Dairy Channel: Farm business summaries give inside look at dairy farm comparison


I recently received the Ohio Farm Business Analysis Summary for 2002. This summary is compiled by county extension agents and Don Breece, an extension agriculture/natural resources specialist in farm management for the West Extension District in Findlay, Ohio.

Comparison. There are only 10 farms in the dairy summary for 2002, far too few to be considered a reliable estimate of the financial and physical performance of Ohio dairy farms.

However, the summary does give participants (individual farms included in the summary) valuable numbers for comparison to their own.

Analyze this. I strongly encourage you to perform some kind of yearly financial analysis on your operation. This process will help you to evaluate the profitability of the entire farm.

Better yet, I’d like to see you perform an analysis of the individual enterprises on your farm, because we often find that some enterprises are profitable while others are not.

Separate out the income and expenses for each crop and animal group and do a profitability analysis on each one.

There is no other way to know where the net farm profit on your Form 1040 Schedule F comes from.

Other options. You have several options for obtaining this type of detailed analysis for your farm.

Many county extension agents use FINPACK Farm Business Analysis and Budgeting software.

Farm Business Planning and Analysis (FBPA) instructors such as the folks at Buckeye JVS in New Philadelphia, Ohio, specialize in farm recordkeeping and analysis.

Some private farm accountants provide business analysis services along with their tax preparation services.

The important thing is to keep the appropriate records and then use them to improve the performance of your operation.

New York numbers. I also received the Dairy Farm Management Business Summary, New York State, 2002, last month.

The 2002 New York summary includes 219 farms with an average herd size of 297 milk cows.

An interesting feature of the New York summary is an analysis of the same 155 dairy herds from 1999 through 2002.

Let’s take a look at some of the selected factors of comparison for the years 1999 through 2002 for the same 99 New York dairy farms. I think you will find it interesting.

Criticism. Since I often receive criticism that “You guys from Extension always tell us we have to milk more cows,” I’ll let you draw your own conclusions form the chart data.

Please note that the New York Summary feed cost figures show actual out-of-pocket expense for purchased feed and crop production inputs, rather than pricing feeds fed at a fair market value as is done in the Ohio Farm Business Summary.

I think the message here is that it is more important than ever to keep good financial and enterprise records.

Get help. It is more important than ever to analyze the results of each year of operations on your farm. If you are not doing it I hope you will take the time to do so.

Find the help you need to do it right. If you will call me, 330-424-7291, I will help you or find someone who will.

(The author is an agricultural extension agent in Columbiana County. Questions or comments can be sent in care of Farm and Dairy, P.O. Box 38, Salem, OH 44460.)

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