A.E. Ext. 87-13
May 1987
-­
'.
NORTHERN HUDSON REGION 1986 Stuart F. Smith
•
Department of Agricultural Economics New York State College of Agriculture and Life Sciences A Statutory College of the State Unjversity Cornell University, Ithaca, New York 14853 1986 DAIRY FARM BUSINESS SUMMARY
Northern Hudson 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.
*The Northern Hudson Region of New York State, with the number of participat­
ing farms in parentheses, is comprised of Albany (4), Rensselaer (21),
Saratoga (0), and Washington (28).
This report was written by Stuart F. Smith, Senior Extension Associate, Farm
Management. Linda Putnam was in charge of the data preparation. Cindy
Farrell and Beverly Carcelli prepared the publication. Farm Business data
was collected by Cooperative Extension agents Tom Gallagher, Cathy Wickswat,
and John Thurgood.
2
SUMMARY OF THE FARM BUSINESS
Business Characteristics
Finding the right management strat.:egies 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 53 Northern Hudson Dairy Farms, 1986 TYJ,;!e of Farm
Dairy
Part-time dairy
Dairy cash-crop
Part-time cash-crop dairy
Number
51
2
0
0
Ty].;!e of Business
Single proprietorship
Partnership
Corporation
Other
Number
37
TYJ,;!e of OwnershiJ,;!
Owner
Renter
Number
51
2
TYJ,;!e of Barn
Stanchion
Freesta11
Other
Number
30
23
0
Mi1kinc, System
Bucket & carry
Dumping station
Pipeline
Herringbone parlor
C,ther parlor
Number
0
3
27
22
1
Business Record System
ELFAC
Account Book
Agrifax (mail-in only)
On-Farm Computer
Other
Number
6
16
Production Records
DHIC
O.S.
Number
38
7
Other
None
11
5
0
11
7
13
Number
2
6
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 J,;!art-time farm has less than six months of labor from all operators and
total labor is less than 12 months.
A dairy cash-cro].;! 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 J,;!articiJ,;!ants 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 53 Northern Hudson Dairy Farms, 1986 EX2ense Item
Cash
Paid
+
Hired Labor
$ 21,084
Feed
Dairy grain & cone.
51,737
Dairy roughage
3,915
Other livestock
101
Machinery
Mach. hire, rent/lease
2,184
Machinery repairs/parts
9,752
440
A'lto exp. (farm share)
Fuel, oil & grease
5,654
Livestock
Replacement livestock
889
Breeding
3,085
Vet & medicine
3,852
Milk marketing
20,211
Cattle lease/rent
44
Other livestock expense
6,964
Crops
Fertilizer & lime
8,848
Seeds & plants
3,449
Spray, other crop expo
3,343
Real Estate
Land/bldg./fence repair
2,900
Taxes
5,008
Insurance
3,894
Rent & lease
4,383
Other
Telephone (farm share)
1,418
Electricity (farm share)
4,515
Interest paid
16,743
Miscellaneous
_3.691
Total Operating
$188,104
Expansion livestock
2,029
Machinery depreciation
Building depreciation
Change in
Accounts Payable
Accrual
EX2enses
, 12
$ 21,096
-328
8
0
50,090
4,116
101
25
61
0
24
2,209
9,736
440
5,622
-35
0
-24
7
146
0
69
889
3,059
3,829
20,357
44
6,998
-162
184
123
382
7
114
9,068
3,640
3,580
20
44
63
-10
104.
2,924
5,071
3,884
4,487
0
74
315
1,418
4,589
17,058
3.718
$188,023
2,029
14,244
7.991
Change in
Inventory* +
$
$ -1,319
193
0
-77
-56
-2
-30
$ -1,163
$
1,082
0
TOTAL ACCRUAL EXPENSES
287
*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 2aid 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 eX2enses 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 & 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
Landjbldg./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's
production.
5
CASH AND ACCRUAL FARM RECEIPTS 53 Northern Hudson Dairy Farms, 1986 Cash
Receipts
Receipt Item
+
Milk sales
$210,170
11,225
Dairy cattle
Dairy calves
2,197
Other livestock 243
Crops 865
Government receipts 3,580
Custom machine work 50
Gas tax refund 72
3,649
Other Less nonfarm noncash cap.* Total Accrual Receipts Change in
Inventory
+
Change in
Accounts
Receivable
$
$
3,847
+
$211,900
14,962
2,194
47
1,168
3,801
50
1,730
-110
-3
o
-196
295
8
221
o
o
72
3,669
926
20
926
$232,051
$
3,020
$
Accrual
Receipts
$236,937 1,866
*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
+
Change in
Accounts
Receivable
+
Accrual
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
$_-­
$_-­
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
53 Northern Hudson Dairy Farms, 1986
Average
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)
My Farm
$236,937
-305
1,519
19,098
921
$258,170
212,287
45,883
24,650
$_-­
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
53 Northern Hudson Dairy Farms, 1986
Item
Net farm income
Family labor unpaid
@ $600 per month
Return to operators' labor,
management, & equity
Average
With
Without
Apprec,
Apprec.
$ 45,883
$ 24,650
1.200
1,200
$ 44,683
$ 23,450
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 deducting 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
operator's labor and management.
r~turn
to each
LABOR AND MANAGEMENT INC0l1E 53 Northern Hudson Dairy Farms, 1986 Item
Average
Return to operators' labor, management,
& equity without appreciation
$ 23,450
Real interest @ 5% on $369,974
average equity capital
- 18.499
Labor & Management Income
$
4,951
Labor & Management Income per
1.42 Operator/Managers
$
3,495
My Farm
$_-­
$_-­
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 53 Northern Hudson Dairy Farms, 1986 Item
Average
Return to operators' labor, management,
& equity capital with appreciation
$ 44,683
Value of operators' labor & management
- 23.512
Return on equity capital with appreciation
$ 21,171
Rate of return on equity capital
with appreciation
Return on equity capital without appreciation
Rate of return without appreciation
5.7%
$
-62
-0.0%
My Farm
$_-­
$_-­
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 53 Northern Hudson Dairy Farms, January 1, 1987 Farm Liabilities
Farm Assets
Current
Farm cash, checking
& savings
$ 3,286
16,979
Accounts rec.
45,649
Feed & supplies
Total
$ 65,914
Intermediate
Dairy cows:
owned
$ 76,552
leased
Heifers
32,519
1,381
Bulls/other lvstk.
100,765
Mach./eq. owned
525
Mach./eq. leased
6,284
FLB/PCA stock
Coop stock & cert.
9,941
Total
$227,967
Long-Term
Land/buildings:
owned
$257,011
leased
2,160
Total
$259,171
°
Total Farm Assets $553,051
& Net Worth
Dec. 31
Jan. 1
Current
Accounts payable
Operating debt
Short-term
5,398
18,825
47,106
$ 71,329
$
Total
Intermediate
Jan. 1
Dec. 31
$ 5,934
6,722
1.095
$ 6,930
9,648
2,168
$ 13,750
$ 18,746
$ 75,891
$ 72,708
525
6.284
715
7,004
$ 82,699
$ 80,427
$ 81,710
°
30,911
1,176
101,524
715
7,004
11,429
$234,469
Financial lease
(cattle/mach.)
FLB/PCA stock
$101,100
$ 99,624
$279,605
1,684
$281,289
Financial lease
(structures)
Total
2,160
$103,260
1,684
$101,308
$587,088 Total Farm Liab.
FARM NET WORTH
$199,709
$353,343
$200,481
$386,606
(Average for 28 farms reporting)
Nonfarm Assets
Jan. 1
Dec. 31
Total
Long-Term
Nonfarm Liabilities
& Net Worth
Jan. 1
Dec. 31
Personal cash, chkg.
$ 1,265 $ 1,226
Nonfarm Liab.
& savings
$ 8,078 $ 8,505
NONFARM NET WORTH $ 61,553 $ 70,676
2,682
Cash value life ins.
3,011
7,143 IFARM & NONFARM*
Nonfarm real estate
6,429
Jan. 1
Dec. 31
2,875 ITotal Assets
Auto (personal sh.)
1,998
$615,869 $658,990
34,697
38,708 ITotal Liabilities 200,974
Stocks & bonds
201.707
9,164 I
Household furn.
, 6,986
2,496 ITOTAL FARM & NONAll other
1.948
Total Nonfarm $ 62,818 $ 71,902 I FARM NET WORTH $414,895 $457,283
*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
Dec. 31
Nonfarm Liabilities
& Net Worth
Jan. 1
Dec. 31
Total Intermediate
Dairy cows:
ownE!d
leased
Heifers
Bulls/other lvstk.
Mach./eq. owned
Mach./eq. leased
FLB/PCA stock
Coop stock & cert.
Total
Intermediate Financial lease
(cattle/mach.)
FLB/PCA stock
Total
Long-Term
Land/buildings:
owned
leased
Long-Term
Total
Financial lease
(structures)
Total
Total Farm Liab.
FARM NET WORTH
Farm Assets
Nonfarm Assets
Jan. 1
Current
Accounts payable
Operating debt
Short-term:
Total
Tot~l
& Net Worth
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 of financial and debt ratios
and other factors measuring levels of debt. Percent equity is calculated by
dividing net worth by assets. Equity increases on the value of assets
increase more than liabilities. 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.
BALANCE SHEET ANALYSIS 53 Northern Hudson Dairy Farms, 1986 Average
Item
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. 1iab. as a % of total debt
Per Cow
Farm Debt Levels:
Total farm debt
$ 1,985
1,003
Long-term debt
982
Intermediate & current debt
My Farm
66%
0.34
0.36
0.32
$ 12,030
$ 33,263
Per Tillable
Acre Owned
$ 1,238
625
612
$
$
3%
51%
49%
%
Per Tillable
Acre Owned
Per Cow
$_­
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.
FARM INVENTORY BALANCE 53 Northern Hudson 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
Mach. LEg,
$100,765
$257,011
9,652*
$ 15,002
$
5,285
+
+
1,573
1,517
1:354
7,991
- 14,244
$+
-759
$+ 4,019
+ 18,576**
+ 1,519
$279,605
$101,524
My Farm
R.E.
Mach. LEg.
$
$
+
°
$+
+
$
$+
+
$
* $ 2,521 land and $ 7,131 buildings and/or depreciable improvements.
**Excludes $522 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
determine how well the cash generated by the business, plus that brought in
from outside, met the annual cash needs of the business and the farm family.
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. When all
the cash inflows and outflows are correct, the statement will balance. If
the imbalance (error) amount is positive, recorded cash inflows exceed
outflows by this amount. If it is negative, cash outflows are too high in
relation to inflows.
ANNUAL CASH FLOW STATEMENT
53 Northern Hudson Dairy Farms, 1986
Item
Cash Inflows
Average
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
My farm
$
3,286
232,051
1,517
1,556
117
23,090
2,155
2,927
5,693
5,426
181
$277,998
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)
$188,104
2,029
15,002
9,652
684
27,749
1,082
$_--­
o
259
26,285
5,398
$276,244
$ 1,755
$_--­
12 Repayment Analysis
The second step of cash flow planning is to compare and evaluate debt
payments planned and made last year, and estimate the payments required in
the current year. It is helpful to compare and evaluate by using debt
payments per unit of production and receipt/debt payment ratios.
FARM DEBT PAYMENTS PLANNED Same 44 Northern Hudson Dairy Farms, 1985 & 1986 Average
1986 Payments
Planned
Made
Debt Payments
Long-term
Interm ediate-te rm
Short- term
Operating (net
redu ction)
Accounts payable
(net reduction)
Total
$ 14,411
17 ,429
1,459
$ 18,157
20,095
1,303
2,038
Per cow
$
Per cwt. 1986 milk $
Percen t of tot al
1986 receipts
Percen t of 198 6
milk receipts
362
2.26
$ 13,020
17,483
1,573
$ 40,286
$
$
17%
17%
19%
$
Planned
1987
$
227
$ 33,336
412
2.57
15%
My Farm
1986 Payments
Made
Planned
1,032
°
731
85
$ 35,422
Planned
1987
$
$
$
$
$
The Cash Flow Coverage Ratio measures the ability of the farm business
to meet its planned debt payment schedule. The ratio shows the percentage of
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 1987.
CASH FLOW COVERAGE RATIO
Same 44 Northern Hudson Dairy Farms, 1985 & 1986
Item
Average
My Farm
Cash farm receipts $231,973
$_--­
- Cash farm expenses 188,435
+ Interest paid 16,127
- Net personal withdrawals from farm* 21. 066
(A)
Amount Available for Debt Service
$ 38,599
$_--­
(B)
Debt Payments Planned for 1986
$ 35,422
$_--­
(A + B) - Cash Flow Coverage Ratio for 1986
1.09
*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
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 complet,e 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
53 Northern Hudson Dairy Farms, 1986
Average
Item
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
Owned
162
48
111
322
Rented
124
14
24
162
Farms
52
50
Acres
153
80
2
53
28
6
4
4
12
11
52
11
226
71
20
31
20
25
56
287
My Farm
Total
287
62
135
484
ProdLAcre
2.71 tn
14.31 tn
4.80 tn
0.18 tn
3,40 tn
107.63 bu
44.67 bu
47.85 bu
Owned
Acres
DM
DM
DM
DM
Rented
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
53 Northern Hudson Dairy Farms, 1986
Item
Total tillable acres per cow
Total forage acres per cow
Harvested forage dry matter, tons per cow
Average
2,92
2.30
7,84
My Farm
14 Cropping 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
Northern Hudson Dairy Farms, 1986
Item
Number of farms
reporting
Average number
of acres
Fertilizer & lime $
Seeds & plants
Spray & other crop
expense
Total
$
Total
Per
Till.
Acre
Corn
Hay Crop
Per
Per
Acre
Ton OM
23
52
Per Ton
Silage
Eguiv.*
Per
Acre
Other
Crops
Per Acre
25
287
31. 63 $
12.70
168
17.54 $
7.21
6.23
2.56
12.48
56.81 $
5,90
30.65 $
2.09
10.88
$
6
108
56.07 $
19.71
3.43
1. 21
1. 61
6.24
$ 102.05 $
$
$
25
15.71
6.22
2.73
24.67
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
53 Northern Hudson 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
5,622
9,736
2,209
440
5,057
14,244
$ 37,308
$
19.61
33.96
7.70
1.53
17.64
49.68
$ 130.12
$
My Farm
Total
Per 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 53 Northern Hudson Dairy Farms, 1986 Dairy Cows
Number
Value
Item
Beginning of year (owned)
+ Change without appreciation
+ Appreciation
End of year (owned)
End including leased
Average number
96
101
101
98
Number
$ 76,552
4,774
384
$ 81,710
Heifers
Value
79
$ 32,519
74
-927
-681
$ 30,911
77
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
53 Northern Hudson Dairy Farms, 1986
Item
Total milk sold, 1bs.
Milk sold per cow, 1bs.
Average milk plant test, percent butterfat
Average
1,574,560
16,045
3.75
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 nonrni1k 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
53 Northern Hudson Dairy Farms, 1986
Item
Average
Per Cow
Total
Accrual Recei];!ts
Milk
$211,900
Dairy cattle
14,962
Dairy calves
2,194
Total
$229,056
Accrual Costs of
Producing Milk
Operating costs $162,986
Total costs w/o
opers' labor,
mgmt. & capital $188,450
Total Costs
$230,461
$
$
2,159
152
22
2,334
$
13.46
0.95
0.14
14.55
$
1,661
$
10.35
$
$
1,920
2,348
$
$
11.97
14.64
$
Total
Per Cwt.
My Farm Per Cow
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 53 Northern Hudson Dairy Farms, 1986 Average
Item
Purchased dairy grain
& concentrates
Purchased dairy roughage
Total Purchased
Dairy Feed
Purchased grain & con~.
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
510
$
$
3.18
0.26
$
3.44
$
4.48
$
0.19
0.24
1.29
0.00
0.44
~
$
552
$
718
$
31
39
207
0
71
My Farm
Per Cwt.
Per Cow
Per Cwt.
$
24%
$
%
33%
$
$
%
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
53 Northern Hudson Dairy Farms, 1986
Per Tillable
Per
Per
Per Tillable
ILem ________________________ Worker ____ Cow ________ Acre ______ Acre Owned
~~~~
Farm capital
Real estate
Machinery & equipment
Capital turnover, years
My Farm:
Farm capital
Real estate
Machinery & equipment
Capital turnover, years
$190,023
~~
~~~
5,809
2,754
1,037
$
33,921
$
~~~~~~
1,988
$
3,519
1,668
355
2.21
$
LABOR FORCE INVENTORY AND ANALYSIS
53 Northern Hudson Dairy Farms, 1986
Labor Force
Operator number 1
Operator number 2
Operator number 3
Family paid
Family unpaid
Hired
Total Months
Age
12
4
1
5
2
12
36
47
37
33
+ 12
My Farm: Total
Operator's
Value of
Labor & Mgmt.
Years of
of Educ.
$ 16,913
4,939
1,660
13
14
13
3.00 Wvrker Equivalent
1.42 Operator/Manager Equiv.
______ Worker Equivalent
+ 12
+ 12 - ______ Operator/Manager Equiv.
-----.----------------------------------------------------------------------­
Labor
Average
My Farm
Efficiency
Cows, average number
Milk sold, pounds
Tillable acres
Work units
Labor Costs
Value of operator(s)
labor ($850/mo.)
$
Family unpd.($600/mo.)
Hired
Total Labor
$
Machinery Cost
$
Total Labor & Mach.
$
Total
Per Worker
98
1,574,560
287
1,023
Total
14,450
1,200
21,096
36,747
37,308
74,055
147
12
-.1.li
$
$
$
374
380
755
Per Worker
33
524,853
96
341
Average
Per
Per
Cow
Til. Acre
$
Total
$ 50.40
4.19
73.58
$128.16
$130.12
$258.29
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. 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 expo
Land, bldg. ,fence repair
Taxes
Insurance
Real est. rent/lease
Utilities
Miscellaneous
Total Less Int. Paid
Regional
Average
(per cow)
98
$
My Farm
Total
Per Cow
2,159
152
22
Expected
1987
Change Projection
$_­
$_--­
$_-­
$_--­
o
12
$
2,424
$
215
510
42
1
23
104
$_--­
57
9
31
39
207
o
71
92
37
36
30
52
40
46
61
38
$
Net Accrual Operating Income
(without interest paid)
Change in lvstk./crop inv.
- Change in accts. rec.
+ Change in feed/supply inv.
+ Change in accts. payable*
NET CASH FLOW
- Net personal withdrawals & family expenditures­
Available for Debt Payments,
Investments & Savings
- Farm Debt Payments
Available for Investment
& Savings
- Capital Purchases: cattle,
machinery & improvements
Additional Capital Needed
1,742
(total)
$ 66,898
3,020
1,866
-1,163
766 $ 61,617 $_ __ 20,411
$ 41,206
45,723
$_ __
$ -4,517
$_ __
$ 27,367
$
*Less change in account payable for interest.
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 44 Northern Hudson Dairy Farms, 1985 & 1986
Average
1985
1986
Selected Factors
My Farm
1986
1985
Goal
Size of Business
Average number of cows
98
92
78
Average number of heifers
75
Milk sold, lbs.
1,417,574 1,565,428
Worker equivalent
2.95
2.92
Total tillable acres
274
270
Rates of Production
Milk sold per cow, lbs.
Hay DM per acre, tons
Corn silage per acre, tons
Labor Efficiency
Cows per worker
Milk sold/worker, lbs.
Cost Control
Grain & conc. purchased
as % of milk sales
Dairy feed & crop expo
per cwt. milk
Labor & mach. costs/cow
CaQital Efficiency*
Farm capital per cow Real estate per cow Mach. & equip. per cow Capital turnover, years 15,466
2.57
14
16,000
2.65
14
31
480,102
34
536,718
24%
25%
$
$
4.83
786
$
$
4.60
733
$
$
$
5,917
2,804
1,029
2.39
$
$
$
5,756
2,778
983
2.17
%
%
$
$
$
$
$
$
$- - - ­
$
$
$
Profitability Net farm inc. w/o apprec. $ 20,933 $ 23,192
Net farm inc. w/apprec. $ 15,969 $ 47,106
Labor & mgmt. income $ 2,354 $ 3,540
Rate of return on eq. capital w/apprec.
-2.20%
5.92%
Financial Summary
Farm net worth, end year
Debt to asset ratio
Farm debt per cow
*Average for the year.
$354,078
0.35
$ 2,007
$385,655
0.33
$ 1,938
$
$
$
%
$_-­
$_---
---_$_--­
%
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
alent
Cows
Sold
6.8
4.4
3.5
3.1
2.8
Rates of Production
Pounds
Tons
Tons Corn
Milk Sold Hay Crop Silage
Per Cow
DM/Acre Per Acre
18,980
4.6
4,319.504
2,108,684
17,551
3.6
1,596,188
16,655
3.1
16,116
2.9
1,304,015
15,543
1,128,297
2.6
73
--_ ... _ .... ---_ ... --­ ...... ------_ .. _­ -----------­
14,953
2.5
65
972,841
2.4
2.3
58
824,836
14,399
2.2
13,682
2.0
50
725,500
2.0
1.8
44
628,376
12,849
1.7
34
1.3
1.4
466,272
11 ,055
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
435
471
516
572
759
48
37
33
31
29
21
18
16
15
15
747,314
575,840
516,053
472,387
432,993
------------­--------­---­
14
13
12
10
8
Cost Control
Labor &
Machinery
Costs
Machinery
Per Cow
Costs Per Cow
$212
282
326
370
404
Labor Efficiency
Cows
Pounds
Per
Milk Sold
Worker
Per Worker
26
24
23
20
16
...
_---_ ..
400,211
367,373
330,625
290,454
215,433
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
tinal 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
Oper. Cost
Milk
Per Cow
$
Oper. Cost
Milk
Per Cwt.
Total Cost
Production
Per Cow
Total Cost
Production
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
Appreciation
Appreciation
Return to Operator's Labor,
Management, & Equity Capital
With
Without
Appreciation
Appreciation
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 Liguidity {reQayment}
Cash Flow
Debt Payments
Coverage
as Percent
Ratio
of Milk ReceiQts
Debt Payments
Made Per Cow
(DFBS pg. 7)
(7)
1%
9
14
18
20
24
27
31
37
63
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
Solvency
DebtLAsset Ratio
Current &
Intermediate
Total
(5)
0.01
0.10
0.18
0.25
0.32
0.39
0.47
0.56
0.64
0.84
(5)
0.00
0.04
0.11
0.16
0.23
0.29
0.36
0.44
0.55
0.81
(7)
Available for
Debt Service
Per Cow
(11)
7.03
2.15
1. 58
1. 30
1.10
0.96
0.80
0.65
0.43
-0.04
$1,012
780
674
606
527
460
387
313
244
42
Long
Term
(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
Farm Cap.
Turnover
Return on
Per Cow
{years}
Eguity CaQ.
(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
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
FARM BUSINESS SUMMARY BY HERD SIZE
404 New York Dairy Farms, 1985
Item
Farm Size:
Number of farms
EXPEHSES
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/building/fence repair
Taxes & insurance
Telephone & electricity
Interest paid
Misc. (including rent)
Total Operating Expenses
Expansion livestock
Machinery depreciation
Building depreciation
Total Accrual Expenses
40 to
54 Cows
55 to
69 Cows
70 to
84 Cows
33
93
82
55
38
$ 4,093
$ 5,937
$
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
22,245
816
250
1,018
4,470
488
3,192
926
1,300
1,672
6,395
39
3,684
4,002
1,311
1,033
1,340
4,505
3,054
8,829
2,764
$79,270
346
7,704
3,217
$90,537
9,,313
27,169
933
555
1,305
5,735
450
4,276
1,800
1,949
2,601
8,313
33
5,053
5,849
2,131
2,077
1,518
6,227
4,025
12,031
3,348
$106,691
874
10,941
5,039
$123,545
$ 13 ,051
33,379
1,158
705
1,644
7,900
645
5,625
1,350
2,565
2,933
10,033
80
5,607
7,976
2,954
2,626
1,989
6,668
4,926
13,163
4,895
$131,872
774
15,593
8.144
$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
5,516
$161,355
844
17,741
8,004
$187,944
$59,218
4,811
933
97
1,030
1,975
$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
l.08
$-3,689
$9,759
$8,700
$-592
l.17
$-508
$12,931
$9,716
$-718
l.33
$-539
$16,637
$19,487
$-453
l.42
$-320
$23,932
$19,249
$4,124
l.42
$2,911
Less than
40 Cows
85 to
99 Cows
ACCRUA~
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.)
-6.6%
-6.4%
-4.0%
-2.3%
-0.6%
-7.1%
-7.0%
-5.3%
-l.4%
-1.8%
24
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/building/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.)
100 to
149 Cows
150 to
199 Cows
200 to
249 Cows
250 or
More Cows
54
20
14
15
$ 26,831
52,504
979
1,253
1,828
12,204
$ 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
372
377
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
12,763
2,816
4,415
6,398
19,197
188
13 ,049
19,173
6,000
7,053
4,147
12,467
7,470
34,925
$294,250
7,108
26,978
17,907
23,424
7,942
10,397
4,852
16,682
11,821
45,152
17,838
$450,102
1,680
32,499
$345,450
$500,902
$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
$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
o
$796,157
81,554
8,731
775
16,228
-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
6,052
Accounts receivable
Feed &. supplies
11,016
27,508
Dairy cows*
11,583
Heifers
560
Bulls &. other 1vstk.
Machinery &. equipment* 41,341
2,024
Coop stocks &. cert.
110,929
Land &. bui1dings*
Total Farm Assets
$213,221
Pers. cash/chkg./sav.$ 7,817
Cash value of life ins. 3,230
2,342
Nonfarm real estate
2,118
Auto (personal share)
5,868
Stocks &. bonds
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
32,026
Long term*
Total Farm Liab,
$ 52,777
438
Total Nonfarm Liab.**
Total Farm &. Nonfarm
Liabilities
$ 53,215
Farm Net Worth
(Equity Capital)
$160,444
Farm &. Nonfarm
Net Worth
$189,872
40 to 54 Cows
Jan. 1
Dec. 31
$
2,280
10,835
25,038
55,435
22,773
599
80,279
4,237
194,568
$396,044
$
2,551
3,561
4,221
2,522
2,005
8,391
2,119
$
$
$
2,456
3,465
4,371
2,246
1,643
8,216
3,098
$
$
8,760
3,214
2,115
2,224
5,976
7,365
1,121
$
$
1,427
7,173
17,l68
38,285
13,815
812
54,064
2,487
144,528
$279,759
1,264
7,548
17,075
40,790
15,737
878
53,683
2,615
140,467
$280,057
1,936
5,791
11,551
25,568
9,208
479
40,782
2,145
115,967
$213,427
$
55 to 69 Cows
Jan. 1
Dec. 31
3,725
3,239
8,953
2,190
16,266
6,930
268
2,584
10,530
25,601
52,811
19,303
474
78,950
4,524
196,143
$390,921
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
$ 55,118
579
$
4,525
323
1,169
36,012
70,323
$112,353
752
$
4,396
592
1,399
36,825
73,521
$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
0,21
Debt/asset ratio-inter. &. current
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
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 *Inc1udes discounted lease payments. **Average of farms reporting nonfarm assets and liabilities for 1985. 26
FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 404 New York Dairy Farms, 1985 Farms with:
70 to 84 Cows
Dec. 31
Jan. 1
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
$
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
$ 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
$514,432
85 to 99 Cows
Jan. 1
Dec. 31
$
2,617
16,078
44,666
82,318
35,773
1,382
115,793
8,095
260,816
$567,538
3,422
15,871
46,961
78,084
32,808
1,372
116,850
8,876
257,440
$561,684
$
4,787
3,600
4,813
2,265
1,940
3,604
4,084
$ 25,092
$
$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-1ong,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
$
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 FI~ANCIAL 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
150 to 199 Cows
Dec. 31
Jan. 1
100 to 149 Cows
Dec, 31
Jan. 1
$
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
129,70Z
$240,075
1,064
$
6,855
2,809
5,789
94,518
131,237
$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
6,336
32,064
73,963
136,797
53,197
868
159,826
28,919
407.082
$899,052
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 of 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
Dec. 31
Jan. 1
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
Liabili ties
Farm Net Worth
(Equity Capital)
Farm & Nonfarm
Net Worth
6,837
46,843
100,424
188,896
84,355
2,011
183,392
27,566
499,166
$1,139,490
$
$
$
16,800
8,038
12,750
4,813
6,875
11,585
5.483
66,343
11,847
43,442
108,417
191,052
73,254
2,250
181,153
27,920
501,587
$1,140,922
$
$
$
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
More than 250 Cows
Jan. 1
Dec. 31
8,039
68,068
172,391
282,847
128,368
1,938
252,055
43,310
781.420
$1,738,436 $
$
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
$
1,700
1,000
5,400
3,150
17,544
1,428
6,400
o
$
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
$
$
$
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
o
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
o
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
*Inc1udes 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
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./ti1. acre
Total machinery costs
Machinery cost/tillable acre
Less than
40 Cows
40 to
54 Cows
55 to
69 Cows
70 to
84 Cows
85 to
99 Cows
33
93
82
55
38
107
25
74
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
76
62
92
48
62
77
924,535 1,162,676 1,430,313
14,897
15,346
15,485
$9.52
$9.71
$9.31
$15.00
$15.37
$14.26
$12.93
$13.06
$12.85
$453
$456
$415
$3.04
$2.97
$2.68
17
2.1
13.1
61.4
6.9
3.3
$21. 06
$14,171
$132
Dairy Analysis
Number of cows
33
Number of heifers
25
Milk sold, 1bs.
465,289
Milk sold/cow, 1bs.
14,113
Operating cost of prod. mi1k/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 & cone. as %
of milk receipts
27%
Purchased feed & crop
expense/cwt. milk
$4.32
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
25%
23%
22%
20%
$4.25
$4.13
$4.14
$3.90
$116,359
6,470
2,602
3,441
1,245
3.13
$134,356
5,960
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
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
3.25
1.42
440,096
28
324
$360
$101
2,477
*Average of all farms, not only those reporting data.
1.42
410,356
27
289
$374
$110
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 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
Dairy Analysis
Number of cows
Number of heifers
Milk sold, lbs.
Milk sold/cow, lbs.
Operating cost of prod. milk/cwt.
Total cost of prod. milk/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 equiv~lent
Milk sold/worker, lbs.
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
160 223 182 107 129 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 $12.94 $12.83 $13.07 $451 $450 $542 $2.91 $2.94 $3.34 342 286 6,189,863 18,099 $9.17 $12.22 $12.86 $550 $3.04 119 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
$199,373
5,600
2,678
2,556
991 2.37
4.50
1.58 544,501 36 379 $338 $102 *Average of all farms, not only those reporting data.
25%
$4.49
$187,431
23%
$4.07
3,185
2,245
818 2.06
$215,826
5,154
3,307
2,325
740 1.92
6.08
1.67 594,859 37 382 $387 $145 8.17
1.58 757,942 42 439 $393 $166 5,115
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.
'"~"J .... 0."' ... '"
l'1.UVJ.U~S i:i process Lor wrltlng 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.
L ...
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
I When
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