|Missouri Dairy Business Update|
|Volume 2, Number 1|
Dairy Financial Management at Year's End!
Every dairyman has to get income and expense information compiled for income tax purposes in January and February. Since this information is already pulled together January is an excellent time to take a few more steps and do some basic analysis to benchmark your dairy farm against others in the industry.
First: Record Keeping
(Necessary to do income taxes)
If you need a new accounting system, check out the Missouri Farm Accounting Resources web page where you'll find information about obtaining a new hand record system or information about using the popular Intuit software Quicken or QuickBooks for farm accounting:
Second: Complete a Balance Sheet
(Tiny bit more work than the tax man demands)
Go one step further than just compiling tax records; also complete a balance sheet, listing all of your assets and liabilities as of January 1. It is a great, easy step toward financial management. If you can get in the habit every year of completing a balance sheet at the beginning of the year you can track progress in net worth. It also helps you later if you want to do a true profit and loss statement for your lender, or yourself.
To download a balance sheet form, click Balance Sheet.pdf
To download a balance sheet in excel, click Balance Sheet.xls
Third: Calculate the Farm Financial Standards Ratios
(Just a bit more work gets you a lot more information)
Use the information from a beginning and ending balance sheet, plus income tax forms to get a true financial picture of your farm using the scorecard developed by the Farm Financial Standards Council.
This scorecard lists the ratios, how they are calculated, and what they mean.
To do them by hand, just download this hand worksheet and fill in the blanks:
To do them using an excel spreadsheet, just download this excel file to your computer, fill in the blanks and let it do the math for you.
To benchmark yourself against other farms, check out this website: http://www.agecon.purdue.edu/extensio/finance/benchmark.html
Fourth: Compare Your Farm Against the Top Dairies in the Country
(Free, but it takes a little more effort, downloading a form, completing it and mailing it back to Cornell. But, you get to log onto their website and compare yourself against the best dairy farms in the country!)
You can also just download the survey here: Top_Dairy_Survey.pdf
Representatives from the Missouri Agricultural Statistics Service will visit area dairies in January to conduct the initial survey for Dairy 2002, a national study of health and health management practices at U.S. dairies.
Data collectors from USDA's National Agricultural Statistics Service (NASS) will begin the study by contacting about 4,000 dairy producers in 21 states, 168 of which are Missouri producers, included in the national sample. The 21 states represent 83 percent of U.S. dairy herds and 85 percent of U.S. dairy cows. The data collected is summarized and used in regional and national estimates.
Click HERE to read the full news release from Missouri Agricultural Statistics Service.
To read more about the information obtained from previous dairy animal health studies, check out this web page:
|University Outreach and Extension|||||AgEBB|||||Dairy Focus Team|||||Dairy Publications|