Dairy Team News - Farm Management/Ag Law

"Working with Dairy Business in Challenging Times," and "John and Mary Davis Case Study"

Mon, 28 Sep 2009 11:28:00 -0600

Kevin Bernhardt, UW-Platteville, Center for Dairy Profitability

Powerpoint Presentation and WORD document presented at the September 11, 2009 Ag Lenders Conference, Kimberly, WI.

http://cdp.wisc.edu/ppt/Ag%20Lenders%202.ppt

http://cdp.wisc.edu/pdf/John%20Dairy%20Case%20Study.pdf

Cost of Production III

Fri, 25 Sep 2009 09:14:00 -0600

Dairy Teamers et. al,,

Gary Frank and I are pleased to announce an update to the Cost of Production (COP) papers titled "Cost of Production III". In this version we revisit the COP option of Per Dollar or Percent of Gross Revenue in addition to the other COP calcualtion approaches previously addressed. Also new to this discussion is the establishment of purpose for the information generated to guide the COP option decision of which approach to use.

Ken Bolton

Cash Flow Positions of Wisconsin and California Dairy Operations

Tue, 11 Aug 2009 10:59:00 -0600

Those who follow the dairy industry know all too well that dairy producers are under severe financial pressure. Milk prices are the lowest seen in many years at the same time that feed costs are up due to strong corn and soybean prices. These market conditions are making it impossible for most dairy producers to show a positive cash flow, let alone turn a profit. If these unfavorable conditions persist, many dairy farmers will likely be forced out of business.

Attached is a paper that discusses the estimated cash flow positions of Wisconsin and California dairy producers.

Prelminary 2008 AgFA Benchmark Reports

Wed, 08 Apr 2009 10:09:00 -0600

Prelminary 2008 Benchmark Reports are being generated. The following report was generated for the same 35 farms in the years 2006-2008. Look for more in the near future.

http://cdp.wisc.edu/AgFAsamplereports.htm

Dairy Proforma Calculator

Tue, 14 Oct 2008 12:03:00 -0600

UPDATED: The Dairy Proforma Calculator on the CDP Website allows you to look at expansions and/or changes in the way you do business. Enter the current year's values for your farm, then enter a change in cow numbers, investment in building, machinery, production per cow, number of heifers, etc. Check to see if your financial situation changes for the better and how senstive your new cashflow is to the changes in milk price, prdouction per cow, corn price, protein price and/or hay price.

http://cdp.wisc.edu/Decision Making Tools.htm

Wisconsin Dairy Enterprise Planning Budget for 2008

Thu, 21 Aug 2008 15:35:00 -0600

The Wisconsin Dairy Enterprice Planning Budget spreadsheet has been added to the to the CDP Website. It allows one to construct enterprise and cash flow budgets for dairy. This budget package is intended to help decision makers assess the profitability and financial feasibility of dairy operations under various price and cost conditions.

http://cdp.wisc.edu

Livestock Gross Margin for Dairy

Fri, 01 Aug 2008 16:27:00 -0600

Livestock Gros Margin for Dairy (LGM-Dairy) is a new insurance product available for Wisconsin dairy producers. LGM-Dairy in a unique bundled insurance option that protects the "margin" between milk price and feed costs and could be an interesting risk management option for Wisconsin dairy producers. We have put together a paper that gives a basic understanding of LGM-dairy that you could find useful. This document can be dowloaded at my webpage: Dairy Management.

I am collaborating with Brian Gould (Ag and Applied Economics Deaprtment) to have the best information and analyses regarding LGM-Dairy for Wisconsin's dairy producers benefit. If you want more details about this insurance, please visit the UW LGM-Dairy place.

We are planning a series of workshops and talks around the state, so stay tuned.

USDA/ERS Monthly Milk Production Cost by State

Tue, 27 May 2008 08:44:00 -0600

Monthly milk production cost ($/cwt) is available for each state from the USDA Economic Reserch Service at the following web site: http://www.ers.usda.gov/eMail/?l=New-At-S&d=5/23/2008&p=2&t=/Data/CostsAndReturns/TestPick.htm#milkproduction Costs are broken down by monthy and presented in a simple to use Excel spreadsheet with a separate worksheet for each year. This site might be useful to show potential new entries, as well as the general public, that costs continue to rise along with record level milk prices.

Prelminiary Dairy Benchmarks for the Year 2007

Mon, 12 May 2008 15:29:00 -0600

The following preliminary benchmark reports for 2007 have been added to the CDP website:

Farm Earnings (comparison Per Farm, Head and Unit Sold)
2007 Balance Sheet (per Head)
Dairy Cost of Production
        - Per Farm, Head and Unit Sold
        - Per Unit Sold (cwt sold, cwt eq)
        - 2005-2007

http://cdp.wisc.edu

Compensation of Middle Management on Wisconsin Dairy Farms

Wed, 16 Apr 2008 15:03:00 -0600

Determining Appropriate Compensation Levels For "Middle Dairy Managers"

Many Wisconsin dairy farms are modernizing and/or expanding and have asked for information . about appropriate compensation levels for "middle managers" on larger Wisconsin dairy farms.

A team of UWEX faculty collaborated with the Wisconsin Agricultural Statistical Service to survey the employee compensation practices on Wisconsin dairy farmers, especially those large enough to have middle managers.

Results: A July 2007 report provides a range in market value of compensation for salaried managers of various types along with market values of hourly rates for variety of farm workers. This information is available to farmers and others athe URL below (see page 2 & 3 in the online document).

http://www.nass.usda.gov/Statistics_by_State/Wisconsin/Publications/Dairy/dairyproducer2007.pdf

Cost of Production Worksheet - per unit sold, residual claimant and equivalent production.

Thu, 20 Mar 2008 16:52:00 -0600

The cost of production (COP) is the costs associated with production divided by the number of units produced. This worksheet looks at three methods (per unit sold, residual claimant, equivalant production) commonly used to calculate the cost of production.

Developed by Dr. Gary Frank, Emeritus Professor, Center for Dairy Profitability, March 2008.

Learning From Existing Farm Systems in Minnesota and Wisconsin

Thu, 20 Mar 2008 16:42:00 -0600

Part of a University of Wisconsin Consortium for Extension and Research in Agriclture and Natural Resrouces Project Titled: "Production Systems in Southern Wisconsin: Quantifying Economics of Scope" by Toni Bockhop and Kevin Bernhardt, UW-Platteville.

Research procedures included: 1) Center for Dairy Profitability (AgFA) and Center for Farm Financial Management databases; 2) analyzing financial, structure and other information for each rotation type; 3) conducting a dupont analysis on each rotation type.

Using Farm Records Effectively for Business and Financial Management

Thu, 20 Mar 2008 16:39:00 -0600

Dairy Farming is a complex business which demands accurate records and careful financial management. Both financial and production records are required in order to provide the information on which the farm manager can make critical decisions.

Impact of Changing Milk and Input Prices on 2008 Wisconsin Dairy Profit Margins

Tue, 04 Mar 2008 15:35:00 -0600

Summary: A decline in milk prices to about $16.00/CWT or less could send net farm income from operations (NFIFO) per unit into negative territory for some Wisconsin dairy farms. Families owning such farms would have to borrow more money or rely on savings or non-farm income to maintain family living expenses in 2008.

Since every farm is different and since prices and costs change often, all Wisconsin dairy farms are encouraged to project their own 2008 cost of production and profit margins soon. They should carefully examine all of their practices and make all of the appropriate adjustments in an attempt to maintain profit margins. Reduced profit margins eventually can encourage reduced production and reduced demand for inputs which can cause the breakeven point to constantly change. I expect Wisconsin dairy systems to weather the expected profit margin reductions as well or better than their counterparts in other states.

Wisconsin Agricultural Land Prices 2001-2007

Fri, 01 Feb 2008 14:07:00 -0600

Authored by Arlin Brannstrom, Center for Dairy Profitability, January 2008.

Wisconsin land values have been increasing steadily for the past several years. The upward run in land prices is both a blessing and a curse for the Wisconsin dairy community. Increased equity from land appreciation provides security and potential borrowing power to the current owners, but high land prices also result in higher land rental rates and raise significant entry barriers for young farmers. Many factors combine to determine land values - earnings potential, financing costs and real estate taxes to name just a few. This paper examines more than 8400 Wisconsin large bare farmland sales between non-related parties between 2001 and 2007.