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"CowProfit$ helped me gain financial control of my farm business. I was able to make management decisions by determining profitability level, defining trends and comparing individual data against group averages."
What can CowProfit$ do for me?
- You can calculate cost per pound of calf produced and cost per pound of gain for feeders.
- You can calculate your operation's costs and returns profile for your enterprises.
- You can create standardized reports that can be compared to provincial research data and benchmarks.
- You can produce your own benchmark data for better budgeting and planning.
- You can use the "Winners and Losers" report to identify profitable enterprises.
CowProfit$ Features
- Uses whole-farm numbers and allocates these to specific enterprises
- Up to five different enterprises in each of Cow Calf, Forage, Feeders, Pasture, Straw, Other
- Includes enterprise interactions such as the forage enterprise transferring feed to the cow calf enterprise
- Analysis is based on cash revenues and expenses with adjustments for inventory and accounts payable and receivable
- Enterprise reports show costs and returns on a "per unit of production" basis
- Export function to spread sheet as well as other formats.
Program Requirements
- Pentium with Intel, Celeron, AMD Processor
- Windows 95/98, NT, 2000 ME, XP
Frequently Asked Questions
I baled my neighbor's straw; 1000 bales were made and I got 500 bales in return. How should this be entered so that the expenses are allocated properly?
There are two solutions:
1) You could create a separate "Straw" enterprise and consider the straw was produced (not bought) in the normal way. You would have 1000 bales produced, 500 transferred to the livestock enterprises, and show 500 bales sold. Also, you would show revenue of 500 bales times price per bale in the financial section. The end result would be that you will have over estimated your cash revenue (when trying to reconcile this to financial statements), but the custom baled straw would have a cost and return.
2) The second and preferred option is to create a custom work transaction in the financial section of revenue allocated to an "other" enterprise. To do this, create a purchased feed entry in the purchased feed inventory, and create a purchased feed expense in the expenses section equal to the value of the purchased straw. This allows the purchased straw (feed) to be transferred to the cows (balancing of physical inventory) and expenses the straw to the livestock enterprise that uses it. It will create a difficulty if you are trying to reconcile the whole farm report to your financial records.
What do I do about government payments? These are almost always out of sync with the production year. Since an income support payment (such as FIDP) is based on the previous year, is it excluded?
Yes, the payments are often out of sync. When you receive money from FIDP, it is actually for the previous fiscal period. In this case, the payment you got in 2000 is for the 1999 production year, but you don't know what you are going to get as a payment for the current year. To deal with this situation, show the payment as revenue allocated to whatever enterprise best fits (then also show the exact same amount as a beginning accounts receivable, estimate how much this year's government payments might be and enter this number as the ending amount for accounts receivable). If you are doing your CowProfit$ analysis at fiscal year end or later, you will likely be able to estimate your payment more accurately.
I'm having trouble allocating some unpaid labor. For example, where do I allocate the time I spend checking cows when they are on pasture? Is it a pasture enterprise or cow enterprise expense?
It really does not matter that much. The key is to track it somewhere. We suggest that you use the best guess or rationale you have. If you check the cows and see if there are any sick or need attention, it is a cow cost. If you check on grass, water, salt, open gates, etc. then it is likely a pasture cost. There is nothing to say that you can't split it between operations. If it takes you an hour to check the cows, allocate ½ hour to cows and ½ hour to pasture. The key is to make it fit your operation.
I want to know how to handle my replacement heifers. Do I send them to a feeder enterprise or keep them in the cow calf enterprise?
This is a multi-part question. First some definitions are needed. A heifer calf is defined as a young calf still at the cow's side. When she is weaned, you must choose where she goes (for sale or transfer). Yearling heifers are those that are not bred, or have not had their first calf at the beginning of the fiscal year (typically 8-24 months of age). If they are to have their first (or successive calves) in this fiscal year, they are classified as bred heifers and cows.
If you want to determine cost of production for the replacement heifers, you need to create a separate enterprise. This can be either a cow calf enterprise or a feeder enterprise. If you choose a feeder enterprise, you will transfer heifer calves from the cow herd to the feeder enterprise; then when they are bred, you will transfer them from the feeder enterprise to yearling heifers in the cow calf enterprise. What this option will give you is a cost per pound produced. If you want to figure out the cost on a per head basis, you need to convert the costs to per head by multiplying by total pounds gained.
If you are not interested in the development costs of the bred heifers and just want to attribute heifer development to the cow herd enterprise, you can use the following cow calf enterprise solution: transfer the Heifer calves to Yearling Heifers and the Yearling Heifers to Cows and Bred Heifers. It may be helpful to refer to them by the year they were born. For instance, your analysis may show some 1999 heifers as beginning inventory in the Replacement Heifer enterprise. In 2000, these 1999 heifers may have been transferred to the Cow Calf enterprise and will show up as ending inventory in the Cows and Bred Heifers category.
If I have a grain crop share agreement, do I record all grain sales or just my share? What do I do with the crop expenses?
Again this is a two-part question. If you include all revenue and all costs, you will have an accurate number for the crop enterprise, but what may happen is, if you try and reconcile the whole farm report in CowProfit$ to your financial records, there will be a discrepancy of the amount of the crop share revenue. However, your grain enterprise will reflect the correct cost of production for total production.
I have a grazing lease payment. Is it really an expense?
Yes and no. Lease payments are included in CowProfit$ and are meant to capture the annual expense. If there is a large purchase of a lease, such as a grazing lease, the upfront cost for acquiring the lease is a capital payment and should be excluded from the CowProfit$ analysis, as CowProfit$ does not track capital purchases. The annual cost of ownership (depreciation) is to be included in CowProfit$, but the capital investment is excluded. Machinery lease payments are treated the same. You expense the annual portion, but the capital or buyouts are a capital transaction and should be excluded from CowProfit$ data entries.
What do I do when I seed new pasture or hay land and my cost per tonne produced is large?
What you are describing is really a capital improvement or capital purchase. If there are regular establishments, then overall the cost of production numbers will be correct; if the establishments are irregular, then there is a problem. The bulk of establishment costs are the same expenses that you would normally have in the forage business--fertilizer, fuel, labor, etc. One approach is to create a forage establishment enterprise and allocate the appropriate expenses to this new enterprise. What this would do is lower the cost of production of your other enterprises by the cost of establishment. In order to determine your long-term cost of production (and remember making enterprise choices based on one or two years is premature), you need to add these costs to the existing forage enterprises. Another approach is to include all these expenses as normal and create a standard forage cost of production. If the establishments were large in that year, just place a notation in the file comments or on the printed reports noting how/why the costs are so high for this year. A third approach that is more detailed and trickier is to enter the expenses as normal and create an account payable that decreases every year. For instance, if the establishment of one field is $10,000 and will be re-established in 10 years, you would expense all the 10,000 and then create an offsetting entry in accounts payables ending inventory for 9000 (10,000/10 gives the annual cost of 1000). This is much trickier and require more effort than it may be worth, especially if you normally have re-establishment of your forage/ pasture acres.
How do I enter purchased feed inventory and why does it have to be separate?
The reason that you want to keep purchased feed inventory separate from the homegrown feeds is to avoid double counting. When you purchase feed, you likely have a cash expense; then if you include it in the home grown feeds fed to the livestock enterprises, you place another value on it because of the transfer.
Is grain used for seed considered grain enterprise or is it considered supply inventory and how do I balance physical bushels?
If the seed was on hand at the start of the physical year, it becomes inventory, and is recorded in the supply inventory tab. If you are accounting for seed that is on hand at the end of the fiscal period, just count it as production and have it as an ending inventory for the current fiscal year. If it was purchased seed and purchased in the current fiscal year, record the cash transaction in the financial section as you would for any expense. The trick now is to ensure it's not counted in the physical bushels, either in opening inventory or in the production year.
How do I account for well site leases?
Lease payments that come as other income not directly related to the farming production are often excluded from CowProfit$ analysis. CowProfit$ concentrates on the cost and returns of production not investment income or capital payments. However, by excluding these payments, CowProfit$ whole farm income page may not match your whole farm Revenue Canada or your personal income expense forms.
These payments (and withdrawals) are not part of the production system. But if the payments are as a result of a production enterprise such as leasing out extra grazing capacity, or leasing out facilities, then they are a return on the investment as you may or may not have that investment if it was not extra capacity. If it was a good year for rainfall and you have extra grazing capacity, then lease payments for grazing are included.
The rule of thumb is that, if the payments are not farm income, they are not included in CowProfit$ analysis.
How can I use my historic CowProfit$ for budget forecasting next year or the next series of years?
From this historic base, you can do some evaluation and forecasting. There is a forecaster available for download. It is in Microsoft Excel format. What the forecaster can do is take your historic analysis for one cow calf enterprise at a time. You can change the different cost components and revenue components to create a projected cost of production. To export your cow calf enterprise, choose "Export menu - to cow calf forecaster". Note that you will have to select which enterprise to export. Then CowProfit$ goes through its export function and saves a file to your hard drive called inputbudg.xls. This file should be in the directory that you installed for CowProfit$. The cow calf forecaster, depending on the version of Excel you have, will automatically find the export file and import it into the forecaster, where you will be able to forecast ahead.
More important than forecasting, based on one year's analysis, is the ability to compare or benchmark your operation. In a perfect scenario, you would have several years of historic analysis in which you could compare and evaluate your production and financial decisions. Since you likely don't have several years of your own information, use whatever benchmarks you can find. AAFRD's Economics and Competitiveness unit collects and publishes different benchmarks from survey work each year. If you would like to take part in the survey, contact Dale Kaliel in the production Economics unit in Edmonton 780-427-5390. The published benchmarks are posted on Alberta Agriculture's website http://www1.agric.gov.ab.ca (the easiest way to find them is search for "cost and return profiles" or through the links to Business Management and Economics, Production Economics, Beef).
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