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On December 18, 2018

To Understand The Winter Manure Spreading Regulations In Maryland

The Maryland Department of Agriculture reminds farmers that December 15 is the last day to spread manure and other organic nutrient sources on cropland in Maryland. Farmers may resume nutrient applications on March 1 as long as fields are not saturated, snow-covered, or hard-frozen.

 

To avoid nutrient losses on farmland and to reduce runoff into waterways, spreading manure in the winter is prohibited by Maryland’s Nutrient Management Regulations. Liquid manure sources generated on the farm must be stored in structures. The department is authorized to work with farmers to prevent overflows from storage structures in the winter and to minimize impacts to water quality. In these circumstances, farmers must contact the Nutrient Management Program for authorization before any spreading can take place.

 

Farmers should contact the Nutrient Management Program at (410) 841-5959 if they have storage concerns or questions regarding the regulations. For additional information, visit the program’s website.

To Use Financial Tools To Evaluate The Status Of Your Dairy Business

For the last three years the average gross milk price received by the Penn State dairy herd has been 2015 – $18.10/cwt; 2016 – $16.84/cwt; and 2017 – $18.26/cwt. Extension Dairy Specialist Virginia Ishler explains the average breakeven milk price for Pennsylvania dairy herds has been $18.50 or higher. The market is signaling that we have a surplus of product and milk prices will trend lower until supply and demand come into balance. It is not surprising that producers are in a state of shock and feel as though there is no light at the end of the tunnel. It is difficult to be overly optimistic but there are options for dealing with this current crisis. It will require keeping an open mind and recognizing that operating the dairy enterprise is no longer business as usual.

Troubleshooting financials is no different than with production. The first line of attack is to identify where the business is for liquidity, solvency, efficiency and profitability. This will require getting the financial statements up to date like the income statement, cash flow and balance sheets. Until these are accurately filled in there is nothing anyone can do to help.

Symptoms of poor liquidity are an increase in payables such as feed, fuel, fertilizer, repairs and others. This is compounded by added interest and late fees. This is often the first thing managers notice at the beginning of financial challenges. Depending on how severe the situation, options to help pay down bills are to sell assets such as feed, crops or animals. Family living expenses may have to be reduced. Caution should be taken on reducing farm production expenses. This tends to be the first knee-jerk reaction when cash flow is a problem, however, reductions in the wrong places could eventually come back to hurt income (i.e. milk production). Consolidating current debt into one loan could also be an option to reduce high interest charges on short-term money.

Poor solvency can threaten the survival of the farm. Over the long-term loans have usually been refinanced instead of being paid down when solvency is an issue. In extreme cases banks will not lend any more money to the operation. When dairies are in this situation drastic measures are required and usually result in the producer relinquishing some control. For example, selling off equipment and relying on custom hire to produce on-farm feeds. Before deciding on any alternatives, the impact on the cash flow should be examined as well as a plan for paying down debt.

Efficiency pertains mainly to the farm production system. Operating ratio, sales/assets, machinery to acres and interest to income are useful indicators on when to upgrade the dairy enterprise. Dairies should have a multi-year plan to examine when technologies, facilities and machinery should be upgraded or replaced. Any investment in the operation should increase the sales/assets or it’s not a good investment choice and will only further strain cash flow.

Return on assets is a common ratio to indicate the dairy’s profitability. This can be influenced by factors outside the producer’s control such as rising costs, decline in prices paid for crops, animals, and milk, and weather events such as droughts and floods. Profitability benefits from monitoring income and expenses routinely throughout the year to make adjustments as needed. Over time, profitability drives all the other financial aspects of the business. If the business is not profitable, the reasons must be identified and fixed or the business will not survive. Monitoring income over feed cost monthly against the breakeven would help flag potential problems sooner versus later.

Penn State Extension has tools and resources to determine a farm’s financial health. Expertise is available to examine bottlenecks to the production system. Producers are better positioned to make the right or best decision on the future of their business by knowing their numbers.

An action plan for improving profitability has these three steps. The goal is to develop an income statement and a balance sheet for 2018 and project a cash flow plan for 2019. The first step is to work with a financial advisor or consultant, fill in the necessary information for the income statement and balance sheet. Step 2 is to work with an extension specialist or consultant develop a cash flow plan for 2019. The third step is to monitor IOFC monthly comparing to the farm’s breakeven number.

Quote Of The Week: “Christmas is forever, not for just one day. For loving, sharing, giving, are not to put away.” Norman Wesley Brooks