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The Management Calendar
Farm Business Management Update, February/March 2006
By Gordon Groover (email@example.com), Extension Economist, Farm Management, Department of Agricultural and Applied Economics, Virginia Tech
Paperwork - who wants to sit at a desk with pencil in hand when it's warm outside? Long-term, it does pay off by having information to make better decisions and hopefully more dollars for family living. 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 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 2006.
- Individuals developing their value-added skills can take away two new items from the Ag Marketing Resource Center at Iowa State, 1) Conducting In-Store Demonstrations (http://www.extension.iastate.edu/agdm/wholefarm/html/c5-33.html) and 2) Choosing a Distributor for Your Product (http://www.extension.iastate.edu/agdm/wholefarm/html/c5-161.html). There are a number of marketing-related studies and resource materials at http://www.agmrc.org/agmrc/; it is worth a bookmark.
- Get the farm's 2005 financial records closed out: Post all income and expenses paid during 2005 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 2005 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 2005 and set goals for contributions in 2006. 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 or your accountant to develop a detailed financial analysis of your farm business, including the 16 major 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 $395. Details at http://www.cffm.umn.edu/Software/FINPACK/.
- Using last year's financial and production records, finalize your projected budgets, cash flow, and income statements for 2006.
- Take your 2005 financial records and 2006 projected whole-farm budgets and cash flow statements to your lender to discuss line-of-credit needs and plans for 2006. Using the FINPACK programs discussed above can help with this process.
- Grain and livestock producers should have their marketing strategies/plan in place for the 2006 marketing year. Be sure to check with your local Farm Service Agency for changes in government programs and signup deadlines. Be sure to visit Purcell's Weekly Agricultural Commodity Market Report for market updates. The report is posted at http://www.ext.vt.edu/news/periodicals/purcell/.
- The end of February and March 15 are the cutoff dates for signing up for most crop insurance polices in Virginia (dates depend on insurance product and where you live). Detailed listings of all policy closing dates are listed at the following site: http://www.rma.usda.gov/data/sales-closing-dates/. Details on crop insurance are best discussed with a local agent. You can locate a local agent by visiting the following web site: http://www3.rma.usda.gov/apps/agents/.
- Make sure your federal taxes are mailed by March 1, unless you pay estimated taxes; then the deadline is April 15. Virginia income tax returns must be postmarked by May 1.
- Prepare your crop and livestock record keeping system for a new year. If you are interested in a listing of agricultural related software packages, go to the following site: http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/econ4118?opendocument.
Well... just get the paperwork done! Ask any Virginia Tech campus or field faculty member; we've all just finished our annual reports. It feels really good to get them done, reflect on our accomplishments, and make plans for the next 12 months.
Virginia Cooperative Extension