The University of Wisconsin-Madison Division of Extension Financial Management & Strategic Planning programs, information and resources intend to improve the farm financial and decision-making skills of Wisconsin agribusiness, farmers and farm managers, agricultural lenders and educators.
Farm Pulse
Information on how to use farm financials to explore farm business decisions. This course will help farmers evaluate their finances, take the pulse of their farm business, and set goals for the future of their operation.
The farm financial model helps the farmer make the best decisions for the farm business. From record-keeping to financial analysis, this model illustrates how to make sound financial decisions and identifies tools to help in the process. To understand the farm business’ records, one needs to understand the purpose records serve to and for the farm manager. The Farm Business Financial Model offers a process for informed decision-making.
The farmer must collect and organize income and expense receipts in an accounting system before generating financial statements. Receipt accounting is also referred to as record keeping.
Organizing the records provides the farmer with the financial information necessary to complete management reports, which are also known as financial statements. The Farm Financial Standards Council (FFSC) recommends farmers create four financial statements from which the financial position and performance may be analyzed. Financial statements should be prepared on a consistent basis. Statements include balance sheet, income statement, statement of cash flows, and statement of owner equity.
Understanding the farm business’s history of financial position and financial performance provides a basis for the farmer to make decisions and plan into the future. Pro forma refers to the future view of the farm’s financial position and performance. For example, what would the balance sheet look like after a future expansion? The future financial position can be analyzed for feasibility, profitability, and risk-ability. Pro forma financial statements complement the farm’s budgets. Cash, partial, and enterprise budgets are commonly used to assist the farmer in decision-making.
Host Katie Wantoch and Jenny Vanderlin, Associate Director of the UW Center for Dairy Profitability, discuss whether a farmer should refinance his loans and tips for communicating with his ag lender.
The farm financial model offers a linear and circular process for informed decision-making. Records feed into reports, and reports help farmers integrate financial sense into farm production decisions.
Farming is a complex business which demands accurate records and careful financial management.
An accounting system is a set of actions and methods designed to collect, store, and process financial transactions into management reports for decision-making.
The balance sheet is a report of the farm business’ financial position at a moment in time. It lists assets, liabilities, and net worth (owner’s equity), and represents a snapshot of the farm business as of a certain date.
The income statement is a report of the farm business’ financial performance during a given time frame. It measures profit or loss in a given time period.
The statement of cash flows tracks the sources and uses of cash in the farm business in the past year. It also adds insight to the understanding of financial position and performance of the farm business.
The statement of owner equity reconciles the change in equity from the beginning balance sheet to the ending balance sheet for the farm business. Also known as the statement of net worth, shows the source of change.
Host Katie Wantoch and Heather Schlesser, agriculture educator from Marathon County, discuss whether a dairy farmer and his son should purchase bred heifers or cows to expand their dairy herd.
Host Katie Wantoch and Stephanie Plaster, Agriculture Educator in Ozaukee and Washington counties, discuss a dairy farmer who has received a CFAP payment for their milk production and are wondering who should pay first with this program payment and how much they should pay to vendors.
Host Katie Wantoch and Simon Jette Nantel, Professor at UW-River Falls and Extension Farm Management Specialist, discuss if a farmer should offer a lower rental rate per acre to the neighbor who is retiring from farming.
Host Katie Wantoch and John Shutske, Professor and Director of UW Center for Agricultural Safety and Health and an Extension Specialist, discuss a farmer’s wife who is worried about her husband and the ongoing struggles with their farm business.
Host Katie Wantoch and Jerry Clark, Extension Agriculture Agent in Chippewa County, discuss a farmer who wants to know if they should sell surplus crops or keep the feed for next year.
Host Katie Wantoch and Jenny Vanderlin, Associate Director of the UW Center for Dairy Profitability, discuss a farmer whose wife lost her off-farm job due and if she should do more work on the farm.
Host Katie Wantoch and Mark Hagedorn, retired Extension Dairy Program Manager, discuss a farmer who wants to know if they should sell pregnant dairy cattle heifers now or wait to sell these animals until after the cow has had her calf.
As we all know, the month of January often brings thoughts of taxes and tax preparation. Gary will focus on issues specific to farm tax returns so those listening may gain a better understanding of what to think about regarding farm tax preparation and be able to ask better questions with their tax advisor.
A new year always elicits new resolutions, goals and plans for how to better our business, family and self. However, a quick google search shows that only 8% of Americans keep their resolutions throughout the year and 80% have failed by February. How can we become an 8-percenter in the new year?
Farmers experienced a number of challenges in 2020, including financial spikes and dips. Farmers have several tools available to assist with managing their tax liability, however some of these tools need to be taken advantage of prior to December 31, 2020.
