Livestock Budgeting Workshop with Tom Cadwallader
November 8 2012
Maxwell Legion Hall, Maxwell IA
On a surprisingly mild Thursday in November, a small but sharp group of farmers met in Maxwell to eat, drink, and be profitable. After a fantastic lunch featuring beef from co-hosts Jacob and Sarah Myers, the attendees listened to a talk by retired University of Wisconsin Extension educator Tom Cadwallader, who explained the importance and basics of keeping good farm financial records.
One of the main points in his “KISS” (Keep It Super Simple) management talk was the importance of setting clear goals and knowing what you want. He recommended that those involved in a farm’s management all sit down and independently respond to the following: “To me, being successful in farming means…” Answers may vary greatly – and it’s important to make sure everyone on the farm has the same goals!
Setting clear fundamental goals makes it easier to evaluate where a farm is, and where it needs to go. Is one of your definitions of “success” as having time for rest and vacations? Then you probably shouldn’t be adding in an extra enterprise! Is “success” preserving the environment? You might want to look into habitat restoration and conservation programs, and may not be able to focus so much on profits. Having a goal for the farm will make it easier to make decisions, as the possible choices can be evaluated on whether or not they move the farm in the right direction.
Goals should all have some sort of “tangible” results – something you can observe to determine whether you’re heading in the right direction. A goal of high-quality beef products might have “signposts” like more animals being graded a certain way, or more compliments from customers and repeat purchases.
“Goals should be your own,” Tom advised, “but remember that you’re never totally immune from the influence of others.” It’s still smart to observe other similar farms’ goals, how they’re getting to them, and the quality of their products. Your definition of success might include taking pride in the homegrown produce you offer at a farmer’s market – but if other farms offer produce of similar quality and do it more economically, you may need to adjust your management.
After a farm’s goals are established, Tom outlined a series of steps to be followed:
- Inventory all of the available resources
- Consider enterprise options that most efficiently utilize the resources
- Develop a hierarchy of short-, intermediate-, and long-term goals
- Implement the changes needed
- Keep records!
- Continually improve: once plans are in action, look back and compare where you were to where you are, and where you want or need to be. Change if needed!
Tom led the group in an exercise to follow some of the basic steps of KISS management. Each person considered the main enterprise on their farm and a related enterprise. They then evaluated the following questions for each:
- How does the enterprise complement, compete, or supplement the other enterprise?
- What forces (manmade and natural) either support or resist the development of the enterprise?
- Do you or someone in your business have experience with the enterprise?
- Does the enterprise add income or is it intended to save money?
After this, Tom said, a farm would start developing goals for the enterprises following the SMART guidelines:
- S: specific
- M: measurable
- A: attainable
- R: related
- T: timed
A valuable tool in to meet goals is benchmarking, which compares your farm business to either other similar operations, or against your past performance. Available benchmarking resources vary by enterprise type. Dairy farms can access lots of information, and directly compare their operation to farms sorted by size and type. Beef farms have less information available in the form of SPA (Specific Performance Analysis) data. If no information is available for your type of farm, however, it is possible to benchmark against yourself. How much did you make per acre, or per animal, this year? How does it compare to last year? How many pounds of feed did you have to by this year versus last, or versus a few years ago? Asking, and answering, questions like this can help determine what management changes had impacts on the farm and farm goals, and can shape future efforts.
Want to know more?
- The PFI Annual Conference (Jan 10-12 2013) will feature workshops on farm finances and enterprise budgeting: https://www.practicalfarmers.org/events/annual-conference.html
- Copies of the handout Tom provided are available from the PFI office – contact Margaret at Margaret@practicalfarmers.org or 515-232-5661 if interested.
- “Enterprise budgets for livestock operations” by PFI staff. https://www.practicalfarmers.org/images/pdfs/Livestock%20Enterprise%20Budget%20Fact%20Sheet.pdf
- “Measuring cow herd performance” by South Dakota University Extension; from Drovers CattleNetwork, November 12. http://www.cattlenetwork.com/e-newsletters/drovers-daily/Measuring-cow-herd-performance–178904181.html
- “Alternative enterprises boost farm income” by John Maday; from Drovers CattleNetwork, November 12. http://www.cattlenetwork.com/e-newsletters/drovers-daily/Alternative-enterprises-boost-farm-incomes-178203221.html
- “Tally Time – 2012 SPA performance measures” by Kansas State University Extension; from Drovers CattleNetwork, November 7. http://www.cattlenetwork.com/e-newsletters/drovers-daily/Tally-Time–2012-SPA-performance-measures-177663531.html
- Minnesota Institute for Sustainable Agriculture: Farm & Food Resources. http://www.misa.umn.edu/FarmFoodResources/index.htm
- Iowa State University Extension: Agriculture/Livestock. http://www.extension.iastate.edu/ag/livestock
- University of Wisconsin-Extension: Programs. http://www.uwex.edu/ces/ag/teams/
- “An Introduction to Basic Marketing Practices” by Community Involved in Sustaining Agriculture. http://www.buylocalfood.org/upload/resource/MarketingManual.2012.pdf