Intensive Grazing/Seasonal Dairying: The Mahoning County Dairy Program

1987-1991

OARDC Research Bulletin 1190

Chapter 10: Tables 10.2, 10.4 and 10.5

Figure 10.4. Footnotes of the income statements shown in Table 10.2.

¹ We have prepared these income statements from data collected at the Mahoning Dairy Project. Unless otherwise noted, figures are based on actual performance. When preparing these statements, performance is reflected from commercial perspective and not from a research farm perspective. A family is presumed to own all the cows but rents the land and buildings. As part of the rent, the family pays property taxes. Costs of modifications to the buildings are borne by the family.

² Income statements are prepared using modified costing principles.

³ Market gains result from changes in inventories less expenditures for purchases plus revenue from culled animals. All purchased and raised COWS are treated similarly so no depreciation is charged on purchased cows. End of year inventory numbers were:

Inventory values are based on prices of $900 for cows, $600 for bred heifers, and $350 for calves.

⁴ Purchased feed includes silage bagging and feed analysis expenses.

⁵ These costs reflect estimates if an individual had rented the barn and land.

⁶ Depreciation reflects 1987 barn set-up costs of $8,402,1987 fencing purchases of $7,402,1988 equipment purchases of $390, and a 1989 bulk tank purchase of $4,700. Depreciation is calculated using a ten-year life and a straight-line method.

⁷ Income before taxes and interest measures profits which provides returns for equity financing, unpaid labor, and unpaid management.

⁸ Cash operating income measures funds available to repay debt principal, pay income taxes, and provide for family living expenditures.

Figure 10.5. Footnotes for the per-cow and replacement results shown in Table 10.4.

¹ Most receipt and cost categories in the budgets equal their respective categories in the income statement (Table 10.2) divided by the number of cows. For example, the 1988 per cow milk sales of $1,333 shown in the budget equals $39,998, total milk sales in 1988, divided by 30 (number of cows milked during 1988). Items not calculated in the above manner are explained in the footnotes given below.

The income statements do not include charges for unpaid labor, investment, and management. The budgets include these opportunity charges, thereby reflecting the full economic costs of operating the dairy enterprise. An operation must have positive returns above total costs to be viable in the long run.

² Market change equals: (ending inventory - beginning inventory - purchases) / number of cows.

³ Pasture charge equals 233 cow-days times $.75 per cow day.

⁴ Interest charge equals 10% times one-half of the purchased feed costs.

⁵ On average, 76 hours were required for each cow in the herd. The labor charge equals 76 hours times $7 per hour.

⁶ Interest and insurance equals the average inventory value-(beginning inventory + ending inventory) / 2- times 10.43%. The 10.43% figure reflects a 10% interest charge and a .43% insurance charge.

⁷ Building and equipment charge equals: (building rent + property tax + (investment in dairy facilities x .20)) / number of cows. Investment in dairy facilities equals $8,792 in 1988 ($8,402 of barn setup costs incurred in 1988 plus $390 of equipment purchases in 1988) and $13,492 in other years ($8,792 investment total in 1988 plus $4,700 for a bulk tank purchase in 1989). The .20 factor represents depreciation, interest, repair, and insurance charges equal to .125, .05, .022, and .003, respectively.

⁸ Five percent of total receipts.