Year-end tune up tips for your farm business
While the work on a farm never ends, most farmers have a stretch of “not-quite-so-busy” time between fall harvest and spring planting when things ease up a bit. This is a great point to assess your farm’s financial performance in 2013 and start the business planning process for 2014. Below is a list that you can do this winter to tune-up your farm business and have it running as smoothly as possible in 2014.
Update your balance sheet on January 1: One of the most important things you can do to accurately assess your farm’s financial performance is update your balance sheet as of January 1 every year. The balance sheet lists all of the farms assets and liabilities. Farm assets include everything that the farm owns. An item that is not completely paid for still appears on the balance sheet at its market value. Assets could include land, buildings, hay in the barn, livestock, crops in the field, unsold grain, purchased feed, prepaid fertilizer, value of fuel in the storage tank, etc. Each asset should be valued at its market price as of January 1. Money expected from a crop insurance claim is listed as an asset.
Farm liabilities are a list of every debt that the farm is responsible for. Liabilities include farm mortgages, machinery loans, operating loans etc. Liabilities should also include money owed to any suppliers as of January 1. This may include an unpaid bill for a tractor repair or an unpaid invoice for feed delivered to the farm prior to January 1. Unpaid land rent is also a liability. Preparing the balance sheet on January 1 eliminates much of the seasonal variation in crop inventories. It allows you to make an accurate comparison between the most recent year’s balance sheet and prior years. It also lets you make “accrual adjustments” to your farm’s income statement for changes in inventories, prepaid expenses, and other changes that occurred between one year’s balance sheet and the next. The ability to make these accrual adjustments will give you a more precise calculation of net farm income and profitability. A couple of things to keep in mind as you update your balance sheet: First, take a good physical inventory of stored crops, feed, market livestock, and supplies—be as thorough and as accurate as possible—and finally, be sure to review the farm’s equipment list so that any new equipment purchased during the year is added to the balance sheet, and any equipment sold is taken off.
Excellence Award for agriculture students now open
Farm Management Canada (FMC) and the Canadian Association of Diploma in Agriculture Programs (CADAP) have joined forces to offer an award de-signed to encourage students to improve their communication and leadership skills through a national video competition. FMC and CADAP are collecting submissions from agricultural students across Canada and will award three winners with $1,000 towards furthering their education in agriculture. The award is designed to help students develop their communication skills by having the opportunity to voice their opinion on a subject related to farm management. Students are asked to submit videos, responding to the following question: What key skills has your educational institution taught you about farm management that will be most useful in your career? Please explain why these are important. Applications must be received no later than May 9, 2014.
For more information, please visit www.fmc-gac.com/excellence-award.