Budgeting for Grass Fed Success

1. Budgeting for Grass Fed Success Joe Colyn, Originz Gary Matteson, Farm Credit Council Allen Williams, Livestock Management Consultants

2. Business & Financial Skill Needs of Beginning Farmers & Ranchers • EIEIO Project • Evaluating and Improving Educational Instruments and Outreach for Beginning Farmers and Ranchers • Community of Practice • Southeastern USA…and wider

4. Looking to the Future • What are your skills? • What is your tolerance for risk? • What is your capacity to deal with ambiguity? • What is your capacity to lead others? • What is your capacity for self-discipline?

5. What is your capacity to gather information?

6. define success acres gross sales tractors yield/acre cows net profit

7. define success enough net profit to meet your goals for your family and your business

8. know your business Plan to succeed, plan to be happy Tell your story in a business plan A budget is a plan in numbers Plan for contingencies

15. The 5-Line Income Statement

16. Showing Annual Business Results This 5-Line Income Statement Becomes the basis of this Cash Flow Analysis Spreadsheet

17. The Concept of Cash Flow Budgeting

19. Grass Fed Cash Flow Analysis Summary of Annual Results from Spreadsheet (the 5-Line Income Statement)

20. Grass Fed Cash Flow Analysis Monthly Results Spreadsheet Cash flows are highlighted in yellow

21. Grass Fed Monthly Cash Flow Analysis

22. Pick-up Truck?

23. how quickly can you make money? • Goal of producing cash in 6 months • Budget to accomplish goal • Pay your bills • Family living expenses

24. Managing inventory/expense…the time factor… 24-36 months 1-2 months

25. plan your business Record keeping is required for taxes Ultimate goal is to manage from records Need up-to-date and accurate records Create budget with expectations and measurable results

26. starting in the beef business Like any small business: income expenses cash flow

27. things to do before starting • Save money • Protect credit rating • Gain experience • Network • Plan

31. Livestock…a 3, 6, 12, 24, 30 month cycle… Riding it out…to succeed.

32. Cycle for cash flow…

33. North Dakota: Returns Per Cow • 2012 Returns: Cow/Calf Operation* • Average : $171.70 Net return per cow • Low 20%: -$34.65 • High 20%: $347.25 • *Based on 527 wwt @ $157.34/cwt.

34. North Dakota: Backgrounding Returns • 2012 Backgrounding Operation Net Returns* • Average: $17.31/cwt • Low 20%: -$73.12/cwt • High 20%: $66.64/cwt • *Based on avg gain of 154 lbs and sale price of $143.46/cwt.

35. North Dakota: Corn Net Returns • 2012 Net Corn Returns Per Acre: • Region 2 • Average: $252.40 • Low 20%: $52.74 • High 20%: $447.97 • Region 3 • Average: $383.96 • Low 20%: $93.07 • High 20%: $554.06

36. Grass Fed Beef Net Returns • Return Per Head • Average Range: $150 - $350 • Low 20%: $10 - $80 • High 20%: $380 - $450 • Return Per Acre • Average Range: $180 - $300 • Low 20%: $15 - $65 • High 20%: $325 - $400

37. Business Cycle ~ Cash Flow Cycle • Plan, prepare – avoid surprises, achieve success

38. Helpful Resource Links • www.finbin.umn.edu • www.ndfarmmanagement.com • www.iowabeefcenter.org • www.grazinghandbook.com • www.bcscd.com • www.Mccc.msu.edu • www.Mandan.ars.usda.gov • www.greencoverseed.com

40. manage your business Three basic business skills: Financial Production Marketing If you are lucky you have two of these skills. Partner with or hire the skill you don’t have.

41. .www.annualcreditreport.com

42. Thank You • Contact us: • Joe Colyn • 616 581 1360 joe.colyn@originz.com • Gary Matteson • 202 879 0840 matteson@fccouncil.com • Allen Williams • 662 312 6826 beefrepro@aol.com