Author: Brian E. Mills

Many producers don’t like doing record keeping. Keeping up-to-date records can be time-consuming and sometimes boring, with having to sift through all your deposits and receipts and then input these into spreadsheets and creating income and cash flow statements. The reward is not always readily seen compared to other farming activities. If you have weeds in your field and you spray it with herbicide, the weeds die. If you feed your calves, they gain weight. Conversely, the benefits of record-keeping may not be seen for months, but it can be the difference between losing and making money. 

Good records are the foundation of decision-making on the farm and should be used to inform your marketing, crop insurance, and loan choices. Any decision made on the farm has a financial impact that affects your revenue, costs, or both and, subsequently, your bottom line. Record keeping is important when things are tough as it allows you to evaluate areas of the farm that can be improved or where costs can be cut. The more detailed your records the more specific changes you can make. This will allow you to evaluate your farm as a whole, by specific crops, or even by specific fields, to determine where problems may arise. A detailed analysis could show that a field was unprofitable because it had some nutrient deficiencies or maybe the crop grown on that field needs to be re-evaluated. Or perhaps the terms of rental agreement is what is causing that field to not be profitable. After diagnosing the issue, you can then determine how changes to this field will impact the farm’s financial performance as a whole. In a tough year, this sort of evaluation is crucial to breaking-even or at least minimizing losses.

Record keeping is equally important when things are going well and to avoid overextending your farm financially. In a good year, the question that needs to be asked when making a large purchase, like equipment, is not “Can I afford this now?” but “Can I afford this over its lifetime?”. There are many instances when high market prices encourage large purchases that set a farm up for failure when prices inevitably fall. If a purchase causes your break-evens to increase so that it is only profitable when prices are above average or high, then it is a risky investment. 

Accurate record-keeping starts with accounting for all income and expense transactions. For each income transaction, you should include: Date, Reference Number, Purchaser, Amount Deposited, and the Type of Income (Table 1). For expense transactions, the following should be included: Date, Check/Reference Number, Payee, Amount Paid, and the Type of Expense (Table 2). Having this information will ensure that each transaction is accurately recorded. The more detailed your record keeping, the more specific adjustments can be made. 

There are programs that can help with record keeping, such as QuickBooks or Excel, or you can handwrite them. Any record-keeping is better than none. Many producers already have data on specific fields through yield maps, soil maps, etc. Using these along with your other records to make more specific evaluations and how these changes impact the farm’s financial statements and ratios is key to long-term financial stability. 

Financial record keeping is an important aspect of farming. Tracking how your farm is doing over time can help you diagnose any potential issues that may arise. Having an accountant can help you understand how your farm is doing financially and prepare your tax returns. To save time and money, it is essential to provide your accountant with accurate records that reflect what actually happened on your farm. Mislabeling an income or expense can lead to incorrect categorization that will take your accountant more time to correct and/or could create a higher tax bill. 

You know your farm better than your accountant, and the more detailed records you have on your farm, the better they are going to be able to help you prepare your financial documents. The following are some tips to make your records more organized for your accountant:

This list is just a starting point for what you need to think about before visiting your accountant. Again, you know your farm better than your accountant, so the more information you can bring to your accountant, the better they will be able to help you. This will save both your accountant’s time and your money. It will also allow you to get a better understanding of how your farm is doing financially. In both good and tough years, it is important to know your full financial situation so that you can plan accordingly. 

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Mills, Brian E., Kitty Charlton, and Kevin Kim. “What to Bring to Your Accountant.” Southern Ag Today 4(53.1). December 30, 2024. Permalink

Planting date is one of the most crucial aspects of crop production. The ability to get a crop in the ground in a timely manner can be the difference between making a profit or a loss. As shown in Figure 1, the optimal planting date for soybeans grown in Mississippi would be around April 20^th (Julian Day 110). Every day before April 20^th reduces yield by 0.51bu/ac, and for every day after, yield decreases by 0.39bu/ac. The goal should be to plant as many acres around this date as possible. One way to do that is by increasing planting speed. To illustrate the impact that planting speed can have on yield, costs, and net returns we can compare a traditional mechanical planter planting at 5 mph to a precision planter planting at 9 mph. 

First, for simplicity’s sake, we will assume a 2,000-acre soybean farm. Using the standard machine cost calculation formulas, a 12-row 38-in row-spacing mechanical planter is going to plant 15 acres per hour (planting at 5 mph), and the same size precision planter is going to plant 26.9 acres per hour (planting at 9 mph). This means a mechanical planter would take 133.6 hours to plant 2,000 acres and a precision planter would only take 74.2 hours. We could just use those numbers to determine when to start planting but that doesn’t consider the fact that weather can prevent farmers from actually getting in the field. The USDA NASS collects data on how many days in a given week are suitable for fieldwork. For this example, we use the average days suitable for fieldwork from 2019-2023 in Mississippi. Table 1 shows the yield, planter speed, and days suitable for fieldwork by week. 

One drawback to the precision planter is that it is going to cost more to purchase. A mechanical planter costs around $106,000, and the same size precision planter will be about $150,000. However, because of increased planting speed which results in fuel efficiency and labor savings, the operating cost per acre is actually less for the precision planter at $15.81/acre compared to $19.20/ac for the mechanical planter. For more information on machine cost calculations, see: http://extension.msstate.edu/publications/farm-machinery-cost-calculations

Putting all this together and some back-of-the-napkin math, the optimal start date for the mechanical planter would be April 9^th (Julian 99) and April 14^th (Julian 104) for the precision planter (Table 2). A precision planter would reduce the days of planting from start to finish from 23 days to 13 days and thus increase yield by 1.2 bu/ac. Assuming a soybean price of $12.00/bu, this would increase revenue by $14.07/ac. Costs would be decreased by $3.38/ac leading to an increase in net returns of $17.45/ac. Effectively, the additional cost of the precision planter would pay for itself in 2 years for a 2,000-acre farm.

Now, this analysis is pretty basic and makes some broad assumptions. It is important to look at your state’s planting date yield data to determine when is optimal for you to plant. Larger farms are going to benefit from higher planting speeds more than smaller farms. It also assumes that there is no yield loss when planting faster. Preliminary data at Mississippi State shows there isn’t a yield hit, but this could vary depending on your situation. Nevertheless, the basic idea is that by planting faster a producer could capture higher yields. So be a maverick and bump that cruise speed up.

Figure 1. Effect of Planting Date on Soybean Yield in Mississippi from Batemen et al. (2020)

Table 1. Weekly comparison between mechanical and precision planter for Mississippi
Period	Average of Soybean Yield bu/ac	Days Suitable for Fieldwork 2019-2023	Hours per Day Suitable for Farminga	Mechanical Planter Acres Per Day	Precision Planter Acres Per Day
Week 12	59.1	2.9	4.9	74.1	132.8
Week 13	62.6	3.4	5.8	86.9	155.9
Week 14	66.2	3.1	5.4	80.7	144.8
Week 15	69.8	2.8	4.8	71.5	128.2
Week 16	71.5	3.5	6.1	91.0	163.2
Week 17	68.7	3.9	6.7	100.8	180.8
Week 18	65.9	4.6	7.8	117.3	210.3
Week 19	63.2	4.0	6.8	101.8	182.6
Week 20	60.5	5.4	9.2	137.8	247.2
Week 21	57.7	5.7	9.7	145.5	261.0
Week 22	55.0	5.6	9.5	143.0	256.4

References

Bateman, N.R., Catchot, A.L., Gore, J., Cook, D.R., Musser, F.R., & Irby, J.T. (2020). Effects of Planting Date for Soybean Growth, Development, and Yield in the Southern USA. Agronomy. https://doi.org/10.3390/agronomy10040596

Johnson, J., & Mills, B.E. (2023). Farm Machinery Cost Calculations. Mississippi State University Extension P3543. Available at: http://extension.msstate.edu/publications/farm-machinery-cost-calculations

USDA NASS. (2024). Days Suitable for Fieldwork. Available at: https://quickstats.nass.usda.gov/

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Mills, Brian, Mike Mulvaney, Wes Lowe, and Oluwaseyi Olomitutu. “Planting Date: The Need for Speed.“ Southern Ag Today 4(12.3). March 20, 2024. Permalink

Artificial Insemination (AI) is a useful tool that cattle producers can use to help their operation. It offers many advantages to natural service that may benefit even small producers. One major advantage of this technology is that it allows access to superior genetics at a reduced cost compared to natural service. A producer can get access to top-of-the-line genetics without having to spend thousands of dollars on a top-of-the-line bull. AI also allows for more selective breeding where a producer can select for increased calving ease, milk production, heavier weaning weights, etc. This technology has been shown to improve conception rates and shorten the calving interval (Anderson & Deaton 2003; Rodgers et al., 2012). This means that AI can be used to increase a producer’s cow herd genetics through replacement heifers. They can also increase herd uniformity, which could lead to better group marketing opportunities and higher prices received.

Despite these benefits, adoption of AI has been relatively low, with only 11.6% of beef cattle operations using this technology. However, like with many technologies, larger producers were more likely to use this technology, with 29.4% of operations with 200 or more head using AI compared to 8.7% of operations with only 1-49 head (USDA APHIS 2017). The major barrier to adopting AI is the increased management and labor requirements. An AI program is going to take significantly more work than natural service. It also has added costs of drugs, semen, and requires additional handling facilities. Furthermore, there are some knowledge barriers that producers need to overcome to use AI effectively.

The question then is, does AI pay? In typical economist fashion, the answer is: it depends. The factors that impact the profitability of AI are:

1. Herd Size
   1. Larger herds tend to see more profit benefit from AI. 
2. Cow-to-bull ratio
   1. A lower cow-to-bull ratio will produce higher returns to switching to AI.
3. How are the calves marketed?
   1. The more premium for better genetics, performance, and uniformity you can capture, the better off you will be with AI.
4. How much is your time worth?
   1. The more valuable your time, the more expensive the increased management and labor costs become, and AI becomes less profitable.
   1. AI programs will vary in labor intensity. 

As with any farm decision, the most economical choice is not going to be the same for everyone. It is important to evaluate your options to determine what is best for your farm. One way to do this is to construct a partial budget. A partial budget is a way of evaluating two different decisions to determine which will be more profitable. It does this by comparing the associated costs and revenues of a choice with the associated costs and revenues of another choice. It only looks at the difference between the two options. For example, it can be used to compare the returns and costs of AI to that of natural service, as seen in Table 1. In this example, a herd with 115 head would increase net returns by $9.87/exposed cow by switching to AI. This is dependent on several factors, including the price received for the cattle, the costs of the drugs, semen, technician, and labor, and the price of the cull bull maintenance and sale. For a more detailed explanation of the numbers and assumptions used in Table 1 please see: http://extension.msstate.edu/publications/economic-impact-artificial-insemination-vs-natural-mating-for-beef-cattle-herds. Also, it should be noted that improved herd genetics is going to have benefits over time. This means that the value of AI likely increases when considering more years. But it is important to do these comparisons yourself to determine if AI is right for you. 

References

Anderson, L., & Deaton, P. (2003). Economics of estrus synchronization and artificial insemination. Proc., Beef Improvement Fed, 15-19.

Karisch, B. (2020). Economic Impact of Artificial Insemination vs. Natural Mating for Beef Cattle Herds. Mississippi State University Extension P2486. Available at: http://extension.msstate.edu/publications/economic-impact-artificial-insemination-vs-natural-mating-for-beef-cattle-herds

Rodgers, J. C., Bird, S. L., Larson, J. E., Dilorenzo, N., Dahlen, C. R., DiCostanzo, A., & Lamb, G.C. (2012). An economic evaluation of estrous synchronization and timed artificial insemination in suckled beef cows, Journal of Animal Science, Volume 90, Issue 11, 4055–4062, https://doi.org/10.2527/jas.2011-4836

USDA APHIS. (2017). Beef 2017. Available at: https://www.aphis.usda.gov/animal_health/nahms/beefcowcalf/downloads/beef2017/Beef2017_dr_PartI.pdf

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Picture by Tara Winstead. TN

In forage production, whether that is establishing a forage system or simply maintaining it, it is important to understand what costs are involved and how these can impact your break-evens. A break-even is the price/yield needed in order to cover your total costs. Depending on the type of forage system you have, the costs can be relatively expensive. Developing an enterprise budget is one way of examining and comparing these costs.

Figure 1 shows the costs per acre from forage enterprise budgets developed at Mississippi State for four different forage maintenance systems: 1) conventional alfalfa hay, 2) permanent summer pasture, 3) mixed grass hay, and 4) hybrid bermudagrass hay. The conventional alfalfa and the hybrid bermudagrass systems had the highest costs per acre at $957.63 and $954.22, respectively. Permanent summer pasture maintenance had the lowest costs per acre at $282.24/ac.  Fertilizer, herbicide, and machinery costs make up a large portion of the costs in each system. Machinery costs include fuel, repair and maintenance, and interest costs. 

Figure 1. Costs per acre for forage maintenance production systems in Mississippi

Figure 2 shows the break-even curves for each of the four forage production systems. Break-even curves show the price and yield needed to cover total specified expenses. Price/yield combinations below this curve would result in losing money, and any combination above the curve would generate a profit. The market price shown in the figure was the average hay price received by producers in Mississippi for 2022 at $126/ton. Hay prices and costs can vary significantly from state to state, so again, it is important to adjust for your situation. However, the basic idea is that production systems with higher costs need a higher price, yield, or both to be profitable. For example, at the Mississippi 2022 market price and assumed costs, a permanent summer pasture system would need to produce 2.2 tons/ac to break-even. A mixed grass hay system would need 4.9 tons/ac to break-even. A conventional alfalfa hay system and a hybrid bermudagrass hay system would each need to produce around 7.6 tons/ac given a price of $126/ton. As such, permanent summer pasture and mixed grass hay are two of the more popular forage systems in Mississippi.

Figure 2. Forage maintenance break-even curves in Mississippi

More information on these costs, as well as over 20 additional forage maintenance and establishment budgets for Mississippi, can be found at: https://www.agecon.msstate.edu/whatwedo/budgets.php. It is important to determine what your specific costs are, and these can vary significantly from state to state and by production system. Below are links to enterprise budgets developed by agricultural economists for each state in the Southern Region.

Alabama: https://www.aces.edu/blog/tag/profiles-and-budgets/?c=farm-management&orderby=title

Arkansas: https://www.uaex.uada.edu/farm-ranch/economics-marketing/farm-planning/budgets/crop-budgets.aspx

Florida : https://fred.ifas.ufl.edu/extension/commodityenterprise-budgets/

Georgia: https://agecon.uga.edu/extension/budgets.html

Kentucky: https://agecon.ca.uky.edu/budgets

Louisiana: https://www.lsuagcenter.com/portals/our_offices/departments/ag-economics-agribusiness/extension_outreach/budgets

North Carolina: https://cals.ncsu.edu/are-extension/business-planning-and-operations/enterprise-budgets/

Oklahoma: http://www.agecon.okstate.edu/budgets/

South Carolina: https://www.clemson.edu/extension/agribusiness/enterprise-budget/index.html

Texas: https://agecoext.tamu.edu/resources/crop-livestock-budgets/

Tennessee: https://arec.tennessee.edu/extension/budgets/