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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