The Management Calendar

Farm Business Management Update, June - July 2007

By Gordon Groover (xgrover@vt.edu), Extension Economist, Farm Management, Department of Agricultural and Applied Economics, Virginia Tech

Well, another dry spring for most of the state, not yet a full blown drought. Hopefully, the rain we received from tropical depression Barry will increase soil moisture levels to get crops a good start. The National Oceanic & Atmospheric Administration (NOAA) does not predict drought conditions in VA through August (http://www.cpc.ncep.noaa.gov/products/expert_assessment/season_drought.gif), yet drought conditions exist just over the line in NC. From my view of the New River Valley, we are behind our normal planting and hay harvest schedules.

• What does it cost to live down on the farm? Data from 1,196 farm families enrolled in the Illinois Farm Business Farm Management Association (FBFM) reported the grand total for living expenses averaged $59,686 for 2006. The details of the Farm and Family Living Income and Expenses for 2006 by Dale Lattz, at the Department of Agricultural and Consumer Economics, University of Illinois can be found at http://www.farmdoc.uiuc.edu/manage/newsletters/fefo07_10/fefo07_10.html
• Ag Decision Maker (AgDM) at Iowa State has an updated series on strategic planning. Topics range from strategic planning to portfolio analysis and enterprise strategy development. These are short papers that can get you to think about and manage your farm as a business. Find them at http://www.extension.iastate.edu/agdm/wdother.html#Strategic.
• The dry spring and spotty rains so far this year may make for a short feed supply for late summer and winter feeding. Plan on developing a feed budget based on animal demand and best and worsted case scenarios for pasture and feed production. The current grain situation makes relying on purchasing additional energy or protein in the spot market more risky. Ed Rayburn, Extension Forage Agronomist at West Virginia University, has a good discussion of what’s required to estimated animal demand and forage production http://www.wvu.edu/~agexten/forglvst/forbudgt.htm. Robert L. Woods and Daren Redfearn, Extension Forage and Pasture Management Specialists at Oklahoma State University, have an example worksheet that can be adapted to Virginia conditions at http://pods.dasnr.okstate.edu/docushare/dsweb/Get/Document-2809/PSS-2584web.pdf.Make sure you check with your local extension agents to get go estimates for local yields.
• Update estimates of harvest time and yields and develop new plans for possible delays or shortfalls of forages for late harvest.
• Update your marketing plan by collecting information on prices and world market situations. Keep abreast of weekly market trends by reading the Roberts’ Weekly Agricultural Commodity Market Report at http://www.ext.vt.edu/news/periodicals/roberts/ and Tennessee Market Highlights http://economics.ag.utk.edu/tnmkt.html.
• As part of your marketing plan, stay up to date on government programs. A fact sheet on Nonrecourse Marketing Assistance Loan and Loan Deficiency Payment Program can be found at http://www.fsa.usda.gov/FSA/printapp?fileName=pf_20070601_farln_en_nonrecmkt.html&newsType=prfactsheet. Up-to-date information on your county's Loan Deficiency Program (LDP) and Posted County Price (PCP) is at the following Farm Service Agency web site http://www.fsa.usda.gov/FSA/webapp?area=home&subject=prsu&topic=landing.
• Be sure to check with your local Farm Service Agency for changes in government programs and sign-up deadlines. Review USDA and other crop and price forecasts. You can find the dates for USDA Agency Reports Calendar release with links to the appropriate agency web sites.
• With half the business year soon be behind you, a six-month financial record check-up is in order. Updating your records through the month of June allows you to quickly gauge financial progress by comparing the farm's actual expenses and income to your budgeted amounts. If you did not develop a budget, compare your mid-year expenses and income to half the items reported on your 2005 Schedule F. Flag any items that are different from budgeted amounts. These differences are not necessarily problems, just items that need to be examined and explained.
• Watch your line-of-credit and compare it to previous years, paying careful attention to large changes from your past experiences.
• Production records for livestock and crops should be updated for the first half of the year. Look for big changes from last year, and make sure to cross-reference these with production expenses.
• Even with the time constraints of summer activities, try to plan and hold regular staff meetings with family members and employees to discuss work plans and set priorities for the next day/week. Consider brainstorming about alternative ways to deal with problems. Use some of the time to help discuss positive outcomes of previous plans and recognize individuals for being creative and doing a good job.
• When you hire new employees make sure you read Sarah L. Fogleman’s (Kansas State) article on “Effective Training” at: http://www.agmanager.info/hr/management/Effective_Training.pdf
• Checking your credit rating in July should become an annual event. Independence Day should remind you that you should be independent from identify theft and credit mistakes. All individuals and business owners should annually check their credit ratings. Additional information on your rights to access your credit report and links to the site for obtaining a free copy of your credit report can be found at the Federal Trade Commission’s (FTC) web site at http://www.ftc.gov/freereports. The FTC cautions consumers to make sure they use the correct site because there are “Imposter” sites.

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