Ms. Dianne Shoemaker, Dairy Extension Specialist, The Ohio State University
The top 20% of dairy producers are really profitable. Year in and year out, as a dairy producer, you want to be in the top 20% (measured by return on assets). Interestingly, there is not one “recipe” to follow that describes the farms that make up that 20% in various farm business summaries. Fortunately, being really good at one of a variety of management styles can land a farm in that top 20%. A common thread, however, among farms we have evaluated was that they were all involved in conducting an annual farm business analysis.
One of the biggest challenges for many participants in this year’s Ohio Farm Benchmarking Project has been finding production and financial numbers for the total operation...and then breaking them down by enterprise.
However, tweaking a few activities now can make the 2011 analysis next January a much simpler and even enjoyable activity. Here are some suggestions:
Tracking crop and feed activities:
- Crop acres – Review and record acres planted; itemize owned and rented acres, including what crops were planted on those acres.
- Crop yields – As crops are harvested, record yields of hay, haylage, silage, grain, straw, etc. Wouldn’t hurt to record moisture levels of those crops as well.
- Crop input costs – This has been one of the biggest challenges for folks enterprising their crop production for the first time. As those bills come in, this is the easiest time to separate seed, fertilizer, and spray costs by crop, not 9 months later. This usually means that the person doing the bookkeeping has to chase down the crop production person and spend some time sorting through the papers and acres, but it is time well-invested.
- Beginning inventories – If you didn’t take a January 1 inventory of seed, fertilizer, pesticide, and other crop production inputs on hand, go back and reconstruct it now. It will be a lot easier to do now than in another 6 months. These will be current assets on your January 1, 2011 balance sheet. You’ll do another inventory for your January 1, 2012 balance sheet. Make sure also you have all of your other beginning inventories up-to-date, including feed, dairy supplies, dairy cattle, equipment, machinery, etc.
- Feed purchases – As you purchase crops out of the field or through other markets, record weights and moisture levels as much as possible in addition to cost.
We are wrapping up the 2010 Ohio analysis now and will have the Ohio summary completed by the end of the summer. Funding is available to continue this project into 2011, and our goal is to complete the 2011 analysis earlier…which depends on our farms having good records ready to go. Keeping track of the details now will make that happen. The top 20% is waiting!