2016 Farm Management Series

This series of meetings is intended for any farmers/couples who are planning a new farm enterprise and more experienced farmers who wish to improve their farm management skills and better analyze and benchmark their farm enterprises against other similar farm businesses.

The 2016 Farm Management Series will be offered at 3 locatons :

Darke County

7:00 P.M. Thursdays , January 7, 14, 21, 28 and February 4, 2016

Meetings will be held at:

   Andersons Maration Ethonol

   5728 Sebring Warner Road.

   Greenville, Ohio 45331

Topics covered:

  • What Is the Mission of Your Farming Operation?
    • Making Record Keeping Do More Than the Tax Return
  • Developing Your Balance Sheet
    • Basics of Finance
  • Developing Your Business Plan
  • Farm Transition Planning
  • Ag Law 101

~Participation limited to the first 50 paid registrations~

Registration form: 2016 Farm Management School Flyer Darke Co.


Wayne County

7:00 P.M. Thursdays, January 7, 14, 21, 28 and February 4, 2016

Meetings will be held at:

Commissioner’s Meeting Room

    Wayne County Administraion Building

     428 W. Liberty St.

     Wooster, Ohio 44691

Topics Covered:

  • What Is the Mission of Your Farming Operation?
    • Making Record Keeping Do More Than the Tax Return
  • Developing Your Balance Sheet
    • Basics of Finance
  • Developing Your Business Plan
    • Analyzing Business Performance
  • Farm Transition Planning
  • Ag Law 101

~Participation limited to the first 30 paid participants~

Registration form: 2016 Farm Management Seminar Flyer, Wooster


Fulton County

6:30 P.M. Tuesday, February 2, 9, 16, and 23, 2016

Meetings will be held at:

   Robert Fulton Ag Center

   8770 State Route 108

   Wauseon, Ohio 43567

Topics covered:

  • Making Your Records Do More than Taxes
    • #knowyournumbers (Farm Benchmarking I)
  • Developing Your Farm’s Business Plan
    • #farmexpensediet (FBM II)
  • Grain Marketing & Crop Insurance Strategies
    • #dontgobrokebreakingeven (FBM III)
  • Options for Paying Members in a Farm LLC
    • #farmanotheryear (FMB IV)


Registration form: 2016 NextGen Farm Management Flyer 12-11-2015 Fulton Co.



Dairymen, all it takes is 30 seconds… Small investments can give you more financial control

Dianne Shoemaker, Field Specialist Dairy Production Economics

Originally published in the October 15, 2015 issue of Farm and Dairy, Dairy Excel Column.


What difference can 30 seconds make? A lot. When a team starts working on their business analysis for 2015, 30 second investments that will make the process easier and the results more reliable:

Crop expenses

These are the most ignored expenses on dairy farms.   It is relatively simple to calculate total crop expenses for a farm for a year, but how useful is that information? With tight margins, how can total crop expenses be used to find opportunities to control costs? They can’t.   Only when they can be allocated between crops can those costs per acre and per ton or bushel be used to identify strengths and concerns.

When invoices come in for seed, chemicals, fertilizer, custom work, or supplies, grab them and jot down what crops they apply to. This is a job for the crop people who should be crossing paths with the bookkeeping people to make sure this information is getting into the system. Also verify that the items being billed were actually delivered and used on your farm.

Acreage use

Acres and yields of each crop are needed to take that next step of determining costs per acre or per ton or bushel.  Jot down acres as crops are planted or harvested. How many acres were rented, how many acres were owned for each crop? Which acres were double cropped? With what?

Crop yields

Jot down yields as crops are harvested. The most common reason for not tracking harvest numbers is the challenge of measuring. Some yields are easy…as long as the counter works on the baler and someone reads and records the counts. Others are more challenging, but doable with a little creativity.

Silage and hay yields were simple to measure when it was all blown into an upright silo. Wait for the silage to settle and check the silo chart. Silage bags are relatively easy to measure with charts as well. The most challenging are silages put into bunkers and piles, especially when they are stacked well above sidewalls. Safety aside, packing density and pile shape can make it very challenging to come up with accurate measurements, especially if there was already other silage in the structure.

An alternative would be to measure silage going into the pile. Some farms have the ability to weigh each load going in. Awesome! Just remember to add it all up and record the final yield. If weighing every load is not an option, weigh a few loads, calculate an average weight for a full load, and count loads going in.

On the surface, acres, costs and yields seem to be simple numbers. Yet too many good farms don’t have reliable systems in place to capture them. These numbers can be relatively easily tracked if the folks involved in these activities would invest those precious 30 seconds…

Breaking Down Cost of Production

Dianne Shoemaker, Field Specialist Dairy Production Economics

Originally published in the September 17, 2015 issue of Farm and Dairy, Dairy Excel Column.


“The mystery of the disappearing dollars” Sounds like the title of a Scooby Doo mystery my son, Ben, would have read in the fifth grade; or “where have all the dollars gone…” hummed to the tune of a 1960s folk song. Silly, yes; yet they refer to a very real situation on dairy farms today. Where are the dollars going?

Let’s turn to the Ohio Dairy Farm Business Analysis Summary for some clues. In the September 3rd column, we looked at the big picture costs of production including feed, direct, and indirect costs. Feed costs are clearly number one with total average feed costs making up more than 57% of total direct and indirect costs for 35 Ohio dairy farms in 2013. Averages are interesting and sometimes useful, but how do they apply to farms of different sizes?

Fortunately, we are able to break out income and expenses by herd size for the Ohio data:

Table 1: 2013 Ohio Farm Business Analysis and Benchmarking Dairy Summary. Costs and net return by herd size


~click photo to enlarge~

As a percent of both direct and total costs, feed costs are the number one cost on farms of all sizes, ranging from 56 to 63 percent of total direct and indirect costs. These costs include purchased feeds and the total cost of production for all raised feeds fed to the milking cows, dry cows and all replacements. These costs should include all the expenses for feed lost to shrink through all growing, harvesting, storing and feeding processes. Even though the cows didn’t eat it, someone has to cover the cost and on a dairy farm that is the cows.

On every farm there are opportunities to lower feed costs by identifying and fixing where feed is lost (nothing I hate more than driving by a field where corn or hay is being chopped and watching forage be blown on the ground when the chopper turns and the blower is not adjusted to keep blowing into the wagon.) Other areas include feed lost to poorly applied silo covers, torn bags or wraps on bales, spillage during mixing and delivery, etc.

Interestingly, hired labor is the number two cost across all farm sizes, ranging from 6% on the smallest farms to 12% on the largest. It is only when we get to the 3rd and 4th highest costs that we see any variation between farm sizes. For all but the herds with 201 to 500 cows, depreciation is the #3 cost and Supplies is #4. They are switched for the 201 to 500 cow herds. These two costs make up 8 to 10% of total costs.

Depreciation is not a direct cash cost – no one writes a check made out to “Depreciation”, but it represents the use of the resources of the business, and for farms with debt on these items, it may be somewhat representative of scheduled principal payments.

The last six categories of the top 10 expenses on dairy farms are much less uniform. Table 2 shows how they sorted out for 35 Ohio dairy farms in 2013. There were numerous ties, indicated by shaded items in the same column. A key to note here is that the items ranked 6th through 10th made up only 1 to 3.6% of total expenses.

September 2015 Breaking down cost of production pic 2

~click photo to enlarge~

As your team looks for your farm’s disappearing dollars, feed is an obvious place to start. If your silage isn’t already “in the bag” or bunker or upright silo, getting it in at the right moisture, packed correctly, using an appropriate inoculant (check out Dairy Issue Brief #8-09 “In this time of tight cash flow, should I use silage additives this year?” at http://dairy.osu.edu) will go a long way towards controlling next year’s feed costs. Look for opportunities to reduce shrink and work with your nutritionist to feed a well-balanced ration.

Don’t ignore other costs. Feed costs are certainly in the crosshairs, but all of the dollars are not disappearing into the feed mixer. In the next column we will look at using benchmarking charts to pinpoint other areas that may be siphoning off dollars on your farm.

Considering Cost of Production

Dianne Shoemaker, Field Specialist Dairy Production Economics

Originally Published in the August 27, 2015 issue of Farm and Dairy, Dairy Excel Column


2014’s milk prices were really nice. 2015’s not so much. With an opportunity to stash some cash in 2014, it took a while for many farms to feel how tight this year’s margins really are. The quirky thing is that 2014 prices were subject to dramatic swings with a $4.74 difference between the highest and lowest Class III prices compared to a mere $1.14 range through July this year.

Why didn’t we notice those swings?

Between April and June of 2014, the Class III price dropped $2.95 per cwt. One reason we didn’t notice so much was that the April 2014 Class III price was $24.31 per cwt., and even with a nearly $3 drop, it was still above $20. However, the other reason was that the Producer Price Differentials (PPDs) in 2014 were very strong in the second and third quarters, masking the dropping Class III prices. With the PPDs increasing from $0.17 per cwt in April to $1.85 per cwt in June, that nearly $3 drop in Class III was softened to a $1.27 per cwt decrease in the milk check received at the farm. (The Class III price plus the PPD equals the base per-hundredweight (cwt) price for farms producing Grade A milk, referred to as the Statistical Uniform Price or SUP.)

Fast forward to today.

The Class III milk price, which averaged $24.49 for the first 6 months of 2014, averaged only $15.99 for the first 6 months of 2015. The PPD which averaged $0.90 per cwt for the first 6 months of 2015 averaged exactly $0.00 (yes, zero) for January through June this year. The result? At the farm, the average SUP (Class III + PPD) received for Grade A milk for the first six months went from $23.49 per cwt in 2014 to $15.99 per cwt in 2015.

How does this income compare to the costs to produce a cwt of milk? In a word, pitifully. Looking at 3 years of dairy farm data from the Ohio Farm Business Analysis and Benchmarking program, total feed costs ranged from a low of $11.78 per cwt in 2012 to a high of $12.68 in 2011. Even with moderating feed prices, feed costs will take the lion’s share of many milk checks this year. These feed costs include feeding the adult cow herd, the replacement cow herd and feed shrink; in other words, total feed costs.

To put milk in the bulk tank takes more than feed. Other direct costs include breeding, veterinary, supplies, fuel and oil, repairs, hired labor, utilities, hauling and trucking, marketing, bedding, operating interest, etc. Adding together feed and all of the other direct costs, total direct costs averaged $19.37 per cwt on 107 Ohio farms from 2011 to 2013. Now add in the indirect costs including interest on intermediate and long term loans, insurance, and depreciation, and we have average total direct and indirect costs of $21.18 per cwt. for the same farms.

It doesn’t take a math genius to see that direct costs averaging $19.37 per cwt cannot be covered by a milk check starting at $15.99 per cwt. Quality premiums have been declining and will not make up the shortfall on the farm. Very strong cull cow and bull calf prices have helped this spring. However even that cannot compensate for the substantial price drop. Total direct and overhead costs adjusted for this expected income stream (other revenue adjustments) averaged $19.40 for 2011 through 2013 for all farms. Still well above our current prices.

No farm untouched.

So how about the top 20% of the farms in the Ohio Farm Business Analysis summary? They are certainly in a better position to weather 2015’s dismal prices. With their historic average direct plus overhead cost of production at $18.28 per cwt and their total cost of production with other revenue adjustments (remember those cull cow, cull heifer, bull calf and breeding stock sales) at $16.10/cwt, margins are micro-thin but still potentially positive.

Prices are poor and don’t appear to be heading up any time soon. To set realistic goals regarding your farm’s costs of production, you have to know where you are starting from. Then you have the opportunity look for strengths and find opportunities to realistically control costs without hurting milk production. We will take a closer look at using Ohio’s benchmarking reports in a future column. Meanwhile, farmers who have participated in the Farm Business Analysis can pull out and use their personalized reports while other farms can find the reports at http://farmprofitability.osu.edu Click on the “Ohio Farm Business Summaries tab to find the annual summaries and benchmarking reports.


August 2015 Considering Cost of Production first picture

~Click on either picture to enlarge~

August 2015 Considering Cost of Production 2nd picture