tier Firming, Saturday, September 10, 1988 A2t-Lancas< F A R MANAGEMENT By John Defassio What Good Farm Records Can Do month my I dis-HPU^H cussed the ion making pro cess and introduc- InV cd a useful tool But just as a / < X S, combine can not operate without a head, FINPACK can’t work with out Farm Records. Farm Records arc as imporiani as any tool to farm management Let’s look at what a good farm record system can do. A farm record system is used to report, diagnose and plan. In addition the system should be easy to maintain and provide useful information in a timely manor. SAVE $10,000!!! I assume that every farmer keeps some form of farm records. After all the federal government requires that a farmer keep the information needed to figure income, deductions, credits, and financial reports. If a farmer fails to keep adequate records, he is subject to a fine not to exceed $10,000.00. The federal govern ment encourages you to keep records. HELP ESTABLISH CREDIT!.'! Any farmer having an outstand ing loan or attempting to borrow additional funds must provide the lender with some form of report. Farm records enables the lender to determine how much risk a farm operation can handle. The lender also needs to know the repayment ability of a farm operation. Many lenders arc now requiring a regular monthly report to monitor the loan and the farm business. Due to this type of reporting the farm records must be completed on a timely basis. There arc a variety of financial arrangements which may require accurate reports, such as: profit sharing arrangements, share crop ping, employee incentive plans, lease arrangements, partnerships, corporations and the list continues. Accurate reports can be very help ful in settling estates and partici pating in government programs. IDENTIFY STRENGTHS AND WEAKNESSES!!! These same farm records can be a useful diagnostic tool. From these records a farmer can pin point problems and identify oppor tunities which can lead to more profit. In order to diagnose an operation, comparisons arc drawn from previous year’s perfor mances to budgets and goals. HELP PLAN FOR THE FUTURE!!! Coupled with budgeting prac tices, the farm records provide a basis to build models of what your farm operation could be. Budget- BRSIHU’nt TKTUH ing allows ihc farmer lo see on paper the results of various alternatives. Although budgeting is not the answer lo all farm management problems, it can certainly save a great deal of lime and money by avoiding false starts. Reasonable budgets can not be formulated without detailed farm records. The planning done with historical data is done with cau tion. Predicting the future is not possible even with the best of records. But, information about an operation’s past performance is necessary to describe the unique situation of that operation. Infer ences about production costs and yields can be drawn from historical data that will most likely occur. Using this data with other avail able data can give a good idea about what may happen in the future, but, there are never any guaranties. If our only concern wre to satis fy the government, a very pimple system would be all that is needed. But as we demand more productiv ity from our farm, we must increase the amount of data gathered. When more data is hand led, controls must be added to the system to insure its accuracy. As the demand for accurate informa tion increases, the complexity of the record keeping system increases. There are many simple systems which can provide the information needed but may lack controls for accuracy. YOU CAN KEEP GOOD FARM RECORDS!!! Farmers can choose from a number of record keeping alterna tives or choose to create their own. Record books arc offered by cooperative extension offices, banks and production credit asso ciations. A wide variety of printed farm record keeping forms arc commercially available from sta tionery and office supply firms. In addition, many service firms offer record keeping in addition to other services such as tax preparation and financial statement prepara tion. The farmer must be able to use the farm records in making busi ness decisions. Any one can gather and record the necessary informa tion, but the data must contain accurate and detailed information in order to properly classify that information. A farmer should work closely wilh the record keep- er in order to assure the accuracy of the final data. START WITH GOALS!!! Farm record systems may vary with the goals of the farm operator, but all good systems must take into account depreciation, liabilities, farm inventories and cash receipts and expenditures. In order to select or create a good farm record sys tem the operator must apply indivi dual goals and understand farm management information needs. 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Significant historical Pennsylvania newspapers