Ontario Beef Cow Summary 2005

Table of Contents

1. Introduction
2. General Layout of the Beef Report
3. Assumptions and Definitions
4. Suggested Feed Inventory and Transfer Values
5. Summary of Ontario Beef Cow Farms - 5 year Summary
6. Summary of Ontario Beef Cow Farms - Farm Income Statement
7. Summary of Ontario Beef Cow Farms - Farm Balance Sheet
8. Summary of Ontario Beef Cow Farms - Beef Cow Enterprise Report (per cow basis)
9. Summary of Ontario Beef Cow Farms - Beef Cow Enterprise Report (per tillable basis)
10. Summary of Ontario Beef Cow Farms - Crops Grown and Fed Report (crop acres and yields)

Introduction

Purpose of the Program

The Ontario Farm Management Analysis Program (OFMAP) is a co-operative effort of farmers and staff of the Ontario Ministry of Agriculture, Food and Rural Affairs.

The primary purpose of the Project is to provide management information to farmers. With financial and production reports, the farmer is better able to:

• identify profitability, strengths and weaknesses, and efficiency of the farm business.
• compare with budgeted plans for this year and with previous years results.
• analyze trends over a period of years.
• compare the farm business to group averages of similar farms.

The secondary purpose of the Program is to obtain, store and utilize data for the preparation of group reports on a county, regional or provincial basis.

Purpose of this Report

The purpose of this report is to present financial and physical information for beef cow farms in Ontario. Farmers can compare the results of their business records with group averages. It should be noted, however, that averages presented in this report do not necessarily represent ideal levels of performance. They should be used to provide an indication of the performance of similar business operations. This comparison by operators of individual farm performance to group performance may suggest ways of increasing the profitability of their farms. Farmers who have participated in OFMAP will most easily be able to compare their costs and returns on a unit basis eg. per cow.

The information is also used by many to budget changes in size of an enterprise or to add a new enterprise. This will help with the preparation of a business plan and a credit application.

Anyone wishing to participate in OFMAP is encouraged to contact the Ontario Ministry of Agriculture, Food and Rural Affairs at 1-877-424-1300 or ag.info@ontario.ca

Basis of Classification

Farms were selected based on the size of the enterprise and the detail of information recorded in their records. The minimum size to be included in this report for each enterprise is shown below:

Beef Cow - Farms with more than 25 cows (farms may sell calves, yearlings or finished stock)

* Note Regarding the Summaries
Data from individual farms are checked for accuracy. Farms are included in the averages if they meet the selection criteria. Because the records are provided by interested producers, a random sampling procedure has not been used.

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General Layout of the Beef Cow Report

1. The section cover with graphical highlights of the trend reports.
   
2. The inside cover with the five-year trend report in a graphical and a tabular format.
   
3. The Farm Income Statement.
   
4. The Farm Balance Sheet and Measurements of Financial Strength.
   
5. The Farm Business Analysis Section including measure of performance, efficiency, cost control, profitability, debt servicing capacity and the main enterprise summary.
   
6. The Livestock Enterprise Reports with unit and general analysis.
   
7. Crop Enterprise Reports.
   
8. Crop Average and Yields, Feed Costs, Investment Summary.

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Formulas Used to Calculate Resource Performances

1. Net Farm Income = Total Farm Revenue - Total Farm Expenses. It is the Return to the Unpaid Family Labour, Operators Labour and Management, and Equity Capital Invested.
   
2. Owner's Equity = Total Farm Assets - Total Liabiliaties
   
3. % equity = (Equity ÷ Total Farm Assets) x 100
   
4. Return on Owner's Equity and Unpaid Labour = (Net Farm Income ÷ Owner's Equity) x 100
   
5. Return on Owner's Assets and Unpaid Labour = ((Net Farm Income + Interest Paid) ÷ Total Farm Assets) x 100
   
6. Return on Investment ($36,000/Person) = ((Net Farm Income + Int Pd + Wages & Salaries - ($36,000 x Person Equiv)) ÷ Total Farm Assets) x 100
   
7. Return to Owner's Labour (5% Investment Rate) = Net Farm Income + Interest Paid - (.05 x Total Farm Assets)
   
8. Value of Farm Production = Total Farm Revenue - (Lvstk + Feed Purchased)
   
9. Cost/$1.00 (VFP) = (Total Expenses - Depreciation - Feed Purchased - Livestock Purchased) ÷ Value of Farm Production
   
10. Capital Turnover (VFP) = (Total Farm Assets ÷ Value of Farm Production) = Years
    
11. Cost Control = (Net Farm Income ÷ Total Farm Revenue) x 100
    
12. Working Capital = Current Assets - Current Liabilities
    
13. Current Ratio = (Current Assets ÷ Currernt Liabilities) : 1
    
14. Debt Structure = (Current Liabilities ÷ Total Liabilities) x 100
    
15. Debt to Asset Ratio = (Total Liabilities ÷ Total Farm Assets) : 1
    
16. Debt to Equity Ratio = (Total Liabilities ÷ Owners Equity) : 1

Notes:

1. Additional information on the various performance criteria present may be found in the OMAFRA publication #379 - "Money Matters".
   
2. Re Formula 4 and 5:
   Imputed value for operator person equivalents was not deducted. Hence, these formulas reflect a return to labour and/or investment, whereas in formula 6 an allowance for labour was made.
   
3. Re Formula 6: Return on Investment
   The portion of this formula that reads "Wages and Salaries minus ($36,000 x Person Equivalents)" is used to allow both sole proprietorships (where usually no operator wages are paid) and corporations (where operator labour may be included as wages paid) to be included. The $36,000 is simply a standard figure. Other amounts could be substituted by the reader as desired.
   
4. Re Formula 7: Labour Income
   In calculating labour income, a figure of 5% return on total assets was used which permits year-to-year comparisons of management information.
   
5. Debt Servicing Capacity
   The calculation of the average amount available for debt servicing is provided for each commodity group. (Debt Servicing Capacity is more fully explained in "Money Matters"). In this calculation depreciation was used as a proxy for "Reserve for Asset Acquisition".

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Assumptions and Definitions

Farm Selection

The low one third and the average and the high one-third of farms were selected on the basis of net farm income.

Calculation of Management Factors

Person Equivalents = an approximation of the number of full-time people actively participating in the operation of the farm.

Inventory Valuation and Transfer Value of Home-Grown Feed

The unit values shown below are suggested values for calculating beginning and ending inventories. Transfer values were used for estimating costs for home-grown feed.

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Suggested Feed Inventory and Transfer Values 2005

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Summary of Ontario Beef Cow Farms - 5 Year Summary

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Summary of Ontario Beef Cow Farms

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Summary of Ontario Beef Cow Farms - Farm Balance Sheet (Assets at Estimated Value)

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Summary of Ontario Beef Cow Farms - Farm Business Analysis Section

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Summary of Ontario Beef Cow Farms - Beef Enterprise Report (per cow basis)

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Summary of Ontario Beef Cow Farms - Crop Enterprise Report (per tillable acre basis)

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Summary of Ontario Beef Cow Farms - Crops Grown and Fed Report (crop acres and yields)

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