“With 2020 underway, cattle producers set their sights on targets for the coming year,” says Ann Boyda, livestock economist with Alberta Agriculture and Forestry (AF). “It is important to assess the ability to pursue those goals, and the AgriProfit$ program can help with that.”
Cow-calf producers enrolled in the program receive additional reports after completing their detailed cost and return survey.
“They receive a balance sheet that summarizes all the investment assets and financial obligations as of the end of the production year,” she says.
Assets and liabilities are organized into current, intermediate and long-term categories, and Boyda says that producers can use this report to provide a picture of both their liquidity and solvency positions. Liquidity is the difference between current assets and current liabilities or working capital. Solvency considers all assets and liabilities.
“Liquidity helps producers deal with business risk like uncertain prices, yields and production costs, allowing flexibility. A debt ratio of less than 1 indicates a solvent business. Ratios of up to .5 are considered safe.”
Another report they receive is the farm revenue and expenses summarizing the farm’s income and expenses on an accrued adjusted basis.
“Accrual based income statements take into account the change in value of all inventories – livestock, crops, purchased inputs,” she explains. “It recognizes the value of production when revenues are earned – whether sold for cash, sold on account, or are ready for sale.”
“Similar on the expense side, production costs recognize cash purchases, accounts payable and changes in supply inventories. With this information, producers can better decide if the level of profitability meets their expectations or whether there is room for improvement.”
To help with that, AgriProfit$ provides the producer with enterprise reports, including:
- The cow-calf enterprise report and physical performance. It includes the unit cost – dollar per cow wintered and dollar per pound weaned of all costs and returns from producing weaned calves. It also incorporates physical performance indicators – length of breeding and calving period, conception and weaning rates, death loss, winter feed use and grazing costs.
- The backgrounding enterprise report that looks at dry lot and grasser performance on a pen-by-pen or lot-by-lot basis. Feeder performance looks at days on feed, average daily gain and unit production costs.
- Forage, crop and pasture enterprise reports that present the costs and returns on a field-by-field basis, expressed in total and per acre values.
“This most certainly is a lot of information to digest, but fear not,” adds Boyda. “AF has developed guides and videos designed to help with interpreting the results. Armed with this information, cow-calf producers are better equipped to pursue their upcoming year’s goals and put a plan in place to make it happen.”
The AgriProfit$ program offers customized business analysis to help Alberta producers maximize profits and lower costs for their farms at no charge. Sign up for AgriProfit$.
Producer information is held in strict confidence. Only aggregated, non-identifying information is published.
Connect with Ann Boyda about AgriProfit$:
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