EXTENSION RISK MANAGEMENT
CONFERENCE
• The Cornell Dairy Farm Business Summary and Analysis
Program
• Mariane Kiraly
• Cornell Cooperative Extension
• Delaware County, New York
CORNELL’S DAIRY FARM SUMMARY
PROGRAM
• A flagship program for more than 50 years
• Is supported and promoted by Cornell’s Applied Economics
and Management Department-The Dyson School, and County
Cooperative Extension Associations in New York State
• Is administered by Dr. Wayne Knoblauch, Professor of Farm
Business Management, Cornell University
• Is a free program to NY State dairy farms and can also be
accessed by farms across the country free of charge
• A comprehensive review of a non-NY farm summary by
Cornell is $100
HOW THE DAIRY SUMMARY REDUCES
RISK
• Producers work with Extension Educators from January
to April to complete the year-end analysis. The report
can be required by USDA FSA, Farm Credit and other
lenders.
• It provides up-to-date data on:
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Profitability
Cash flow
Balance Sheet
Trend analysis
Repayment ability
Capital and labor efficiency
Crop and dairy cow aspects
DATA COLLECTION: ANOTHER
OPPORTUNITY TO INTERFACE
• This year-end look at a farm business invariably brings
up other opportunities to assist the farmer
• Extension Educators generally complete the summary
data input sheets with the farmer one-on-one
• Experienced farmers can fill out the information sheets
themselves or on-line as they become more familiar with
the data
• Most look forward to the final report as it is the “report
card” that gives them a comprehensive look at their dairy
business
THE VISIT, INTERACTION & RESULTS
• In general, farm summary participants are asked to have
their year-end books available, milk testing data, milk
check summary report, machinery and land inventories,
crop information.
• Educators ask questions to get at other data such as
worker equivalents, supply inventories for accrual basis
reporting, unusual circumstances and off-farm income in
order to get a full and accurate picture of the farm
business.
• Follow-up with other resources is a regular outcome.
ANALYSIS OF SUMMARY DATA
• The 18 page report shows an analysis that encompasses
these important measures:
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Milk sold, pounds; Milk sold/cow
Worker equivalent; Milk sold/worker
Hay DM per acre; Corn silage per acre
Cows per worker; Milk sold per worker, pounds
Grain and concentrate purchased as a % of milk sales
Dairy feed and crop expense per cwt. milk
Labor and machinery costs/cow
Total cost of producing milk per cwt.
Operating cost of producing milk per cwt.
Net milk price
EXAMPLE SUMMARY DATA
OTHER IMPORTANT MEASURES
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Net farm income with and without appreciation
Net farm income per cow with and without appreciation
Labor and management income per operator
Rate of return on equity capital with and without apprec.
Farm net worth, end of year
Debt to asset ratio
Farm debt/cow
Debt coverage ratio
ANALYSIS OF DATA
• These measures can be overwhelming to a first-time
participant, so the Educator generally goes over the
report with the farmer to explain the measures and what
they mean.
• Strengths and weaknesses are pointed out and goals
are developed for the next year. However, it is important
to note that goals should be SMART goals (specific,
measurable, attainable, realistic and timed).
• The Educator will be sure that the goals do not make the
farmer feel that he/she isn’t doing a good job and that it’s
more of a “let’s see if we can improve this…” kind of
approach.
TYPICAL GOALS FOR FIRST-TIME
FARMERS
Improving the grain purchased as a % of milk sales
• Easy to calculate on a monthly basis
• Can make a big impact on a farm’s bottom line
• Is usually associated with a common benchmark like 25%
Operating Cost of Producing Milk/Cwt
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Is a number that everyone really wants to know
Is commonly referred to in dairy publications
Gives producers a good idea of the margin on their farm
These measures get farmers to buy-in to complete a farm summary
annually
CARBONLESS 2-COPY GOAL SHEET
WRITTEN GOALS
• Goals that are written down are much more likely to be
attained
• The farmer and educator both keep a copy of the goal
sheet to review together the next year.
• The farmer posts the goal sheet in the farm office in a
prominent location
• It is reviewed the next year and a new sheet is
completed
• Goals generally become more detailed and complex the
longer the farm is in the program
ADDITIONAL FOLLOW-UP
• The farmer has the Summary report within a week or so
and has reviewed it and taken note of the comments.
• Any errors are corrected at that time and the data sheet
is sent in to Cornell
• The farm’s summary is evaluated and becomes part of
the NYS Summary data
• Regional Summaries are printed, along with size-specific
summary reports that are sent out to Educators
• Regional Summary data can then be compared to
individual results for evaluation purposes
RISK REDUCTION WITH THE FARM
SUMMARY PROGRAM
• Regular Summary participants will see trends based on
the summary report and can react to them in a positive
manner
• Records become a priority along with analysis so that
the farmer sees an accurate picture of the farm business
• Benchmarks can be compared on a regular basis
• Daily decision-making is based on timely information,
analysis and goal setting
• Interaction with Extension opens the door to other
educational opportunities for the farmer
RISK REDUCTION RESULTS
• Farmers learn that they “can’t manage what they can’t
measure”
• Dairy farmers get into better record-keeping habits in
order to measure accurately
• Decision-making is based on analysis, not just a “gut
feeling”
• Banks are more confident in lending to farmers that have
a good handle on their farm business
• Farmers are more successful when they make SMART
goals and follow-up annually
THE REALITY
• Dairy farmers may not take the initiative to get involved
in the Dairy Farm Summary Program unless they are
required to do so by a bank.
• Many times, the farm business is in serious trouble by
the time an Educator is asked to complete a summary.
• A new business is usually more receptive to participation
and that is always the best time to start the program.
• It’s much easier to start off with a complete summary
program in order to make the best use of farm records
and catch weaknesses before they threaten to derail the
farm business.
THE THIRD YEAR AND BEYOND
• By the 3rd year, farmers have a true commitment to the
program as they can see the benefits of summary and
analysis
• Farmers have learned to look for and use the Summary
tools to reduce financial risks by:
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Knowing their cost of production
Understanding their debt exposure measures
Using accurate and timely information to make decisions
Sharing the report with lenders to increase credibility and
communication
• Becoming better managers of their farm businesses
HOW CAN EDUCATORS TAKE
ADVANTAGE OF THIS PROGRAM?
• Pick up a brochure and get familiar with the program
• Choose a dairy farmer who could use some assistancesomeone who may be new to dairy or who might be
having cash-flow issues
• Spend time helping to complete and input the data into
the Top Dairies Program on-line
• Generate a report and analyze it with the farmer
• Develop goals for the next year
• Note progress of the farm business and interact often
ON-LINE SUMMARY RESOURCES
• www.dfbs.cornell.edu will link you to the sign-in page to
create a password
• U.S. Top Dairies screen appears
• There are instructions and worksheet downloads so
anyone can put in their own data
• Educators that have a group of farms can see them all in
a database
• Data is submitted on-line and can be reviewed
• Reports can be developed for comparison to other
similar farms
SAMPLE SUMMARY
• A sample summary has been provided as additional
information for attendees of this conference and will be
made available to you
• I have a few copies of that summary along with
brochures about the Cornell Dairy Farm Summary
Program
• I also have a sample of the annual summary reports that
are distributed to educators, farmers, and financial
institutions
THANK YOU!
Questions?