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									             ODAP-B
Ontario Data Analysis Project - Beef


             FARM SUMMARY

               For 1998 Tax Year



                   prepared by:

                 Lynn Marchand



          Economics and Business Section

               RIDGETOWN COLLEGE


JANUARY                                    2000
                  TABLE OF CONTENTS

1.    SUMMARY STATISTICS


2.    SELECTED DESCRIPTIVE DATA


3.    PERSONALIZED FARM INCOME STATEMENT


4.    PERSONALIZED FARM BALANCE SHEET


5.    PERSONALIZED FARM FINANCIAL ANALYSIS


6.    FINANCIAL ANALYSIS DEFINITIONS


7.    PERSONALIZED REVENUE SOURCE GRAPH


8.    PERSONALIZED EXPENSE SOURCE GRAPH


9.    PERSONALIZED FARM ASSET GRAPH


10.   PERSONALIZED FARM DEBT AND EQUITY GRAPH


11.   PERSONALIZED PERFORMANCE GRAPH
                             SUMMARY STATISTICS


This past year 20 beef farms participated in the Ontario Data Analysis Project. This
year all 20 farms surveyed were classified as Feedlot operations with five of the 20 farms
reporting both feedlot and cow-calf enterprises. Backgrounding cattle were reported on
two of the 20 farms surveyed. The following pages summarize selected data results from
the ODAP survey for the 1998 fiscal year based on the data collected from the 20 farms
surveyed.

1. Farm Size

The survey results showed 25% (5) of the farms reported beef cows at the end of their
fiscal year. The average herd size for the five farms was 95 cows. It was recorded that
75% (15) of the farms reported feedlot cattle at their year-end and the average ending
inventory was 453 head. During the 1998 fiscal year, the feeder cattle sales averaged 650
head from the 19 farms that participated.

The average tillable acreage of the farms was 553 acres of which 67% (373 acres) was
owned. The principle crops grown were corn ( grain, silage, high moisture), soybeans,
hay (includes haylage), and wheat. The survey results show the average pasture acreage
was 161 acres with 94 acres classified as Improved pasture.

2. Operator Background

The average farm operator was 49 years old and had been raising cattle for 28 years. The
survey results recorded 50% of producers had post-secondary education. The majority
of the surveyed farms reported 75% planned on maintaining the size of their operation
over the next five years, 20% had expansion plans and the remaining 5% planned on
decreasing the size of their operations.

3. Business and Management Characteristics

The survey results showed the most frequent business organization structure was Spousal
Partnerships (35% of participants), 30% Sole Proprietorships, 25% Family Corporations,
and 10% Family Partnerships. The survey data showed 75% of the producers reported
using a computer for farm management. Accounting was selected as the most important
computer use, followed by Livestock Management.

4. Beef Production

The survey results recorded the most popular beef breeds in the cow herds were Charolais
and Angus (19% each), Simmental (17%), Hereford (14%) and Limousin (13%). The
feedlot operations reported the most popular breed to be a Charolais Cross (41%) followed
by a Hereford Cross (17%), Angus Cross (15%), Limousin Cross (6%) and a Simmental
Cross (5%).
5. Financial Characteristics

The survey results indicated the average Net Farm Income was ($7,985) before income
tax. The total cash revenue was $973,930 of which $862,428 was Beef or Cull Stock
Sales. The Beef Purchases averaged $579,192 and the total Feed Purchases averaged
$101,438.

The average ending assets were $1,717,224 with the ending liabilities being $835,262
and the ending equity of $881,962. The survey results recorded the majority of the debt
was short term. The average Return on Assets was 1.8% and the average Return on
Equity was -0.9%.
Selected Descriptive Data
                SURVEY ITEM                      Bottom 10    AVERAGE     Top 10
                                                 FARMS (1)    20 Farms    FARMS

Age of Main Decision Maker                            49.1         48.8       48.4
Years Raising Beef (after age 16)                     30.0         28.1       26.0
Education Level
 - not reported                                        10%           5%         0%
 - less than high school                               10%          20%        30%
 - high school                                         40%          25%        10%
 - post high school                                    40%          50%        60%
Off Farm Income of Main Decision Maker              $6,910       $5,355     $3,800
   (Full-time + part-time)
Business Organization
 - Sole Proprietor                                     30%         30%        30%
 - Spousal Partnership                                 10%         25%        40%
 - Family Partnership                                  20%         10%          0%
 - Family Corporation                                  40%         35%        30%
 - Other                                                 0%         0%          0%
Tillable Acres Owned                                   396         373        389
Acreage Rented or Sharecropped                         293         180        319
Total Acreage Worked                                   688         553        708
Average Length of Lease (years)                         2.0        1.1         1.0
Average Price Paid for Rented Acreage ($/acre)         $96         $87        $82
Barn Capacities
 Beef Cow (# hd)                                        55          89         98
 Feedlot (# hd)                                        633         500        366
Management Factors
% Using Computers                                      70%         75%        80%
 Environmental Farm Plan Complete                      50%         55%        60%
 Nutrient Management Plan Complete                     20%         15%        10%
Expansion Plans over next 5 years:
 - expand                                              30%         20%        10%
 - maintain present size                               70%         75%        80%
 - decrease/quit                                        0%          5%        10%
Manure Handling
- bulk spread                                     100%     98%     96%
- irrigated                                         0%      1%      1%
- injected                                          0%      1%      3%
Manure Storage Capacity
> 200 days                                         50%     35%     20%
150 - 200 days                                     20%     30%     40%
100 - 150 days                                     20%     30%     40%
< 100 days                                         10%      5%      0%
Weaning Weight: Bulls/Steers (lbs)                 520     532     535
Weaning Weight: Heifers (lbs)                      490     505     509
Adj. 200 day Weaning Weight: Bulls/Steers (lbs)     NA     613     613
Adj. 200 day Weaning Weight: Heifers (lbs)          NA     610     610

Average Purchase Price: Calves                    $1.15   $1.17   $1.19
Average Purchase Price: Yearlings                 $1.10   $1.00   $0.98

Average Selling Price: Finished Calves            $0.89   $0.91   $0.93
Average Selling Price: Finished Yearlings         $0.98   $1.03   $1.16

Average Arrival Weight: Calves                     627     576     540
Average Arrival Weight: Yearlings                  917     881     783

Average Selling Weight: Finished Calves           1,286   1,240   1,207
Average Selling Weight: Finished Yearlings        1,336   1,317   1,267
Average Daily Gain: Calves                         2.61    2.54    2.49
Average Daily Gain: Yearlings                      2.65    2.73    2.93
Average Days on Feed: Calves                        241     264     280
Average Days on Feed: Yearlings                     169     168     167
Market Cattle Sold:
- Direct to Packer                                 53%     61%     69%
- Terminal Auction Market                           0%      6%     12%
- Community Sales Barn                             24%     17%     10%
- Electronic Auction (OLEX)                        22%     15%      8%
- Privately (freezer trade)                         1%      0%      0%
Market Cattle are priced:
- Rail Grade Basis                                 84%     73%     62%
- Liveweight Basis                                 16%     27%     38%
                                                                   FARM INCOME STATEMENT

                                                                     Bottom 10        AVERAGE           Top 10          YOUR
                                                                     FARMS (1)        20 Farms          FARMS           FARM
REVENUE
CATTLE (BEEF) SALES                                                   $1,179,440        $861,465         $543,489
CULL SALES (BEEF)                                                            114             963            1,812
OTHER LIVESTOCK                                                            4,870           6,254            7,638
CORN                                                                       4,232           9,474           14,717
SOYBEANS                                                                  26,660          27,607           28,555
WHEAT                                                                     12,954           9,435            5,915
OTHER CROP                                                                26,197          16,241            6,286
CUSTOM WORK                                                               20,121          16,948           13,775
CROP INSURANCE                                                             3,397           2,597            1,797
MARKET REVENUE                                                             1,465             804              143
NISA                                                                      13,963          11,270            8,578
OTHER GOVERNMENT PROGRAMS                                                    156             362              567
OTHER FARM INCOME                                                         10,098          10,510           10,921
TOTAL CASH REVENUE                                                     1,303,666         973,930          644,193
CHANGE IN ACCOUNTS RECEIVABLE                                            (21,297)          1,736           24,769
CHANGE IN INVENTORIES                                                    (63,377)        (26,969)           9,439

 TOTAL REVENUE                                                         1,218,993          948,697         678,402



EXPENSES
CATTLE (BEEF) PURCHASES                                                  829,081          579,192         329,304
OTHER LIVESTOCK PURCHASES                                                    715              430             145
FEED AND SUPPLEMENTS                                                     136,886          101,438          65,990
VET. MED. BREEDING                                                        15,148           10,309           5,471
CUSTOM WORK - LIVESTOCK                                                      411              913           1,416
TRUCKING, MARKETING                                                       26,538           16,963           7,388
OTHER DIRECT LIVESTOCK EXPENSES                                              289              144               0
FERTILIZER                                                                20,439           20,005          19,571
PESTICIDE EXPENSES                                                        14,675           12,702          10,729
SEED AND PLANT EXPENSES                                                   19,134           18,812          18,491
OTHER DIRECT CROP EXPENSES                                                11,921           11,500          11,078
CROP INSURANCE AND MARKET REVENUE PREMIUMS                                 3,870            2,370             870
REPAIRS AND MAINTENANCE                                                   24,893           22,236          19,579
FUEL                                                                      14,402           12,249          10,097
BUILDING REPAIRS                                                           5,478            4,567           3,656
HIRED LABOUR                                                              28,814           17,847           6,880
UTILITIES                                                                  8,075            5,964           3,854
ACCOUNTING AND PROFESSIONAL                                                3,875            3,299           2,723
OPERATING LOAN INTEREST                                                   30,246           20,449          10,653
OTHER FARM EXPENSES                                                       17,387           12,045           6,703
TOTAL CASH OPERATING EXPENSES                                          1,212,276          873,436         534,596
CHANGE IN ACCOUNTS PAYABLE                                               (30,589)         (15,986)         (1,383)
TOTAL OPERATING EXPENSES                                               1,181,687          857,450         533,213

OPERATING MARGIN                                                          37,306           91,247         145,189

RENT (LAND AND BUILDINGS)                                                 16,885           17,521          18,157
PROPERTY TAX AND GENERAL INSURANCE                                        15,786           10,863           5,940
INTEREST (TERM AND MORTGAGE)                                              21,895           18,475          15,054
TOTAL CASH OVERHEAD EXPENSES                                              54,567           46,859          39,151
DEPRECIATION (2)                                                          57,251           52,374          47,497
TOTAL OVERHEAD EXPENSES                                                  111,817           99,233          86,649

TOTAL EXPENSES                                                         1,293,504          956,682         619,861

 NET FARM INCOME                                                         (74,511)          (7,985)         58,540
(1) Farms Ranked by Total Net Farm Income (before taxation)
(2) DEPRECIATION = 2.5% Other Assets, 5% Buildings, 15% Field Machinery Including Trucks and Cars, 20% Barn Equipment
 FARM BALANCE SHEET (YEAR END MARKET VALUE)

                                      Bottom 10    AVERAGE      Top 10      YOUR
                                      FARMS (1)    20 Farms     FARMS       FARM

ASSETS

CASH                                       $837        $750         $663
SECURITIES                                   510       3,505       6,500
ACCOUNTS RECEIVABLE                       10,099      21,755      33,410
MARKET & FEEDER LIVESTOCK                532,447     415,139     297,831
CROPS IN STORAGE                         142,402     147,970     153,539
CROPS IN THE GROUND                        5,795       6,714       7,634
SEED, FERTILIZER, PESTICIDES               2,691       1,759         827
FUEL                                          65         168         270
PURCHASED FEED                             1,098       3,181       5,263
OTHER CURRENT ASSETS                       2,155       2,937       3,720
TOTAL CURRENT ASSETS                     698,098     603,877     509,656

NISA ACCOUNT (FUND # 1)                   18,539       19,549     20,559
BREEDING LIVESTOCK - BEEF                  4,810       22,330     39,850
OTHER BREEDING LIVESTOCK                     780          653        525
MARKET QUOTA                                   0            0          0
FIELD MACHINERY & FARM VEHICLES          261,859      270,360    278,861
BARN EQUIPMENT                            46,911       27,574      8,236
FARM BUILDINGS                           161,953      125,258     88,562
LAND                                     694,916      553,218    411,521
HOUSE ETC.                               109,625       92,413     75,200
OTHER CAP. ASSETS                          3,098        1,992        886
TOTAL CAPITAL ASSETS                   1,302,493    1,113,346    924,200

TOTAL FARM ASSETS                      2,000,591    1,717,224   1,433,856



LIABILITIES

ACCOUNTS PAYABLE                          23,479      13,770       4,061
INCOME TAX PAYABLE                           372         261         150
INTEREST ARREARS                             580         290           0
ADVANCED PAYMENTS                          7,103       6,386       5,668
OPERATING CREDIT                         440,890     303,067     165,245
CURRENT LT DEBT                           18,670      32,218      45,767
OTHER CURRENT LIABILITIES                221,008     124,826      28,644
TOTAL CURRENT LIABILITIES                712,102     480,818     249,535

DEFERRED TAXATION                         14,561      29,229      43,896
TERM DEBT                                133,869     123,995     114,120
REAL ESTATE MORTGAGES                    338,220     201,221      64,222
TOTAL LONG TERM LIABILITIES              486,650     354,444     222,238

TOTAL FARM LIABILITIES                 1,198,751     835,262     471,773

EQUITY IN FARM                           801,840     881,962     962,083

(1) FARMS RANKED BY NET FARM INCOME                                                0
                                               FARM FINANCIAL ANALYSIS

                                               Bottom 10     AVERAGE       Top 10     YOUR
                                               FARMS (1)     20 Farms      FARMS      FARM

** LIQUIDITY **

WORKING CAPITAL (ENDING)                         ($14,003)    $123,059     $260,122
CURRENT RATIO (ENDING)                               0.98         1.26         2.04
DEBT STRUCTURE (ENDING)                             59.4%        57.6%        52.9%



** SOLVENCY **

PERCENT EQUITY (ENDING)                             40.1%        51.4%        67.1%
DEBT TO ASSET RATIO (ENDING)                         0.60         0.49         0.33
DEBT TO EQUITY RATIO (ENDING)                        1.50         0.95         0.49



** PROFITABILITY **

NET FARM INCOME (BEFORE TAX)                     ($74,511)      ($7,985)    $58,540
RETURN ON ASSETS (AVG)                              -1.1%          1.8%        6.1%
RETURN ON EQUITY (AVG)                              -9.1%         -0.9%        6.2%



** FINANCIAL EFFICIENCY **

INTEREST AS A PERCENTAGE OF                          4.2%          4.3%        4.5%
 OPERATING EXPENSES + CASH OVERHEAD EXPENSES
OPERATING MARGIN                                  $37,306      $91,247     $145,189




** DEBT SERVICING **

DEBT SERVICING RATIO                                 0.06          0.06        0.06




(1) FARMS RANKED BY NET FARM INCOME
                       FINANCIAL ANALYSIS DEFINITIONS
Working Capital             =   Current Assets - Current Liabilities (ending)

Current Ratio               =   Current Assets (ending)          :1
                                Current Liabilities (ending)


Debt Structure              =   Current Liabilities (ending) : 1
                                Total Liabilities (ending)


Percent Equity              =   Equity in farm Business (ending) x 100
                                Total Assets (ending)


Debt to Asset Ratio         =   Total Liabilities (ending)     :1
                                Total Farm Assets (ending)


Debt to Equity Ratio        =   Total Liabilities (ending) : 1
                                Owners Equity (ending)


Return on Assets            =   Net farm Income (accrual) + Interest Paid (all) x 100
                                Total Farm Assets (average beg. & end.)


Return On Equity            =   Net Farm Income (accrual)             X 100
                                Owners Equity (average beg. & end.)


Interest As A % Of          =   Interest Paid (all)
Operating Expenses + Cash       Total Operating Expenses + Cash Overhead Expenses
Overhead Expenses


Operating Margin            =   Total Revenue - Operating Expenses


Debt Servicing              =   Principal + Interest Paid (All) : 1
Requirement                     Total Farm Revenue


Depreciation                =   2.5% on other capital assets, 5% on buildings, 15% on
                                machinery including trucks & cars and 20% on barn equipment
              FINANCIAL ANALYSIS: DEFINITIONS EXPLAINED


Liquidity


Liquidity is a measurement of the ability to generate cash without disrupting the operations of the
business. Asset items which are easily sold, such as grain and livestock, increase liquidity while
machinery, breeding stock, and land which are assets more difficult to sell quickly, decrease liquidity.


Three measures of liquidity have been calculated:


1) Working Capital =            Current Assets (ending) - Current Liabilities (ending)

2) Current Ratio =              Current Assets (ending)         :1
                                Current Liabilities (ending)


        eg. 2.40 : 1 means you have $2.40 in liquid (current) assets for every dollar you owe in the
        next 12 months (current debt).


3) Debt Structure =             Current Liabilities (ending) x 100
                                Total Liabilities (ending)

        eg. 28 % indicates that 28 % of your liabilities are due within one year.


Solvency

Solvency is a term which measures the ability of a business to pay its debt. When a business cannot
repay its entire debt, it is said to be technically insolvent. Three measures of solvency have been
calculated:

1) Percent Equity =             Equity in Farm Business (ending) x 100
                                Total Assets (ending)

        eg. 69 % signifies that you actually own 69 percent of the total assets of the business.
2) Debt To Asset Ratio =       Total Liabilities (ending) : 1
                               Total Farm Assets (ending)


       eg. 0.31 :1 indicates that for every dollar of assets, 31 cents is represented by debt and 69
       cents by equity.


3) Debt to Equity Ratio = Total Liabilities (ending) : 1
                               Owners Equity (ending)


       eg. 0.60 : 1 tells you that for every dollar you have in equity (paid assets), you have 60 cents
       still owing in farm liabilities (unpaid assets).


Profitability


Three measurements of profitability have been calculated:


1) Net Farm Income (before income tax) = Total Farm Income - Total Farm Expenses


2) Return On Assets =          Net Farm Income (accrual) + Interest Paid (all) x 100
                               Total Farm Assets (average beg & end)


       eg. 11.9 % ROA indicates that for every dollar in assets controlled by the business 11.9 cents
       is available to pay a return to the owners of the assets.


3) Return On Equity =          Net Farm Income (accrual)                x 100
                               Owners Equity (average beg & end)


       eg. 10.8% shows that for every dollar of business equity, 10.8 cents is available to pay a
       return to the owners of the equity.. This represents a 10.8% return on paid assets.
Financial Efficiency
To determine financial efficiency we look at the following measurements:


1) Interest As A % Of =      Interest Paid (all)
  Operating Expenses +       Total Operating Expenses + Cash Overhead Expenses
  Cash Overhead Expenses


2) Operating Margin =        Total Revenue - Operating Expenses


Debt Servicing


This is used as an indicator to show exactly how much of the farm's gross revenue is used towards
debt repayment.


Debt Servicing Requirement =         Principal + Interest Paid (All) : 1
                                     Total Farm Revenue
       eg. 0.27 : 1 would tell us that of every dollar of revenue taken in, 27 cents of it is used
       towards debt repayment (includes principal & interest).
100%


  80%
 % of Farm Revenue




  60%


  40%


  20%
                                    Farm Revenue Sources (Cash)

             0%
                      Average                                   Your

                      Beef              Other Livestock      Crop

                      Custom Work       Government           Other




100%


      80%
% of Farm Expenses




      60%


      40%


      20%
                                        Farm Cash Expenses


                 0%
                      Average                                       Your


                      Beef Purchases       Purchased Feed            Other Livestock

                      Direct Crop          Interest                  Other
100%


     80%
% of Farm Assets




     60%


     40%

     20%                                      Farm Assets (excl house)


              0%
                         Average                                              Your

                    Land / Buildings          Market Livestock          Breeding Livestock

                    Machinery / Equipment     Crop / Feed               Other

100%


     80%


     60%
 %




     40%


     20%
                                       Farm Debt (excluding deferred tax) and Equity


               0%
                          Average                                               Your

                           Equity                Mortgage              Term

                           Other Current         Current Term          Operating
SELECTED FEEDLOT PERFORMANCE VARIABLES

                                    Your Farm   Average
                                                 $1.17

                                                   576
                                                 $0.91

                                                 1,240
                                                   2.5

                                                   264


                                                 $1.00
                                                   881

                                                 $1.03
                                                 1,317

                                                   2.7
                                                   168

								
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