60 seconds toward financial control

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What difference can 60 seconds make? A lot. When a farm team starts working on their business analysis for 2020, 60 second investments will make the process easier and the results more reliable.

Let’s break them down:

Crop expenses

These are the most ignored expenses on dairy farms. Amazingly, this is also the category where the actual (accrual adjusted) amount spent for a production year does not match up with what the farm thought it was on many crop farms. It is relatively simple to calculate total crop expenses for a farm for a year, but how useful is that information?

With tight margins, how can total crop expenses be used to find opportunities to control costs? They can’t. Only when they can be allocated between crops can those costs per acre and per ton or bushel be used to identify strengths and concerns.

When invoices come in for seed, chemicals, fertilizer, custom work or supplies, grab them and jot down what crops they apply to. This is a job for the crop people who should be crossing paths with the bookkeeping people to make sure this information is getting into the system. Also verify that the items being billed were actually delivered and used on your farm.

Acreage use

Acres and yields of each crop are needed to take that next step of determining costs per acre or per ton or bushel. Jot down acres as crops are planted or harvested. How many acres were rented, how many acres were owned for each crop? Which acres were double cropped? With what?

This is multi-use information; farms that participate in FSA programs or purchase crop insurance will need to report these numbers for those programs as well.

Crop yields

Jot down yields as crops are harvested. The most common reason for not tracking harvest numbers is the challenge of measuring. Some yields are easy — as long as the counter works on the baler and someone reads and records the counts. Others are more challenging, but doable with a little creativity.

Silage and hay yields were simple to measure when it was all blown into an upright silo. Wait for the silage to settle and check the silo chart. Silage bags are relatively easy to measure with charts as well. The most challenging are silages put into bunkers and piles, especially when they are stacked well above sidewalls.

Safety aside, packing density and pile shape can make it very challenging to come up with accurate measurements, especially if there was already other silage in the structure. An alternative would be to measure silage going into the pile. Some farms have the ability to weigh each load going in. Awesome! Just remember to add it all up and record the final yield. If weighing every load is not an option, weigh a few loads, calculate an average weight for a full load, and count loads going in.

On the surface, acres, costs and yields seem to be simple numbers. Yet too many farms don’t have reliable systems in place to capture them. These numbers can be relatively easily tracked if the folks involved in these activities would invest those precious 60 seconds.

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Dianne Shoemaker is an OSU Extension field specialist in dairy production economics. You can contact her at 330-533-5538 or shoemaker.3@osu.edu.

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