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The Management Calendar
Farm Business Management Update, December 2006/January 2007
By Gordon Groover, (email@example.com), Extension Economist, Farm Management, Department of Agricultural and Applied Economics, Virginia Tech
Selective information available that might be useful:
- Interested in a variety of information about Virginia agriculture from apples to watermelons? Get a copy of the Virginia Agricultural Statistics Bulletin and Resource Directory Number 81. The publication covers year 2005 and is published annually in September. You can download a copy by going to http://www.nass.usda.gov/Statistics_by_State/Virginia/Publications/Annual_Statistical_Bulletin/bulletin2005.pdf. A hard copy can be obtained by contacting Virginia Agricultural Statistics Service (VASS) via telephone (804) 771-2493 or e-mail firstname.lastname@example.org.
- Interested in understanding the terms used in marketing or AKA marketing jargon? Take a look at two articles from Don Hofstrand, Co-Director, Ag Marketing Resource Center, Iowa State University Extension titled “Product Marketing Terms,” published in the December 2006 Ag Decision Maker at http://www.extension.iastate.edu/agdm/ and “Specialty Grain Terms” at http://www.extension.iastate.edu/agdm/crops/html/a3-50.html.
- Thinking about computerizing your farm records and you want to start simple? Consider using Quicken® Home and Business software. Quicken is reasonably priced, very flexible, and can be adapted to most farm cash record keeping systems. Step-by-step instructions on getting started with Quicken are variable from Dr. Damona Doye at Okalahoma State University. She maintains instruction for Quicken 2003 to 2007 at her web site. http://agecon.okstate.edu/quicken/Instructions.htm
- If you want to continue with your hand kept farm records, it is time to order a copy of the Virginia Cooperative Extension “Farm Record Book: Expenses and Receipts” (Publication 446-017). This 120-page record book provides an organized way of keeping track of annual financial, labor, personnel, and production related records. It provides forms for many categories of expenses, receipts, labor, and financial summaries to meet the needs of most agriculturally related businesses using cash accounting methods. Column headings are included for major items with some columns remaining blank for your own headings. Forms are arranged to facilitate transferring totals to income tax forms (Schedule F, tax deprecation, and Form 4797) and to help complete end-of-the-year analysis. Virginia Cooperative Extension “Farm Record Book: Expenses and Receipts” is available from Virginia Cooperative Extension for $12.00. Call your local extension office and request they order VCE Publication 446-016 or contact me at (540) 231-5850.
Farm business managers should consider putting the following activities on their management calendar for December-January.
- Before the end of the year (calendar tax year filers) follow up on end-of-year tax management strategies recommended by tax advisor. Additional information can be found in IRS publication 225 Farmer’s Tax Guide at http://www.irs.gov/pub/irs-pdf/p225.pdf. Hardcopies of Farmer’s Tax Guide can be obtained from your local extension office or many of your public libraries.
- Begin closing out the farm books by collecting information for the farm net worth statement. Around the first of the year when you need to walk off all that holiday food, take a notepad or try out the new digital video camera and walk around the farm. Record the number and approximate value of all the farm assets (cattle, tractors, machinery, buildings, inventories of grains and feedstuffs, chemicals, etc.) that can be organized on the asset side of the balance sheet. Be sure to save the notes recording or, better yet, place the notes recording in a safe location (safety deposit box or fireproof box) for possible insurance claims. Review your end-of-year bank statements or contact your lender for current listings for all personal and business liabilities.
- If you are using cash accounting methods for tax purposes (computerized business records or hand kept), you need to make sure your actual records match the deposit and check dates for all claimed income and expenses. A quick check of the records will help address any problems that might arise at tax time.
- Plan to get all tax records summarized and to your tax advisor by February 1, 2006, and check with your Virginia Cooperative Extension's farm business management agent on farm-related changes in state and federal taxes. A listing of Virginia tax credits can be found at the following site: http://www.tax.virginia.gov/site.cfm?alias=TaxCredit. Make sure that your tax advisor is aware of these credits.
- Using 2006 financial and production records, develop projected budgets, cash flow, and income statements for 2006. If you are using Quicken or QuickBooks use the automated feature to create a budget based on last year as a starting place to create a detailed budget to reflect your expected costs and returns for 2007. If you are using the Virginia Cooperative Extension “Farm Record Book: Expenses and Receipts,” the back pages provide the forms to summarize all your financial data.
- Depending on the type of farm, begin working on a marketing plan for 2007 by collecting information on prices and world market situations. Be sure to check with your local Farm Service Agency for changes in government programs and signup deadlines. Contact information for your local FSA office can be found at http://offices.sc.egov.usda.gov/locator/app?state=us&agency=fsa
- Keep up-to-date on release of economic, crop conditions and estimates, world agricultural situation and outlook, and many other USDA reports by looking at the USDA report calendar at http://www.usda.gov/news/releases/rptcal/calindex.htm.
- Check on crop insurance policies by visiting the Risk Management Agency website at http://www.rma.usda.gov/ to find an agent and view the multitude of policies that are available in your area.
- Close out and summarize livestock and/or crop records for 2006, noting problems that must be addressed when making cropping, feeding, and breeding decisions during 2007. Compare 2006 records to previous years looking for strengths and weakness.
- Review 2006's crop, hay, and livestock records for labor problems, bottlenecks, and down times. Include all employees in spotting and planning to correct labor bottlenecks. Draw up a labor flow chart listing estimated times and identify employees who will be responsible for major tasks.
- Schedule regular meeting with all workers and family members to discuss work activities as you gear up for the spring push. Make sure all workers feel free to suggest ways to improve efficiency. Think about creating an employee handbook for important information on pesticide safety, farm bio-security, and safe operations of machinery and equipment.
- Bio-security has gotten lots of press. Do you have a plan? Do all your employees know and understand the plan and have your trained them? The best bio-security plan means nothing if no one understands how you plan to implement it. Bio-security is just one example. Oh, by the way, do you have an employee handbook, training program, and job descriptions? Consider the risk of employee mistakes with pesticides, employee negligence with trucks, machinery, and equipment, and so on. All these risks related to employees should be spelled out in a handbook and reviewed regularly with all employees and family members. Demonstrating that you have implemented a program to train employees could reduce problems and lessen the payouts in a law suit.
Happy Holidays to all!
Virginia Cooperative Extension