Northwest New York Dairy, Livestock & Field Crops Enrollment

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  • Dairy Management
  • Farm Business Management
  • Field Crops
  • Livestock & Small Farms

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

John Hanchar, Farm Business Management Specialist
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

NWNY Dairy Day 2022

December 6, 2022
Batavia, NY

REGISTRATION NOW OPEN!

Theme: The Future of Your Dairy's Youngstock

The NWNY Dairy, Livestock and Field Crops team will be holding it's first "Dairy Day" this December! We will be bringing the latest in dairy research to you with this in-person, 1-day conference.

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2023 Corn Congress - Batavia, NY

Event Offers DEC Credits

January 5, 2023
Batavia, NY

Save the Date for 2023 Corn Congress - January 5 & 6, 2023

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2023 Corn Congress - Waterloo, NY

Event Offers DEC Credits

January 6, 2023
Waterloo, NY

Save the Date for 2023 Corn Congress - January 5 & 6, 2023

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Announcements

The NWNY Team Blog

Our goal for this blog is to share with farmers and allied industry professionals, technical and applicable resources regarding all aspects of dairy farming, livestock and small farms, field crops and soils, and topics related to farm business management and precision agriculture.

The blog will feature Crop Alerts, Dairy Alerts, Bilingual (Spanish) Resources, Upcoming Events and more from our team members. This blog is free for everyone to use, explore and enjoy. When new material is published, subscribers will receive an email notification.

We hope you enjoy this new platform, and are looking forward to engaging with you in the future!
https://blogs.cornell.edu/nwny-dairy-livestock-field-crops/


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