A.E. Ext. 84~17
May 1984
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EASTERN NEW YORK RENTER SUMMARY
.
--
.
1983
Stuart F. Smith
Linda D. Putnam
Deportment of Agricultural Economics
New York Stole College of Agricul ture and life Sciences
A. Statutory Coliege 01 the Stol. Univ .. "ity
Cornell University. Ithaca, New York 148SJ
1983 EASTERN NEW YOB DUllY FABK RENTEIl BUSINBSS 8UMMAJlY
INTllODUCTION
Dairyfarmers throughout lew York State subait business records for
summarization and analysis through Cooperative Bxtension's Fara Business
Management Program. Averages from a compilation of the individual farm
reports are published in ten regional summaries and in one statewide
summary.
This special Bastern New York Dairy Su...ry is an average of 30 busi­
nesses that are renting substantially all of the fara real estate. The farm
income, financial summary, and business analysis sections of this report
include comparisons with average data on 204 owned dairy farms in the
region. This report is prepared in workbook form for farm renters to use in
the systematic study of their fara business operations.
LIST OF TABLES
Table
Management Systems, Production Technology, and
Farm Size
Page
2
Capital Investment - Farm Inventory
Inventory Accounting, Selected Changes
Farm Receipts
Farm Bxpenses
Farm Income Summary
Farm Family Financial Situation
2
Financial Measures and Debt Commitment
Measures of Size of Business
Crop Yields and Milk Sold Per Cow
7
Measures of Labor Bfficiency
Measures of Capital Bfficiency
Feed Costs and Related Measures
Machinery and Labor Costs
3
3
4
5
6
8
8
9
9
9
10
Other Cost and Receipt Measures
Yearly Cash Flow Planning and Analysis
10
Progress of the Farm Business
12
11
Business records for 30 farms in Columbia, Delaware, Dutchess,
Otsego, Rensselaer, Saratoga, Sullivan, and Washington Counties are
summarized in this publication.
2
SUMMARY OF THE FARK BUSINESS
Business Characteristics
The CODlbination of resources and management techniques used to put
resources to work is an important part of planning. The tables below show
important farm business characteristics, the number of fa!.1ll8 reporting
these characteristics, and the average level of resources used in produc­
tion.
MAN.ltGEMBNT SYSTEMS, PRODUCTION TECHNOLOGY, AND PARK SIZE
30 Eastern New York Dairy Parm Renters, 1983
!IE!
of Business- Number Busiuess Records
Account Book
Proprietorship
16
Partnership
12
Agrifax
2
Corporation
Other
Number
10
19
1
Dai!,l Record., Number
D.H.I.C.
21
Owner Sampler
1
None
8
Barn !IE!
Stanchion
Freestall
Other
Nwaber
1
3
20
Number
6
0
Labor Porce
Operator 1.
2.
3.
PalRily paid
Pamily unpaid
Hired
Total
Number
25
5
0
!!l
Parm
110.
110.
1110.
110.
11.0.
110.
Hilki!!S Slstem
Bucket & Carry
DUmping Station
Pipeline
Averase
12
5
1
1
3
9
31
110.
Herringbone
Other Parlor
Land Use
!!l
Parm Averae
321
196
!!l
Parm Averase
Total acres rented
Tillable acre. rented
Number of Cows
Beginning of year
End of year
Average for year
65
86
68
Ca ital Invest_nt-Parm Invento
represents the 1I8rket value of
resources co_itte
am usiness at the beginning and end of the
year. Increases in inventory occurs with herd expansion, new 1I8chinery,
and building additions and appreciation of land, buildings, and 11vestock.
CAPITAL INVESTMBlCT - PARM INVENTORY 30 Eastern New York Dairy Parm Renters, 1983 My Parm
1/1/8~
1/1/84
Itea
Livestock
reed and supplies
Machinery and equiPMllt
Land and building.
TOTAL
----
$
$
$_-­
Average
1/1/83
1/1184
$ 89,593
20,946
$ 81,434
24,582
69,112
11,077
$186.,205
67,5~1
$
10,815
$188,945
3
INVENTORY ACCOUNTING, SELECTED CIWIGES
30 Eaatern New York Dairy Para Rentera, 1983
It ell
Para
Average
$_-­
$-8,159
My
Livestock Inventory:
Total Change
Appredation.!1
Net Change in
-8,886
Inventor~
727
Machinery and Equipment:
9,134
2,291
Depreciation
Appreciation.!/31
Real Estate:
681
749
330
Value addecJ!!!
Depredation
Appredat ion.!1
l/Change in inventory caused by inflation or deflation of prices.
l/Change in inventory caused by change in herd size and/or quality.
3/positive value indicates machinery depreciation charge exceeda actual
- decline in market value.
4/Cost of new real estate that can be added to value of new fara. Lost
- capital has been deducted.
FARKRECEIPTS
30 Eastern New York Dairy Farm Renters, 1983
It ell
CASH RECEIPTS
Milk sales
Crop sales
Dairy cattle sold
Calves and other livestock aales
Gas tax refund
Government payments
Custom machine work
Other
Total Cash Receipts
Farm
Per Farm
Per Cow
$_-­
$141,223
1,080
8,832
1,928
60
191
1,411
1 1 058
$2,077
16
130
28
1
3
21
15
$_ _ __ $155,783
$2,291
727
3,636
11
53
My
NONCASH RECEIPTS
Increase in livestock inventory
Increase in feed and supplies
TOTAL FARK RECEIPTS EXCLUDING
APPRECIATION
Livestock appreciation Machinery appreciation Real estate appreciation TOTAL PARK RECEIPTS
----
$
$
$160,146
- 8,886
2,291
330
$153,881 $2,355
131
34
5
$2,263 4
FARM EXPENSES
30 Eastern New York Dairy Farm Renters, 1983
Item
Hired Labor
Feed
Dairy concentrate
Hay and other
Machinery
Farm
Per Farm
Per Cow
$_-­
$ 10,012
$
My
Hachine hire Machinery repairs Auto expense (farm share) Gas and oil Livestock
Replacement livestock Breeding fees Veterinary and medicine Milk marketing Cattle lease Other livestock expense Crops
Fertilizer and lime Seeds and plants Spray, other crop expense Real Estate
Land, building, fence repair
Taxes
Insurance
Rent
Other
Telephone (farm share) Electricity (farm share) Interest paid Miscellaneous Total Cash Expenses
Decrease in livestock and/or feed
ExpanSion livestock
Machinery depreciation
Building depreciation
Unpaid familY labor @ $500/month
TOTAL FARM EXPENSES EXCLUDING
INTBRBST OM EQUITY CAPITAL
551
1,391
5,397
244
5,122
21
79
2,228
2,205
33
32
35
178
2~402
$_-­
Interest on equity capital @ 51
TOTAL FARM EXPENSES
37,444
2,960
12,109
92
5,883
$_-­
$
147
44
4
75
1
87
7,544
2,662
1,687
111
39
25
1,389
2,216
2,003
13,138
20
33
29
193
502
3,238
7,317
2,190
$131,375
7
48
108
32
$1,932
o
559
9,134
749
1.700
0
8
135
11
25
$143,517
$2,111
6,462
95
$149,979
$2,206
Farm Business Profitability
Four common ways to measure the return. fro. a fara bu.ine.s are
reported bere.
Net casb fara income reflect. tbe casb available fro. the year'.
operation of the business. Labor and management income is the return to
tbe operator for his or her labor and management input into tbe business.
Labor mana ement, and ownersbi income per operator reflects the combined
return to tbe farmer for his her triple role of worker-aanager, financier,
and owner. Return on equity capital is computed witb appreciation. To
compute tbe rate of return, divide return on equity capital by farm net
wortb or equity capital.
FARM INCOME SUHtWlY Eastern New York Dairy Fara Renters and OWners, 1983 Ite.
My Farm
30 Dairy
Farm Renter.
204 Dairy
Farm Owners
Casb farm receipts
Cash farm expenses
$._-­
$155,783
131,375
$185,647
152,233
NET CASH FARM INCOME
$_-­
$ 24,408
$ 33,414
Total farm receipts excluding
appreciation
Total farm expenses
LABOR AND MANAGEMENT INCOME
$_-­
$160,146
149,979
$ 10,167
$190,384
186,821
$ 3,563
1.53
1.29
$_-­
Full-time operator-manager equivalents _______
LABOR AND MANAGEMENT INCOME PER
OPERATOR-MANAGER
Total farm receipts
Total farm expenses excluding
interest on equity capital
LABOR, MANAGEMENT, AND OWNERSHIP
INCOME PER FARM
Full-time operator-manager equivalents
$_-­
$_-­
$
6,645
$
2,762 $153,881
$188,100 143,517
172,057 $ 10,364
$ 16,043 -----
1.53
1.29
LABOR, MANAGEMENT, AND OWNERSHIP
INCOME PER OPERATOR~GER
$_-­
$
6,774
$ 12,436
Labor, management and ownership
income per farm
$_-­
$ 10,364
$ 16,043
23,007
20,026
$-12,643
-9.8%
$- 3,983 -1.3% Less value of operator's labor
and management*
Return on Equity Capital Including
Appreciation
RATE OF RETURN ON $
EQUITY
-----
$
*Value of operator's labor and management estimated by operators.
6
Parm Pamily Pinancial Situation
The financial situation is an important part of the farm business
summary. It has a direct affect on current cash outflow and future capital
investment decisions. A farmer may have a good labor and management
income, but high debt payments may restrict management flexibility. Parm
net worth is total farm assets less total farm liabilities. Pamily net
worth is total assets less all liabilities reported.
PARK PAMILY PINANCIAL SITUATION Eastern New York Dairy Parm Renters and Owners, January 1, 1984 My Parm
Item
30 Dairy
Parm Renters
204 Dairy
Parm Owners
Assets
Livestock
$
$ 81,434
$100,965
(includes discounted lease pymts) - - - ­
(0)
(73)
Peed and supplies
24,582
34,822
Machinery and equipment
69,844
85,326
(857)
(732)
(includes discounted lease pymts)
12,467
231,411
Land and buildings
(includes discounted lease pymts)
(1,390)
(2,300)
Co-op investments
7,409
10,258
Accounts receivable
12,915
13,753
Cash and checking accounts
4,170
2,286
$212,821
$478,821
Total Parm Assets
$_-­
Savings accounts
Cash value life insurance
Stocks and bonds
Nonfarm real estate
Auto (personal share)
All other
Total Nonfarm Assets
2,686
631
2,305
3,933
1,062
2 2445
$ 13,062
$225,883
3,689
2,246
3,629
4,749
1,243
5,827
$ 21,383
$500,204
$_-­
$ 9,312
57,791
2,122
4,210
10,146
$ 83,581
1,546
$ 85,127
$107,352
61,332
3,230
4,287
7,350
$183,551
831
$184,382 FAIM NET WORTH (EQUITY CAPITAL)
$_-­
$129,240
$295,270 FAMILY NET WORTH
$
$140,756
$315,822 TOTAL ASSETS
$_-­
$_-­
Liabilities
Long term Intermediate Financial lease Short term Other farm accounts Total Parm Liabilities
$_-­
$_-­
Nonfarm Liabilities
TOTAL LIABILITIBS
7
Payment ability is the most important consideration in deteraining if
and how proposed investments should be financed. The fara business must
produce sufficient cash income to meet operating expenaes, to cover family
or personal living expenses, to make payments on debts, and to cover cash
purchases of capital iteas that occur during the year.
Payment ability is estimated in the following table. Interest paid
and income from off-fara work are added to net cash fara income because
planned or budgeted debt payments will include interest as well as princi­
pal. Estimate family living expenses for your fara to calculate cash
available for debt payment and capital purchases made in cash.
Debt payments planned are the scheduled debt payments as of January.
Some farms in the group had scheduled debt payments exceeding 50 percent of
the milk receipts. C01lllllitting this much cash inflow to debt payments can
put a "big squeeze" on cash available for operating the business and f amily
living.
FINANCIAL MEASURES & DEBT OOMMITKENT
Eastern New York Dairy Farm Renters and Owners, January 1, 1984
Item
30 Dairy
Fara Renters
204 Dairy
Fara OWners
$24,408
7,317
$33,414
17 ,171
1,298
1,681
----
$33,023
22,296
$52,266
20,970
$
---­
----
$10,727
$31,296
$
$1,418
18,339
$13,737
18,929
3,058
3,370
1,653
$24,468
2 2556
$38,592
$_-­
$285
$476
$_-­
17%
$972
62%
23%
$2,266
My
Fara
Payment Ability
Net cash farm income
Plus interest paid
Plus off-farm income
CASH AVAILABLE FOR DEBT SERVICE
AND LIVING
Less family living expenses*
CASH AVAILABLE FOR DEBT PAYMENTS
AND CAPITAL PURCHASES
Scheduled Annual Debt Payments
Long term Intermediate $_-­
$
Financial lease Short tera Other farm accounts
TOTAL PAYMENTS PLANNED FOR 1983
Measures of Debt Commitment &
Equity Position
Debt payments planned per cow
Debt payments planned as
percent of milk sales
Farm debt per cow
Percent equity (total)
----
$
%
*Estimated as $10,500 per family plus four percent of cash receipts.
63%
8
ANALYSIS OF THE FARM BUSINESS
In analyzing a farm business, a manager must consider measures or
factors that reflect the performance of specified parts of the farm busi­
ness. One method of doing this is to look at factors of size, production,
labor efficiency, capital efficiency and cost control. These factors are
considered on the following pages.
MEASURES OF SIZE OF BUSINESS
Eastern New York Dairy Farm Renters and Owners, 1983
Item
My
30 Dairy
Farm Renters
Farm
Number of cows
Number of heifers
Pounds of milk sold
204 Dairy
Farm Owners
68
49
79
64
985,600
2.58
732
203
Worker equivalent
Total work units
Total tillable acres
1,182,600
2.83
878
248
CROP YIELDS & MILK SOLD PER COW 30 Eastern New York Dairy Farm Renters, 1983 Cr02
Baled hay
!!l
Acres
Farm
Yield
Averase of Farms Re2orti]f
Farms
Acres
Yield~cre
25
(combined
Bay crop silage
Total Hay Crops
16
28
Corn silage
Other forage
27
2
below)
118
2.5 tons DK
65
11.6 tons
11
2.5 tons DK
28
8
4
182
37
33
Total Forage
Crops
Grain corn
Oats
Other crops
Tillable pasture
2
75
6
27
Idle tillable land
6
44
2.9 tons DK
82.1 bu.
52.0 bu.
--------------------------------------------------------------------------
Milk sold per cow
14,494 lbs.
1983 average yields for 204 dairy farm owners in Eastern New York included:
Milk sold per cow, 14,970 pounds
All bay crops, 2.4 tons dry matter per acre
Corn silage, 11.8 tons per acre
9
MEASURES OP LABOR DPICIENCY Bastern New York Dairy Parm Renters and Owners, 1983 Ite.
Hy
Parm
30 Dairy
'arm bnters
Cows per worker
Pounds of milk sold per worker
Work units per worker
204 Dairy
'ara Owners
26
28
382,016
284
417 ,880
310
MEASURES OP CAPITAL EFPICIENCY
Bastern Hew York Dairy Parm Renters and Owners, 1983
I
30 Dairy
Para Renters
204 Dairy
Para Owners
$
$72,172
$158,761
$
$2,165
$5,547
$
$
$804
$340
1.2 years
$1,043
$341
2.4 years
Hz
Ite.
Para capital per worker
Parm capital per cow
Machinery investment per cow
Machinery per tillable acre
Capital turnover
Para
years
PBBD COSTS AND BELATED MEASURES Eastern New York Dairy Parm Renters and Owners, 1983 Ite.
30 Dairy
My Parm Para Renters
204 Dairy
Parm Owners
Dairy concentrate purchased per cow
Dairy concentrate purchased per cwt.
of milk sold
Percent dairy concentrate is of milk
receipts
Crop expense per cow
$_-­
$551
$535
$_-­
$3.80
$3.58
Peed and crop expense per cwt. milk
$_-­
27%
$175
$5.31
25%
$162
$4.76
Porage dry matter harv. per cow (tons)
Acres of forage per cow
7.8
2.7
7.4
2.4
Total tillable acres per cow
Pertilizer and lime per tillable acre
3.0
$37
3.1
$34
Heifers as percent of cow numbers
--_%
$_ _ __
----%
$
72%
81%
10
MACHINERY & LABOR COSTS
Eastern New York Dairy Farm Renters and Owners, 1983
Item
Machinery:
My
Depreciation
1
Farm
$
2
Interest
Operating expense 3
Total machinery
Per cow
Per cwt. of milk
Labor:
Value of operators
Unpaid family5
4
Hired
Total labor
Per cow
Per cwt. milk
Labor & machinery costs/cwt. milk
$
$
$
204 Dairy
Farm Owners
30 Dairy
Farm Renters
$ 9,134
$12,129 3,418
12 2 154
4,158
16 2 124
$24,706
$363
$2.51
$32,411
$410
$2.74
$13,675
$11,482
1,'00
1,341
1°1°12
$25,387
$373
$2.58
$5.09
14,592
$27,415
$347
$2.32
$5.60
lRegular depreciation from last year's tax plus 10 percent of new
purchases.
2Five percent of average machinery investment.
3Machine hire, repairs, farm share auto expense, and gas and oil.
4$750 per month.
5$500 per month.
OTHER COST AND RECEIPT MEASURES
Eastern New York Dairy Farm Renters and OWners, 1983
Item
!!l
Total livestock expense (exlcuding
replacements & overhead) per cow
$
Total real estate expenses per cow
Farm
30 Dairy
Farm Renters
204 Dairy
Farm Owners
$
$334
$276
$331
$163
Milk and cattle sales per cow
Average price per cwt. milk sold
$
$
$2,235
$14.33
$2,271
$14.18
Total cash receipt. per worker
$
$60,381
$65,600
11
Y&AB.LY CASB PLOW PLANNING , ANALYSIS
The worksheet below is a valuable tool in planuiOl expansiona and for
setting goals for improving the fara business. The average is from 30
Eastern New York dairy fara renters.
My Farm,
Average
Item
Per Cow
CASH RECEIPTS
Milk sales
$2.077
16
Crop sales
130
Dairy cattle
28
Calves & other livestock
40
Other
$2,291
Total Cash Receipts
CASB EXPENSES
$ 147
Hired labor
551
Dairy concentrate
44
Hay and other
20
Machine hire
83
Machine repair & auto expense
75
Gas & 011
33
Replacement livestock
32
Breeding fees
35
Vet & medicine
178
Milk marketing (ADA, Dues)
Other livestock exp. (incl. $1 lease) 88
111
Fertilizer & lime
39
Seeds & plants
Spray & other
25
20
Land, bldg. fence repair
Taxes
33
Insurance
30
Rent
193
Telephone (farm share)
7
48
Electricity (fara share)
Miscellaneous
32
1
Total Cash Expenses
$1,824
Total Cash Receipts
$2,291
1
Total Cash Expenses
-1,824
Net Cash Flow
$ 467
2
Cash Family Living Expense
- 328
Amount Left for Debt Service,
Capital Investment &
Retained Earnings
$ 139
Scheduled Debt Service
- 285
Available for Capital Investment
$ (146)
Planned Expansion Livestock Purch.
Planned Equipment Purchase
Borrowed or Equity Funds Needed
Cows
Goal
Per Cow Total
$_-- $_-- $_-­
$_-- $_-- $_-­
$_-- $_-- $_-­
$_-- $_-- $_-­
$_-- $_-- $_-­
$_-- $_-- $_-­
$
$
$_-­
$
$
$
1Interest paid excluded for it is contained in Scheduled Debt Service.
2Estimated: $10,500 per family and four percent of cash farm receipts.
12
PROGRESS OF THE FARM BUSINESS
Comparing your business with that of other farmers is one part of a
business checkup. It is equally important to compare your current year's
business with that of earlier years to show the progress you are making,
and to plan ahead, by setting business targets or goals.
1981
Item
1982
1983
1984 Goal
Size of Business
Number of cows
Number of heifers
Pounds of milk sold
Worker equivalent
Total tillable acres
Rates of Production
Lbs. milk sold per cow
Tons hay D.M. per acre
Tons corn silage per acre
Labor Efficiency
Cows per worker
Lbs. milk sold per worker
Cost Control
Purch. feed as % milk sold
Feed & crop exp./cwt. milk
Labor & mach. cost per cow
Capital Efficiency
Farm capital per cow
Capital turnover
Price
Price per cwt. milk
$_-­ $_-­ $_-­ $_-­
$_-­ $_-­ $_-­ $_-­
$_-­ $_-­ $_-­ $_-­
$_-­ $_-­ $_-­ $_-­
$_-­ $_-­ $_-­ $_-­
$_-­ $_-­ $_-­ $_-­
Financial Summary
Net cash farm income
$
$_-­
$
$_-­
Labor & agBt. inc./oper.
Parm net worth
Rate of return on equity
Percent equity
Farm debt per cow
$
$_-­
$
$_-­
$
$_-­ $
$_-­
____X
% ____X
%
--....;%
$
%
$_-­
____X
$
%
$_-­