Rate Your Record Keeping System by Mary Kate (Wheeler) MacKenzie

December 11, 2020

Have you ever heard the business adage: "You can't manage what you don't measure?" When it comes to the financial side of your farm business, good record keeping is the first step to measuring — and managing — business performance.

Good financial record keeping takes time, discipline, organization, and often teamwork. For some farms, it may also require investing in accounting software, or hiring a professional bookkeeper. In other words, you have to commit resources to this effort, and the commitment must be ongoing. However, with all of the day-to-day production activities demanding attention from the farm operator, it can be easy to lose track of that commitment.

If the benefits of good record keeping are not enough to convince you that the effort is worthwhile, then consider the costs of poor record keeping. In my experience, farms with inadequate financial record keeping systems face three major costs: wasted time, missed opportunities, and high stress. While it may be difficult to quantify these costs, they are very real. When you spend hours searching for a lost bill or receipt, incur service fees due to a missed payment, or overlook an opportunity to increase profits, both your financial bottom line and your mental health can suffer.

What makes a good record keeping system, and how do you know if you already have one or not? This short quiz can help you answer both of these questions. The five quiz questions encourage you to reflect on attributes of your current record keeping system. Keep track of your points to see how your system ranks, and what you can do to improve it, in the scoring section following the quiz.

Rate Your Record Keeping Quiz

On my farm, records of individual income and expense transactions are:

  1. Regularly entered into an accounting system before going into organized storage (3 points)
  2. Organized, stored in a specific location, easy to find (2 points)
  3. Disorganized, stored in multiple locations, hard to find (1 point)

Which statement best describes the accounting system used to enter and track financial data on your farm?

  1. We regularly enter financial transactions into a digital accounting program — e.g. QuickBooks, CenterPoint, Quicken, etc. (4 points)
  2. We regularly enter financial transactions using a simple accounting tool — e.g. Cornell Farm Account Book, Excel spreadsheet, etc. (3 points)
  3. We use checking account statements as the primary record of financial transactions — e.g. the digital shoebox method (2 points)
  4. We collect paper receipts and hand them over to an off-farm accountant at the end of the year — e.g. the shoebox method (1 point)

Who is responsible for financial record keeping on your farm?

  • One person is responsible, and that person sets clear expectations for other team members (3 points)
  • Multiple people share responsibility, and their roles are not clearly defined (2 points)
  • Nobody (1 point)

Which statement best describes the income tax situation on your farm?

  1. The farm completes income tax returns on a timely basis (3 points)
  2. We are still working on last year's taxes (2 points)
  3. Our farm is more than a year behind on filing income taxes (1 point)

Our farm generates and uses financial statements to analyze business performance:

  1. Regularly, on a monthly or quarterly basis (4 points)
  2. Regularly, on an annual basis (3 points)
  3. Only when our lender requires it (2 points)
  4. Not at all (1 point)
Interpret Your Score

5 - 9 points: Poor

Your record keeping system is inadequate. It may be costly in terms of high stress, inefficient labor, and missed opportunities. Your farm desperately needs someone to make a commitment to take your system to the next level. To set up a basic system, you will need to identify who, what, when, where and how. Who will be responsible for organizing records and entering transactions? What categories will you track for revenues, expenses, and other transaction types? When will your designated bookkeeper complete their record keeping activities? Where will records be stored, whether in digital or print format? What accounting tool will you use to record transactions? If you are more than a year behind on your record keeping, you may consider using a simple accounting tool to catch up quickly, while putting a more sophisticated tool into place for future years.

10 - 14 points: Adequate

You have a basic record keeping system in place, which most likely satisfies the IRS and your banker, and helps with farm decision making. However, your system may not provide enough detail or accuracy to analyze your farm's financial performance. It is time to ramp up your record keeping game, and build a system that creates more value for your business. Do you have the in-house capacity to manage a sophisticated record keeping system? If so, invest in training for whoever on the farm is responsible for record keeping. Explore different accounting software packages, and discuss their pros and cons with your tax accountant and your lender. Select a record keeping software that works for you, one that is simple enough for your on-farm bookkeeper to learn and manage, yet sophisticated enough to analyze data and generate financial reports. If you do not have a person on the farm who can provide leadership for a record keeping transition, consider hiring an outside bookkeeper to enter transactions on a weekly or monthly basis.

15 - 17 points: Rock Solid

You have reliable numbers to support detailed financial analysis. You can plan and make management decisions with confidence. Once your record keeping system reaches this level, you can shift your focus from data tracking to analysis. At this point, you should have a strong foundation for whole farm budgeting and strategic business planning. Be sure to set clear financial goals and review your profitability on a regular basis, whether monthly, quarterly or annually. Consider benchmarking your financial performance against other farms in your industry to identify opportunities for improvement. The agricultural extension program in your state can help you locate benchmarking resources for your industry. Ultimately, your farm will benefit from your ability to evaluate financial impacts of possible changes, and plan for the future of your business. Depending on where you are in the lifecycle of your business, it may be time to start developing a farm succession plan.




Rate Your Record Keeping System (pdf; 190KB)
  • Mary Kate (Wheeler) MacKenzie was recognized by the National Association of County Agricultural Agents (NACAA) with a na



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Upcoming Events

Cornell Hemp Field Day

August 11, 2022
Geneva, NY

The Cornell Hemp Field Day will incorporate multiple workshop-style talks on several topics including hemp genetics and breeding, pest management, and grain and fiber production. It will also involve demonstrations of combine harvesting and baling. This hands-on field day will have interactive workshops offering DEC credits on the use of pesticides and disease management. Digital ag applications and an introduction of the USDA hemp germplasm repository will also be included.

https://hemp.cals.cornell.edu/...

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Pasture Walk: Multi-Species Grazing and Direct Marketing

August 13, 2022
Van Etten, NY

Join livestock farmers, Ike and Dave Mallula for a tour of their multi-species grazing operation. Learn how they manage beef, poultry, and hogs on pasture, and how they engage consumers to direct market pasture-raised meats

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2022 Aurora Farm Field Day

Event Offers DEC Credits

August 18, 2022
Aurora, NY

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for Commercial and Private Field Crop Licenses

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Announcements

New York State Farm Directory launching in June 2022

From our friends at Cornell CALS

As part of Cornell Cooperative Extension's role in strengthening New York State agriculture, we are helping to spread word of the New York State Department of Agriculture and Markets' plans to launch a statewide online Farm Directory. The Farm Directory, which launches in mid-June, will connect consumers to producers of farm products and promote New York farms.

The Farm Directory will appear on the New York State Department of Agriculture and Markets' website at agriculture.ny.gov/farming/farm-directory. It will show information for each listed farm, which can include the farm name, farm type, point of contact, addresses, telephone number, email address, website, social media, and a listing of all available products produced by the farm. Other categories of interest to the public, like the farm's inclusion in the New York State Grown & Certified Program and designations of organic, halal or kosher certified may also be noted. Website visitors will be able to sort or search the directory by any field.

Since not every farm offers products to the public at the farm site, each farm can indicate whether it is open to the public, or if there is another means that their farm product can be accessed. This might include listing a distributor, a brand name that your product is eventually marketed under, or a specific consumer-facing website where the public can determine where to purchase your product in a retail location. The information available on the directory for each farm can be tailored to meet the individual needs of each business and farmers will be able to update their information as desired.

The creation of the Farm Directory derives from Section 16(52) of the New York State Agriculture and Markets Law, requiring the Department to create a directory of every farm in New York State. Farms will be receiving a package in the mail shortly outlining the Farm Directory purpose, a survey to collect information on the farm to be included in the Directory, and a return envelope.

If you choose not to have your farm participate in the Directory, you are required by law to notify the New York State Department of Agriculture and Markets of this decision by opting out. Farms may opt out by returning the provided survey or indicating it through the online survey linked at the website above.

Farms that initially opt out can later contact the New York State Department of Agriculture and Markets if they wish to be included at any point. Also, farms can also contact the New York State Department of Agriculture and Markets if they wish to opt out after initially choosing to participate in the Directory.

For questions or additional information on the Farm Directory, please contact the New York State Department of Agriculture and Markets at (518) 485-1050 or FarmDirectory@agriculture.ny.gov.


NYS Climate Action Council Draft Scoping Plan

The Climate Leadership and Community Protection Act (Climate Act) was signed into law in 2019 as one of the most ambitious climate laws in the world. The law created the Climate Action Council (the Council), which is tasked with developing a draft scoping plan that serves as an initial framework for how the State will reduce greenhouse gas emissions and achieve net-zero emissions, increase renewable energy usage, and ensure climate justice. On December 20, the Council voted to release the draft scoping plan for public comment. January 1, 2022 marks the beginning of a 120-day public comment period to receive feedback from the public as the Council works to develop and release a final scoping plan by the end of 2022. Read the Draft Scoping Plan [PDF] including the  entire document with appendices. https://climate.ny.gov/Our-Climate-Act/Draft-Scoping-Plan

From Our Team to Yours: COVID-19 Resources for Dairy Farmers

The South Central NY Dairy and Field Crops Team has compiled a list of articles that we think may be useful to dairy producers and their service providers as we all navigate the COVID-19 situation. Please stay safe and reach out to our team if you have questions or need help finding information. We are here to help with tools and resources to support all of the normal day-to-day dairy and field crop management considerations, in addition to emerging topics related to COVID-19.

For the full list, click here: COVID-19 Resources for Dairy Farmers


Regional Team Operations During COVID-19

Click here for an operations update.


Dairy Acceleration Program Funds Available

Funds available for the
  • organization of financial records/benchmarking up to $1,000
  • continued business planning (for farms awarded in a previous year) up to $2,500
  • business planning up to $5,000
Guidelines remain the same DAP covers 80% of the cost up to the value of the award and the farm is responsible for 20%.  Visit https://prodairy.cals.cornell.edu/dairy-acceleration/

HEMP GROWER'S EXCHANGE BOARD

CCE Hemp Exchange Board On-Line
Dear Hemp Growers & Processors: Our exchange board has its first postings; plenty of interest in selling and purchasing. You can check it out at http://www.nyhempexchange.org/

 *The NY Hemp Exchange Board is posted for your information and research purposes. Cornell Cooperative Extension does not endorse or recommend any product, service, individual, business or other entity. All "Hemp Exchanges" are posted at the discretion of CCE. "Hemp Exchanges" requests may be denied or removed at any time for any reason Maire Ullrich, MBA Agriculture Program Leader Eastern New York Horticulture Team - Vegetables Cornell University Cooperative Extension Orange County


2018 Drug Residue Prevention Manual

For more than 30 years, the U.S. dairy industry has focused educational efforts on the judicious use of antibiotics through the annual publication of a Best Practices Manual. The 2018 edition of the National Dairy FARM Program: Farmers Assuring Responsible Management? Milk and Dairy Beef Drug Residue Prevention Manual is the primary educational tool for dairy farm managers throughout the country on the judicious and responsible use of antibiotics, including avoidance of drug residues in milk and meat.

The manual is a quick resource to review those antibiotics approved for dairy animals and can also be used as an educational tool and resource for farm managers as they develop on-farm best management practices necessary to avoid milk and meat residues. Visit the Manual and Form Library to download copies of this important tool!

http://www.nationaldairyfarm.com/drug-residue-manual


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Dairy Grazing Apprenticeship

Western New York Dairy Farmers Kim Shaklee and Janice Brown make the news with their successful Dairy Grazing Apprenticeship match. Kim and Janice are Master Graizers, and they are working hard with their Apprentice, Travis Belmore and preparing Lauren La Mar for an official Apprenticeship. 

http://www.americanagriculturist.com/dairy/guiding-next-gen-dairy-graziers-win-win

ProDairy Forage Management

Are you prepared to change your routine this spring?

By: Joe Lawrence, Cornell CALS PRO-DAIRY and Ron Kuck, Cornell Cooperative Extension North Country Regional Ag Team


While spring tasks vary by farm, there are many "rites of spring," and they are often completed in a fairly rigid sequence. Depending on the farm, these often include fixing fence, spreading manure, planting new seedings, planting corn and harvesting first cutting, and are often performed in this order.

We are optimistic that the upcoming turn in weather will allow these task to be accomplished in a timely manner, but at this point it is time to ask yourself: Are you willing to change your spring routine?

In addition to adverse weather it is no secret that everyone is facing extremely tight economic times, and dealing with forage inventories of poor digestibility forages from 2017. This combination of factors makes it more critical than ever to be ready to tackle the task that will have the most impact on your business at the proper time.

Recent reference articles on dealing with tough times:
• Key Opportunities to Optimize 2018 Crop Production Efficiency
• Resources for Dealing with Spring Weather Delays
First Cutting
The number one focus should be on timely harvest of first cutting.
• Park the corn planter when a field of first cutting is ready for harvest.
o Monitoring 1st cut harvest timing
• Approach harvest by the acre, not by the field. Be ready to skip over a field that has passed its optimum harvest stage.
o Dynamic Harvest Schedules
• Strategically plan feed storage to best utilize forage inventories for the right group of animals.
o Strategic Forage Storage Planning
o When More is Better
Corn Planting
The window for planting for silage is generally wider than for grain, which is why first cutting can and should take priority over corn planting. However, in the event of extreme delays in planting corn, performance will diminish with late plantings. If corn planting progresses into late May or early June, begin to consider alternative options for those acres. Previous research from Cornell and Penn State suggest a 0.5 to 1 ton/acre per week decline in silage yield for planting after mid to late May.

Multi-Tasking
First and foremost during a time of year that can be very busy and stressful, taking every precaution to keep your team safe is critical.

The idea of fitting all of this work into a condensed time period, and still getting key tasks completed before critical deadlines can seem impossible, but year after year many find unique ways to get it all done. Consider working with neighbors, custom operators or renting equipment to accomplish these key tasks on time.

If you currently utilize custom operators, now is a good time to set up a time to meet with them and make sure you are on the same page to get tasks accomplished in the time-frame needed. Make sure that your expectations and goals are clearly defined. They will also be under stress to fit their work into a condensed period and meet their customers' expectations, so defining expectations and pre-planning how to most efficiently get the work accomplished when the custom operator arrives can go a long way to increase the chances for success.



NYSERDA Agriculture Energy Audit Program

NYSERDA offers energy audits to help eligible farms and on-farm producers identify ways to save energy and money on utility bills. Reports include recommendations for energy efficiency measures.

Eligibility
Eligible farms include but are not limited to dairies, orchards, greenhouses, vegetables, vineyards, grain dryers, and poultry/egg. The farms must also be customers of New York State investor-owned utilities and contribute to the System Benefits Charge (SBC). Please check your farmís current utility bills to see if your farm pays the SBC.

Energy Audit Options
You can request the level of energy audit that best fits your farmís needs. NYSERDA will assign a Flexible Technical Assistance Program Consultant to visit your farm and perform an energy audit at no cost to you.

For more information and the NYSERDA Agriculture Energy Audit Program Application click here


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