The Management Calendar

Gordon Groover (groover@vt.edu), 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:

• 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/choices-magazine.
  • Third Quarter 2013 Theme Articles: Theme Overview: Transitions in Agriculture. Shannon L. Ferrell. Recognizing the growing importance of farm transition issues, USDA’s Economic Research Service and Oklahoma State University organized a Transitions in Agriculture Conference held in March of 2013, bringing together experts from a number of fields to share their perspectives on transition issues and to start a new conversation on how to address them.
    • Drivers of Agricultural Transition. Derrell Peel, Damona Doye, and Mary Ahearn
    • Retired Farmer – An Elusive Concept. Joy Kirkpatrick
    • The Policy and Legal Environment for Farm Transitions. Shannon L. Ferrell, Michael D. Boehlje, and Rodney Jones
    • Agriculture, the Tax Code, and Potential Tax Reform. James M. Williamson
    • Credit Markets and Land Ownership for Young and Beginning. Nathan S. Kauffman
    • o   Farmers Social Forces and Cultural Factors Influencing Farm Transition. Shoshanah Inwood
    • Submitted Articles:
      • Behind the Collapse of MF Global. Paul E. PetersonNearly $1.6 billion was missing from more than 27,000 customer accounts when MF Global, one of the world’s leading futures brokerage firms, failed in October 2011. This article reviews the events leading to MF Global’s collapse and highlights the need for better protections against the misuse of customer funds.
      • The Changing Landscape of Northern Great Plains Wheat Markets. Anton Bekkerman. Food security and decreased production concerns have likely prompted multinational agribusinesses to vertically integrate procurement, transportation, and export of Northern Great Plains wheat. Resulting grain demand increases may have already changed land conservation behaviors. Potential longer run implications include decreased competition for grain and structural changes to wheat production areas and marketing.
      • Lack of Information Is the Root of U.S. Foodborne Illness Risk. Tanya Roberts. While the 2011 Food Safety Modernization Act improves food safety incentives, only 0.05% of U.S. foodborne illnesses are linked to the causative food now. New pathogen tests, coupled with policies to improve information in the marketplace, have the potential to reduce the risk of foodborne illness and their Long Term Health Outcomes.
      • Agricultural Conservation & Environmental Programs: The Challenge of Data-Driven Conservation. Otto C. Doering, Douglas J. Lawrence, and J. Douglas Helms. Improving conservation program efficiency requires collecting, analyzing, and using natural resource data. USDA has a long history of collecting natural resource information, but data collection is not enough. Policy makers must support data collection, analysis, and validation over time and data must be useful for policy decision-making and adaptive management.

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 recordkeeping 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 2013 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, see the article below titled Virginia Tech Income Tax School.
• 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.