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“I’m Not an Expert – This Is Just the Way I Do Things” Getting Info for Better Farm Business Management I farm 2,000 acres northeast of Crookston with my wife Becky and our children Krystyna, Anna, and Zach. I grow 445 acres of sugarbeets, 1,000 acres of wheat and 550 acres of soybeans. I started farming in 1992 and operate as Cymbaluk Farms Inc. Our accounting system is computerized and I use Red Wing Agchek software to pull up income or expense figures at any time to see where the farm is at. However, with all the dollars that are turned over each year, I feel it is very important to be on top of the business end of farming, in addition to the production end. So about five years ago I enrolled in the farm business management program to take my farm’s financial analysis to a higher level. I wanted someone to analyze the financial strengths/weaknesses of my plan and point out what’s doing well and what could be done better.
Greg (Greg Kalinoski, an instructor with the Northwest Minnesota Farm Business Management Program) and I sit down in the fall, typically in November (my corporate year end is Oct. 31) and we prepare a balance sheet, do my yearly business analysis and do my enterprising by crop. We then do our business planning for the coming year. These are some of the things we look at: Balance Sheet – This helps me compare my financial status from one year to the next. Did I make any progress this year? It helps establish a history so I know where I’ve been, and keeps me looking toward where I want to go. Having an accurate balance sheet helps me know how much working capital I have, which allows me to make purchases that I might need. Financial Ratios – Knowing my ratios and what is considered strong or weak helps me track the financial progress of my operation, what I need to work on and what I am strong at. Since we’ve been doing this I have a better understanding of financial buzzwords such as debt-to-asset ratio, working capital, return on equity, operating expense ratio, repayment capacity, etc. Crop Enterprising – This tells me what I make and spend per acre per crop each year. I then can compare my figures with the crop returns of other people involved in farm business management. This helps me see if I’m spending more or less than the average on something. If I’m spending more than the average, what can I do to bring it down? Cost of Production – One of the many things that Greg does for me is figuring my cost of production. Using my financial numbers, he figures what I need per bushel or ton to make a profit. This is very important when it comes to marketing. If there is an opportunity to sell wheat or beans, I can “pull the trigger” more comfortably. If I have a better idea of what my cost of production is, I’ll have a better idea of what a profit will be. Looking at the trends in all of the areas has been interesting. Useful too, because the financial information on my farm prepared by Greg is ready for my lender to use when we discuss my operational needs and plans for the coming year. It’s nice going into the bank and preparing for next year having info ready to go. It also helps for making sound business decisions and providing for growth of the farm. One of the most important things that Greg’s number -scrunching does is that it gives me the ability to see how “what ifs” might affect my operation. What if I trade tractors? What if I take on additional land? Having the numbers to know where I’m at allows me to make better informed decisions about that tractor or that land. I mentioned earlier how having a handle on production costs is important for marketing. Part of my Farm Business Management involvement is being part of a marketing group that is instructed by Mike Lockhart of Ulen, Minn. In this group many things are discussed, mostly marketing stuff but also many other topics that relate such as farm program policies. A couple of the things that we talk about are basis, futures and seasonal patterns. Before I started with this group I knew very little about these things . I’m not saying I know everything there is to know about basis and futures now, but I do have a better understanding that I can use to market my wheat and soybeans. As a group we discuss what is a good basis and the time of the year that the basis is usually the lowest and what time of year the futures are the highest. We don’t always hit it exactly but on average we have done pretty well in keeping track of these two areas. In our Crookston group we have also learned how to implement and use a marketing plan. Overall, I’d say the farm business management program has been a big plus for my operation. I truly enjoy it and would recommend it (and a marketing group) to other farmers. If you’re a producer (or if you know of a producer) with a Northern Plains perspective on a particular crop production topic – whether it be producing no-till, growing a certain crop, using precision ag techniques, weed/disease control, boosting crop yield/quality or selling grain – we’d love to hear from you. Contact Tracy Sayler, at tsayler@prairieagcomm.com or ph 701-347-5930. ---------------------------------- Managing Your Farm Biz Minnesota – The Northwest Minnesota Farm Business Management program is coordinated through Northland Community Technical College, Thief River Falls. More information on the FBM program in Minnesota can be found online at http://www.mgt.org/fbm . Ron Dvergsten is dean of the Northwest FBM program and can be reached at (800) 959 - 6282 ext. 1797, ron.dvergsten@northlandcollege.edu . North Dakota – North Dakota Farm Business Management information, including instructors across the state and financial reports, can be found online at http://www.ndfarmmanagement.com /. Steve Zimmerman is state supervisor: ph 701-328-3162, szimmerm@state.nd.us . South Dakota – Lake Area Technical Institute, Watertown, SD, (605) 882-5284 or 1-800-657-4344, Ext 261, web site: http://lati.tec.sd.us/programs/
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