first_imgShare Facebook Twitter Google + LinkedIn Pinterest By Matt ReeseThere is hope for better prices in 2019 for some agricultural sectors, but there is no doubt that there are still challenging times ahead for the farm economy. Understanding the details of farm profitability (or lack of) can make the difference between a vibrant future for individual farms and no future at all.To help with this endeavor, Ohio State University Extension has created the Ohio Farm Business Analysis Program. The goal of the program is to help farms understand what all the numbers behind profits or losses mean, and learn how to improve farm businesses based on analysis of specifics. The program covers all aspects of the farming business, including crops, livestock and much more.“This program is a way for farmers to take a very in depth look at where they are at business wise. We look at the whole farm and for the farms that want to put in the time, we can do enterprise analysis so they can drive it down to, ‘What is my cost of production for each of my enterprises,’” said Dianne Shoemaker, Ohio State University Extension field specialist who heads up the program. “We want to help family farms be profitable. You can’t know where you are until you push the numbers. What are the debts, assets and liabilities? Are you profitable? Can you make the payments? Knowing those costs really helps when you start looking at marketing more effectively.”To complete a farm analysis, an Extension technician will start with a farm’s beginning and ending balance sheets from the previous year. This provides a snapshot of what the farm looked like at the beginning and end of the analysis. To fill in the rest of the year, there are forms to input all purchases, sales, and any other enterprise information to provide a complete a financial analysis of the farming operation. This program analysis will help farmers understand areas of profitability and loss within the business. The program also features tools to help provide understanding of the numbers behind the analysis and demonstrate how those numbers can be used to move forward in a positive direction.The Ohio Farm Business Analysis Program also provides great insights into an individual farm’s performance by comparing other similar farms.“When we take a look at what is happening on an individual farm, one of the questions is, ‘How am I doing compared to others?’ What are other people doing? We have benchmarking reports that can help with that,” Shoemaker said.The program can provide a broad overview of the farm economy in Ohio as well.“How do we communicate how the farm sector is doing to our legislators? When we have good data about what farms look like in Ohio, we can leverage that information,” Shoemaker said. “It is all confidential so we are not sharing any individual farm’s numbers, but we can share how the economy is doing as a whole with legislators.”For example, 42 farms completed their 2016 farm business and crop enterprise analysis in 2017. The four lowest cost producers averaged $3.08 per bushel, the median cost of production was $4.17, and the four highest cost producers averaged $6.21 per bushel. Only the high 20% of these corn enterprises generated a positive net return for corn. For the other 80%, the personalized benchmark reports they receive helped them identify strengths and areas of opportunity in each crop enterprise.The highest cost producers will be able to see if their costs were high compared to previous years due to weather or other yield-depressing events or if these numbers are “normal” and signaling a red flag as an area of concern. Combining the real numbers from each enterprise and benchmark reports with production information gives each farm manager powerful information to make positive changes.“We are in the process of really trying to expand our farm numbers. With data from more farms it becomes more valuable to the individual farms. If you are a commercial grain farm, you’d like to know how you’re doing compared to other grain farms that have similar acres of crops. It is hard to compare a 100-acre farm to a 1,000- or 3,000-acre farm. One of our objectives is to increase the number of farms raising corn, beans or wheat so we can provide them with some effective benchmarking data,” Shoemaker said. “We are looking at the 2017 numbers now and we will start on 2018 numbers once the books are closed for the year. In 2017, our crop farms looked a little better than our dairy farms, but there is always a range. Corn had a negative return on rented ground, soybeans were positive. When we look at our ‘18 numbers, I am expecting some pretty bleak things for our dairy farms and I am concerned about our crop farm performance in 2018 with the much lower crop prices we have seen this year.”The 2017 Ohio Farm Business Analysis Crop Summary with Benchmark Reports is available to download at http://farmprofitability.osu.edu. In 2017, 42 farms with 32,626 crop acres participated in the program. These farms provided detailed financial and production data to complete a whole farm analysis. More than 30 of the farms also completed an enterprise analysis for their crop enterprises. Farms ranged in size from 60 crop acres to more than 2,200 crop acres. The 10 largest farms were an average of 1,597 acres each.The 2017 summary contains enterprise reports for corn harvested as dry shell corn and corn silage, alfalfa hay, mixed hay, soybeans, winter wheat harvested as grain, and small grain double crops harvested as silage. Results are reported by land tenure — for owned acres and for cash rented acres. While there are some share‐rented acres, there are not enough to generate individual reports. When data for more than 18 farms is available, the enterprise summary includes the average for all farms, and the average for the high 20% of farms based on net return per acre.Ohio has expanded capacity to do farm business analysis work with four additional farm business analysis technicians working in Ohio. Each farm receives their farm’s analysis as soon as it is completed. All 2018 analyses will be completed by the end of May with benchmark reports and summaries available this summer.Now is the perfect time to start farm business analysis. For more information, contact a Technician including:Defiance County: Clint Schroeder at 419-782-4771 or [email protected] County: Dave Grum at 740-670-5315 or [email protected] County: Cristina Benton at 330-533-5538 or [email protected] County: Sharon Harris at 937-440-3945 or [email protected] County: Trish Levering at 740-474-7534 or [email protected] to a three-year USDA-NIFA Farm Business Analysis grant, the cost for a farm to complete an analysis for the 2018 business year is $100. To learn more about farm business analysis, contact Dianne Shoemaker or Haley Shoemaker at 330-533-5538 or email [email protected] or [email protected]last_img

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