Dairy Farm Business Summary: Northern New York Region 1998

Change in Inventory + Change in Accounts Receivable = Accrual Receipts Milk sales $ 498,883 $ 12,653 $ 511,536 Dairy cattle 14,198 $ 26,728 32 40,958 Dairy calves 2,767 2 2,769 Other livestock 448 59 0 507 Crops 3,611 6,966 1,571 12,148 Government receipts 6,682 -52 * 12 6,642 Custom machine work 842 108 950 Gas tax refund 92 6 98 Other 4,304 40 4,344 Less nonfarm noncash capital** (-) 465 ** (-) 465 Total Receipts $ 531,827 $ 33,236 $ 14,424 $ 579,487 *Change in advanced government receipts.**Gifts or inheritances of cattle or crops included in inventory.Cash receipts include the gross value of milk checks received during the year plus all other payments received from the sale of farm products, services, and government programs.Nonfarm income is not included in calculating farm profitability.Changes in inventory of assets produced by the business are calculated by subtracting beginning of year values from end of year values excluding appreciation.Increases in livestock inventory caused by herd growth and/or quality are added, and decreases caused by herd reduction and/or quality are subtracted.Changes in inventories of crops grown are also included.An increase in advanced government receipts is subtracted from cash income because it represents income received in 1998 for the 1999 crop year in excess of funds earned for 1998.Likewise, a decrease is added to cash government receipts because it represents funds earned for 1998 but received in 1997.Changes in accounts receivable are calculated by subtracting beginning year balances from end year balances.Payments in January 1999 for milk produced in December 1998 compared to January 1998 payments for milk produced in 1997 are included as a change in accounts receivable in determining accrual milk sales.Accrual receipts represent the value of all farm commodities produced and services actually generated by the farm business during the year. Profitability AnalysisFarm operators * contribute labor, management, and equity capital to their businesses and the combination of these resources, and the other resources used in the business, determines profitability.Farm profitability can be measured as the return to all family resources or as the return to one or more individual resources such as labor and management.The return to any individual resource must be viewed as an estimate because the cost of other family resources must be approximated to calculate returns to the selected resource.For example, the costs of operator and family labor and management must be approximated to calculate the returns to equity capital.* Operators are the individuals who are integrally involved in the operation and management of the farm business.They are not limited to those who are the owner of a sole proprietorship or are formally a member of the partnership or corporation.