The Rural Voice, 1996-06, Page 54on good perimeter fence.
• A range of six to eight paddocks
seems to work well for many
operators.
• Livestock should be allowed to get
over as much of the pasture as early
as possible - quick rotation in spring.
• Producers must accept the fact that
some hay will have to be harvested
from the pasture each year and this
should be done on a rotational basis.
• Any forage over 12 inches in height
should be harvested as hay.
• Good quality hay can and should be
harvested about mid-June.
• To keep pasture in a vegetative state
it should be maintained in a range of
four to 10 or 12 inches in height.
• Stocking rates in the spring are a
challenge to effective use of early
pasture.
• Fertilizer (manure) application
works well with a pasture system.
• Clipping and harrowing are thought
to be essential management practices
for success.
• Frost seeding with clovers (red,
white, and alsike) has been shown to
work well.
• Shade may not be a necessary part
of pasture management.
• Readily available water to each
paddock has been found to be
desirable, especially for dairy
animals.
• Intensive pasture management will
probably require five to six years
experience to be relatively successful.
• Stocking rates will increase year to
year with experience and
management.
• A high management level (skill) is
required to make it work.
• Species of forage may be irrelevant
- the key is how you manage pasture
which is acquired by experience only.
• Keep informed.0
Pre -loan planning
important
By Rob Gamble
OMAFRA Business Management
Advisor
John MacDonald, Business
Management Advisor, says a farm
business does not experience
financial difficulty overnight. Many
events take place leading up to the
Advice
tragic happening, he writes. Usually
the manager of the farm is not aware
of these happenings because of his
daily involvement with the general
production activities of the business.
Major capital investment such as
buying land or erecting
improvements does not take place
every day. When these events occur,
and borrowed money is involved,
very careful planning should take
place.
In situations when correct
estimates are not obtained for
improvements, and a short -fall occurs
in the amount of money borrowed,
the manager will usually draw upon
his operating loan. Couple this
mistake with the fact that the
borrowed money is amortized over
too short a period, a cash flow
shortfall will occur before the
business produces and markets
additional units of output.
Add these factors to the reality
that farm income will fluctuate
dramatically within a given period of
time, it becomes inevitable that a
cash shortfall can occur at some point
of time. To avoid this happening, the
farm manager should obtain correct
estimates for the new improvements.
Make sure the components such as
wiring, and ventilation are included.
Obtain three estimates; examine the
estimates and select the most accurate
one.
When meeting with the lending
institution, make sure to borrow
sufficient money to cover the total
expenditure. Estimates can vary from
five to 10 per cent below actual costs.
When establishing an amortization
period, try to lean toward a longer
period of time than a shorter period.
One guide is to match the
amortization period to the economic
life of the capital improvement.
Usually, buildings have an economic
life of 20 years.
When obtaining a mortgage,
remember that you are charged legal
fees, appraisal fees and sometimes,
survey fees. If you have to refinance
that mortgage at a later date because
of a cash flow shortfall, legal fees and
appraisal fees will be charged again
as well as a substantial penalty.
The revenue side of the equation
also often gets neglected, when a
major building project is underway.
Were those extra heifers or gilts bred
to produce on time? Were extra
plants ordered for greenhouses? Has
extra quota been obtained?
Pre -loan planning will pay
dividends in the long run. Give
consideration to more aspects than
the amount of interest you have to
pay.
Many OMAFRA offices have a
computer program that lets producers
in this planning stage look at the
critical financial numbers. The disk
contains a cash flow, loan calculator
and a debt servicing workshect.0
Business analysis and
planning for your farm
Historically fanners have
compared livestock in the show ring.
Production reports arc very useful in
herd management and in field
management. Business reports are
equally important in measuring the
financial performance of the farm.
Computerized Business Analysis
provides a snapshot of your business
performance through the common
financial statements - the Income
Statement, the Balance Sheet and the
Statement of Change in Financial
Position. You also receive financial
analysis, dcbt servicing, enterprise
cost reports and a five-year report.
Comparisons do Increase
Profits. Everyone wants to know
how they stand. Provincial and
regional reports are prepared that
summarize the business performance
for the low third, average and high
third of farms based on net farm
income. The individual farm reports
provide a comparison to provincial
averages to help you set and achieve
your production and cost control
goals!
CROPS AND LIVESTOCK
FINANCIAL ANALYSIS
Basic OFMAP for Livestock
The Ontario Farm Management
Analysis Project (OFMAP) is
entering its 50th year. It provides all
of the above reports and allows you
analyze up to two livestock
enterprises and your basic crop\
enterprise.
New for 1996 - CROPS$ BIZ
JUNE 1996 51