Dairy Industry Trends in NYS - Benchmarking

Transcription

1 Dairy Industry Trends in NYS - Benchmarking Jason Karszes Senior Extension Associate PRO-DAIRY B21 Morrison Hall JK57@Cornell.edu Cornell University Phone Ithaca, NY Department of Animal Science College of Agriculture and Life Sciences Cornell University

2 New York Dairy Industry Currently 3 rd largest dairy state Number of herds decreasing Total cow numbers decreasing Average herd size increasing Production per cow increasing Total state production increasing Larger % of production concentrated in fewer herds 2

3 New York Dairy Industry Milk sales comprised 44.6% of New York State agricultural gross sales in Largest processor of the following dairy products Yogurt Cottage cheese Sour cream Total estimated agricultural impact for state is 37.6 Billion(2014) 1 1. Schmit, Todd, The Contribution of Agriculture to the New York Economy., Research & Policy Brief Series, Community & Regional Development Institute, Ithaca, NY, Cornell University, August

4 Selected New York Dairy Statistics # of Cows, Thousand Total Production, Millions # of Herds Milk per Cow , ,045 18, , ,103 19, , ,432 19, , ,424 20, , ,713 20, , ,826 21, , ,190 21, , ,463 22, , ,730 22, , ,100 22, Average Herd Size , ,765 23, % Change, 5 Year 11.4% 1.6% 15.1% 13.3% 14.7% % Change, 10 Year 22.3% 2.8% 22.6% 26.1% 25.1% Source: New York Dairy Statistics Data from Progressive Dairyman Annual Statistics

5 Selected Dairy Statistics , Same 136 New York Farms Dairy Farm Business Summary and Analysis Project # of Herds # of Cows, Thousand Total Production, Millions Milk per Cow Average Herd Size ,220 24, ,365 25, ,490 25, ,611 25, ,731 25, % Change, 4 Years 19.1% 23.0% 5.0% 19.1% % Change, NYS 1.3% 9.9% 8.5% 10.3% % of NYS, % 14.6% 17.3% % of NYS, % 17.2% 19.4% Source: New York Dairy Statistics 2015 and Dairy Farm Business Summary

6 DAIRY FARM BUSINESS SUMMARY AND ANALYSIS PROJECT

7 DFBS History Started in 1955 Partnership between Cornell Cooperative Extension Associations, PRO-DAIRY, and the Charles H. Dyson School of Applied Economics and Management in the Cornell SC Johnson College of Business at Cornell University Program micro-computerized in 1982 Accrual adjustments in 1985, with all extension educators using micro computer by the late 80 s.

8 DFBS History Follows Farm Financial Standards Council recommendations. 10 extension educators around the state utilize the educational program, with coverage in 43 counties in 2015 with 190 farms participating. Participation also from farms located in 12 different states

9 DFBS History Program converted to Web-Based system for the 2003 business year New comparison and trend reports with web-based system Faster information back to producers

10 Why Farms Participate Whole farm financial analysis Are we making any more money Meet lending requirements Improve record keeping system Standardized analysis techniques Multi-year trends

11 Why Farms Participate Accrual adjusted consolidated financial statement Financial analysis Budgeting Independent review of data Benchmarks of farm performance

12 Why Farms Participate Identify areas to improve Training of management Information for use with advisors Provide data to University for Research Extension Teaching

13 Use of Benchmarks on Farm Compare to past performance Compare to goals Compare to budget Local or regional data National data Other types of businesses 13

14 Extension Use of Dairy Benchmarks Presentations Articles Publications Discussion groups One-on-one farm visits 14

15 Focus Areas Changes Trends Relationships Comparisons Financial performance tied to management practicies 15

16 26 20 Years of Variability DFBS Farms, New York State, Dollars per Cwt. Or % Reate of Return Gross Milk Price, Cwt. Total Cost to Produce Milk, Cwt. Purchased Grain & Conc. % ROA w/o Apprec

17 Risk Management Debt Coverage Ratio Debt per Cow Working Capital % Expenses Percent Equity Operating Expense Ratio $209 70% 99% , , , , , , , , , New York Dairy Farms,

18 Risk Management % Return to All Capital Debt Coverage Ratio Debt per Cow Working Capital % Expenses Percent Equity Operating Expense Ratio $248 65% 98% , , , , , , , , , New York Dairy Farms,

19 Milk Production

20 Milk Production

21 Cost Control

22 Cost Control

23 Relationships

24 Relationships

25 Relationships

26 Relationships

27 Relationships

28 Performance

29 Efficiency ASSET TURNOVER AND PROFITABILITY 173 New York Dairy Farms, 2014 Number of Number of Farm Capital (average for year) Labor & Management Income Per Net Farm Income (without Ratio Farms Cows Per Cow Per Worker Operator appreciation) > $9,599 $429,494 $1,158,619 $1,688, to , ,577 1,037,767 1,277, to , , ,764 1,083,118 Less than , , , ,852 ASSET TURNOVER AND PROFITABILITY 168 New York Dairy Farms, 2015 Number of Number of Farm Capital (average for year) Labor & Management Income Per Net Farm Income (without Ratio Farms Cows Per Cow Per Worker Operator appreciation) > $6,959 $330,903 -$82,518 $81, to ,196 10, , ,707 21, to ,064 10, ,531-38, ,899 Less than , ,171-77, ,326

30 Labor MILK SOLD PER WORKER AND NET FARM INCOME 173 New York Dairy Farms, 2014 No. of Farms No. of Cows Pounds Milk Per Cow Net Farm Income (without appreciation) Labor & Management Income Per Operator Pounds of Milk Sold Per Worker Under 500, ,481 $49,535 $-7, ,000 to 699, , ,412 59, ,000 to 899, , , , ,000 to 1,099, ,772 1,191, ,094 1,100,000 & over 65 1,100 25,977 2,029, ,245 MILK SOLD PER WORKER AND NET FARM INCOME 168 New York Dairy Farms, 2015 No. of Farms No. of Cows Pounds Milk Per Cow Net Farm Income (without appreciation) Labor & Management Income Per Operator Pounds of Milk Sold Per Worker Under 500, ,522 $8,026 $-43, ,000 to 699, ,069-6,466-48, ,000 to 899, ,280 76,729-50, ,000 to 1,099, , ,320-96,794 1,100,000 & over 74 1,146 26, , ,690

31 6 Year Trend Numbers 136 farms participating in Dairy Farm Business Summary for six years Capture two 3-year cycles Top 20% of farms by ROA w/o appreciation vs remaining 80% of farms What are the trends and comparison 31

32 Top 20% of Farms vs. Remaining 80% of Farms Selected Measures, Six Year Comparison Same 136 Farms, Dairy Farm Business Summary, New York State Net Investment Per Cow Top 20% $582 $1,103 $1,063 $1,011 $1,538 $1,188 80% $622 $850 $986 $886 $1,164 $1,223 Farm Capital per Cow Top 20% $8,251 $9,064 $9,722 $10,370 $11,202 $11,815 80% $9,293 $9,849 $10,567 $11,032 $11,697 $12,365 Tillable Acres per Cow Top 20% % Net Calf & Cow Income, per Cow(1) Top 20% $328 $373 $421 $410 $552 $628 80% $279 $315 $376 $388 $500 $550 Operating Cost to Produce Milk per Cwt. Top 20% $12.26 $14.36 $14.83 $15.29 $15.88 $ % $14.09 $15.91 $16.13 $17.17 $17.83 $16.27 Total Cost to Produce Milk per Cwt. Top 20% $15.02 $17.68 $18.22 $18.90 $19.72 $ % $17.45 $19.49 $19.85 $21.04 $21.99 $20.49 Working Capital as Percent of Expenses Top 20% 22% 32% 29% 32% 41% 30% 80% 17% 19% 19% 19% 25% 19% % Return on Equity, Without Appreciation Top 20% 16.4% 20.2% 10.8% 15.2% 22.8% 3.8% 32 80% 6.7% 13.4% 4.5% 6.8% 16.1% -1.7%

33 DISCUSSION GROUPS BUSINESS FOCUS

34 Discussion Groups Business Focused Small groups that meet to discuss business 5-15 farms in a group Generally meet twice a year, overnight Longest tenured group meeting since 1995 Objective: Increased understanding of business and financial management

35 Benchmarking for Groups Key component of groups Full disclosure Two reports One sorted independently to show relationship to rest of group Second not sorted, with names If going to talk about topic, goal is to have business data benchmarked for meeting All looking at same things calculated same way 35

36 Total Operator Value , , , , ,300 Operator Value per Month 26 3,618 3,979 4,569 5,993 6,051 Percent Change % 2.0% 3.0% 3.0% 8.0% ROA w/o Apprec, Standard LM Value % -2.8% -0.3% 2.1% 2.1% Change in ROA Investment per Cow 30 9,983 10,018 10,299 10,682 11,613 Annual Change 31 (922) (443) (188) (151) 420 % Tillable Land Owned % 30.8% 31.9% 35.2% 36.7% Milk Cow Value, End of Year 33 1,300 1,400 1,500 1,600 1,600 Mach Invest per Cow 34 $1,913 $2,094 $2,111 $2,967 $3,013 Annual Change

37 Areas Benchmarked Financial performance annual (DFBS) Monthly key production and financial parameters (DPM) Activity analysis projects 37

38 Activity Analysis Projects Objectives Increase understanding of cost and performance across different areas of business Encourage adoption of managerial accounting approaches Develop tools and approaches for use in extension educational programming 38

39 Activities Analyzed Dairy replacements Milking center Feed center Herd health Reproduction Haylage harvest Manure spreading Labor allocation and cost 39

40 Private Industry Benchmarks Additional resources for dairy industry in the Northeast Providing financial analysis and benchmarking services along with business management consulting Targeted towards client, but some published information on trends and performance Key partners with DFBS 40

41 Farm Credit East Blue Book(1975?) Large Herd Consulting Project (1988) Annual Financial Analysis Extensive production and activity data Dairy Profit Analyzer(2006) Monthly analysis Comparison to budget 41

42 Dehm Associates LLC The Dairy DashBoard Annual Financial Analysis Monthly Financial Analysis Monthly financial analysis Comparison to budget Started in

43 Summary Benchmarking is key component to management New York dairy industry has a long history associated with benchmarking on and across farms Continued educational efforts can support further adoption of benchmarking 43