FARM BUSINESS MANAGEMENT ANALYSIS by ydo11566

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									                                                                                           Agriculture Today
   FARM BUSINESS
MANAGEMENT ANALYSIS                                                                      Risk
                                                                                         Management
                                                                                                                            “Fina
                                                                                                                                 nc
                                                                                                                           Snaps ial
                                                                                                                                 hots”
             A Program for Missouri Farmers
                                                                                                         Breakeven
                                                                                                         Analysis               Cost Variances

                                                                                                                         Marketing Pl
                                                                                                   s                                  ans
                                                                                         Cash Flow

                                                                                    Balan                                            at   ios
                                                                                          ce   Sheets                     Financial R




FBMA
                                                                                    FBMA Rationale
Evolved from
                                                                                    Designed to assist farmers in:
•   Veteran’s Education Programs                                                      Establishing and maintaining a good and
•   Adult Education Programs thru DESE                                                defendable farm business accounting system.
•   Balanced Farming Program                                                          Using data from the farm records to do a financial
                                                                                      analysis of the farm business.
•   Missouri Loose-leaf Record Book                                                   Compare financial and production data from the
•   Missouri Young Farmers Record Book                                                farm business to benchmark and comparative data
                                                                                      from similar groups of farms. Utilize the
•   Missouri Farm Business Record Book                                                comparisons to make profitable adjustments in the
•   Manual 75                                                                         farm business.




                         FBMA Puzzle                                                                   Monthly Records
                                                                                    Instructor/Enrollee selects an accounting
                                        Beginning                                     system to track expenses/receipts and
                                      Balance Sheets

                Monthly Records                             Ending Balance
                                                                                      enterprise information
                                                                Sheets
                                                                                        – Options:
                                                                                               •   Missouri Farm Business Record Book
                                                                                               •   Quicken
                                                                                               •   PC Mars
                                                         Comparison w/benchmark &              •   Others
    FINAN Whole Farm Analysis                            similar forms data


                                  FINAN Crops & Lvstk
                                   Enterprise Analysis
    Beginning Balance Sheet-
            FinPack
• Instructor/Enrollee build beginning cost and
  market balance sheets in FinPack.




Ending Balance Sheet-FinPack                      FINAN-Whole Farm Analysis
• At end of year, Instructor/Enrollee build      • At end of year, Instructor/Enrollee use
  closing cost and market balance sheets in        summary information from the accounting
  FinPack.                                         system and the balance sheet information to
                                                   complete a whole farm (financial) analysis
                                                   for the year.
    FINAN-Crop & Livestock
       Enterprise Analysis
• When whole farm analysis is good,
  production information is added and an
  enterprise analysis is added to the annual
  farm analysis.




                                               Comparisons W/Benchmark &
                                               Similar Farm Data - RankEm
                                               • The RankEm program is used to “measure”
                                                 the enrollee’s farm with other Missouri
                                                 farms, farms with similar characteristics,
                                                 and farms from a national database
                                                 (FINBIN)
           FBMA
Puts All The Circles Together:
                                                An FBMA Instructor wears
             Instruction
                                    Practical
                                   Experience        several hats:

                      Leadership




Teaches Classes
                                                Works with individual FBMA members:
  Topics Meetings
                                                  Assist with establishing and maintaining
  In-Depth Classes
                                                  records
                                                  Helps research and solve problems
                                                  Completes farm and enterprise analysis
                                                  Assists in tax estimation and management
                                                                                        FBMA Instructor Guidelines
                                                                                                         (Full-Time)

 Advises the Young Farmer Chapter                                                              500 contact hours of instruction
     Assists in planning meetings, fund-raisers &
     community service activities.                                                     125-300 hours-FBMA instruction
     Attends and coordinates chapter involvement in                                         (25 hr/member)
     state and national activities.
                                                                                       125-300 hours-Classroom instruction
                                                                                          75 hours-Leadership (Young Farmers)
                                                                                         500 contact hours




                FBMA              Classroom          Leadership
                                  Instruction       Development
 Minimum   5 business units=
           125 contact hours
                                125 contact hours     75 hours
                                                                                       FBMA Curriculum Parts
 Maximum   12 business units=   300 contact hours     75 hours
           300 contact hours
 Example   5 business units=
           125 contact hours
                                300 contact hours     75 hours    =500 contact hours
                                                                                       • FBMA I – Establishing a Farm Accounting
 Example   6 business units=
           150 contact hours
                                275 contact hours     75 hours    =500 contact hours
                                                                                         System
 Example   7 business units=
           175 contact hours
                                250 contact hours     75 hours    =500 contact hours
                                                                                       • FBMA II – Analyzing the Farm Business
 Example   8 business units=
           200 contact hours
                                225 contact hours     75 hours    =500 contact hours
                                                                                       • FBMA III – Adjusting the Farm Business
 Example   9 business units=    200 contact hours     75 hours    =500 contact hours
           225 contact hours
 Example   10 business units=   175 contact hours     75 hours    =500 contact hours
           250 contact hours
 Example   11 business units=   150 contact hours     75 hours    =500 contact hours
           275 contact hours
 Example   12 business units=   125 contact hours     75 hours    =500 contact hours
           300 contact hours




FBMA I Topics:                                                                         FBMA I Topics (continued) :
• Orientation to the Farm Business                                                     • Developing the Balance Sheets
  Management Analysis Program                                                            – Inventories of Machinery/Equipment
• Introduction to Farm Accounting                                                        – Inventories of Livestock, Crops, and Crop
                                                                                           Supplies
• Recording Receipts and Expenditures
                                                                                         – Inventories of Real Estate and Non-Farm
• Developing the Year’s Cash Flow Summary                                                  Assets
                                                                                       • Inventories of Short, Intermediate and Long
                                                                                         Term Liabilities
FBMA I Topics (continued) :                         FBMA II Topics:
• Keeping Enterprise (Cost and Profit Center)       • Maximizing After-Tax Income
  Records                                           • Tax Management Strategies
• Developing Non-Farm and Family Living             • Planning Next Year’s Livestock and
  Records                                             Cropping Programs and Cash Flow
• Completing a Whole Farm Financial                   (FINFLO)
  Analysis (FINAN)                                  • Analyzing the Financial Statement and Cash
                                                      Flow




FBMA II Topics (continued) :                        FBMA III Topics:
• Analyzing the Profit/Loss Statement               • Determining the Most Profitable Cropping
• Analyzing the Financial Statement and Cash Flow     System
• Analyzing Livestock Enterprises
                                                    • Determining the Most Profitable Livestock
• Analyzing Crop Enterprise
                                                      System
• Analyzing Machinery, Equipment, and Building
  Costs                                             • Planning Income Tax Management
• Utilizing Farm Credit                             • Planning This Year’s Cash Flow (FINFLO)
• Completing Whole Farm Financial and Enterprise
  Analysis
                                                    • Analyzing the Farm Business




FBMA III Topics (continued) :
• Strategies for Lowering Operating Costs
                                                    What Can a Secondary Teacher Do?
• Strategies for Reducing Overhead Costs
• Evaluating Capital Investments to Increase
  Net Profit (FINLRB)
• Strategies for Increasing Labor Efficiency
                                       Daryl Olvader, CEO
                                       Farm Credit Services of Missouri
         Cooperative Individual
          Classes    Instruction
                                       On managing risk:
                                       • Develop a current financial “snapshot” of your
        FBMA                In-Depth      business.
       Program               Classes
                                       • Conduct a “breakeven” analysis of your
                                          agricultural enterprise.
         Young Farmer Topics
                      Classes
                                       • Identify major cost variances which exceed
           Chapter
                                          industry standards or county averages.
                                       • Develop a cash flow analysis to support cash
                                          and borrowing needs.
    Pick your pieces of the pie!       • Develop a marketing plan and stick to it.




Farm Business Management
        Analysis
            Norman F. Rohrbach
              125 Gentry Hall
         Columbia, MO 65211-7040
               573-882-7379

								
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