Record Keeping and Business Management for the New Year

Ted Probert January is the time of year that many business owners turn their minds to record keeping and business analysis. With that in mind I wanted to spend a little time discussing some record keeping and planning tools. The following article on Balance Sheets was written by Joe Horner for the last issue of Missouri Dairy Business Update. I thought it would be worth sharing with a broader audience. By the way, if you would like to receive Missouri Dairy Business Update you can subscribe at this website: http://agebb.missouri.edu/modbu/index.htm.

Farm Finance Basics: Complete a Balance Sheet - January 1

Tracking your farm financial progress starts with completing a Balance Sheet as of January 1st every year. The balance sheet lists everything you own and everything you owe. The difference needed to "balance" what you owe and what you own is your equity or net worth at the point in time you do the balance sheet. Completing a balance sheet every year as of January 1, gives you the ability to:

Track and demonstrate growth in wealth to lenders or stakeholders

Combine income and expenses from calendar year tax records with changes in your balance sheet, allowing one to see the true "accrual" profit or losses

Examine trends in working capital (current assets - current liabilities)

Serve as a quick template to update any time of year you may need a balance sheet for a lender when getting a loan

If you don't have a standard blank balance sheet from your lender, here is a balance sheet form and a completed dairy balance sheet to use as an example. Additional farm balance sheet templates are available online simply by doing an internet search for "Farm Balance Sheet." To learn more about using farm financial statements and measures, check out the Center for Farm Financial Management's web site at: http://ifsam.cffm.umn.edu/.

Accounting Resources Concerning record keeping, I want to inform you of the resources that are available through University of Missouri Extension for farm accounting. Extension offers several accounting options, one of which should meet the needs of about any agricultural business.

Missouri Farm Tax Record Book

This popular record book is simple and inexpensive. It is a good option if you like keeping records on paper as opposed to on the computer. It is available at your local extension office or from the following links: Missouri Farm Tax Record: Part 1, Cash Paid-Cash Received

Missouri Farm Tax Record: Part 2, Four-Year Depreciation Records

Missouri Farm Business Record Book This record book for adult farmers was developed cooperatively by University Extension and Ag Education. It contains receipts, expenditures, summary, and enterprise forms needed for one year of records. Refills can be purchased from your local extension office or the order form may be downloaded at: http://www.missouricareereducation.org/doc/order/OrderForm.pdf. A free pdf version of refill sections for printing may be downloaded at: http://www.missouricareereducation.org/project/farmrecordbk.

Quicken Farm Accounting Software Quicken is a very popular finance software program and is available through many retailers and office supply stores. Many farmers use this software as their farm record keeping program. The university extension services in several states maintain detailed web sites to help farmers and ranchers adapt Quicken to their needs. Files for customizing Quicken to a farm business can be downloaded from this website: Quicken for Farm/Ranch Financial Records (Oklahoma State University) For Quicken basics: Using Quicken (Flagship Technologies)

QuickBooks Farm Accounting Software QuickBooks is also a very popular finance software program and is available through many retailers and office supply stores. The following links have discussion and guides related to using QuickBooks for farms. Quicken vs. QuickBooks Discussion (Flagship Technologies) QuickBooks Farm Accounting Cookbook (Flagship Technologies) More information on farm financial analysis and farm accounting is available at this web site: http://agebb.missouri.edu/mgt/mofar/index.htm

2016 Ag Budgets One final set of resources that you may find useful is MU Extension’s 2016 Farm Budgets. Livestock budgets for beef, dairy, sheep and goats, and swine enterprises are available. Additionally, you can access budgets for grain crops, hay and pasture, and silage/baleage. These budgets can come in handy for planning purposes as you make both financial and production decisions for the coming year. They are available at: http://agebb.missoui.edu/mgt/budget/index.htm. If you have questions about any of the information discussed above contact your local extension office.

University of Missouri System, Lincoln University, U.S. Department of Agriculture & Local University Extension Councils Cooperating EQUAL OPPORTUNITY/ADA INSTUTIONS

Howell County Extension Center

1376 Bill Virdon Blvd., West Plains, MO. 65775

Phone 417-256-2391

March 2016

South Central Missouri AG News

Sarah Kenyon, Agronomy Specialist, Ted Probert, Dairy Specialist,

Bob Schultheis, Natural Resource Engineer

Randy Wiedmeier, Livestock Specialist Stacy Hambelton, Agriculture Economist

Curtain Drains Dry Swampy Soil Bob Schultheis

All the wet weather and flooding this winter has produced several moisture problems in, under and around area homes. Mildew in the house, flooded crawl spaces, bacteria-contaminated water wells, and overflowing septic tanks from subsurface water recharge are frequently being reported. Most counties in southern Missouri have upland soils with a "fragipan", which is a dense, 3"-36" thick soil layer starting 18"-24" below ground surface. Because water won't seep through this soil layer easily, it travels sideways underground until it finds a break, such as a house foundation or hill slope, and then surfaces. If septic lateral lines were laid with even a slight slope toward the septic tank, subsurface water will backfeed through the perforated pipes and prematurely fill the tank. A soil evaluator, for a nominal fee, can help you determine if restrictive soil layers underground are contributing to the water problem. Or just dig a post hole to the fragipan and come back the next day to see if water is standing in the hole. See http://health.mo.gov/living/environment/onsite/ose for a list of evaluators in your county. If in town, check with your city building inspector to see what municipal codes and regulations might apply to the drainage work you do. To cure the water problems, start with the easiest things first. Make sure the ground around the house slopes away 6 inches in the first 10 feet. Add or fix missing or faulty gutters and direct downspouts well away from the house foundation. Gutters should have one inch of drop per 16 lineal feet toward the downspout. Install 6-mil plastic sheeting on the crawl space floor, seal overlapping seams, seal the edges to the foundation walls, and open all foundation vents to let moisture escape. See Figure 1 below and http://extension.missouri.edu/webster/house_sick.aspx for more details. A sump pump can be a good solution for houses with seepage problems that can't be located. These pumps automatically collect water inside the house and return it to the outside. Grade earthen terraces (with a 3"-4" drop per 100 foot run) to divert surface water around the house. When these methods fail, use a "curtain" or French drain (see Figure 1a and 1b). These drains are placed along the slope uphill of the area you want to dry out, such as the house foundation or septic absorption field, to intercept the groundwater as it flows into the area. The end(s) of the drain are extended beyond the area needing drying. A typical curtain drain is made by digging a 12"-24" wide trench at least 6 inches into the restrictive soil layer. Soil moisture is very important. Too wet, and the trench sidewalls will smear and seal over, preventing the drain from working right. The soil moisture is right when the soil crumbles in your hand.

The trench is located at least 10 feet upslope of the house or septic absorption field. Clean 1 1/2”-3” gravel fill is placed around a 3"-4" diameter perforated drain pipe, which is has a 3"-4" drop per 100 foot. Putting 6-mil black plastic on the downslope trench wall will improve the

effectiveness of the drain. The trench is filled with gravel to all the way to the top of the ground. Do not cover the rock with soil or grass. On sloped sites, the drain pipe discharges to the ground surface downslope. On flat ground, direct the curtain drains to a sump pump. A ¼" mesh screen put over the outlet end blocks entry of small animals. A perforated plastic alternative like that shown at http://www.multi-flow.com/Menu/residential_app.html can work if the soils can be easily trenched and is usually more aesthetically pleasing than the rock and trench system. Contractors in your county who should be familiar with installing curtain drains are the sewage system installers with the letters ADV (for Advanced) in front of their names at http://health.mo.gov/living/environment/onsite/counties.

Good Stewardship and Herbicide Tolerant Crops

Sarah Kenyon University of Missouri Weed Science Research Team, including Dr.’s Kevin Bradley and Mandy Bish, have released a new video on herbicide drift and injury. The video describes how chemicals can move off target and impact sensitive crops. This video does an excellent job at describing factors that can cause damage to sensitive species. Specific topics include drift, herbicide volatilization, and how to properly cleaning field sprayers. The video describes the best time of day to spray to minimize drift and volatilization, and the consequences of improperly cleaning spray equipment. To watch the video, follow this link: http://weedscience.missouri.edu/video.cfm then select the video titled, “Good Stewardship and Herbicide Tolerant Crops”. For questions related to weed control, please contact Agronomy Specialist Sarah Kenyon.

Figure 2a. Curtain drain located uphill of a septic absorption field

Figure 2b. Curtain drain intercepts surface and subsurface water

Figure 1. Methods to reduce moisture problems in crawl space

A Few Comments on 2015 Randy Wiedmeier

It’s been quite a year with record cattle prices and then an abrupt drop, the 7-year battle regarding the Country of Origin Labeling Act (COOL), the Waters of the United States Rule (WOTUS), and the last-minute Omnibus/Tax Package passed by Congress. We were blessed with an abundance of timely moisture in the spring and summer but also an abundance of untimely moisture this winter that has resulted in flood damage and even loss of life. Although we did experience a cattle market crash in 2015, I think it would be better described as a crash relative to 2014, which will likely be the record year of the decade regarding cattle markets. Many cattle market analysts have noted that October 2015 feeder cattle prices were the second highest on record, with 2014 of course being the highest. We should still be able to be profitable with a buck ninety for five weight steers. As my Grandpa used to say “No one should go broke making a profit”. Of course Grandpa wasn’t in the cattle business in 1975. The COOL issue began as a result of the 9-11 tragedy. It ended up being a mandatory act by which meat from cattle either born, grown or finished in other countries would be required to be labeled as such. As a result Canada and Mexico filed a grievance with the World Trade Organization (WTO) that COOL constituted an unfair trade rule. The WTO ruled in favor of Canada and Mexico. After four appeals the decision remained in favor of Canada and Mexico and authorized $10 billion in retaliatory tariffs against U.S. products unless COOL was repealed. Congress didn’t act until the last minute but finally repealed COOL through the Omnibus/Tax Package. The EPA-Corps of Engineers Waters of the United States (WOTUS) rule would extend the jurisdiction of the Clean Water Act greatly. I don’t think any of us can deny that the Clean Water Act and the EPA have done some good things for the environment. The problem I see with WOTUS is overreach. I doubt if any of us want EPA agents poking around on our pastures or back yards issuing citations, fines, etc. There have been court cases this past year that have cast doubt on the legality of WOTUS. The Government Accountability Office (GAO) found that EPA had violated rules when using social media to promote the WOTUS rule. In fact, the exact wording was, “ the EPA engaged in covert propaganda and grassroots lobbying to support the WOTUS Rule”. Several agricultural groups encouraged congress to prohibit implementation of WOTUS through the Omnibus/Tax Package. As far as I could tell, the Omnibus/Tax Package did not include any language to prohibit EPA from moving WOTUS forward. So we need to remain alert. The Omnibus/Tax Package provided for substantial increases in funding for waterways and port maintenance, which is of importance to agriculture since it much less expensive to ship products via the waterways compared to other methods. The package also increased discretionary funding for agricultural appropriations by $925 million. An additional $350 million was placed in the competitive grant system for Agricultural and Food Research, and an additional $212 million to help refit some of our important Agricultural Research Service facilities. This is good news for our Land Grant Institutions. The Animal and Plant Health Inspection Service (APHIS) received an additional $23 million to help with costs of the avian flu epidemic. It appeared that the Omnibus/Tax Package was trying to make some moves to simplify the tax code, but we’ll have to wait and see. One good item regarding taxes was for section 179, business expense deductions for capital improvements was permanently capped at $500,000 instead of $25,000. Lastly, I would like to comment on the upcoming Beef Checkoff Referendum. If my memory serves me correctly, the original Beef Checkoff was instituted in 1988 and authorized a $1/head fee on cattle sales, the proceeds of which were to be used for beef promotion, education and research. The familiar advertisements with the deep voice of Sam Elliot saying “Beef, it’s what’s for dinner” is an example of the promotional efforts of the Beef Checkoff.

With decreased cattle numbers and decreased purchasing power of that dollars since 1988, cattle producers are being asked for an additional dollar or $2/head sold ($1 for national and $1 for state of Missouri). I sold some calves last week and when the check came information about the Beef Checkoff Referendum was enclosed. We have the opportunity to vote on the matter. I have a personal opinion on the referendum but this newsletter is not a forum for my personal soapbox. However, I would encourage all to become informed on this important issue and by all means vote. To vote you must register. Registration can be handled in two ways: online at agriculture.mo.gov/ or by calling 573-751-5633, January 4th through March 4, 2016. Ballots will be mailed to registered voters on April 4th, 2016 and must be postmarked by April 15th, 2016. Results will be announced April 15, 2016. Please free to call or email me and I would be happy to discuss this important issue with you.

Fescue Toxicosis Workshops March 28-30

The Alliance for Grassland Renewal is holding three workshops in late March 2016. The workshops are one-day events to discuss fescue toxicosis and novel endophytes. The Alliance provides educational schools to assist producers with successfully converting Kentucky 31 tall fescue to novel endophyte varieties. Schools begin with understanding fescue toxicosis, then walk producers through the conversion process. Conversion topics include establishment practices, fertility needs, smother crops, weed control, stand maintenance, and variety selection. Schools provide hands on training for drill calibration in addition to pasture walks to observe different novel endophyte varieties. Education is a combination of University, NRCS, Agribusiness and Producers presentations to give participants the opportunity to get answers to questions from a variety of perspectives and information sources. The date and locations of the schools are March 28, Welch, OK; March 29, Mt Vernon, MO; and March 30, Columbia, MO. The schools start at 9:00 a.m. and conclude by 5:00 p.m. Advanced registration is $60 for individuals or $110 for couples (must be received a week before the event). Late registration is $75 for individuals or $125 for couples. Includes meal, refreshments and proceedings. For complete information on locations, agenda, and registration for the Alliance fescue school use this link: http://grasslandrenewal.org/education.htm

Broomsedge Bluestem Management (Andropogon virginicus L.)

Anthony Ohmes and Sarah Kenyon Broomsedge (a.k.a broomsage, bromesedge, yellow bluestem) is a warm season perennial grass found throughout Missouri. Like other warm season grasses, it is dormant during the fall through early spring, as pictured below. Broomsedge growth begins as temperatures consistently stay above 60 degrees F. It produces many seeds that are distributed by wind. It is a poor competitor, has poor forage quality and low palatability. Broomsedge can quickly become the dominant species in over-grazed, low pH (<5.5), low phosphorus, thin (eroded) soils where desired vegetation will not thrive. Since broomsedge is a perennial, and is usually well established when many consider management, elimination within a single season is generally not practical. Also, controlling a grass weed in a grass crop has limited control options. Because of these two factors good cultural control practices are important. The first step is to conduct a soil test. Since this plant thrives on low pH and low fertility soils (also thrives on fertile soils), soil testing is the first step in managing a broomsedge infested field. Improved soil pH and fertility will shift the competitive edge toward the desirable forages. This component will take various lengths of time depending on soil test levels. If your budget is limited, the priority should be adjusting pH with limestone. There is believed to be a correlation between broomsedge populations and low soil phosphorus levels, where broomsedge is more abundant in low phosphorus conditions. It is important to note that if both pH and phosphorus are low, then the low pH should be corrected first. However, if soil pH is adequate then increasing phosphorus can reduce broomsedge populations over time. A demonstration conducted at Mt. Vernon, MO observed that when soil pH was similar, adding 30 lbs./acre phosphorus decreased broomsedge after a three year period. There is a very short window when vegetative growth just begins, prior to early boot, that cattle may graze broomsedge, but even then it is not choice forage and generally avoided in a continuous grazing system. Broomsedge is also a poor competitor with other forage species. Managed rotational grazing will help shift the pasture back to desirable forages. If broomsedge is shading desirable species lower in the canopy, mowing may be necessary to bring in more light. However, neither mowing nor prescribed burning will reduce broomsedge populations. The application of glyphosate during active growth, either as a spot spray or rope wick, can be an effective herbicide option. A broadcast application of glyphosate in a spray-smother-spray program when establishing a new pasture will also help reduce broomsedge populations.

Soils Tests Help Answer Questions Ben Polley

Having your soil tested is the first step to having a more productive pasture or garden. Ben Polley, a graduate student working for the University of Missouri Extension in Douglas County, recommends having soils tested prior to fertilizer applications or, for well-managed operation, every 2 to 3 years. “You can’t make good fertility decisions unless you know what’s there” said Polley. “Amending untested soils can waste money, result in disappointing yields, and harm the environment.” To collect a sample, take 15 to 20 cores from each area tested. Due to soil variability, this area should be no more than 20 acres but can be as small as desired. Samples can be taken by walking in a zig-zag pattern throughout the area and pulling soil cores from a depth of six to seven inches. Sample probes are available from local Extension offices. Break up and mix the cores in a clean bucket. A total sample volume of about 2 cups is needed for testing. Samples can be brought in to the local MU Extension office for packaging and shipping. Some fees apply. “Fertilizer prices are down right now,” said Polley. “It’s a good time to invest in fertility but you can over or under apply if you don’t test your soil. In addition to showing the amount of nutrients in your soil and providing recommendations, a soil test determines the pH of your pastures or plot. Soils in the region tend to be acidic and limits the amount of nutrients that available to be taken up by the plants. A pH of 6.0 to 6.5 is optimal for most crops grown in the area. There are, however, a few exceptions. Alfalfa needs a pH of at least 6.5 whereas blueberries need a pH of 4.5-5.0. “Ensuring the pH is correct for what you’re trying to grow is paramount,” said Polley. “If it isn’t, the nutrients your plants need won’t be as available. The pH reading is one of the first things I look at on a soil sample report.” MU Extension has developed guide sheets for soil sampling and soil pH/liming. These can be found by doing an internet search for G9215 and G9102 respectively, by looking on http://www.extension.missouri.edu, or by coming to your local MU Extension office.

The soil pH on both halves of the field is 6.0, the right side received one application of P at a rate of 30 lb/A. Three years later this picure was taken. Source: Dr. Dale Blevins and Dr. Kevin Bradley,