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The Management Calendar
Farm Business Management Update, August - September 2007
By Gordon Groover (email@example.com), Extension Economist, Farm Management, Department of Agricultural and Applied Economics, Virginia Tech
Well, I know it is dry when the grass over our septic tank is dead. The top of the tank is about a foot below the soil surface–only the second time in 20 years this has happened. To see the severity of drought across the U.S. take a look at the following web site http://droughtreporter.unl.edu/. Farmers should keep abreast of the news as more and more areas are designated disaster areas.
Farm business managers, consider the following sources of information and activities to put on your management calendars for August-September.
- 2007 Virginia Cooperative Extensions Crop Budgets are available at http://www.ext.vt.edu/cgi-bin/WebObjects/Docs.woa/wa/getcat?cat=ir-fbmm-bu. See the article titled New Crop Budgets on VCE Website in this issue for additional details.
- Want to compare your financials to other farms? Take a look at the FINBIN Farm Financial Database maintained by the Center for Farm Financial Management at the University of Minnesota. The majority of the data is from North Central and Midwestern states (Minnesota, Missouri, Nebraska, North Dakota, Ohio, Utah, and Wisconsin), yet it is a good source of financial data to benchmark profitability measures for crop, livestock, and dairy farms. The database has 557 dairy farms for 2006. FINBIB can be found at http://www.finbin.umn.edu/. To compare the basic financial ratios for all farms take a look at the section titled Farm financial standards measures by type or size of farm the data base has 2,504 farms for comparison.
- Be sure to get your crop records in shape as harvest time approaches. Include yields, machine times, and equipment used (this information will help with next year’s budgeting); identify weed problems and differences in hybrids. In addition to recording information on weeds, etc., think about labor constraints and bottlenecks slowing down tasks during the harvest season. Have employees and family members record problems and successes (maybe give them a cash payment for each problem identified). When the crunch is over, spend a couple hours reviewing notes on what can be done next year to solve the problems and duplicate the successes. During the post-harvest review make sure the discussion centers on how to resolve problems, not who to blame.
Always pay close attention to cash flow needs as you generate cash reserves during fall harvest and get ready for real estate and personal property taxes this winter. Almost all computerized recordkeeping software, e.g., Quicken® or Microsoft Money® and accounting software, e.g. QuickBooks® or FarmWorks, create cash flow reports that assist in managing cash available for debt service, family living, and cash expenses. Compare this year’s cash flow to the budgeted amount and highlight deviations. If you did not develop a budget for this year, compare your inflows and outflow to last year’s August totals. Make sure you have a series of possible plans to address any projected cash short falls. Projected surplus should be added to your retirement program, e.g., IRA’s, 401-K’s, or used to pay down debt.
The time to make tax management decisions is quickly approaching. Make sure that you have set aside a few days in October to summarize all farm and family financial records and make an appointment now with your accountant to work on end-of-year tax management strategies.
Virginia Cooperative Extension