,001
2.33
14
15,540
2.46
15
29
437,054
29
455,768
25%
26%
$
$
4.38
755
$
$
4.31
740
Canital Efficienc)!:*
Farm capital per cow
Real estate per cow
Mach. & equip. per cow
Capital turnover, years
$
$
$
5,490
2,557
1,060
2.43
$
$
$
5,355
2,405
1,053
2.21
Profi tab i.U t)!:
Net farm inc. w/o apprec.
Net farm inc. w/apprec.
Labor & mgmt. income
Rate of return on eq.
capital w/apprec.
$ 22,293
$ 21,160
$ 6,837
financial Summar)!:
Farm net worth, end year
Debt to asset ratio
Farm debt per cow
*Average for the year.
-0.60%
$267,260
0.40
$ 2,116
$ 17,469
$ 35,373
$ 1,723
%
$
$
%
$
$
$
$
$
$
$
$
$
$
$
4.49%
$273,741
0.39
$ 2,075
%
$
$
$
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 404 farms for that factor.
The other figures in each column are the average for the second 10 percent,
third 10 percent, etc. Each column of the chart is independent of the others.
The farms which are in the top 10 percent for one factor would not necessarily
be the same farms which make up the top 10 percent for any other factor.
The cost control factors are ranked from low to high, but the lowest cost
is not necessarily the most profitable. In some cases, the "best" management
position is somewhere near the middle or average. Many things affect the level
of costs, and must be taken into account when analyzing the factors.
FARM BUSINESS CHART FOR FARM MANAGEMENT COOPERATORS
404 New York Dairy Farms, 1985
Size of Business
Worker
No.
Pounds
Equiv­
of
Milk
Sold
alent
Cows
Rates of Production
Pounds
Tons
Tons Corn
Milk Sold Hay Crop Silage
Per Cow
OM/Acre Per Acre
Labor Efficiency
Cows
Pounds
Milk Sold
Per
Worker
Per Worker
4.6
4,319,504
18,980
21
48
747,314
2,108,684
17,551
3.6
18
37
575,840
1,596,188
16,655
3.1
16
33
516,053
1,304,015
16,116
2.9
15
31
472,387
15,543
1,128,297
2.6
15
73
432,993
29
...... ------- ........ ----- .. ------­ ... ----------------------------------------------_.-----­
2.5
972,841
14,953
2.4
65
14
26
400,211
2.3
824,836
14,399
58
2.2
13
24
367,373
2.0
725,500
13,682
50
2.0
12
330,625
23
44
1.8
628,376
12,849
10
20
1.7
290,454
34
1.4
466,272
11,055
8
1.3
16
215,433
6.8
4.4
3.5
3.1
2.8
252
134
101
85
Grain
Bought
Per Cow
% Feed is
of Milk
Receipts
$185
288
352
397
439
10%
15
18
21
23
476
518
562
608
721
25
27
28
31
36
Cost Control
Machinery
Labor &
Costs
Machinery
Per Cow
Costs Per Cow
$212
282
326
370
404
435
471
516
572
759
Feed & Crop
Expenses
Per Cow
Feed & Crop
Expenses Per
Cwt. Milk
503
605
670
726
783
$375
464
525
567
605
$2.52
3.23
3.60
3.87
4.10
832
882
956
1,025
1,251
647
683
731
783
913
4.31
4.48
$
4.77
5.12
5.85
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 404 New York Dairy Farms, 1985 Milk
Receipts
Per Cow
Dairy
Receipts
Per Cwt.
$2,735
2,508
2,399
2,290
2,197
$16.52
15.15
14.68
14.40
14.13
2,097
1,999
1,898
1,760
1,507
13.91
13.67
13.42
13.08
12.11
Total Cost
Production
Per Cow
Total Cost
Production
Per Cwt.
Oper. Cost
Milk
Per Cow
Oper. Cost
Milk
Per Cwt.
901
1,112
1,231
1,334
1,399
$ 6.10
7.70
8.39
8.93
9.39
$1,667
1,895
2,007
2,088
2,196
$11.26
12.55
13.29
13.94
14.47
1,498
1,584
1,672
1,800
2,074
9.82
10.32
10.94
11.82
13.81
2,281
2,360
2,480
2,609
3,032
15.02
15.82
16.55
17.45
20.80
$
Profitability
Net Farm Income
With
Without
Ap~reciation
Ap~reciation
Return to Operator's Labor,
Management, & Eguit~ Ca~ita1
With
Without
Ap~reciation
Ap~reciation
Labor & Management Income Per Per
Farm Operator
$101,576
51,232
34,730
26,015
19,413
$98,427
54,238
36,084
25,033
18,975
$100,957
49,740
33,833
24,933
17,901
$97,616
52,972
35,030
23,703
17,131
$67,398
27,247
16,338
10,248
5,056
$49,398
19,608
11,912
7,708
3,887
13,695
9,055
2,290
- 6,727
-28,801
12,180
6,473
-56
-9,810
-39,020
12,066
6,863
374
-8,364
-30,637
9,951
4,834
-1,936
-11,125
-40,495
-342
-5,172
-10,015
-19,381
-46,928
-320
-4,523
-8,491
-16,205
-43,181
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,
12, and 17 of this publication. References to DFBS output page numbers for
participating dairy farmers are provided in the table headings.
FINANCIAL ANALYSIS CHART 404 New York Dairy Farms, 1985 Debt Payments
Made Per Cow
(DFBS pg. 7)
$
Liguidity (renayment}
Cash Flow
Debt Payments
as Percent
Coverage
Ratio
of Milk Receints
(7)
(7)
25
171
264
332
406
460
518
591
722
1,165
Percent
Eguity
(DFBS
pg. 5)
99%
90
82
75
68
61
53
44
36
16
Summari~e
Solvency
DebtLAsset R§tio
Current &
Total
Intermedlate
0.01
0.10
0.18
0.25
0.32
0.39
0.47
0.56
0.64
0.84
(11)
7.03
2.15
1.58
1.30
1.10
0.96
0.80
0.65
0.43
-0.04
1%
9
14
18
20
24
27
31
37
63
(5)
Available for
Debt Service
Per Cow
(5)
0.00
0.04
0.11
0.16
0.23
0.29
0.36
0.44
0.55
0.81
$1,012
780
674
606
527
460
387
313
244
42
Long
TeIm
(5)
0.00
0.01
0.10
0.25
0.37
0.50
0.63
0.73
0.89
1.38
Debt
Per Cow
(5)
$
70
568
1,011
1,489
1,858
2,195
2,584
3,130
3,679
4,795
Efficiency & Profitability
Total
Capital
Rate of
Turnover
Farm Cap.
Return on
fer ~ow
(years)
Eguity Ca:Q.
(10)
(10)
(3)
$3,705
4,524
4,960
5,289
5,654
5,955
6,342
6,837
7,671
9,498
1.67
2.00
2.19
2.40
2.60
2.77
2.93
3.14
3.46
4.57
14
6
4
1
-1
-4
-6
-11
-20
-83
YouI BUliliness 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
FARM BUSINESS SUMMARY BY HERD SIZE
404 New York Dairy Farms, 1985
Item
Farm Size:
Number of farms
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
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
ACCRUAL RECEIPTS
Milk sales
Dairy cattle
Dairy calves
Other livestock
Crops
Misc. receipts
Total Accrual Receipts
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.)
Less than
40 Cows
33
$ 4,093
15,862
813
164
588
2,560
405
2,442
465
998
1,173
4,836
3
2,492
2,255
712
476
778
3,725
2,267
4,443
1,660
$ 53,210
968
6,124
2,193
$62,495
to
99 Cows
40 to
54 Cows
55 to
69 Cows
to
84 Cows
93
82
55
38
$ 5,937 $ 9,313 $ 13,051
33,379
27,169
22,245
1,158
933
816
705
250
555
1,644
1,305
1,018
7,900
4,470
5,735
645
450
488
5,625
4,276
3,192
1,350
1,800
926
2,565
1,300
1,949
2,601
2,933
1,672
6,395
8,313
10,033
80
33
39
3,684
5,053
5,607
4,002
5,849
7,976
1,311
2,131
2,954
2,626
1,033
2,077
1,340
1,518
1,989
6,227
6,668
4,505
3,054
4,025
4,926
8,829
12,031
13,163
3,348
4,895
2,764
$79,270 $106,691 $131,872
874
346
774
10,941
15,593
7,704
3,217
5,039
8,144
$90,537 $123,545 $156,383
$ 18,026
37,599
767
2,234
1,251
10,291
368
7,090
1,078
2,491
3,664
10,296
0
8,095
10,357
4,128
2,881
2,769
9,482
5,436
17,536
$161,355
844
17,741
$187,944
$68,064
$ 88,407
6,521
1,163
243
806
3,156
$100,296
$119,550
9,436
1,444
352
592
5,102
$136,476
$151,834
11,266
1,798
436
1,949
5,737
$173,020
$183,742
14,400
2,364
472
3,216
7,682
$211,876
$5,569
$4,706
$-3,996
1.08
$-3,689
$9,759
$8,700
$-592
1.17
$-508
$12,931
$9,716
$-718
1. 33
$-539
$16,637
$19,487
$-453
1.42
$-320
$23,932
$19,249
$4,124
1.42
$2,911
$59,218
4,811
933
97
1,030
-6.6%
-6.4%
-4.0%
-2.3%
-0.6%
-7.1%
-7.0%
-5.3%
-1.4%
-1. 8%
24
FARM BUSINESS SUMMARY BY HERD SIZE
404 New York Dairy Farms, 1985
Item
Farm Size:
100 to
149 Cows
150 to
199 Cows
200 to
249 Cows
250 or
More Cows
54
20
14
15
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
$ 26,831
52,504
979
1,253
1,828
12,204
372
9,375
1,300
3,611
5,044
13,992
68
9,665
11,193
4,444
3,981
2,981
10,303
6,501
23,255
6.759
$208,443
1,127
20,258
9,161
$238,989
$ 37,871
69,080
3,007
1,581
2,514
17,945
$ 69,656
119,361
1,464
176
4,138
30,301
829
18,866
1,521
7,083
9,844
30,848
$118,623
181,104
6,896
193
3,541
37,855
303
24,475
3,244
11,731
20,184
38,127
344
31,495
33,953
14,478
15,416
9,358
23,234
17,907
75,543
21. 921
$689,925
16,690
45,087
35,310
$787,012
ACCRUAL RECEIPTS
Milk sales
Dairy cattle
Dairy calves
Other livestock
Crops
Misc. receipts
Total Accrual Receipts
$236,108
20,211
2,992
556
193
7.420
$267,480
$320,343
32,874
3,559
21
5,092
16.589
$378,478
$468,190
46,908
5,168
89
10,339
21. 994
$552,688
16,228
15,205
$918,650
$28,491
$29,111
$5,196
1.50
$3,464
$33,028
$24,269
$6,896
1.58
$4,355
$51,786
$44,731
$17,279
1.67
$10,367
$131,638
$120,705
$76,669
1.58
$48,423
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.)
377
12,763
2,816
4,415
6,398
19,197
188
13,049
19,173
6,000
7,053
b., 147
12,467
7,470
34,925
11.814
$294,250
7,108
26,978
17.114
$345,450
o
17,907
23,424
7,942
10,397
4,852
16,682
11,821
45,152
17,838
$450,102
1,680
32,499
16.621
$500,902
$796,157
81,554
8,731
775
-0.0%
0.6%
2,8%
8.7%
0.1%
-1.1%
1.8%
7.7%
25
FARM FAMILY FINANCIAL SITUATION BY HERD SIZE
404 New York Dairy Farms, 1985
Item
Farms with: Less than 40 Cows
Jan. 1
Dec. 31
ASSETS
Farm cash/chkg./sav. $ 2,208
Accounts receivable
6,052
Feed & supplies
11,016
Dairy cows*
27,508
Heifers
11,583
Bulls & other 1vstk.
560
Machinery & equipment* 41,341
Coop stocks & cert.
2,024
Land & bui1dings*
110,929
Total Farm Assets
$213.221
Pers. cash/chkg./sav.$ 7,817
Cash value of life ins. 3,230
Nonfarm real estate
2,342
Auto (personal share)
2,118
Stocks & bonds
5,868
Household furnishings
7,192
All other
1,298
Total Nonfarm
Assets**
$ 29,866
Total Farm & Nonfarm
Assets
$243,087
LIABILITIES
Accounts payable
$ 1,955
Operating debt
0
Short term
984
Intermediate*
17,813
Long term*
~026
Total Farm Liab.
$ 52,777
Total Nonfarm Liab.**____-==
Total Farm & Nonfarm
Liabili ties
$ 53,215
Farm Net Worth
(Equity Capital)
$160,444
Farm & Nonfarm
Net Worth
$189,872
$
40 to 54 Cows
Jan. 1
Dec. 31
1,936
5,791
11,551
25,568
9,208
479
40,782
2,145
115,967
$213,427
$
8,760
3,214
2,115
2,224
5,976
7,365
1, 121
$
$
1,264
7,548
17,075
40,790
15,737
878
53,683
2,615
140,467
$280,057
$
2,456
3,465
4,371
2,246
1,643
8,216
3,098
$
55 to 69 Cows
Jan. 1
Dec. 31
2,584
10,530
25,601
52,811
19,303
474
78,950
4,524
196,143
$390,921
2,280
10,835
25,038
55,435
22,773
599
80,279
4,237
194,568
$396,044
$
3,725
3,239
8,953
2,190
16,266
6,930
268
$
1,427
7,173
17,168
38,285
13,815
812
54,064
2,487
144,528
$279,759
$
2,551
3,561
4,221
2,522
2,005
8,391
2,119
$
3,960
3,187
9,312
2,416
16,945
7,925
1,048
$ 30,776
$ 25,495
$ 25,369
$ 41,569
$ 44,793
$244,203
$305,552
$305,128
$437,613
$435,714
2,293
0
871
17,003
34.951
$ 55, ll8
579
$
4,525
323
1,169
36,012
70,323
$112,353
752
$
$
$
$116,734
1,181
3,675
798
1,450
44,541
89,325
$139,789
2,664
$ 55,697
$113,105
$117,915
$142,453
$142,771
$158,310
$167,704
$163,026
$256,255
$250,987
$188,506
$192,447
$187,213
$295,160
$292,943
$
FINANCIAL MEASURES
Less than 40 Cows
Percent equity
74%
Debt/asset ratio-long term
0.30
Debt/asset ratio inter. & current
0.21
Total farm debt per cow
$1,621
Annual debt payments made
$12,166
Debt payments made per cow
$368
Debt payments as % of milk sales
20%
Amount avail. for debt service
$16,942
Cash flow coverage ratio for 1985
1. 74
4,396
592
1,399
36,825
40 to 54 Cows
58%
0.51
0.32
$2,382
$20,351
$432
23%
$23,026
1.07
3,744
1,192
1,265
44,628
89,105
$139,933
2,838
55 to 69 Cows
64%
0.45
0.26
$2,186
$30,885
$500
26%
$30,400
1.04
*Includes discounted lease payments. **Average of farms reporting nonfarm assets and liabilities for 1985. -.
26
FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 404 Naw York Dairy Farms, 1985 Farms with:
Item
ASSETS
Farm cash/chkg./savings
Accounts receivable
Feed & supplies
Dairy cows*
Heifers
Bulls & other 1vstk.
Machinery & equipment*
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 84 Cows
Jan. 1
Dec. 31
85 to 99 Cows
Dec. 31
Jan. 1
$
5,766
14,697
35,637
65,176
29,022
747
95,054
5,003
204,940
$456,042
$
4,884
14,487
35,228
62,650
25,175
981
98,240
5,700
208,015
$455,360
$
2,617
16,078
44,666
82,318
35,773
1,382
115,793
8,095
260,816
$567,538
$
$ 15,519
4,650
13,829
2,819
9,052
7,200
5,321
$ 58,390
$ 13,636
5,373
13,700
3,158
10,261
7,223
5,986
$ 59,336
$
4,787
3,600
4,813
2,265
1,940
3,604
4,084
$ 25,092
$
$514,432
$514,696
$592,630
$592,255
$
5,037
1,074
1,148
44,336
90,933
$142,529
454
$
6,816
1,924
2,185
46,725
88,906
$146,555
1,242
$
4,539
4,013
3,724
68,472
116,051
$196,799
21
$
$142,983
$147,797
$196,820
$198,550
$313,513
$308,805
$370,739
$363,155
$371,449
$366,899
$395,810
$393,705
FINANCIAL MEASURES
Percent equity
Debt/asset ratio-long term
Debt/asset ratio-inter. & current
Total farm debt per cow
Annual debt payments made
Debt payments made per cow
Debt payments as % of milk sales
Amount avail. for debt service
Cash flow coverage ratio for 1985
70 to 84 Cows
68%
0.43
0.23
$1,879
$30,462
$402
20%
$41,194
1.40
3,422
15,871
46,961
78,084
32,808
1,372
116,850
8,876
257,440
$561,684
6,288
3,859
5,542
2,338
3,000
4,792
4,752
$ 30,571
4,883
4,144
2,827
67,533
119,142
$198,529
21
85 to 99 Cows
65%
0.46
0.26
$2,112
$39,392
$426
21%
$45,661
1.09
*Inc1udes discounted lease payments. **Average of farms reporting nonfarm assets and liabilities for 1985. 27 FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 404 New York Dairy Farms, 1985 Farms with:
Item
ASSETS
Farm cash/chkg./savings
Accounts receivable
Feed & supplies
Dairy cows*
Heifers
Bulls & other 1vstk.
Machinery & equipment*
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
6,336
32,064
73,963
136,797
53,197
868
159,826
28,919
407,082
$899,052
$
4,109
20,971
57,947
102,408
46,781
1,699
128,332
12,808
312,736
$687,791
$
3,938
20,473
56,439
98,777
45,478
1,255
127,976
13,373
317.406
$685,115
$
5,551
27,818
71,818
135,614
59,207
905
157,670
24,972
411,748
$895,303
$
$
3,454
3,101
14,212
3,465
6,212
9,167
2,949
$ 42,561
$ 3,103
3,480
15,212
3,582
9,026
9,785
3,461
$ 47,648
$
1,248
14,353
8,333
3,550
1,963
11,417
6,660
$ 47,523
$
$730,352
$732,763
$942,826
$948,608
$ 8,457
2,275
4,442
95,195
129,107
$240,075
1,064
$
6,855
2,809
5,789
94,518
131,231
$241,208
946
$ 15,603
12,751
4,901
153,072
204,102
$390,429
4,650
$ 11,279
11,042
2,918
153,000
220,169
$398,408
3,984
$241,139
$242,154
$395,079
$402,392
$447,716
$443,907
$504,874
$500,644
$489,213
$490,609
$547,747
$546,216
FINANCIAL MEASURES
Percent equity
Debt/asset ratio-long term
Debt/asset ratio-inter. & current
Total farm debt per cow
Annual debt payments made
Debt payments made per cow
Debt payments as % of milk sales
Amount avail. for debt service
Cash flow coverage ratio for 1985
100 to 149 Cows
65%
0.41
0.30
$1,977
$60,605
$503
25%
$59,930
1.01
1,313
14,730
9,167
2,700
3,404
11,417
6,826
$ 49,556
150 to 199 Cows
56%
0.54
0.36
$2,371
$98,620
$611
31%
$75,317
0.86
*Inc1udes discounted lease payments. **Average o'f farms reporting nonfarm assets and liabilities for 1985. 28 FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 404 New York Dairy Farms, 1985 200 to 249 Cows
Jan. 1
Dec. 31
Farms with:
Item
ASSETS
Farm cash/chkg./savings
Accounts receivable
Feed & supplies
Dairy cows*
Heifers
Bulls & other 1vstk.
Machinery & equipment*
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
More than 250 Cows
Jan. 1
Dec. 31
6,837
46,843
100,424
188,896
84,355
2,011
183,392
27,566
499,166
$1,139,490
$
11,847
43,442
108,417
191,052
73,254
2,250
181,153
27,920
501,587
$1,140,922
8,039
68,068
172,391
282,847
128,368
1,938
252,055
43,310
781,,4,0
$1,738,436
16,800
8,038
12,750
4,813
6,875
11,585
5,483
66,343
$
$
$
$
$
$
13,613
9,825
24,000
4,000
8,563
11 ,460
6,247
77,707
$1,205,833
$1,218,629
$ 14,599
12,829
814
161,140
284,505
$473,887
0
$
1,068
5,226
5,409
72,250
180,862
294,830
122,225
1,876
254,436
46,142
808,694
$1,786,724
$
$
o
o
$
1,700
1,000
5,400
3.150
17,544
1,428
6,400
$
1,000
1,000
4,800
3.086
17,714
$1,755,980
$1,804,438
$ 15,885
14,851
1,984
159,375
269,685
$461,780
0
$
$
$
14,777
6,667
13,302
325,610
332,094
692,450
$
12,388
9,667
28,805
326,324
321, 161
698,344
$473,887
$461,780
$
692,450
$
698,344
$665,603
$679,142
$1,045,986
$1,088,380
$731,946
$756,849
$1,063,530
$1,106,094
FINANCIAL MEASURES
Percent equity
Debt/asset ratio-long term
Debt/asset ratio-inter. & current
Total farm debt per cow
Annual debt payments made
Debt payments made per cow
Debt payments as % of milk sales
Amount avail. for debt service
Cash flow coverage ratio for 1985
200 to 249 Cows
60%
0.54
0.30
$1,965
$92,757
$412
19%
$97,464
0.94
o
o
More than 250 Cows
61%
0.40
0.39
$1,962
$154,197
$438
19%
$220,436
1. 31
*Includes discounted lease payments. **Average of farms reporting nonfarm assets and liabilities for 1985. 29
SELECTED BUSINESS FACTORS BY HERD SIZE
404 New York Dairy Farms, 1985
Farms with:
Item
Number of farms
Croppin& Pro&ram 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./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
33
93
82
55
38
107
25
74
17
2.1
13.1
61.4
6.9
3.3
$21. 06
$14,171
$132
165
53
107
29
2.2
13.2
82.1
7.7
3.5
$24.20
$19,519
$118
206
63
119
40
2.5
13.5
86.9
7.7
3.3
$28.35
$26,647
$129
258
86
132
54
2.4
14.4
76.9
7.8
3.4
$30.93
$36,161
$140
329
106
156
73
2.6
13.7
74.4
8.2
3.6
$31.45
$42,527
$129
47
37
691,467
14,722
$9.75
$15.46
$12.79
$491
$3.33
62
92
76
48
62
77
924,535 1,162,676 1,430,313
14,897
15,346
15,485
$9.71
$9.52
$9.31
$15.37
$15.00
$14.26
$13.06
$12.93
$12.85
$453
$456
$415
$3.04
$2.97
$2.68
Less than
40 Cows
Dairy Analysis
33
Number of cows
Number of heifers
25
Milk sold, Ibs.
465,289
Milk sold/cow, 1bs.
14,113
Operating cost of prod. milk/cwt. $9.53
Total cost of prod. mi1k/cwt.
$16.67
Price/cwt. milk sold
$12.73
Purchased dairy feed/cow
$506
Purchased dairy feed/cwt. milk
$3.58
Purchased grain & conc. as %
of milk receipts
27%
Purchased feed & crop
expenSE:: lcwt. milk
$4.32
25%
23%
22%
20%
$4.25
$4.13
$4.14
$3.90
Capital Efficiency
Farm capital/worker
Farm capital/cow
Farm capital/til. acre owned
Real estate/cow
Machinery investment/cow
Capital turnover, years
$116,359
6,470
2,602
3,441
1,245
3.13
$134,356
5,960
2,477
3,034
1,147
2.79
$162,820
6,340
2,752
3,148
1,283
2.88
$160,836
6,015
2,649
2,725
1,276
2.63
$173,727
6,113
2,532
2,805
1,259
2.66
Labor Efficiency
Worker equivalent
Operator/manager equivalent
Milk sold/worker, lbs.
Cows/worker
Work units/worker
Labor cost/cow
Labor cost/tillable acre
1. 83
1.08
253,794
18
188
$490
$151
2.08
1.17
331,904
23
243
$412
$117
2.42
1. 33
382,566
26
272
$374
$113
2.83
1.42
410,356
27
289
$374
$110
3.25
1.42
440,096
28
324
$360
$101
*Average of all farms, not only those reporting data.
30
SELECTED BUSINESS FACTORS BY HERD SIZE 404 New York Dairy Farms, 1985 Farms with:
Item
Number of farms
Cropping Program Analysis
Total Tillable acres
Tillable acres rented*
Hay crop acres*
Corn silage acres*
Hay crop, tons DM/acre
Corn silage, tons/acre
Oats, bushels/acre
Forage DM per cow, tons
Tillable acres/cow
Fert. & lime exp./til. acre
Total machinery costs
Machinery cost/tillable acre
Dairy Analysis
Number of cows
Number of heifers
Milk sold, 1bs.
Milk sold/cow, 1bs.
Operating cost of prod. milk/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
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, 1bs.
Cows/worker
Work units/worker
Labor cost/cow
Labor cost/tillable acre
100 to
149 Cows
150 to
199 Cows
200 to
249 Cows
250 or
More Cows
54 20 14 15 364 120 180 89 3.0
14.2
81. 7 8.2
3.1
$30.74
$50,416
$138
529 194 235 128 2.9
14.0
64.9
8.1
3.3
$36.27
$68,482
$130
595 237 237 220 3.2
14.8
71.4
8.3
2.7
$39.35
$95,644
$161
809 276 280 348 3.8
15.9
93.6
8.5
2.4
$41.99
$123,924
$153
160 119 223 107 182 129 1,839,601 2,450,256 3,618,728 15,524 15,295 16,233 $9.63 $9.64 $10.10 $14.04 $13.97 $13.35 $12.83 $13 .07 $12.94 $451 $450 $542 $2.91 $2.94 $3.34 342 286 6,189,863 18,099 $9.17 $12.22 $12.86 $550 $3.04 22%
$3.97
$179,075
5,793
2,813
2,659
1,081
2.57
3.83
1. 50 479,896 31 332 $357 $116 22%
$4.26
25%
$4.49
23%
$4.07
$199,373
5,600
2,678
2,556
991 2.37
$187,431
5,115
3,185
2,245
818 2.06
$215,826
5,154
3,307
2,325
740 1. 92 4.50
1. 58 544,501 36 379 $338 $102 6.08
1.67 594,859 37 382 $387 $145 8.17
1.58 757,942 42 439 $393 $166 *Average of all farms, not only those reporting data.
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.
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).
Worksheet for Setting Goals
I. General Philosophy and Objectives
32
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).
IHow
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