D22-Lancaster Farming Saturday, October 12,1985 ftbe Dairy Business By x ,\ Newton Bair EDITOR’S NOTE For those of you who read ‘The Dairy Business’ in last week’s Lancaster Farming, you probably searched high and low for the graph that was referred to in the column. Because we Inadvertently left out the graph when we were laying out the page last week, we’re rerunning the same column (in cluding the graph, of course!) this week. We regret the error. Tracking Trends In The Business The trouble with being a farm management consultant is that the 380 304 228 152 1980 1981 1982 CALF KENNELS Compare the Stoltzf us Woodwork Calf Hutch Lifting Hook for easy handling (Optionl Rear Vent I Option I Sturdy 2x4 conatniction Tilt Out Feeder (or/ Treated ikldi euayacceai. exterior plywood ALSO AVAILABLE: TRACK FOR FASTENING CALVES' CHAIN TO CEILING OF HUTCH STOLTZfUS WOODWORK MFD. BY: exposure is limited to certain kinds of farms and farmers. I often wish that I could have a more intimate look at the very best farms, the kind that are well managed and obviously making money, even in these times of financial stress. I can only guess at some of what I would see, if allowed to look at the books of a good manager. But one thing would be obvious, there would be good record books, neatly kept and complete in every detail. Not the kind that are entered once every three or six months, when the bottom drawer, filled with ALL FARMS-PENNA FARM ASSETS - - FARM DEBTS • NET WORTH One Sheet Galvanized Metal Roof "29 Rt. 897 North - Gap, PA 17527 717-442-8972 bills, receipts, and sundry penciled notes, is emptied. I've even seen some desk drawers that are only emptied once a year, when the whole mess is dumped in the tax accountant’s lap. I wonder how he ever sorts it out! And what good does the farmer get from his records? If the reports published by some of the professional accounting services are indictive of how the better farmers are doing, we can make some valid comparisons that serve as a guide for others. I have analyzed some figures from one state-wide service that are eye openers 7 Anyone who wants to compare their own figures with the top managers can do so. Using figures for the last five years, certain trends in farm assets, farm debt, and farm net worth can be charted. These three broad indicators can be compared to similar trends that are available to nearly everyone, if they are on a good accounting system or using their IRS 1040-F forms for five years. As the graph shows, for the top 10 percent of farm managers, total farm asset value has declined slightly in the last five years. Farm debt has remained about steady, while net worth has decreased slightly. It indicates a trend that is no fault of the manager, but of the economy in general. The decline in asset value can be attributed to lower land value, and lower inventory values. These will usually follow the trends of inflation in the economy, so can rise as* well as fall with the economy. A rise in debt load and decline of net-worth are more serious, however, and must be closely monitored. I shudder when the net worth of a farm business is plummeting to near or below zero. The only an swer for these cases is to consider getting out of business before they tace bankruptcy. It’s never a clear-cut or pleasant decision, but it may be the most honest and practical one for some. 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You can get your free copy from your local ABS Representative or contact American Breeders Service at P.O. Box 459, DeForest, Wl 53532. business with a negative cash-flow (where the expenses are more than current income) are few. Cash flow must cover debt repayment as well as operating expenses and family living. Living expenses often are covered by depreciation of assets. The only hope of survival is to reduce debts by liquidating assets, or find some way to in crease productivity of marketable produce. Use the graph to compare your trends in these three areas over the past five years. The dips should be no steeper than the averages, or there may be trouble ahead. For FREE Estimate CALL Seal Crete Ine. PAINTING & WATERPROOFING RD 2, Box 417, Ephrata, PA 17522 • 717-859-1127 a! New trailer KANAWHA, lA. - A new Bolt- Together livestock trailer has been introduced by Kiefer Built, Inc. 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