Year-End Bookwork

Posted: 12/30/2014

By: Rebecca Christman
Questions answered by: Lori Tonak 

 

Most of the time we think of farmers doing hard work out in the fields and not hunched over a desk. In December however, many farmers are spending long hours to get caught up on year-end bookwork.

 

Just like any business farmers keep up with the bookkeeping all year long. December is a critical time because farmers are taking one last look at 2014 and starting to make financial decisions for the next year. 

 

Where should we spend money and where can we save? These are questions that grocery store owners, auto body shops, and clothing stores ask all the time. Farmers should too, because although farming is a way of life, it’s also a business. This business is how farmers pay for food, clothes, and rent for their family.

 

Lori Tonak works at Mitchell Tech with the Farm and Ranch management program. This program assists farmers and ranchers in being “better business managers.”. Lori was gracious enough to answer a few questions farm management and her insights about agricultural trends.

 

Describe your job.  How do you help farmers? 

My job is to help farmers/ranchers with goal setting, computerized record keeping, and year-end analysis of the farm.  The analysis is done on the whole farm and on each enterprise of the operation, such as backgrounding cattle, cow/calf production, feeder pig production, etc.  Also, crop production analysis is done on each individual field.  These analysis results help producers see the progress they have made and adjust their goals for the future.

  

Why is it important for farmers to keep accurate records? 

It is important for farmers to keep accurate records to see where they are making a profit, where input costs may be reduced, where spending may be higher than it should be.  Accurate records help in goal setting and gauging whether the farm is profitable.  Even though there is money in the bank at the end of the year, the farm may not be profitable.  With accurate records, a farmer can see how money is being used and where it is returning the most profit. 

  

What is the difference between high and low profit farms? 
The biggest difference between high and low profit farms, in my opinion, is how they use their financial information.  Some producers will limit their amount of borrowed money, some use futures and contract marketing to lock in a profit, some use a combination of reducing input costs, marketing and being careful with borrowed money.  There is no specific thing that high profit farms do over low profit farms as there are so many variables on every operation. 

 

What trends did you see in agriculture over the past year and what do you expect for the future?  

The biggest trend in agriculture this past year was the discussion of how to manage inputs on crop production to still be able to show a profit with the falling commodity prices.  I would guess this will continue to be a major point of discussion as we move into 2015.   On the cattle side, the trend has been the increasing value of livestock, and reduced commodity prices, and what is the best way to market calves for the most profitability.  I also think using cash flow projections can become a good tool to decide on changes that may need to be made on the operation to help manage the use of capital. 

 

Thanks for your insight Lori!

 

Like anything else, farming has to be profitable. How else could a farm survive to pass on to the next generation? As 2014 comes to a close, farmers are looking forward to 2015. Just like each year they will be looking for ways to grow more with less, and will be doing their part to feed our growing population. 

 

Listen to this week's audio recording here! SD_Farm_Familes_-_Dec_29th.mp3