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

BackgroundRisk 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.
RiskRisk 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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Upcoming Events

Dairy Cattle Summer Research Update

July 18, 2019
7:00-9:00pm
Batavia, NY

After the day's work is done, come hear about two new research trials conducted by Julio Giordano's lab:
  • Strategies for improving dairy cattle reproductive performance and economics
  • Using automated sensors for improving dairy cattle health monitoring and management

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Weed Resistance Management Demonstration and Plot Tour

Event Offers DEC Credits

July 23, 2019
1:00 - 3:00 p.m.
Waterloo, NY

Come join us on July 23 in Seneca County at Quinten Good's farm for a demonstration and walking tour of 16 different pre- and post-emergence treatments in soybean and 12 different treatments and combinations in corn.
  • Tall waterhemp and marestail are two weeds that are resistant to glyphosate and ALS herbicide modes of action in the WNY and Finger Lakes regions.
  • Each year the number of acres with resistant weed populations expands.
  • For herbicides to be an effective tool in weed management, we have to know what chemistries & application timings are most effective against these resistant weeds.

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Income and Real Property Tax Primer-A Learning Circle for Women Non-Operating Land Owners of Ag Land

July 24, 2019
9:00 am - 3:00 pm
Portageville, NY

For many of us taxes can be a mystery, let's have a conversation with the experts about the tax considerations agricultural landowners need to think about. 
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Announcements

RMA Announces Additional One-time Changes to Prevented Planting Provisions

June 29, 2019

RMA Announces Additional One-time Changes to Prevented Planting Provisions
for 2019 Crop Year

In response to delayed and prevented planting resulting from above average rainfall and wetness, the USDA Risk Management Agency has made a one-time change to the 2019 crop year prevented planting rules that effectively allows silage corn, if planted as a cover crop following local agricultural expert guidelines, to be acceptable as a post-prevented planting cover crop. Under this one-time rule change, producers are allowed to produce this crop while retaining their prevented planting payment. This change couples with previously announced one-time changes to the prevented planting rules - including expanded acceptable uses for post-prevented planting cover crops and a change in the cover crop haying and grazing start date rule - serve to help those struggling to meet their forage needs due to the weather.

Read the full article from the New York Crop Insurance Education Program.

The USDA-RMA states that "For crop insurance purposes, a cover crop is a crop generally recognized by agricultural experts as agronomically sound for the area for erosion control or other purposes related to conservation or soil improvement." PRO-DAIRY specialists Joe Lawrence and Karl Czymmek and Dr. Quirine Ketterings, Professor and Director of Cornell Nutrient Management Spear Program have released a letter stating "Corn on Prevented Planting acres meets these objectives."


USDA Announces New Decision Tool for New Dairy Margin Coverage Program

WASHINGTON, April 30, 2019 ? Agriculture Secretary Sonny Perdue announced today the availability of a new web-based tool - developed in partnership with the University of Wisconsin - to help dairy producers evaluate various scenarios using different coverage levels through the new Dairy Margin Coverage (DMC) program.

The 2018 Farm Bill authorized
DMC, a voluntary risk management program that offers financial 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. It replaces the program previously known as the Margin Protection Program for Dairy. Sign up for this USDA Farm Service Agency (FSA) program opens on June 17.

"With sign-up for the
DMC program just weeks away, we encourage producers to use this new support tool to help make decisions on participation in the program," Secretary Perdue said. "Dairy producers have faced tough challenges over the years, but the DMC program should help producers better weather the ups and downs in the industry."

The University of Wisconsin launched the decision support tool in cooperation with FSA and funded through a cooperative agreement with the USDA Office of the Chief Economist. The tool was designed to help producers determine the level of coverage under a variety of conditions that will provide them with the strongest financial safety net. It allows farmers to simplify their coverage level selection by combining operation data and other key variables to calculate coverage needs based on price projections.

The decision tool assists producers with calculating total premiums costs and administrative fees associated with participation in
DMC. It also forecasts payments that will be made during the coverage year.

"
The new Dairy Margin Coverage program offers very appealing options for all dairy farmers to reduce their net income risk due to volatility in milk or feed prices," said Dr. Mark Stephenson, Director of Dairy Policy Analysis, University of Wisconsin, Madison. "Higher coverage levels, monthly payments, and more flexible production coverage options are especially helpful for the sizable majority of farms who can cover much of their milk production with the new five million pound maximum for Tier 1 premiums. This program deserves the careful consideration of all dairy farmers."

For more information, access the tool at fsa.usda.gov/dmc-tool. For
DMC sign up, eligibility and related program information, visit fsa.usda.gov or contact your local USDA Service Center. To locate your local FSA office, visit farmers.gov/service-locator.


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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