Farm Management Minute: Financial footing of record keeping

Blaine Carey
Instructor, South Dakota Center for Farm/Ranch Management

The essentials of financial recordkeeping on modern farms and ranches has grown with the need to track income and expenses to determine a profit in a business with very tight margins. In several instances the present record keeping system, which may still be shoe box filing and hoping for a profit at the end of the year, is not providing the business the information needed to know specific costs of production. It is crucial to be able to track these to calculate break-evens which is an important phase of marketing. There are several software programs that can help ease the burden of maintaining these necessary financial records.

The South Dakota Center for Farm and Ranch Management’s key feature is to help producers develop good records with the goal of maintaining a financially-sound business. The ability to track income and expense plus capital purchases is the focal point of completing an analysis of the whole farm. Most farms operate on a cash basis which is commonly used to file income taxes; however, those numbers do not reflect the true profitability of the farm. A sharper picture of a farms actual performance emerges after making the appropriate changes on an accrual basis. The adjustments do not entail complex formulas but are easily computed from good farm records that track inventories.

Students enrolled with the South Dakota Center of Farm and Ranch Management are happy with the support and information they receive to develop a sound record keeping system. They are farmers and ranchers from across South Dakota. The curriculum is certainly not just for college aged folks. The program is set up over three years and will compile records to establish trends in the operation. Further assistance can then be continued on a consulting basis after completing the base program. If this is something that interests you for your operation, please give us a call.

You may contact me at either 1-605-299-6760 or Blaine.Carey@mitchelltech.edu. For more information about the South Dakota Center Farm/Ranch Management, visit www.sdcfrm.com.