Gordon Groover, Extension Economist, Farm Management, Department of Agricultural and Applied Economics, Virginia Tech
Listed below are a few items that might be of interest to farm business managers:
Want to know the value of agricultural research, teaching, and extension to U.S. agriculture then take a look at Agricultural Productivity Growth in the United States: Measurement, Trends, and Drivers (USDA-ERS Research Report 189 July 2015 http://www.ers.usda.gov/media/1875389/err189.pdf). U.S. agricultural output more than doubled between 1948 and 2011, with growth averaging 1.49 percent per year. With little growth in total measured use of agricultural inputs, the extraordinary performance of the U.S. farm sector was driven mainly by increases in total factor productivity….
- A must read for all of us involved in agriculture is the current issue of “Choices,” published by the Agricultural and Applied Economics Association and can be found at http://www.choicesmagazine.org/.
- Theme Overview: Agricultural Grain Transportation: Are We Underinvesting and Why? Kenneth L Casavant
- Agricultural Transportation by Rail: Consolidation, Competition and Fuel Prices. Kevin E. Henrickson and Wesley W. Wilson
- Grain Handling and Transportation Policy in Canada: Implications for the United States. James Nolan and Steven Peterson
- Railroad Competition and Wheat Rates. Michael W. Babcock
Other articles of interest in Choices:
- Is America Running Out of Farmland? Paul D. Gottlieb
- The 2014 U.S. Farm Bill and Cotton: Proof that the WTO Matters. Terry Townsend
- Remember to take a look at the Economic and Policy Update from the Ag Economics Department at the University of Kentucky at http://www.uky.edu/Ag/AgEcon/extbluesheet.php.
Farm business managers should consider the following activities for their management calendars in August-September.
- As you start into harvest season, be sure to think about your crop records. Make sure you get information on yields, machine times, and equipment used (this information will help with next year’s budgeting); identify weed problems and differences in varieties. In addition to recording information on weeds, etc., think about labor constraints and bottlenecks slowing down tasks during the harvest season. Have employees and family members record problems and successes (maybe give them a cash payment for each problem identified). When the crunch is over, spend a couple hours reviewing notes on what can be done next year to solve the problems and duplicate the successes. Family business meetings should focus management discussion on how to resolve problems, not who to blame. Also take a close look at the yield potential of each field; with input costs at their current levels, some fields may no longer provide a sufficient profit margin during periods of drought – changing crops may provide that hedge against a major loss.
- Always pay close attention to cash flow needs as you generate cash reserves during fall harvest, and get ready for real estate and personal property taxes this winter. Almost all computerized record-keeping software, e.g. Quicken® and accounting software, e.g. QuickBooks® or FarmWorks®, create cash flow reports that assist in managing cash available for debt service, family living, and cash expenses. Compare this year’s cash flow to the budgeted amount and highlight deviations. If you did not develop a budget for this year, compare your inflows and outflow to last year’s August totals. Make sure you have a series of possible plans to address any projected cash short falls.
- The time to make tax management decisions is quickly approaching. Make sure that you have set aside a few days in October to summarize all farm and family financial records, and make an appointment now with your accountant to work on end-of-year tax management strategies. As the forms and publications for the 2015 tax year become available, they can be obtained from the Internal Revenue Service site www.irs.gov/formspubs/index.html. Consider attending one of the farm tax workshops conducted by the Virginia Tech Income Tax School for details see http://www.tax.vt.edu/tax_about.html.
- Livestock producers should develop a feed budget for the next 12 months. Make use of the feed budget just like you would a projected cash flow statement. Chart out deficits and develop strategies to fill in the deficits using local sources at harvest or planned purchases during the next 12 months.