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HomeMy WebLinkAboutThe Huron Expositor, 1984-04-11, Page 20B6 THE HURON EXPOSITOR, APRIL 11, 1984 FAHM NEW EXECUTIVE—A new executive was acclaimed to office at the annual meeting of the Huron -Bruce Progressive Conservative Association, Shown' (back left) are election finance chairman Lorne Klelnstiver, direct- ors Stewart Farrell, Elmer Hayter, Harry Hayter, YPC president Bernie Haines, directors Harold Robinson and Len Metcalfe and fifth yip Robert Dinsmore. In front row are first v/p Barry Johnson, secretary -trea- surer Maria Van Keulen, president Mary Donnelly, past- president Marg Bennett, second v/p Ken Campbell and third v/p Donna Wood: (Exeter Taw -Advocate Photo) Relief offered to dairy farms Total milk marketings in January 1984 increased 1.4 per cent compared to January 1983. This is the second consecutive month -over -month increase following ten months of decreases compared to the same month a year ago. The increase in December was 0,1 per cent. Starting in February last year, production began to decline in response to the quota reductions and the potentially serious over -quota situation for which Ontario was headed. Based on actual marketings from August 1983 to January 1984, and with supplies for the remainder of the dairy year forecast to be up 1.4 per cent and assuming fluid sales for the current dairy year to be 1.5 per cent higher than last year, it is estimated that provincial utilization of MSQ will be 102.3%. if supplies do not taper off in the months ahead as forecast, the month -over -month increases could be significantly higher than 'that experienced in January. The net result would be an even higher • provincial utilization of MSQ than the 102.3 per cent estimated above, Another factor which merits attention is the provincial average butterfat test which for the dairy year to -date is approximately 0.8 per cent higher than for the correspond- ing period last year. Should the butterfat level continue at this rate of increase, the effect would be to raise the estimated level of MSQ utilization to 102.7 per cent. The quota system will remain tight for the balance of the year. In all likelihood. Ontario cream producers will utilize virtually all of their quota allotment. Furthermore all provinces have indicated that they expect to utilize at least 100 per cent of their available MSQ. At the last meeting of the Canadian Milk Supply Management Committee, some possible relief was offered in Ontario's obligation to pay over -quota levies on provincial production falling between 98 and 100 per cent of MSQ. Prior to that meeting, Ontario was obliged to pay over -quota levies between 98 and 100 per cent regardless of increases in Canadian requirements.. The situation now is that, if for example, requirements increased one per cent from 98 to 99 per cent of MSQ, the obligation to pay the over -quota levy applies only to produc- tion between 99 and 100 per cent. This is a benefit only to the extent that the demand for industrial milk products increases. Based on disappearance to Dec. 31, 1983, the CMSMC felt that demand was stronger than previously determined and an increase in Canadian requirements of one per cent for the airy year is not an unrealistic expectation. All things considered, producers are again strongly advised to bring production in line with their 1983/84 quota holdings, and aim to fill 100 per cent of their quota. THE FLUID MARKET On a sales day adjusted basis, fluid sales increased 3.9 per cent in January, 1984 compared to January 1983. With the exception of December at -0.2 per cent fluid sales have been very strong since the beginning of the dairy year. For the August toJanuary period of 1983/84 fluid sales have increased 2.7 per cent compared to the same period of 1982/83. Ventilation should be planned before barn built BY SAM BRADSHAW Far too often, after 1 answer the phone, the person at the other end will say, "My new barn is almost completed. How should 1 ventilate it?" Ventilation must come firstl A barn must be planned around the ventilation system, not the other way around. Not planning your ventilation system first is like incorporating five pounds of atrazine into a field -and then at the last minute planting soybeans. it won't work. There are many ventilation (systems a...ilable and most will work if the type of animal, the width of the barn and, most important, the pen layout, are matched to the ventilation system. There are three basic systems - negative pressure cross flow, powered intakes and natural. Most operators are using the cross flow system with fans in one wall and a slot -type inlet with a baffle board. This style works well if incoming air is directed across the ceiling and allowed to drop in the dunging area. It won't work if the air is allowed to drop in the feeding or resting area. Dirty pens and sick animals usually result. Fan -powered air inlets will also do a job of ventilating if the room is designed for them, again making sure the air is directed along the ceiling and dropped only in the dunging area. Natural ventilation uslhErcontinuous auto- mated doors along both sides of a building plus a continuous ,slot opening at the ridge, which can also be controlled has proven to be a good option over the past few years. Open:front shed roof buildings, agt}in 'hg natural ventilation, have also pry the selves and are quite economical. Crosbie lashes at (Continued from page BS) Crosbie drew a direct conneetigp between the federal National Energy Policy -and the recent announcement by Shell Oil that. 800 Ontario workers are being laid off and the oil company is moving its headquarters from Toronto to Calgary. "I would sooner have jobs than a 12 percent increase in ownership by Petrocan", Crosbie remarked. Crosbie attacked the increasing rate of inflation and the enormous budgetdeficits piling up year by year. Since 1972, the deficit has grown to $101 billion, and now one in three tax dollars goes to service this debt, -he said. In concluding, Crosbie answered press accusations of the Conservative's lack of policy by informing his audience that "We have truckloads of policy, policy coming out our.ears, but it wouldn't niatter if we didn't have one shred of policy, not a single ounce...it would be better to vote for us...we have opposed all these things that have turned out so disatrously." The partisan crowd gave him a standing ovation. Murray Cardiff, MP for the Huron -Bruce riding, publicly announced he will be a candidate when nominations are held in the riding. A new Association executive was ac- claimed to office. Members are Marg Bennett, past , president; Mary Donnelly, Liberals president; 1st vice president Barry Johnston second vice president Ken Campbell; third vice president Donna Wood; fourth vice president Joe Reichenback and fifth vice president Robert Dinsmore. Directors are Elmer Hayter, Stewart Farrell, Harold- Robinson, Len Metcalfe and Flury Hayter, Bernie Haines heads the Young P.C.s, and Maria Van Keulen is the new secretary -treasurer. Lorne Kleinstiver was appointed election finance chairman. Honourary Association members are Elmer D. Bell, Charles S. McNaughton, George McCutcheon, James Hayter, Wm. Walden, Robert E. McKinley and James W. Britnell, Strength and weakness cash flow recognized in BY ALAN.SCOTT, Ag. Rep. My banker wants a letter to indicate that you think my cash flow will work." I'm getting this request more often this winter. It's a challenging request to service. There's a need for more than a yes or no answer. It's a matter of recognizing strengths and weaknesses. In some cases a proposal will work, but wili need tender loving care and attention. It's important to point out some of the things that must be done if the proposal is going to be successful. It's not difficult to do the usual check. Are prices realistic? Are buying and selling prices of feeder animals in line? Have you left "tracks" to show how the final figure for sales or purchases was built up from pounds and price? How does incomd, expenses and production in the projection compare with the "track record" of the last year and the year before? A lender will be skeptical that you can produce 15 pigs from each sow if you only averaged 10 last year. You'll get an argument until you show that you can do it. Sometimes costs seem to be too low. You expect that there will be extra costs that aren't in the budget. Dairy and . sow operations can usually count on cash expenses (before debt payments) amounting to65% of gross income, That leaves 35% for debt payments and personal expenses. Cash expenses can be lower if there are above normal livestock sales, or reduced costs because of homegrown protein. There are always exceptions to every thumbrule. Sometimes it's useful to calculate a breakeven point, especially if there's a_ heavy overhead of debt. Maybe it's just not passible for the dairy cows or sows to carry the accumulated load. Breakevens are straight forward for a -single enterprise operation. Simply deter- mine the total cash going out the gate for the year - personal living, principal and interest and the other direct and indirect expenses. In a farrow -to -finish operation It's not difficult to work back to the breakeven price that's needed per sow or market hog. Breakeven§!, can also be determined from multi -enterprise operations. The cash out- flossOsas to be allocated among the different enterprises. A breakeven tells you what must happen in order to make ends meet. For example, ou might need 15 pigs indexing at 103 from y. 100 sows, and a martcet price of /2c in to cover the cash going out the gate. INCREASE YIELDS! Be This technique' can help you determine whether your overhead is out of line, and also whether a proposed expansion may make you vulnerable: If the breakeven is out of line you can work through again to check the improvement that comes with producing an extra pig per sow or higher quality forage. This exercise helps to set goals that will fine-tune your operation. I'm convinced that some proposals work because the owner gives constant attention to the little things. There are dollars to be harvested by improving one area just a little. Each improvement is small on its own, however, when the improvements are added together they represent a tremendous amount of "gravy' money that is available to pay debts. As an example, let's look at production in dairy cattle. One thumbrule suggests that excellent production will allow a debt load of $5,000. to $6,000. per cow. The same source estimates that a debt load of $2500. per cow is the limit for a poor producing herd. How do you know if your real life figures are keep{ng up to the ones you made on paper? All managers need to monitor their financial and business progress. You've worked hard on that 'projection. It's more useful for you than for the lender who asked for it originally. It's your planning guide for the next year. You had to set goals in order to make the plan. Now you have to determine whether or not you are achieving those goals. If you never measure how, well you're doing, you eliminate a lot of the value of doing the original projection. Monitoring is easy for the dairyman. He has a monthly cheque and a monthly statement of production. It's easy to Compare whether income and production are on target - especially if tlpe herd is on a milk recording program. The sow owner can do the same through his record keeping system. He predicts that he'll ship 1200 pigs on his cash flow. He's set a goal for the year which in turn points out the number of pigs that should be weaned weekly. The goal for pigs weaned determines the number of sows bred each week. You can determine if you are on course for your annual goals by measuring whether or not you are achieving those weekly goals. The accrual income expense statement and net worth statement are tools for measuring financial health. Annual state- ments are minimum requirements for any business. Many businessnien like to take a statement each month. This procedure enables them to catch a trend before it gets out of hand. 1 suggest rponthly monitoring to business- es in trouble. They need to know,the extent of equity loss on a monthly basis. If the monthly loss is severe, then there is a need for immediate action. Changes can be made and the new plan given a chance to succeed. Lenders are patient if the monthly state- ments show that the business is holding its own. Each year O.M.A.F. publishes a summary that shows an accrual income statement, net worth and liestock production statistics. There ar -sf 'dies for most of the major enterprises. Each one has average figures, as we • s figures for the top thirty-three per cent in the group. An individual's statistics are always part of a group of at (east five. I challenge the individual to enrol in this study. He'll get back a printout which shows most of the analysis information that I've been mentioning in this article. An owner is flying blind without this sort of help. I also challenge the manager to look hard at ways of improving production efficiency. I think that it's important to get involved in the courses which are held each .winter in Perth County. You are always picking up ideas from either the course material or from the comments from other producers who are in the same business. Its vital to have a thirst for information and ideas that can help you improve. The whole industry is improving. You lose ground by remaining the Same. Don't give up your only copy of the cash flow to your lender. Demand a photo copy if you haven't made one yourself. Use your plan during the coming year to see if you are on target with your projections. Convert your cash flow projection into an accrual income expense statement. Some - timet cash flows look good because you're selling off inventory. There's little gain if you have a 510,000 surplus on the cash flow along with an inventory decrease of S10,000. These are some of the areas that I touch on when commenting on a cash flow. 1 indicate whether or not 1 think -it will work. However, I'm also forced to attach a rider "it depends"..Market prices and debt restruc- turing are in this category, but there's one that's even more important. Whether or not the plan will work depends so much on the management ability and determination of the person who has pushed the pencil. f farmers are still vulnerable BYi,IACK RIDDELL AND JIM MCGUiGAN Vire are now into the second year of the Mfrnistry of Agricultnre's Beef Cattle Financial Protection Program and all indica- tions point to the fact that Ontario beef producers have been lulled into a false sense of security and many are just as vulnerable in cases of cattle' dealer bankruptcies as they batiP ever been in the past. Recently at the Public Aounts Commit- tee; Government administrators of the program revealed that only 388 licenses have been issued and 74 other applicants are deemed to be licensed. This figure is a decrease from the 597 dealers that were licensed last year. Moreover, they agreed with us that there are a potential 1,200 cattle dealers operating in the province. The great majority of them do not yet hold a license even though the MGhister stated, on May 27, 1982. that "all Hill AND Hill FARMS VARNA u7N1TE beef cattle buyers in the province will be licensed by August, 1". As of Sept. 1, 1982, dealers without licenses will be operating in contravention of the law. In his press release of July 29, 1982, the Minister of Agriculture stated that beef roducers who sell to unlicensed dealers 'will not be covered by the Program's compensation fund in the event of payment default." The manager of the Program explained that cattle producers must notify the Protection Board immediately if they have not been paid within 48 hours of the sale of the cattle. Otherwise, they also will not be eligible to collect from the Protection Fund in the event of the default of the purchaser. We believe that this may not be clearly understood by sellers and suggest that all invoices or purchase slips issued by sellers should be clearly stamped with a warning to the seller. We call on the Minister of Agriculture to widely advertise the fact that it is up to sellers themselves to determine whether or not buyers are licensed. Legislation must be introduced similar to that in the U.S. to apply sanctions against employment of those people in the industry who have defrauded producers. The government's own 1977 Report of the Financial Protection Task Force stated that "illusionary protection is probably more harmful to a farmer's long -run financial interest than no protection at all." If farmers are not aware of the shortcom- ings of this pt'ogram, this legislation could become another piece of the Ministry of Agriculture's show window legislation. ONT. FIRST LINE SEED SEED CORN 1626 (2550 CHU) WITH THE HELP OF OUR TWO AIR -FLOW DRY SPRAYERS •ELIMINATE FERTILIZER SEGREGATION @UNPARALLELED PRECISION IN A SIXTY FOOT PATTERN •THIS PATTERN IS VIRTUALLY UNAFFECTED BY WIND •PROVIDES PRECISION EQUAL TO LIQUID • BROADCASTS SEEDS AND SMALL GRAINS • Complete line of FARM CHEMICALS available, including BULK SUTAN plus BULK LASSO -- ALSO AVAILABLE — • PIONEER SEED CORN' • MAPLE ARROW SOYABEANS • SINGLE AND DOUBLE CUT RED CLOVER • Complete line of CEREALS & SMALL SEEDS Day or Nite the Service is Rite HOEGY'S FARM SUPPLY 345-2941 Brodhagen LIMITED soles Representative Peter Rowntree will ere customers at the Cllnfietd Elevators and the Elevators at Varna. if busy phone 3452311 FIRST LINE SEED PHONE 482-3218 Hill ane Exceptional Yield - Superior stalk strength 1646 (2800 CHU) Exceptional Yield excellent stalk strength. 1656 (2900 CHU) Exceptionol stalk strength . high yield H-2300 (3000 CHU) Excellent silage maker high stalk strength 169 (3100 CHU) High yielding silage maker. "CHECK US IN THE 1984 CORN PERFORMANCE TRIALS" SEED SOYBEANS MAPLE AMBER MAPLE ARROW EVANS ' HODGSON GRANULAR & PEAT INOCULANT RED CLOVER SEED - No. 1 DOUBLE CUT Farrns Limit 'VARNA 482-3218