New Year's Resolution for Dairy Farmers
Still looking for that perfect New Year’s resolution? While many people concentrate on weight loss, personal growth, or financial stability, the New Year is a perfect time to set goals and prepare a plan for growth and risk management within the dairy operation. Young and beginning farmers have ample opportunities with Farm Credit Mid-America (FCMA) to, prepare annual financial statements, walk through a business plan and attend Know to Grow, our educational program for young and beginning farmers to help set the stage for a successful year within the farm operation.
“One of the most important things that a dairy farmer can do is sit down and create a year-end balance sheet,” says Gary Book, business analyst from FCMA. “Setting a goal to create consistent, 12/31 balance sheets allows for us to calculate the true income of an operation and determine what options there are for financing, as well as identify strengths and weaknesses.”
Balance sheets, which list out all of an operations assets and liabilities, cash flow statements or annual dairy herd improvement records, and tax returns or income and expense summaries help provide a well-rounded picture of the operation. Financial records are the foundation of a core package to provide to the operation’s lending partner for financial analysis.
“Business planning can help guide success for young and beginning farmers,” says Dakota Parent, who serves as FCMA’s Growing Forward Specialist for Indiana and Ohio. “Setting realistic goals and strategies both short & long-term for the dairy operation helps establish a road-map to utilize for both marketing and growth.” FCMA offers a simple, three page business plans for farmers to complete that map out short and long-term goals, marketing strategies, contingency plans, expansion, and risk management.
Striving to utilize the business plan as a connection between all of the key influencers of the business also sets up young and beginning dairy producers for success. By having a plan in writing, young farmers are able to share this plan with those that influence the operation on a regular basis. It also provides a benchmark to check the operation against on an annual or even quarterly basis.
FCMA, in partnership with Purdue University provides a 2-day educational seminar for young and beginning farmers called Know to Grow that walks farmers through the basics of connecting business planning to financial statements and then using key measures to make management decisions. Other parts of the seminar include breakout sessions on topics such crop insurance, livestock management, and social stewardship. Know to Grow also provides opportunities for farmers to network and socialize, getting to know other farmers in similar situations across the state. This seminar sets producers up for eligibility into lending programs to continue to start or grow their operation.