AN249

Dairy Business Analysis Project: 2008 Financial Summary1

A. De Vries, M. Sowerby, L. Ely, and R. Giesy2

Introduction
The Dairy Business Analysis Project (DBAP) was initiated in 1996 by the University of Florida in an effort to measure and document the financial performance of Florida dairy farms using standardized accounting measures. The University of Georgia has been a formal collaborator since 1998. The DBAP website is http://dairy.ifas.ufl.edu/dbap.

discussed with the participants to identify challenges and opportunities for improvement. This publication is a summary of the financial performance of the 14 dairy farms that participated in 2008. It is intended for general use by dairy farmers, the allied industry, government, and educational professionals.

Data Collection and Accounting Methods

Dairy producers in Florida and Georgia were given the opportunity to participate in DBAP. Participants were not a random sample of all dairy farms in the two states. The financial performance results in this publication are therefore not necessarily representative of the average results of all dairy farms in Florida and Georgia.

Financial data for the year 2008 were collected from 14 participating dairy farms and screened for completeness and validity. Each dairy farm then received a benchmark report detailing its financial results compared to the average results for the other participants and the six dairy farms with the highest net farm income per cwt. This benchmark report is

Most of the data were collected by Extension agents when visiting dairy farms using a standardized data collection spreadsheet. Occasionally, data were sent in by the dairy producers. The financial data were either entered into the spreadsheet on the farm or mailed in on paper copies of the spreadsheet.

1. This document is AN249, one of a series of the Department of Animal Sciences, Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida. Original publication date August 2010. Visit the EDIS Web Site at http://edis.ifas.ufl.edu. 2. Albert De Vries, Associate Professor, Department of Animal Sciences; Mary Sowerby, Regional Dairy Extension Agent III; Lane Ely, Professor, Department of Animal and Dairy Science, University of Georgia; Russ Giesy, former Extension Agent IV (retired); Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida, Gainesville, FL 32611.
The Institute of Food and Agricultural Sciences (IFAS) is an Equal Opportunity Institution authorized to provide research, educational information and other services only to individuals and institutions that function with non-discrimination with respect to race, creed, color, religion, age, disability, sex, sexual orientation, marital status, national origin, political opinions or affiliations. U.S. Department of Agriculture, Cooperative Extension Service, University of Florida, IFAS, Florida A. & M. University Cooperative Extension Program, and Boards of County Commissioners Cooperating. Millie Ferrer-Chancy, Interim Dean

Dairy Business Analysis Project: 2008 Financial Summary

The accounting methods followed the recommendations made by the Farm Financial Standards Council (Farm Financial Standards Council. 1997. Financial Guidelines for Agricultural Producers). All revenues and expenses were accrual adjusted. Cash receipts and expenses were therefore adjusted for changes in inventory, prepaid expenses, accounts payable, and accounts receivable. Depreciation data were often taken from tax records. Asset valuation was based on market values if available, but the changes from January 1 to December 31 were kept small. Unpaid management was valued at $50,000 per farm. Gain or loss on sale of purchased livestock resulted when livestock depreciation did not completely account for the gain or loss in the value of the purchased livestock during 2008. Appreciation resulted when machinery and building depreciation did not completely account for the gain or loss in the value of these capital assets during 2008. The bottom line of each dairy farm is its net farm income. Net farm income is the return to the owner and unpaid family members for their labor, management, and equity in the dairy farm. It is the total income available for owner's salary, new investments, taxes, and paying off principal. All submitted data were carefully scrutinized and checked for completeness. The cash flow statement reconciles the net cash flow resulting from the reported operating, investing, and financing activities with the reported available cash on the January 1 and December 31 balance sheets. The equity statement reconciles the changes in equity through reported retained capital and valuation with the calculated equity on the balance sheets. The reconciliation attempts typically result in unresolved imbalances. Both cash flow imbalance and equity imbalance had to be less than 10% to be included in the summary results reported here. All results in this publication are the simple averages of the statistics of the dairy farms with valid data. Every dairy farm has equal weight. For example, assume a 100-cow herd produced 1,700,000 lbs of milk (17,000 lbs/cow) and a 1000-cow herd produced 19,000,000 lbs of milk (19,000 lbs/cow). Average milk yield per farm is (19,000,000 + 1,700,000) / 2 = 10,350,000 lbs, and average herd size is (100 + 1000) / 2 = 550 cows. The weighted

average milk yield per cow is 10,350,000 / 550 = 18,818 lbs/cow. The simple average milk yield per cow is (17,000 + 19,000) / 2 = 18,000 lbs/cow. Some definitions and calculation rules are as follows: Asset turnover ratio = total revenues / average assets Assets = value of assets on the balance sheet Average assets = average of value of assets on January 1 and December 31 Average equity = average of value of equity on January 1 and December 31 Capital replacement and term debt repayment margin = NFIFO + depreciation + interest on term debt net social security and income taxes owner withdrawals annual scheduled payments on term debt and capital leases Cash flow coverage ratio = (cash revenues cash expenses) / current liabilities Current assets = short-term assets that can be utilized within one year Current liabilities = liabilities due within one year Current ratio = current assets / current liabilities Debt to asset ratio = liabilities / assets Debt to equity ratio = liabilities / equity Depreciation expense ratio = depreciation / total revenue Equity = assets liabilities Equity to asset ratio = equity / assets FTE = full time equivalent worker, on average 54 hours per week Interest expense ratio = interest paid / total revenue Liabilities = value of liabilities on the balance sheet

Dairy Business Analysis Project: 2008 Financial Summary

Net farm income = NFIFO + gain on sale of capital assets NFIFO = net farm income from operations NFIFO ratio = NFIFO / total revenue Operating expense ratio = (total operating expenses depreciation) / total revenue Operating profit margin ratio = (NFIFO + interest paid unpaid management) / total revenues Rate of return on dairy assets = (NFIFO + interest paid unpaid management) / average assets Rate of return on equity = (NFIFO unpaid management) / average equity Std = standard deviation Term debt and capital lease coverage ratio = (NFIFO + nondairy income + depreciation + interest paid on term debt net social security and income taxes owner withdrawals) / (annual scheduled payments on term debt and capital leases) Working capital = current assets - current liabilities

Net farm income per cwt. was $0.95. These results indicate a marked decrease in average profitability compared to 2007.

Figure 1. DBAP 2008 SummaryMilk production (lbs/cow/year) by heifers per cow.

Results
Summary results for 2008 are presented in Tables 1.1 to 4.4 and Figures 1 to 5. Each category in Tables 2.1 to 4.4 is divided into three levels based on the lowest 5, middle 4, and highest 5 farms for that category. Therefore, the lowest 5 farms in one category may be different from the lowest 5 farms in another category. Revenues and expenses may not add up due to rounding. In brief, 14 dairy farms were included in the summary results. Of these, 11 were located in Florida and 3 in Georgia. The average herd size of the participating dairies was 1584 cows and 834 heifers with 17,588 lbs. milk sold per cow. The average culling rate was 33%. The average milk income was $23.16. Average total revenues were $25.48 per cwt. milk sold. Total expenses averaged $24.54 per cwt. sold. The largest items were purchased feed, $11.21, and personnel costs, $3.92 per cwt. sold. Net farm income from operations averaged $0.94 per cwt. sold.

Figure 2. DBAP 2008 SummaryNet farm income ($/cwt) by heifers per cow.

Figure 3. DBAP 2008 SummaryNet farm income ($/cwt) by total expenses ($/cwt).

Dairy Business Analysis Project: 2008 Financial Summary

Figure 4. DBAP 2008 SummaryNet farm income ($/cwt) by milk yield (lbs/cow/year).

Figure 5. DBAP 2008 SummaryNet farm income per cwt ($) by average number of cows. The x-axis is not displayed to avoid possible identification of dairy farms.

Dairy Business Analysis Project: 2008 Financial Summary

Table 1.1. DBAP 2008 SummaryBusiness size and production efficiency by state and overall average, median, and standard deviation. Overall Category Number of farms Business Size: Number of cows Number of heifers Milk sold (million lbs) 2 FTE workers Acres of pasture + cultivated land Production Efficiency: Milk sold (lbs/cow/year) Cows/FTE worker Milk sold (million lbs)/FTE worker Cull rate
1 2

State Averages Std

1

Average 14 1,584 834 27.59 22 810

Median 14 1,648 673 25.77 22 663

Florida 11 1,709 819 28.37 22 853

Georgia 3 1,125 890 24.73 23 653

14 1,296 787 21.61 14 641

17,588 64 1.12 33%

17,364 57 1.05 31%

3,484 35 0.56 11%

16,328 71 1.16 34%

22,208 42 0.94 30%

Standard deviation Full-time equivalent

Dairy Business Analysis Project: 2008 Financial Summary

Table 1.2. DBAP 2008 SummaryRevenues and expenses by state and overall average, median, and standard deviation ($/cwt). Overall Category Number of farms Revenues: Milk sold Raised, leased cow sales Heifer sales Gain on purchased livestock Sales Other revenues Total revenues Expenses: Personnel Purchased feed Crops Machinery Livestock Milk marketing Buildings and land Interest Depreciation: Livestock Machinery Buildings Other expenses Total expenses Net farm income from operations Gain on sale of capital assets Net farm income
1

State Averages Std

1

Average 14 23.16 0.45 0.46 0.29 1.13 25.48 3.92 11.21 0.63 1.22 1.86 1.27 0.70 0.43 1.10 0.58 0.43 1.20 24.54 0.94 0.01 0.95

Median 14 23.37 0.29 0.47 0.00 0.70 25.94 3.44 11.27 0.64 1.07 1.78 1.31 0.54 0.42 0.61 0.46 0.21 1.14 24.25 1.15 0.00 1.15

Florida 11 23.28 0.29 0.57 0.33 0.50 24.97 3.67 11.61 0.61 1.20 1.91 1.27 0.57 0.43 1.37 0.48 0.47 1.14 24.72 0.25 0.00 0.25

Georgia 3 22.69 1.04 0.08 0.13 3.43 27.37 4.84 9.75 0.69 1.28 1.67 1.29 1.20 0.45 0.09 0.96 0.26 1.41 23.88 3.49 0.05 3.54

14 2.34 1.27 0.78 0.87 1.70 2.97 1.64 2.35 0.53 0.75 0.75 0.31 0.64 0.38 1.16 0.59 0.56 0.47 3.89 3.67 0.04 3.66

Standard deviation

Dairy Business Analysis Project: 2008 Financial Summary

Table 1.3. DBAP 2008 SummaryFinancial performance by state and overall average, median, and standard deviation. Overall Category Number of farms Liquidity: Current ratio Working capital ($) Solvency: Debt to asset ratio Equity to asset ratio Debt to equity ratio Profitability: Rate of return on assets Rate of return on equity Operating profit margin ratio Financial efficiency: Asset turnover rate Operating expense ratio Depreciation expense ratio Interest expense ratio NFIFO ratio
2

State Averages Std

1

Average 14 14.16 369,244 0.29 0.71 0.60 0.15 0.26 0.13 0.86 0.77 0.07 0.03 0.14 20.18
3 4

Median 14 0.98 110,056 0.26 0.74 0.35 0.17 0.19 0.16 0.81 0.76 0.07 0.02 0.16 0.86 1.48 569,504

Florida 11 2.32 186,491 0.27 0.73 0.51 0.04 0.07 (0.01) 0.80 0.89 0.09 0.02 0.00 1.39 4.41 587,223

Georgia 3 77.31 1,436,494 0.20 0.80 0.31 0.09 0.13 0.12 0.58 0.80 0.05 0.02 0.13 79.02 1.37 215,537

14 43.80 866,026 0.21 0.21 0.70 0.18 0.51 0.20 0.57 0.14 0.04 0.02 0.14 55.72 4.71 877,533

Repayment capacity: Cash flow coverage ratio Term debt coverage ratio
1 2

3.63 704,737

Capital replacement margin ($)

Standard deviation Net farm income from operations ratio 3 Term debt and capital lease coverage ratio 4 Capital replacement and term debt repayment margin

Dairy Business Analysis Project: 2008 Financial Summary

Table 1.4. DBAP 2008 SummaryBalance sheet by state and overall average, median, and standard deviation ($/cow). Overall Median 14 489 5,354 416 1,149 4,132 369 5,452 314 1,349 4,147

Category Number of farms Balance sheet (January 1): Current assets Total assets Current liabilities Total liabilities Equity Balance sheet (December 31): Current assets Total assets Current liabilities Total liabilities Equity
1

Average 14 670 7,685 539 1,428 6,256 625 7,567 466 1,324 6,243

Std

State Averages Florida Georgia 11 512 6,304 488 1,287 5,017 453 6,339 497 1,264 5,075 3 1,248 12,749 724 1,948 10,801 1,256 12,069 353 1,543 10,526

14 595 5,049 542 1,218 5,613 611 5,127 373 943 5,608

Standard deviation

Table 2.1. DBAP 2008 SummaryBusiness size and production efficiency by average number of cows and milk per cow. Average number of cows 790 > 2000 2000 4 1,476 1,079 26.21 23 810 5 2,862 1,323 49.93 36 1,245 Milk yield (lbs/cow/year) < 16,000 16,000> 19,000 19,000 5 1,923 473 28.33 20 1,018 4 1,276 940 21.81 21 723 5 1,491 1,111 31.48 26 672

Category Number of farms Business Size: Average number of cows Average number of heifers Milk sold (million lbs) FTE workers Acres of pasture + cultivated land Production Efficiency: Milk sold (lbs/cow/year) Cows/FTE worker Milk sold (million lbs)/FTE worker Cull rate

< 790 5 392 150 6.37 8 376

16,541 41 0.67 41%

18,501 67 1.22 25%

17,905 86 1.48 31%

13,948 76 1.10 35%

17,342 65 1.13 34%

21,425 52 1.12 29%

Dairy Business Analysis Project: 2008 Financial Summary

Table 2.2. DBAP 2008 SummaryRevenues and expenses by average number of cows and milk per cow ($/cwt). Average number of cows Category Number of farms Revenues: Milk sold Raised, leased cow sales Heifer sales Gain on purchased livestock Sales Other revenues Total revenues Expenses: Personnel Purchased feed Crops Machinery Livestock Milk marketing Buildings and land Interest Depreciation: Livestock Machinery Buildings Other expenses Total expenses Net farm income from operations Gain on sale of capital assets Net farm income 4.90 12.02 0.65 0.97 1.89 1.36 0.82 0.29 1.27 0.44 0.23 1.56 26.39 (2.51) 0.03 (2.48) 3.64 9.85 1.13 2.14 2.04 0.98 0.48 0.57 0.22 0.90 0.75 1.21 23.92 1.85 (0.00) 1.84 3.16 11.50 0.20 0.73 1.68 1.41 0.76 0.46 1.62 0.47 0.36 0.82 23.18 3.67 0.00 3.67 3.95 12.24 0.47 1.14 2.04 1.33 0.48 0.32 1.28 0.52 0.42 1.13 25.32 (0.95) 0.00 (0.95) 3.86 10.93 0.74 1.31 2.04 1.30 0.43 0.51 1.73 0.41 0.65 1.22 25.12 0.13 0.00 0.13 3.94 21.50 (0.64) 0.74 0.51 1.76 23.89 23.94 1.29 0.33 (0.16) 0.37 25.77 24.18 0.87 0.28 0.41 1.11 26.85 22.30 0.25 0.89 0.44 0.48 24.37 24.30 0.30 0.01 0.01 0.63 25.25 < 790 5 7902000 4 > 2000 5 Milk yield (lbs/cow/year) < 16,000 5 16,00019,000 4

> 19,000 5 23.09 0.76 0.40 0.35 2.18 26.79

10.42 0.69 1.22 1.54 1.19 1.14 0.48 0.41 0.78 0.25 1.25 23.30 3.49 0.03 3.52

Dairy Business Analysis Project: 2008 Financial Summary

Table 2.3. DBAP 2008 SummaryFinancial performance by average number of cows and milk per cow. Average number of cows Category Number of farms Liquidity: Current ratio Working capital ($) Solvency: Debt to asset ratio Equity to asset ratio Debt to equity ratio Profitability: Rate of return on assets Rate of return on equity Operating profit margin ratio Financial efficiency: Asset turnover rate Operating expense ratio Depreciation expense ratio Interest expense ratio NFIFO ratio
1

10

Milk yield (lbs/cow/year) > 2000 5 4.91 < 16,000 5 0.86 154,072 0.21 0.79 0.33 (0.01) (0.01) (0.10) 0.63 0.95 0.08 0.01 (0.05) 0.43 6.57 241,544 16,00019,000 4 4.86 369,615 0.30 0.70 0.70 0.02 (0.01) 0.01 0.80 0.86 0.11 0.02 0.00 2.86 2.42 562,731 > 19,000 5 46.73 822,413 0.26 0.74 0.43 0.14 0.24 0.13 0.83 0.79 0.06 0.02 0.13 47.74 2.02 729,485

< 790 5 0.29 (120,837) 0.23 0.77 0.54 (0.06) (0.09) (0.18) 0.50 1.02 0.08 0.01 (0.11) (0.08)
2 3

7902000 4 57.85 8,441 0.27 0.73 0.38 0.07 0.06 0.09 0.87 0.83 0.07 0.02 0.07 59.81 1.50 376,220

1,386,260 0.27 0.73 0.47 0.15 0.26 0.15 0.90 0.75 0.09 0.02 0.14 2.70 9.74 1,115,304

Repayment capacity: Cash flow coverage ratio Term debt coverage ratio
1 2

(0.42) 4,934

Capital replacement margin ($)

Net farm income from operations ratio Term debt and capital lease coverage ratio 3 Capital replacement and term debt repayment margin

Dairy Business Analysis Project: 2008 Financial Summary

Table 2.4. DBAP 2008 SummaryBalance sheet by average number of cows and milk per cow ($/cow). Average number of cows Category Number of farms Balance sheet (January 1): Current assets Total assets Current liabilities Total liabilities Equity Balance sheet (December 31): Current assets Total assets Current liabilities Total liabilities Equity 232 10,804 428 1,171 9,632 434 5,633 287 1,371 4,261 1,171 5,876 648 1,438 4,438 663 7,185 447 1,592 5,593 431 5,854 541 1,640 4,215 < 790 5 352 10,761 283 1,046 9,715 7902000 4 442 5,824 387 1,399 4,426 > 2000 5 1,171 6,097 916 1,835 4,262 Milk yield (lbs/cow/year) < 16,000 5 380 7,164 528 1,631 5,534 16,00019,000 4 278 5,665 683 1,799 3,866

11

> 19,000 5 476 7,633 704 1,684 5,949 1,127 9,059 475 2,054 7,005

Table 3.1. DBAP 2008 SummaryBusiness size and production efficiency by net farm income per cwt and rate of return on assets. Net farm income ($/cwt) < $0.50 $0.50$2.00 > $2.00 5 703 346 10.50 13 424 1,441 1,286 25.47 25 1,006 4 5 2,579 961 46.39 30 1,040 630 363 9.25 12 414 Rate of return on assets (%) < 2.0% 2.0%6.0% > 6.0% 5 1,682 1,101 27.29 24 1,069 4 2,460 1,092 46.18 31 1,000 5

Category Number of farms Business Size: Average number of cows Average number of heifers Milk sold (million lbs) FTE workers Acres of pasture + cultivated land Production Efficiency: Milk sold (lbs/cow/year) Cows/FTE worker Milk sold (million lbs)/FTE worker Cull rate

15,009 48 0.74 38%

18,627 56 1.02 31%

19,336 87 1.57 29%

15,683 42 0.63 40%

16,716 73 1.22 31%

20,191 80 1.52 27%

Dairy Business Analysis Project: 2008 Financial Summary

12

Table 3.2. DBAP 2008 SummaryRevenues and expenses by net farm income per cwt and rate of return on assets ($/cwt). Net farm income ($/cwt) Category Number of farms Revenues: Milk sold Raised, leased cow sales Heifer sales Gain on purchased livestock Sales Other revenues Total revenues Expenses: Personnel Purchased feed Crops Machinery Livestock Milk marketing Buildings and land Interest Depreciation: Livestock Machinery Buildings Other expenses Total expenses Net farm income from operations Gain on sale of capital assets Net farm income 4.24 12.25 0.66 1.23 1.84 1.31 0.40 0.42 1.35 0.49 0.31 1.41 25.92 (2.65) 0.00 (2.65) 4.94 10.73 0.92 1.76 2.35 1.10 1.14 0.30 0.35 0.47 0.67 1.34 26.05 1.19 0.04 1.23 2.78 10.57 0.36 0.77 1.49 1.36 0.65 0.55 1.44 0.77 0.35 0.87 21.96 4.34 (0.00) 4.34 5.26 11.92 0.76 1.38 2.05 1.26 0.88 0.18 0.81 0.45 0.29 1.58 26.82 (2.55) 0.03 (2.52) 3.74 11.08 0.52 1.31 2.42 1.35 0.48 0.57 1.54 0.47 0.77 1.01 25.26 1.12 0.00 1.12 2.72 10.61 0.59 0.98 1.22 1.21 0.70 0.58 1.03 0.80 0.29 0.96 21.68 4.30 (0.00) 4.30 < $0.50 5 21.92 (0.24) 0.67 0.50 0.41 23.27 $0.50$2.00 4 24.28 0.52 0.28 (0.02) 2.18 27.24 > $2.00 5 23.49 1.08 0.40 0.32 1.01 26.30 Rate of return on assets (%) < 2.0% 5 21.72 (0.18) 0.84 0.34 1.54 24.27 2.0%6.0% 4 24.41 0.91 (0.04) 0.27 0.83 26.38 > 6.0% 5 23.59 0.70 0.48 0.25 0.96 25.98

Dairy Business Analysis Project: 2008 Financial Summary

Table 3.3. DBAP 2008 SummaryFinancial performance by net farm income per cwt and rate of return on assets. Net farm income ($/cwt) Category Number of farms Liquidity: Current ratio Working capital ($) Solvency: Debt to asset ratio Equity to asset ratio Debt to equity ratio Profitability: Rate of return on assets Rate of return on equity Operating profit margin ratio Financial efficiency: Asset turnover rate Operating expense ratio Depreciation expense ratio Interest expense ratio NFIFO ratio
1

13

Rate of return on assets (%) > $2.00 5 47.29 < 2.0% 5 0.29 (132,712) 0.17 0.83 0.24 (0.06) (0.08) (0.19) 0.53 1.04 0.06 0.01 (0.11) (0.08) (0.73) (91,885) 2.0%6.0% 4 5.31 621,193 0.26 0.74 0.65 0.04 0.01 0.05 0.80 0.83 0.11 0.02 0.04 3.13 8.02 770,626 > 6.0% 5 46.95 907,934 0.34 0.66 0.56 0.17 0.29 0.18 0.94 0.73 0.08 0.02 0.17 48.03 4.84 896,598

< $0.50 5 0.38 (186,891) 0.30 0.70 0.67 (0.05) (0.09) (0.17) 0.66 1.01 0.09 0.02 (0.12) 0.05
2 3

$0.50$2.00 4 4.78 365,907 0.13 0.87 0.17 0.04 0.04 0.03 0.76 0.89 0.06 0.01 0.04 2.59 1.46 628,305

1,166,342 0.30 0.70 0.51 0.17 0.28 0.18 0.83 0.71 0.10 0.02 0.17 48.34 9.74 997,827

Repayment capacity: Cash flow coverage ratio Term debt coverage ratio
1 2

(0.39) (79,257)

Capital replacement margin ($)

Net farm income from operations ratio Term debt and capital lease coverage ratio 3 Capital replacement and term debt repayment margin

Dairy Business Analysis Project: 2008 Financial Summary

Table 3.4. DBAP 2008 SummaryBalance sheet by net farm income per cwt and rate of return on assets ($/cow). Net farm income ($/cwt) Category Number of farms Balance sheet (January 1): Current assets Total assets Current liabilities Total liabilities Equity Balance sheet (December 31): Current assets Total assets Current liabilities Total liabilities Equity 180 7,340 483 1,408 5,932 449 8,885 230 705 8,180 1,211 6,738 639 1,734 5,004 181 10,580 317 845 9,735 511 5,862 362 1,229 4,633 < $0.50 5 . 308 7,144 346 1,256 5,887 $0.50$2.00 4 . 457 9,088 185 630 8,458 > $2.00 5 . 1,203 7,103 1,015 2,239 4,864 Rate of return on assets (%) < 2.0% 5 . 231 10,399 179 571 9,828 2.0%6.0% 4 . 613 6,224 350 1,284 4,940

14

> 6.0% 5 . 1,155 6,139 1,049 2,401 3,737 1,161 5,917 699 1,879 4,039

Table 4.1. DBAP 2008 SummaryBusiness size and production efficiency by assets per cow and liabilities per cow. Assets ($/cow) Category Number of farms Business Size: Average number of cows Average number of heifers Milk sold (million lbs) FTE workers Acres of pasture + cultivated land Production Efficiency: Milk sold (lbs/cow/year) Cows/FTE worker Milk sold (million lbs)/FTE worker Cull rate 16,452 58 0.98 28% 18,318 91 1.58 26% 18,141 50 0.88 42% 15,721 46 0.70 39% 16,890 68 1.16 31% 20,015 79 1.50 28% 1,429 1,104 24.68 24 715 2,717 1,154 47.96 32 1,194 832 309 14.21 12 599 1,063 759 16.33 18 947 1,475 954 24.91 22 670 2,192 814 41.00 27 785 < $4,750 5 $4,750 $8,000 4 > $8,000 5 < $1,000 5 Liabilities ($/cow) $1,000 $1,700 4 > $1,700 5

Dairy Business Analysis Project: 2008 Financial Summary

Table 4.2. DBAP 2008 SummaryRevenues and expenses by assets per cow and liabilities per cow ($/cwt). Assets ($/cow) Category Number of farms Revenues: Milk sold Raised, leased cow sales Heifer sales Gain on purchased livestock Sales Other revenues Total revenues Expenses: Personnel Purchased feed Crops Machinery Livestock Milk marketing Buildings and land Interest Depreciation: Livestock Machinery Buildings Other expenses Total expenses Net farm income from operations Gain on sale of capital assets Net farm income 3.54 11.09 0.55 1.30 1.64 1.28 0.76 0.56 1.19 0.39 0.14 1.11 23.56 0.62 0.00 0.62 3.03 10.74 0.65 1.39 1.59 1.05 0.45 0.63 0.86 0.45 0.85 0.92 22.60 3.23 0.00 3.23 5.00 11.73 0.68 1.00 2.29 1.43 0.85 0.14 1.19 0.88 0.37 1.51 27.07 (0.56) 0.03 (0.53) 5.17 12.24 0.55 1.06 2.45 1.47 1.05 0.10 0.80 0.56 0.33 1.44 27.22 (1.48) 0.03 (1.45) 3.95 10.73 1.07 1.97 2.07 0.94 0.47 0.44 0.88 0.39 0.79 1.21 24.92 0.24 (0.00) 0.24 2.63 22.52 0.35 0.10 0.58 0.63 24.18 24.07 0.75 0.48 (0.37) 0.90 25.83 23.06 0.31 0.81 0.51 1.81 26.51 22.22 (0.10) 0.75 0.73 2.13 25.74 24.11 0.96 0.48 (0.42) 0.04 25.16 < $4,750 5 $4,750 $8,000 4 > $8,000 5 < $1,000 5 Liabilities ($/cow) $1,000 $1,700 4

15

> $1,700 5 23.33 0.59 0.16 0.40 1.00 25.49

10.58 0.35 0.77 1.11 1.33 0.54 0.75 1.56 0.76 0.23 0.94 21.55 3.93 (0.00) 3.93

Dairy Business Analysis Project: 2008 Financial Summary

Table 4.3. DBAP 2008 SummaryFinancial performance by assets per cow and liabilities per cow. Assets ($/cow) Category Number of farms Liquidity: Current ratio Working capital ($) Solvency: Debt to asset ratio Equity to asset ratio Debt to equity ratio Profitability: Rate of return on assets Rate of return on equity Operating profit margin ratio Financial efficiency: Asset turnover rate Operating expense ratio Depreciation expense ratio Interest expense ratio NFIFO ratio
1

16

Liabilities ($/cow) > $8,000 5 46.56 341,940 0.09 0.91 0.11 (0.01) (0.00) (0.09) 0.40 0.92 0.09 0.01 (0.02) 47.47 6.22 350,329 < $1,000 5 4.14 533,662 0.06 0.94 0.08 (0.04) (0.05) (0.15) 0.51 1.01 0.06 0.00 (0.07) 1.62 3.72 388,463 $1,000 $1,700 4 0.53 (259,431) 0.27 0.73 0.39 0.03 0.01 0.02 0.80 0.89 0.08 0.02 0.01 0.96 2.59 277,350 > $1,700 5 46.92 946,060 0.43 0.57 0.93 0.17 0.27 0.17 0.95 0.72 0.10 0.03 0.15 48.07 4.73 810,871

< $4,750 5 4.02 293,611 0.36 0.64 0.81 0.06 0.10 0.02 1.04 0.90 0.07 0.02 0.01 2.06
2 3

$4,750 $8,000 4 1.13 795,782 0.32 0.68 0.50 0.12 0.16 0.14 0.82 0.77 0.09 0.02 0.12 1.16 6.01 558,611

Repayment capacity: Cash flow coverage ratio Term debt coverage ratio
1 2

(0.51) 623,996

Capital replacement margin ($)

Net farm income from operations ratio Term debt and capital lease coverage ratio 3 Capital replacement and term debt repayment margin

Dairy Business Analysis Project: 2008 Financial Summary

Table 4.4. DBAP 2008 SummaryBalance sheet by assets per cow and liabilities per cow ($/cow). Assets ($/cow) Category Number of farms Balance sheet (January 1): Current assets Total assets Current liabilities Total liabilities Equity Balance sheet (December 31): Current assets Total assets Current liabilities Total liabilities Equity 496 3,689 542 1,333 2,356 999 5,740 746 1,886 3,855 455 12,905 167 865 12,040 423 10,732 260 323 10,409 200 5,959 365 1,472 4,487 < $4,750 5 581 3,861 532 1,522 2,339 $4,750 $8,000 4 1,030 5,757 979 2,106 3,651 > $8,000 5 471 13,051 193 793 12,258 < $1,000 5 431 10,358 170 248 10,111 Liabilities ($/cow) $1,000 $1,700 4 255 6,377 286 1,185 5,192

17

> $1,700 5 1,241 6,057 1,110 2,804 3,254 1,167 5,688 754 2,206 3,481