Dyson.cornell.edu Outreach Extensionpdf 2002 Cornell AEM Eb0207
II: c= en - Cornell...
Transcript of II: c= en - Cornell...
May 1984 A.E. Ext. 84~17
EASTERN NEW YORK RENTER SUMMARY. - - . c 1983
:& II: c= en
Stuart F. Smith
Linda D. Putnam
Deportment of Agricultural Economics New York Stole College of Agricul ture and life Sciences
A. Statutory Coliege 01 the Stol. Univ .. "ity
Cornell University. Ithaca, New York 148SJ
1983 EASTERN NEW YOB DUllY FABK RENTEIl BUSINBSS 8UMMAJlY
INTllODUCTION
Dairyfarmers throughout lew York State subait business records for summarization and analysis through Cooperative Bxtension's Fara Business Management Program. Averages from a compilation of the individual farm reports are published in ten regional summaries and in one statewide summary.
This special Bastern New York Dairy Su...ry is an average of 30 businesses that are renting substantially all of the fara real estate. The farm income, financial summary, and business analysis sections of this report include comparisons with average data on 204 owned dairy farms in the region. This report is prepared in workbook form for farm renters to use in the systematic study of their fara business operations.
LIST OF TABLES
Table Page
Management Systems, Production Technology, and Farm Size 2
Capital Investment - Farm Inventory 2
Inventory Accounting, Selected Changes 3
Farm Receipts 3
Farm Bxpenses 4
Farm Income Summary 5
Farm Family Financial Situation 6
Financial Measures and Debt Commitment 7
Measures of Size of Business 8
Crop Yields and Milk Sold Per Cow 8
Measures of Labor Bfficiency 9
Measures of Capital Bfficiency 9
Feed Costs and Related Measures 9
Machinery and Labor Costs 10
Other Cost and Receipt Measures 10
Yearly Cash Flow Planning and Analysis 11
Progress of the Farm Business 12
Business records for 30 farms in Columbia, Delaware, Dutchess, Otsego, Rensselaer, Saratoga, Sullivan, and Washington Counties are summarized in this publication.
2
SUMMARY OF THE FARK BUSINESS
Business Characteristics
The CODlbination of resources and management techniques used to put resources to work is an important part of planning. The tables below show important farm business characteristics, the number of fa!.1ll8 reporting these characteristics, and the average level of resources used in production.
MAN.ltGEMBNT SYSTEMS, PRODUCTION TECHNOLOGY, AND PARK SIZE 30 Eastern New York Dairy Parm Renters, 1983
!IE! of Business- Number Busiuess Records Number Dai!,l Record., Number
Proprietorship 16 Account Book 10 D.H.I.C. 21 Partnership 12 Agrifax 19 Owner Sampler 1 Corporation 2 Other 1 None 8
Barn !IE! Number Hilki!!S Slstem Nwaber Number
Stanchion 25 Bucket & Carry 1 Herringbone 6 Freestall 5 DUmping Station 3 Other Parlor 0 Other 0 Pipeline 20
Labor Porce !!l Parm Averase Land Use !!l Parm Averae
Operator 1. 110. 12 Total acres rented 321 2. 110. 5 Tillable acre. rented 196 3. 1110. 1
PalRily paid 110. 1 Number of Cows !!l Parm Averase Pamily unpaid 11.0. 3 Hired 110. 9 Beginning of year 65
End of year 86 Total 110. 31 Average for year 68
Ca ital Invest_nt-Parm Invento represents the 1I8rket value of resources co_itte am usiness at the beginning and end of the year. Increases in inventory occurs with herd expansion, new 1I8chinery, and building additions and appreciation of land, buildings, and 11vestock.
CAPITAL INVESTMBlCT - PARM INVENTORY 30 Eastern New York Dairy Parm Renters, 1983
My Parm AverageItea 1/1/8~ 1/1/84 1/1/83 1/1184
Livestock $ $ 89,593 $ 81,434 $_-reed and supplies ---- 20,946 24,582 Machinery and equiPMllt 67,5~1 69,112 Land and building. 10,815 11,077
TOTAL $ $ $188,945 $186.,205
----
3
INVENTORY ACCOUNTING, SELECTED CIWIGES 30 Eaatern New York Dairy Para Rentera, 1983
Itell My Para Average
Livestock Inventory:
Total Change
Appredation.!1
Net Change in Inventor~
$_- $-8,159
-8,886
727
Machinery and Equipment:
Depreciation Appreciation.!/31
9,134
2,291
Real Estate:
Value addecJ!!! 681
Depredation
Appredat ion.!1 749
330
l/Change in inventory caused by inflation or deflation of prices. l/Change in inventory caused by change in herd size and/or quality. 3/positive value indicates machinery depreciation charge exceeda actual - decline in market value. 4/Cost of new real estate that can be added to value of new fara. Lost - capital has been deducted.
FARKRECEIPTS 30 Eastern New York Dairy Farm Renters, 1983
Itell My Farm Per Farm Per Cow
CASH RECEIPTS
Milk sales Crop sales Dairy cattle sold Calves and other livestock aales Gas tax refund Government payments Custom machine work Other
Total Cash Receipts
NONCASH RECEIPTS
Increase in livestock inventory Increase in feed and supplies
TOTAL FARK RECEIPTS EXCLUDING APPRECIATION
Livestock appreciation Machinery appreciation Real estate appreciation
TOTAL PARK RECEIPTS
$_-
$____
$
$
$141,223 1,080 8,832 1,928
60 191
1,411 11058
$155,783
727 3,636
$160,146
- 8,886 2,291
330
$153,881
$2,077 16
130 28
1 3
21 15
$2,291
11 53
$2,355
131 34
5
$2,263
4
FARM EXPENSES 30 Eastern New York Dairy Farm Renters, 1983
Item My Farm Per Farm Per Cow
Hired Labor
Feed
Dairy concentrate Hay and other
Machinery
Hachine hire Machinery repairs Auto expense (farm share) Gas and oil
Livestock
Replacement livestock Breeding fees Veterinary and medicine Milk marketing Cattle lease Other livestock expense
Crops
Fertilizer and lime Seeds and plants Spray, other crop expense
Real Estate
Land, building, fence repair Taxes Insurance Rent
Other
Telephone (farm share) Electricity (farm share) Interest paid Miscellaneous
Total Cash Expenses
Decrease in livestock and/or feed ExpanSion livestock Machinery depreciation Building depreciation Unpaid familY labor @$500/month
TOTAL FARM EXPENSES EXCLUDING INTBRBST OM EQUITY CAPITAL
Interest on equity capital @51
TOTAL FARM EXPENSES
$_-
$_-
$_-
$
$ 10,012 $ 147
37,444 2,960
551 44
1,391 5,397
244 5,122
21 79 4
75
2,228 2,205 2~402
12,109 92
5,883
33 32 35
178 1
87
7,544 2,662 1,687
111 39 25
1,389 2,216 2,003
13,138
20 33 29
193
502 3,238 7,317 2,190
$131,375
7 48
108 32
$1,932
o 559
9,134 749
1.700
0 8
135 11 25
$143,517 $2,111
6,462 95
$149,979 $2,206
-----
-----
Farm Business Profitability
Four common ways to measure the return. fro. a fara bu.ine.s are reported bere.
Net casb fara income reflect. tbe casb available fro. the year'. operation of the business. Labor and management income is the return to tbe operator for his or her labor and management input into tbe business. Labor mana ement, and ownersbi income per operator reflects the combined return to tbe farmer for his her triple role of worker-aanager, financier, and owner. Return on equity capital is computed witb appreciation. To compute tbe rate of return, divide return on equity capital by farm net wortb or equity capital.
FARM INCOME SUHtWlY Eastern New York Dairy Fara Renters and OWners, 1983
30 Dairy 204 Dairy Ite. My Farm Farm Renter. Farm Owners
Casb farm receipts $._-Cash farm expenses
NET CASH FARM INCOME $_-
Total farm receipts excluding appreciation $_-
Total farm expenses
LABOR AND MANAGEMENT INCOME $_-
Full-time operator-manager equivalents _______
LABOR AND MANAGEMENT INCOME PER OPERATOR-MANAGER $_-
Total farm receipts Total farm expenses excluding
interest on equity capital
LABOR, MANAGEMENT, AND OWNERSHIP INCOME PER FARM $_-
Full-time operator-manager equivalents
LABOR, MANAGEMENT, AND OWNERSHIP INCOME PER OPERATOR~GER $_-
Labor, management and ownership income per farm $_-
Less value of operator's labor and management*
Return on Equity Capital Including
$155,783 131,375
$ 24,408
$160,146 149,979
$ 10,167
1.53
$ 6,645
$153,881
143,517
$ 10,364
1.53
$ 6,774
$ 10,364
23,007
$185,647 152,233
$ 33,414
$190,384 186,821
$ 3,563
1.29
$ 2,762
$188,100
172,057
$ 16,043
1.29
$ 12,436
$ 16,043
20,026
Appreciation $ $-12,643 $- 3,983 RATE OF RETURN ON $ EQUITY -9.8% -1.3%
*Value of operator's labor and management estimated by operators.
6
Parm Pamily Pinancial Situation
The financial situation is an important part of the farm business summary. It has a direct affect on current cash outflow and future capital investment decisions. A farmer may have a good labor and management income, but high debt payments may restrict management flexibility. Parm net worth is total farm assets less total farm liabilities. Pamily net worth is total assets less all liabilities reported.
PARK PAMILY PINANCIAL SITUATION Eastern New York Dairy Parm Renters and Owners, January 1, 1984
30 Dairy 204 Dairy Item My Parm Parm Renters Parm Owners
Assets
Livestock $ $ 81,434 (includes discounted lease pymts) --- (0)
Peed and supplies 24,582 Machinery and equipment 69,844
(includes discounted lease pymts) (732) Land and buildings 12,467
(includes discounted lease pymts) (1,390) Co-op investments 7,409 Accounts receivable 12,915 Cash and checking accounts 4,170
Total Parm Assets $212,821$_-
Savings accounts 2,686 Cash value life insurance 631 Stocks and bonds 2,305 Nonfarm real estate 3,933 Auto (personal share) 1,062 All other 22445
$100,965 (73)
34,822 85,326
(857) 231,411
(2,300) 10,258 13,753 2,286
$478,821
3,689 2,246 3,629 4,749 1,243 5,827
$ 21,383
$500,204
$107,352 61,332 3,230 4,287 7,350
$183,551
831
$184,382
$295,270
$315,822
Total Nonfarm Assets
TOTAL ASSETS
Liabilities
Long term Intermediate Financial lease Short term Other farm accounts
Total Parm Liabilities
Nonfarm Liabilities
TOTAL LIABILITIBS
FAIM NET WORTH (EQUITY CAPITAL)
FAMILY NET WORTH
$_-
$_-
$_-
$_-
$_-
$_-
$
$ 13,062
$225,883
$ 9,312 57,791 2,122 4,210
10,146
$ 83,581
1,546
$ 85,127
$129,240
$140,756
----
----
----
7
Payment ability is the most important consideration in deteraining if and how proposed investments should be financed. The fara business must produce sufficient cash income to meet operating expenaes, to cover family or personal living expenses, to make payments on debts, and to cover cash purchases of capital iteas that occur during the year.
Payment ability is estimated in the following table. Interest paid and income from off-fara work are added to net cash fara income because planned or budgeted debt payments will include interest as well as principal. Estimate family living expenses for your fara to calculate cash available for debt payment and capital purchases made in cash.
Debt payments planned are the scheduled debt payments as of January. Some farms in the group had scheduled debt payments exceeding 50 percent of the milk receipts. put a "big squeeze" living.
C01lllllitting this much cash inflow to debt payments on cash available for operating the business and f
can amily
FINANCIAL MEASURES & DEBT OOMMITKENT Eastern New York Dairy Farm Renters and Owners, January 1, 1984
30 Dairy 204 Dairy Item My Fara Fara Renters Fara OWners
Payment Ability
Net cash farm income Plus interest paid
Plus off-farm income
CASH AVAILABLE FOR DEBT SERVICE AND LIVING
Less family living expenses*
CASH AVAILABLE FOR DEBT PAYMENTS AND CAPITAL PURCHASES
Scheduled Annual Debt Payments
Long term
Intermediate
Financial lease
Short tera
Other farm accounts
TOTAL PAYMENTS PLANNED FOR 1983
Measures of Debt Commitment & Equity Position
Debt payments planned per cow Debt payments planned as
percent of milk sales
Farm debt per cow
Percent equity (total)
$_-
$
$--- $
$
$_-
$_-
%
$24,408 7,317
1,298
$33,023
22,296
$10,727
$1,418
18,339
3,058
1,653 $24,468
$285
17% $972
62%
$33,414
17 ,171
1,681
$52,266
20,970
$31,296
$13,737
18,929
3,370
22556
$38,592
$476
23%
$2,266
63%
*Estimated as $10,500 per family plus four percent of cash receipts.
--------------------------------------------------------------------------
8
ANALYSIS OF THE FARM BUSINESS
In analyzing a farm business, a manager must consider measures or factors that reflect the performance of specified parts of the farm business. One method of doing this is to look at factors of size, production, labor efficiency, capital efficiency and cost control. These factors are considered on the following pages.
MEASURES OF SIZE OF BUSINESS Eastern New York Dairy Farm Renters and Owners, 1983
Item My Farm 30 Dairy
Farm Renters 204 Dairy
Farm Owners
Number of cows
Number of heifers
Pounds of milk sold
Worker equivalent
Total work units
Total tillable acres
68
49
985,600
2.58
732
203
79
64
1,182,600
2.83
878
248
CROP YIELDS & MILK SOLD PER COW 30 Eastern New York Dairy Farm Renters, 1983
!!l Farm Averase of Farms Re2orti]f Cr02 Acres Yield Farms Acres Yield~cre
Baled hay 25 (combined
Bay crop silage 16 below) Total Hay Crops 28 118 2.5 tons DK
Corn silage 27 65 11.6 tons Other forage 2 11 2.5 tons DK
Total Forage Crops 28 182 2.9 tons DK
Grain corn 8 37 82.1 bu. Oats 4 33 52.0 bu. Other crops 2 75
Tillable pasture 6 27
Idle tillable land 6 44
Milk sold per cow 14,494 lbs.
1983 average yields for 204 dairy farm owners in Eastern New York included: Milk sold per cow, 14,970 pounds All bay crops, 2.4 tons dry matter per acre Corn silage, 11.8 tons per acre
----
9
MEASURES OP LABOR DPICIENCY Bastern New York Dairy Parm Renters and Owners, 1983
30 Dairy 204 Dairy Ite. Hy Parm 'arm bnters 'ara Owners
Cows per worker 26 28
Pounds of milk sold per worker 382,016 417 ,880
Work units per worker 284 310
MEASURES OP CAPITAL EFPICIENCY Bastern Hew York Dairy Parm Renters and Owners, 1983
I 30 Dairy 204 Dairy
Ite. Hz Para Para Renters Para Owners
Para capital per worker $ $72,172 $158,761
Parm capital per cow $ $2,165 $5,547
Machinery investment per cow $ $804 $1,043
Machinery per tillable acre $ $340 $341
Capital turnover years 1.2 years 2.4 years
PBBD COSTS AND BELATED MEASURES Eastern New York Dairy Parm Renters and Owners, 1983
30 Dairy 204 Dairy Ite. My Parm Para Renters Parm Owners
Dairy concentrate purchased per cow
Dairy concentrate purchased per cwt. of milk sold
Percent dairy concentrate is of milk receipts
Crop expense per cow
Peed and crop expense per cwt. milk
Porage dry matter harv. per cow (tons) Acres of forage per cow
Total tillable acres per cow
Pertilizer and lime per tillable acre
Heifers as percent of cow numbers
$_-
$_-
--_% $____
$_-
$
%
$551
$3.80
27%
$175
$5.31
7.8
2.7
3.0
$37
72%
$535
$3.58
25%
$162
$4.76
7.4
2.4
3.1
$34
81%
10
MACHINERY & LABOR COSTS Eastern New York Dairy Farm Renters and Owners, 1983
30 Dairy 204 Dairy Item My Farm Farm Renters Farm Owners
Machinery: 1Depreciation $
Interest2
3Operating expense
Total machinery
Per cow
Per cwt. of milk
Labor: 4Value of operators $
Unpaid family5
Hired
Total labor $
Per cow
Per cwt. milk
Labor &machinery costs/cwt. milk $
$ 9,134 $12,129
3,418 4,158
12 2154 162124
$24,706 $32,411
$363 $410
$2.51 $2.74
$13,675 $11,482
1,'00 1,341
1°1°12 14,592
$25,387 $27,415
$373 $347
$2.58 $2.32
$5.09 $5.60
lRegular depreciation from last year's tax plus 10 percent of new purchases.
2Five percent of average machinery investment. 3Machine hire, repairs, farm share auto expense, and gas and oil. 4$750 per month. 5$500 per month.
OTHER COST AND RECEIPT MEASURES Eastern New York Dairy Farm Renters and OWners, 1983
Item !!l Farm 30 Dairy
Farm Renters 204 Dairy
Farm Owners
Total livestock expense (exlcuding replacements & overhead) per cow $ $334 $331
Total real estate expenses per cow $ $276 $163
Milk and cattle sales per cow $ $2,235 $2,271 Average price per cwt. milk sold $ $14.33 $14.18
Total cash receipt. per worker $ $60,381 $65,600
11
Y&AB.LY CASB PLOW PLANNING , ANALYSIS
The worksheet below is a valuable tool in planuiOl expansiona and for setting goals for improving the fara business. The average is from 30 Eastern New York dairy fara renters.
Average My Farm, Cows
Item Per Cow Per Cow Total Goal
CASH RECEIPTS Milk sales $2.077 Crop sales 16 Dairy cattle 130 Calves & other livestock 28 Other 40
Total Cash Receipts $2,291
CASB EXPENSES Hired labor $ 147 Dairy concentrate Hay and other
551 44
Machine hire 20 Machine repair &auto expense Gas & 011
83 75
Replacement livestock 33 Breeding fees 32 Vet & medicine 35 Milk marketing (ADA, Dues) 178 Other livestock exp. (incl. $1 Fertilizer & lime
lease) 88 111
Seeds & plants 39 Spray & other 25 Land, bldg. fence repair 20 Taxes 33 Insurance 30 Rent 193 Telephone (farm share) 7 Electricity (fara share) 48 Miscellaneous 32
Total Cash Expenses1 $1,824
Total Cash Receipts $2,291
Total Cash Expenses1 -1,824
Net Cash Flow $ 467
Cash Family Living Expense2 - 328 Amount Left for Debt Service,
Capital Investment & Retained Earnings $ 139
Scheduled Debt Service - 285 Available for Capital Investment $ (146)
Planned Expansion Livestock Purch. Planned Equipment Purchase
Borrowed or Equity Funds Needed
$_-- $_-- $_-
$_-- $_-- $_-
$_-- $_-- $_-
$_-- $_-- $_-
$_-- $_-- $_-
$_-- $_-- $_-
$ $ $_-
$ $ $
1Interest paid excluded for it is contained in Scheduled Debt Service.
2Estimated: $10,500 per family and four percent of cash farm receipts.
12
PROGRESS OF THE FARM BUSINESS
Comparing your business with that of other farmers is one part of a business checkup. It is equally important to compare your current year's business with that of earlier years to show the progress you are making, and to plan ahead, by setting business targets or goals.
Item 1981 1982 1983 1984 Goal
Size of Business
Number of cows
Number of heifers
Pounds of milk sold
Worker equivalent
Total tillable acres
Rates of Production
Lbs. milk sold per cow
Tons hay D.M. per acre
Tons corn silage per acre
Labor Efficiency
Cows per worker
Lbs. milk sold per worker
Cost Control
Purch. feed as % milk sold
Feed & crop exp./cwt. milk
Labor &mach. cost per cow
Capital Efficiency
$_-
$_-
$_-
$_-
$_-
$_-
$_-
$_-
$_-
$_-
$_-
$_-
Farm capital per
Capital turnover
Price
cow $_-
$_-
$_-
$_-
$_-
$_-
$_-
$_-
Price per cwt. milk
Financial Summary $_- $_- $_- $_-
Net cash farm income
Labor &agBt. inc./oper.
Parm net worth
Rate of return on equity
Percent equity
Farm debt per cow
$
$
$ ____X
--....;%
$
$_-
$_-
$_-%
%
$_-
$
$
$ ____X
____X
$
$_-
$_-
$_-%
%
$_-