National Farm Business Management Conference Tools to help Ohio’s dairy farmers manage in challenging economic conditions Dianne Shoemaker The Ohio State University Extension

Class III and Support Price COP

3 How do I know if I’m profitable? How do I know if I’m competitive? How do I survive?

Simple and Useful: Cost of Production Worksheets

-Nutrition and feed costs -Reproduction and health -Calf and heifer management -Business issues -People and stress management Dairy Issue Briefs

How should I take on additional debt…continued

Download at: Purchase online at: extension.org/

Why the 15 Measures? What are competitive NE & Midwest milk producers doing? Where does an individual farm stand in relation to competitive dairy farms?

Ten Areas: Rate of production  Pounds of milk sold/worker Cost control  Total feed cost per cwt milk sold  Milking herd feed cost/cwt milk sold  Operating expense ratio Capital Efficiency  Dairy investment per cow  Asset Turnover ratio Profitability  Net farm income  Rate of return on farm assets

Ten Areas: Liquidity  Current ratio and working capital Repayment schedule  Scheduled debt payment Solvency  Debt to asset ratio  Debt per cow Mission Maintain standard of living Motivated labor force

The Measures Provide: Number, ratio, percentage, or description Specific instructions for calculation An example calculation Brief description Specific recommendations for firms that are above or below the competitive level

How the 15 Measures may help: Evaluate an existing business. Help the farm get a better feel for where the business could go. Identify priority areas the farm needs to work on to meet business objectives. Cautions:  Looking at one or two measures does not a complete evaluation make!  Look at the whole business.

Key measures for 2010 Working capital Debt/Asset ratio Debt per cow Debt repayment schedule And…

Different Farms…...Different Costs

In Summary… Our dairy farms are facing unique challenges in 2010…following 2009! Successful farms must monitor key competitive measures and their costs of production Tools available at