Concurrent Sessions

3055. A Snapshot of LLC Statutes in the Midwest and their Usefulness for Farm Businesses

Presenters: Peggy Hall and Evin Bachelor

The Limited Liability Company (LLC) business structure is a relatively new entity option that didn’t exist until Wyoming established the first LLC statute in 1977. All fifty states now have laws that allow businesses to formally organize as an LLC. While a model statute for LLCs exists, only a handful of states adopted the model law while other states chose to create unique LLC statutes. Nonetheless, state LLC laws share common attributes and many farm businesses have chosen to organize as an LLC. The last U.S. Census of Agriculture indicates that LLCs are now nearly as common as corporations for farm business structures. In this presentation, we examine LLC laws in the Midwestern farming states and analyze the usefulness of the LLC for farm businesses. Part one identifies common provisions in LLC statutes in the Midwest. In part two, we focus on the liability, taxation, and management flexibility benefits of the LLC structure and review recent legal developments in those areas. Part three involves a discussion of the adoption of the LLC structure for agriculture and its unexpected usefulness for estate and business planning. We conclude that while farms that utilize the LLC structure can benefit from the limited liability protections and tax options conferred by LLC statutes, the estate and business planning benefits are equally and perhaps more important for farm families.

3040. Adapting and Delivering Farm Business Management Virtually

Presenters: Curtis Mahnken, Pauline Van Nurden and Tina LeBrun

Technology continues to rapidly evolve in the world around us. Technology can provide important advantages and efficiencies as budgets continue to tighten and farmers are quickly adopting these new technologies to improve their operations and bottom lines. To date, farm management education is typically delivered in a traditional manner and has been slow to adopt new delivery methods or adapt to new technologies to do the work.

Virtual farm business management education is being utilized by some instructors with great success in their local programs. Virtual delivery of farm management is also seen as a means to expand educational offerings to new locations and with new partners. This workshop will outline the successes and challenges seen to date by delivering farm management education virtually and will even demonstrate the technology at work. We will also outline a vision for the future of farm management education, where programs expand their reach and capacity with the addition of virtual farm management meetings and program delivery.

3045. Characteristics of Financially Successful Farms

Presenter: C. Rob Holcomb; Authors: C. Robert Holcomb, Joleen Hadrich and Curtis Mahnken

Why some farmers are more profitable than others is a perennial question. The answer is of interest not only to farmers but all professionals working in the agricultural sector. Farm business data contributed to the FINBIN database from the Minnesota State Farm Business Management Program, and the Southwest Minnesota Farm Business Management Association shows significant differences in median net farm income for producers in the top 20th percentile versus the bottom 20th percentile. The objective of this study was to identify the characteristics and tendencies of highly successful farmers. As part of this study, the students from the Minnesota State Farm Business Management Program and members of the Southwest Farm Business Management Association were asked to respond to an online survey. The survey addressed a wide variety of topics but focused on the five areas of agricultural risk management; production, market, financial, legal and human resource risk. In addition to the risk management components, participants identified the types of technology utilized in their farming operations. As part of the data analysis, survey responses were matched up with the producer’s FINPACK data. Net farm income ratio was used to determine a benchmark for financial success. Financial benchmarks were then linked to the survey data to determine statistical significance for the producer characteristics and tendencies affecting financial success.

3049. Contemporary Farmland Lease Issues: Results from Recent Surveys in Ohio and Educational Opportunities

Presenters: Barry Ward, Peggy Hall and Eric Richer

A series of farmland leasing workshops and policy and outlook meetings offered the opportunity to conduct informal surveys of participants regarding farmland lease arrangements. Participants were surveyed on subjects relating to lease types, lease terms, factors that affect rental rates, trends in crop share and flex lease arrangements and how capital investments are shared between landowners and tenants.

Surveys revealed that eighty-nine percent of the leases reported by participants were cash leases. Of the cash leases, 7.6% were reported to be flexible cash leases. Eleven percent of the reported leases were share lease arrangements. Participants stated that 50% of the lease arrangements currently active were in the form of a written lease. Tenant farmer participants were asked to rank in order of importance the top factors that affect their farm lease cash rental decisions. They were in order of importance: 1. Expected Crop Return, 2. Land Quality, 3. Drainage Capabilities, 4. Fertility, 5. Location of Fields and Access, 6. Size of Fields.

Separate surveys revealed 50/50 crop share leases are predominant among those surveyed with crop-share lease arrangements. The predominant flex lease arrangement among those surveyed was a “percent of gross revenue” approach.

Preliminary data showed a mix of arrangements when capital investments are made on leased farmland. Tenant farmers in many cases have invested in capital improvements on leased land with guarantees of a longer term lease, lower rental rates and/or investment recoupment guarantees.

These findings will help to inform future lease educational materials and offerings.

3054. Cropland Lease Arrangements: Mitigating Yield and Price Risk

Presenters: Jim Jensen and Jeffrey Stokes

Approximately 40 percent of the farmland in the United States has a rental arrangement in place for crop or livestock production. In major grain producing regions, crop production on rented acres may exceed 50 percent of the farmland in an area (NASS 2014). Landlords and tenants commonly utilize three types of rental agreements on rented land including crop shares, cash leases, and alternative flex lease arrangement.

Landowners and operators commonly face uncertainty in crop yields and prices when negotiating rental arrangements. Depending upon the terms of the lease, the equitability of the contract may vary depending upon actual crop yields or prices. This session will demonstrate how optimum lease arrangements change based upon conditions by evaluating simulated crop yields and prices for an eastern Nebraska farm. Specifically, discussion included as part of the presentation will define the differences between the three major types of leases, evaluate the relationship between crop yields and prices, and develop strategies based upon the simulation to better formulate cropland rental arrangements.

Educational efforts on land management and lease arrangement have extended throughout Nebraska over the last decade with over 500 people per year attending these outreach events. Findings from this session will be utilized in outreach across the state. Attendees at this session will improve their understanding on formulating cropland leases when advising or conducting outreach for agricultural producers.

3030. Developing a Mobile App to Address Problems in Farm Management

Presenter: Jordan Shockley

The delivery of educational material has evolved and expanded as technology adopted by producers has progressed. More producers have access to educational material via the Internet with a cell phone and tablet. The challenge for becomes, how do we reach the technology-driven producers and provide tools that they will utilize? One way to reach this audience is by addressing problems with mobile apps.

Mobile apps are not the answer to every problem faced by a producer, however, can be a vital tool to solve problems for which spreadsheets may not be practical. One example of this is for grain transportation. Determining which market to sell grain can be a complex decision. The most profitable option for a producer to deliver grain can change from load to load due to proximity to an elevator, quality of each load, and market prices. Thus, it may be cumbersome and unrealistic to use a spreadsheet for each load of grain delivered. Hence, a mobile app with preloaded elevators, discount schedules, and georeferenced capabilities can provide a more efficient means for determining the most profitable option to deliver grain. This presentation will discuss the methods of converting a spreadsheet tool into a mobile application, development cost, validation, feedback, and lessons learned from developing a mobile app. This will discuss elements in the 2018 Gold Quill Award from the American Society of Farm Managers and Rural Appraiser journal article of the year.

3038. Digital Agriculture as a Risk Management Strategy

Presenter: Terry Griffin

Precision agriculture technologies have been available for adoption and utilization at the farm level for several decades. Some technologies have been readily adopted while others were adopted more slowly. An analysis of nearly 700 Kansas Farm Management Association (KFMA) farmer members provided insights regarding adoption of technology and how adoption rates changed as farm consolidation occurred. The likelihood that farms adopt specific technology given that other technology had been adopted are reported. Results indicate some technologies were more readily adopted than others. These results are useful to farmers considering investment in technology, retailers targeting potential technology adopters, and manufacturers in supply chain management.

3060. Efficacy of Farm Bill Programs in Reducing Risk on Midwest Grain Farms

Presenter: Gary Schnitkey

The Federal farm safety net available to American farmers includes both crop insurance and commodity title programs. Federal crop insurance is made available to farmers, with a large portion of the premium subsidized by the Federal government. The 2018 Farm Bill offered further risk support through the choice of two commodity title programs: Agriculture Risk Coverage (ARC) providing county level revenue protection and Price Loss Coverage (PLC) providing individual level price protection.

Our presentation stems from our current study analyzing the importance of crop insurance and commodity title programs in reducing intertemporal risks. We examine how much crop insurance and commodity title programs reduce the tails of net worth and debt-to-asset ratio distributions, as well as chance of bankruptcy, over time. Our objective is determining whether crop insurance or commodity title programs are most important in mitigating farm risk under numerous likely price scenarios for the next five years.

In the analysis a representative case farm’s financial performance is simulated in a stochastic model over five years. Given likely price scenario, PLC is expected to provide greater risk reductions than ARC. Commodity title programs provide important risk mitigating impacts because of their intertemporal nature. High levels of Revenue Protection (RP) also have important risk mitigating impacts. The combination of PLC and RP at the highest coverage level has the most beneficial risk reducing impact. Results of this study are valuable as farmers prepared to make a two-year election between ARC and PLC later in 2019.

3058. Enhancing The Probability of Successful Farm Business Transition

Presenter: Rodney Jones

Research suggests that family-owned businesses like farms and ranches historically have only about a 30% success rate in transferring the business intact without significant disruption to the successive generation. These low success rates suggest that the common desire to keep together what a farm owner has built for the next generation to start from is difficult to satisfy. Our objective is to identify farm transition strategies and tools that will increase the chance of success given the well-known cash flow constraints and year-to-year variability, and to subsequently extend those strategies and tools to assist a broad array of farm families in implementing successful transition strategies. Using a representative farm simulated over a multi-year transition period we examined several common strategies, looking at the likelihood that the farming operation could remain financially viable through the transition timeline (also considering the retirement needs of the senior generation). Strategies include requiring the successor generation to “borrow” funds (either commercially or from family) to accommodate the transition, sinking fund or life insurance purchase strategies, and formation of various types of asset holding entities and associated restrictions on the assets in those holding entities. In order to get the “probability of success” up to an acceptably high level, we find that one or more family stakeholders must make some concession. That concession can take many different forms including attractive lending rates, reduced asset values passed on to certain heirs, or restrictions on what certain heirs can do with the assets after inheritance.

3029. Farm Financial Management Education for Minnesota Producers

Presenter: Nathan Hulinsky

With the current challenging state of the farm economy, there is a need for financial education to support and assist producers. To address this need, the Agricultural Business Management Team with the University of Minnesota Extension has developed a program to provide farmers with skills necessary to implement a full circle, farm financial management approach, on their operation. Producer workshops were held around the state to enhance farm financial management skills. Utilizing an interactive approach, these sessions equip Minnesota producers with the knowledge to develop and analyze financial statements; be better prepared to evaluate their own financial position; manage their operation for greater financial gain; and have a better relationship with farm partners, including lenders. The intended audience was beginning farmers, small farmers, and traditional farmers wanting additional financial education.

Participants acted as a loan review committee, put their newly learned skills to the test, as they reviewed a case study farm, and determine its creditworthiness. Participants of the program learned about the case farm’s balance sheet, income statement, cash flow and all of the financial ratios that went along with them. A record keeping section finished the program with a review of what records are needed for better results. The group reviewed important financial metrics and considered impacts on their operation. The goal of the program is to promote better internal decision-making skills regarding farm management, as well as to foster stronger relationships with external partners. Evaluations were completed at the end of the meeting to gauge initial learning, and six months later to determine effectiveness.

3039. Farm Succession Focus Groups Offer Insight to Program Development and Barriers to Address

Presenter: Heather Schlesser

Four focus group discussions were held with Wisconsin farmers in the fall of 2017. The goals of the discussions groups were to define farm succession; identify barriers to planning; identify educational needs and farmers’ preferences for farm succession planning programming. Twenty-eight farmers participated. The discussions were audio-recorded, transcribed and analyzed with qualitative data analysis software. This session will present the results of the focus groups and offer program directions based on the results. The data indicates similar themes to work done in Pennsylvania by M.J. Pitts, et al, entitled Dialectical Tensions Underpinning Family Farm Succession Planning, published in the Journal of Applied Communication Research in 2009. These themes include tensions around control, change, financial needs, fair vs. equal, and communication when addressing farm succession. In addition to these tensions, the Wisconsin focus group participants identified learner needs that will shape future programming around not only farm succession education, but also other risk management topics that are emotionally charged and include life changes. This presentation will provide suggestions in program development based on the learner needs and ideas on addressing the tensions around farm succession conversations and planning. We will also share results we found regarding the various tensions and how these tensions influence a person’s willingness to participate in Farm Succession planning. We will also share a Farm Succession manual that we developed to help county based extension educators with Farm Succession Programs.

3044. Farming Your Finances

Presenter: Sandra Stuttgen

The Farming Your Finances curriculum follows the financial model continuum, beginning with farm business records, through financial statements, to decision-making. Covered concepts apply to all businesses, making this curriculum beneficial to any entrepreneur. Farming Your Finances is taught during two sessions. First developed using a dairy farm case study, the curriculum was modified in February 2019 to include a beef case farm and beginning beef enterprise analysis.

Nineteen individuals have participated since the March 2017 inaugural workshop for dairy farmers to the January 2019 workshop for a mixed audience representing dairy, cash grain, CSA, beef and maple syrup enterprises. Nine beef producers participated in the February 2019 workshop when the Farming Your Finances-beef curriculum was used.

To determine the curriculum effectiveness, we are collecting participant’s self-reported gain in knowledge scores and Wilcoxon Signed Rank analysis of pre- and post-quiz scores of the material. Participants surveyed six months after the 2017 workshop reported, “I created my own Income Statement using my farm's Schedule F” and “I calculated my farm's debt to asset ratio and rate of return on assets.”

Authors of this curriculum include Sandy Stuttgen, Agriculture Educator, Extension Taylor County; Heather Schlesser, Dairy and Livestock Agent, Marathon County; Simon Jette-Nantel, University of Wisconsin-River Falls and Center for Dairy Profitability; Nate Splett, University of Wisconsin-River Falls Emeritus and Center for Dairy Profitability; Jenny Vanderlin, Center for Dairy Profitability

The facilitator’s manual is available from University of Wisconsin-Extension Heart of the Farm, https://fyi.uwex.edu/heartofthefarm/educational-resources/for-women-in-ag/

3033. Financial Performance of the Farm Business

Presenter: Charles Brown

The standard for analyzing a farm operation has been the "Sweet 16" ratios which have now been expanded to 21 ratios. These all have their place, but is there a another way to help a farmer understand their business? Financial performance separates the farm into two parts; operations and capital. The operation analysis determines what percent of the gross revenues are converted to profits and what percent of those profits are spent for interest and living expenses. This also determines how much is left on the capital side for debt retirement and growth. Guidelines are given as to what these percentages should be. Understanding how efficient a farmer is in converting revenues to profits starts to provide insight into revenue generation, cost analysis, ability to support family living and debt structure. On our Ag Decision Maker website we have a fact sheet and spreadsheet, C3-59, to help calculate the financial performance.

3041. Finding the Balance-Management of Calf Health versus Cost of Production

Presenters: Sarah Mills-Lloyd and Tina Kohlman

Margins in the dairy industry continue to tighten. Dairy farms are seeking opportunities to control costs, but also maximize the health of their heifers as dairy replacements are the foundation for genetic progress and improvement of the herd.

Since 1997, UW-Extension has sought to provide economic information on dairy replacements with four unique replications of the Intuitive Cost of Production Analysis (ICPA) for preweaned calves. In 2017, ICPA was conducted on 26 farms to provide economic information comparing automated group and individual calf feeding systems. It was determined the cost to raise a dairy calf on an automated calf feeding system to be $6.35 per calf per day as compared to $5.84 per calf per day on an individual calf feeding system.

But what do those costs mean? What management practices do these costs present? To help correlate health and management practices to calf rearing costs, a Preweaned Calf Health Management Survey was conducted simultaneously with 12 of the 26 participating farms. Each system was analyzed and compared on multiple key parameters, including: housing and ventilation, feed and nutrition, labor efficiency, colostrum management, health management, biosecurity, and recordkeeping management and training/treatment decisions.

3028. FSMA Education for Small and Limited Resource Producers

Presenters: E'licia Chaverest and Duncan M. Chembezi

Food Safety Modernization Act (FSMA) was developed to educate producers of the food system. This project is of particular importance because it increases producer and consumer awareness and understanding of food safety education, issues and conditions that enhance economic and market opportunities for growers as well as the resilience, sustainability, and well-being of small farm operations and communities. This collaborative project covering eleven counties dominated by small diversified fruits/vegetable operations in Alabama, Georgia and Tennessee. The long-term goal is to expand market opportunities through produce safety education and outreach training for limited resource growers, thereby increase their operations’ viability, competitiveness, and profitability, for the longer term. The rationale is that preparing this segment of growers with the foundational principles of produce safety, food safety liability risks and management skills, will help them make better production, marketing and food safety decisions and comply with the Food Safety Modernization Act (FSMA). Specifically, the project (1) delivers grower produce safety certification training and offers Good Agricultural Practices (GAPs) education through grower-owned cooperatives; (2) provides technical assistance to guide growers in developing and adopting a comprehensive strategy for managing food safety liability risks; and (3) increases the level of stakeholder connectivity, collaboration and cohort feedback through a unified food safety communications platform and strategy among growers, mentors, and organizations which exist to support them in ways that connect them to produce safety resources and information needed when they need it the most. We believe that comprehensive produce safety education from farm to fork is crucial to decreasing the risk of outbreaks and enhancing grower access to expanding market opportunities for safe and nutritious fresh produce. The presentation will highlight the key partnerships and the implementation of the project and primarily results thus far.

3102. Implementing Farm Financial Guidelines - Where to Start & How to Improve

Presenters: Pauline Van Nurden and Mark Wood

As educators, we realize having accurate farm financial information is key to management decision making. But, it is often hard to get farms started in this direction. That is where the Financial Guidelines for Agriculture: An Implementation Guide for Non-Accountants can be a helpful resource. This workshop, presented by Farm Financial Standards Council representatives, will describe the steps and stages of how to better the financial information a farming operation provides.

3063. Improving Farm Management Training through Collaboration

Presenters: Ryan Larsen and Jay Olsen

Farm management training programs delivered to farmers and ranchers are many and varied in their purpose, delivery method, length of training, and measurable impact. The Extension education system provides an effective manner to reach a large number of agricultural producers but the lack of individual training and aggregated data often leads to lower perceived value from participants. Empirical evidence suggests that there is value to the Farm Business Management (FBM) model of agriculture education, that uses, confidential and regular/on-going face-to-face teaching visits in the farmer’s/rancher’s home or business office. Collaborating with FBM programs provides Extension educators with relevant data and the means to provide benchmark information. Conversely, FBM programs can benefit from applied research developed by Extension educators and the resources of the state specific Extension system. Utah State University Extension and Snow College Farm Management program has a history of collaboration that provides a template for synergistic activities. One example of this is the development and use of benchmarks developed by FBM programs and utilized by Extension. 57% of participants in the Snow College Farm Business Management program indicated that they thought utilizing financial benchmarks was very valuable to their operation with close to 75% indicating that utilizing production benchmarks was valuable to very valuable. Utah Production Benchmarks are estimated from FBM data and utilized in FBM and Extension education activities. Utilizing these benchmarks provides Extension farm management educators with effective and relevant material to present at Extension workshops.

3048. Negotiations, Communications and Farm/Ranch Succession

Presenter: Allan Vyhnalek

Lack of communication among family members is the most common issue in estate and transition planning. This presentation will focus on effective yet simple strategies to tackle communications and negotiation breakdowns and barriers. Allan will share his best tips and tricks to improve family meetings, improve negotiated results, hone listening skills, and improve the ability to ask clarifying questions.

A special focus will be on implementing effective techniques for Educators to use with audiences. Allan attended a workshop on Negotiation at Harvard University recently and will incorporate that information into this talk.

3052. Planning for Your Small Farm Dream

Presenters: David Marrison and Ashley Kulhanek

In many counties across Ohio, there are an increasing number of residents who are purchasing small acreage. As a result, Extension Educators are receiving more questions from small land owners on what they can raise or grow to generate income from their acreage. To help these aspiring farmers, a one-day, six hour Saturday workshop, the Northeast Ohio Small Farm Workshop, was developed. This presentation will describe the efforts in developing this program. During this workshop, participants were challenged to develop realistic expectations for their small farm and to develop a business plan for their operation. During the course, participants learned about the current opportunities in small-scale farming; how to identify the strengths & weaknesses of their farm; how to keep records and develop budgets; and how to effectively price & market ag products to consumers. Participants also learned about farm insurance, governmental assistance, farm taxes, and ways to mitigate risk. Ninety-four small farmers owning 1,952 acres participated in three workshops held in 2018-2019. The average farm income goal reported by participants was $15,273. Ninety-seven percent of the attendees reported they feel more confident in their ability to manage their small farm as a result of their attendance. These workshops also opened OSU Extension up to a new clientele base as 69.9% of the attendees had never previously enrolled in an OSU Extension program and 100% indicated they would enroll in future Extension programs. As a result of these workshops, OSU Extension is now planning targeted evening programs for the attendees.

3042. ‘Pricing Standing Hay’ Mobile App

Presenter: Greg Blonde

An estimated 2.5 million acres of dry hay and haylage are harvested each year in Wisconsin, with baled hay alone accounting for $80-$100 million in market sales. As the structure and number of commercial farms continues to change, the opportunity for buying/selling standing hay seems to grow.

Unfortunately, there is not an established commodity market for hay like there is for corn or soybeans. Finding reliable hay price information can be a challenge, and trying to value standing hay from the field is even more challenging.

To help farmers and Ag professionals identify a fair price or help negotiate the sale or purchase of standing hay, UW-Madison Extension Agriculture Agent Greg Blonde will demonstrate his mobile app that can quickly find hay price information for WI, as well as the other top hay producing states. Other features include:

• Quick link button to WI and USDA hay market prices.
• Calculates price/acre for each cutting and total price for the year.
• Hay yield estimator and cutting schedule options.
• WI Custom Rate Guide chopping and baling cost reference tables.
• Field loss and weather risk input option for buyers.
• “Share” button to email inputs & results from the field or office.
• Free for Android Apple (iOS) smartphones and tablets.
• Over 2,000 downloads since 2015

3056. Beyond Cropland Leasing: Legal Issues with Recreational and Solar Leases on Farmland

Presenters: Peggy Hall and Evin Bachelor

Alternative leasing on farmland offers landowners the ability to diversify their revenue streams and capture additional value from their properties. Two increasingly popular types of alternative leases today are recreational leases and solar energy leases. Recreational leases allow persons to use farm property for hunting, fishing, hiking, and similar recreational activities. Solar leases permit the placement of solar energy collection systems on farmland. These types of leases present legal issues that are both similar to and different than the more familiar cropland lease. For example, farmland owners who lease their land for crops are accustomed to setting rental payments, but determining the payment for recreational or solar energy purposes is much different than calculating the land’s worth for crop production. In this project, we identify the important issues for landowners to consider when leasing land for recreational and solar energy purposes. Highlighting our two recently published legal guides on recreational and solar leases, we discuss solutions and offer examples of lease provisions that address critical legal issues for landowners.

3032. The Farm Labor Situation in Wisconsin

Presenter: Trisha Wagner

The current farm labor market is extremely competitive with many farm employers having difficulties filling all of their positions. Over the years, farms have consolidated and increased their reliance on and demand for hired labor. At the same time the rural workforce has declined in most counties. Although the presence of immigrant labor did offer respite to farm employers over the last 15 years, this pool of labor is now fully employed. Additionally, low commodity prices for milk have increased the challenges for farm employer to compete in the labor market. Questions arise as to whether or not Wisconsin dairy farms can offer employees a living wage.

These factors have forced employers to compete more actively for labor and to become more creative in terms of recruitment and retention strategies.

To better understand farm human resource management in Wisconsin, in 2018, the University of Wisconsin-Cooperative Extension and the Center for Dairy Profitability conducted a statewide survey of farm businesses. In particular, the survey focused on employee wages, turnover rates, and the current sources of farm labor.

Participants in this session will learn more about employee wages for different areas of the state and how it compares to “living wage”, different employment types, compensation benefits, and the number of new hires and their previous employment status. The results presented are based on 224 responses received from dairy farms specifically, covering 2,899 employees.

3051. The Impact of Corn Silage Harvesting and Feeding Decisions on Income Over Feed Costs

Presenter: Robert Goodling

Feeding and cropping management practices are critical to the profitably of a dairy business. For harvest years 2016 and 2017, 25 farms were sampled for corn silage and their total mixed ration. These farms monitored monthly income over feed cost (IOFC) and completed an annual financial analysis. The objective was to work with producers and their advisors to examine the whole farm system. Decisions made in one area can have a significant impact in other management areas. Project farms were categorized by their net return over labor and management (profit) and compared for differences in corn silage quality, precision feeding, and IOFC. High net return groups averaged greater milk production, average components, and average gross milk price when compared to medium and low groups. The high group had lower feed costs regardless if based on home raised costs or standardized market costs. There was little difference in average corn silage quality and precision feeding results between net return groups. Medium net return farms had the lowest average milk production by group, but had the highest milk components, which improved their overall milk price. Monthly IOFC was an adequate barometer of profitability when compared to annual financial performance. Producers can do an excellent job managing feed costs and production, but if hired labor or loan payments are excessive, those farms are challenged with little opportunity for improvement.

3057. Using the 15 Measures of Dairy Farm Competitiveness to Help Dairy Farmers Plan for the Future

Presenter: Dianne Shoemaker

Hartschuh, JM; Zoller, C; Shoemaker, D; Eastridge, M; Weiss, B; Lewandowski, R

The Ohio State University

Across the country, the majority of dairy farm families struggle to maintain profitability and minimize loss of hard-earned equity. In Ohio, 182 dairy farms ceased milk production in the past 15 months, while others hope to rebuild equity and build a future for their businesses. The 15 Measures of Dairy Farm Competitiveness is a resource developed by a team of Ohio State University Extension Educators and Specialists to help dairy farms gauge their competitiveness compared to similar dairy farms. This resource helps farms identify business strengths and areas for improvement. Originally published in 1997, the publication was most recently updated in 2019 to reflect recent major changes in the dairy industry. Farm business analysis data from Ohio, New York, and the Northeast Region were used to update levels of financial competitiveness for dairy farms. The 15 Measures offers farms benchmarks in nine areas: rate of production, cost control, capital efficiency, profitability, liquidity, repayment schedule, solvency, mission, standard of living, motivated labor force, and manure nutrient management. An example is provided for each measure followed by a discussion of factors affecting the measure, implications of not achieving the competitive level, and recommendations to consider. The “A Fork in the Road” section discusses strategies for managers who wish to become competitive and what a farm can do if becoming competitive is not an option. The 15 Measures is used by farmers, lenders, educators and industry personnel to evaluate dairy farm businesses.

In this presentation, we will discuss the 15 Measures and how this tool can be used with dairy farmers to help them evaluate where they are and determine their farm’s strategy for the future.

3043. What Makes a Top Farmer?

Presenters: Gregory Ibendahl and Terry Griffin

Those of us in Extension are frequently asked by farmers and lenders to explain what is important for a farmer to be a top producer. Farming is a complicated business that can be difficult to analyze. Profitability is often dictated by the weather conditions so a single year analysis of farms is often not revealing. Also, the use of cash accounting by farmers means that many farmers have minimal records for analysis. This paper explores possible explanations of why one farm is more profitable than another farm in order to provide advice that can help all farms improve their overall profitability. We use a 10-year balanced panels of grain farms from the Kansas Farm Management Association to ensure that weather effects are minimized and that all farms have good records. Farms are ranked each year based on the net income per acre. The 10 years of farm rankings are then averaged together to get a mean farm rank. Our initial analysis shows that few farms are consistently in the top or bottom each year while the majority are somewhere in the middle. The distribution of the mean rankings appears to be normally distributed. Thus, there appears to be a set of farms we can call top producers. The rest of the analysis will examine factors that could explain these mean rankings and why a certain group of farms are top farms. We plan to analyze, farm size, debt levels, percent rented land, crop yields, machinery investments, etc. for the final paper.

3062. Why Dairy Cows are Leaving Herds in Minnesota and Economic Drivers

Presenter: Amber Roberts

Culling decisions have a substantial effect on farm finances. The cost of maintaining a herd is one of the largest variable expenses. Farmers who are able to make effective culling decisions boost their farms financial health. However, farmers face a mixture of constraints including animal health, reproductive status, and prices in their decision to cull. DHIA records were used to analyze the culling decisions of 90 Minnesota herds from 2012-2018 to understand how farmers choose cows to culls and the economic drivers impacting their decisions.

Our research indicates that a decline in the price of milk was a significant factor in increasing voluntarily culled cows. There was a spike in the number of cows sold in their first and second lactation to other farms when milk prices declined. Milk prices were an influential financial driver as farmers were more likely to cull cows in their first and second lactation, even though cows had not reached their break-even point. A potential explanation would be that farmers are not making efficient culling decisions, but are motivated by the instability of milk prices and their preferences for cows who have been in the herd longer. Further research will examine the possibility of a lemons market for culled cows sold as dairy.

Additional research reflects that the breed of the dairy cow was a significant factor in the farmer’s decision to cull. Farmers were 5% more likely to cull Holsteins compare to other breeds. Surprisingly, farmers preferred to treat and keep diseased Holsteins.