Lake Erie Grape Farm Cost Lake Erie Grape Farm Cost Study (LEGFCS) Using Tax-Study (LEGFCS) Using Tax-based Records For Cost of based Records For Cost of

ProductionProduction

Barry ShafferBarry ShafferLake Erie Regional Grape ProgramLake Erie Regional Grape Program

Cornell Cooperative ExtensionCornell Cooperative ExtensionFredonia NYFredonia NY

bes9@cornell.edubes9@cornell.edu

LEGFCS GenesisLEGFCS Genesis

In 1993, we assembled a committee to design a simple form to get the most information with skimpy financial records.

Most Lake Erie Grape Belt Growers are now specialized grape growers.

Very little in the way of inventories Cooperative members would likely have

large accounts receivable. Cash market growers would likely have low to no accounts receivable.

Lake Erie Grape Farm Cost Study Lake Erie Grape Farm Cost Study (LEGFCS) started for the 1991 tax (LEGFCS) started for the 1991 tax

year.year.The committee decided to use farms The committee decided to use farms

that had a minimum of 85% of crop that had a minimum of 85% of crop receipts from grapes. This probably receipts from grapes. This probably eliminated no more than 20% of the eliminated no more than 20% of the grape farms in the Lake Erie Region.grape farms in the Lake Erie Region.

We erred on the side of getting a We erred on the side of getting a larger sample size instead of more larger sample size instead of more detail on fewer farms and based detail on fewer farms and based much of the information from much of the information from Schedule F’s.Schedule F’s.

LEGFCS GuidelinesLEGFCS Guidelines

We also gathered production We also gathered production information such as:information such as:Bearing acreageBearing acreageBusiness organizational type (mainly Business organizational type (mainly

sole proprietors, a few corporations, sole proprietors, a few corporations, and very few partnerships)and very few partnerships)

Yields (tons per acre farm wide)Yields (tons per acre farm wide)How many operations were using Sec. How many operations were using Sec.

179 expensing179 expensingNitrogen rates (starting in 2006)Nitrogen rates (starting in 2006)

LEGFCS ProcessLEGFCS Process

I developed a simple 5-page worksheet to gather the data.

Normally make farm visits for data collection after taxes are done (push to finish most in March and April)

Compile the averages and then prepare individual farm analyses for LEGFCS cooperators. Then sit down again with cooperators usually starting in July to go over the results.

LEGFCS SoftwareLEGFCS Software

Originally I had the records on MS Originally I had the records on MS Excel.Excel.

After 2 or 3 years, I transferred over to After 2 or 3 years, I transferred over to Filemaker Pro. This was a good Filemaker Pro. This was a good database to use because I used Macs database to use because I used Macs up until 1998 and then switched to PC’s. up until 1998 and then switched to PC’s. I was able to transfer to the PC with no I was able to transfer to the PC with no problems with Filemaker Pro files.problems with Filemaker Pro files.

The individual farm analyses include The individual farm analyses include graphs from MS Excel spreadsheets.graphs from MS Excel spreadsheets.

Cost of Production Cost of Production BenchmarksBenchmarks

The information received allows us to The information received allows us to establish benchmarks for American establish benchmarks for American grape production for NY, PA,OH, and grape production for NY, PA,OH, and MI.MI.

We use the information inWe use the information inNewslettersNewslettersInformal meetingsInformal meetingsConferencesConferencesPublicationsPublications

Information ExampleInformation ExampleAverage Annual Costs, by Category, 2001-2005

380

356

213

117

116

114

100

78

78

68

43

0 50 100 150 200 250 300 350 400

Paid labor

Other costs

Depreciation

Chemicals

Operator labor

Interest

Repairs

Supplies

Insurance

Taxes

Fertilizer

$ per acre

LEGFCS LimitationsLEGFCS Limitations

Missing Net Worth Missing Net Worth I have an idea where net worth is

trending but no definitive numbers.Liabilities and debt restructuring aren’t

captured directly.Tax Depreciation

Where Could Tax-based Cost of Where Could Tax-based Cost of Production Studies Fit?Production Studies Fit?

Farms with little or no ending inventories.Some vegetable growersFarm standsSome fruit farmsSome greenhouse operationsIndustries with spotty financial recordsOthers?

Tax-based Farm RecordsTax-based Farm Records

Better to get half a loaf than nothing Better to get half a loaf than nothing at all.at all.

Multiple year averages help to give a Multiple year averages help to give a more complete picture.more complete picture.

Cost of production can help growers Cost of production can help growers of all sizes to help evaluate their of all sizes to help evaluate their operations.operations.

Easier data collection!Easier data collection!