Northwest New York Dairy, Livestock & Field Crops Enrollment

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Annual Farm Business Summary and Analysis Season Is Right Around The Corner

John Hanchar, Farm Business Management
Northwest New York Dairy, Livestock & Field Crops

December 2, 2013

Background
Risk management continues to be a common challenge faced by farm business owners. Recent succession planning workshops were presented within the framework of successfully managing human resources, legal and financial risks. Many upcoming programs can be thought of as designed to increase risk management capacities. Risk management tools and their availability receive emphasis.

Risk
Risk is variability in outcomes. Agricultural risks relate to production, price, legal, human resources, and financial aspects of the business. For farm businesses, production, prices (both output and input), and financial outcomes, among others vary. Results are not known with certainty. The ability to meet cash obligations in a timely manner, the ability to generate profits, and other financial outcomes are not known with certainty -- they vary over time.

Sound Financial Planning and Control are Keys to Successfully Managing Risks 

An overall strategy for successfully managing financial risk includes sound financial planning and control. 

Financial planning is using financial information to answer the following questions.

1. Where is the business now?
2. Where do you want it to be?
3. How will you get the business to where you want it to be?

Financial planning practices include

• generating financial statements (balance sheet, cash flow statement, and income statement)
• using results to identify strengths and weaknesses
• developing projections, including those associated with proposed changes to the farm business.

Financial control involves measuring financial condition and performance over time to determine whether or not the business is achieving desired results, and if not asking “Why not?” to identify and implement needed changes.

As the end of the year draws near, the next few months present good opportunities to examine your business’ financial management practices. As a farm business owner, you have financial objectives and goals, written hopefully, or unwritten. These direct your efforts. Do you measure the financial condition of your farm business using the balance sheet? Do you measure financial performance using the cash flow statement and income statement? If you don’t measure financial management factors, then how do you expect to successfully manage the business toward achieving desired financial results?

The statement “If you can’t, or don’t measure it, then you can’t manage it” with its emphasis on measuring outcomes underlies the value and need for sound financial management, especially as it relates to successfully managing risks.

Business Summary and Analysis Tools

Cornell University Cooperative Extension’s Dairy Farm Business Summary (DFBS) Program

  • The objective of the DFBS Program is to allow producers to analyze their production and financial situation, set future goals, and make sound financial decisions.
  • The DFBS allows producers to compare their business performance to that of other dairy producers.
  • The summary and analysis for each farm includes profitability analysis, balance sheet analysis, analyses of annual cash flows and repayment ability, capital and labor efficiency as well as analyses of the cropping and dairy aspects the business.

The DFBS program is a preferred financial management tool for summary and analysis for dairy farm businesses of all kinds.

Financial Statements for Agriculture (FISA) Program

  • FISA is a computer based spreadsheet program that can be used by all types of farm businesses to achieve an objective similar to the one above for the DFBS Program.
  • In practice, FISA’s ability to provide for peer to peer comparisons is limited.
  • The summary and analysis for each farm includes profitability analysis, balance sheet analysis, analyses of annual cash flows and repayment ability, as well as some capital efficiency measures and analysis. The program does not summarize and analyze production aspects of the business. 

Farm Business Summary and Analysis with the NWNY Dairy, Livestock, and Field Crops Program

If you are interested in improving your farm business’ ability to practice sound financial management, then please contact me to learn more about some of the tools available and their value and, or to discuss plans for completing a farm business summary and analysis for 2013. The NWNY Dairy, Livestock, and Field Crops Program has the capacity, using the above tools, to develop valuable farm business summary and analysis. The NWNY team has the capacity and desire to work with a variety of farm businesses -- dairy (small, medium, and large; conventional; organic; grazing; and others), field crop, livestock, and others.



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calendar of events

Upcoming Events

Beginning Farmer/Hobby Farmer Workshop $5/pp, class size is limited, so pre-register by April 15th!

April 27, 2019
9:00 am - 1:00 pm
Canandaigua, NY

This hands-on workshop is for beginning or part-time farmers who would like to improve their farm machinery skills, learn to properly and safely maintain their equipment to protect their investment. If you have been thinking about buying a tractor, new or used, two-wheel or four-wheel drive, compact or utility or more come join us. Topics include: selecting the right size/type tractor for the job; basic maintenance; staying safe around tractors and equipment; attaching implements properly; and information about ROPS and SMV's. There will be time for questions.

Pre-registration requested by April 15, 2019 email Amy with your name, address, and phone number or call 585-394-3977 x 429.
Fee: $5.00/person. Class size is limited.

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2019 Pastured Poultry Seminar, lunch included so please register by May 10th! $25/person

May 18, 2019
Registration begins at 8:00 a.m.w/ coffee & donuts with the Program running from 9:00 a.m. - 5 p. m.
Attica, NY

The main speaker this year is Eli Reiff of Mifflinburg Pennsylvania. Eli raises broilers, turkeys, sheep, and beef, all on pasture. Topics to be covered will include the pasture, feed and nutrition, marketing, costs, and much more. As we grow as farm operators and get bigger, we may not pay as much attention to the basics as we should. So those areas are where we will start, and then expand to cover the group's interests.

Mike Badger, Director of the American Pastured Poultry Producers Association will also be available for a round-table discussion. Plans are to have representatives from Farm Bureau, NYCAMH for farm health and safety, Wyoming County Chamber of Commerce, and Cornell Cooperative Extension of Wyoming County, as well as others.

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Calling all 9th-12th graders! 4th Annual Precision Agriculture Day at Genesee Community College

May 21, 2019
9:00 am - 1:30 pm Register by Friday May 10th! $15/per person includes lunch
Batavia, NY

Calling all 9th-12th graders!  We have an exciting new program for students interested in technology, science, engineering, and agriculture!
Would you like to:
  • Learn about how Drones collect information
  • Check out some potential career opportunities that have new and ever-changing technology
  • Learn how these technologies can be used in our own backyards in WNY
  • Discover potential and exciting career opportunities

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Announcements

Producers Previously Enrolled in the LGM Program Now Eligible for MPP

Dairy Producers Previously Enrolled in the Livestock Gross Margin Program Now Eligible for 2018 Margin Protection Program
The U.S. Department of Agriculture (USDA) today announced that dairy producers who elected to participate in the Livestock Gross Margin for Dairy Cattle Program (LGM-Dairy) now have the opportunity to participate in the Margin Protection Program for Dairy (MPP-Dairy) for 2018 coverage. Sign-up will take place March 25 through May 10, 2019.
Eligible producers can enroll during the sign-up period at their local USDA service center. To locate your office, visit farmers.gov.


Smart Farming Team Technical Assistance Grant Application

The Labor Ready Farmer Project is offering grants to provide up to 12 hours of Technical Assistance (TA) consulting services to farms who want to make improvements to their farm's processes in hiring, training, managing or evaluating employees. Applicants will choose from one of the following four areas for TA assistance and identify a specific project. If selected they will be matched with a "Smart Farming Team" of consultants who will provide one on one technical assistance.
  • HIRING EMPLOYEES 101 - GETTING OFF TO A GOOD START
  • ONBOARDING & TRAINING EMPLOYEES QUICKLY AND EFFECTIVELY
  • FINE-TUNING & IMPROVING THE WORKING ENVIRONMENT
  • H2-A READINESS
Please complete this application and send to Nicole Waters, Beginning Farm Project Coordinator for the Cornell Small Farms Program. The form can be submitted by email, mail or in-person at the address listed below. Please feel free to call or email with any questions.

Nicole Waters - Beginning Farmer Project Coordinator
Plant Science Building, Room 15b
Tower Road, Cornell University
Ithaca, NY 14853
Phone: 607-255-9911
Email: nw42@cornell.edu

Applications accepted on a rolling basis.



USDA Announces January Income over Feed Cost Margin Triggers First 2019 Dairy Sa

WASHINGTON, March 6, 2019 ? The U.S. Department of Agriculture's Farm Service Agency (FSA) announced this week that the January 2019 income over feed cost margin was $7.99 per hundredweight, triggering the first payment for eligible dairy producers who purchase the appropriate level of coverage under the new but yet-to-be established Dairy Margin Coverage (DMC) program.

DMC, which replaces the Margin Protection Program for Dairy, is a voluntary risk management program for dairy producers that was authorized by the 2018 Farm Bill. DMC offers protection to dairy producers when the difference between the all milk price and the average feed cost (the margin) falls below a certain dollar amount selected by the producer.

Agriculture Secretary Sonny Perdue announced last week that sign up for 
DMC will open by mid-June of this year. At the time of sign up, producers who elect a DMC coverage level between $8.00 and $9.50 would be eligible for a payment for January 2019.

For example, a dairy operation with an established production history of 3 million pounds (30,000 cwt.) that elects the $9.50 coverage level for 50 percent of its production could potentially be eligible to receive $1,887.50 for January.

Sample calculation:
$9.50 - $7.99 margin = $1.51 difference
$1.51 times 50 percent of production times 2,500 cwt. (30,000 cwt./12) = $1,887.50

The calculated annual premium for coverage at $9.50 on 50 percent of a 3-million-pound production history for this example would be $2,250.

Sample calculation:
3,000,000 times 50 percent = 1,500,000/100 = 15,000 cwt. times 0.150 premium fee = $2,250

Operations making a one-time election to participate in DMC through 2023 are eligible to receive a 25 percent discount on their premium for the existing margin coverage rates.

"Congress created the Dairy Margin Coverage program to provide an important financial safety net for dairy producers, helping them weather shifting milk and feed prices," FSA Administrator Richard Fordyce said. "This program builds on the previous Margin Protection Program for Dairy, carrying forward many of the program upgrades made last year based on feedback from producers. We're working diligently to implement the DMC program and other FSA programs authorized by the 2018 Farm Bill."

Additional details about DMC and other FSA farm bill program changes can be found at farmers.gov/farmbill.


New Guidance for Mortality Disposal Issued

NYS Department of Ag and Markets has posted guidelines on disposal of livestock carcasses, in response to reports that some rendering companies have halted pickups from farms.

https://nwnyteam.cce.cornell.edu/submission.php?id=761&crumb=dairy|1

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