Starting a Farm AnalysisQualifications: Anyone who has been farming for less than 5 years
What is the Farm Financial Analysis?
The analysis is a tool you use to manage your farming and ranching operations. The analysis takes cash basis accounting records, generally kept for tax purposes, makes the necessary adjustments that are done for tax purposes, and converts the records to an accrual based financial statement. These adjustments allow the producer to have more accurate and detailed information to make a management decision, rather than just knowing the income and expenses for the year.
Farm Financial Analysis Types:
Whole Farm: Provides an overview of the farming or ranching operation for the year by including the following:
- Accrual Net Farm Income
- Earned Net Worth Change
- 21 Standard Financial Ratios
Enterprise Analysis: Provides the same information as the Whole Farm Analysis, but takes it a step further. The operation’s income and expenses are detailed out to the enterprise of the business. It also provides more detail and the information can be split into the following:
- Crop Tenure Type
- Per Field
- Per Livestock Type
Benefits to the Beginning Farmer:
Special Pricing: Beginning Producers who sign up will receive special 5-year pricing:
- 1st year: Free Analysis
- 2nd year: $400 discount off Analysis cost
- 3rd year: $300 discount off Analysis cost
- 4th year: $200 discount off Analysis cost
- 5th year: $100 discount off Analysis cost
|Whole Farm w/Enterprise (Due July 1st):||Crop||Livestock|
|Less than $500,000 Gross Production:||$700||$860|
|$500,000-$1,000,000 Gross Production:||$1,050||$1,155|
|Over $1,000,000 Gross Production:||$1,265||$1,425|
An Annual One-on-One Meeting:
During this meeting a NFBI consultant will discuss the Financial Analysis with the Beginning Farmer to help better understand the costs of the operation and provide information that will allow the producer to make sound financial decisions. The goal will be to help allow the operation to rise above the competition and to provide the operation the information needed to make a good farm, better!
The analysis will provide the producer with Financial Statements such as:
- Balance Sheets
- Enterprise Reports per Crop or Livestock types
In addition to the Financial Statements that are provided with the analysis, NFBI will work with the Beginning Farmer to build an annual cash flow and provide them with the guidance necessary to complete it as accurately and detailed as possible, as well as giving the producer a better understanding to the importance of building accurate financial information.
Beginning Farmers will receive the NFBI Annual Average Books for the Whole State, a Top Efficient Group, and a Regional book for the applicable region. These resources provide a great benchmarking tool, allowing the producer to see where they are on a scale of those operations that are similar to theirs.
A NFBI consultant can help you with your record keeping as well. The consultant can help you get set up on PC Mars, an accounting software created for farmers, or will work with your current software to help you keep the best records you can. NFBI also offers a monthly accounting service in our office. If the Beginning Farmer chooses to use our in office service, they will receive a $150 discount per year.
Beginning Farmer Analysis Program Timeline:
…the producer and consultant will work together to build a thorough and accurate Beginning Balance Sheet.
…is the time of the year the producer and consultant will meet to go over the accounting records they have available. At this time, they will also work to gather the information needed to have a complete Ending Balance sheet as of December 31st. Grain and Livestock production and inventory numbers will be gathered, along with any pre-paid inputs that were made. Also during this time, the producer and consultant will work to build an annual cash flow. The producer will receive a hands-on experience and the guidance from their consultant to find the value in building accurate financial statements that will be beneficial to their operation.
Analysis will be complete…
…as soon as the operation’s details are gathered and entered. The producer will then receive a bound copy of their Farm Financial Analysis for the year of production.
…are calculated from operations that we do analysis for throughout the state. These numbers are then published and mailed out to each analysis program participant.
An Analysis Review meeting between the producer and consultant will take place to review their analysis that was computed with the operation’s numbers. At this meeting the consultant will provide the knowledge to help the producer to better understand the “management” side of their operation. It is also a time for them to benchmark their operation with the Whole Sate Averages, as well as with other producers within their region.
After the first year is completed, the same steps will be taken for each year following. The analysis program also opens up the opportunity to have the consultant look into those “what if” situations and provide another management tool for the farm/ranch.