September’s report shows pounds shipped per cow fell below budget for the first time since December. Cow number increases are keeping the total pounds shipped from the farm 695,218 lbs. over budget. We made a second report comparing the farm’s performance to the first nine months of 2000. Pounds shipped in 2001 are 1,091,808 lbs. higher.

Total expenses were below budget this month for the first time this year. Feed costs were also below budget for the first time in 11 months. The farm posted a net income of $42,081 this month.

The 2000 comparison report shows the cost of production has increased $1.31 per cwt. over the same nine-month period. Feed and forage purchases are $1.87 higher than last year. Repairs have increased $.26. Marketing costs show the greatest reduction, saving $.77 per cwt. shipped.

John

Example 2:
A Note From Dehm Associates
Dear Dairy Producer,

September’s report shows pounds shipped per cow dropped to the lowest level this year. This resulted in reducing expected milk sales $11,394. The increased pay price more than offset this income loss contributing an additional $15,880 toward milk sales. Total income was $3,250 over budget.

Total expense was $4,443 below budget this month. The largest line item cost savings was fertilizer, expected to be $10,877 this month. For the year fertilizer cost are $20,051 below budget. Because the farm reports are on a cash basis, it is impossible for me to tell if this is a savings or if bills remain outstanding. A good example of this is office and professional fees which are $6,261 over budget this month. We budgeted this cost for May. Year to date office and professional fees are only $835 over budget. Land rent and repairs went over the annual allotment with this month’s expenses. Veterinary expenses went over the annual allotment in August.

Bruce

Example 3:
A Note From Dehm Associates
Dear Dairy Producer,

September’s reports show cow numbers dropped below budget for the first time since April. Pounds shipped per cow is only 1 lb per cow per day but the number of cows in milk has dropped to 433 or 78% of the total. The pounds of milk sold from the farm were below the monthly goal 98,648 lbs. in September and 64,229lbs below August’s goal. The favorable pay price kept milk sales above budget both months and making this 10 months in a row this fiscal year.

The second comparison report shows labor costs increased $58,259 over the first ten months of 2000. The per cwt. analysis shows the cost for this line item has dropped $.50 per cwt.

I am including a preliminary budget for fiscal 2001. I am including per cow and per cwt. analysis for the budget with 2001 and historical costs for 1998 through 2000. Please study the pages and mail back corrections with the next QuickBooks backup. I believe I have the debt payments nailed down. I am very unsure about cow numbers and production levels. The break-even is 68 lbs. per day at this pay price.

I have assembled a balance sheet folder for the year end reports. I found that I am missing the loan number of the mixer truck and the phone and fax numbers for your bank. I also need a hard copy of the transaction describing the mixer truck purchase. Sandy faxed me a copy with the amortization schedule on September 17th but it must have been on some lined paper or written very lightly because the transmission was illegible.

John

Example 4:
A Note From Dehm Associates
Dear Dairy Producer,

September’s report shows cow numbers at budgeted levels but, based on the information we have received from Great Lakes Dairy the number in milk is less than expected. Pay price is $.60 higher than budget so milk sales were also $1,559 higher than budget.

Total expenses were $4,436 over budget. The line items showing the greatest increase were feed and utilities.

We included a second report showing the farm’s performance this year to 2000. The number of pounds shipped per cow per day is 3.7 lbs. below last year. The per cwt. analysis shows the cost of production has increased $1.21 per cwt. $.77 of this increase is due to updated depreciation estimates ( a non-cash expense). Feed and forage purchases are up $1.09 per cwt. for the nine-month period. Labor, livestock supplies and repairs are all $.20 per cwt. below last year.

Bruce

Example 5:
A Note From Dehm Associates
Dear Dairy Producer,

September’s report shows another month of increasing cow numbers and higher than budgeted pounds shipped per cow. This resulted in an addition $4,809 in milk sales from increased production. Pay price increased $3.41 per cwt. but the forward contract reduced income $2.66 per cwt.

Total expenses were under budget for the second month in a row. Feed cost are shown to be $8,744 below budget. Cash expense for feed was only $3,965.78 to which we added an estimated $8,000 in an attempt to bring costs up to a reasonable level. The graph shows that even with this adjustment June and July are the only months this line item went over budget. The second comparison report shows that despite the decrease in feed purchases total costs per cwt. have increased $.68 per cwt. over the same period in 2000. Capital purchases are$12,909 higher in 2001 due to increased equipment purchases. Livestock purchases dropped $31,834 but heifer raising is up for the period $37,532.

John

Example 6:
A Note From Dehm Associates
Dear Dairy Producer,

September’s report shows cow numbers remain below budget for the third month in a row. Pounds shipped per cow has remained above budget for the same period. The reduced number of cows has kept total pounds shipped below budget an average 25,000 lbs. per month for August and September. We included a second comparison report showing the farms performance this year vs. 2000. It show pounds shipped has increased 477,298 lbs. over the first nine months of last year. Average production per cow is below last year 4 lbs. per cow per day.

Total expenses are over budget on both the year to date reports and the two monthly reports we included. The 2000 comparison report shows similar increases. The production analysis shows an increase of $1.73 per cwt. for the first nine months. The largest cost increases this year can be found in feed, hired labor, forage purchases, and heifer raising.

Bruce