The Management Calendar

Farm Business Management Update, April - May 2009

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

Most business managers are uncertain about the future of their business. Declining revenues and increasing costs have lead many to shut down some enterprises or reduced production to a few core products that they can at least break even on costs. The foundation for making business management decisions during uncertain times and in better times is financial and production records. The main objective is to start where you are now and build your production and financial records system. Where do you start? The best place to start is with your fellow farmers and local extension offices asking questions about current practices. Ask what financial and production records programs are used and what’s good and bad about them. Then gauge what level of data collection and management you will feel comfortable with as a starting point. Be careful not to over estimate what you can get done the first year. I have asked a number of producers what financial system they are using on their computer and their response was, “Our accountant recommended this package (holding up a dusty box). She uses, we got it, we tried it for a few months, and gave up. We went back to the farm record book we’d always used.” So just start off simple, learn as you go, and then upgrade to more integrated software. The same is true for production records; learn as you go, and then upgrade as you realize the need and ability to incorporate the data into the daily management process. The main objective is to establish a system that will help provide the data to manage the uncertainty and a sound foundation for decision making.

Selective information available that might be useful:

• Most of us focus on a small part of the overall agricultural and food industry with little time to stand up and take a global look at “What's Driving Food Prices?” The folks at the Farm Foundation provided the support for this type of analysis in 2008 and then in March of 2009. This is a must-read for all of us involved in agriculture, from farmers that produce the basic ingredients to consumers that buy food. You can find the complete report at http://www.farmfoundation.org/default.aspx.
• Need a summary of data about Virginia or other states? Then visit the USDA Economic Research Service’s site State Fact Sheets a http://www.ers.usda.gov/StateFacts. There are both population and agricultural census information in an accessible format and includes state demographics, per-capita income, earnings per job, poverty rates, employment, unemployment, farm and farm-related jobs, farm characteristics, farm financial characteristics, top agricultural commodities, top export commodities, and the top counties in agricultural sales.
• Please make sure that marketing is still high on your to-do list. To keep abreast of the outlook and markets producers should visit two sites regularly. Our own Mike Roberts writes a weekly outlook report. It is published on Mondays and is found at http://www.ext.vt.edu/news/periodicals/roberts/. On Fridays, Emmit L. Rawls and Delton C. Gerloff publish the newsletter Tennessee Market Highlights at http://economics.ag.utk.edu/tnmkt.html.

Listed below are the items that need to be included on the farm business manager's calendar for the spring of 2009.

• Make sure your Virginia state income taxes are postmarked by May 1.
• Review first quarter livestock records and compare them to last year’s; look for problems and successes.
• Livestock producers should develop a detailed feed budget for all of 2009 and winter 2010. Include current feed costs, estimate this year’s production under average and drought conditions, and estimate demand until 2010. Deficits should be addressed now. First, look locally for alternatives. For example, can you contract with a neighbor to buy their forages or grains, can you rent additional lands, can you work with a grain farmer to harvest his grains as silage, can you buy grain at harvest at a discount, consider high moisture grain storage, and so on? Second, if you cannot find local solutions then look to reputable brokers for forages and try to lineup part of your supply needs this spring. As the season progresses, keep the budget up-to-date to make sure you have covered your feed demand one year out.
• Follow up with your lender to review and update your line-of-credit needs.
• Prepare a crop record keeping system for a new year. If you do not have a crop record keeping system, consider purchasing the Doane’s hand-kept crop and machinery notebook, “Field and Equipment Record Book.” This notebook provides an inexpensive way of getting started. It can be ordered via the internet at http://www.doanebookstore.com/ or by (800) 535-2342, Extension 220. The price is less than $20.00.
• Update your marketing plan 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. Review USDA and other crop and price forecasts. All USDA reports are listed on the internet and can be viewed by going to Agency Reports on the USDA newsroom page or visit www.usda.gov/news/releases/rptcal/calindex.htm.

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