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									                                                  ABOUT THE DAIRY
                                                 CASH FLOW BUDGET

I NTRODUCTION                                     sheets to cover cash flow of monthly
                                                  principal and interest payments.
The Dairy Cash Flow Budget is a tool to
help project farm income and expenses. By         The worksheets have color-coded cells to
using expected milking cow numbers,               aide in data entry, and some contain
projected milk production and prices plus         formulas that may be protected. Green-
planned farm expenses, you can utilize the        shaded cells require input on cows milking,
power of an electronic spreadsheet to             milk per day and milk price to generate milk
develop a budget quickly. It was originally a     income. Note that each month’s milk
paper spreadsheet cash flow projection and        income is delayed one month. For instance,
part of the Coordinated Financial                 you enter December cow and milk
Statements, North Central Regional                production numbers and milk price in the
Extension publication NCR-34 worksheet V.         green cells in the upper left for January milk
Roger Betz, Michigan State University             income. Other income and expenses are also
Extension district farm management agent,         entered in the green cells. Black text cells
and Bill Robb, Extension dairy agent,             are protected, and blue text cells can receive
converted it to this Excel electronic             input but also have formulas. We suggest
spreadsheet, which allows for easy input and      you make a backup copy of the worksheets
multiple projections. Using your prior year’s     before you start entering data in case you
expense records and price projections, you        remove any formulas.
can shortly identify business cash flow
peaks and valleys. You can find the               F EATURES
spreadsheet                                at
                                                  The program allows the posting of annual
                                                  income and expenses totals allocated evenly
                                                  to 12 months. Enter lump sum payments,
E LEMENTS                                         such as rents, in the months that they occur.
The Dairy Cash Flow Budget is composed            This is a quick way to estimate a cash flow
of three worksheets plus an introduction.         projection, which can be fine-tuned later or
The two main worksheets use either                updated as monthly records are completed.
Schedule F expense categories or MSU              Use the "Existing Loans" worksheet to
Telfarm record keeping expense codes. Use         input your existing operating, intermediate
whichever sheet better matches your farm          and long-term principal. A weighted average
records. The third worksheet involves the         interest percentage is calculated and entered
calculation of existing loans as a liabilities    on the farm worksheet. Interest rate on "new
summary, which is linked to the prior two         borrowed money" is based on the weighted
interest rate calculated from the existing             available from the milk market administrator
loans. This interest is automatically                  office at The most
calculated and paid monthly in the interest            accurate budgets will be developed with
line.                                                  your farm actual data adjusted from the prior
                                                       year. If your records lack an expense
If the month ends in a negative cash position
                                                       category, you can obtain Michigan averages
then "ending cash balance" will be zero
                                                       to use as benchmark figures from the
because operating money will automatically
                                                       Michigan Dairy Farm Business Analysis at
be borrowed. The "new operating loan"
monthly balance or accumulated cash deficit
will be shown in red.

A DDITIONAL R ESOURCES                                 C ONTACT
                                                       The Dairy Cash Flow Budget can help
Estimates from DHIA PCDART or other
                                                       predict potential cash shortages and allow
records can assist you in estimating number
                                                       producers to plan. Using the Dairy Cash
of milking cows per month. Milk price
                                                       Flow Budget requires Excel software on
forecasts can be estimated with help from
                                                       your personal computer. For more
futures prices adjusted for your farm basis at
                                                       information on this Dollars and Sense tool, or from milk outlook
                                                       contact Bill Robb by calling (616) 846-8250
projections at
                                                       or e-mailing
under “marketing.” Historical data are also

                           Growing a healthy Michigan dairy industry
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