July 1986 AE Ext 86~21

CENT AL PLAI REGIO 1985

JIOUY JO 1916

IfY

PARJoo WO lOOl 195 DAlr~ y FARM lRJar-uS ~y

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hel Jta~ tanclblcS91 rellCe ref Taxbullbull Infirane8 RUlt r 1

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18557 1)1502

2174 -6 5

-Robert A Milliga n

linda D Putn am

Department of Agricultu ral Econo mics New York State College of Agriculture and life Sciences

A SIQI~Qry Colle 0 1 Ihe Sial Unie i Iy

Cornell University Ithaca New York 14853

1985 DAIRY FARM BUSINESS SUMMARY Central Plain Region

Introduction

Dairy farmers throughout the State have been participating in New York Cooperative Extensions farm business summary and analysis program since the early 1950s Each participating farmer receives a complete summary and analysis of his or her farm business in addition to this publication The information in this report is compiled by averaging data submitted from the region described at the bottom of this page

Program Objective

The primary objective of the dairy farm business summary DFBS is to provide farm managers information concerning profitability financial condishytion productivity and efficiency to be used to assist them in delineating the strengthsweaknesses of the farm business and to improve decision-making In short DFBS identifies the records farmers need and provides information to be used in making business and financial management decisions

Program Improvements

The 1985 DFBS report features improved accrual accounting procedures a new measure of farm profitability a more indepth balance sheet an annual cash flow statement and several major improvements in the business analysis format and the analysis measures used These and other changes are identified in the body of this report

The revised format provides one full page for the analysis of the farm cropping program and another for complete analysis of the dairy program Corn and hay crop related expenses are evaluated separately for cooperating farmers The cost of producing milk per cow and per hundredweight of milk sold has been compiled An annual cash flow worksheet has been added to the farmers individual report The popular Progress of The Farm Business report has been moved to page one of the farmers report and added to this pubHcation

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 50 percent of our dairy farm management field staff This innovative program provides faster 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 Specialist Larry N Davis The Central Plain Region is comprised of Ontario Seneca Wayne and Yates 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 23 Central Plain Region Dairy Farms 1985

Type of Farm Number Type of Business Number Dairy 14 Single proprietorship 14 Part-time dairy 2 Partnership 9 Dairy cash-crop 5 Corporation o Part-time cash-crop dairy 2 Other o

Type of Ownership Number Type of Barn Number Owner 22 Stanchion 7 Renter 1 Freestall 13

Other 3

Milking System Number Business Record System Number Bucket amp carry o CAMIS 5 Dumping station 2 Account Book 8 Pipeline 8 Agrifax (mail-in only) 7 Herringbone parlor 12 On-Farm Computer I Other parlor 1 Other 2

Dairy Records Service Number Number DHIC 21 Other 1 OS 1 None o

Milk Diyersion Prosram Participants Number 4

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 part-time farm has less than 12 months of labor from all operators

A dairy cash-crop 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

Milk Diversion Proampram Participants are the farmers that were in the 1984-85 federal milk diversion program These farms have also been included in the regional summary averages

3

Income Statement

The revised accrual income statement begins with an accounting of all farm business expenses

CASH AND ACCRUAL FARM EXPENSES 23 Central Plain Region Dairy Farms 1985

Cash Change in Change in Accrual EXBense Item faid + Inventoo + Acconta fapoundable Ji2Wenses

Hired Labor $ 26966 $ 29 $ 26995 Feed Dairy grain amp conc 29394 $-167 -142 29085 Dairy roughage 2583 0 -65 2518 Other livestock 2561 -27 6 2540 Machinerpound Mach hire rentlease 2958 -44 2914 Machinery repairsparts 11632 -83 522 12071 Auto expense (fs) 272 0 272 Fuel oil amp grease 9677 -80 10 9607 Livestock Replacement livestock 579 44 623 Breeding 2822 32 54 2908 Vet amp medicine 3778 -32 99 3845 Milk marketing 9582 0 9582 Cattle leaserent 187 0 187 Other livestock expense 7625 -85 117 7657 CroBs Fertilizer amp lime 12273 48 -620 11701 Seeds amp plants 5131 21 -58 5094 Spray other crop expo 5092 6 0 5098 Real Estate Landb1dgfence repair 2184 -208 1976 Taxes 5189 181 5370 Insurance 3543 29 3572 Rent amp lease 4292 373 4665 Other Telephone (fs) 945 0 945 Electricity (fs) 4735 20 4755 Interest paid 25805 363 26168 Miscellaneous 2438 -ill 2556 Total Operating $182243 $-370 $ 831 $182704 Expansion livestock $ 918 $ 0 $ 918 Machinery depreciation 20041 Building depreciation 7882

TOTAL ACCRUAL EXPENSES $211545

Cash Baid 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 eXBenses are the costs of inputs actually used in this years 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 income and compare it with the averages on the opposite page

CASH AND ACCRUAL FARM EXPENSES WORKSHEET

Cash Change in Change in Accrual Expense Item Paid + Inventory + Accounts Payable Expenses

Hired Labor Feed Dairy grain amp cone Dairy roughage Other livestock Machinery Mach hire rentlease Machinery repairsparts Auto expense (fs) Fuel oil amp grease Livestock Replacement livestock Breeding Vet amp medicine Milk marketing Cattle leaserent Other livestock expense Crops Fertilizer amp lime Seeds amp plants Spray other crop expo Real Estate Landjbldgfence repair Taxes Insurance Rent amp lease Other Telephone (fs) Electricity (fs) Interest paid Miscellaneous Total Operating Expansion livestock Machinery depreciation Building depreciation

TOTAL ACCRUAL EXPENSES

$_-- $_-- $_-- $_--shy

$___ $_-- $_-- $_--shy

$ $ $ $

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

Accrual expenses are the costs of inputs actually used in this years production Purchased feed and supplies used out of inventory must be included Beginning of year less end of year purchased feed and supply inventory equals the change in inventory to include in accrual expenses Feed supplies and services used but not paid for must be included by adding the net increase in operating accounts payable Increases in operating accounts payable are determined by subtracting the balance at the beginning of the year from the end of year balance

5

CASH AND ACCRUAL FARM RECEIPTS 23 Central Plain Region Dairy Farms 1985

Change in Cash Change in Accounts Accrual

Receipt Item Receipts + InventoIY + Receivable + Receipts

Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other

Total Accrual Receipts

$177 112 11623

2073 3898

12481 6576

148 303

5234

$219448

$1216

-741 100

$ 575

$-423 550

0 0

298 -969

0 0

---22

$-322

$176689 13388

2073 3157

12879 5607

148 303

5456

$219700

Cash receipts includes the gross value of milk checks received during the year plus all other payments received for 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 liveshystock inventory caused by herd growth andor quality are included as accrual receipts Decreases in inventory caused by herd reduction are deducted Changes in inventories of crops grown are accounted for in accrual receipts Changes in accounts receivable include the January milk check for this Decemshybers marketings compared with the previous Januarys check and other delayed payments

CASH AND ACCRUAL FARM RECEIPT WORKSHEET

Change in Cash Change in Accounts Accrual

Receipt Item Receipts + Inventory + Receivable + Receipts

Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other

Total Accrual Receipts

$_-- $_-shy

$_-- $_-shy

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 Th~ changes in inventories caused by declining 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

----_ _--shy

6

Profitability Analysis

Farm ownersoperators 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 operator(s) and other unpaid family members for their labor management and equity capital It is the farm familys net annual return from working managing financing and owning the farm business This is not a measure of cash available from the years business operation Cash flow is evaluated later in this report

Net farm income is computed with and without appreciation Appreciashytion represents the change in livestock machinery and real estate inventory values caused by changes in prices during the year Appreciation is a major factor contributing to changes in farm net worth and must be included in the profitability analysis

NET FARM INCOME 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Total accrual receipts Appreciation Livestock

Machinery Real Estate

Total Including Appreciation Total accrual expenses Net Farm Income (with appreciation) Net Farm Income (without appreciation)

$219700 -7658 5072

-114 $217000

211545 $ 5455 $ 8155

$_--shy

$_-shy

$_-shy$_-shy

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 Operator(s) labor is not included in unpaid family labor Return to operator(s) labor manageshyment 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 OPERATOR(S) LABOR MANAGEMENT AND EQUITY 23 Central Plain Region Dairy Farms 1985

Item

Av~uage Without With Wprec Wprec

My Farm Without With Wprec Apprec

Net farm income $8155 $5455 $_-shy $_-shyFamily labor unpaid

$550 per month 1100 1lQO Return to operator(s)

labor management amp equity $7055 $4355 $_-shy $_-shy

7

Labor and manaampement income is the share of net farm income without appreciashytion returned to the operator(s) 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 operator(s) labor manageshyment 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 manaampement income per operator measures the return to each operators labor and management

LABOR AND MANAGEMENT INCOME 23 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Return to operator(s) labor management amp equity without appreciation

Real interest 5 on $338140 equity capital

Labor amp Management Income (142 operators)

Labor amp Management Income per Operator

$ 7055 $_-shy

16907

$-9852

$-6954

$_-shy

$_--shy

Return on equity capital measures the net return remaining for the farmers equity or owned capital after a charge has been made for the owner-operators labor and management The earnings or amount of net farm income allocated to labor and management is the opportunity cost or value of operator(s) 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 end of year farm net worth or equity capital

RETURN ON EQUITY CAPITAL 23 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Return to operator(s) labor management amp equity capital with appreciation

Value of operator(s) labor amp 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

$ 4355

26118

$-21763

-64

$-19063

-56

$_--shy

$_-shy

$_-shy

8

Farm and Family Fipancial 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

1985 FARM BUSINESS amp NONFARM BALANCE SHEET 23 Central Plain Region Dairy Farms 1985

Farm Liabilities Farm Ass~tsect JSn 1 Dec 31 ~ Net W0Ith JSn 1 Dilc 31

Current Current Farm cash checking Accounts payable $ 10064 $ 9151 amp saving$ $ 2675 $ 1734 Operating debt 5982 6732

Accounts rec 16672 19609 Short-term 448 4314 Feed amp supplies 42430 42412

Total $ 68777 $ 70755 Total $ 18494 $ 20196 Intemilsliate Intermilsllate Dairy cows 97805 99503

owned 79625 78604 leased 0 0

Heifers 42800 37495 Bullsother lvstk 3886 3027 Macheq owned 130959 127430 Macheq leased Coop stock amp cert

1214 1JZ2~

1755 lJ2~2

Financial lease (cattlemach ) 1214 1Z55

Total $272207 $262276 Total $ 99019 $101258 l=ong-Term Long-Term Landjbulldings 181283 176493

owned 314960 303056 leased 1QQ2 1QJ Total $315969 $304090 Financial lease

(structures) 1009 103 Total $182291 $177528

Total Farm Assets $656953 $637122 Total Farm Liab $299804 $298981 FARM NET WORTH $357149 $338140

Nonfarm Liabilities NonfSI Assect~tsect Jm 1 D~pound n ~ N~t i2Ith Jm 1 Qec 31

Personal cash chkg amp savings $ 505

Cash value life ins 5331 $ 692

6058

Nonfarm Uab NOHfARM HiT iQRTH

IfARM amp6QHFARM

$ 0 ~17lJZ Jan 1

$ 0 ~18JIZ Qec ~l

Nonfarm real estate 1063 451 ITotal Assets $674090 $655439 Auto (personal sh) Stocks ampbonds

2861 1611

3087 2034

ITotal Liabilities I

2998Q4 98981

Household furn 5365 5674 I All other Ql 321 ITOTAL FARM amp NON-

Total Nonfarm $ 17137 $ 18317 I FARM NET WORTH $374286 $356457

Financial lease obligations are included in the balance sheet The present values of all future payments are listed as liabilities since the farmer (lessee) is committed to make the payments The present values are also listed as assets representing the future value the item has to the business

9

1985 FARM BUSINESS amp NONFARM BALANCE SHEET

Farm Assets Jan 1 Dec 31 Farm Liabilities amp Net Worth Jan 1 Dec 31

Current Farm cash checking amp savings

Accounts rec Feed amp supplies

Current Accounts payable Operating debt Short-term

Total Total

Intermediate Dairy cows

owned leased

Heifers Bullsother Ivstk Macheq owned Macheq leased Coop stock amp cert

Total

IntlUJlediate

Financial lease (cattlemach )

Total

Loni-Term LandbuUdings

owned leased

Loni-Term

Total

Total Farm Assets

Financial lease (structures) Total

Total Farm Liab FARM NET WORTH

Nonfarm Liabilities Nonfarm Assets Jan 1 Dec 31 ampNet Worth Jan 1 Dec 31

Nonfarm Liab Personal cash

amp savings chkg

Cash value life ins

Nonfarm real est Auto (pers share) Stocks ampbonds

Total Nonfarm Liabilities

Household furn All other Nonfarm

Total Nonfarm Net Worth

TOTAL FARM ~ NONFARM Jan 1 Dec 31

Total Farm amp Nonfarm Assets Less Total Farm amp Nonfarm Liabilities Farm amp Nonfarm Net Worth

10

Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed

BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309

Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047

long-term 058 intermediatecurrent 036

Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59

Intermediate amp current debt

Current amp inter 1iab as a of total debt 41

Farm Debt Levels Total farm debt Long-term debt

Per Cow $3082

1830

Per Tillable Acre Owned

$1220 725

Per Cow $_-shy

1252 496

$_-shy$_-shy

----_ ---_ ---_

Per Tillable Acre Owned $_--shy

Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these 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 23 Central Plain Region Dairy Farms 1985

Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg

Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy

$1330 land and $4097 buildings andor depreciable improvements

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 years cash flow is the first step toward planning and managing cash flow for the current and future years

The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end 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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm Cash Inflows

Beginning farm cash checking amp savings

Cash farm receipts

Sale of assets Machinery

Real estate

Money borrowed (intermediate amp long-term)

Money borrowed (short-term)

Increase in operating debt

Nonfarm income

Money borrowed - nonfarm

Total

Cash Outflows

Cash farm expenses

Capital purchases Expansion livestock

Machinery

Real estate

Principal payments (intermediate amp long-term)

Principal payments (short-term)

Decrease in operating debt

Nonfarm debt payments

Personal withdrawals amp family expo

Ending farm cash checking amp savings

Total

Imbalance (error)

$ 2675

219448

214

7363

24469

2485

750

1461

0

$258865

$182243

918

11654

5427

27561

620

0

0

10708

1734

$240860

$ 18005

$

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 receiptdebt payment ratios

FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986

Debt Payments

Avetaamp~ 1985 Payments

Planned Made Planned

1986

My Farm 1985 Payments

Planned Made Planned

1986

Long-term IntermShort-Operating (net

redu

(net reduction)

ediate-term term

ction Accounts payable

$20431 30095 9705

0

6294

$28583 29330 1004

0

3548

$17021 27543

3490

3769

2112

$_-- $_-- $_-shy

Total $66526 $62465 $53934 $ $_-- $_-shy

Per cow Per cwt Percen

1985 milk t of total

$723 $477

$679 $448

$ $_-shy$_-_$_-shy

1985 receipts Percent of 1985

29 27

milk receipts 38 35

The Cash Flow Covetaampe 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 years available cash flow report

Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments

CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Cash farm receipts $227219 $_--shy- Cash farm expenses 189555

+ Interest paid 25369

- Net personal withdrawals from farm 11980

(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077

Personal withdrawals and family expenditures less nonfarm income 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 indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency

to allow a m and the

more factors

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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Land Tillable Nonti1lable 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

~ Rented Total 245 163 407

20 7 26 90 -1Q 100

355 180 533

fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn

47 tn DM 2 14 12 tn DM

23 205 35 tn DM 22 124 806 bu 13 46 807 bu

9 36 626 bu 8 42 6 19

12 45 407

Rented

~ frodLAcre 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 23 Central Plain Region Dairy Farms 1985

Item My Farm

Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow

431 217 760

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 Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed

to equal one ton of

CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985

Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops

Expense Acre Acre Ton DM Acre Eguiv Per Acre

Fertilizer amp lime $2872 $ 975 $171 $4458 $181 $2950 Seeds amp plants 1250 726 127 1932 079 877 Spray amp other crop

expense 1251 408 -2ll 2480 JJll 799 Total $5374 $2110 $369 $8869 $361 $4627

My Farm

Fertilizer amp lime $__ $__ $__ $_- $_- $_shySeeds amp plants Spray amp other crop

expense Total $__ $== $==

Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres

Corn grain converted to silage equivalent using 588 bushels - one ton 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 23 Central Plain Region Dairy Farms 1985

My Farm Machinery Total Per Til Total Per Til

Expense Item Expenses Acre Expenses Acre

Fuel oil amp grease Machinery repairs amp parts

$ 9606 12071

$2358 2963

$_-shy $_-shy

Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919

Total $51364 $12607 $_-shy $_--shy

15

Dairy Program Analysis

Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business 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 23 Central Plain Region Dairy Farms 1985

pairy Cows Heifers Item Number Value Number Value

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

92

96 97 95

$79625 3763

-4784 $78604

89

87

88

$42800 -2548 -2757

$37495

My Farm

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

$_--shy

$_--shy

$_--shy

$_--shy

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

MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985

Item

Total milk sold lbs

Average

1399978

My Farm

Milk sold per cow lbs 14811

Average milk plant test percent butterfat 365

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 nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation

ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt

Accrual Receipts Milk Dairy cattle

$176689 13389

$1869 142

$1262 096

$_-shy $_-shy $_-shy

Dairy calves 2073 ----22 015 Total $192151 $2033 $1373 $_-shy $_-shy $_-shy

Accrual Costs of Producing Milk Operating costs Total costs withshy

$140178 $1483 $1001 $_-shy $_-shy $_-shy

out op(s) labor mgmt amp capital

Total Costs $169633 $212658

$1795 $2250

$1212 $1519

$_-shy$_-shy

$_-shy$_-shy

$_-shy$_-shy

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 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt

Purchased dairy grain amp concentrates

Purchased dairy roughage Total Purchased

Dairy Feed Purchased grain amp conc as of milk receipts

Purchased feed amp crop expo Purchased feed amp crop expo

as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense

$308 ---12

$208 JLU

$ $_-shy

$339 $229 $ $_--shy

$571 16

$386 $ -- $_-shy

$31 41

101 2

81

3U $021 027 068 001 055

$ $_-shy

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 managements success

CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985

Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned

Farm capital Real estate Machinery amp equipment Capital turnover years

$180569

36469

$6845 3280 1383

295

$1588

321

$2641 1265

My Farm Farm capital Real estate

$_-shy $_--shy $_-shy $_-shy

Machinery amp equipment Capital turnover years

LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985

Labor Force Months Age

Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired

Total

My Farm Total Operators

11 4 2 6 2

18 43

44 44 32

+ 12 shy

+ 12 shy+ 12 shy

Years of gf Educ

Value of Labor amp Mgmt

14 13 13

$17283 6574 2261

358 Yorker Equivalent 142 OperatorManager Equiv

___ Yorker Equivalent OperatorManager Equiv

Labor Efficiency

Average Total Per Yorker Total

My Farm Per Yorker

Cows average number Milk sold pounds Tillable acres

95 1399978

407

26 390692

114 York units 1105 308

Average My Eatm Per Per Per Per

Labor Costs Total Cow Iil Acre Iotal Cow Til Acre

Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $

Family unpd ($550mo) 1100 12 270 Hired 26995 286 6626 Total Labor $41695 $441 $10234 $ $ $ Machinery Cost $51364 $543 $12607 $ $ $ Total Labor amp Mach $93059 $985 $22840 $ $ $

18

ANNUAL CASH FLOW WORKSHEEET

Regional Hy Farm Expected 1986 Item Average Total Per Cow Change Projection

(per cow) Average number of cows 95 Accrual Oper Receipts Milk Dairy cattle

$186929 14165

$___ $_shy ---_$_--shyDairy calves 21 93 Other livestock 3340 Crops 13625 Misc receipts 121 80

Total $232432 $___ $_shy ---_$_--shyAccrual Oper Expensect~s Hired labor Dairy grain amp conc

$ 28560 30770

$ $_shy ---_$_--shyDairy roughage 31 79 Other lvstk feed 2674 Mach hirerentlease 3067 Mach Fuel

rpr parts amp auto oil amp grease

12993 10112

Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691

Total Less Int Paid $164775 $_--shy

Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy

- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp

family expenditures 10708 Available for Debt Payments

Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment

amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle

machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy

1985 DAIRY FARM BUSINESS SUMMARY Central Plain Region

Introduction

Dairy farmers throughout the State have been participating in New York Cooperative Extensions farm business summary and analysis program since the early 1950s Each participating farmer receives a complete summary and analysis of his or her farm business in addition to this publication The information in this report is compiled by averaging data submitted from the region described at the bottom of this page

Program Objective

The primary objective of the dairy farm business summary DFBS is to provide farm managers information concerning profitability financial condishytion productivity and efficiency to be used to assist them in delineating the strengthsweaknesses of the farm business and to improve decision-making In short DFBS identifies the records farmers need and provides information to be used in making business and financial management decisions

Program Improvements

The 1985 DFBS report features improved accrual accounting procedures a new measure of farm profitability a more indepth balance sheet an annual cash flow statement and several major improvements in the business analysis format and the analysis measures used These and other changes are identified in the body of this report

The revised format provides one full page for the analysis of the farm cropping program and another for complete analysis of the dairy program Corn and hay crop related expenses are evaluated separately for cooperating farmers The cost of producing milk per cow and per hundredweight of milk sold has been compiled An annual cash flow worksheet has been added to the farmers individual report The popular Progress of The Farm Business report has been moved to page one of the farmers report and added to this pubHcation

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 50 percent of our dairy farm management field staff This innovative program provides faster 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 Specialist Larry N Davis The Central Plain Region is comprised of Ontario Seneca Wayne and Yates 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 23 Central Plain Region Dairy Farms 1985

Type of Farm Number Type of Business Number Dairy 14 Single proprietorship 14 Part-time dairy 2 Partnership 9 Dairy cash-crop 5 Corporation o Part-time cash-crop dairy 2 Other o

Type of Ownership Number Type of Barn Number Owner 22 Stanchion 7 Renter 1 Freestall 13

Other 3

Milking System Number Business Record System Number Bucket amp carry o CAMIS 5 Dumping station 2 Account Book 8 Pipeline 8 Agrifax (mail-in only) 7 Herringbone parlor 12 On-Farm Computer I Other parlor 1 Other 2

Dairy Records Service Number Number DHIC 21 Other 1 OS 1 None o

Milk Diyersion Prosram Participants Number 4

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 part-time farm has less than 12 months of labor from all operators

A dairy cash-crop 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

Milk Diversion Proampram Participants are the farmers that were in the 1984-85 federal milk diversion program These farms have also been included in the regional summary averages

3

Income Statement

The revised accrual income statement begins with an accounting of all farm business expenses

CASH AND ACCRUAL FARM EXPENSES 23 Central Plain Region Dairy Farms 1985

Cash Change in Change in Accrual EXBense Item faid + Inventoo + Acconta fapoundable Ji2Wenses

Hired Labor $ 26966 $ 29 $ 26995 Feed Dairy grain amp conc 29394 $-167 -142 29085 Dairy roughage 2583 0 -65 2518 Other livestock 2561 -27 6 2540 Machinerpound Mach hire rentlease 2958 -44 2914 Machinery repairsparts 11632 -83 522 12071 Auto expense (fs) 272 0 272 Fuel oil amp grease 9677 -80 10 9607 Livestock Replacement livestock 579 44 623 Breeding 2822 32 54 2908 Vet amp medicine 3778 -32 99 3845 Milk marketing 9582 0 9582 Cattle leaserent 187 0 187 Other livestock expense 7625 -85 117 7657 CroBs Fertilizer amp lime 12273 48 -620 11701 Seeds amp plants 5131 21 -58 5094 Spray other crop expo 5092 6 0 5098 Real Estate Landb1dgfence repair 2184 -208 1976 Taxes 5189 181 5370 Insurance 3543 29 3572 Rent amp lease 4292 373 4665 Other Telephone (fs) 945 0 945 Electricity (fs) 4735 20 4755 Interest paid 25805 363 26168 Miscellaneous 2438 -ill 2556 Total Operating $182243 $-370 $ 831 $182704 Expansion livestock $ 918 $ 0 $ 918 Machinery depreciation 20041 Building depreciation 7882

TOTAL ACCRUAL EXPENSES $211545

Cash Baid 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 eXBenses are the costs of inputs actually used in this years 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 income and compare it with the averages on the opposite page

CASH AND ACCRUAL FARM EXPENSES WORKSHEET

Cash Change in Change in Accrual Expense Item Paid + Inventory + Accounts Payable Expenses

Hired Labor Feed Dairy grain amp cone Dairy roughage Other livestock Machinery Mach hire rentlease Machinery repairsparts Auto expense (fs) Fuel oil amp grease Livestock Replacement livestock Breeding Vet amp medicine Milk marketing Cattle leaserent Other livestock expense Crops Fertilizer amp lime Seeds amp plants Spray other crop expo Real Estate Landjbldgfence repair Taxes Insurance Rent amp lease Other Telephone (fs) Electricity (fs) Interest paid Miscellaneous Total Operating Expansion livestock Machinery depreciation Building depreciation

TOTAL ACCRUAL EXPENSES

$_-- $_-- $_-- $_--shy

$___ $_-- $_-- $_--shy

$ $ $ $

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

Accrual expenses are the costs of inputs actually used in this years production Purchased feed and supplies used out of inventory must be included Beginning of year less end of year purchased feed and supply inventory equals the change in inventory to include in accrual expenses Feed supplies and services used but not paid for must be included by adding the net increase in operating accounts payable Increases in operating accounts payable are determined by subtracting the balance at the beginning of the year from the end of year balance

5

CASH AND ACCRUAL FARM RECEIPTS 23 Central Plain Region Dairy Farms 1985

Change in Cash Change in Accounts Accrual

Receipt Item Receipts + InventoIY + Receivable + Receipts

Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other

Total Accrual Receipts

$177 112 11623

2073 3898

12481 6576

148 303

5234

$219448

$1216

-741 100

$ 575

$-423 550

0 0

298 -969

0 0

---22

$-322

$176689 13388

2073 3157

12879 5607

148 303

5456

$219700

Cash receipts includes the gross value of milk checks received during the year plus all other payments received for 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 liveshystock inventory caused by herd growth andor quality are included as accrual receipts Decreases in inventory caused by herd reduction are deducted Changes in inventories of crops grown are accounted for in accrual receipts Changes in accounts receivable include the January milk check for this Decemshybers marketings compared with the previous Januarys check and other delayed payments

CASH AND ACCRUAL FARM RECEIPT WORKSHEET

Change in Cash Change in Accounts Accrual

Receipt Item Receipts + Inventory + Receivable + Receipts

Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other

Total Accrual Receipts

$_-- $_-shy

$_-- $_-shy

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 Th~ changes in inventories caused by declining 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

----_ _--shy

6

Profitability Analysis

Farm ownersoperators 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 operator(s) and other unpaid family members for their labor management and equity capital It is the farm familys net annual return from working managing financing and owning the farm business This is not a measure of cash available from the years business operation Cash flow is evaluated later in this report

Net farm income is computed with and without appreciation Appreciashytion represents the change in livestock machinery and real estate inventory values caused by changes in prices during the year Appreciation is a major factor contributing to changes in farm net worth and must be included in the profitability analysis

NET FARM INCOME 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Total accrual receipts Appreciation Livestock

Machinery Real Estate

Total Including Appreciation Total accrual expenses Net Farm Income (with appreciation) Net Farm Income (without appreciation)

$219700 -7658 5072

-114 $217000

211545 $ 5455 $ 8155

$_--shy

$_-shy

$_-shy$_-shy

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 Operator(s) labor is not included in unpaid family labor Return to operator(s) labor manageshyment 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 OPERATOR(S) LABOR MANAGEMENT AND EQUITY 23 Central Plain Region Dairy Farms 1985

Item

Av~uage Without With Wprec Wprec

My Farm Without With Wprec Apprec

Net farm income $8155 $5455 $_-shy $_-shyFamily labor unpaid

$550 per month 1100 1lQO Return to operator(s)

labor management amp equity $7055 $4355 $_-shy $_-shy

7

Labor and manaampement income is the share of net farm income without appreciashytion returned to the operator(s) 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 operator(s) labor manageshyment 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 manaampement income per operator measures the return to each operators labor and management

LABOR AND MANAGEMENT INCOME 23 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Return to operator(s) labor management amp equity without appreciation

Real interest 5 on $338140 equity capital

Labor amp Management Income (142 operators)

Labor amp Management Income per Operator

$ 7055 $_-shy

16907

$-9852

$-6954

$_-shy

$_--shy

Return on equity capital measures the net return remaining for the farmers equity or owned capital after a charge has been made for the owner-operators labor and management The earnings or amount of net farm income allocated to labor and management is the opportunity cost or value of operator(s) 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 end of year farm net worth or equity capital

RETURN ON EQUITY CAPITAL 23 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Return to operator(s) labor management amp equity capital with appreciation

Value of operator(s) labor amp 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

$ 4355

26118

$-21763

-64

$-19063

-56

$_--shy

$_-shy

$_-shy

8

Farm and Family Fipancial 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

1985 FARM BUSINESS amp NONFARM BALANCE SHEET 23 Central Plain Region Dairy Farms 1985

Farm Liabilities Farm Ass~tsect JSn 1 Dec 31 ~ Net W0Ith JSn 1 Dilc 31

Current Current Farm cash checking Accounts payable $ 10064 $ 9151 amp saving$ $ 2675 $ 1734 Operating debt 5982 6732

Accounts rec 16672 19609 Short-term 448 4314 Feed amp supplies 42430 42412

Total $ 68777 $ 70755 Total $ 18494 $ 20196 Intemilsliate Intermilsllate Dairy cows 97805 99503

owned 79625 78604 leased 0 0

Heifers 42800 37495 Bullsother lvstk 3886 3027 Macheq owned 130959 127430 Macheq leased Coop stock amp cert

1214 1JZ2~

1755 lJ2~2

Financial lease (cattlemach ) 1214 1Z55

Total $272207 $262276 Total $ 99019 $101258 l=ong-Term Long-Term Landjbulldings 181283 176493

owned 314960 303056 leased 1QQ2 1QJ Total $315969 $304090 Financial lease

(structures) 1009 103 Total $182291 $177528

Total Farm Assets $656953 $637122 Total Farm Liab $299804 $298981 FARM NET WORTH $357149 $338140

Nonfarm Liabilities NonfSI Assect~tsect Jm 1 D~pound n ~ N~t i2Ith Jm 1 Qec 31

Personal cash chkg amp savings $ 505

Cash value life ins 5331 $ 692

6058

Nonfarm Uab NOHfARM HiT iQRTH

IfARM amp6QHFARM

$ 0 ~17lJZ Jan 1

$ 0 ~18JIZ Qec ~l

Nonfarm real estate 1063 451 ITotal Assets $674090 $655439 Auto (personal sh) Stocks ampbonds

2861 1611

3087 2034

ITotal Liabilities I

2998Q4 98981

Household furn 5365 5674 I All other Ql 321 ITOTAL FARM amp NON-

Total Nonfarm $ 17137 $ 18317 I FARM NET WORTH $374286 $356457

Financial lease obligations are included in the balance sheet The present values of all future payments are listed as liabilities since the farmer (lessee) is committed to make the payments The present values are also listed as assets representing the future value the item has to the business

9

1985 FARM BUSINESS amp NONFARM BALANCE SHEET

Farm Assets Jan 1 Dec 31 Farm Liabilities amp Net Worth Jan 1 Dec 31

Current Farm cash checking amp savings

Accounts rec Feed amp supplies

Current Accounts payable Operating debt Short-term

Total Total

Intermediate Dairy cows

owned leased

Heifers Bullsother Ivstk Macheq owned Macheq leased Coop stock amp cert

Total

IntlUJlediate

Financial lease (cattlemach )

Total

Loni-Term LandbuUdings

owned leased

Loni-Term

Total

Total Farm Assets

Financial lease (structures) Total

Total Farm Liab FARM NET WORTH

Nonfarm Liabilities Nonfarm Assets Jan 1 Dec 31 ampNet Worth Jan 1 Dec 31

Nonfarm Liab Personal cash

amp savings chkg

Cash value life ins

Nonfarm real est Auto (pers share) Stocks ampbonds

Total Nonfarm Liabilities

Household furn All other Nonfarm

Total Nonfarm Net Worth

TOTAL FARM ~ NONFARM Jan 1 Dec 31

Total Farm amp Nonfarm Assets Less Total Farm amp Nonfarm Liabilities Farm amp Nonfarm Net Worth

10

Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed

BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309

Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047

long-term 058 intermediatecurrent 036

Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59

Intermediate amp current debt

Current amp inter 1iab as a of total debt 41

Farm Debt Levels Total farm debt Long-term debt

Per Cow $3082

1830

Per Tillable Acre Owned

$1220 725

Per Cow $_-shy

1252 496

$_-shy$_-shy

----_ ---_ ---_

Per Tillable Acre Owned $_--shy

Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these 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 23 Central Plain Region Dairy Farms 1985

Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg

Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy

$1330 land and $4097 buildings andor depreciable improvements

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 years cash flow is the first step toward planning and managing cash flow for the current and future years

The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end 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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm Cash Inflows

Beginning farm cash checking amp savings

Cash farm receipts

Sale of assets Machinery

Real estate

Money borrowed (intermediate amp long-term)

Money borrowed (short-term)

Increase in operating debt

Nonfarm income

Money borrowed - nonfarm

Total

Cash Outflows

Cash farm expenses

Capital purchases Expansion livestock

Machinery

Real estate

Principal payments (intermediate amp long-term)

Principal payments (short-term)

Decrease in operating debt

Nonfarm debt payments

Personal withdrawals amp family expo

Ending farm cash checking amp savings

Total

Imbalance (error)

$ 2675

219448

214

7363

24469

2485

750

1461

0

$258865

$182243

918

11654

5427

27561

620

0

0

10708

1734

$240860

$ 18005

$

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 receiptdebt payment ratios

FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986

Debt Payments

Avetaamp~ 1985 Payments

Planned Made Planned

1986

My Farm 1985 Payments

Planned Made Planned

1986

Long-term IntermShort-Operating (net

redu

(net reduction)

ediate-term term

ction Accounts payable

$20431 30095 9705

0

6294

$28583 29330 1004

0

3548

$17021 27543

3490

3769

2112

$_-- $_-- $_-shy

Total $66526 $62465 $53934 $ $_-- $_-shy

Per cow Per cwt Percen

1985 milk t of total

$723 $477

$679 $448

$ $_-shy$_-_$_-shy

1985 receipts Percent of 1985

29 27

milk receipts 38 35

The Cash Flow Covetaampe 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 years available cash flow report

Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments

CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Cash farm receipts $227219 $_--shy- Cash farm expenses 189555

+ Interest paid 25369

- Net personal withdrawals from farm 11980

(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077

Personal withdrawals and family expenditures less nonfarm income 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 indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency

to allow a m and the

more factors

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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Land Tillable Nonti1lable 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

~ Rented Total 245 163 407

20 7 26 90 -1Q 100

355 180 533

fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn

47 tn DM 2 14 12 tn DM

23 205 35 tn DM 22 124 806 bu 13 46 807 bu

9 36 626 bu 8 42 6 19

12 45 407

Rented

~ frodLAcre 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 23 Central Plain Region Dairy Farms 1985

Item My Farm

Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow

431 217 760

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 Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed

to equal one ton of

CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985

Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops

Expense Acre Acre Ton DM Acre Eguiv Per Acre

Fertilizer amp lime $2872 $ 975 $171 $4458 $181 $2950 Seeds amp plants 1250 726 127 1932 079 877 Spray amp other crop

expense 1251 408 -2ll 2480 JJll 799 Total $5374 $2110 $369 $8869 $361 $4627

My Farm

Fertilizer amp lime $__ $__ $__ $_- $_- $_shySeeds amp plants Spray amp other crop

expense Total $__ $== $==

Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres

Corn grain converted to silage equivalent using 588 bushels - one ton 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 23 Central Plain Region Dairy Farms 1985

My Farm Machinery Total Per Til Total Per Til

Expense Item Expenses Acre Expenses Acre

Fuel oil amp grease Machinery repairs amp parts

$ 9606 12071

$2358 2963

$_-shy $_-shy

Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919

Total $51364 $12607 $_-shy $_--shy

15

Dairy Program Analysis

Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business 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 23 Central Plain Region Dairy Farms 1985

pairy Cows Heifers Item Number Value Number Value

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

92

96 97 95

$79625 3763

-4784 $78604

89

87

88

$42800 -2548 -2757

$37495

My Farm

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

$_--shy

$_--shy

$_--shy

$_--shy

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

MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985

Item

Total milk sold lbs

Average

1399978

My Farm

Milk sold per cow lbs 14811

Average milk plant test percent butterfat 365

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 nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation

ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt

Accrual Receipts Milk Dairy cattle

$176689 13389

$1869 142

$1262 096

$_-shy $_-shy $_-shy

Dairy calves 2073 ----22 015 Total $192151 $2033 $1373 $_-shy $_-shy $_-shy

Accrual Costs of Producing Milk Operating costs Total costs withshy

$140178 $1483 $1001 $_-shy $_-shy $_-shy

out op(s) labor mgmt amp capital

Total Costs $169633 $212658

$1795 $2250

$1212 $1519

$_-shy$_-shy

$_-shy$_-shy

$_-shy$_-shy

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 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt

Purchased dairy grain amp concentrates

Purchased dairy roughage Total Purchased

Dairy Feed Purchased grain amp conc as of milk receipts

Purchased feed amp crop expo Purchased feed amp crop expo

as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense

$308 ---12

$208 JLU

$ $_-shy

$339 $229 $ $_--shy

$571 16

$386 $ -- $_-shy

$31 41

101 2

81

3U $021 027 068 001 055

$ $_-shy

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 managements success

CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985

Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned

Farm capital Real estate Machinery amp equipment Capital turnover years

$180569

36469

$6845 3280 1383

295

$1588

321

$2641 1265

My Farm Farm capital Real estate

$_-shy $_--shy $_-shy $_-shy

Machinery amp equipment Capital turnover years

LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985

Labor Force Months Age

Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired

Total

My Farm Total Operators

11 4 2 6 2

18 43

44 44 32

+ 12 shy

+ 12 shy+ 12 shy

Years of gf Educ

Value of Labor amp Mgmt

14 13 13

$17283 6574 2261

358 Yorker Equivalent 142 OperatorManager Equiv

___ Yorker Equivalent OperatorManager Equiv

Labor Efficiency

Average Total Per Yorker Total

My Farm Per Yorker

Cows average number Milk sold pounds Tillable acres

95 1399978

407

26 390692

114 York units 1105 308

Average My Eatm Per Per Per Per

Labor Costs Total Cow Iil Acre Iotal Cow Til Acre

Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $

Family unpd ($550mo) 1100 12 270 Hired 26995 286 6626 Total Labor $41695 $441 $10234 $ $ $ Machinery Cost $51364 $543 $12607 $ $ $ Total Labor amp Mach $93059 $985 $22840 $ $ $

18

ANNUAL CASH FLOW WORKSHEEET

Regional Hy Farm Expected 1986 Item Average Total Per Cow Change Projection

(per cow) Average number of cows 95 Accrual Oper Receipts Milk Dairy cattle

$186929 14165

$___ $_shy ---_$_--shyDairy calves 21 93 Other livestock 3340 Crops 13625 Misc receipts 121 80

Total $232432 $___ $_shy ---_$_--shyAccrual Oper Expensect~s Hired labor Dairy grain amp conc

$ 28560 30770

$ $_shy ---_$_--shyDairy roughage 31 79 Other lvstk feed 2674 Mach hirerentlease 3067 Mach Fuel

rpr parts amp auto oil amp grease

12993 10112

Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691

Total Less Int Paid $164775 $_--shy

Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy

- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp

family expenditures 10708 Available for Debt Payments

Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment

amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle

machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy

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 23 Central Plain Region Dairy Farms 1985

Type of Farm Number Type of Business Number Dairy 14 Single proprietorship 14 Part-time dairy 2 Partnership 9 Dairy cash-crop 5 Corporation o Part-time cash-crop dairy 2 Other o

Type of Ownership Number Type of Barn Number Owner 22 Stanchion 7 Renter 1 Freestall 13

Other 3

Milking System Number Business Record System Number Bucket amp carry o CAMIS 5 Dumping station 2 Account Book 8 Pipeline 8 Agrifax (mail-in only) 7 Herringbone parlor 12 On-Farm Computer I Other parlor 1 Other 2

Dairy Records Service Number Number DHIC 21 Other 1 OS 1 None o

Milk Diyersion Prosram Participants Number 4

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 part-time farm has less than 12 months of labor from all operators

A dairy cash-crop 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

Milk Diversion Proampram Participants are the farmers that were in the 1984-85 federal milk diversion program These farms have also been included in the regional summary averages

3

Income Statement

The revised accrual income statement begins with an accounting of all farm business expenses

CASH AND ACCRUAL FARM EXPENSES 23 Central Plain Region Dairy Farms 1985

Cash Change in Change in Accrual EXBense Item faid + Inventoo + Acconta fapoundable Ji2Wenses

Hired Labor $ 26966 $ 29 $ 26995 Feed Dairy grain amp conc 29394 $-167 -142 29085 Dairy roughage 2583 0 -65 2518 Other livestock 2561 -27 6 2540 Machinerpound Mach hire rentlease 2958 -44 2914 Machinery repairsparts 11632 -83 522 12071 Auto expense (fs) 272 0 272 Fuel oil amp grease 9677 -80 10 9607 Livestock Replacement livestock 579 44 623 Breeding 2822 32 54 2908 Vet amp medicine 3778 -32 99 3845 Milk marketing 9582 0 9582 Cattle leaserent 187 0 187 Other livestock expense 7625 -85 117 7657 CroBs Fertilizer amp lime 12273 48 -620 11701 Seeds amp plants 5131 21 -58 5094 Spray other crop expo 5092 6 0 5098 Real Estate Landb1dgfence repair 2184 -208 1976 Taxes 5189 181 5370 Insurance 3543 29 3572 Rent amp lease 4292 373 4665 Other Telephone (fs) 945 0 945 Electricity (fs) 4735 20 4755 Interest paid 25805 363 26168 Miscellaneous 2438 -ill 2556 Total Operating $182243 $-370 $ 831 $182704 Expansion livestock $ 918 $ 0 $ 918 Machinery depreciation 20041 Building depreciation 7882

TOTAL ACCRUAL EXPENSES $211545

Cash Baid 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 eXBenses are the costs of inputs actually used in this years 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 income and compare it with the averages on the opposite page

CASH AND ACCRUAL FARM EXPENSES WORKSHEET

Cash Change in Change in Accrual Expense Item Paid + Inventory + Accounts Payable Expenses

Hired Labor Feed Dairy grain amp cone Dairy roughage Other livestock Machinery Mach hire rentlease Machinery repairsparts Auto expense (fs) Fuel oil amp grease Livestock Replacement livestock Breeding Vet amp medicine Milk marketing Cattle leaserent Other livestock expense Crops Fertilizer amp lime Seeds amp plants Spray other crop expo Real Estate Landjbldgfence repair Taxes Insurance Rent amp lease Other Telephone (fs) Electricity (fs) Interest paid Miscellaneous Total Operating Expansion livestock Machinery depreciation Building depreciation

TOTAL ACCRUAL EXPENSES

$_-- $_-- $_-- $_--shy

$___ $_-- $_-- $_--shy

$ $ $ $

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

Accrual expenses are the costs of inputs actually used in this years production Purchased feed and supplies used out of inventory must be included Beginning of year less end of year purchased feed and supply inventory equals the change in inventory to include in accrual expenses Feed supplies and services used but not paid for must be included by adding the net increase in operating accounts payable Increases in operating accounts payable are determined by subtracting the balance at the beginning of the year from the end of year balance

5

CASH AND ACCRUAL FARM RECEIPTS 23 Central Plain Region Dairy Farms 1985

Change in Cash Change in Accounts Accrual

Receipt Item Receipts + InventoIY + Receivable + Receipts

Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other

Total Accrual Receipts

$177 112 11623

2073 3898

12481 6576

148 303

5234

$219448

$1216

-741 100

$ 575

$-423 550

0 0

298 -969

0 0

---22

$-322

$176689 13388

2073 3157

12879 5607

148 303

5456

$219700

Cash receipts includes the gross value of milk checks received during the year plus all other payments received for 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 liveshystock inventory caused by herd growth andor quality are included as accrual receipts Decreases in inventory caused by herd reduction are deducted Changes in inventories of crops grown are accounted for in accrual receipts Changes in accounts receivable include the January milk check for this Decemshybers marketings compared with the previous Januarys check and other delayed payments

CASH AND ACCRUAL FARM RECEIPT WORKSHEET

Change in Cash Change in Accounts Accrual

Receipt Item Receipts + Inventory + Receivable + Receipts

Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other

Total Accrual Receipts

$_-- $_-shy

$_-- $_-shy

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 Th~ changes in inventories caused by declining 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

----_ _--shy

6

Profitability Analysis

Farm ownersoperators 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 operator(s) and other unpaid family members for their labor management and equity capital It is the farm familys net annual return from working managing financing and owning the farm business This is not a measure of cash available from the years business operation Cash flow is evaluated later in this report

Net farm income is computed with and without appreciation Appreciashytion represents the change in livestock machinery and real estate inventory values caused by changes in prices during the year Appreciation is a major factor contributing to changes in farm net worth and must be included in the profitability analysis

NET FARM INCOME 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Total accrual receipts Appreciation Livestock

Machinery Real Estate

Total Including Appreciation Total accrual expenses Net Farm Income (with appreciation) Net Farm Income (without appreciation)

$219700 -7658 5072

-114 $217000

211545 $ 5455 $ 8155

$_--shy

$_-shy

$_-shy$_-shy

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 Operator(s) labor is not included in unpaid family labor Return to operator(s) labor manageshyment 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 OPERATOR(S) LABOR MANAGEMENT AND EQUITY 23 Central Plain Region Dairy Farms 1985

Item

Av~uage Without With Wprec Wprec

My Farm Without With Wprec Apprec

Net farm income $8155 $5455 $_-shy $_-shyFamily labor unpaid

$550 per month 1100 1lQO Return to operator(s)

labor management amp equity $7055 $4355 $_-shy $_-shy

7

Labor and manaampement income is the share of net farm income without appreciashytion returned to the operator(s) 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 operator(s) labor manageshyment 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 manaampement income per operator measures the return to each operators labor and management

LABOR AND MANAGEMENT INCOME 23 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Return to operator(s) labor management amp equity without appreciation

Real interest 5 on $338140 equity capital

Labor amp Management Income (142 operators)

Labor amp Management Income per Operator

$ 7055 $_-shy

16907

$-9852

$-6954

$_-shy

$_--shy

Return on equity capital measures the net return remaining for the farmers equity or owned capital after a charge has been made for the owner-operators labor and management The earnings or amount of net farm income allocated to labor and management is the opportunity cost or value of operator(s) 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 end of year farm net worth or equity capital

RETURN ON EQUITY CAPITAL 23 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Return to operator(s) labor management amp equity capital with appreciation

Value of operator(s) labor amp 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

$ 4355

26118

$-21763

-64

$-19063

-56

$_--shy

$_-shy

$_-shy

8

Farm and Family Fipancial 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

1985 FARM BUSINESS amp NONFARM BALANCE SHEET 23 Central Plain Region Dairy Farms 1985

Farm Liabilities Farm Ass~tsect JSn 1 Dec 31 ~ Net W0Ith JSn 1 Dilc 31

Current Current Farm cash checking Accounts payable $ 10064 $ 9151 amp saving$ $ 2675 $ 1734 Operating debt 5982 6732

Accounts rec 16672 19609 Short-term 448 4314 Feed amp supplies 42430 42412

Total $ 68777 $ 70755 Total $ 18494 $ 20196 Intemilsliate Intermilsllate Dairy cows 97805 99503

owned 79625 78604 leased 0 0

Heifers 42800 37495 Bullsother lvstk 3886 3027 Macheq owned 130959 127430 Macheq leased Coop stock amp cert

1214 1JZ2~

1755 lJ2~2

Financial lease (cattlemach ) 1214 1Z55

Total $272207 $262276 Total $ 99019 $101258 l=ong-Term Long-Term Landjbulldings 181283 176493

owned 314960 303056 leased 1QQ2 1QJ Total $315969 $304090 Financial lease

(structures) 1009 103 Total $182291 $177528

Total Farm Assets $656953 $637122 Total Farm Liab $299804 $298981 FARM NET WORTH $357149 $338140

Nonfarm Liabilities NonfSI Assect~tsect Jm 1 D~pound n ~ N~t i2Ith Jm 1 Qec 31

Personal cash chkg amp savings $ 505

Cash value life ins 5331 $ 692

6058

Nonfarm Uab NOHfARM HiT iQRTH

IfARM amp6QHFARM

$ 0 ~17lJZ Jan 1

$ 0 ~18JIZ Qec ~l

Nonfarm real estate 1063 451 ITotal Assets $674090 $655439 Auto (personal sh) Stocks ampbonds

2861 1611

3087 2034

ITotal Liabilities I

2998Q4 98981

Household furn 5365 5674 I All other Ql 321 ITOTAL FARM amp NON-

Total Nonfarm $ 17137 $ 18317 I FARM NET WORTH $374286 $356457

Financial lease obligations are included in the balance sheet The present values of all future payments are listed as liabilities since the farmer (lessee) is committed to make the payments The present values are also listed as assets representing the future value the item has to the business

9

1985 FARM BUSINESS amp NONFARM BALANCE SHEET

Farm Assets Jan 1 Dec 31 Farm Liabilities amp Net Worth Jan 1 Dec 31

Current Farm cash checking amp savings

Accounts rec Feed amp supplies

Current Accounts payable Operating debt Short-term

Total Total

Intermediate Dairy cows

owned leased

Heifers Bullsother Ivstk Macheq owned Macheq leased Coop stock amp cert

Total

IntlUJlediate

Financial lease (cattlemach )

Total

Loni-Term LandbuUdings

owned leased

Loni-Term

Total

Total Farm Assets

Financial lease (structures) Total

Total Farm Liab FARM NET WORTH

Nonfarm Liabilities Nonfarm Assets Jan 1 Dec 31 ampNet Worth Jan 1 Dec 31

Nonfarm Liab Personal cash

amp savings chkg

Cash value life ins

Nonfarm real est Auto (pers share) Stocks ampbonds

Total Nonfarm Liabilities

Household furn All other Nonfarm

Total Nonfarm Net Worth

TOTAL FARM ~ NONFARM Jan 1 Dec 31

Total Farm amp Nonfarm Assets Less Total Farm amp Nonfarm Liabilities Farm amp Nonfarm Net Worth

10

Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed

BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309

Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047

long-term 058 intermediatecurrent 036

Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59

Intermediate amp current debt

Current amp inter 1iab as a of total debt 41

Farm Debt Levels Total farm debt Long-term debt

Per Cow $3082

1830

Per Tillable Acre Owned

$1220 725

Per Cow $_-shy

1252 496

$_-shy$_-shy

----_ ---_ ---_

Per Tillable Acre Owned $_--shy

Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these 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 23 Central Plain Region Dairy Farms 1985

Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg

Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy

$1330 land and $4097 buildings andor depreciable improvements

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 years cash flow is the first step toward planning and managing cash flow for the current and future years

The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end 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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm Cash Inflows

Beginning farm cash checking amp savings

Cash farm receipts

Sale of assets Machinery

Real estate

Money borrowed (intermediate amp long-term)

Money borrowed (short-term)

Increase in operating debt

Nonfarm income

Money borrowed - nonfarm

Total

Cash Outflows

Cash farm expenses

Capital purchases Expansion livestock

Machinery

Real estate

Principal payments (intermediate amp long-term)

Principal payments (short-term)

Decrease in operating debt

Nonfarm debt payments

Personal withdrawals amp family expo

Ending farm cash checking amp savings

Total

Imbalance (error)

$ 2675

219448

214

7363

24469

2485

750

1461

0

$258865

$182243

918

11654

5427

27561

620

0

0

10708

1734

$240860

$ 18005

$

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 receiptdebt payment ratios

FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986

Debt Payments

Avetaamp~ 1985 Payments

Planned Made Planned

1986

My Farm 1985 Payments

Planned Made Planned

1986

Long-term IntermShort-Operating (net

redu

(net reduction)

ediate-term term

ction Accounts payable

$20431 30095 9705

0

6294

$28583 29330 1004

0

3548

$17021 27543

3490

3769

2112

$_-- $_-- $_-shy

Total $66526 $62465 $53934 $ $_-- $_-shy

Per cow Per cwt Percen

1985 milk t of total

$723 $477

$679 $448

$ $_-shy$_-_$_-shy

1985 receipts Percent of 1985

29 27

milk receipts 38 35

The Cash Flow Covetaampe 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 years available cash flow report

Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments

CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Cash farm receipts $227219 $_--shy- Cash farm expenses 189555

+ Interest paid 25369

- Net personal withdrawals from farm 11980

(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077

Personal withdrawals and family expenditures less nonfarm income 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 indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency

to allow a m and the

more factors

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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Land Tillable Nonti1lable 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

~ Rented Total 245 163 407

20 7 26 90 -1Q 100

355 180 533

fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn

47 tn DM 2 14 12 tn DM

23 205 35 tn DM 22 124 806 bu 13 46 807 bu

9 36 626 bu 8 42 6 19

12 45 407

Rented

~ frodLAcre 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 23 Central Plain Region Dairy Farms 1985

Item My Farm

Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow

431 217 760

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 Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed

to equal one ton of

CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985

Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops

Expense Acre Acre Ton DM Acre Eguiv Per Acre

Fertilizer amp lime $2872 $ 975 $171 $4458 $181 $2950 Seeds amp plants 1250 726 127 1932 079 877 Spray amp other crop

expense 1251 408 -2ll 2480 JJll 799 Total $5374 $2110 $369 $8869 $361 $4627

My Farm

Fertilizer amp lime $__ $__ $__ $_- $_- $_shySeeds amp plants Spray amp other crop

expense Total $__ $== $==

Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres

Corn grain converted to silage equivalent using 588 bushels - one ton 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 23 Central Plain Region Dairy Farms 1985

My Farm Machinery Total Per Til Total Per Til

Expense Item Expenses Acre Expenses Acre

Fuel oil amp grease Machinery repairs amp parts

$ 9606 12071

$2358 2963

$_-shy $_-shy

Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919

Total $51364 $12607 $_-shy $_--shy

15

Dairy Program Analysis

Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business 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 23 Central Plain Region Dairy Farms 1985

pairy Cows Heifers Item Number Value Number Value

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

92

96 97 95

$79625 3763

-4784 $78604

89

87

88

$42800 -2548 -2757

$37495

My Farm

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

$_--shy

$_--shy

$_--shy

$_--shy

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

MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985

Item

Total milk sold lbs

Average

1399978

My Farm

Milk sold per cow lbs 14811

Average milk plant test percent butterfat 365

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 nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation

ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt

Accrual Receipts Milk Dairy cattle

$176689 13389

$1869 142

$1262 096

$_-shy $_-shy $_-shy

Dairy calves 2073 ----22 015 Total $192151 $2033 $1373 $_-shy $_-shy $_-shy

Accrual Costs of Producing Milk Operating costs Total costs withshy

$140178 $1483 $1001 $_-shy $_-shy $_-shy

out op(s) labor mgmt amp capital

Total Costs $169633 $212658

$1795 $2250

$1212 $1519

$_-shy$_-shy

$_-shy$_-shy

$_-shy$_-shy

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 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt

Purchased dairy grain amp concentrates

Purchased dairy roughage Total Purchased

Dairy Feed Purchased grain amp conc as of milk receipts

Purchased feed amp crop expo Purchased feed amp crop expo

as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense

$308 ---12

$208 JLU

$ $_-shy

$339 $229 $ $_--shy

$571 16

$386 $ -- $_-shy

$31 41

101 2

81

3U $021 027 068 001 055

$ $_-shy

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 managements success

CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985

Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned

Farm capital Real estate Machinery amp equipment Capital turnover years

$180569

36469

$6845 3280 1383

295

$1588

321

$2641 1265

My Farm Farm capital Real estate

$_-shy $_--shy $_-shy $_-shy

Machinery amp equipment Capital turnover years

LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985

Labor Force Months Age

Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired

Total

My Farm Total Operators

11 4 2 6 2

18 43

44 44 32

+ 12 shy

+ 12 shy+ 12 shy

Years of gf Educ

Value of Labor amp Mgmt

14 13 13

$17283 6574 2261

358 Yorker Equivalent 142 OperatorManager Equiv

___ Yorker Equivalent OperatorManager Equiv

Labor Efficiency

Average Total Per Yorker Total

My Farm Per Yorker

Cows average number Milk sold pounds Tillable acres

95 1399978

407

26 390692

114 York units 1105 308

Average My Eatm Per Per Per Per

Labor Costs Total Cow Iil Acre Iotal Cow Til Acre

Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $

Family unpd ($550mo) 1100 12 270 Hired 26995 286 6626 Total Labor $41695 $441 $10234 $ $ $ Machinery Cost $51364 $543 $12607 $ $ $ Total Labor amp Mach $93059 $985 $22840 $ $ $

18

ANNUAL CASH FLOW WORKSHEEET

Regional Hy Farm Expected 1986 Item Average Total Per Cow Change Projection

(per cow) Average number of cows 95 Accrual Oper Receipts Milk Dairy cattle

$186929 14165

$___ $_shy ---_$_--shyDairy calves 21 93 Other livestock 3340 Crops 13625 Misc receipts 121 80

Total $232432 $___ $_shy ---_$_--shyAccrual Oper Expensect~s Hired labor Dairy grain amp conc

$ 28560 30770

$ $_shy ---_$_--shyDairy roughage 31 79 Other lvstk feed 2674 Mach hirerentlease 3067 Mach Fuel

rpr parts amp auto oil amp grease

12993 10112

Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691

Total Less Int Paid $164775 $_--shy

Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy

- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp

family expenditures 10708 Available for Debt Payments

Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment

amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle

machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy

3

Income Statement

The revised accrual income statement begins with an accounting of all farm business expenses

CASH AND ACCRUAL FARM EXPENSES 23 Central Plain Region Dairy Farms 1985

Cash Change in Change in Accrual EXBense Item faid + Inventoo + Acconta fapoundable Ji2Wenses

Hired Labor $ 26966 $ 29 $ 26995 Feed Dairy grain amp conc 29394 $-167 -142 29085 Dairy roughage 2583 0 -65 2518 Other livestock 2561 -27 6 2540 Machinerpound Mach hire rentlease 2958 -44 2914 Machinery repairsparts 11632 -83 522 12071 Auto expense (fs) 272 0 272 Fuel oil amp grease 9677 -80 10 9607 Livestock Replacement livestock 579 44 623 Breeding 2822 32 54 2908 Vet amp medicine 3778 -32 99 3845 Milk marketing 9582 0 9582 Cattle leaserent 187 0 187 Other livestock expense 7625 -85 117 7657 CroBs Fertilizer amp lime 12273 48 -620 11701 Seeds amp plants 5131 21 -58 5094 Spray other crop expo 5092 6 0 5098 Real Estate Landb1dgfence repair 2184 -208 1976 Taxes 5189 181 5370 Insurance 3543 29 3572 Rent amp lease 4292 373 4665 Other Telephone (fs) 945 0 945 Electricity (fs) 4735 20 4755 Interest paid 25805 363 26168 Miscellaneous 2438 -ill 2556 Total Operating $182243 $-370 $ 831 $182704 Expansion livestock $ 918 $ 0 $ 918 Machinery depreciation 20041 Building depreciation 7882

TOTAL ACCRUAL EXPENSES $211545

Cash Baid 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 eXBenses are the costs of inputs actually used in this years 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 income and compare it with the averages on the opposite page

CASH AND ACCRUAL FARM EXPENSES WORKSHEET

Cash Change in Change in Accrual Expense Item Paid + Inventory + Accounts Payable Expenses

Hired Labor Feed Dairy grain amp cone Dairy roughage Other livestock Machinery Mach hire rentlease Machinery repairsparts Auto expense (fs) Fuel oil amp grease Livestock Replacement livestock Breeding Vet amp medicine Milk marketing Cattle leaserent Other livestock expense Crops Fertilizer amp lime Seeds amp plants Spray other crop expo Real Estate Landjbldgfence repair Taxes Insurance Rent amp lease Other Telephone (fs) Electricity (fs) Interest paid Miscellaneous Total Operating Expansion livestock Machinery depreciation Building depreciation

TOTAL ACCRUAL EXPENSES

$_-- $_-- $_-- $_--shy

$___ $_-- $_-- $_--shy

$ $ $ $

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

Accrual expenses are the costs of inputs actually used in this years production Purchased feed and supplies used out of inventory must be included Beginning of year less end of year purchased feed and supply inventory equals the change in inventory to include in accrual expenses Feed supplies and services used but not paid for must be included by adding the net increase in operating accounts payable Increases in operating accounts payable are determined by subtracting the balance at the beginning of the year from the end of year balance

5

CASH AND ACCRUAL FARM RECEIPTS 23 Central Plain Region Dairy Farms 1985

Change in Cash Change in Accounts Accrual

Receipt Item Receipts + InventoIY + Receivable + Receipts

Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other

Total Accrual Receipts

$177 112 11623

2073 3898

12481 6576

148 303

5234

$219448

$1216

-741 100

$ 575

$-423 550

0 0

298 -969

0 0

---22

$-322

$176689 13388

2073 3157

12879 5607

148 303

5456

$219700

Cash receipts includes the gross value of milk checks received during the year plus all other payments received for 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 liveshystock inventory caused by herd growth andor quality are included as accrual receipts Decreases in inventory caused by herd reduction are deducted Changes in inventories of crops grown are accounted for in accrual receipts Changes in accounts receivable include the January milk check for this Decemshybers marketings compared with the previous Januarys check and other delayed payments

CASH AND ACCRUAL FARM RECEIPT WORKSHEET

Change in Cash Change in Accounts Accrual

Receipt Item Receipts + Inventory + Receivable + Receipts

Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other

Total Accrual Receipts

$_-- $_-shy

$_-- $_-shy

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 Th~ changes in inventories caused by declining 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

----_ _--shy

6

Profitability Analysis

Farm ownersoperators 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 operator(s) and other unpaid family members for their labor management and equity capital It is the farm familys net annual return from working managing financing and owning the farm business This is not a measure of cash available from the years business operation Cash flow is evaluated later in this report

Net farm income is computed with and without appreciation Appreciashytion represents the change in livestock machinery and real estate inventory values caused by changes in prices during the year Appreciation is a major factor contributing to changes in farm net worth and must be included in the profitability analysis

NET FARM INCOME 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Total accrual receipts Appreciation Livestock

Machinery Real Estate

Total Including Appreciation Total accrual expenses Net Farm Income (with appreciation) Net Farm Income (without appreciation)

$219700 -7658 5072

-114 $217000

211545 $ 5455 $ 8155

$_--shy

$_-shy

$_-shy$_-shy

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 Operator(s) labor is not included in unpaid family labor Return to operator(s) labor manageshyment 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 OPERATOR(S) LABOR MANAGEMENT AND EQUITY 23 Central Plain Region Dairy Farms 1985

Item

Av~uage Without With Wprec Wprec

My Farm Without With Wprec Apprec

Net farm income $8155 $5455 $_-shy $_-shyFamily labor unpaid

$550 per month 1100 1lQO Return to operator(s)

labor management amp equity $7055 $4355 $_-shy $_-shy

7

Labor and manaampement income is the share of net farm income without appreciashytion returned to the operator(s) 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 operator(s) labor manageshyment 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 manaampement income per operator measures the return to each operators labor and management

LABOR AND MANAGEMENT INCOME 23 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Return to operator(s) labor management amp equity without appreciation

Real interest 5 on $338140 equity capital

Labor amp Management Income (142 operators)

Labor amp Management Income per Operator

$ 7055 $_-shy

16907

$-9852

$-6954

$_-shy

$_--shy

Return on equity capital measures the net return remaining for the farmers equity or owned capital after a charge has been made for the owner-operators labor and management The earnings or amount of net farm income allocated to labor and management is the opportunity cost or value of operator(s) 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 end of year farm net worth or equity capital

RETURN ON EQUITY CAPITAL 23 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Return to operator(s) labor management amp equity capital with appreciation

Value of operator(s) labor amp 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

$ 4355

26118

$-21763

-64

$-19063

-56

$_--shy

$_-shy

$_-shy

8

Farm and Family Fipancial 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

1985 FARM BUSINESS amp NONFARM BALANCE SHEET 23 Central Plain Region Dairy Farms 1985

Farm Liabilities Farm Ass~tsect JSn 1 Dec 31 ~ Net W0Ith JSn 1 Dilc 31

Current Current Farm cash checking Accounts payable $ 10064 $ 9151 amp saving$ $ 2675 $ 1734 Operating debt 5982 6732

Accounts rec 16672 19609 Short-term 448 4314 Feed amp supplies 42430 42412

Total $ 68777 $ 70755 Total $ 18494 $ 20196 Intemilsliate Intermilsllate Dairy cows 97805 99503

owned 79625 78604 leased 0 0

Heifers 42800 37495 Bullsother lvstk 3886 3027 Macheq owned 130959 127430 Macheq leased Coop stock amp cert

1214 1JZ2~

1755 lJ2~2

Financial lease (cattlemach ) 1214 1Z55

Total $272207 $262276 Total $ 99019 $101258 l=ong-Term Long-Term Landjbulldings 181283 176493

owned 314960 303056 leased 1QQ2 1QJ Total $315969 $304090 Financial lease

(structures) 1009 103 Total $182291 $177528

Total Farm Assets $656953 $637122 Total Farm Liab $299804 $298981 FARM NET WORTH $357149 $338140

Nonfarm Liabilities NonfSI Assect~tsect Jm 1 D~pound n ~ N~t i2Ith Jm 1 Qec 31

Personal cash chkg amp savings $ 505

Cash value life ins 5331 $ 692

6058

Nonfarm Uab NOHfARM HiT iQRTH

IfARM amp6QHFARM

$ 0 ~17lJZ Jan 1

$ 0 ~18JIZ Qec ~l

Nonfarm real estate 1063 451 ITotal Assets $674090 $655439 Auto (personal sh) Stocks ampbonds

2861 1611

3087 2034

ITotal Liabilities I

2998Q4 98981

Household furn 5365 5674 I All other Ql 321 ITOTAL FARM amp NON-

Total Nonfarm $ 17137 $ 18317 I FARM NET WORTH $374286 $356457

Financial lease obligations are included in the balance sheet The present values of all future payments are listed as liabilities since the farmer (lessee) is committed to make the payments The present values are also listed as assets representing the future value the item has to the business

9

1985 FARM BUSINESS amp NONFARM BALANCE SHEET

Farm Assets Jan 1 Dec 31 Farm Liabilities amp Net Worth Jan 1 Dec 31

Current Farm cash checking amp savings

Accounts rec Feed amp supplies

Current Accounts payable Operating debt Short-term

Total Total

Intermediate Dairy cows

owned leased

Heifers Bullsother Ivstk Macheq owned Macheq leased Coop stock amp cert

Total

IntlUJlediate

Financial lease (cattlemach )

Total

Loni-Term LandbuUdings

owned leased

Loni-Term

Total

Total Farm Assets

Financial lease (structures) Total

Total Farm Liab FARM NET WORTH

Nonfarm Liabilities Nonfarm Assets Jan 1 Dec 31 ampNet Worth Jan 1 Dec 31

Nonfarm Liab Personal cash

amp savings chkg

Cash value life ins

Nonfarm real est Auto (pers share) Stocks ampbonds

Total Nonfarm Liabilities

Household furn All other Nonfarm

Total Nonfarm Net Worth

TOTAL FARM ~ NONFARM Jan 1 Dec 31

Total Farm amp Nonfarm Assets Less Total Farm amp Nonfarm Liabilities Farm amp Nonfarm Net Worth

10

Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed

BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309

Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047

long-term 058 intermediatecurrent 036

Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59

Intermediate amp current debt

Current amp inter 1iab as a of total debt 41

Farm Debt Levels Total farm debt Long-term debt

Per Cow $3082

1830

Per Tillable Acre Owned

$1220 725

Per Cow $_-shy

1252 496

$_-shy$_-shy

----_ ---_ ---_

Per Tillable Acre Owned $_--shy

Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these 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 23 Central Plain Region Dairy Farms 1985

Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg

Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy

$1330 land and $4097 buildings andor depreciable improvements

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 years cash flow is the first step toward planning and managing cash flow for the current and future years

The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end 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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm Cash Inflows

Beginning farm cash checking amp savings

Cash farm receipts

Sale of assets Machinery

Real estate

Money borrowed (intermediate amp long-term)

Money borrowed (short-term)

Increase in operating debt

Nonfarm income

Money borrowed - nonfarm

Total

Cash Outflows

Cash farm expenses

Capital purchases Expansion livestock

Machinery

Real estate

Principal payments (intermediate amp long-term)

Principal payments (short-term)

Decrease in operating debt

Nonfarm debt payments

Personal withdrawals amp family expo

Ending farm cash checking amp savings

Total

Imbalance (error)

$ 2675

219448

214

7363

24469

2485

750

1461

0

$258865

$182243

918

11654

5427

27561

620

0

0

10708

1734

$240860

$ 18005

$

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 receiptdebt payment ratios

FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986

Debt Payments

Avetaamp~ 1985 Payments

Planned Made Planned

1986

My Farm 1985 Payments

Planned Made Planned

1986

Long-term IntermShort-Operating (net

redu

(net reduction)

ediate-term term

ction Accounts payable

$20431 30095 9705

0

6294

$28583 29330 1004

0

3548

$17021 27543

3490

3769

2112

$_-- $_-- $_-shy

Total $66526 $62465 $53934 $ $_-- $_-shy

Per cow Per cwt Percen

1985 milk t of total

$723 $477

$679 $448

$ $_-shy$_-_$_-shy

1985 receipts Percent of 1985

29 27

milk receipts 38 35

The Cash Flow Covetaampe 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 years available cash flow report

Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments

CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Cash farm receipts $227219 $_--shy- Cash farm expenses 189555

+ Interest paid 25369

- Net personal withdrawals from farm 11980

(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077

Personal withdrawals and family expenditures less nonfarm income 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 indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency

to allow a m and the

more factors

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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Land Tillable Nonti1lable 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

~ Rented Total 245 163 407

20 7 26 90 -1Q 100

355 180 533

fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn

47 tn DM 2 14 12 tn DM

23 205 35 tn DM 22 124 806 bu 13 46 807 bu

9 36 626 bu 8 42 6 19

12 45 407

Rented

~ frodLAcre 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 23 Central Plain Region Dairy Farms 1985

Item My Farm

Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow

431 217 760

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 Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed

to equal one ton of

CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985

Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops

Expense Acre Acre Ton DM Acre Eguiv Per Acre

Fertilizer amp lime $2872 $ 975 $171 $4458 $181 $2950 Seeds amp plants 1250 726 127 1932 079 877 Spray amp other crop

expense 1251 408 -2ll 2480 JJll 799 Total $5374 $2110 $369 $8869 $361 $4627

My Farm

Fertilizer amp lime $__ $__ $__ $_- $_- $_shySeeds amp plants Spray amp other crop

expense Total $__ $== $==

Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres

Corn grain converted to silage equivalent using 588 bushels - one ton 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 23 Central Plain Region Dairy Farms 1985

My Farm Machinery Total Per Til Total Per Til

Expense Item Expenses Acre Expenses Acre

Fuel oil amp grease Machinery repairs amp parts

$ 9606 12071

$2358 2963

$_-shy $_-shy

Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919

Total $51364 $12607 $_-shy $_--shy

15

Dairy Program Analysis

Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business 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 23 Central Plain Region Dairy Farms 1985

pairy Cows Heifers Item Number Value Number Value

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

92

96 97 95

$79625 3763

-4784 $78604

89

87

88

$42800 -2548 -2757

$37495

My Farm

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

$_--shy

$_--shy

$_--shy

$_--shy

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

MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985

Item

Total milk sold lbs

Average

1399978

My Farm

Milk sold per cow lbs 14811

Average milk plant test percent butterfat 365

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 nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation

ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt

Accrual Receipts Milk Dairy cattle

$176689 13389

$1869 142

$1262 096

$_-shy $_-shy $_-shy

Dairy calves 2073 ----22 015 Total $192151 $2033 $1373 $_-shy $_-shy $_-shy

Accrual Costs of Producing Milk Operating costs Total costs withshy

$140178 $1483 $1001 $_-shy $_-shy $_-shy

out op(s) labor mgmt amp capital

Total Costs $169633 $212658

$1795 $2250

$1212 $1519

$_-shy$_-shy

$_-shy$_-shy

$_-shy$_-shy

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 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt

Purchased dairy grain amp concentrates

Purchased dairy roughage Total Purchased

Dairy Feed Purchased grain amp conc as of milk receipts

Purchased feed amp crop expo Purchased feed amp crop expo

as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense

$308 ---12

$208 JLU

$ $_-shy

$339 $229 $ $_--shy

$571 16

$386 $ -- $_-shy

$31 41

101 2

81

3U $021 027 068 001 055

$ $_-shy

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 managements success

CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985

Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned

Farm capital Real estate Machinery amp equipment Capital turnover years

$180569

36469

$6845 3280 1383

295

$1588

321

$2641 1265

My Farm Farm capital Real estate

$_-shy $_--shy $_-shy $_-shy

Machinery amp equipment Capital turnover years

LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985

Labor Force Months Age

Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired

Total

My Farm Total Operators

11 4 2 6 2

18 43

44 44 32

+ 12 shy

+ 12 shy+ 12 shy

Years of gf Educ

Value of Labor amp Mgmt

14 13 13

$17283 6574 2261

358 Yorker Equivalent 142 OperatorManager Equiv

___ Yorker Equivalent OperatorManager Equiv

Labor Efficiency

Average Total Per Yorker Total

My Farm Per Yorker

Cows average number Milk sold pounds Tillable acres

95 1399978

407

26 390692

114 York units 1105 308

Average My Eatm Per Per Per Per

Labor Costs Total Cow Iil Acre Iotal Cow Til Acre

Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $

Family unpd ($550mo) 1100 12 270 Hired 26995 286 6626 Total Labor $41695 $441 $10234 $ $ $ Machinery Cost $51364 $543 $12607 $ $ $ Total Labor amp Mach $93059 $985 $22840 $ $ $

18

ANNUAL CASH FLOW WORKSHEEET

Regional Hy Farm Expected 1986 Item Average Total Per Cow Change Projection

(per cow) Average number of cows 95 Accrual Oper Receipts Milk Dairy cattle

$186929 14165

$___ $_shy ---_$_--shyDairy calves 21 93 Other livestock 3340 Crops 13625 Misc receipts 121 80

Total $232432 $___ $_shy ---_$_--shyAccrual Oper Expensect~s Hired labor Dairy grain amp conc

$ 28560 30770

$ $_shy ---_$_--shyDairy roughage 31 79 Other lvstk feed 2674 Mach hirerentlease 3067 Mach Fuel

rpr parts amp auto oil amp grease

12993 10112

Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691

Total Less Int Paid $164775 $_--shy

Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy

- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp

family expenditures 10708 Available for Debt Payments

Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment

amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle

machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy

4

Worksheets are provided to enable any dairy farmer to compute his or her accrual farm income and compare it with the averages on the opposite page

CASH AND ACCRUAL FARM EXPENSES WORKSHEET

Cash Change in Change in Accrual Expense Item Paid + Inventory + Accounts Payable Expenses

Hired Labor Feed Dairy grain amp cone Dairy roughage Other livestock Machinery Mach hire rentlease Machinery repairsparts Auto expense (fs) Fuel oil amp grease Livestock Replacement livestock Breeding Vet amp medicine Milk marketing Cattle leaserent Other livestock expense Crops Fertilizer amp lime Seeds amp plants Spray other crop expo Real Estate Landjbldgfence repair Taxes Insurance Rent amp lease Other Telephone (fs) Electricity (fs) Interest paid Miscellaneous Total Operating Expansion livestock Machinery depreciation Building depreciation

TOTAL ACCRUAL EXPENSES

$_-- $_-- $_-- $_--shy

$___ $_-- $_-- $_--shy

$ $ $ $

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

Accrual expenses are the costs of inputs actually used in this years production Purchased feed and supplies used out of inventory must be included Beginning of year less end of year purchased feed and supply inventory equals the change in inventory to include in accrual expenses Feed supplies and services used but not paid for must be included by adding the net increase in operating accounts payable Increases in operating accounts payable are determined by subtracting the balance at the beginning of the year from the end of year balance

5

CASH AND ACCRUAL FARM RECEIPTS 23 Central Plain Region Dairy Farms 1985

Change in Cash Change in Accounts Accrual

Receipt Item Receipts + InventoIY + Receivable + Receipts

Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other

Total Accrual Receipts

$177 112 11623

2073 3898

12481 6576

148 303

5234

$219448

$1216

-741 100

$ 575

$-423 550

0 0

298 -969

0 0

---22

$-322

$176689 13388

2073 3157

12879 5607

148 303

5456

$219700

Cash receipts includes the gross value of milk checks received during the year plus all other payments received for 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 liveshystock inventory caused by herd growth andor quality are included as accrual receipts Decreases in inventory caused by herd reduction are deducted Changes in inventories of crops grown are accounted for in accrual receipts Changes in accounts receivable include the January milk check for this Decemshybers marketings compared with the previous Januarys check and other delayed payments

CASH AND ACCRUAL FARM RECEIPT WORKSHEET

Change in Cash Change in Accounts Accrual

Receipt Item Receipts + Inventory + Receivable + Receipts

Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other

Total Accrual Receipts

$_-- $_-shy

$_-- $_-shy

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 Th~ changes in inventories caused by declining 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

----_ _--shy

6

Profitability Analysis

Farm ownersoperators 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 operator(s) and other unpaid family members for their labor management and equity capital It is the farm familys net annual return from working managing financing and owning the farm business This is not a measure of cash available from the years business operation Cash flow is evaluated later in this report

Net farm income is computed with and without appreciation Appreciashytion represents the change in livestock machinery and real estate inventory values caused by changes in prices during the year Appreciation is a major factor contributing to changes in farm net worth and must be included in the profitability analysis

NET FARM INCOME 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Total accrual receipts Appreciation Livestock

Machinery Real Estate

Total Including Appreciation Total accrual expenses Net Farm Income (with appreciation) Net Farm Income (without appreciation)

$219700 -7658 5072

-114 $217000

211545 $ 5455 $ 8155

$_--shy

$_-shy

$_-shy$_-shy

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 Operator(s) labor is not included in unpaid family labor Return to operator(s) labor manageshyment 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 OPERATOR(S) LABOR MANAGEMENT AND EQUITY 23 Central Plain Region Dairy Farms 1985

Item

Av~uage Without With Wprec Wprec

My Farm Without With Wprec Apprec

Net farm income $8155 $5455 $_-shy $_-shyFamily labor unpaid

$550 per month 1100 1lQO Return to operator(s)

labor management amp equity $7055 $4355 $_-shy $_-shy

7

Labor and manaampement income is the share of net farm income without appreciashytion returned to the operator(s) 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 operator(s) labor manageshyment 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 manaampement income per operator measures the return to each operators labor and management

LABOR AND MANAGEMENT INCOME 23 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Return to operator(s) labor management amp equity without appreciation

Real interest 5 on $338140 equity capital

Labor amp Management Income (142 operators)

Labor amp Management Income per Operator

$ 7055 $_-shy

16907

$-9852

$-6954

$_-shy

$_--shy

Return on equity capital measures the net return remaining for the farmers equity or owned capital after a charge has been made for the owner-operators labor and management The earnings or amount of net farm income allocated to labor and management is the opportunity cost or value of operator(s) 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 end of year farm net worth or equity capital

RETURN ON EQUITY CAPITAL 23 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Return to operator(s) labor management amp equity capital with appreciation

Value of operator(s) labor amp 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

$ 4355

26118

$-21763

-64

$-19063

-56

$_--shy

$_-shy

$_-shy

8

Farm and Family Fipancial 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

1985 FARM BUSINESS amp NONFARM BALANCE SHEET 23 Central Plain Region Dairy Farms 1985

Farm Liabilities Farm Ass~tsect JSn 1 Dec 31 ~ Net W0Ith JSn 1 Dilc 31

Current Current Farm cash checking Accounts payable $ 10064 $ 9151 amp saving$ $ 2675 $ 1734 Operating debt 5982 6732

Accounts rec 16672 19609 Short-term 448 4314 Feed amp supplies 42430 42412

Total $ 68777 $ 70755 Total $ 18494 $ 20196 Intemilsliate Intermilsllate Dairy cows 97805 99503

owned 79625 78604 leased 0 0

Heifers 42800 37495 Bullsother lvstk 3886 3027 Macheq owned 130959 127430 Macheq leased Coop stock amp cert

1214 1JZ2~

1755 lJ2~2

Financial lease (cattlemach ) 1214 1Z55

Total $272207 $262276 Total $ 99019 $101258 l=ong-Term Long-Term Landjbulldings 181283 176493

owned 314960 303056 leased 1QQ2 1QJ Total $315969 $304090 Financial lease

(structures) 1009 103 Total $182291 $177528

Total Farm Assets $656953 $637122 Total Farm Liab $299804 $298981 FARM NET WORTH $357149 $338140

Nonfarm Liabilities NonfSI Assect~tsect Jm 1 D~pound n ~ N~t i2Ith Jm 1 Qec 31

Personal cash chkg amp savings $ 505

Cash value life ins 5331 $ 692

6058

Nonfarm Uab NOHfARM HiT iQRTH

IfARM amp6QHFARM

$ 0 ~17lJZ Jan 1

$ 0 ~18JIZ Qec ~l

Nonfarm real estate 1063 451 ITotal Assets $674090 $655439 Auto (personal sh) Stocks ampbonds

2861 1611

3087 2034

ITotal Liabilities I

2998Q4 98981

Household furn 5365 5674 I All other Ql 321 ITOTAL FARM amp NON-

Total Nonfarm $ 17137 $ 18317 I FARM NET WORTH $374286 $356457

Financial lease obligations are included in the balance sheet The present values of all future payments are listed as liabilities since the farmer (lessee) is committed to make the payments The present values are also listed as assets representing the future value the item has to the business

9

1985 FARM BUSINESS amp NONFARM BALANCE SHEET

Farm Assets Jan 1 Dec 31 Farm Liabilities amp Net Worth Jan 1 Dec 31

Current Farm cash checking amp savings

Accounts rec Feed amp supplies

Current Accounts payable Operating debt Short-term

Total Total

Intermediate Dairy cows

owned leased

Heifers Bullsother Ivstk Macheq owned Macheq leased Coop stock amp cert

Total

IntlUJlediate

Financial lease (cattlemach )

Total

Loni-Term LandbuUdings

owned leased

Loni-Term

Total

Total Farm Assets

Financial lease (structures) Total

Total Farm Liab FARM NET WORTH

Nonfarm Liabilities Nonfarm Assets Jan 1 Dec 31 ampNet Worth Jan 1 Dec 31

Nonfarm Liab Personal cash

amp savings chkg

Cash value life ins

Nonfarm real est Auto (pers share) Stocks ampbonds

Total Nonfarm Liabilities

Household furn All other Nonfarm

Total Nonfarm Net Worth

TOTAL FARM ~ NONFARM Jan 1 Dec 31

Total Farm amp Nonfarm Assets Less Total Farm amp Nonfarm Liabilities Farm amp Nonfarm Net Worth

10

Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed

BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309

Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047

long-term 058 intermediatecurrent 036

Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59

Intermediate amp current debt

Current amp inter 1iab as a of total debt 41

Farm Debt Levels Total farm debt Long-term debt

Per Cow $3082

1830

Per Tillable Acre Owned

$1220 725

Per Cow $_-shy

1252 496

$_-shy$_-shy

----_ ---_ ---_

Per Tillable Acre Owned $_--shy

Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these 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 23 Central Plain Region Dairy Farms 1985

Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg

Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy

$1330 land and $4097 buildings andor depreciable improvements

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 years cash flow is the first step toward planning and managing cash flow for the current and future years

The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end 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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm Cash Inflows

Beginning farm cash checking amp savings

Cash farm receipts

Sale of assets Machinery

Real estate

Money borrowed (intermediate amp long-term)

Money borrowed (short-term)

Increase in operating debt

Nonfarm income

Money borrowed - nonfarm

Total

Cash Outflows

Cash farm expenses

Capital purchases Expansion livestock

Machinery

Real estate

Principal payments (intermediate amp long-term)

Principal payments (short-term)

Decrease in operating debt

Nonfarm debt payments

Personal withdrawals amp family expo

Ending farm cash checking amp savings

Total

Imbalance (error)

$ 2675

219448

214

7363

24469

2485

750

1461

0

$258865

$182243

918

11654

5427

27561

620

0

0

10708

1734

$240860

$ 18005

$

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 receiptdebt payment ratios

FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986

Debt Payments

Avetaamp~ 1985 Payments

Planned Made Planned

1986

My Farm 1985 Payments

Planned Made Planned

1986

Long-term IntermShort-Operating (net

redu

(net reduction)

ediate-term term

ction Accounts payable

$20431 30095 9705

0

6294

$28583 29330 1004

0

3548

$17021 27543

3490

3769

2112

$_-- $_-- $_-shy

Total $66526 $62465 $53934 $ $_-- $_-shy

Per cow Per cwt Percen

1985 milk t of total

$723 $477

$679 $448

$ $_-shy$_-_$_-shy

1985 receipts Percent of 1985

29 27

milk receipts 38 35

The Cash Flow Covetaampe 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 years available cash flow report

Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments

CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Cash farm receipts $227219 $_--shy- Cash farm expenses 189555

+ Interest paid 25369

- Net personal withdrawals from farm 11980

(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077

Personal withdrawals and family expenditures less nonfarm income 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 indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency

to allow a m and the

more factors

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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Land Tillable Nonti1lable 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

~ Rented Total 245 163 407

20 7 26 90 -1Q 100

355 180 533

fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn

47 tn DM 2 14 12 tn DM

23 205 35 tn DM 22 124 806 bu 13 46 807 bu

9 36 626 bu 8 42 6 19

12 45 407

Rented

~ frodLAcre 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 23 Central Plain Region Dairy Farms 1985

Item My Farm

Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow

431 217 760

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 Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed

to equal one ton of

CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985

Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops

Expense Acre Acre Ton DM Acre Eguiv Per Acre

Fertilizer amp lime $2872 $ 975 $171 $4458 $181 $2950 Seeds amp plants 1250 726 127 1932 079 877 Spray amp other crop

expense 1251 408 -2ll 2480 JJll 799 Total $5374 $2110 $369 $8869 $361 $4627

My Farm

Fertilizer amp lime $__ $__ $__ $_- $_- $_shySeeds amp plants Spray amp other crop

expense Total $__ $== $==

Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres

Corn grain converted to silage equivalent using 588 bushels - one ton 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 23 Central Plain Region Dairy Farms 1985

My Farm Machinery Total Per Til Total Per Til

Expense Item Expenses Acre Expenses Acre

Fuel oil amp grease Machinery repairs amp parts

$ 9606 12071

$2358 2963

$_-shy $_-shy

Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919

Total $51364 $12607 $_-shy $_--shy

15

Dairy Program Analysis

Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business 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 23 Central Plain Region Dairy Farms 1985

pairy Cows Heifers Item Number Value Number Value

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

92

96 97 95

$79625 3763

-4784 $78604

89

87

88

$42800 -2548 -2757

$37495

My Farm

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

$_--shy

$_--shy

$_--shy

$_--shy

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

MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985

Item

Total milk sold lbs

Average

1399978

My Farm

Milk sold per cow lbs 14811

Average milk plant test percent butterfat 365

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 nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation

ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt

Accrual Receipts Milk Dairy cattle

$176689 13389

$1869 142

$1262 096

$_-shy $_-shy $_-shy

Dairy calves 2073 ----22 015 Total $192151 $2033 $1373 $_-shy $_-shy $_-shy

Accrual Costs of Producing Milk Operating costs Total costs withshy

$140178 $1483 $1001 $_-shy $_-shy $_-shy

out op(s) labor mgmt amp capital

Total Costs $169633 $212658

$1795 $2250

$1212 $1519

$_-shy$_-shy

$_-shy$_-shy

$_-shy$_-shy

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 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt

Purchased dairy grain amp concentrates

Purchased dairy roughage Total Purchased

Dairy Feed Purchased grain amp conc as of milk receipts

Purchased feed amp crop expo Purchased feed amp crop expo

as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense

$308 ---12

$208 JLU

$ $_-shy

$339 $229 $ $_--shy

$571 16

$386 $ -- $_-shy

$31 41

101 2

81

3U $021 027 068 001 055

$ $_-shy

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 managements success

CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985

Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned

Farm capital Real estate Machinery amp equipment Capital turnover years

$180569

36469

$6845 3280 1383

295

$1588

321

$2641 1265

My Farm Farm capital Real estate

$_-shy $_--shy $_-shy $_-shy

Machinery amp equipment Capital turnover years

LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985

Labor Force Months Age

Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired

Total

My Farm Total Operators

11 4 2 6 2

18 43

44 44 32

+ 12 shy

+ 12 shy+ 12 shy

Years of gf Educ

Value of Labor amp Mgmt

14 13 13

$17283 6574 2261

358 Yorker Equivalent 142 OperatorManager Equiv

___ Yorker Equivalent OperatorManager Equiv

Labor Efficiency

Average Total Per Yorker Total

My Farm Per Yorker

Cows average number Milk sold pounds Tillable acres

95 1399978

407

26 390692

114 York units 1105 308

Average My Eatm Per Per Per Per

Labor Costs Total Cow Iil Acre Iotal Cow Til Acre

Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $

Family unpd ($550mo) 1100 12 270 Hired 26995 286 6626 Total Labor $41695 $441 $10234 $ $ $ Machinery Cost $51364 $543 $12607 $ $ $ Total Labor amp Mach $93059 $985 $22840 $ $ $

18

ANNUAL CASH FLOW WORKSHEEET

Regional Hy Farm Expected 1986 Item Average Total Per Cow Change Projection

(per cow) Average number of cows 95 Accrual Oper Receipts Milk Dairy cattle

$186929 14165

$___ $_shy ---_$_--shyDairy calves 21 93 Other livestock 3340 Crops 13625 Misc receipts 121 80

Total $232432 $___ $_shy ---_$_--shyAccrual Oper Expensect~s Hired labor Dairy grain amp conc

$ 28560 30770

$ $_shy ---_$_--shyDairy roughage 31 79 Other lvstk feed 2674 Mach hirerentlease 3067 Mach Fuel

rpr parts amp auto oil amp grease

12993 10112

Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691

Total Less Int Paid $164775 $_--shy

Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy

- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp

family expenditures 10708 Available for Debt Payments

Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment

amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle

machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy

5

CASH AND ACCRUAL FARM RECEIPTS 23 Central Plain Region Dairy Farms 1985

Change in Cash Change in Accounts Accrual

Receipt Item Receipts + InventoIY + Receivable + Receipts

Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other

Total Accrual Receipts

$177 112 11623

2073 3898

12481 6576

148 303

5234

$219448

$1216

-741 100

$ 575

$-423 550

0 0

298 -969

0 0

---22

$-322

$176689 13388

2073 3157

12879 5607

148 303

5456

$219700

Cash receipts includes the gross value of milk checks received during the year plus all other payments received for 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 liveshystock inventory caused by herd growth andor quality are included as accrual receipts Decreases in inventory caused by herd reduction are deducted Changes in inventories of crops grown are accounted for in accrual receipts Changes in accounts receivable include the January milk check for this Decemshybers marketings compared with the previous Januarys check and other delayed payments

CASH AND ACCRUAL FARM RECEIPT WORKSHEET

Change in Cash Change in Accounts Accrual

Receipt Item Receipts + Inventory + Receivable + Receipts

Milk sales Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other

Total Accrual Receipts

$_-- $_-shy

$_-- $_-shy

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 Th~ changes in inventories caused by declining 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

----_ _--shy

6

Profitability Analysis

Farm ownersoperators 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 operator(s) and other unpaid family members for their labor management and equity capital It is the farm familys net annual return from working managing financing and owning the farm business This is not a measure of cash available from the years business operation Cash flow is evaluated later in this report

Net farm income is computed with and without appreciation Appreciashytion represents the change in livestock machinery and real estate inventory values caused by changes in prices during the year Appreciation is a major factor contributing to changes in farm net worth and must be included in the profitability analysis

NET FARM INCOME 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Total accrual receipts Appreciation Livestock

Machinery Real Estate

Total Including Appreciation Total accrual expenses Net Farm Income (with appreciation) Net Farm Income (without appreciation)

$219700 -7658 5072

-114 $217000

211545 $ 5455 $ 8155

$_--shy

$_-shy

$_-shy$_-shy

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 Operator(s) labor is not included in unpaid family labor Return to operator(s) labor manageshyment 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 OPERATOR(S) LABOR MANAGEMENT AND EQUITY 23 Central Plain Region Dairy Farms 1985

Item

Av~uage Without With Wprec Wprec

My Farm Without With Wprec Apprec

Net farm income $8155 $5455 $_-shy $_-shyFamily labor unpaid

$550 per month 1100 1lQO Return to operator(s)

labor management amp equity $7055 $4355 $_-shy $_-shy

7

Labor and manaampement income is the share of net farm income without appreciashytion returned to the operator(s) 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 operator(s) labor manageshyment 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 manaampement income per operator measures the return to each operators labor and management

LABOR AND MANAGEMENT INCOME 23 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Return to operator(s) labor management amp equity without appreciation

Real interest 5 on $338140 equity capital

Labor amp Management Income (142 operators)

Labor amp Management Income per Operator

$ 7055 $_-shy

16907

$-9852

$-6954

$_-shy

$_--shy

Return on equity capital measures the net return remaining for the farmers equity or owned capital after a charge has been made for the owner-operators labor and management The earnings or amount of net farm income allocated to labor and management is the opportunity cost or value of operator(s) 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 end of year farm net worth or equity capital

RETURN ON EQUITY CAPITAL 23 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Return to operator(s) labor management amp equity capital with appreciation

Value of operator(s) labor amp 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

$ 4355

26118

$-21763

-64

$-19063

-56

$_--shy

$_-shy

$_-shy

8

Farm and Family Fipancial 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

1985 FARM BUSINESS amp NONFARM BALANCE SHEET 23 Central Plain Region Dairy Farms 1985

Farm Liabilities Farm Ass~tsect JSn 1 Dec 31 ~ Net W0Ith JSn 1 Dilc 31

Current Current Farm cash checking Accounts payable $ 10064 $ 9151 amp saving$ $ 2675 $ 1734 Operating debt 5982 6732

Accounts rec 16672 19609 Short-term 448 4314 Feed amp supplies 42430 42412

Total $ 68777 $ 70755 Total $ 18494 $ 20196 Intemilsliate Intermilsllate Dairy cows 97805 99503

owned 79625 78604 leased 0 0

Heifers 42800 37495 Bullsother lvstk 3886 3027 Macheq owned 130959 127430 Macheq leased Coop stock amp cert

1214 1JZ2~

1755 lJ2~2

Financial lease (cattlemach ) 1214 1Z55

Total $272207 $262276 Total $ 99019 $101258 l=ong-Term Long-Term Landjbulldings 181283 176493

owned 314960 303056 leased 1QQ2 1QJ Total $315969 $304090 Financial lease

(structures) 1009 103 Total $182291 $177528

Total Farm Assets $656953 $637122 Total Farm Liab $299804 $298981 FARM NET WORTH $357149 $338140

Nonfarm Liabilities NonfSI Assect~tsect Jm 1 D~pound n ~ N~t i2Ith Jm 1 Qec 31

Personal cash chkg amp savings $ 505

Cash value life ins 5331 $ 692

6058

Nonfarm Uab NOHfARM HiT iQRTH

IfARM amp6QHFARM

$ 0 ~17lJZ Jan 1

$ 0 ~18JIZ Qec ~l

Nonfarm real estate 1063 451 ITotal Assets $674090 $655439 Auto (personal sh) Stocks ampbonds

2861 1611

3087 2034

ITotal Liabilities I

2998Q4 98981

Household furn 5365 5674 I All other Ql 321 ITOTAL FARM amp NON-

Total Nonfarm $ 17137 $ 18317 I FARM NET WORTH $374286 $356457

Financial lease obligations are included in the balance sheet The present values of all future payments are listed as liabilities since the farmer (lessee) is committed to make the payments The present values are also listed as assets representing the future value the item has to the business

9

1985 FARM BUSINESS amp NONFARM BALANCE SHEET

Farm Assets Jan 1 Dec 31 Farm Liabilities amp Net Worth Jan 1 Dec 31

Current Farm cash checking amp savings

Accounts rec Feed amp supplies

Current Accounts payable Operating debt Short-term

Total Total

Intermediate Dairy cows

owned leased

Heifers Bullsother Ivstk Macheq owned Macheq leased Coop stock amp cert

Total

IntlUJlediate

Financial lease (cattlemach )

Total

Loni-Term LandbuUdings

owned leased

Loni-Term

Total

Total Farm Assets

Financial lease (structures) Total

Total Farm Liab FARM NET WORTH

Nonfarm Liabilities Nonfarm Assets Jan 1 Dec 31 ampNet Worth Jan 1 Dec 31

Nonfarm Liab Personal cash

amp savings chkg

Cash value life ins

Nonfarm real est Auto (pers share) Stocks ampbonds

Total Nonfarm Liabilities

Household furn All other Nonfarm

Total Nonfarm Net Worth

TOTAL FARM ~ NONFARM Jan 1 Dec 31

Total Farm amp Nonfarm Assets Less Total Farm amp Nonfarm Liabilities Farm amp Nonfarm Net Worth

10

Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed

BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309

Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047

long-term 058 intermediatecurrent 036

Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59

Intermediate amp current debt

Current amp inter 1iab as a of total debt 41

Farm Debt Levels Total farm debt Long-term debt

Per Cow $3082

1830

Per Tillable Acre Owned

$1220 725

Per Cow $_-shy

1252 496

$_-shy$_-shy

----_ ---_ ---_

Per Tillable Acre Owned $_--shy

Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these 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 23 Central Plain Region Dairy Farms 1985

Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg

Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy

$1330 land and $4097 buildings andor depreciable improvements

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 years cash flow is the first step toward planning and managing cash flow for the current and future years

The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end 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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm Cash Inflows

Beginning farm cash checking amp savings

Cash farm receipts

Sale of assets Machinery

Real estate

Money borrowed (intermediate amp long-term)

Money borrowed (short-term)

Increase in operating debt

Nonfarm income

Money borrowed - nonfarm

Total

Cash Outflows

Cash farm expenses

Capital purchases Expansion livestock

Machinery

Real estate

Principal payments (intermediate amp long-term)

Principal payments (short-term)

Decrease in operating debt

Nonfarm debt payments

Personal withdrawals amp family expo

Ending farm cash checking amp savings

Total

Imbalance (error)

$ 2675

219448

214

7363

24469

2485

750

1461

0

$258865

$182243

918

11654

5427

27561

620

0

0

10708

1734

$240860

$ 18005

$

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 receiptdebt payment ratios

FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986

Debt Payments

Avetaamp~ 1985 Payments

Planned Made Planned

1986

My Farm 1985 Payments

Planned Made Planned

1986

Long-term IntermShort-Operating (net

redu

(net reduction)

ediate-term term

ction Accounts payable

$20431 30095 9705

0

6294

$28583 29330 1004

0

3548

$17021 27543

3490

3769

2112

$_-- $_-- $_-shy

Total $66526 $62465 $53934 $ $_-- $_-shy

Per cow Per cwt Percen

1985 milk t of total

$723 $477

$679 $448

$ $_-shy$_-_$_-shy

1985 receipts Percent of 1985

29 27

milk receipts 38 35

The Cash Flow Covetaampe 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 years available cash flow report

Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments

CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Cash farm receipts $227219 $_--shy- Cash farm expenses 189555

+ Interest paid 25369

- Net personal withdrawals from farm 11980

(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077

Personal withdrawals and family expenditures less nonfarm income 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 indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency

to allow a m and the

more factors

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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Land Tillable Nonti1lable 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

~ Rented Total 245 163 407

20 7 26 90 -1Q 100

355 180 533

fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn

47 tn DM 2 14 12 tn DM

23 205 35 tn DM 22 124 806 bu 13 46 807 bu

9 36 626 bu 8 42 6 19

12 45 407

Rented

~ frodLAcre 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 23 Central Plain Region Dairy Farms 1985

Item My Farm

Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow

431 217 760

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 Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed

to equal one ton of

CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985

Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops

Expense Acre Acre Ton DM Acre Eguiv Per Acre

Fertilizer amp lime $2872 $ 975 $171 $4458 $181 $2950 Seeds amp plants 1250 726 127 1932 079 877 Spray amp other crop

expense 1251 408 -2ll 2480 JJll 799 Total $5374 $2110 $369 $8869 $361 $4627

My Farm

Fertilizer amp lime $__ $__ $__ $_- $_- $_shySeeds amp plants Spray amp other crop

expense Total $__ $== $==

Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres

Corn grain converted to silage equivalent using 588 bushels - one ton 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 23 Central Plain Region Dairy Farms 1985

My Farm Machinery Total Per Til Total Per Til

Expense Item Expenses Acre Expenses Acre

Fuel oil amp grease Machinery repairs amp parts

$ 9606 12071

$2358 2963

$_-shy $_-shy

Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919

Total $51364 $12607 $_-shy $_--shy

15

Dairy Program Analysis

Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business 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 23 Central Plain Region Dairy Farms 1985

pairy Cows Heifers Item Number Value Number Value

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

92

96 97 95

$79625 3763

-4784 $78604

89

87

88

$42800 -2548 -2757

$37495

My Farm

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

$_--shy

$_--shy

$_--shy

$_--shy

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

MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985

Item

Total milk sold lbs

Average

1399978

My Farm

Milk sold per cow lbs 14811

Average milk plant test percent butterfat 365

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 nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation

ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt

Accrual Receipts Milk Dairy cattle

$176689 13389

$1869 142

$1262 096

$_-shy $_-shy $_-shy

Dairy calves 2073 ----22 015 Total $192151 $2033 $1373 $_-shy $_-shy $_-shy

Accrual Costs of Producing Milk Operating costs Total costs withshy

$140178 $1483 $1001 $_-shy $_-shy $_-shy

out op(s) labor mgmt amp capital

Total Costs $169633 $212658

$1795 $2250

$1212 $1519

$_-shy$_-shy

$_-shy$_-shy

$_-shy$_-shy

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 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt

Purchased dairy grain amp concentrates

Purchased dairy roughage Total Purchased

Dairy Feed Purchased grain amp conc as of milk receipts

Purchased feed amp crop expo Purchased feed amp crop expo

as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense

$308 ---12

$208 JLU

$ $_-shy

$339 $229 $ $_--shy

$571 16

$386 $ -- $_-shy

$31 41

101 2

81

3U $021 027 068 001 055

$ $_-shy

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 managements success

CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985

Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned

Farm capital Real estate Machinery amp equipment Capital turnover years

$180569

36469

$6845 3280 1383

295

$1588

321

$2641 1265

My Farm Farm capital Real estate

$_-shy $_--shy $_-shy $_-shy

Machinery amp equipment Capital turnover years

LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985

Labor Force Months Age

Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired

Total

My Farm Total Operators

11 4 2 6 2

18 43

44 44 32

+ 12 shy

+ 12 shy+ 12 shy

Years of gf Educ

Value of Labor amp Mgmt

14 13 13

$17283 6574 2261

358 Yorker Equivalent 142 OperatorManager Equiv

___ Yorker Equivalent OperatorManager Equiv

Labor Efficiency

Average Total Per Yorker Total

My Farm Per Yorker

Cows average number Milk sold pounds Tillable acres

95 1399978

407

26 390692

114 York units 1105 308

Average My Eatm Per Per Per Per

Labor Costs Total Cow Iil Acre Iotal Cow Til Acre

Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $

Family unpd ($550mo) 1100 12 270 Hired 26995 286 6626 Total Labor $41695 $441 $10234 $ $ $ Machinery Cost $51364 $543 $12607 $ $ $ Total Labor amp Mach $93059 $985 $22840 $ $ $

18

ANNUAL CASH FLOW WORKSHEEET

Regional Hy Farm Expected 1986 Item Average Total Per Cow Change Projection

(per cow) Average number of cows 95 Accrual Oper Receipts Milk Dairy cattle

$186929 14165

$___ $_shy ---_$_--shyDairy calves 21 93 Other livestock 3340 Crops 13625 Misc receipts 121 80

Total $232432 $___ $_shy ---_$_--shyAccrual Oper Expensect~s Hired labor Dairy grain amp conc

$ 28560 30770

$ $_shy ---_$_--shyDairy roughage 31 79 Other lvstk feed 2674 Mach hirerentlease 3067 Mach Fuel

rpr parts amp auto oil amp grease

12993 10112

Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691

Total Less Int Paid $164775 $_--shy

Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy

- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp

family expenditures 10708 Available for Debt Payments

Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment

amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle

machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy

6

Profitability Analysis

Farm ownersoperators 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 operator(s) and other unpaid family members for their labor management and equity capital It is the farm familys net annual return from working managing financing and owning the farm business This is not a measure of cash available from the years business operation Cash flow is evaluated later in this report

Net farm income is computed with and without appreciation Appreciashytion represents the change in livestock machinery and real estate inventory values caused by changes in prices during the year Appreciation is a major factor contributing to changes in farm net worth and must be included in the profitability analysis

NET FARM INCOME 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Total accrual receipts Appreciation Livestock

Machinery Real Estate

Total Including Appreciation Total accrual expenses Net Farm Income (with appreciation) Net Farm Income (without appreciation)

$219700 -7658 5072

-114 $217000

211545 $ 5455 $ 8155

$_--shy

$_-shy

$_-shy$_-shy

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 Operator(s) labor is not included in unpaid family labor Return to operator(s) labor manageshyment 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 OPERATOR(S) LABOR MANAGEMENT AND EQUITY 23 Central Plain Region Dairy Farms 1985

Item

Av~uage Without With Wprec Wprec

My Farm Without With Wprec Apprec

Net farm income $8155 $5455 $_-shy $_-shyFamily labor unpaid

$550 per month 1100 1lQO Return to operator(s)

labor management amp equity $7055 $4355 $_-shy $_-shy

7

Labor and manaampement income is the share of net farm income without appreciashytion returned to the operator(s) 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 operator(s) labor manageshyment 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 manaampement income per operator measures the return to each operators labor and management

LABOR AND MANAGEMENT INCOME 23 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Return to operator(s) labor management amp equity without appreciation

Real interest 5 on $338140 equity capital

Labor amp Management Income (142 operators)

Labor amp Management Income per Operator

$ 7055 $_-shy

16907

$-9852

$-6954

$_-shy

$_--shy

Return on equity capital measures the net return remaining for the farmers equity or owned capital after a charge has been made for the owner-operators labor and management The earnings or amount of net farm income allocated to labor and management is the opportunity cost or value of operator(s) 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 end of year farm net worth or equity capital

RETURN ON EQUITY CAPITAL 23 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Return to operator(s) labor management amp equity capital with appreciation

Value of operator(s) labor amp 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

$ 4355

26118

$-21763

-64

$-19063

-56

$_--shy

$_-shy

$_-shy

8

Farm and Family Fipancial 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

1985 FARM BUSINESS amp NONFARM BALANCE SHEET 23 Central Plain Region Dairy Farms 1985

Farm Liabilities Farm Ass~tsect JSn 1 Dec 31 ~ Net W0Ith JSn 1 Dilc 31

Current Current Farm cash checking Accounts payable $ 10064 $ 9151 amp saving$ $ 2675 $ 1734 Operating debt 5982 6732

Accounts rec 16672 19609 Short-term 448 4314 Feed amp supplies 42430 42412

Total $ 68777 $ 70755 Total $ 18494 $ 20196 Intemilsliate Intermilsllate Dairy cows 97805 99503

owned 79625 78604 leased 0 0

Heifers 42800 37495 Bullsother lvstk 3886 3027 Macheq owned 130959 127430 Macheq leased Coop stock amp cert

1214 1JZ2~

1755 lJ2~2

Financial lease (cattlemach ) 1214 1Z55

Total $272207 $262276 Total $ 99019 $101258 l=ong-Term Long-Term Landjbulldings 181283 176493

owned 314960 303056 leased 1QQ2 1QJ Total $315969 $304090 Financial lease

(structures) 1009 103 Total $182291 $177528

Total Farm Assets $656953 $637122 Total Farm Liab $299804 $298981 FARM NET WORTH $357149 $338140

Nonfarm Liabilities NonfSI Assect~tsect Jm 1 D~pound n ~ N~t i2Ith Jm 1 Qec 31

Personal cash chkg amp savings $ 505

Cash value life ins 5331 $ 692

6058

Nonfarm Uab NOHfARM HiT iQRTH

IfARM amp6QHFARM

$ 0 ~17lJZ Jan 1

$ 0 ~18JIZ Qec ~l

Nonfarm real estate 1063 451 ITotal Assets $674090 $655439 Auto (personal sh) Stocks ampbonds

2861 1611

3087 2034

ITotal Liabilities I

2998Q4 98981

Household furn 5365 5674 I All other Ql 321 ITOTAL FARM amp NON-

Total Nonfarm $ 17137 $ 18317 I FARM NET WORTH $374286 $356457

Financial lease obligations are included in the balance sheet The present values of all future payments are listed as liabilities since the farmer (lessee) is committed to make the payments The present values are also listed as assets representing the future value the item has to the business

9

1985 FARM BUSINESS amp NONFARM BALANCE SHEET

Farm Assets Jan 1 Dec 31 Farm Liabilities amp Net Worth Jan 1 Dec 31

Current Farm cash checking amp savings

Accounts rec Feed amp supplies

Current Accounts payable Operating debt Short-term

Total Total

Intermediate Dairy cows

owned leased

Heifers Bullsother Ivstk Macheq owned Macheq leased Coop stock amp cert

Total

IntlUJlediate

Financial lease (cattlemach )

Total

Loni-Term LandbuUdings

owned leased

Loni-Term

Total

Total Farm Assets

Financial lease (structures) Total

Total Farm Liab FARM NET WORTH

Nonfarm Liabilities Nonfarm Assets Jan 1 Dec 31 ampNet Worth Jan 1 Dec 31

Nonfarm Liab Personal cash

amp savings chkg

Cash value life ins

Nonfarm real est Auto (pers share) Stocks ampbonds

Total Nonfarm Liabilities

Household furn All other Nonfarm

Total Nonfarm Net Worth

TOTAL FARM ~ NONFARM Jan 1 Dec 31

Total Farm amp Nonfarm Assets Less Total Farm amp Nonfarm Liabilities Farm amp Nonfarm Net Worth

10

Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed

BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309

Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047

long-term 058 intermediatecurrent 036

Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59

Intermediate amp current debt

Current amp inter 1iab as a of total debt 41

Farm Debt Levels Total farm debt Long-term debt

Per Cow $3082

1830

Per Tillable Acre Owned

$1220 725

Per Cow $_-shy

1252 496

$_-shy$_-shy

----_ ---_ ---_

Per Tillable Acre Owned $_--shy

Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these 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 23 Central Plain Region Dairy Farms 1985

Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg

Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy

$1330 land and $4097 buildings andor depreciable improvements

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 years cash flow is the first step toward planning and managing cash flow for the current and future years

The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end 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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm Cash Inflows

Beginning farm cash checking amp savings

Cash farm receipts

Sale of assets Machinery

Real estate

Money borrowed (intermediate amp long-term)

Money borrowed (short-term)

Increase in operating debt

Nonfarm income

Money borrowed - nonfarm

Total

Cash Outflows

Cash farm expenses

Capital purchases Expansion livestock

Machinery

Real estate

Principal payments (intermediate amp long-term)

Principal payments (short-term)

Decrease in operating debt

Nonfarm debt payments

Personal withdrawals amp family expo

Ending farm cash checking amp savings

Total

Imbalance (error)

$ 2675

219448

214

7363

24469

2485

750

1461

0

$258865

$182243

918

11654

5427

27561

620

0

0

10708

1734

$240860

$ 18005

$

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 receiptdebt payment ratios

FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986

Debt Payments

Avetaamp~ 1985 Payments

Planned Made Planned

1986

My Farm 1985 Payments

Planned Made Planned

1986

Long-term IntermShort-Operating (net

redu

(net reduction)

ediate-term term

ction Accounts payable

$20431 30095 9705

0

6294

$28583 29330 1004

0

3548

$17021 27543

3490

3769

2112

$_-- $_-- $_-shy

Total $66526 $62465 $53934 $ $_-- $_-shy

Per cow Per cwt Percen

1985 milk t of total

$723 $477

$679 $448

$ $_-shy$_-_$_-shy

1985 receipts Percent of 1985

29 27

milk receipts 38 35

The Cash Flow Covetaampe 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 years available cash flow report

Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments

CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Cash farm receipts $227219 $_--shy- Cash farm expenses 189555

+ Interest paid 25369

- Net personal withdrawals from farm 11980

(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077

Personal withdrawals and family expenditures less nonfarm income 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 indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency

to allow a m and the

more factors

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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Land Tillable Nonti1lable 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

~ Rented Total 245 163 407

20 7 26 90 -1Q 100

355 180 533

fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn

47 tn DM 2 14 12 tn DM

23 205 35 tn DM 22 124 806 bu 13 46 807 bu

9 36 626 bu 8 42 6 19

12 45 407

Rented

~ frodLAcre 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 23 Central Plain Region Dairy Farms 1985

Item My Farm

Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow

431 217 760

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 Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed

to equal one ton of

CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985

Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops

Expense Acre Acre Ton DM Acre Eguiv Per Acre

Fertilizer amp lime $2872 $ 975 $171 $4458 $181 $2950 Seeds amp plants 1250 726 127 1932 079 877 Spray amp other crop

expense 1251 408 -2ll 2480 JJll 799 Total $5374 $2110 $369 $8869 $361 $4627

My Farm

Fertilizer amp lime $__ $__ $__ $_- $_- $_shySeeds amp plants Spray amp other crop

expense Total $__ $== $==

Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres

Corn grain converted to silage equivalent using 588 bushels - one ton 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 23 Central Plain Region Dairy Farms 1985

My Farm Machinery Total Per Til Total Per Til

Expense Item Expenses Acre Expenses Acre

Fuel oil amp grease Machinery repairs amp parts

$ 9606 12071

$2358 2963

$_-shy $_-shy

Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919

Total $51364 $12607 $_-shy $_--shy

15

Dairy Program Analysis

Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business 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 23 Central Plain Region Dairy Farms 1985

pairy Cows Heifers Item Number Value Number Value

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

92

96 97 95

$79625 3763

-4784 $78604

89

87

88

$42800 -2548 -2757

$37495

My Farm

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

$_--shy

$_--shy

$_--shy

$_--shy

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

MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985

Item

Total milk sold lbs

Average

1399978

My Farm

Milk sold per cow lbs 14811

Average milk plant test percent butterfat 365

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 nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation

ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt

Accrual Receipts Milk Dairy cattle

$176689 13389

$1869 142

$1262 096

$_-shy $_-shy $_-shy

Dairy calves 2073 ----22 015 Total $192151 $2033 $1373 $_-shy $_-shy $_-shy

Accrual Costs of Producing Milk Operating costs Total costs withshy

$140178 $1483 $1001 $_-shy $_-shy $_-shy

out op(s) labor mgmt amp capital

Total Costs $169633 $212658

$1795 $2250

$1212 $1519

$_-shy$_-shy

$_-shy$_-shy

$_-shy$_-shy

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 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt

Purchased dairy grain amp concentrates

Purchased dairy roughage Total Purchased

Dairy Feed Purchased grain amp conc as of milk receipts

Purchased feed amp crop expo Purchased feed amp crop expo

as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense

$308 ---12

$208 JLU

$ $_-shy

$339 $229 $ $_--shy

$571 16

$386 $ -- $_-shy

$31 41

101 2

81

3U $021 027 068 001 055

$ $_-shy

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 managements success

CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985

Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned

Farm capital Real estate Machinery amp equipment Capital turnover years

$180569

36469

$6845 3280 1383

295

$1588

321

$2641 1265

My Farm Farm capital Real estate

$_-shy $_--shy $_-shy $_-shy

Machinery amp equipment Capital turnover years

LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985

Labor Force Months Age

Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired

Total

My Farm Total Operators

11 4 2 6 2

18 43

44 44 32

+ 12 shy

+ 12 shy+ 12 shy

Years of gf Educ

Value of Labor amp Mgmt

14 13 13

$17283 6574 2261

358 Yorker Equivalent 142 OperatorManager Equiv

___ Yorker Equivalent OperatorManager Equiv

Labor Efficiency

Average Total Per Yorker Total

My Farm Per Yorker

Cows average number Milk sold pounds Tillable acres

95 1399978

407

26 390692

114 York units 1105 308

Average My Eatm Per Per Per Per

Labor Costs Total Cow Iil Acre Iotal Cow Til Acre

Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $

Family unpd ($550mo) 1100 12 270 Hired 26995 286 6626 Total Labor $41695 $441 $10234 $ $ $ Machinery Cost $51364 $543 $12607 $ $ $ Total Labor amp Mach $93059 $985 $22840 $ $ $

18

ANNUAL CASH FLOW WORKSHEEET

Regional Hy Farm Expected 1986 Item Average Total Per Cow Change Projection

(per cow) Average number of cows 95 Accrual Oper Receipts Milk Dairy cattle

$186929 14165

$___ $_shy ---_$_--shyDairy calves 21 93 Other livestock 3340 Crops 13625 Misc receipts 121 80

Total $232432 $___ $_shy ---_$_--shyAccrual Oper Expensect~s Hired labor Dairy grain amp conc

$ 28560 30770

$ $_shy ---_$_--shyDairy roughage 31 79 Other lvstk feed 2674 Mach hirerentlease 3067 Mach Fuel

rpr parts amp auto oil amp grease

12993 10112

Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691

Total Less Int Paid $164775 $_--shy

Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy

- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp

family expenditures 10708 Available for Debt Payments

Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment

amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle

machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy

7

Labor and manaampement income is the share of net farm income without appreciashytion returned to the operator(s) 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 operator(s) labor manageshyment 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 manaampement income per operator measures the return to each operators labor and management

LABOR AND MANAGEMENT INCOME 23 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Return to operator(s) labor management amp equity without appreciation

Real interest 5 on $338140 equity capital

Labor amp Management Income (142 operators)

Labor amp Management Income per Operator

$ 7055 $_-shy

16907

$-9852

$-6954

$_-shy

$_--shy

Return on equity capital measures the net return remaining for the farmers equity or owned capital after a charge has been made for the owner-operators labor and management The earnings or amount of net farm income allocated to labor and management is the opportunity cost or value of operator(s) 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 end of year farm net worth or equity capital

RETURN ON EQUITY CAPITAL 23 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Return to operator(s) labor management amp equity capital with appreciation

Value of operator(s) labor amp 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

$ 4355

26118

$-21763

-64

$-19063

-56

$_--shy

$_-shy

$_-shy

8

Farm and Family Fipancial 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

1985 FARM BUSINESS amp NONFARM BALANCE SHEET 23 Central Plain Region Dairy Farms 1985

Farm Liabilities Farm Ass~tsect JSn 1 Dec 31 ~ Net W0Ith JSn 1 Dilc 31

Current Current Farm cash checking Accounts payable $ 10064 $ 9151 amp saving$ $ 2675 $ 1734 Operating debt 5982 6732

Accounts rec 16672 19609 Short-term 448 4314 Feed amp supplies 42430 42412

Total $ 68777 $ 70755 Total $ 18494 $ 20196 Intemilsliate Intermilsllate Dairy cows 97805 99503

owned 79625 78604 leased 0 0

Heifers 42800 37495 Bullsother lvstk 3886 3027 Macheq owned 130959 127430 Macheq leased Coop stock amp cert

1214 1JZ2~

1755 lJ2~2

Financial lease (cattlemach ) 1214 1Z55

Total $272207 $262276 Total $ 99019 $101258 l=ong-Term Long-Term Landjbulldings 181283 176493

owned 314960 303056 leased 1QQ2 1QJ Total $315969 $304090 Financial lease

(structures) 1009 103 Total $182291 $177528

Total Farm Assets $656953 $637122 Total Farm Liab $299804 $298981 FARM NET WORTH $357149 $338140

Nonfarm Liabilities NonfSI Assect~tsect Jm 1 D~pound n ~ N~t i2Ith Jm 1 Qec 31

Personal cash chkg amp savings $ 505

Cash value life ins 5331 $ 692

6058

Nonfarm Uab NOHfARM HiT iQRTH

IfARM amp6QHFARM

$ 0 ~17lJZ Jan 1

$ 0 ~18JIZ Qec ~l

Nonfarm real estate 1063 451 ITotal Assets $674090 $655439 Auto (personal sh) Stocks ampbonds

2861 1611

3087 2034

ITotal Liabilities I

2998Q4 98981

Household furn 5365 5674 I All other Ql 321 ITOTAL FARM amp NON-

Total Nonfarm $ 17137 $ 18317 I FARM NET WORTH $374286 $356457

Financial lease obligations are included in the balance sheet The present values of all future payments are listed as liabilities since the farmer (lessee) is committed to make the payments The present values are also listed as assets representing the future value the item has to the business

9

1985 FARM BUSINESS amp NONFARM BALANCE SHEET

Farm Assets Jan 1 Dec 31 Farm Liabilities amp Net Worth Jan 1 Dec 31

Current Farm cash checking amp savings

Accounts rec Feed amp supplies

Current Accounts payable Operating debt Short-term

Total Total

Intermediate Dairy cows

owned leased

Heifers Bullsother Ivstk Macheq owned Macheq leased Coop stock amp cert

Total

IntlUJlediate

Financial lease (cattlemach )

Total

Loni-Term LandbuUdings

owned leased

Loni-Term

Total

Total Farm Assets

Financial lease (structures) Total

Total Farm Liab FARM NET WORTH

Nonfarm Liabilities Nonfarm Assets Jan 1 Dec 31 ampNet Worth Jan 1 Dec 31

Nonfarm Liab Personal cash

amp savings chkg

Cash value life ins

Nonfarm real est Auto (pers share) Stocks ampbonds

Total Nonfarm Liabilities

Household furn All other Nonfarm

Total Nonfarm Net Worth

TOTAL FARM ~ NONFARM Jan 1 Dec 31

Total Farm amp Nonfarm Assets Less Total Farm amp Nonfarm Liabilities Farm amp Nonfarm Net Worth

10

Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed

BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309

Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047

long-term 058 intermediatecurrent 036

Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59

Intermediate amp current debt

Current amp inter 1iab as a of total debt 41

Farm Debt Levels Total farm debt Long-term debt

Per Cow $3082

1830

Per Tillable Acre Owned

$1220 725

Per Cow $_-shy

1252 496

$_-shy$_-shy

----_ ---_ ---_

Per Tillable Acre Owned $_--shy

Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these 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 23 Central Plain Region Dairy Farms 1985

Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg

Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy

$1330 land and $4097 buildings andor depreciable improvements

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 years cash flow is the first step toward planning and managing cash flow for the current and future years

The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end 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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm Cash Inflows

Beginning farm cash checking amp savings

Cash farm receipts

Sale of assets Machinery

Real estate

Money borrowed (intermediate amp long-term)

Money borrowed (short-term)

Increase in operating debt

Nonfarm income

Money borrowed - nonfarm

Total

Cash Outflows

Cash farm expenses

Capital purchases Expansion livestock

Machinery

Real estate

Principal payments (intermediate amp long-term)

Principal payments (short-term)

Decrease in operating debt

Nonfarm debt payments

Personal withdrawals amp family expo

Ending farm cash checking amp savings

Total

Imbalance (error)

$ 2675

219448

214

7363

24469

2485

750

1461

0

$258865

$182243

918

11654

5427

27561

620

0

0

10708

1734

$240860

$ 18005

$

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 receiptdebt payment ratios

FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986

Debt Payments

Avetaamp~ 1985 Payments

Planned Made Planned

1986

My Farm 1985 Payments

Planned Made Planned

1986

Long-term IntermShort-Operating (net

redu

(net reduction)

ediate-term term

ction Accounts payable

$20431 30095 9705

0

6294

$28583 29330 1004

0

3548

$17021 27543

3490

3769

2112

$_-- $_-- $_-shy

Total $66526 $62465 $53934 $ $_-- $_-shy

Per cow Per cwt Percen

1985 milk t of total

$723 $477

$679 $448

$ $_-shy$_-_$_-shy

1985 receipts Percent of 1985

29 27

milk receipts 38 35

The Cash Flow Covetaampe 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 years available cash flow report

Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments

CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Cash farm receipts $227219 $_--shy- Cash farm expenses 189555

+ Interest paid 25369

- Net personal withdrawals from farm 11980

(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077

Personal withdrawals and family expenditures less nonfarm income 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 indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency

to allow a m and the

more factors

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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Land Tillable Nonti1lable 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

~ Rented Total 245 163 407

20 7 26 90 -1Q 100

355 180 533

fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn

47 tn DM 2 14 12 tn DM

23 205 35 tn DM 22 124 806 bu 13 46 807 bu

9 36 626 bu 8 42 6 19

12 45 407

Rented

~ frodLAcre 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 23 Central Plain Region Dairy Farms 1985

Item My Farm

Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow

431 217 760

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 Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed

to equal one ton of

CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985

Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops

Expense Acre Acre Ton DM Acre Eguiv Per Acre

Fertilizer amp lime $2872 $ 975 $171 $4458 $181 $2950 Seeds amp plants 1250 726 127 1932 079 877 Spray amp other crop

expense 1251 408 -2ll 2480 JJll 799 Total $5374 $2110 $369 $8869 $361 $4627

My Farm

Fertilizer amp lime $__ $__ $__ $_- $_- $_shySeeds amp plants Spray amp other crop

expense Total $__ $== $==

Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres

Corn grain converted to silage equivalent using 588 bushels - one ton 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 23 Central Plain Region Dairy Farms 1985

My Farm Machinery Total Per Til Total Per Til

Expense Item Expenses Acre Expenses Acre

Fuel oil amp grease Machinery repairs amp parts

$ 9606 12071

$2358 2963

$_-shy $_-shy

Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919

Total $51364 $12607 $_-shy $_--shy

15

Dairy Program Analysis

Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business 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 23 Central Plain Region Dairy Farms 1985

pairy Cows Heifers Item Number Value Number Value

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

92

96 97 95

$79625 3763

-4784 $78604

89

87

88

$42800 -2548 -2757

$37495

My Farm

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

$_--shy

$_--shy

$_--shy

$_--shy

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

MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985

Item

Total milk sold lbs

Average

1399978

My Farm

Milk sold per cow lbs 14811

Average milk plant test percent butterfat 365

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 nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation

ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt

Accrual Receipts Milk Dairy cattle

$176689 13389

$1869 142

$1262 096

$_-shy $_-shy $_-shy

Dairy calves 2073 ----22 015 Total $192151 $2033 $1373 $_-shy $_-shy $_-shy

Accrual Costs of Producing Milk Operating costs Total costs withshy

$140178 $1483 $1001 $_-shy $_-shy $_-shy

out op(s) labor mgmt amp capital

Total Costs $169633 $212658

$1795 $2250

$1212 $1519

$_-shy$_-shy

$_-shy$_-shy

$_-shy$_-shy

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 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt

Purchased dairy grain amp concentrates

Purchased dairy roughage Total Purchased

Dairy Feed Purchased grain amp conc as of milk receipts

Purchased feed amp crop expo Purchased feed amp crop expo

as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense

$308 ---12

$208 JLU

$ $_-shy

$339 $229 $ $_--shy

$571 16

$386 $ -- $_-shy

$31 41

101 2

81

3U $021 027 068 001 055

$ $_-shy

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 managements success

CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985

Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned

Farm capital Real estate Machinery amp equipment Capital turnover years

$180569

36469

$6845 3280 1383

295

$1588

321

$2641 1265

My Farm Farm capital Real estate

$_-shy $_--shy $_-shy $_-shy

Machinery amp equipment Capital turnover years

LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985

Labor Force Months Age

Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired

Total

My Farm Total Operators

11 4 2 6 2

18 43

44 44 32

+ 12 shy

+ 12 shy+ 12 shy

Years of gf Educ

Value of Labor amp Mgmt

14 13 13

$17283 6574 2261

358 Yorker Equivalent 142 OperatorManager Equiv

___ Yorker Equivalent OperatorManager Equiv

Labor Efficiency

Average Total Per Yorker Total

My Farm Per Yorker

Cows average number Milk sold pounds Tillable acres

95 1399978

407

26 390692

114 York units 1105 308

Average My Eatm Per Per Per Per

Labor Costs Total Cow Iil Acre Iotal Cow Til Acre

Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $

Family unpd ($550mo) 1100 12 270 Hired 26995 286 6626 Total Labor $41695 $441 $10234 $ $ $ Machinery Cost $51364 $543 $12607 $ $ $ Total Labor amp Mach $93059 $985 $22840 $ $ $

18

ANNUAL CASH FLOW WORKSHEEET

Regional Hy Farm Expected 1986 Item Average Total Per Cow Change Projection

(per cow) Average number of cows 95 Accrual Oper Receipts Milk Dairy cattle

$186929 14165

$___ $_shy ---_$_--shyDairy calves 21 93 Other livestock 3340 Crops 13625 Misc receipts 121 80

Total $232432 $___ $_shy ---_$_--shyAccrual Oper Expensect~s Hired labor Dairy grain amp conc

$ 28560 30770

$ $_shy ---_$_--shyDairy roughage 31 79 Other lvstk feed 2674 Mach hirerentlease 3067 Mach Fuel

rpr parts amp auto oil amp grease

12993 10112

Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691

Total Less Int Paid $164775 $_--shy

Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy

- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp

family expenditures 10708 Available for Debt Payments

Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment

amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle

machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy

8

Farm and Family Fipancial 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

1985 FARM BUSINESS amp NONFARM BALANCE SHEET 23 Central Plain Region Dairy Farms 1985

Farm Liabilities Farm Ass~tsect JSn 1 Dec 31 ~ Net W0Ith JSn 1 Dilc 31

Current Current Farm cash checking Accounts payable $ 10064 $ 9151 amp saving$ $ 2675 $ 1734 Operating debt 5982 6732

Accounts rec 16672 19609 Short-term 448 4314 Feed amp supplies 42430 42412

Total $ 68777 $ 70755 Total $ 18494 $ 20196 Intemilsliate Intermilsllate Dairy cows 97805 99503

owned 79625 78604 leased 0 0

Heifers 42800 37495 Bullsother lvstk 3886 3027 Macheq owned 130959 127430 Macheq leased Coop stock amp cert

1214 1JZ2~

1755 lJ2~2

Financial lease (cattlemach ) 1214 1Z55

Total $272207 $262276 Total $ 99019 $101258 l=ong-Term Long-Term Landjbulldings 181283 176493

owned 314960 303056 leased 1QQ2 1QJ Total $315969 $304090 Financial lease

(structures) 1009 103 Total $182291 $177528

Total Farm Assets $656953 $637122 Total Farm Liab $299804 $298981 FARM NET WORTH $357149 $338140

Nonfarm Liabilities NonfSI Assect~tsect Jm 1 D~pound n ~ N~t i2Ith Jm 1 Qec 31

Personal cash chkg amp savings $ 505

Cash value life ins 5331 $ 692

6058

Nonfarm Uab NOHfARM HiT iQRTH

IfARM amp6QHFARM

$ 0 ~17lJZ Jan 1

$ 0 ~18JIZ Qec ~l

Nonfarm real estate 1063 451 ITotal Assets $674090 $655439 Auto (personal sh) Stocks ampbonds

2861 1611

3087 2034

ITotal Liabilities I

2998Q4 98981

Household furn 5365 5674 I All other Ql 321 ITOTAL FARM amp NON-

Total Nonfarm $ 17137 $ 18317 I FARM NET WORTH $374286 $356457

Financial lease obligations are included in the balance sheet The present values of all future payments are listed as liabilities since the farmer (lessee) is committed to make the payments The present values are also listed as assets representing the future value the item has to the business

9

1985 FARM BUSINESS amp NONFARM BALANCE SHEET

Farm Assets Jan 1 Dec 31 Farm Liabilities amp Net Worth Jan 1 Dec 31

Current Farm cash checking amp savings

Accounts rec Feed amp supplies

Current Accounts payable Operating debt Short-term

Total Total

Intermediate Dairy cows

owned leased

Heifers Bullsother Ivstk Macheq owned Macheq leased Coop stock amp cert

Total

IntlUJlediate

Financial lease (cattlemach )

Total

Loni-Term LandbuUdings

owned leased

Loni-Term

Total

Total Farm Assets

Financial lease (structures) Total

Total Farm Liab FARM NET WORTH

Nonfarm Liabilities Nonfarm Assets Jan 1 Dec 31 ampNet Worth Jan 1 Dec 31

Nonfarm Liab Personal cash

amp savings chkg

Cash value life ins

Nonfarm real est Auto (pers share) Stocks ampbonds

Total Nonfarm Liabilities

Household furn All other Nonfarm

Total Nonfarm Net Worth

TOTAL FARM ~ NONFARM Jan 1 Dec 31

Total Farm amp Nonfarm Assets Less Total Farm amp Nonfarm Liabilities Farm amp Nonfarm Net Worth

10

Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed

BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309

Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047

long-term 058 intermediatecurrent 036

Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59

Intermediate amp current debt

Current amp inter 1iab as a of total debt 41

Farm Debt Levels Total farm debt Long-term debt

Per Cow $3082

1830

Per Tillable Acre Owned

$1220 725

Per Cow $_-shy

1252 496

$_-shy$_-shy

----_ ---_ ---_

Per Tillable Acre Owned $_--shy

Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these 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 23 Central Plain Region Dairy Farms 1985

Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg

Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy

$1330 land and $4097 buildings andor depreciable improvements

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 years cash flow is the first step toward planning and managing cash flow for the current and future years

The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end 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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm Cash Inflows

Beginning farm cash checking amp savings

Cash farm receipts

Sale of assets Machinery

Real estate

Money borrowed (intermediate amp long-term)

Money borrowed (short-term)

Increase in operating debt

Nonfarm income

Money borrowed - nonfarm

Total

Cash Outflows

Cash farm expenses

Capital purchases Expansion livestock

Machinery

Real estate

Principal payments (intermediate amp long-term)

Principal payments (short-term)

Decrease in operating debt

Nonfarm debt payments

Personal withdrawals amp family expo

Ending farm cash checking amp savings

Total

Imbalance (error)

$ 2675

219448

214

7363

24469

2485

750

1461

0

$258865

$182243

918

11654

5427

27561

620

0

0

10708

1734

$240860

$ 18005

$

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 receiptdebt payment ratios

FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986

Debt Payments

Avetaamp~ 1985 Payments

Planned Made Planned

1986

My Farm 1985 Payments

Planned Made Planned

1986

Long-term IntermShort-Operating (net

redu

(net reduction)

ediate-term term

ction Accounts payable

$20431 30095 9705

0

6294

$28583 29330 1004

0

3548

$17021 27543

3490

3769

2112

$_-- $_-- $_-shy

Total $66526 $62465 $53934 $ $_-- $_-shy

Per cow Per cwt Percen

1985 milk t of total

$723 $477

$679 $448

$ $_-shy$_-_$_-shy

1985 receipts Percent of 1985

29 27

milk receipts 38 35

The Cash Flow Covetaampe 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 years available cash flow report

Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments

CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Cash farm receipts $227219 $_--shy- Cash farm expenses 189555

+ Interest paid 25369

- Net personal withdrawals from farm 11980

(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077

Personal withdrawals and family expenditures less nonfarm income 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 indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency

to allow a m and the

more factors

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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Land Tillable Nonti1lable 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

~ Rented Total 245 163 407

20 7 26 90 -1Q 100

355 180 533

fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn

47 tn DM 2 14 12 tn DM

23 205 35 tn DM 22 124 806 bu 13 46 807 bu

9 36 626 bu 8 42 6 19

12 45 407

Rented

~ frodLAcre 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 23 Central Plain Region Dairy Farms 1985

Item My Farm

Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow

431 217 760

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 Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed

to equal one ton of

CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985

Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops

Expense Acre Acre Ton DM Acre Eguiv Per Acre

Fertilizer amp lime $2872 $ 975 $171 $4458 $181 $2950 Seeds amp plants 1250 726 127 1932 079 877 Spray amp other crop

expense 1251 408 -2ll 2480 JJll 799 Total $5374 $2110 $369 $8869 $361 $4627

My Farm

Fertilizer amp lime $__ $__ $__ $_- $_- $_shySeeds amp plants Spray amp other crop

expense Total $__ $== $==

Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres

Corn grain converted to silage equivalent using 588 bushels - one ton 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 23 Central Plain Region Dairy Farms 1985

My Farm Machinery Total Per Til Total Per Til

Expense Item Expenses Acre Expenses Acre

Fuel oil amp grease Machinery repairs amp parts

$ 9606 12071

$2358 2963

$_-shy $_-shy

Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919

Total $51364 $12607 $_-shy $_--shy

15

Dairy Program Analysis

Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business 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 23 Central Plain Region Dairy Farms 1985

pairy Cows Heifers Item Number Value Number Value

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

92

96 97 95

$79625 3763

-4784 $78604

89

87

88

$42800 -2548 -2757

$37495

My Farm

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

$_--shy

$_--shy

$_--shy

$_--shy

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

MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985

Item

Total milk sold lbs

Average

1399978

My Farm

Milk sold per cow lbs 14811

Average milk plant test percent butterfat 365

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 nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation

ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt

Accrual Receipts Milk Dairy cattle

$176689 13389

$1869 142

$1262 096

$_-shy $_-shy $_-shy

Dairy calves 2073 ----22 015 Total $192151 $2033 $1373 $_-shy $_-shy $_-shy

Accrual Costs of Producing Milk Operating costs Total costs withshy

$140178 $1483 $1001 $_-shy $_-shy $_-shy

out op(s) labor mgmt amp capital

Total Costs $169633 $212658

$1795 $2250

$1212 $1519

$_-shy$_-shy

$_-shy$_-shy

$_-shy$_-shy

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 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt

Purchased dairy grain amp concentrates

Purchased dairy roughage Total Purchased

Dairy Feed Purchased grain amp conc as of milk receipts

Purchased feed amp crop expo Purchased feed amp crop expo

as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense

$308 ---12

$208 JLU

$ $_-shy

$339 $229 $ $_--shy

$571 16

$386 $ -- $_-shy

$31 41

101 2

81

3U $021 027 068 001 055

$ $_-shy

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 managements success

CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985

Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned

Farm capital Real estate Machinery amp equipment Capital turnover years

$180569

36469

$6845 3280 1383

295

$1588

321

$2641 1265

My Farm Farm capital Real estate

$_-shy $_--shy $_-shy $_-shy

Machinery amp equipment Capital turnover years

LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985

Labor Force Months Age

Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired

Total

My Farm Total Operators

11 4 2 6 2

18 43

44 44 32

+ 12 shy

+ 12 shy+ 12 shy

Years of gf Educ

Value of Labor amp Mgmt

14 13 13

$17283 6574 2261

358 Yorker Equivalent 142 OperatorManager Equiv

___ Yorker Equivalent OperatorManager Equiv

Labor Efficiency

Average Total Per Yorker Total

My Farm Per Yorker

Cows average number Milk sold pounds Tillable acres

95 1399978

407

26 390692

114 York units 1105 308

Average My Eatm Per Per Per Per

Labor Costs Total Cow Iil Acre Iotal Cow Til Acre

Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $

Family unpd ($550mo) 1100 12 270 Hired 26995 286 6626 Total Labor $41695 $441 $10234 $ $ $ Machinery Cost $51364 $543 $12607 $ $ $ Total Labor amp Mach $93059 $985 $22840 $ $ $

18

ANNUAL CASH FLOW WORKSHEEET

Regional Hy Farm Expected 1986 Item Average Total Per Cow Change Projection

(per cow) Average number of cows 95 Accrual Oper Receipts Milk Dairy cattle

$186929 14165

$___ $_shy ---_$_--shyDairy calves 21 93 Other livestock 3340 Crops 13625 Misc receipts 121 80

Total $232432 $___ $_shy ---_$_--shyAccrual Oper Expensect~s Hired labor Dairy grain amp conc

$ 28560 30770

$ $_shy ---_$_--shyDairy roughage 31 79 Other lvstk feed 2674 Mach hirerentlease 3067 Mach Fuel

rpr parts amp auto oil amp grease

12993 10112

Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691

Total Less Int Paid $164775 $_--shy

Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy

- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp

family expenditures 10708 Available for Debt Payments

Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment

amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle

machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy

9

1985 FARM BUSINESS amp NONFARM BALANCE SHEET

Farm Assets Jan 1 Dec 31 Farm Liabilities amp Net Worth Jan 1 Dec 31

Current Farm cash checking amp savings

Accounts rec Feed amp supplies

Current Accounts payable Operating debt Short-term

Total Total

Intermediate Dairy cows

owned leased

Heifers Bullsother Ivstk Macheq owned Macheq leased Coop stock amp cert

Total

IntlUJlediate

Financial lease (cattlemach )

Total

Loni-Term LandbuUdings

owned leased

Loni-Term

Total

Total Farm Assets

Financial lease (structures) Total

Total Farm Liab FARM NET WORTH

Nonfarm Liabilities Nonfarm Assets Jan 1 Dec 31 ampNet Worth Jan 1 Dec 31

Nonfarm Liab Personal cash

amp savings chkg

Cash value life ins

Nonfarm real est Auto (pers share) Stocks ampbonds

Total Nonfarm Liabilities

Household furn All other Nonfarm

Total Nonfarm Net Worth

TOTAL FARM ~ NONFARM Jan 1 Dec 31

Total Farm amp Nonfarm Assets Less Total Farm amp Nonfarm Liabilities Farm amp Nonfarm Net Worth

10

Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed

BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309

Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047

long-term 058 intermediatecurrent 036

Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59

Intermediate amp current debt

Current amp inter 1iab as a of total debt 41

Farm Debt Levels Total farm debt Long-term debt

Per Cow $3082

1830

Per Tillable Acre Owned

$1220 725

Per Cow $_-shy

1252 496

$_-shy$_-shy

----_ ---_ ---_

Per Tillable Acre Owned $_--shy

Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these 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 23 Central Plain Region Dairy Farms 1985

Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg

Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy

$1330 land and $4097 buildings andor depreciable improvements

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 years cash flow is the first step toward planning and managing cash flow for the current and future years

The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end 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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm Cash Inflows

Beginning farm cash checking amp savings

Cash farm receipts

Sale of assets Machinery

Real estate

Money borrowed (intermediate amp long-term)

Money borrowed (short-term)

Increase in operating debt

Nonfarm income

Money borrowed - nonfarm

Total

Cash Outflows

Cash farm expenses

Capital purchases Expansion livestock

Machinery

Real estate

Principal payments (intermediate amp long-term)

Principal payments (short-term)

Decrease in operating debt

Nonfarm debt payments

Personal withdrawals amp family expo

Ending farm cash checking amp savings

Total

Imbalance (error)

$ 2675

219448

214

7363

24469

2485

750

1461

0

$258865

$182243

918

11654

5427

27561

620

0

0

10708

1734

$240860

$ 18005

$

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 receiptdebt payment ratios

FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986

Debt Payments

Avetaamp~ 1985 Payments

Planned Made Planned

1986

My Farm 1985 Payments

Planned Made Planned

1986

Long-term IntermShort-Operating (net

redu

(net reduction)

ediate-term term

ction Accounts payable

$20431 30095 9705

0

6294

$28583 29330 1004

0

3548

$17021 27543

3490

3769

2112

$_-- $_-- $_-shy

Total $66526 $62465 $53934 $ $_-- $_-shy

Per cow Per cwt Percen

1985 milk t of total

$723 $477

$679 $448

$ $_-shy$_-_$_-shy

1985 receipts Percent of 1985

29 27

milk receipts 38 35

The Cash Flow Covetaampe 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 years available cash flow report

Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments

CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Cash farm receipts $227219 $_--shy- Cash farm expenses 189555

+ Interest paid 25369

- Net personal withdrawals from farm 11980

(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077

Personal withdrawals and family expenditures less nonfarm income 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 indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency

to allow a m and the

more factors

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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Land Tillable Nonti1lable 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

~ Rented Total 245 163 407

20 7 26 90 -1Q 100

355 180 533

fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn

47 tn DM 2 14 12 tn DM

23 205 35 tn DM 22 124 806 bu 13 46 807 bu

9 36 626 bu 8 42 6 19

12 45 407

Rented

~ frodLAcre 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 23 Central Plain Region Dairy Farms 1985

Item My Farm

Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow

431 217 760

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 Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed

to equal one ton of

CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985

Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops

Expense Acre Acre Ton DM Acre Eguiv Per Acre

Fertilizer amp lime $2872 $ 975 $171 $4458 $181 $2950 Seeds amp plants 1250 726 127 1932 079 877 Spray amp other crop

expense 1251 408 -2ll 2480 JJll 799 Total $5374 $2110 $369 $8869 $361 $4627

My Farm

Fertilizer amp lime $__ $__ $__ $_- $_- $_shySeeds amp plants Spray amp other crop

expense Total $__ $== $==

Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres

Corn grain converted to silage equivalent using 588 bushels - one ton 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 23 Central Plain Region Dairy Farms 1985

My Farm Machinery Total Per Til Total Per Til

Expense Item Expenses Acre Expenses Acre

Fuel oil amp grease Machinery repairs amp parts

$ 9606 12071

$2358 2963

$_-shy $_-shy

Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919

Total $51364 $12607 $_-shy $_--shy

15

Dairy Program Analysis

Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business 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 23 Central Plain Region Dairy Farms 1985

pairy Cows Heifers Item Number Value Number Value

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

92

96 97 95

$79625 3763

-4784 $78604

89

87

88

$42800 -2548 -2757

$37495

My Farm

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

$_--shy

$_--shy

$_--shy

$_--shy

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

MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985

Item

Total milk sold lbs

Average

1399978

My Farm

Milk sold per cow lbs 14811

Average milk plant test percent butterfat 365

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 nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation

ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt

Accrual Receipts Milk Dairy cattle

$176689 13389

$1869 142

$1262 096

$_-shy $_-shy $_-shy

Dairy calves 2073 ----22 015 Total $192151 $2033 $1373 $_-shy $_-shy $_-shy

Accrual Costs of Producing Milk Operating costs Total costs withshy

$140178 $1483 $1001 $_-shy $_-shy $_-shy

out op(s) labor mgmt amp capital

Total Costs $169633 $212658

$1795 $2250

$1212 $1519

$_-shy$_-shy

$_-shy$_-shy

$_-shy$_-shy

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 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt

Purchased dairy grain amp concentrates

Purchased dairy roughage Total Purchased

Dairy Feed Purchased grain amp conc as of milk receipts

Purchased feed amp crop expo Purchased feed amp crop expo

as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense

$308 ---12

$208 JLU

$ $_-shy

$339 $229 $ $_--shy

$571 16

$386 $ -- $_-shy

$31 41

101 2

81

3U $021 027 068 001 055

$ $_-shy

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 managements success

CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985

Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned

Farm capital Real estate Machinery amp equipment Capital turnover years

$180569

36469

$6845 3280 1383

295

$1588

321

$2641 1265

My Farm Farm capital Real estate

$_-shy $_--shy $_-shy $_-shy

Machinery amp equipment Capital turnover years

LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985

Labor Force Months Age

Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired

Total

My Farm Total Operators

11 4 2 6 2

18 43

44 44 32

+ 12 shy

+ 12 shy+ 12 shy

Years of gf Educ

Value of Labor amp Mgmt

14 13 13

$17283 6574 2261

358 Yorker Equivalent 142 OperatorManager Equiv

___ Yorker Equivalent OperatorManager Equiv

Labor Efficiency

Average Total Per Yorker Total

My Farm Per Yorker

Cows average number Milk sold pounds Tillable acres

95 1399978

407

26 390692

114 York units 1105 308

Average My Eatm Per Per Per Per

Labor Costs Total Cow Iil Acre Iotal Cow Til Acre

Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $

Family unpd ($550mo) 1100 12 270 Hired 26995 286 6626 Total Labor $41695 $441 $10234 $ $ $ Machinery Cost $51364 $543 $12607 $ $ $ Total Labor amp Mach $93059 $985 $22840 $ $ $

18

ANNUAL CASH FLOW WORKSHEEET

Regional Hy Farm Expected 1986 Item Average Total Per Cow Change Projection

(per cow) Average number of cows 95 Accrual Oper Receipts Milk Dairy cattle

$186929 14165

$___ $_shy ---_$_--shyDairy calves 21 93 Other livestock 3340 Crops 13625 Misc receipts 121 80

Total $232432 $___ $_shy ---_$_--shyAccrual Oper Expensect~s Hired labor Dairy grain amp conc

$ 28560 30770

$ $_shy ---_$_--shyDairy roughage 31 79 Other lvstk feed 2674 Mach hirerentlease 3067 Mach Fuel

rpr parts amp auto oil amp grease

12993 10112

Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691

Total Less Int Paid $164775 $_--shy

Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy

- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp

family expenditures 10708 Available for Debt Payments

Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment

amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle

machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy

10

Balance sheet analysis continues by examining financial and debt ratios and factors measuring levels of debt Percent equity is calculated by dividing net worth by assets The debt to asset ratio is compiled by dividing liabilities by assets Low debt to asset ratios reflect strength in solvency and the potential capacity to borrow The debt analysis ratios show how well the debt is structured and managed

BALANCE SHEET ANALYSIS 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Change in Farm Net Worth From Balance Sheet -$19009 Excluding Appreciation -$16309

Financial Ratios -Farm Percent equity 53 Debtasset ratio total 047

long-term 058 intermediatecurrent 036

Financial Ratios - Farm amp Nonfarm Percent equity 54 Total debtasset ratio 046 Farm Debt Analysis Accounts payable as of total debt 3 Long-term liabilities as a of total debt 59

Intermediate amp current debt

Current amp inter 1iab as a of total debt 41

Farm Debt Levels Total farm debt Long-term debt

Per Cow $3082

1830

Per Tillable Acre Owned

$1220 725

Per Cow $_-shy

1252 496

$_-shy$_-shy

----_ ---_ ---_

Per Tillable Acre Owned $_--shy

Balance sheet analysis concludes with a summary of the inventory balancing procedure for farm real estate and machinery and equipment It is important to account for the value of these 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 23 Central Plain Region Dairy Farms 1985

Item Avamp of Reampional Farms My Farm ~ Mach lEg ~ Mach lEg

Value beg of year $314960 $130959 $_-shy $_-shyPurchases $5427 $11654 $_-- $_-shyLost capital 1210 deg Sales 8126 214 Depreciation 7882 20041 Net investment -11791 -8601 -+---shy -+--shyAppreciation -114 5072 ++---shy $-shyValue end of year $303056 $127430 $_-shy

$1330 land and $4097 buildings andor depreciable improvements

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 years cash flow is the first step toward planning and managing cash flow for the current and future years

The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end 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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm Cash Inflows

Beginning farm cash checking amp savings

Cash farm receipts

Sale of assets Machinery

Real estate

Money borrowed (intermediate amp long-term)

Money borrowed (short-term)

Increase in operating debt

Nonfarm income

Money borrowed - nonfarm

Total

Cash Outflows

Cash farm expenses

Capital purchases Expansion livestock

Machinery

Real estate

Principal payments (intermediate amp long-term)

Principal payments (short-term)

Decrease in operating debt

Nonfarm debt payments

Personal withdrawals amp family expo

Ending farm cash checking amp savings

Total

Imbalance (error)

$ 2675

219448

214

7363

24469

2485

750

1461

0

$258865

$182243

918

11654

5427

27561

620

0

0

10708

1734

$240860

$ 18005

$

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 receiptdebt payment ratios

FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986

Debt Payments

Avetaamp~ 1985 Payments

Planned Made Planned

1986

My Farm 1985 Payments

Planned Made Planned

1986

Long-term IntermShort-Operating (net

redu

(net reduction)

ediate-term term

ction Accounts payable

$20431 30095 9705

0

6294

$28583 29330 1004

0

3548

$17021 27543

3490

3769

2112

$_-- $_-- $_-shy

Total $66526 $62465 $53934 $ $_-- $_-shy

Per cow Per cwt Percen

1985 milk t of total

$723 $477

$679 $448

$ $_-shy$_-_$_-shy

1985 receipts Percent of 1985

29 27

milk receipts 38 35

The Cash Flow Covetaampe 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 years available cash flow report

Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments

CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Cash farm receipts $227219 $_--shy- Cash farm expenses 189555

+ Interest paid 25369

- Net personal withdrawals from farm 11980

(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077

Personal withdrawals and family expenditures less nonfarm income 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 indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency

to allow a m and the

more factors

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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Land Tillable Nonti1lable 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

~ Rented Total 245 163 407

20 7 26 90 -1Q 100

355 180 533

fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn

47 tn DM 2 14 12 tn DM

23 205 35 tn DM 22 124 806 bu 13 46 807 bu

9 36 626 bu 8 42 6 19

12 45 407

Rented

~ frodLAcre 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 23 Central Plain Region Dairy Farms 1985

Item My Farm

Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow

431 217 760

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 Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed

to equal one ton of

CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985

Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops

Expense Acre Acre Ton DM Acre Eguiv Per Acre

Fertilizer amp lime $2872 $ 975 $171 $4458 $181 $2950 Seeds amp plants 1250 726 127 1932 079 877 Spray amp other crop

expense 1251 408 -2ll 2480 JJll 799 Total $5374 $2110 $369 $8869 $361 $4627

My Farm

Fertilizer amp lime $__ $__ $__ $_- $_- $_shySeeds amp plants Spray amp other crop

expense Total $__ $== $==

Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres

Corn grain converted to silage equivalent using 588 bushels - one ton 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 23 Central Plain Region Dairy Farms 1985

My Farm Machinery Total Per Til Total Per Til

Expense Item Expenses Acre Expenses Acre

Fuel oil amp grease Machinery repairs amp parts

$ 9606 12071

$2358 2963

$_-shy $_-shy

Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919

Total $51364 $12607 $_-shy $_--shy

15

Dairy Program Analysis

Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business 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 23 Central Plain Region Dairy Farms 1985

pairy Cows Heifers Item Number Value Number Value

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

92

96 97 95

$79625 3763

-4784 $78604

89

87

88

$42800 -2548 -2757

$37495

My Farm

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

$_--shy

$_--shy

$_--shy

$_--shy

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

MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985

Item

Total milk sold lbs

Average

1399978

My Farm

Milk sold per cow lbs 14811

Average milk plant test percent butterfat 365

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 nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation

ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt

Accrual Receipts Milk Dairy cattle

$176689 13389

$1869 142

$1262 096

$_-shy $_-shy $_-shy

Dairy calves 2073 ----22 015 Total $192151 $2033 $1373 $_-shy $_-shy $_-shy

Accrual Costs of Producing Milk Operating costs Total costs withshy

$140178 $1483 $1001 $_-shy $_-shy $_-shy

out op(s) labor mgmt amp capital

Total Costs $169633 $212658

$1795 $2250

$1212 $1519

$_-shy$_-shy

$_-shy$_-shy

$_-shy$_-shy

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 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt

Purchased dairy grain amp concentrates

Purchased dairy roughage Total Purchased

Dairy Feed Purchased grain amp conc as of milk receipts

Purchased feed amp crop expo Purchased feed amp crop expo

as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense

$308 ---12

$208 JLU

$ $_-shy

$339 $229 $ $_--shy

$571 16

$386 $ -- $_-shy

$31 41

101 2

81

3U $021 027 068 001 055

$ $_-shy

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 managements success

CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985

Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned

Farm capital Real estate Machinery amp equipment Capital turnover years

$180569

36469

$6845 3280 1383

295

$1588

321

$2641 1265

My Farm Farm capital Real estate

$_-shy $_--shy $_-shy $_-shy

Machinery amp equipment Capital turnover years

LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985

Labor Force Months Age

Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired

Total

My Farm Total Operators

11 4 2 6 2

18 43

44 44 32

+ 12 shy

+ 12 shy+ 12 shy

Years of gf Educ

Value of Labor amp Mgmt

14 13 13

$17283 6574 2261

358 Yorker Equivalent 142 OperatorManager Equiv

___ Yorker Equivalent OperatorManager Equiv

Labor Efficiency

Average Total Per Yorker Total

My Farm Per Yorker

Cows average number Milk sold pounds Tillable acres

95 1399978

407

26 390692

114 York units 1105 308

Average My Eatm Per Per Per Per

Labor Costs Total Cow Iil Acre Iotal Cow Til Acre

Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $

Family unpd ($550mo) 1100 12 270 Hired 26995 286 6626 Total Labor $41695 $441 $10234 $ $ $ Machinery Cost $51364 $543 $12607 $ $ $ Total Labor amp Mach $93059 $985 $22840 $ $ $

18

ANNUAL CASH FLOW WORKSHEEET

Regional Hy Farm Expected 1986 Item Average Total Per Cow Change Projection

(per cow) Average number of cows 95 Accrual Oper Receipts Milk Dairy cattle

$186929 14165

$___ $_shy ---_$_--shyDairy calves 21 93 Other livestock 3340 Crops 13625 Misc receipts 121 80

Total $232432 $___ $_shy ---_$_--shyAccrual Oper Expensect~s Hired labor Dairy grain amp conc

$ 28560 30770

$ $_shy ---_$_--shyDairy roughage 31 79 Other lvstk feed 2674 Mach hirerentlease 3067 Mach Fuel

rpr parts amp auto oil amp grease

12993 10112

Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691

Total Less Int Paid $164775 $_--shy

Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy

- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp

family expenditures 10708 Available for Debt Payments

Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment

amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle

machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy

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 years cash flow is the first step toward planning and managing cash flow for the current and future years

The Annual Cash Flow Statement in the following table is structured to compare all the cash inflows with all the cash outflows for the year Cash inflows include all the cash farm receipts receipts from the sale of farm assets additional funds borrowed as well as the amount of cash available at the beginning of the year Cash outflows include all the cash farm expenses capital purchases principal payments money taken out of the business and the cash balance left at years end 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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm Cash Inflows

Beginning farm cash checking amp savings

Cash farm receipts

Sale of assets Machinery

Real estate

Money borrowed (intermediate amp long-term)

Money borrowed (short-term)

Increase in operating debt

Nonfarm income

Money borrowed - nonfarm

Total

Cash Outflows

Cash farm expenses

Capital purchases Expansion livestock

Machinery

Real estate

Principal payments (intermediate amp long-term)

Principal payments (short-term)

Decrease in operating debt

Nonfarm debt payments

Personal withdrawals amp family expo

Ending farm cash checking amp savings

Total

Imbalance (error)

$ 2675

219448

214

7363

24469

2485

750

1461

0

$258865

$182243

918

11654

5427

27561

620

0

0

10708

1734

$240860

$ 18005

$

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 receiptdebt payment ratios

FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986

Debt Payments

Avetaamp~ 1985 Payments

Planned Made Planned

1986

My Farm 1985 Payments

Planned Made Planned

1986

Long-term IntermShort-Operating (net

redu

(net reduction)

ediate-term term

ction Accounts payable

$20431 30095 9705

0

6294

$28583 29330 1004

0

3548

$17021 27543

3490

3769

2112

$_-- $_-- $_-shy

Total $66526 $62465 $53934 $ $_-- $_-shy

Per cow Per cwt Percen

1985 milk t of total

$723 $477

$679 $448

$ $_-shy$_-_$_-shy

1985 receipts Percent of 1985

29 27

milk receipts 38 35

The Cash Flow Covetaampe 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 years available cash flow report

Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments

CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Cash farm receipts $227219 $_--shy- Cash farm expenses 189555

+ Interest paid 25369

- Net personal withdrawals from farm 11980

(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077

Personal withdrawals and family expenditures less nonfarm income 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 indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency

to allow a m and the

more factors

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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Land Tillable Nonti1lable 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

~ Rented Total 245 163 407

20 7 26 90 -1Q 100

355 180 533

fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn

47 tn DM 2 14 12 tn DM

23 205 35 tn DM 22 124 806 bu 13 46 807 bu

9 36 626 bu 8 42 6 19

12 45 407

Rented

~ frodLAcre 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 23 Central Plain Region Dairy Farms 1985

Item My Farm

Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow

431 217 760

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 Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed

to equal one ton of

CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985

Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops

Expense Acre Acre Ton DM Acre Eguiv Per Acre

Fertilizer amp lime $2872 $ 975 $171 $4458 $181 $2950 Seeds amp plants 1250 726 127 1932 079 877 Spray amp other crop

expense 1251 408 -2ll 2480 JJll 799 Total $5374 $2110 $369 $8869 $361 $4627

My Farm

Fertilizer amp lime $__ $__ $__ $_- $_- $_shySeeds amp plants Spray amp other crop

expense Total $__ $== $==

Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres

Corn grain converted to silage equivalent using 588 bushels - one ton 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 23 Central Plain Region Dairy Farms 1985

My Farm Machinery Total Per Til Total Per Til

Expense Item Expenses Acre Expenses Acre

Fuel oil amp grease Machinery repairs amp parts

$ 9606 12071

$2358 2963

$_-shy $_-shy

Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919

Total $51364 $12607 $_-shy $_--shy

15

Dairy Program Analysis

Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business 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 23 Central Plain Region Dairy Farms 1985

pairy Cows Heifers Item Number Value Number Value

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

92

96 97 95

$79625 3763

-4784 $78604

89

87

88

$42800 -2548 -2757

$37495

My Farm

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

$_--shy

$_--shy

$_--shy

$_--shy

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

MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985

Item

Total milk sold lbs

Average

1399978

My Farm

Milk sold per cow lbs 14811

Average milk plant test percent butterfat 365

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 nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation

ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt

Accrual Receipts Milk Dairy cattle

$176689 13389

$1869 142

$1262 096

$_-shy $_-shy $_-shy

Dairy calves 2073 ----22 015 Total $192151 $2033 $1373 $_-shy $_-shy $_-shy

Accrual Costs of Producing Milk Operating costs Total costs withshy

$140178 $1483 $1001 $_-shy $_-shy $_-shy

out op(s) labor mgmt amp capital

Total Costs $169633 $212658

$1795 $2250

$1212 $1519

$_-shy$_-shy

$_-shy$_-shy

$_-shy$_-shy

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 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt

Purchased dairy grain amp concentrates

Purchased dairy roughage Total Purchased

Dairy Feed Purchased grain amp conc as of milk receipts

Purchased feed amp crop expo Purchased feed amp crop expo

as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense

$308 ---12

$208 JLU

$ $_-shy

$339 $229 $ $_--shy

$571 16

$386 $ -- $_-shy

$31 41

101 2

81

3U $021 027 068 001 055

$ $_-shy

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 managements success

CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985

Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned

Farm capital Real estate Machinery amp equipment Capital turnover years

$180569

36469

$6845 3280 1383

295

$1588

321

$2641 1265

My Farm Farm capital Real estate

$_-shy $_--shy $_-shy $_-shy

Machinery amp equipment Capital turnover years

LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985

Labor Force Months Age

Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired

Total

My Farm Total Operators

11 4 2 6 2

18 43

44 44 32

+ 12 shy

+ 12 shy+ 12 shy

Years of gf Educ

Value of Labor amp Mgmt

14 13 13

$17283 6574 2261

358 Yorker Equivalent 142 OperatorManager Equiv

___ Yorker Equivalent OperatorManager Equiv

Labor Efficiency

Average Total Per Yorker Total

My Farm Per Yorker

Cows average number Milk sold pounds Tillable acres

95 1399978

407

26 390692

114 York units 1105 308

Average My Eatm Per Per Per Per

Labor Costs Total Cow Iil Acre Iotal Cow Til Acre

Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $

Family unpd ($550mo) 1100 12 270 Hired 26995 286 6626 Total Labor $41695 $441 $10234 $ $ $ Machinery Cost $51364 $543 $12607 $ $ $ Total Labor amp Mach $93059 $985 $22840 $ $ $

18

ANNUAL CASH FLOW WORKSHEEET

Regional Hy Farm Expected 1986 Item Average Total Per Cow Change Projection

(per cow) Average number of cows 95 Accrual Oper Receipts Milk Dairy cattle

$186929 14165

$___ $_shy ---_$_--shyDairy calves 21 93 Other livestock 3340 Crops 13625 Misc receipts 121 80

Total $232432 $___ $_shy ---_$_--shyAccrual Oper Expensect~s Hired labor Dairy grain amp conc

$ 28560 30770

$ $_shy ---_$_--shyDairy roughage 31 79 Other lvstk feed 2674 Mach hirerentlease 3067 Mach Fuel

rpr parts amp auto oil amp grease

12993 10112

Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691

Total Less Int Paid $164775 $_--shy

Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy

- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp

family expenditures 10708 Available for Debt Payments

Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment

amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle

machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy

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 receiptdebt payment ratios

FARM DEBT PAYMENTS PLANNED Same 17 Central Plain Region Dairy Farms 1985 and 1986

Debt Payments

Avetaamp~ 1985 Payments

Planned Made Planned

1986

My Farm 1985 Payments

Planned Made Planned

1986

Long-term IntermShort-Operating (net

redu

(net reduction)

ediate-term term

ction Accounts payable

$20431 30095 9705

0

6294

$28583 29330 1004

0

3548

$17021 27543

3490

3769

2112

$_-- $_-- $_-shy

Total $66526 $62465 $53934 $ $_-- $_-shy

Per cow Per cwt Percen

1985 milk t of total

$723 $477

$679 $448

$ $_-shy$_-_$_-shy

1985 receipts Percent of 1985

29 27

milk receipts 38 35

The Cash Flow Covetaampe 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 years available cash flow report

Farmers that did not participate in DFBS last year will find in their a cash flow coverage ratio based on this years planned debt payments

CASH FLOW COVERAGE RATIO Same 17 Central Plain Region Dairy Farms 1985

Item Averaampe My Farm

Cash farm receipts $227219 $_--shy- Cash farm expenses 189555

+ Interest paid 25369

- Net personal withdrawals from farm 11980

(A) Amount Available for Debt Service $ 51053 $---- shy(B) Debt Payments Planned for 1985 $ 66526 $---- shy(A + B) - Cash Flow Coverage Ratio for 1985 077

Personal withdrawals and family expenditures less nonfarm income 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 indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency

to allow a m and the

more factors

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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Land Tillable Nonti1lable 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

~ Rented Total 245 163 407

20 7 26 90 -1Q 100

355 180 533

fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn

47 tn DM 2 14 12 tn DM

23 205 35 tn DM 22 124 806 bu 13 46 807 bu

9 36 626 bu 8 42 6 19

12 45 407

Rented

~ frodLAcre 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 23 Central Plain Region Dairy Farms 1985

Item My Farm

Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow

431 217 760

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 Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed

to equal one ton of

CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985

Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops

Expense Acre Acre Ton DM Acre Eguiv Per Acre

Fertilizer amp lime $2872 $ 975 $171 $4458 $181 $2950 Seeds amp plants 1250 726 127 1932 079 877 Spray amp other crop

expense 1251 408 -2ll 2480 JJll 799 Total $5374 $2110 $369 $8869 $361 $4627

My Farm

Fertilizer amp lime $__ $__ $__ $_- $_- $_shySeeds amp plants Spray amp other crop

expense Total $__ $== $==

Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres

Corn grain converted to silage equivalent using 588 bushels - one ton 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 23 Central Plain Region Dairy Farms 1985

My Farm Machinery Total Per Til Total Per Til

Expense Item Expenses Acre Expenses Acre

Fuel oil amp grease Machinery repairs amp parts

$ 9606 12071

$2358 2963

$_-shy $_-shy

Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919

Total $51364 $12607 $_-shy $_--shy

15

Dairy Program Analysis

Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business 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 23 Central Plain Region Dairy Farms 1985

pairy Cows Heifers Item Number Value Number Value

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

92

96 97 95

$79625 3763

-4784 $78604

89

87

88

$42800 -2548 -2757

$37495

My Farm

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

$_--shy

$_--shy

$_--shy

$_--shy

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

MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985

Item

Total milk sold lbs

Average

1399978

My Farm

Milk sold per cow lbs 14811

Average milk plant test percent butterfat 365

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 nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation

ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt

Accrual Receipts Milk Dairy cattle

$176689 13389

$1869 142

$1262 096

$_-shy $_-shy $_-shy

Dairy calves 2073 ----22 015 Total $192151 $2033 $1373 $_-shy $_-shy $_-shy

Accrual Costs of Producing Milk Operating costs Total costs withshy

$140178 $1483 $1001 $_-shy $_-shy $_-shy

out op(s) labor mgmt amp capital

Total Costs $169633 $212658

$1795 $2250

$1212 $1519

$_-shy$_-shy

$_-shy$_-shy

$_-shy$_-shy

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 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt

Purchased dairy grain amp concentrates

Purchased dairy roughage Total Purchased

Dairy Feed Purchased grain amp conc as of milk receipts

Purchased feed amp crop expo Purchased feed amp crop expo

as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense

$308 ---12

$208 JLU

$ $_-shy

$339 $229 $ $_--shy

$571 16

$386 $ -- $_-shy

$31 41

101 2

81

3U $021 027 068 001 055

$ $_-shy

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 managements success

CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985

Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned

Farm capital Real estate Machinery amp equipment Capital turnover years

$180569

36469

$6845 3280 1383

295

$1588

321

$2641 1265

My Farm Farm capital Real estate

$_-shy $_--shy $_-shy $_-shy

Machinery amp equipment Capital turnover years

LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985

Labor Force Months Age

Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired

Total

My Farm Total Operators

11 4 2 6 2

18 43

44 44 32

+ 12 shy

+ 12 shy+ 12 shy

Years of gf Educ

Value of Labor amp Mgmt

14 13 13

$17283 6574 2261

358 Yorker Equivalent 142 OperatorManager Equiv

___ Yorker Equivalent OperatorManager Equiv

Labor Efficiency

Average Total Per Yorker Total

My Farm Per Yorker

Cows average number Milk sold pounds Tillable acres

95 1399978

407

26 390692

114 York units 1105 308

Average My Eatm Per Per Per Per

Labor Costs Total Cow Iil Acre Iotal Cow Til Acre

Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $

Family unpd ($550mo) 1100 12 270 Hired 26995 286 6626 Total Labor $41695 $441 $10234 $ $ $ Machinery Cost $51364 $543 $12607 $ $ $ Total Labor amp Mach $93059 $985 $22840 $ $ $

18

ANNUAL CASH FLOW WORKSHEEET

Regional Hy Farm Expected 1986 Item Average Total Per Cow Change Projection

(per cow) Average number of cows 95 Accrual Oper Receipts Milk Dairy cattle

$186929 14165

$___ $_shy ---_$_--shyDairy calves 21 93 Other livestock 3340 Crops 13625 Misc receipts 121 80

Total $232432 $___ $_shy ---_$_--shyAccrual Oper Expensect~s Hired labor Dairy grain amp conc

$ 28560 30770

$ $_shy ---_$_--shyDairy roughage 31 79 Other lvstk feed 2674 Mach hirerentlease 3067 Mach Fuel

rpr parts amp auto oil amp grease

12993 10112

Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691

Total Less Int Paid $164775 $_--shy

Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy

- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp

family expenditures 10708 Available for Debt Payments

Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment

amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle

machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy

------

13

ANALYSIS OF THE FARM BUSINESS

The farm business has been divided into three parts indepth analysis of the cropping program the dairy prograaffecting capital and labor efficiency

to allow a m and the

more factors

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 23 Central Plain Region Dairy Farms 1985

Item Average My Farm

Land Tillable Nonti1lable 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

~ Rented Total 245 163 407

20 7 26 90 -1Q 100

355 180 533

fimsect ~ fIQdLAcI~ 23 134 29 tn DM 22 72 132 tn

47 tn DM 2 14 12 tn DM

23 205 35 tn DM 22 124 806 bu 13 46 807 bu

9 36 626 bu 8 42 6 19

12 45 407

Rented

~ frodLAcre 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 23 Central Plain Region Dairy Farms 1985

Item My Farm

Total tillable acres per cow Total forage acres per cow Harvested forage dry matter tons per cow

431 217 760

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 Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed

to equal one ton of

CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985

Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops

Expense Acre Acre Ton DM Acre Eguiv Per Acre

Fertilizer amp lime $2872 $ 975 $171 $4458 $181 $2950 Seeds amp plants 1250 726 127 1932 079 877 Spray amp other crop

expense 1251 408 -2ll 2480 JJll 799 Total $5374 $2110 $369 $8869 $361 $4627

My Farm

Fertilizer amp lime $__ $__ $__ $_- $_- $_shySeeds amp plants Spray amp other crop

expense Total $__ $== $==

Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres

Corn grain converted to silage equivalent using 588 bushels - one ton 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 23 Central Plain Region Dairy Farms 1985

My Farm Machinery Total Per Til Total Per Til

Expense Item Expenses Acre Expenses Acre

Fuel oil amp grease Machinery repairs amp parts

$ 9606 12071

$2358 2963

$_-shy $_-shy

Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919

Total $51364 $12607 $_-shy $_--shy

15

Dairy Program Analysis

Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business 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 23 Central Plain Region Dairy Farms 1985

pairy Cows Heifers Item Number Value Number Value

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

92

96 97 95

$79625 3763

-4784 $78604

89

87

88

$42800 -2548 -2757

$37495

My Farm

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

$_--shy

$_--shy

$_--shy

$_--shy

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

MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985

Item

Total milk sold lbs

Average

1399978

My Farm

Milk sold per cow lbs 14811

Average milk plant test percent butterfat 365

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 nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation

ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt

Accrual Receipts Milk Dairy cattle

$176689 13389

$1869 142

$1262 096

$_-shy $_-shy $_-shy

Dairy calves 2073 ----22 015 Total $192151 $2033 $1373 $_-shy $_-shy $_-shy

Accrual Costs of Producing Milk Operating costs Total costs withshy

$140178 $1483 $1001 $_-shy $_-shy $_-shy

out op(s) labor mgmt amp capital

Total Costs $169633 $212658

$1795 $2250

$1212 $1519

$_-shy$_-shy

$_-shy$_-shy

$_-shy$_-shy

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 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt

Purchased dairy grain amp concentrates

Purchased dairy roughage Total Purchased

Dairy Feed Purchased grain amp conc as of milk receipts

Purchased feed amp crop expo Purchased feed amp crop expo

as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense

$308 ---12

$208 JLU

$ $_-shy

$339 $229 $ $_--shy

$571 16

$386 $ -- $_-shy

$31 41

101 2

81

3U $021 027 068 001 055

$ $_-shy

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 managements success

CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985

Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned

Farm capital Real estate Machinery amp equipment Capital turnover years

$180569

36469

$6845 3280 1383

295

$1588

321

$2641 1265

My Farm Farm capital Real estate

$_-shy $_--shy $_-shy $_-shy

Machinery amp equipment Capital turnover years

LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985

Labor Force Months Age

Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired

Total

My Farm Total Operators

11 4 2 6 2

18 43

44 44 32

+ 12 shy

+ 12 shy+ 12 shy

Years of gf Educ

Value of Labor amp Mgmt

14 13 13

$17283 6574 2261

358 Yorker Equivalent 142 OperatorManager Equiv

___ Yorker Equivalent OperatorManager Equiv

Labor Efficiency

Average Total Per Yorker Total

My Farm Per Yorker

Cows average number Milk sold pounds Tillable acres

95 1399978

407

26 390692

114 York units 1105 308

Average My Eatm Per Per Per Per

Labor Costs Total Cow Iil Acre Iotal Cow Til Acre

Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $

Family unpd ($550mo) 1100 12 270 Hired 26995 286 6626 Total Labor $41695 $441 $10234 $ $ $ Machinery Cost $51364 $543 $12607 $ $ $ Total Labor amp Mach $93059 $985 $22840 $ $ $

18

ANNUAL CASH FLOW WORKSHEEET

Regional Hy Farm Expected 1986 Item Average Total Per Cow Change Projection

(per cow) Average number of cows 95 Accrual Oper Receipts Milk Dairy cattle

$186929 14165

$___ $_shy ---_$_--shyDairy calves 21 93 Other livestock 3340 Crops 13625 Misc receipts 121 80

Total $232432 $___ $_shy ---_$_--shyAccrual Oper Expensect~s Hired labor Dairy grain amp conc

$ 28560 30770

$ $_shy ---_$_--shyDairy roughage 31 79 Other lvstk feed 2674 Mach hirerentlease 3067 Mach Fuel

rpr parts amp auto oil amp grease

12993 10112

Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691

Total Less Int Paid $164775 $_--shy

Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy

- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp

family expenditures 10708 Available for Debt Payments

Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment

amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle

machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy

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 Corn production has been converted to corn silage equivalent using 588 bushels of dry shell equivalent corn silage as fed

to equal one ton of

CROP RELATED ACCRUAL EXPENSES 23 Central Plain Region Dairy Farms 1985

Total Per Per Hay Crop Corn Ton Corn Other Till Per Per Per Silage Crops

Expense Acre Acre Ton DM Acre Eguiv Per Acre

Fertilizer amp lime $2872 $ 975 $171 $4458 $181 $2950 Seeds amp plants 1250 726 127 1932 079 877 Spray amp other crop

expense 1251 408 -2ll 2480 JJll 799 Total $5374 $2110 $369 $8869 $361 $4627

My Farm

Fertilizer amp lime $__ $__ $__ $_- $_- $_shySeeds amp plants Spray amp other crop

expense Total $__ $== $==

Hay 12 farms reporting 132 average acres corn 12 farms reporting 199 average acres other crops 5 farms reporting 131 average acres

Corn grain converted to silage equivalent using 588 bushels - one ton 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 23 Central Plain Region Dairy Farms 1985

My Farm Machinery Total Per Til Total Per Til

Expense Item Expenses Acre Expenses Acre

Fuel oil amp grease Machinery repairs amp parts

$ 9606 12071

$2358 2963

$_-shy $_-shy

Machine hire rent amp lease 2914 715 Auto expense (farm share) 272 067 Interest (5) 6460 1585 Depreciation 20041 4919

Total $51364 $12607 $_-shy $_--shy

15

Dairy Program Analysis

Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business 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 23 Central Plain Region Dairy Farms 1985

pairy Cows Heifers Item Number Value Number Value

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

92

96 97 95

$79625 3763

-4784 $78604

89

87

88

$42800 -2548 -2757

$37495

My Farm

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

$_--shy

$_--shy

$_--shy

$_--shy

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

MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985

Item

Total milk sold lbs

Average

1399978

My Farm

Milk sold per cow lbs 14811

Average milk plant test percent butterfat 365

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 nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation

ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt

Accrual Receipts Milk Dairy cattle

$176689 13389

$1869 142

$1262 096

$_-shy $_-shy $_-shy

Dairy calves 2073 ----22 015 Total $192151 $2033 $1373 $_-shy $_-shy $_-shy

Accrual Costs of Producing Milk Operating costs Total costs withshy

$140178 $1483 $1001 $_-shy $_-shy $_-shy

out op(s) labor mgmt amp capital

Total Costs $169633 $212658

$1795 $2250

$1212 $1519

$_-shy$_-shy

$_-shy$_-shy

$_-shy$_-shy

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 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt

Purchased dairy grain amp concentrates

Purchased dairy roughage Total Purchased

Dairy Feed Purchased grain amp conc as of milk receipts

Purchased feed amp crop expo Purchased feed amp crop expo

as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense

$308 ---12

$208 JLU

$ $_-shy

$339 $229 $ $_--shy

$571 16

$386 $ -- $_-shy

$31 41

101 2

81

3U $021 027 068 001 055

$ $_-shy

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 managements success

CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985

Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned

Farm capital Real estate Machinery amp equipment Capital turnover years

$180569

36469

$6845 3280 1383

295

$1588

321

$2641 1265

My Farm Farm capital Real estate

$_-shy $_--shy $_-shy $_-shy

Machinery amp equipment Capital turnover years

LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985

Labor Force Months Age

Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired

Total

My Farm Total Operators

11 4 2 6 2

18 43

44 44 32

+ 12 shy

+ 12 shy+ 12 shy

Years of gf Educ

Value of Labor amp Mgmt

14 13 13

$17283 6574 2261

358 Yorker Equivalent 142 OperatorManager Equiv

___ Yorker Equivalent OperatorManager Equiv

Labor Efficiency

Average Total Per Yorker Total

My Farm Per Yorker

Cows average number Milk sold pounds Tillable acres

95 1399978

407

26 390692

114 York units 1105 308

Average My Eatm Per Per Per Per

Labor Costs Total Cow Iil Acre Iotal Cow Til Acre

Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $

Family unpd ($550mo) 1100 12 270 Hired 26995 286 6626 Total Labor $41695 $441 $10234 $ $ $ Machinery Cost $51364 $543 $12607 $ $ $ Total Labor amp Mach $93059 $985 $22840 $ $ $

18

ANNUAL CASH FLOW WORKSHEEET

Regional Hy Farm Expected 1986 Item Average Total Per Cow Change Projection

(per cow) Average number of cows 95 Accrual Oper Receipts Milk Dairy cattle

$186929 14165

$___ $_shy ---_$_--shyDairy calves 21 93 Other livestock 3340 Crops 13625 Misc receipts 121 80

Total $232432 $___ $_shy ---_$_--shyAccrual Oper Expensect~s Hired labor Dairy grain amp conc

$ 28560 30770

$ $_shy ---_$_--shyDairy roughage 31 79 Other lvstk feed 2674 Mach hirerentlease 3067 Mach Fuel

rpr parts amp auto oil amp grease

12993 10112

Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691

Total Less Int Paid $164775 $_--shy

Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy

- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp

family expenditures 10708 Available for Debt Payments

Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment

amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle

machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy

15

Dairy Program Analysis

Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business 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 23 Central Plain Region Dairy Farms 1985

pairy Cows Heifers Item Number Value Number Value

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

92

96 97 95

$79625 3763

-4784 $78604

89

87

88

$42800 -2548 -2757

$37495

My Farm

Beginning of year (owned) + Change without appreciation + Appreciation End of year (owned) End including leased Average number

$_--shy

$_--shy

$_--shy

$_--shy

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

MILK PRODUCTION 23 Central Plain Region Dairy Farms 1985

Item

Total milk sold lbs

Average

1399978

My Farm

Milk sold per cow lbs 14811

Average milk plant test percent butterfat 365

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 nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation

ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt

Accrual Receipts Milk Dairy cattle

$176689 13389

$1869 142

$1262 096

$_-shy $_-shy $_-shy

Dairy calves 2073 ----22 015 Total $192151 $2033 $1373 $_-shy $_-shy $_-shy

Accrual Costs of Producing Milk Operating costs Total costs withshy

$140178 $1483 $1001 $_-shy $_-shy $_-shy

out op(s) labor mgmt amp capital

Total Costs $169633 $212658

$1795 $2250

$1212 $1519

$_-shy$_-shy

$_-shy$_-shy

$_-shy$_-shy

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 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt

Purchased dairy grain amp concentrates

Purchased dairy roughage Total Purchased

Dairy Feed Purchased grain amp conc as of milk receipts

Purchased feed amp crop expo Purchased feed amp crop expo

as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense

$308 ---12

$208 JLU

$ $_-shy

$339 $229 $ $_--shy

$571 16

$386 $ -- $_-shy

$31 41

101 2

81

3U $021 027 068 001 055

$ $_-shy

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 managements success

CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985

Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned

Farm capital Real estate Machinery amp equipment Capital turnover years

$180569

36469

$6845 3280 1383

295

$1588

321

$2641 1265

My Farm Farm capital Real estate

$_-shy $_--shy $_-shy $_-shy

Machinery amp equipment Capital turnover years

LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985

Labor Force Months Age

Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired

Total

My Farm Total Operators

11 4 2 6 2

18 43

44 44 32

+ 12 shy

+ 12 shy+ 12 shy

Years of gf Educ

Value of Labor amp Mgmt

14 13 13

$17283 6574 2261

358 Yorker Equivalent 142 OperatorManager Equiv

___ Yorker Equivalent OperatorManager Equiv

Labor Efficiency

Average Total Per Yorker Total

My Farm Per Yorker

Cows average number Milk sold pounds Tillable acres

95 1399978

407

26 390692

114 York units 1105 308

Average My Eatm Per Per Per Per

Labor Costs Total Cow Iil Acre Iotal Cow Til Acre

Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $

Family unpd ($550mo) 1100 12 270 Hired 26995 286 6626 Total Labor $41695 $441 $10234 $ $ $ Machinery Cost $51364 $543 $12607 $ $ $ Total Labor amp Mach $93059 $985 $22840 $ $ $

18

ANNUAL CASH FLOW WORKSHEEET

Regional Hy Farm Expected 1986 Item Average Total Per Cow Change Projection

(per cow) Average number of cows 95 Accrual Oper Receipts Milk Dairy cattle

$186929 14165

$___ $_shy ---_$_--shyDairy calves 21 93 Other livestock 3340 Crops 13625 Misc receipts 121 80

Total $232432 $___ $_shy ---_$_--shyAccrual Oper Expensect~s Hired labor Dairy grain amp conc

$ 28560 30770

$ $_shy ---_$_--shyDairy roughage 31 79 Other lvstk feed 2674 Mach hirerentlease 3067 Mach Fuel

rpr parts amp auto oil amp grease

12993 10112

Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691

Total Less Int Paid $164775 $_--shy

Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy

- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp

family expenditures 10708 Available for Debt Payments

Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment

amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle

machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy

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 nonmilk accrual receipts from total accrual operating expenses Total costs of producing milk include the operating costs plus expansion livestock purchased depreciation on machinery and buildings the value of operator(s) labor and management and the intershyest charge for using equity capital Note that the cost of labor manageshyment and equity capital has been excluded in the intermediate compilation

ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Total Per Cow Per Cwt Total Per Cow Per Cwt

Accrual Receipts Milk Dairy cattle

$176689 13389

$1869 142

$1262 096

$_-shy $_-shy $_-shy

Dairy calves 2073 ----22 015 Total $192151 $2033 $1373 $_-shy $_-shy $_-shy

Accrual Costs of Producing Milk Operating costs Total costs withshy

$140178 $1483 $1001 $_-shy $_-shy $_-shy

out op(s) labor mgmt amp capital

Total Costs $169633 $212658

$1795 $2250

$1212 $1519

$_-shy$_-shy

$_-shy$_-shy

$_-shy$_-shy

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 23 Central Plain Region Dairy Farms 1985

Average My Farm Item Per Cow Per Cwt Per Cow Per Cwt

Purchased dairy grain amp concentrates

Purchased dairy roughage Total Purchased

Dairy Feed Purchased grain amp conc as of milk receipts

Purchased feed amp crop expo Purchased feed amp crop expo

as of milk receipts Breeding Veterinary amp medicine Milk marketing Cattle lease Other livestock expense

$308 ---12

$208 JLU

$ $_-shy

$339 $229 $ $_--shy

$571 16

$386 $ -- $_-shy

$31 41

101 2

81

3U $021 027 068 001 055

$ $_-shy

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 managements success

CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985

Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned

Farm capital Real estate Machinery amp equipment Capital turnover years

$180569

36469

$6845 3280 1383

295

$1588

321

$2641 1265

My Farm Farm capital Real estate

$_-shy $_--shy $_-shy $_-shy

Machinery amp equipment Capital turnover years

LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985

Labor Force Months Age

Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired

Total

My Farm Total Operators

11 4 2 6 2

18 43

44 44 32

+ 12 shy

+ 12 shy+ 12 shy

Years of gf Educ

Value of Labor amp Mgmt

14 13 13

$17283 6574 2261

358 Yorker Equivalent 142 OperatorManager Equiv

___ Yorker Equivalent OperatorManager Equiv

Labor Efficiency

Average Total Per Yorker Total

My Farm Per Yorker

Cows average number Milk sold pounds Tillable acres

95 1399978

407

26 390692

114 York units 1105 308

Average My Eatm Per Per Per Per

Labor Costs Total Cow Iil Acre Iotal Cow Til Acre

Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $

Family unpd ($550mo) 1100 12 270 Hired 26995 286 6626 Total Labor $41695 $441 $10234 $ $ $ Machinery Cost $51364 $543 $12607 $ $ $ Total Labor amp Mach $93059 $985 $22840 $ $ $

18

ANNUAL CASH FLOW WORKSHEEET

Regional Hy Farm Expected 1986 Item Average Total Per Cow Change Projection

(per cow) Average number of cows 95 Accrual Oper Receipts Milk Dairy cattle

$186929 14165

$___ $_shy ---_$_--shyDairy calves 21 93 Other livestock 3340 Crops 13625 Misc receipts 121 80

Total $232432 $___ $_shy ---_$_--shyAccrual Oper Expensect~s Hired labor Dairy grain amp conc

$ 28560 30770

$ $_shy ---_$_--shyDairy roughage 31 79 Other lvstk feed 2674 Mach hirerentlease 3067 Mach Fuel

rpr parts amp auto oil amp grease

12993 10112

Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691

Total Less Int Paid $164775 $_--shy

Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy

- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp

family expenditures 10708 Available for Debt Payments

Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment

amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle

machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy

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 managements success

CAPITAL EFFICIENCY 23 Central Plain Region Dairy Farms 1985

Per Per Per Tillable Per Tillable Item Yorker Cgw Acre Acre Owned

Farm capital Real estate Machinery amp equipment Capital turnover years

$180569

36469

$6845 3280 1383

295

$1588

321

$2641 1265

My Farm Farm capital Real estate

$_-shy $_--shy $_-shy $_-shy

Machinery amp equipment Capital turnover years

LABOR FORCE INVENTORY AND ANALYSIS 23 Central Plain Region Dairy Farms 1985

Labor Force Months Age

Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired

Total

My Farm Total Operators

11 4 2 6 2

18 43

44 44 32

+ 12 shy

+ 12 shy+ 12 shy

Years of gf Educ

Value of Labor amp Mgmt

14 13 13

$17283 6574 2261

358 Yorker Equivalent 142 OperatorManager Equiv

___ Yorker Equivalent OperatorManager Equiv

Labor Efficiency

Average Total Per Yorker Total

My Farm Per Yorker

Cows average number Milk sold pounds Tillable acres

95 1399978

407

26 390692

114 York units 1105 308

Average My Eatm Per Per Per Per

Labor Costs Total Cow Iil Acre Iotal Cow Til Acre

Value of operator(s) labor ($800month) $13600 $144 $ 3338 $ $ $

Family unpd ($550mo) 1100 12 270 Hired 26995 286 6626 Total Labor $41695 $441 $10234 $ $ $ Machinery Cost $51364 $543 $12607 $ $ $ Total Labor amp Mach $93059 $985 $22840 $ $ $

18

ANNUAL CASH FLOW WORKSHEEET

Regional Hy Farm Expected 1986 Item Average Total Per Cow Change Projection

(per cow) Average number of cows 95 Accrual Oper Receipts Milk Dairy cattle

$186929 14165

$___ $_shy ---_$_--shyDairy calves 21 93 Other livestock 3340 Crops 13625 Misc receipts 121 80

Total $232432 $___ $_shy ---_$_--shyAccrual Oper Expensect~s Hired labor Dairy grain amp conc

$ 28560 30770

$ $_shy ---_$_--shyDairy roughage 31 79 Other lvstk feed 2674 Mach hirerentlease 3067 Mach Fuel

rpr parts amp auto oil amp grease

12993 10112

Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691

Total Less Int Paid $164775 $_--shy

Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy

- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp

family expenditures 10708 Available for Debt Payments

Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment

amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle

machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy

18

ANNUAL CASH FLOW WORKSHEEET

Regional Hy Farm Expected 1986 Item Average Total Per Cow Change Projection

(per cow) Average number of cows 95 Accrual Oper Receipts Milk Dairy cattle

$186929 14165

$___ $_shy ---_$_--shyDairy calves 21 93 Other livestock 3340 Crops 13625 Misc receipts 121 80

Total $232432 $___ $_shy ---_$_--shyAccrual Oper Expensect~s Hired labor Dairy grain amp conc

$ 28560 30770

$ $_shy ---_$_--shyDairy roughage 31 79 Other lvstk feed 2674 Mach hirerentlease 3067 Mach Fuel

rpr parts amp auto oil amp grease

12993 10112

Replacement lvstk 655 Breeding 3078 Vet amp medicine 4069 Milk marketing 101 37 Cattle lease 1 98 Other 1vstk expo 8101 Fertilizer amp lime 12318 Seeds amp plants 5362 Sprayother crop expo 5366 Land bldg fence repair 2080 Taxes 5653 Insurance 3760 Real est rentlease 4911 Utilities 6000 Miscellaneous 2691

Total Less Int Paid $164775 $_--shy

Net Accrual Operating Income (total) (total) (without interest paid) $63163 $_-- $_--shy

- Change in lvstkcrop inv 575 - Change in accts rec -322 + Change in feedsupply inv -370 + Change in accts payable 831 NET CASH FLOW $63861 $_-- $_--shy- Personal withdrawals amp

family expenditures 10708 Available for Debt Payments

Investments amp Savings $53153 $_-- $_--shy- Farm Debt Payments 55502 Available for Investment

amp Savings $-2349 $_-- $_--shy- Capital Purchases cattle

machinery amp improvements $17999 Additional Capital Needed $_-- $_--shy

___ _

19

PROGRESS OF THE FARM BUSINESS

Comparing your business with average data from regional DFBS cooperashytors 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 17 Central Plain Dairy Farms 1984 and 1985

Average My Farm Selected Factors 1984 1985 1984 1985 Goal

Size of Business Average number of cows Average number of heifers Milk sold lbs Worker equivalent Total tillable acres

Rates of Production Milk sold per cow 1bs Hay DM per acre tons Corn silage per acre tons

Labor Efficiency Cows per worker Milk sold per worker lbs

Cost Control Grain amp conc purchased

as of milk sales Dairy feed amp crop expo

per cwt milk Labor amp mach costscow

Capital Efficiency Farm capital per cow Real estate per cow Mach amp equip per cow Capital turnover years

Profitability Net farm inc wo apprec Net farm inc wapprec Labor amp mgmt income Rate of return on eq

capital wapprec

Financial Summary Farm net worth Debt to asset ratio Farm debt per cow

Average for the year

89 92 88 89

1340447 1393320 353shy408

15081 31

14

25 379267

17

$439 $1079

$7740 $3749 $1522

30

$12702 $22767 $-7123

-09

$377688 045

$3537

375 409

15135 31 14

25 371552

16

$391 $1094

$7434 $3592 $1492

30

$8617 $3815

$-10616

-62

$362655 046

$3273

$___ $___ $___

$___ $___ $___

$_-shy$_-shy$_-shy

$_-shy$_--shy$_-shy

$_-shy$_-shy$_-shy

-

21

Financial AnalYsis Chart

The farm financial analysis chart 1s designed just like the ~ 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 ~ages 7 10 12 and 17 of this publication

FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984

Liguidity ~Reeayent Available for Cash Flow Debt Payments

Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow

$ 36 $909 767 2 $ 104 176 640 216 9 638 277 537 141 14 1142 362 469 110 19 1625 438 411 91 22 1930 500 357 75 26 2377 571 279 58 30 2688 656 216 46 35 3161 752 126 28 40 3770 971 -95 -56 52 5072

Solvency Efficiency ~ Profit~bility DebtlAsset Ratio Capital Rate of Return on

Leverage Ratio l

-Percent Eguity

Long Term

Intermediate amp Current

Turnover (years) Eguity Investment2

02 99 00 00 160 18 13

12 90 02 04 190 8 9

24 81 14 11 206 5 7

37 73 30 16 220 3 6

51 67 41 23 234 1 4

70 60 51 29 251 -1 3

94 53 62 37 266 -3 1 122 46 73 45 295 -6 0 172 38 85 55 325 -11 -3 504 20 1 27 80 454 -37 -8

IDollars of debt per dollar of equity computed by dividing total liabilities by total equity

2Return on all farm capital (no deduction for interest paid) divided by total farm assets

22

FARM BUSINESS SUMMARY BY HERD SIZE 458 New York Dairy Farms 1984

Less than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows

Ca~ita1 Investment (end of year) Livestock Feed amp supplies Machinery amp equipment Land amp buildings

$ 39803 11239 40402

120967

$ 58991 17653 53984

142160

$ 81180 26056 76669

193710

$100136 34432 97951

225287

TOTAL INVESTMENT $212411 $272788 $377615 $457806

Receipts Milk sales $ 58562 $ 89405 $123086 $155027 Dairy cattle sold Other livestock sales

4531 1004

5287 1626

8630 2110

10295 1890

Crop sales Miscellaneous receipts

Total Cash Receipts Increase in livestock Increase in feed amp supplies Appreciation

425 3Zn

$ 68313 -589 501

1609

738 3291

$101047 687

10 3371

1411 5448

$140685 889

2085 6243

2271 5640

$175123 3018

435 5188

TOTAL FARM RECEIPTS $ 69834 $105115 $149902 $183764 TOTAL FARM REC EXCL APPREC $ 68225 $101744 $143659 $178576

Expenses Hired labor Dairy grain amp concentrate Other feed

$ 2503 16993

1632

$ 5326 23274 1422

$ 8539 30095 2227

$ 13584 36692

1486 Machine hire Machinery repairAuto expense (farm share) Gas amp oil

764 3072

446 2072

949 4013

415 3157

1494 5929

502 4494

1501 7527

485 6131

Replacement animals Breeding fees Veterinary amp medicine Milk marketing Cattle lease

549 875

1072 4893

0

766 1238 1617 7345

55

1692 2062 2641 9676

87

1116 2548 3098

12223 125

Other livestock expenseFertilizer amp lime Seeds amp plants Spray amp other crop expense Land bldg fence repairTaxes amp insurance E1ec amp phone (farm share)Interest paid Misc expenses (incl rent)

Total Cash Expenses Expansion livestock Machinery depreciation Building depreciationUnpaid family labor Interest on equity 5

2362 2355

697 693 936

3292 2018 5789 1941

$ 54454 60

6475 2001 1844 1433

3650 3446 1081

813 1190 4120 2879 9300 30~~

$ 79144 238

7623 3166 1750 21sect2

5511 6291 1933 1438 1971 5922 3875

12660 4125

$113164 702

11531 5605 1821

12618

6278 8000 2602 1988 2339 7203 4700

14845 2609

$140080 1062

15287 5742 1805

15111

TOTAL FARM EXPENSES $ 72267 $101083 $145501 $179747

Financial Summax~ NET CASH FARM INCOME

Labor amp Management Income Number of Operators

LABOR amp MGT INCOMEOPER LABOR MGT amp OWNSHP INCIOPER

$13 859 $-4042

107 $-3778

$4673

$21903 $661 118 $560

$11181

$27521 $-1842

132 $-1395 $12939

$35043 $-1171

134 $-874

$14767

23

FARM BUSINESS SUMMARY BY HERD SIZE 458 New York Dairy Farms 1984

85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows

Capital Investment (end of year) Livestock $124747 $166776 $223343 $ 317993 $ 470722 Feed amp supplies 41199 60934 81393 113736 189321 Machinery amp equipment 111838 134403 183205 190946 259528 Land amp buildings 242050 348070 415970 581058 879980

TOTAL INVESTMENT $519834 $710183 $903911 $1203733 $1799551

Receipts Milk sales $189618 $256245 $343599 $505975 $ 838467 Dairy cattle sold 12783 16560 24102 37420 48329 Other livestock sales 2448 3855 5448 8275 9101 Crop sales 1066 2528 5851 4013 14125 Miscellaneous receipts 4509 9564 18177 19824 11764

Total Cash Receipts $210424 $288752 $397177 $575507 $ 921786 Increase in livestock 5264 2971 7534 4471 51943 Increase in feed amp supplies 281 7022 6856 4218 14687 Appreciation 2746 10566 11658 24903 12861

TOTAL FARM RECEIPTS TOTAL FARM REe EXCL

$218715 $309311 $423225 APPR$215969 $298745 $411567

$609099 $1001277 $584196 $988416

ExpensesHired labor Dairy grain amp concentrate Other feed Machine hire Machinery repairAuto expense (farm share)Gas amp oil Replacement animals Breeding fees Veterinary amp medicine Milk marke ting Cattle lease Other livestock expenseFertilizer amp lime Seeds amp plantsSpray amp other crop expense Land bldg fence repairTaxes amp insurance E1ec amp phone (farm share) Interest paid Mise expenses (inc1 rent)

Total Cash Expenses Expansion livestock Machinery depreciationBuilding depreciationUnpaid family labor Interest on equity 5

$ 16688 $ 27852 $ 46503 49523 61297 78388

1616 3305 3705 1049 1539 2704

10347 14395 20231 608 307 534

7220 10651 13739 1045 1673 4834 2715 3811 5028 3776 5339 6729

15285 19404 26629 150 104 0

8091 9643 15299 9363 13360 21445 3122 4101 7169 2126 4726 7328 2697 3860 3746 7346 10300 13188 5464 6851 8877

19120 27319 39003 5312 8375 10210

$172663 $238212 $335289 1040 729 3596

16720 21513 29514 7497 10826 11453 1698 1348 760

16884 22692 29569

$ 77411 115416

4065 3679

27963 696

19720 1189 8061

12980 39971

o 17745 26273 9889 6131 6384

16264 11927 50300 20000

$476064 7173

32577 22077

938 38653

$117236 201481 10626

4676 38467

329 24792 1354

12013 20847 52277

732 32245 32100 12436 15530

9185 18689 15604 87833 23600

$732052 20888 48605 31860

1433 59533 -TOTAL FARM EXPENSES $216502 $295320 $410181 $577482 $894371

Financial SummaryNET CASH FARM INCOME

Labor amp Management Income Number of Operators

LABOR amp MGT INCOMEOPERLABORMGT amp OWNSHP INCIOP

$37761 $-533 137

$-389 $13939

$50540 $3425

141 $2429

$26016

$61888 $1386

1 52 $912

$28035

$99443 $6714

144 $4663

$48799

$189734 $94045

180 $52247 $92466

24

SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984

Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows

Number of farms 45 100 94 64

Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)

Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495

Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298

Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30

Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238

Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25

Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53

Average of all farms

25

SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984

85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows

Number of farms 43 56 25 16

Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)

Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571

Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412

Feed Costs Feed purchased per cow $544 $494 $461 $504 Crop expense p~r cow $161 $179 $211 $185 Feed cost per cwt milk $354 $326 $307 $313 Feed amp crop expcwt milk $470 $462 $462 $438 feed is of milk receipts 26 24 23 23 Tons forage dry mattercow 81 80 87 85 Tillable acres per cow 32 31 32 27 Fertilizer amp limecrop acre $32 $35 $39 $42

Machinery amp Labor Costs Total machinery costs $41499 $54991 $75651 $94090 Machinery cost per cow $456 $443 $445 $411 Machinery cost per cwt milk $297 $293 $296 $255 Labor cost per cow $337 $338 $360 $399 Labor cost per cwt milk $219 $223 $239 $247

Capital Efficiency Investment per worker $168777 $181169 $193557 $195094 Investment per cow $5590 $5636 $5165 $5144 Investment per cwt milk $37 $38 $35 $33 Land ampbuildings per cow $2603 $2762 $2377 $2483 Machinery investment per cow $1203 $1067 $1047 $816 Capital turnover 24 23 21 20

Other Price per cwt milk sold $1355 $1364 $1346 $1370 Acres hay crops 154 176 258 237 Acres corn si1age 71 102 144 235

Average of all farms

15

359 285

6247600 858

3801 790

(260)

17403 40

163 800

42 728159

443

$561 $167

$322 $436

24 80 22 $41

$129309 $360

$207 $375

$215

$209738 $4699

$29 $2298

$678 18

$13 42 245 326

26

FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 458 New York Dairy Farms January I 1985

Less Than 40 to 55 to 70 to 85 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows 99 Cows

Number of farms 45 100 94 64 43

Assets Livestock (includes $ 39803 $ 59013 $ 81180 $100161 $124747 discounted lease payments)

Feed amp supplies (0)

11239 (22)

17653 (0)

26056 (25)

34432 (0)

41199 Machinery amp equip (includes 40617 55212 77650 98722 112637

discounted lease payments) Land amp buildings (includes

(215) 121757

(1228) 144453

(981) 194790

(771) 227936

(799) 246366

discounted lease payments) (608) (2293) (1080) (2649) (4316) Co-op investment 950 2842 3971 4747 7902 Accounts receivable 5903 8170 11281 14229 17314 Cash amp checking accounts 1084 1664 2028 3492 2463

Total Farm Assets $221171 $289007 $396956 $483719 $552628 Savings accounts 2892 3025 2751 4773 3694 Cash value life insurance 2071 2119 3115 2670 1908 Stocks amp bonds 990 2082 2195 3755 2155 Nonfarm real estate 3853 2905 8897 5656 3616 Auto (personal share) 1464 1903 2005 1806 1979 All other 7871 9212 6298 6887 5231

Total Nonfarm Assets $ 19141 $ 21246 $ 25261 $ 25547 $ 18583 TOTAL ASSETS $240312 $310253 $422217 $509266 $571211

Liabilities Long-term $ 48126 $ 61437 $ 80274 $ 97144 $130575 Intermediate 20644 35075 54202 59859 68539 Financial lease 823 3543 2061 3445 5115 Short-term 500 2191 2547 2059 5511 Other farm accounts 2414 3526 4311 5789 5209

Total Farm Liabilities $ 72507 $105772 $143395 $168296 $214949 Total Nonfarm Liabilities 190 830 856 1816 570 TOTAL LIABILITIES $ 72697 $106602 $144251 $170112 $215519 Farm Net Worth (Eq Cap) $148664 $183235 $253561 $315423 $337679 FAMILY NET WORTH $167615 $203651 $277966 $339154 $355692

Financial Measures Percent equity 70 66 66 67 62 Farm debt per cow $2133 $2204 $2351 $2130 $2311 Available for debt service

amp living $22264 $33907 $43287 $50678 $57557 Scheduled annual debt pymt $13695 $21704 $29930 $35772 $45664 Scheduled debt pymtscow $398 $447 $486 $450 $487 Payment as of milk check 23 24 24 23 24 DebtAsset ratio - long-term 040 043 041 043 053 DebtAsset ratio

amp short-term - intermediate

022 028 029 026 026 Cash flow coverage ratio 057 078 078 081 075

27

FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 458 New York Dairy Farms January I 1985

Item Farms with 100 to

149 Cows 150 to

199 Cows 200 to

249 Cows 250 or

More Cows

Number of farms 56 25 16 15

Assets Livestock (includes

discounted lease payments) Feed amp supplies Machinery amp equip (includes

discounted lease payments) Land amp buildings (includes discounted lease payments)

Co-op investment Accounts receivable Cash amp checking accounts

Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other

$166776 (0)

60934 135106

(703) 348754

(684) 14180 23033 5401

$754184 3921 3560 5664 7632 1817 8148

$ 223343 (0)

81393 184455 (1250) 415970

(0) 28568 31420 4236

$ 969385 8721 6789 8108

13880 3173 7340

$ 317 993 (0)

113736 196961 (6015) 581058

(0) 32536 50181 9H1

$1301582 3796 3796 2455

0 1063 1019

$ 470722 (0)

189321 260222

(694) 879980

(0) 41442 76619

6807 $1925113

9126 9126 4079 6867

667 4411

Total Nonfarm Assets TOTAL ASSETS

$ 30742 $784926

$ 48000 $1017385

$ 16029 $ 27500 $1317611 $19523613

Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts

Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH

$164375 116134

1387 7550

10893 $300339

742 $301081 $453845 $483845

$218110 135883

1250 10275 12494

$378012 l51B

$379590 $591373 $637795

$272541 228449

6015 5801

15108 $528514

250 $528764 $773068 $788847

$399185 298210

694 13752 22605

$734446 400

$734846 $1190667 $1217767

Financial H~Asures Percent equity Farm debt per cow Available for debt service

amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate

amp short-term Cash flow coverage ratio

62 $2384

$79761 $67136

$531 26

047

031 078

63 $2160

$103180 $92504

$526 27

052

027 076

60 $2259

$150134 $118968

$508 34

047

033 094

62 $1918

$277674 $186887

$488 22

045

030 118

-

28

MEASURE YOUR PERFORMANCE

After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement

The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business

STRONG POINTS AVERAGE

NEED IMPROVEMENT

After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration

Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress

1 Do livestock number labor force and crop acres make up a well balanced unit of resources

2 Have rates of production shown a steady increase

3 When will milk output per worker reach 700000 pounds

4 Have some costs of production declined over the last two years

5 Is net farm income improving fast enough to meet your needs

6 Is growth in net worth keeping up with increased capital investment

7 Have you reached the business goals set for 1985 and have you set new goals for 1986

21

Financial AnalYsis Chart

The farm financial analysis chart 1s designed just like the ~ 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 ~ages 7 10 12 and 17 of this publication

FINANCIAL ANALYSIS CHART 458 New York Dairy Farms 1984

Liguidity ~Reeayent Available for Cash Flow Debt Payments

Debt Payments Debt Service Coverage as Percent of Debt Per Cow Per Cow Ratio Milk Sales Per Cow

$ 36 $909 767 2 $ 104 176 640 216 9 638 277 537 141 14 1142 362 469 110 19 1625 438 411 91 22 1930 500 357 75 26 2377 571 279 58 30 2688 656 216 46 35 3161 752 126 28 40 3770 971 -95 -56 52 5072

Solvency Efficiency ~ Profit~bility DebtlAsset Ratio Capital Rate of Return on

Leverage Ratio l

-Percent Eguity

Long Term

Intermediate amp Current

Turnover (years) Eguity Investment2

02 99 00 00 160 18 13

12 90 02 04 190 8 9

24 81 14 11 206 5 7

37 73 30 16 220 3 6

51 67 41 23 234 1 4

70 60 51 29 251 -1 3

94 53 62 37 266 -3 1 122 46 73 45 295 -6 0 172 38 85 55 325 -11 -3 504 20 1 27 80 454 -37 -8

IDollars of debt per dollar of equity computed by dividing total liabilities by total equity

2Return on all farm capital (no deduction for interest paid) divided by total farm assets

22

FARM BUSINESS SUMMARY BY HERD SIZE 458 New York Dairy Farms 1984

Less than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows

Ca~ita1 Investment (end of year) Livestock Feed amp supplies Machinery amp equipment Land amp buildings

$ 39803 11239 40402

120967

$ 58991 17653 53984

142160

$ 81180 26056 76669

193710

$100136 34432 97951

225287

TOTAL INVESTMENT $212411 $272788 $377615 $457806

Receipts Milk sales $ 58562 $ 89405 $123086 $155027 Dairy cattle sold Other livestock sales

4531 1004

5287 1626

8630 2110

10295 1890

Crop sales Miscellaneous receipts

Total Cash Receipts Increase in livestock Increase in feed amp supplies Appreciation

425 3Zn

$ 68313 -589 501

1609

738 3291

$101047 687

10 3371

1411 5448

$140685 889

2085 6243

2271 5640

$175123 3018

435 5188

TOTAL FARM RECEIPTS $ 69834 $105115 $149902 $183764 TOTAL FARM REC EXCL APPREC $ 68225 $101744 $143659 $178576

Expenses Hired labor Dairy grain amp concentrate Other feed

$ 2503 16993

1632

$ 5326 23274 1422

$ 8539 30095 2227

$ 13584 36692

1486 Machine hire Machinery repairAuto expense (farm share) Gas amp oil

764 3072

446 2072

949 4013

415 3157

1494 5929

502 4494

1501 7527

485 6131

Replacement animals Breeding fees Veterinary amp medicine Milk marketing Cattle lease

549 875

1072 4893

0

766 1238 1617 7345

55

1692 2062 2641 9676

87

1116 2548 3098

12223 125

Other livestock expenseFertilizer amp lime Seeds amp plants Spray amp other crop expense Land bldg fence repairTaxes amp insurance E1ec amp phone (farm share)Interest paid Misc expenses (incl rent)

Total Cash Expenses Expansion livestock Machinery depreciation Building depreciationUnpaid family labor Interest on equity 5

2362 2355

697 693 936

3292 2018 5789 1941

$ 54454 60

6475 2001 1844 1433

3650 3446 1081

813 1190 4120 2879 9300 30~~

$ 79144 238

7623 3166 1750 21sect2

5511 6291 1933 1438 1971 5922 3875

12660 4125

$113164 702

11531 5605 1821

12618

6278 8000 2602 1988 2339 7203 4700

14845 2609

$140080 1062

15287 5742 1805

15111

TOTAL FARM EXPENSES $ 72267 $101083 $145501 $179747

Financial Summax~ NET CASH FARM INCOME

Labor amp Management Income Number of Operators

LABOR amp MGT INCOMEOPER LABOR MGT amp OWNSHP INCIOPER

$13 859 $-4042

107 $-3778

$4673

$21903 $661 118 $560

$11181

$27521 $-1842

132 $-1395 $12939

$35043 $-1171

134 $-874

$14767

23

FARM BUSINESS SUMMARY BY HERD SIZE 458 New York Dairy Farms 1984

85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows

Capital Investment (end of year) Livestock $124747 $166776 $223343 $ 317993 $ 470722 Feed amp supplies 41199 60934 81393 113736 189321 Machinery amp equipment 111838 134403 183205 190946 259528 Land amp buildings 242050 348070 415970 581058 879980

TOTAL INVESTMENT $519834 $710183 $903911 $1203733 $1799551

Receipts Milk sales $189618 $256245 $343599 $505975 $ 838467 Dairy cattle sold 12783 16560 24102 37420 48329 Other livestock sales 2448 3855 5448 8275 9101 Crop sales 1066 2528 5851 4013 14125 Miscellaneous receipts 4509 9564 18177 19824 11764

Total Cash Receipts $210424 $288752 $397177 $575507 $ 921786 Increase in livestock 5264 2971 7534 4471 51943 Increase in feed amp supplies 281 7022 6856 4218 14687 Appreciation 2746 10566 11658 24903 12861

TOTAL FARM RECEIPTS TOTAL FARM REe EXCL

$218715 $309311 $423225 APPR$215969 $298745 $411567

$609099 $1001277 $584196 $988416

ExpensesHired labor Dairy grain amp concentrate Other feed Machine hire Machinery repairAuto expense (farm share)Gas amp oil Replacement animals Breeding fees Veterinary amp medicine Milk marke ting Cattle lease Other livestock expenseFertilizer amp lime Seeds amp plantsSpray amp other crop expense Land bldg fence repairTaxes amp insurance E1ec amp phone (farm share) Interest paid Mise expenses (inc1 rent)

Total Cash Expenses Expansion livestock Machinery depreciationBuilding depreciationUnpaid family labor Interest on equity 5

$ 16688 $ 27852 $ 46503 49523 61297 78388

1616 3305 3705 1049 1539 2704

10347 14395 20231 608 307 534

7220 10651 13739 1045 1673 4834 2715 3811 5028 3776 5339 6729

15285 19404 26629 150 104 0

8091 9643 15299 9363 13360 21445 3122 4101 7169 2126 4726 7328 2697 3860 3746 7346 10300 13188 5464 6851 8877

19120 27319 39003 5312 8375 10210

$172663 $238212 $335289 1040 729 3596

16720 21513 29514 7497 10826 11453 1698 1348 760

16884 22692 29569

$ 77411 115416

4065 3679

27963 696

19720 1189 8061

12980 39971

o 17745 26273 9889 6131 6384

16264 11927 50300 20000

$476064 7173

32577 22077

938 38653

$117236 201481 10626

4676 38467

329 24792 1354

12013 20847 52277

732 32245 32100 12436 15530

9185 18689 15604 87833 23600

$732052 20888 48605 31860

1433 59533 -TOTAL FARM EXPENSES $216502 $295320 $410181 $577482 $894371

Financial SummaryNET CASH FARM INCOME

Labor amp Management Income Number of Operators

LABOR amp MGT INCOMEOPERLABORMGT amp OWNSHP INCIOP

$37761 $-533 137

$-389 $13939

$50540 $3425

141 $2429

$26016

$61888 $1386

1 52 $912

$28035

$99443 $6714

144 $4663

$48799

$189734 $94045

180 $52247 $92466

24

SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984

Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows

Number of farms 45 100 94 64

Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)

Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495

Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298

Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30

Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238

Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25

Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53

Average of all farms

25

SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984

85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows

Number of farms 43 56 25 16

Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)

Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571

Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412

Feed Costs Feed purchased per cow $544 $494 $461 $504 Crop expense p~r cow $161 $179 $211 $185 Feed cost per cwt milk $354 $326 $307 $313 Feed amp crop expcwt milk $470 $462 $462 $438 feed is of milk receipts 26 24 23 23 Tons forage dry mattercow 81 80 87 85 Tillable acres per cow 32 31 32 27 Fertilizer amp limecrop acre $32 $35 $39 $42

Machinery amp Labor Costs Total machinery costs $41499 $54991 $75651 $94090 Machinery cost per cow $456 $443 $445 $411 Machinery cost per cwt milk $297 $293 $296 $255 Labor cost per cow $337 $338 $360 $399 Labor cost per cwt milk $219 $223 $239 $247

Capital Efficiency Investment per worker $168777 $181169 $193557 $195094 Investment per cow $5590 $5636 $5165 $5144 Investment per cwt milk $37 $38 $35 $33 Land ampbuildings per cow $2603 $2762 $2377 $2483 Machinery investment per cow $1203 $1067 $1047 $816 Capital turnover 24 23 21 20

Other Price per cwt milk sold $1355 $1364 $1346 $1370 Acres hay crops 154 176 258 237 Acres corn si1age 71 102 144 235

Average of all farms

15

359 285

6247600 858

3801 790

(260)

17403 40

163 800

42 728159

443

$561 $167

$322 $436

24 80 22 $41

$129309 $360

$207 $375

$215

$209738 $4699

$29 $2298

$678 18

$13 42 245 326

26

FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 458 New York Dairy Farms January I 1985

Less Than 40 to 55 to 70 to 85 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows 99 Cows

Number of farms 45 100 94 64 43

Assets Livestock (includes $ 39803 $ 59013 $ 81180 $100161 $124747 discounted lease payments)

Feed amp supplies (0)

11239 (22)

17653 (0)

26056 (25)

34432 (0)

41199 Machinery amp equip (includes 40617 55212 77650 98722 112637

discounted lease payments) Land amp buildings (includes

(215) 121757

(1228) 144453

(981) 194790

(771) 227936

(799) 246366

discounted lease payments) (608) (2293) (1080) (2649) (4316) Co-op investment 950 2842 3971 4747 7902 Accounts receivable 5903 8170 11281 14229 17314 Cash amp checking accounts 1084 1664 2028 3492 2463

Total Farm Assets $221171 $289007 $396956 $483719 $552628 Savings accounts 2892 3025 2751 4773 3694 Cash value life insurance 2071 2119 3115 2670 1908 Stocks amp bonds 990 2082 2195 3755 2155 Nonfarm real estate 3853 2905 8897 5656 3616 Auto (personal share) 1464 1903 2005 1806 1979 All other 7871 9212 6298 6887 5231

Total Nonfarm Assets $ 19141 $ 21246 $ 25261 $ 25547 $ 18583 TOTAL ASSETS $240312 $310253 $422217 $509266 $571211

Liabilities Long-term $ 48126 $ 61437 $ 80274 $ 97144 $130575 Intermediate 20644 35075 54202 59859 68539 Financial lease 823 3543 2061 3445 5115 Short-term 500 2191 2547 2059 5511 Other farm accounts 2414 3526 4311 5789 5209

Total Farm Liabilities $ 72507 $105772 $143395 $168296 $214949 Total Nonfarm Liabilities 190 830 856 1816 570 TOTAL LIABILITIES $ 72697 $106602 $144251 $170112 $215519 Farm Net Worth (Eq Cap) $148664 $183235 $253561 $315423 $337679 FAMILY NET WORTH $167615 $203651 $277966 $339154 $355692

Financial Measures Percent equity 70 66 66 67 62 Farm debt per cow $2133 $2204 $2351 $2130 $2311 Available for debt service

amp living $22264 $33907 $43287 $50678 $57557 Scheduled annual debt pymt $13695 $21704 $29930 $35772 $45664 Scheduled debt pymtscow $398 $447 $486 $450 $487 Payment as of milk check 23 24 24 23 24 DebtAsset ratio - long-term 040 043 041 043 053 DebtAsset ratio

amp short-term - intermediate

022 028 029 026 026 Cash flow coverage ratio 057 078 078 081 075

27

FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 458 New York Dairy Farms January I 1985

Item Farms with 100 to

149 Cows 150 to

199 Cows 200 to

249 Cows 250 or

More Cows

Number of farms 56 25 16 15

Assets Livestock (includes

discounted lease payments) Feed amp supplies Machinery amp equip (includes

discounted lease payments) Land amp buildings (includes discounted lease payments)

Co-op investment Accounts receivable Cash amp checking accounts

Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other

$166776 (0)

60934 135106

(703) 348754

(684) 14180 23033 5401

$754184 3921 3560 5664 7632 1817 8148

$ 223343 (0)

81393 184455 (1250) 415970

(0) 28568 31420 4236

$ 969385 8721 6789 8108

13880 3173 7340

$ 317 993 (0)

113736 196961 (6015) 581058

(0) 32536 50181 9H1

$1301582 3796 3796 2455

0 1063 1019

$ 470722 (0)

189321 260222

(694) 879980

(0) 41442 76619

6807 $1925113

9126 9126 4079 6867

667 4411

Total Nonfarm Assets TOTAL ASSETS

$ 30742 $784926

$ 48000 $1017385

$ 16029 $ 27500 $1317611 $19523613

Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts

Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH

$164375 116134

1387 7550

10893 $300339

742 $301081 $453845 $483845

$218110 135883

1250 10275 12494

$378012 l51B

$379590 $591373 $637795

$272541 228449

6015 5801

15108 $528514

250 $528764 $773068 $788847

$399185 298210

694 13752 22605

$734446 400

$734846 $1190667 $1217767

Financial H~Asures Percent equity Farm debt per cow Available for debt service

amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate

amp short-term Cash flow coverage ratio

62 $2384

$79761 $67136

$531 26

047

031 078

63 $2160

$103180 $92504

$526 27

052

027 076

60 $2259

$150134 $118968

$508 34

047

033 094

62 $1918

$277674 $186887

$488 22

045

030 118

-

28

MEASURE YOUR PERFORMANCE

After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement

The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business

STRONG POINTS AVERAGE

NEED IMPROVEMENT

After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration

Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress

1 Do livestock number labor force and crop acres make up a well balanced unit of resources

2 Have rates of production shown a steady increase

3 When will milk output per worker reach 700000 pounds

4 Have some costs of production declined over the last two years

5 Is net farm income improving fast enough to meet your needs

6 Is growth in net worth keeping up with increased capital investment

7 Have you reached the business goals set for 1985 and have you set new goals for 1986

22

FARM BUSINESS SUMMARY BY HERD SIZE 458 New York Dairy Farms 1984

Less than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows

Ca~ita1 Investment (end of year) Livestock Feed amp supplies Machinery amp equipment Land amp buildings

$ 39803 11239 40402

120967

$ 58991 17653 53984

142160

$ 81180 26056 76669

193710

$100136 34432 97951

225287

TOTAL INVESTMENT $212411 $272788 $377615 $457806

Receipts Milk sales $ 58562 $ 89405 $123086 $155027 Dairy cattle sold Other livestock sales

4531 1004

5287 1626

8630 2110

10295 1890

Crop sales Miscellaneous receipts

Total Cash Receipts Increase in livestock Increase in feed amp supplies Appreciation

425 3Zn

$ 68313 -589 501

1609

738 3291

$101047 687

10 3371

1411 5448

$140685 889

2085 6243

2271 5640

$175123 3018

435 5188

TOTAL FARM RECEIPTS $ 69834 $105115 $149902 $183764 TOTAL FARM REC EXCL APPREC $ 68225 $101744 $143659 $178576

Expenses Hired labor Dairy grain amp concentrate Other feed

$ 2503 16993

1632

$ 5326 23274 1422

$ 8539 30095 2227

$ 13584 36692

1486 Machine hire Machinery repairAuto expense (farm share) Gas amp oil

764 3072

446 2072

949 4013

415 3157

1494 5929

502 4494

1501 7527

485 6131

Replacement animals Breeding fees Veterinary amp medicine Milk marketing Cattle lease

549 875

1072 4893

0

766 1238 1617 7345

55

1692 2062 2641 9676

87

1116 2548 3098

12223 125

Other livestock expenseFertilizer amp lime Seeds amp plants Spray amp other crop expense Land bldg fence repairTaxes amp insurance E1ec amp phone (farm share)Interest paid Misc expenses (incl rent)

Total Cash Expenses Expansion livestock Machinery depreciation Building depreciationUnpaid family labor Interest on equity 5

2362 2355

697 693 936

3292 2018 5789 1941

$ 54454 60

6475 2001 1844 1433

3650 3446 1081

813 1190 4120 2879 9300 30~~

$ 79144 238

7623 3166 1750 21sect2

5511 6291 1933 1438 1971 5922 3875

12660 4125

$113164 702

11531 5605 1821

12618

6278 8000 2602 1988 2339 7203 4700

14845 2609

$140080 1062

15287 5742 1805

15111

TOTAL FARM EXPENSES $ 72267 $101083 $145501 $179747

Financial Summax~ NET CASH FARM INCOME

Labor amp Management Income Number of Operators

LABOR amp MGT INCOMEOPER LABOR MGT amp OWNSHP INCIOPER

$13 859 $-4042

107 $-3778

$4673

$21903 $661 118 $560

$11181

$27521 $-1842

132 $-1395 $12939

$35043 $-1171

134 $-874

$14767

23

FARM BUSINESS SUMMARY BY HERD SIZE 458 New York Dairy Farms 1984

85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows

Capital Investment (end of year) Livestock $124747 $166776 $223343 $ 317993 $ 470722 Feed amp supplies 41199 60934 81393 113736 189321 Machinery amp equipment 111838 134403 183205 190946 259528 Land amp buildings 242050 348070 415970 581058 879980

TOTAL INVESTMENT $519834 $710183 $903911 $1203733 $1799551

Receipts Milk sales $189618 $256245 $343599 $505975 $ 838467 Dairy cattle sold 12783 16560 24102 37420 48329 Other livestock sales 2448 3855 5448 8275 9101 Crop sales 1066 2528 5851 4013 14125 Miscellaneous receipts 4509 9564 18177 19824 11764

Total Cash Receipts $210424 $288752 $397177 $575507 $ 921786 Increase in livestock 5264 2971 7534 4471 51943 Increase in feed amp supplies 281 7022 6856 4218 14687 Appreciation 2746 10566 11658 24903 12861

TOTAL FARM RECEIPTS TOTAL FARM REe EXCL

$218715 $309311 $423225 APPR$215969 $298745 $411567

$609099 $1001277 $584196 $988416

ExpensesHired labor Dairy grain amp concentrate Other feed Machine hire Machinery repairAuto expense (farm share)Gas amp oil Replacement animals Breeding fees Veterinary amp medicine Milk marke ting Cattle lease Other livestock expenseFertilizer amp lime Seeds amp plantsSpray amp other crop expense Land bldg fence repairTaxes amp insurance E1ec amp phone (farm share) Interest paid Mise expenses (inc1 rent)

Total Cash Expenses Expansion livestock Machinery depreciationBuilding depreciationUnpaid family labor Interest on equity 5

$ 16688 $ 27852 $ 46503 49523 61297 78388

1616 3305 3705 1049 1539 2704

10347 14395 20231 608 307 534

7220 10651 13739 1045 1673 4834 2715 3811 5028 3776 5339 6729

15285 19404 26629 150 104 0

8091 9643 15299 9363 13360 21445 3122 4101 7169 2126 4726 7328 2697 3860 3746 7346 10300 13188 5464 6851 8877

19120 27319 39003 5312 8375 10210

$172663 $238212 $335289 1040 729 3596

16720 21513 29514 7497 10826 11453 1698 1348 760

16884 22692 29569

$ 77411 115416

4065 3679

27963 696

19720 1189 8061

12980 39971

o 17745 26273 9889 6131 6384

16264 11927 50300 20000

$476064 7173

32577 22077

938 38653

$117236 201481 10626

4676 38467

329 24792 1354

12013 20847 52277

732 32245 32100 12436 15530

9185 18689 15604 87833 23600

$732052 20888 48605 31860

1433 59533 -TOTAL FARM EXPENSES $216502 $295320 $410181 $577482 $894371

Financial SummaryNET CASH FARM INCOME

Labor amp Management Income Number of Operators

LABOR amp MGT INCOMEOPERLABORMGT amp OWNSHP INCIOP

$37761 $-533 137

$-389 $13939

$50540 $3425

141 $2429

$26016

$61888 $1386

1 52 $912

$28035

$99443 $6714

144 $4663

$48799

$189734 $94045

180 $52247 $92466

24

SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984

Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows

Number of farms 45 100 94 64

Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)

Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495

Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298

Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30

Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238

Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25

Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53

Average of all farms

25

SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984

85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows

Number of farms 43 56 25 16

Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)

Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571

Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412

Feed Costs Feed purchased per cow $544 $494 $461 $504 Crop expense p~r cow $161 $179 $211 $185 Feed cost per cwt milk $354 $326 $307 $313 Feed amp crop expcwt milk $470 $462 $462 $438 feed is of milk receipts 26 24 23 23 Tons forage dry mattercow 81 80 87 85 Tillable acres per cow 32 31 32 27 Fertilizer amp limecrop acre $32 $35 $39 $42

Machinery amp Labor Costs Total machinery costs $41499 $54991 $75651 $94090 Machinery cost per cow $456 $443 $445 $411 Machinery cost per cwt milk $297 $293 $296 $255 Labor cost per cow $337 $338 $360 $399 Labor cost per cwt milk $219 $223 $239 $247

Capital Efficiency Investment per worker $168777 $181169 $193557 $195094 Investment per cow $5590 $5636 $5165 $5144 Investment per cwt milk $37 $38 $35 $33 Land ampbuildings per cow $2603 $2762 $2377 $2483 Machinery investment per cow $1203 $1067 $1047 $816 Capital turnover 24 23 21 20

Other Price per cwt milk sold $1355 $1364 $1346 $1370 Acres hay crops 154 176 258 237 Acres corn si1age 71 102 144 235

Average of all farms

15

359 285

6247600 858

3801 790

(260)

17403 40

163 800

42 728159

443

$561 $167

$322 $436

24 80 22 $41

$129309 $360

$207 $375

$215

$209738 $4699

$29 $2298

$678 18

$13 42 245 326

26

FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 458 New York Dairy Farms January I 1985

Less Than 40 to 55 to 70 to 85 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows 99 Cows

Number of farms 45 100 94 64 43

Assets Livestock (includes $ 39803 $ 59013 $ 81180 $100161 $124747 discounted lease payments)

Feed amp supplies (0)

11239 (22)

17653 (0)

26056 (25)

34432 (0)

41199 Machinery amp equip (includes 40617 55212 77650 98722 112637

discounted lease payments) Land amp buildings (includes

(215) 121757

(1228) 144453

(981) 194790

(771) 227936

(799) 246366

discounted lease payments) (608) (2293) (1080) (2649) (4316) Co-op investment 950 2842 3971 4747 7902 Accounts receivable 5903 8170 11281 14229 17314 Cash amp checking accounts 1084 1664 2028 3492 2463

Total Farm Assets $221171 $289007 $396956 $483719 $552628 Savings accounts 2892 3025 2751 4773 3694 Cash value life insurance 2071 2119 3115 2670 1908 Stocks amp bonds 990 2082 2195 3755 2155 Nonfarm real estate 3853 2905 8897 5656 3616 Auto (personal share) 1464 1903 2005 1806 1979 All other 7871 9212 6298 6887 5231

Total Nonfarm Assets $ 19141 $ 21246 $ 25261 $ 25547 $ 18583 TOTAL ASSETS $240312 $310253 $422217 $509266 $571211

Liabilities Long-term $ 48126 $ 61437 $ 80274 $ 97144 $130575 Intermediate 20644 35075 54202 59859 68539 Financial lease 823 3543 2061 3445 5115 Short-term 500 2191 2547 2059 5511 Other farm accounts 2414 3526 4311 5789 5209

Total Farm Liabilities $ 72507 $105772 $143395 $168296 $214949 Total Nonfarm Liabilities 190 830 856 1816 570 TOTAL LIABILITIES $ 72697 $106602 $144251 $170112 $215519 Farm Net Worth (Eq Cap) $148664 $183235 $253561 $315423 $337679 FAMILY NET WORTH $167615 $203651 $277966 $339154 $355692

Financial Measures Percent equity 70 66 66 67 62 Farm debt per cow $2133 $2204 $2351 $2130 $2311 Available for debt service

amp living $22264 $33907 $43287 $50678 $57557 Scheduled annual debt pymt $13695 $21704 $29930 $35772 $45664 Scheduled debt pymtscow $398 $447 $486 $450 $487 Payment as of milk check 23 24 24 23 24 DebtAsset ratio - long-term 040 043 041 043 053 DebtAsset ratio

amp short-term - intermediate

022 028 029 026 026 Cash flow coverage ratio 057 078 078 081 075

27

FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 458 New York Dairy Farms January I 1985

Item Farms with 100 to

149 Cows 150 to

199 Cows 200 to

249 Cows 250 or

More Cows

Number of farms 56 25 16 15

Assets Livestock (includes

discounted lease payments) Feed amp supplies Machinery amp equip (includes

discounted lease payments) Land amp buildings (includes discounted lease payments)

Co-op investment Accounts receivable Cash amp checking accounts

Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other

$166776 (0)

60934 135106

(703) 348754

(684) 14180 23033 5401

$754184 3921 3560 5664 7632 1817 8148

$ 223343 (0)

81393 184455 (1250) 415970

(0) 28568 31420 4236

$ 969385 8721 6789 8108

13880 3173 7340

$ 317 993 (0)

113736 196961 (6015) 581058

(0) 32536 50181 9H1

$1301582 3796 3796 2455

0 1063 1019

$ 470722 (0)

189321 260222

(694) 879980

(0) 41442 76619

6807 $1925113

9126 9126 4079 6867

667 4411

Total Nonfarm Assets TOTAL ASSETS

$ 30742 $784926

$ 48000 $1017385

$ 16029 $ 27500 $1317611 $19523613

Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts

Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH

$164375 116134

1387 7550

10893 $300339

742 $301081 $453845 $483845

$218110 135883

1250 10275 12494

$378012 l51B

$379590 $591373 $637795

$272541 228449

6015 5801

15108 $528514

250 $528764 $773068 $788847

$399185 298210

694 13752 22605

$734446 400

$734846 $1190667 $1217767

Financial H~Asures Percent equity Farm debt per cow Available for debt service

amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate

amp short-term Cash flow coverage ratio

62 $2384

$79761 $67136

$531 26

047

031 078

63 $2160

$103180 $92504

$526 27

052

027 076

60 $2259

$150134 $118968

$508 34

047

033 094

62 $1918

$277674 $186887

$488 22

045

030 118

-

28

MEASURE YOUR PERFORMANCE

After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement

The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business

STRONG POINTS AVERAGE

NEED IMPROVEMENT

After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration

Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress

1 Do livestock number labor force and crop acres make up a well balanced unit of resources

2 Have rates of production shown a steady increase

3 When will milk output per worker reach 700000 pounds

4 Have some costs of production declined over the last two years

5 Is net farm income improving fast enough to meet your needs

6 Is growth in net worth keeping up with increased capital investment

7 Have you reached the business goals set for 1985 and have you set new goals for 1986

23

FARM BUSINESS SUMMARY BY HERD SIZE 458 New York Dairy Farms 1984

85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows

Capital Investment (end of year) Livestock $124747 $166776 $223343 $ 317993 $ 470722 Feed amp supplies 41199 60934 81393 113736 189321 Machinery amp equipment 111838 134403 183205 190946 259528 Land amp buildings 242050 348070 415970 581058 879980

TOTAL INVESTMENT $519834 $710183 $903911 $1203733 $1799551

Receipts Milk sales $189618 $256245 $343599 $505975 $ 838467 Dairy cattle sold 12783 16560 24102 37420 48329 Other livestock sales 2448 3855 5448 8275 9101 Crop sales 1066 2528 5851 4013 14125 Miscellaneous receipts 4509 9564 18177 19824 11764

Total Cash Receipts $210424 $288752 $397177 $575507 $ 921786 Increase in livestock 5264 2971 7534 4471 51943 Increase in feed amp supplies 281 7022 6856 4218 14687 Appreciation 2746 10566 11658 24903 12861

TOTAL FARM RECEIPTS TOTAL FARM REe EXCL

$218715 $309311 $423225 APPR$215969 $298745 $411567

$609099 $1001277 $584196 $988416

ExpensesHired labor Dairy grain amp concentrate Other feed Machine hire Machinery repairAuto expense (farm share)Gas amp oil Replacement animals Breeding fees Veterinary amp medicine Milk marke ting Cattle lease Other livestock expenseFertilizer amp lime Seeds amp plantsSpray amp other crop expense Land bldg fence repairTaxes amp insurance E1ec amp phone (farm share) Interest paid Mise expenses (inc1 rent)

Total Cash Expenses Expansion livestock Machinery depreciationBuilding depreciationUnpaid family labor Interest on equity 5

$ 16688 $ 27852 $ 46503 49523 61297 78388

1616 3305 3705 1049 1539 2704

10347 14395 20231 608 307 534

7220 10651 13739 1045 1673 4834 2715 3811 5028 3776 5339 6729

15285 19404 26629 150 104 0

8091 9643 15299 9363 13360 21445 3122 4101 7169 2126 4726 7328 2697 3860 3746 7346 10300 13188 5464 6851 8877

19120 27319 39003 5312 8375 10210

$172663 $238212 $335289 1040 729 3596

16720 21513 29514 7497 10826 11453 1698 1348 760

16884 22692 29569

$ 77411 115416

4065 3679

27963 696

19720 1189 8061

12980 39971

o 17745 26273 9889 6131 6384

16264 11927 50300 20000

$476064 7173

32577 22077

938 38653

$117236 201481 10626

4676 38467

329 24792 1354

12013 20847 52277

732 32245 32100 12436 15530

9185 18689 15604 87833 23600

$732052 20888 48605 31860

1433 59533 -TOTAL FARM EXPENSES $216502 $295320 $410181 $577482 $894371

Financial SummaryNET CASH FARM INCOME

Labor amp Management Income Number of Operators

LABOR amp MGT INCOMEOPERLABORMGT amp OWNSHP INCIOP

$37761 $-533 137

$-389 $13939

$50540 $3425

141 $2429

$26016

$61888 $1386

1 52 $912

$28035

$99443 $6714

144 $4663

$48799

$189734 $94045

180 $52247 $92466

24

SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984

Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows

Number of farms 45 100 94 64

Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)

Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495

Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298

Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30

Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238

Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25

Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53

Average of all farms

25

SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984

85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows

Number of farms 43 56 25 16

Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)

Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571

Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412

Feed Costs Feed purchased per cow $544 $494 $461 $504 Crop expense p~r cow $161 $179 $211 $185 Feed cost per cwt milk $354 $326 $307 $313 Feed amp crop expcwt milk $470 $462 $462 $438 feed is of milk receipts 26 24 23 23 Tons forage dry mattercow 81 80 87 85 Tillable acres per cow 32 31 32 27 Fertilizer amp limecrop acre $32 $35 $39 $42

Machinery amp Labor Costs Total machinery costs $41499 $54991 $75651 $94090 Machinery cost per cow $456 $443 $445 $411 Machinery cost per cwt milk $297 $293 $296 $255 Labor cost per cow $337 $338 $360 $399 Labor cost per cwt milk $219 $223 $239 $247

Capital Efficiency Investment per worker $168777 $181169 $193557 $195094 Investment per cow $5590 $5636 $5165 $5144 Investment per cwt milk $37 $38 $35 $33 Land ampbuildings per cow $2603 $2762 $2377 $2483 Machinery investment per cow $1203 $1067 $1047 $816 Capital turnover 24 23 21 20

Other Price per cwt milk sold $1355 $1364 $1346 $1370 Acres hay crops 154 176 258 237 Acres corn si1age 71 102 144 235

Average of all farms

15

359 285

6247600 858

3801 790

(260)

17403 40

163 800

42 728159

443

$561 $167

$322 $436

24 80 22 $41

$129309 $360

$207 $375

$215

$209738 $4699

$29 $2298

$678 18

$13 42 245 326

26

FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 458 New York Dairy Farms January I 1985

Less Than 40 to 55 to 70 to 85 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows 99 Cows

Number of farms 45 100 94 64 43

Assets Livestock (includes $ 39803 $ 59013 $ 81180 $100161 $124747 discounted lease payments)

Feed amp supplies (0)

11239 (22)

17653 (0)

26056 (25)

34432 (0)

41199 Machinery amp equip (includes 40617 55212 77650 98722 112637

discounted lease payments) Land amp buildings (includes

(215) 121757

(1228) 144453

(981) 194790

(771) 227936

(799) 246366

discounted lease payments) (608) (2293) (1080) (2649) (4316) Co-op investment 950 2842 3971 4747 7902 Accounts receivable 5903 8170 11281 14229 17314 Cash amp checking accounts 1084 1664 2028 3492 2463

Total Farm Assets $221171 $289007 $396956 $483719 $552628 Savings accounts 2892 3025 2751 4773 3694 Cash value life insurance 2071 2119 3115 2670 1908 Stocks amp bonds 990 2082 2195 3755 2155 Nonfarm real estate 3853 2905 8897 5656 3616 Auto (personal share) 1464 1903 2005 1806 1979 All other 7871 9212 6298 6887 5231

Total Nonfarm Assets $ 19141 $ 21246 $ 25261 $ 25547 $ 18583 TOTAL ASSETS $240312 $310253 $422217 $509266 $571211

Liabilities Long-term $ 48126 $ 61437 $ 80274 $ 97144 $130575 Intermediate 20644 35075 54202 59859 68539 Financial lease 823 3543 2061 3445 5115 Short-term 500 2191 2547 2059 5511 Other farm accounts 2414 3526 4311 5789 5209

Total Farm Liabilities $ 72507 $105772 $143395 $168296 $214949 Total Nonfarm Liabilities 190 830 856 1816 570 TOTAL LIABILITIES $ 72697 $106602 $144251 $170112 $215519 Farm Net Worth (Eq Cap) $148664 $183235 $253561 $315423 $337679 FAMILY NET WORTH $167615 $203651 $277966 $339154 $355692

Financial Measures Percent equity 70 66 66 67 62 Farm debt per cow $2133 $2204 $2351 $2130 $2311 Available for debt service

amp living $22264 $33907 $43287 $50678 $57557 Scheduled annual debt pymt $13695 $21704 $29930 $35772 $45664 Scheduled debt pymtscow $398 $447 $486 $450 $487 Payment as of milk check 23 24 24 23 24 DebtAsset ratio - long-term 040 043 041 043 053 DebtAsset ratio

amp short-term - intermediate

022 028 029 026 026 Cash flow coverage ratio 057 078 078 081 075

27

FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 458 New York Dairy Farms January I 1985

Item Farms with 100 to

149 Cows 150 to

199 Cows 200 to

249 Cows 250 or

More Cows

Number of farms 56 25 16 15

Assets Livestock (includes

discounted lease payments) Feed amp supplies Machinery amp equip (includes

discounted lease payments) Land amp buildings (includes discounted lease payments)

Co-op investment Accounts receivable Cash amp checking accounts

Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other

$166776 (0)

60934 135106

(703) 348754

(684) 14180 23033 5401

$754184 3921 3560 5664 7632 1817 8148

$ 223343 (0)

81393 184455 (1250) 415970

(0) 28568 31420 4236

$ 969385 8721 6789 8108

13880 3173 7340

$ 317 993 (0)

113736 196961 (6015) 581058

(0) 32536 50181 9H1

$1301582 3796 3796 2455

0 1063 1019

$ 470722 (0)

189321 260222

(694) 879980

(0) 41442 76619

6807 $1925113

9126 9126 4079 6867

667 4411

Total Nonfarm Assets TOTAL ASSETS

$ 30742 $784926

$ 48000 $1017385

$ 16029 $ 27500 $1317611 $19523613

Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts

Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH

$164375 116134

1387 7550

10893 $300339

742 $301081 $453845 $483845

$218110 135883

1250 10275 12494

$378012 l51B

$379590 $591373 $637795

$272541 228449

6015 5801

15108 $528514

250 $528764 $773068 $788847

$399185 298210

694 13752 22605

$734446 400

$734846 $1190667 $1217767

Financial H~Asures Percent equity Farm debt per cow Available for debt service

amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate

amp short-term Cash flow coverage ratio

62 $2384

$79761 $67136

$531 26

047

031 078

63 $2160

$103180 $92504

$526 27

052

027 076

60 $2259

$150134 $118968

$508 34

047

033 094

62 $1918

$277674 $186887

$488 22

045

030 118

-

28

MEASURE YOUR PERFORMANCE

After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement

The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business

STRONG POINTS AVERAGE

NEED IMPROVEMENT

After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration

Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress

1 Do livestock number labor force and crop acres make up a well balanced unit of resources

2 Have rates of production shown a steady increase

3 When will milk output per worker reach 700000 pounds

4 Have some costs of production declined over the last two years

5 Is net farm income improving fast enough to meet your needs

6 Is growth in net worth keeping up with increased capital investment

7 Have you reached the business goals set for 1985 and have you set new goals for 1986

24

SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984

Less Than 40 to 55 to 70 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows

Number of farms 45 100 94 64

Size of Business Number of cows 33 47 61 77 Number of heifers 27 38 52 67 Pounds of milk sold 443000 664700 919900 1159400 Worker equivalent 1 75 208 250 292 Total work units 366 526 694 870 Total tillable acres 112 164 213 271 (Tillable acres rented) (26) (50) (71) (80)

Rates of Production Milk sold per cow 13424 14143 15080 15057 Tons hay crop dry matter per acre 22 23 24 27 Tons corn silage per acre 129 130 128 129 Bushels of oats per acre 398 517 568 495

Labor Efficiency Cows per worker 19 23 24 26 Pounds milk sold per worker 253143 319567 367960 397055 Work units per worker 209 253 278 298

Feed Costs Feed purchased per cow $515 $495 $493 $477 Crop expense per cow $113 $114 $158 $164 Feed cost per cwt milk $384 $350 $327 $316 Feed amp crop expo per cwt milk $505 $452 $456 $438 feed is of milk receipts 29 26 24 24 Tons forage dry matter per cow 76 77 78 80 Tillable acres per cow 34 35 35 35 Fertilizer amp lime per crop acre $21 $21 $30 $30

Machinery amp Labor Costs Total machinery costs $14820 $18829 $27749 $35813 Machinery cost per cow $449 $401 $455 $465 Machinery cost per cwt milk $335 $283 $302 $309 Labor cost per cow $425 $376 $364 $358 Labor cost per cwt milk $317 $266 $242 $238

Capital Efficiency Investment per worker $121378 $131148 $151046 $156783 Investment per cow $6247 $5683 $6190 $5795 Investment per cwt milk $48 $41 $41 $39 Land amp buildings per cow $3558 $2962 $3176 $2852 Machinery investment per cow $1188 $1125 $1257 $1240 Capital turnover 30 26 25 25

Other Price per cwt milk sold $1322 $1345 $1338 $1337 Acres hay crops 77 104 125 140 Acres corn si1age 17 28 41 53

Average of all farms

25

SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984

85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows

Number of farms 43 56 25 16

Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)

Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571

Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412

Feed Costs Feed purchased per cow $544 $494 $461 $504 Crop expense p~r cow $161 $179 $211 $185 Feed cost per cwt milk $354 $326 $307 $313 Feed amp crop expcwt milk $470 $462 $462 $438 feed is of milk receipts 26 24 23 23 Tons forage dry mattercow 81 80 87 85 Tillable acres per cow 32 31 32 27 Fertilizer amp limecrop acre $32 $35 $39 $42

Machinery amp Labor Costs Total machinery costs $41499 $54991 $75651 $94090 Machinery cost per cow $456 $443 $445 $411 Machinery cost per cwt milk $297 $293 $296 $255 Labor cost per cow $337 $338 $360 $399 Labor cost per cwt milk $219 $223 $239 $247

Capital Efficiency Investment per worker $168777 $181169 $193557 $195094 Investment per cow $5590 $5636 $5165 $5144 Investment per cwt milk $37 $38 $35 $33 Land ampbuildings per cow $2603 $2762 $2377 $2483 Machinery investment per cow $1203 $1067 $1047 $816 Capital turnover 24 23 21 20

Other Price per cwt milk sold $1355 $1364 $1346 $1370 Acres hay crops 154 176 258 237 Acres corn si1age 71 102 144 235

Average of all farms

15

359 285

6247600 858

3801 790

(260)

17403 40

163 800

42 728159

443

$561 $167

$322 $436

24 80 22 $41

$129309 $360

$207 $375

$215

$209738 $4699

$29 $2298

$678 18

$13 42 245 326

26

FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 458 New York Dairy Farms January I 1985

Less Than 40 to 55 to 70 to 85 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows 99 Cows

Number of farms 45 100 94 64 43

Assets Livestock (includes $ 39803 $ 59013 $ 81180 $100161 $124747 discounted lease payments)

Feed amp supplies (0)

11239 (22)

17653 (0)

26056 (25)

34432 (0)

41199 Machinery amp equip (includes 40617 55212 77650 98722 112637

discounted lease payments) Land amp buildings (includes

(215) 121757

(1228) 144453

(981) 194790

(771) 227936

(799) 246366

discounted lease payments) (608) (2293) (1080) (2649) (4316) Co-op investment 950 2842 3971 4747 7902 Accounts receivable 5903 8170 11281 14229 17314 Cash amp checking accounts 1084 1664 2028 3492 2463

Total Farm Assets $221171 $289007 $396956 $483719 $552628 Savings accounts 2892 3025 2751 4773 3694 Cash value life insurance 2071 2119 3115 2670 1908 Stocks amp bonds 990 2082 2195 3755 2155 Nonfarm real estate 3853 2905 8897 5656 3616 Auto (personal share) 1464 1903 2005 1806 1979 All other 7871 9212 6298 6887 5231

Total Nonfarm Assets $ 19141 $ 21246 $ 25261 $ 25547 $ 18583 TOTAL ASSETS $240312 $310253 $422217 $509266 $571211

Liabilities Long-term $ 48126 $ 61437 $ 80274 $ 97144 $130575 Intermediate 20644 35075 54202 59859 68539 Financial lease 823 3543 2061 3445 5115 Short-term 500 2191 2547 2059 5511 Other farm accounts 2414 3526 4311 5789 5209

Total Farm Liabilities $ 72507 $105772 $143395 $168296 $214949 Total Nonfarm Liabilities 190 830 856 1816 570 TOTAL LIABILITIES $ 72697 $106602 $144251 $170112 $215519 Farm Net Worth (Eq Cap) $148664 $183235 $253561 $315423 $337679 FAMILY NET WORTH $167615 $203651 $277966 $339154 $355692

Financial Measures Percent equity 70 66 66 67 62 Farm debt per cow $2133 $2204 $2351 $2130 $2311 Available for debt service

amp living $22264 $33907 $43287 $50678 $57557 Scheduled annual debt pymt $13695 $21704 $29930 $35772 $45664 Scheduled debt pymtscow $398 $447 $486 $450 $487 Payment as of milk check 23 24 24 23 24 DebtAsset ratio - long-term 040 043 041 043 053 DebtAsset ratio

amp short-term - intermediate

022 028 029 026 026 Cash flow coverage ratio 057 078 078 081 075

27

FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 458 New York Dairy Farms January I 1985

Item Farms with 100 to

149 Cows 150 to

199 Cows 200 to

249 Cows 250 or

More Cows

Number of farms 56 25 16 15

Assets Livestock (includes

discounted lease payments) Feed amp supplies Machinery amp equip (includes

discounted lease payments) Land amp buildings (includes discounted lease payments)

Co-op investment Accounts receivable Cash amp checking accounts

Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other

$166776 (0)

60934 135106

(703) 348754

(684) 14180 23033 5401

$754184 3921 3560 5664 7632 1817 8148

$ 223343 (0)

81393 184455 (1250) 415970

(0) 28568 31420 4236

$ 969385 8721 6789 8108

13880 3173 7340

$ 317 993 (0)

113736 196961 (6015) 581058

(0) 32536 50181 9H1

$1301582 3796 3796 2455

0 1063 1019

$ 470722 (0)

189321 260222

(694) 879980

(0) 41442 76619

6807 $1925113

9126 9126 4079 6867

667 4411

Total Nonfarm Assets TOTAL ASSETS

$ 30742 $784926

$ 48000 $1017385

$ 16029 $ 27500 $1317611 $19523613

Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts

Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH

$164375 116134

1387 7550

10893 $300339

742 $301081 $453845 $483845

$218110 135883

1250 10275 12494

$378012 l51B

$379590 $591373 $637795

$272541 228449

6015 5801

15108 $528514

250 $528764 $773068 $788847

$399185 298210

694 13752 22605

$734446 400

$734846 $1190667 $1217767

Financial H~Asures Percent equity Farm debt per cow Available for debt service

amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate

amp short-term Cash flow coverage ratio

62 $2384

$79761 $67136

$531 26

047

031 078

63 $2160

$103180 $92504

$526 27

052

027 076

60 $2259

$150134 $118968

$508 34

047

033 094

62 $1918

$277674 $186887

$488 22

045

030 118

-

28

MEASURE YOUR PERFORMANCE

After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement

The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business

STRONG POINTS AVERAGE

NEED IMPROVEMENT

After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration

Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress

1 Do livestock number labor force and crop acres make up a well balanced unit of resources

2 Have rates of production shown a steady increase

3 When will milk output per worker reach 700000 pounds

4 Have some costs of production declined over the last two years

5 Is net farm income improving fast enough to meet your needs

6 Is growth in net worth keeping up with increased capital investment

7 Have you reached the business goals set for 1985 and have you set new goals for 1986

25

SELECTED BUSINESS FACTORS BY HERD SIZE 458 New York Dairy Farms 1984

85 to 100 to 150 to 200 to 250 or Item Farms with 99 Cows 149 Cows 199 Cows 249 Cows More Cows

Number of farms 43 56 25 16

Size of Business Number of cows 91 124 170 229 Number of heifers 83 III 134 200 Pounds of milk sold 1399400 1878500 2553000 3692600 Worker equivalent 308 392 467 617 Total work units 1030 1398 1907 2541 Total tillable acres 290 383 549 622 (Tillable acres rented) (101) (136) (220) (222)

Rates of Production Milk sold per cow 15378 15149 15018 16125 Tons hay crop dry matteracre 27 29 30 33 Tons corn silage per acre 134 138 144 154 Bushels of oats per acre 530 458 501 571

Labor Efficiency Cows per worker 30 32 36 37 Pounds milk soldworker 454351 479209 546681 598476 Work units per worker 334 357 408 412

Feed Costs Feed purchased per cow $544 $494 $461 $504 Crop expense p~r cow $161 $179 $211 $185 Feed cost per cwt milk $354 $326 $307 $313 Feed amp crop expcwt milk $470 $462 $462 $438 feed is of milk receipts 26 24 23 23 Tons forage dry mattercow 81 80 87 85 Tillable acres per cow 32 31 32 27 Fertilizer amp limecrop acre $32 $35 $39 $42

Machinery amp Labor Costs Total machinery costs $41499 $54991 $75651 $94090 Machinery cost per cow $456 $443 $445 $411 Machinery cost per cwt milk $297 $293 $296 $255 Labor cost per cow $337 $338 $360 $399 Labor cost per cwt milk $219 $223 $239 $247

Capital Efficiency Investment per worker $168777 $181169 $193557 $195094 Investment per cow $5590 $5636 $5165 $5144 Investment per cwt milk $37 $38 $35 $33 Land ampbuildings per cow $2603 $2762 $2377 $2483 Machinery investment per cow $1203 $1067 $1047 $816 Capital turnover 24 23 21 20

Other Price per cwt milk sold $1355 $1364 $1346 $1370 Acres hay crops 154 176 258 237 Acres corn si1age 71 102 144 235

Average of all farms

15

359 285

6247600 858

3801 790

(260)

17403 40

163 800

42 728159

443

$561 $167

$322 $436

24 80 22 $41

$129309 $360

$207 $375

$215

$209738 $4699

$29 $2298

$678 18

$13 42 245 326

26

FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 458 New York Dairy Farms January I 1985

Less Than 40 to 55 to 70 to 85 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows 99 Cows

Number of farms 45 100 94 64 43

Assets Livestock (includes $ 39803 $ 59013 $ 81180 $100161 $124747 discounted lease payments)

Feed amp supplies (0)

11239 (22)

17653 (0)

26056 (25)

34432 (0)

41199 Machinery amp equip (includes 40617 55212 77650 98722 112637

discounted lease payments) Land amp buildings (includes

(215) 121757

(1228) 144453

(981) 194790

(771) 227936

(799) 246366

discounted lease payments) (608) (2293) (1080) (2649) (4316) Co-op investment 950 2842 3971 4747 7902 Accounts receivable 5903 8170 11281 14229 17314 Cash amp checking accounts 1084 1664 2028 3492 2463

Total Farm Assets $221171 $289007 $396956 $483719 $552628 Savings accounts 2892 3025 2751 4773 3694 Cash value life insurance 2071 2119 3115 2670 1908 Stocks amp bonds 990 2082 2195 3755 2155 Nonfarm real estate 3853 2905 8897 5656 3616 Auto (personal share) 1464 1903 2005 1806 1979 All other 7871 9212 6298 6887 5231

Total Nonfarm Assets $ 19141 $ 21246 $ 25261 $ 25547 $ 18583 TOTAL ASSETS $240312 $310253 $422217 $509266 $571211

Liabilities Long-term $ 48126 $ 61437 $ 80274 $ 97144 $130575 Intermediate 20644 35075 54202 59859 68539 Financial lease 823 3543 2061 3445 5115 Short-term 500 2191 2547 2059 5511 Other farm accounts 2414 3526 4311 5789 5209

Total Farm Liabilities $ 72507 $105772 $143395 $168296 $214949 Total Nonfarm Liabilities 190 830 856 1816 570 TOTAL LIABILITIES $ 72697 $106602 $144251 $170112 $215519 Farm Net Worth (Eq Cap) $148664 $183235 $253561 $315423 $337679 FAMILY NET WORTH $167615 $203651 $277966 $339154 $355692

Financial Measures Percent equity 70 66 66 67 62 Farm debt per cow $2133 $2204 $2351 $2130 $2311 Available for debt service

amp living $22264 $33907 $43287 $50678 $57557 Scheduled annual debt pymt $13695 $21704 $29930 $35772 $45664 Scheduled debt pymtscow $398 $447 $486 $450 $487 Payment as of milk check 23 24 24 23 24 DebtAsset ratio - long-term 040 043 041 043 053 DebtAsset ratio

amp short-term - intermediate

022 028 029 026 026 Cash flow coverage ratio 057 078 078 081 075

27

FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 458 New York Dairy Farms January I 1985

Item Farms with 100 to

149 Cows 150 to

199 Cows 200 to

249 Cows 250 or

More Cows

Number of farms 56 25 16 15

Assets Livestock (includes

discounted lease payments) Feed amp supplies Machinery amp equip (includes

discounted lease payments) Land amp buildings (includes discounted lease payments)

Co-op investment Accounts receivable Cash amp checking accounts

Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other

$166776 (0)

60934 135106

(703) 348754

(684) 14180 23033 5401

$754184 3921 3560 5664 7632 1817 8148

$ 223343 (0)

81393 184455 (1250) 415970

(0) 28568 31420 4236

$ 969385 8721 6789 8108

13880 3173 7340

$ 317 993 (0)

113736 196961 (6015) 581058

(0) 32536 50181 9H1

$1301582 3796 3796 2455

0 1063 1019

$ 470722 (0)

189321 260222

(694) 879980

(0) 41442 76619

6807 $1925113

9126 9126 4079 6867

667 4411

Total Nonfarm Assets TOTAL ASSETS

$ 30742 $784926

$ 48000 $1017385

$ 16029 $ 27500 $1317611 $19523613

Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts

Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH

$164375 116134

1387 7550

10893 $300339

742 $301081 $453845 $483845

$218110 135883

1250 10275 12494

$378012 l51B

$379590 $591373 $637795

$272541 228449

6015 5801

15108 $528514

250 $528764 $773068 $788847

$399185 298210

694 13752 22605

$734446 400

$734846 $1190667 $1217767

Financial H~Asures Percent equity Farm debt per cow Available for debt service

amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate

amp short-term Cash flow coverage ratio

62 $2384

$79761 $67136

$531 26

047

031 078

63 $2160

$103180 $92504

$526 27

052

027 076

60 $2259

$150134 $118968

$508 34

047

033 094

62 $1918

$277674 $186887

$488 22

045

030 118

-

28

MEASURE YOUR PERFORMANCE

After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement

The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business

STRONG POINTS AVERAGE

NEED IMPROVEMENT

After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration

Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress

1 Do livestock number labor force and crop acres make up a well balanced unit of resources

2 Have rates of production shown a steady increase

3 When will milk output per worker reach 700000 pounds

4 Have some costs of production declined over the last two years

5 Is net farm income improving fast enough to meet your needs

6 Is growth in net worth keeping up with increased capital investment

7 Have you reached the business goals set for 1985 and have you set new goals for 1986

26

FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 458 New York Dairy Farms January I 1985

Less Than 40 to 55 to 70 to 85 to Item Farms with 40 Cows 54 Cows 69 Cows 84 Cows 99 Cows

Number of farms 45 100 94 64 43

Assets Livestock (includes $ 39803 $ 59013 $ 81180 $100161 $124747 discounted lease payments)

Feed amp supplies (0)

11239 (22)

17653 (0)

26056 (25)

34432 (0)

41199 Machinery amp equip (includes 40617 55212 77650 98722 112637

discounted lease payments) Land amp buildings (includes

(215) 121757

(1228) 144453

(981) 194790

(771) 227936

(799) 246366

discounted lease payments) (608) (2293) (1080) (2649) (4316) Co-op investment 950 2842 3971 4747 7902 Accounts receivable 5903 8170 11281 14229 17314 Cash amp checking accounts 1084 1664 2028 3492 2463

Total Farm Assets $221171 $289007 $396956 $483719 $552628 Savings accounts 2892 3025 2751 4773 3694 Cash value life insurance 2071 2119 3115 2670 1908 Stocks amp bonds 990 2082 2195 3755 2155 Nonfarm real estate 3853 2905 8897 5656 3616 Auto (personal share) 1464 1903 2005 1806 1979 All other 7871 9212 6298 6887 5231

Total Nonfarm Assets $ 19141 $ 21246 $ 25261 $ 25547 $ 18583 TOTAL ASSETS $240312 $310253 $422217 $509266 $571211

Liabilities Long-term $ 48126 $ 61437 $ 80274 $ 97144 $130575 Intermediate 20644 35075 54202 59859 68539 Financial lease 823 3543 2061 3445 5115 Short-term 500 2191 2547 2059 5511 Other farm accounts 2414 3526 4311 5789 5209

Total Farm Liabilities $ 72507 $105772 $143395 $168296 $214949 Total Nonfarm Liabilities 190 830 856 1816 570 TOTAL LIABILITIES $ 72697 $106602 $144251 $170112 $215519 Farm Net Worth (Eq Cap) $148664 $183235 $253561 $315423 $337679 FAMILY NET WORTH $167615 $203651 $277966 $339154 $355692

Financial Measures Percent equity 70 66 66 67 62 Farm debt per cow $2133 $2204 $2351 $2130 $2311 Available for debt service

amp living $22264 $33907 $43287 $50678 $57557 Scheduled annual debt pymt $13695 $21704 $29930 $35772 $45664 Scheduled debt pymtscow $398 $447 $486 $450 $487 Payment as of milk check 23 24 24 23 24 DebtAsset ratio - long-term 040 043 041 043 053 DebtAsset ratio

amp short-term - intermediate

022 028 029 026 026 Cash flow coverage ratio 057 078 078 081 075

27

FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 458 New York Dairy Farms January I 1985

Item Farms with 100 to

149 Cows 150 to

199 Cows 200 to

249 Cows 250 or

More Cows

Number of farms 56 25 16 15

Assets Livestock (includes

discounted lease payments) Feed amp supplies Machinery amp equip (includes

discounted lease payments) Land amp buildings (includes discounted lease payments)

Co-op investment Accounts receivable Cash amp checking accounts

Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other

$166776 (0)

60934 135106

(703) 348754

(684) 14180 23033 5401

$754184 3921 3560 5664 7632 1817 8148

$ 223343 (0)

81393 184455 (1250) 415970

(0) 28568 31420 4236

$ 969385 8721 6789 8108

13880 3173 7340

$ 317 993 (0)

113736 196961 (6015) 581058

(0) 32536 50181 9H1

$1301582 3796 3796 2455

0 1063 1019

$ 470722 (0)

189321 260222

(694) 879980

(0) 41442 76619

6807 $1925113

9126 9126 4079 6867

667 4411

Total Nonfarm Assets TOTAL ASSETS

$ 30742 $784926

$ 48000 $1017385

$ 16029 $ 27500 $1317611 $19523613

Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts

Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH

$164375 116134

1387 7550

10893 $300339

742 $301081 $453845 $483845

$218110 135883

1250 10275 12494

$378012 l51B

$379590 $591373 $637795

$272541 228449

6015 5801

15108 $528514

250 $528764 $773068 $788847

$399185 298210

694 13752 22605

$734446 400

$734846 $1190667 $1217767

Financial H~Asures Percent equity Farm debt per cow Available for debt service

amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate

amp short-term Cash flow coverage ratio

62 $2384

$79761 $67136

$531 26

047

031 078

63 $2160

$103180 $92504

$526 27

052

027 076

60 $2259

$150134 $118968

$508 34

047

033 094

62 $1918

$277674 $186887

$488 22

045

030 118

-

28

MEASURE YOUR PERFORMANCE

After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement

The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business

STRONG POINTS AVERAGE

NEED IMPROVEMENT

After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration

Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress

1 Do livestock number labor force and crop acres make up a well balanced unit of resources

2 Have rates of production shown a steady increase

3 When will milk output per worker reach 700000 pounds

4 Have some costs of production declined over the last two years

5 Is net farm income improving fast enough to meet your needs

6 Is growth in net worth keeping up with increased capital investment

7 Have you reached the business goals set for 1985 and have you set new goals for 1986

27

FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 458 New York Dairy Farms January I 1985

Item Farms with 100 to

149 Cows 150 to

199 Cows 200 to

249 Cows 250 or

More Cows

Number of farms 56 25 16 15

Assets Livestock (includes

discounted lease payments) Feed amp supplies Machinery amp equip (includes

discounted lease payments) Land amp buildings (includes discounted lease payments)

Co-op investment Accounts receivable Cash amp checking accounts

Total Farm Assets Savings accounts Cash value life insurance Stocks amp bonds Nonfarm real estate Auto (personal share) All other

$166776 (0)

60934 135106

(703) 348754

(684) 14180 23033 5401

$754184 3921 3560 5664 7632 1817 8148

$ 223343 (0)

81393 184455 (1250) 415970

(0) 28568 31420 4236

$ 969385 8721 6789 8108

13880 3173 7340

$ 317 993 (0)

113736 196961 (6015) 581058

(0) 32536 50181 9H1

$1301582 3796 3796 2455

0 1063 1019

$ 470722 (0)

189321 260222

(694) 879980

(0) 41442 76619

6807 $1925113

9126 9126 4079 6867

667 4411

Total Nonfarm Assets TOTAL ASSETS

$ 30742 $784926

$ 48000 $1017385

$ 16029 $ 27500 $1317611 $19523613

Liabil1thli Long-term Intermediate Financial lease Short-term Other farm accounts

Total Farm Liabilities Total Nonfarm Liabilities TOTAL LIABILITIES Farm Net Worth (Eq Cap ) FAMILY NET WORTH

$164375 116134

1387 7550

10893 $300339

742 $301081 $453845 $483845

$218110 135883

1250 10275 12494

$378012 l51B

$379590 $591373 $637795

$272541 228449

6015 5801

15108 $528514

250 $528764 $773068 $788847

$399185 298210

694 13752 22605

$734446 400

$734846 $1190667 $1217767

Financial H~Asures Percent equity Farm debt per cow Available for debt service

amp living Scheduled annual debt pymt Scheduled debt pymtscow Payment as of milk check DebtAsset ratio - long-term DebtAsset ratio - intermediate

amp short-term Cash flow coverage ratio

62 $2384

$79761 $67136

$531 26

047

031 078

63 $2160

$103180 $92504

$526 27

052

027 076

60 $2259

$150134 $118968

$508 34

047

033 094

62 $1918

$277674 $186887

$488 22

045

030 118

-

28

MEASURE YOUR PERFORMANCE

After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement

The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business

STRONG POINTS AVERAGE

NEED IMPROVEMENT

After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration

Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress

1 Do livestock number labor force and crop acres make up a well balanced unit of resources

2 Have rates of production shown a steady increase

3 When will milk output per worker reach 700000 pounds

4 Have some costs of production declined over the last two years

5 Is net farm income improving fast enough to meet your needs

6 Is growth in net worth keeping up with increased capital investment

7 Have you reached the business goals set for 1985 and have you set new goals for 1986

28

MEASURE YOUR PERFORMANCE

After you have entered your farm business data on the pages of this workbook categorize your farm business performance into three groups List the strong points those which indicate average performance and those areas which need improvement Your business factors that exceed the regional average should be listed as strong points factors that are close to the regional average should be identified as averaampe and factors that are below average should be listed under need improvement

The Farm Business Chart on page 20 and the Financial Analysis Chart on page 21 can be used to identify strengths and weaknesses by comparing your business with a large number of New York dairy farms summarized for the previous year It is recommended that you use more than one standard for comparison when analyzing the farm business

STRONG POINTS AVERAGE

NEED IMPROVEMENT

After identifying opportunities for improvement consider alternative ways of solving each problem List each alternative and analyze the consequences in detail Cooperative Extension conducts many schools meetings and provides many printed materials that should be of assistance Local agribusinesses often provide helpful information and assistance Seek out information related to the problem under consideration

Another way to measure your management performance is to compare your current business factors with those from previous years Page 19 is provided for this purpose Answering the following questions may also help evaluate your farm business progress

1 Do livestock number labor force and crop acres make up a well balanced unit of resources

2 Have rates of production shown a steady increase

3 When will milk output per worker reach 700000 pounds

4 Have some costs of production declined over the last two years

5 Is net farm income improving fast enough to meet your needs

6 Is growth in net worth keeping up with increased capital investment

7 Have you reached the business goals set for 1985 and have you set new goals for 1986