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The Management Calendar
Farm Business Management Update, February/March 2004
By Gordon Groover
I thought we lived in the sunny South? So far Blacksburg has seen lots of snow, ice, wind, and more than a few days of bitter cold temperatures. If you need an excuse to stay inside and work on the books or stare at the computer screen, you've got it! For those who have not started on the paperwork, remember the first day of spring is less than two months away and federal taxes for most farmers are due in to the IRS by March 1. Listed below are the items that need to be included on the farm business managers' calendar for the first quarter of 2004.
- Get the farm's 2003 financial records closed out: Post all income and expenses paid during 2003 in your record book or accounting software. There's still time to conduct an end-of-the-year inventory of all the farm assets and liabilities to provide data for the farm's net worth statement.
- Using your 2003 records, develop an itemized list of income and expenses. The categories found on the IRS Schedule F can serve as a starting point for estimating net income for the farm business. Compare your results to previous years, looking for both weakness and strengths.
- Decide how much you'll contribute to an IRA for 2003 and set goals for 2004. If you do not have a certified financial planner (CFP), consider their usefulness in helping plan for retirement, college, insurance coverage, and other items. Visit the web site for the CFP organization to get information on services and standards required for planners. You can also search or a CFP in your area at http://www.cfp.net/
- Seek assistance from Virginia Cooperative Extension's farm business management agents, lenders, or your accountant to develop a detailed financial analysis of your farm business, including the major 16 financial ratios. Send me an e-mail message if you want me to send you the recommended 16 financial ratios (firstname.lastname@example.org). These ratios and a detailed financial analysis can be generated by using the Center for Farm Financial Management program FINAN. FINAN and other computer programs can be purchased annually for approximately $100 or the whole analysis and planning package of three computer programs for $395. Details at http://www.cffm.umn.edu/Software/FINPACK/
- Dairy farmers with good financial records please take note: You can enter your farm's production and financial records and compare your farm to the U.S. Top Dairies Financial Benchmarks. Currently, there are 1,398 dairy farms are in the national database for comparison. Details at http://www.cpdmp.cornell.edu/Data.4D$TDWelcome. Once reaching the "Benchmarks" page, click on "I wish to become a registered user and submit my information." This link will take you to the data entry area.
- Using last year's financial and production records, finalize your projected budgets, cash flow, and income statements for 2004.
- Take your 2003 financial records and 2004 projected whole-farm budgets and cash flow statements to your lender to discuss line-of-credit needs and plans for 2004. Using the FINPACK programs discussed above can help with this process.
- Grain and livestock producers should have their marketing strategies/plan in place for 2004 marketing year. Be sure to check with your local Farm Service Agency for changes in government programs and signup deadlines. Be sure to visit Purcell's Weekly Agricultural Commodity Market Report for market updates the report is posted at http://www.ext.vt.edu/news/periodicals/purcell/.
- The end of February and March 15 are the cutoff dates for signing up for most crop insurance polices in Virginia (dates depend on insurance product and where you live). Detailed listings of all policy closing dates are listed at the following site: http://www.rma.usda.gov/data/sales-closing-dates/. Details on crop insurance are best discussed with a local agent. You can locate a local agent by visiting the following web site http://www3.rma.usda.gov/apps/agents/.
- Make sure your federal taxes are mailed by March 1, unless you pay estimated taxes, then the deadline is April 15. Virginia income tax returns must be postmarked by May 1.
- Prepare your crop and livestock record keeping system for a new year. If you are interested in a listing of agricultural related software packages go to the following site: http://www.agric.gov.ab.ca/agdex/agsoft/.
- Beef cattle producers interested in an evaluation of beef cattle software should take a look at the following publication from the Oklahoma State Animal Science Department: http://www.ansi.okstate.edu/exten/beef/WCR-3279/WCR-3279.html.
- As the Bovine Spongiform Encephalopathy (BSE) situation continues beef producers will want to explore electronically identification systems for cattle. Kevin C. Dhuyvetter and Dale Blasi of Kansas State University have developed a spreadsheet to estimate costs of implementation. Their spreadsheet, which requires Microsoft Excel, can be downloaded at: http://www.agmanager.info/livestock/budgets/production/default.asp.
- Early results of the 2002 US Agricultural Census are available on the National Agricultural Statistics Service (NASS) web site http://www.nass.usda.gov/census.
Winter is the time to get the book work done, and the weather is signaling that this is a wise use of your time. Besides it's a lot more comfortable inside next to the woodstove.
Virginia Cooperative Extension