Money & Markets:Keeping Track and Moving Forward

Record keeping is one of those boring jobs that we need to train ourselves to do on any production setting. There is a large benefit to knowing what we have done and are we or are we not moving forward in our operations.

There are many reasons that we want to keep records. The first reason that most people keep records is for the finances. Record keeping is a way to calculate profit or loss and track income and expense for income taxes.  Also, records on finances are a way that you can put together financial documents to borrow money or establish credit.

The second reason to keep records would be to track production. By tracking production you will be able to make sound management decisions. Production records when coupled with financial records can make for a sound method to make plans for the future and make necessary adjustments to improve your operation.

The first step is to develop a record keeping system. Record keeping systems are as varied and abundant as the types of and animals or veggies you can grow. The record system will depend on the complexity of your operation and the skill sets that you have as a manager. Keep the records as simple as you can. If the system gets too complicated for the need, there is an increased chance that there will be mistakes in the record; as the operation becomes more complex, the more complex the record keeping system. For example, if you are only growing tomatoes for the farmers market your record keeping system would be more simplified than if you were raising 20 different veggies.

The next step is to keep track of records of economic importance. These would be factors that influence the money in and out of pocket book. Records of economic importance are pounds of product sold or dollars per unit.  Direct costs are also part of your records. For example if you were selling lettuce at the farmers market would keep track of the pounds of lettuce sold and the price sold at for each day and market.

There are production records that allow for future decision making, and can be helpful in making decisions regarding breeding stock, variety selection, expanding or downsizing. With production records we want to be able standardize these records. Record standardization allows you, as the producer, to compare apples to apples. In the livestock area there are adjustment factors and equations. For example weaning weights in beef cattle are adjusted to 205 day weights. This adjustment factor no takes into account the age of the cow, birth weight of the calf, sex of the calf and age of the calf at weaning to get all the calves to an equal playing field.  Utilizing these records you can start to track which cows are not producing calves of adequate size and can be used to make culling decisions. Likewise, if we use our lettuce example by tracking price and pounds sold you are better able to track markets that pay more or better plan amount of product to bring.

There are many considerations to record keeping. It can be as simple as a notebook in your pocket or a complex computer spreadsheet. Either way, getting the right information recorded will make tax time easier and lead to better decision making. Visit UWEX Emerging Markets Team at http://www.uwex.edu/ces/agmarkets/ for more information on record keeping or contact your local extension office.

Author: Adam Hady, Richland County Agriculture Agent

Originally Published: The weekend Farmer, Spring/Summer 2008