Ag
Connection
Your local link to MU for ag
extension and research information
September 2009
Publishing Information
Ag Connection is published monthly for Central Missouri
Region producers and is supported by University of Missouri Extension, the Commercial
Agriculture program, the Missouri Agricultural Experiment Station and the MU College of
Agriculture, Food and Natural Resources. Editorial board: Joni Ross, Managing
Editor; Mary Sobba, Parman Green, Gene Schmitz, Mark Stewart, Wendy Flatt, Jim
Jarman, Todd Lorenz, Wayne Crook, Dee Cooper, James Quinn and Kent Shannon.
Comments or Suggestions?
Please send your comments and suggestions to
Joni Ross, Agronomy Specialist, University of Missouri Extension, 100 E Newton
St., 4th Floor, Versailles, MO 65084, call 573/378-5358 or send messages by
e-mail to: rossjo@missouri.edu.
To send a message to an author, click on the author's name at the end of an article.
 |
|
|
|
|
|
|
Winter will be back sooner than you think, now is the time for planning! |
|
|
|
|
|
|
|
|
Click Here for "Print Friendly" PDF
Format of Newsletter |
[This Month in Ag Connection] [Ag Connection - Other Issues Online]
Farm Financial Yardstick Increases
Agriculture has a set of financial
ratios that have been used for many years by lenders and farmers. That set
of ratios, often called “The Sweet 16” was developed many years ago by the
Farm Financial Standards Task Force after the farm crisis of the 1980’s.
The Sweet 16 includes several common
ratios such as the current ratio, debt to asset ratio and net farm income
ratio. The ratios are simply a yardstick to see how a farm is doing over
time (is it becoming more profitable) or to compare it to similar farms.
The ratios are categorized into five
categories: 1) liquidity (ability to meet obligations as they become due),
2) solvency (ability to pay all debts), 3) profitability (difference between
value and cost of goods produced), 4) repayment capacity (ability to pay
term debts on time) and 5) financial efficiency (how effectively assets are
being used to generate income). These ratios have worked fairly well
for many years, but occasionally the need for additional information arises,
so the task force this year added five additional ratios, for a total of 21
ratios. The five new ratios are:
à Working
capital to gross revenues is classified as a
liquidity ratio. The ratio measures the operating capital available against
the size of the business. (Working capital ÷ Gross farm
income)
à Earnings
Before Interest Taxes Depreciation and Amortization (EBITDA)
is a profitability ratio. It measures earnings available
for debt repayment. (Net Farm Income + Interest Expense + Depreciation &
amortization expense)
The three
remaining new ratios are repayment capacity ratios.
à Capital
debt repayment capacity measures the amount
generated from farm and non-farm sources, to cover debt repayment and
capital replacement. (Net farm income + Depreciation + Net non-farm income –
family living & income taxes + Interest expense on term notes)
à Replacement
margin is the amount of income remaining after
paying principal and interest on term loans and unfunded (cash) capital
purchases. (Capital
debt repayment margin – Unfunded (cash) capital replacement
allowance)
à Replacement
margin coverage ratio is calculated as a number
and the larger the number the better. A number under 1.0 indicates that not
enough income was generated to cover term debt payments and unfunded capital
purchases. [Capital
debt repayment capacity ÷ (Scheduled principal & interest on term loans or
capital leases + Unfunded capital replacement allowance)]
The ag
business specialists have a scorecard (available in the online version of Ag
Connection) available that shows whether your numbers are strong or if they
are in the vulnerable category.
They also have
more information about where to find the numbers to use in the calculations.
For more information contact MU Extension Ag
Business Specialists:
Mary Sobba 573-581-3231 or
Parman Green
660-542-1792
(Source:
Mary Sobba, MU Extension
Ag Business Specialist)
[This Month in
Ag Connection] [Ag Connection - Other
Issues Online]
Reducing Energy in Grain Drying Operations
One of the most efficient drying methods is to use natural air for
drying. While it takes more management, natural air can be used to dry
grain that is below 30 percent moisture. When using natural air, it is
important to match fan capacity to grain bin volume and do not over-fill
bins. MU
Guide 1310,
Low-Temperature In-Bin Drying: Shelled Corn in Southwest, Central and
Northern Missouri. This is available at:
http://extension.missouri.edu/publications/DisplayPub.aspx?P=G1310
This guide uses typical weather conditions for Missouri to determine the
depths of grain that can be dried. It also gives the sizes of fans needed to
dry and adjusts grain depths for fans that don’t match those sizes. Very
seldom do we have a typical year so one should check the grain regularly for
any problems that might occur.
Grain depth at various moisture levels can be determined from this guide.
Once the grain is dried, more grain can be added. The depth of grain to be
added should be determined by the moisture level of the grain to be added.
Using multiple grain bins, you can dry a large volume of grain with natural
air.
Stirring devices can be installed in bins to increase the drying capacity.
Care should be taken to install and operate them correctly. The airflow in
bins is increased, thereby increasing the drying capacity. If used
properly, over-drying can be minimized by the mixing of the grain.
Inspect and maintain grain bins and equipment:
· Drying
equipment should be inspected for proper working order. This includes
bearings, belts, etc.
· Check
the burners for a blue flame indicating complete combustion when using
heated air.
· If
equipment is aging, consider replacing with efficient dryers and fans.
Consider centrifugal fans for efficient air movement in deep bins.
· Fans
and burners should be cleaned. Check the regulators and sensors for good
working order.
· Be
sure air flow around the fan is not blocked.
· Inspect
and clean drying floors. Treat them for insect control according to
pesticide application guidelines and the latest recommendations for control.
· Check
your grain moisture meters for accuracy.
· Clean
dirt and chaff from grain to prevent blockage of airflow in the bins.
· Grain
should be leveled in bins to be sure airflow is even throughout the grain.
Management during harvest and drying:
Grain moisture during harvest and drying should be checked regularly. Be
sure you don’t over-dry the grain. If you have automatic controls, check
them regularly. Once you start drying in the bin, keep the fans running
continuously regardless of the weather until the entire mass of grain
in the bin is dried. However, if natural air drying and humidity is high,
such as raining for a week, shut fans off and resume when air dries out.
Dry the grain to the following moisture levels:
Management of grain during storage:
After grain is dried, it should be cooled in the fall to about 40 degrees.
This will avoid moisture migration in the bin due to temperature differences
between the grain in the bin and the outside air temperatures. Check the
grain regularly throughout the winter by running the fans to check for musty
odors. Take the temperature of the grain and record it to observe any
changes in the temperature. Grain should be warmed in the spring by turning
on the fans and blowing warm air through the grain. When the grain is cooled
or warmed, care should be taken to be sure the cooling or warming front
moves completely through the grain.
Long-term considerations:
· Consider
replacing existing equipment with more efficient equipment when your
equipment ages and needs considerable repair.
· Consider
alternative fuels after you have made your system as efficient as possible.
q Solar
has not in general been economically feasible, but as energy prices increase
and incentives come along, they may become more feasible.
q Biofuels
and biomass could be used to dry grain rather than using electricity or LP
Gas. Biofuel burners could be adapted for grain drying to use
these fuels.
q Recapture
heat from the dryer. A dryer that captures the heat from cooling the dry
corn and a portion of the air from the final drying portion
of the dryer can reduce
the energy used to dry the corn by about 20 percent. Newer
dryers typically have
incorporated features to make them more energy efficient than
previous dryers.
If
you feed your grain to livestock, consider high moisture storage of the
grain.
(Source: Don Day, MU
Extension Associate Energy)
[This Month in
Ag Connection] [Ag Connection - Other
Issues Online]
Winter will be back sooner than you think, now is the time
for planning!
The hay in the HY and
HS treatments was very typical of Missouri fescue hay; the crude protein
(CP) and neutral detergent fiber (NDF) were 7.7 %, 71.6% and 8.0%, 74.2%
for year 1 and year 2, respectively. Needless to say, the hay was definitely
on the low end of the quality scale, but is very typical in Missouri.
During August of both
trial years, 40 lbs N/acre from ammonium nitrate was applied to the STF
paddock treatment and allowed to grow until the start of the trials in
November 2006 and December 2007. The STF treatment had pre-grazing nutrition
levels of 11.8 % CP, 67.2 %NDF, and 36.2 % ADF, which was definitely higher
in nutrition than the hay. STF was strip-grazed and the cattle were moved
approximately twice a week. At the end of the winter grazing season the
STF had decreased CP 7.4%, and increased ADF and NDF levels (the higher the
ADF and NDF values, the lower quality the forage is), and still better
nutritionally than the hay. During year 1 of the
trial, HS treatment cows were supplemented with 0.88 pounds of corn per day
until midway through the calving season (March 16th) and
then increased to 2.7 pounds of corn plus 3.2 pounds of dried distiller’s
grains with solubles (DDGS) per day until March 27, 2006 (the end of year
number 1). During year 2, cows in the HS treatment were supplemented with
2.4 pounds of corn and 2 pounds of DDGS for a total of 4.4 pounds per day of
supplement, throughout the winter period, which ended March 26, 2007. Basically, the
results of the three treatments showed what producers could expect to see at
home. The STF cows actually gained almost 50 pounds during the first winter
while the cows on the HY and HS treatments lost 12 and 39 pounds,
respectively. During year 2, cows on STF, HS and HY lost 114, 109 and 187
pounds respectively. One reason for the dramatic weight loss, in year 2, was
the cold wet weather increasing their energy requirements. Snow and ice also
decreased the accessibility of the STF, which could explain the average
weight loss of 114 pounds. When all was said and
done, the STF and HS cows made it through the winter better than the HY
cows. After seeing the
results of this particular research project, stockpiling fescue makes
practical sense. Take advantage of the ample rain we have had this past
year, add some nitrogen fertilizer to a hay meadow or pasture and invest
in some temporary electric fence and you will not only have a great source
of nutritional winter feed for your cows. The beef cattle market is in
somewhat of a downturn this year, so make every penny count and wean as many
live healthy calves as you can. This research project shows that producers
can keep more live healthy calves when stockpiling, and that cows will
winter better with that “old fescue” when it is fed right. Cows and calves
will be more comfortable and do better over the course of the winter.
(Source: Wendy Flatt,
MU Extension Livestock Specialist)
[This Month in Ag Connection]
[Ag Connection - Other Issues Online]
Farewell & Good Luck
(Author:
Joni Ross, MU Extension Agronomy
Specialist)
[This Month in
Ag Connection] [Ag Connection - Other
Issues Online]
Taxation Tidbit: The Kiddie Tax
Over the years
financial planners have encouraged the use of 529 plans (higher education
saving plans) as a saving vehicle for the cost of higher education. MOST –
Missouri’s 529 college savings plan warrants your consideration. So why are
we hawking 529 plans? Earnings and funds taken from 529 plans to pay the
costs of higher education avoid income taxes, even the kiddie tax. The
kiddie tax is the tax provision that can tax the unearned income of
dependent children at the highest marginal rate of the parents, rather
than the child’s lower marginal rate. Originally, when the
kiddie tax was implemented in 1987, it was targeted for dependents under the
age of 14. In 2006 the applicable age was changed to those under age 18.
Even then, the kiddie tax didn’t impact many children in college. However
starting in 2008, the kiddie tax is expanded to apply to dependents who are
full-time students under the age of 24. Again, the extra tax bite is only on
the unearned income (interest, dividends, and capital gains) of the child.
But for many full-time students - they have more unearned income than earned
income.
Key planning pointers:
1. Creating
a saving vehicle is more important than the exact type of the saving
vehicle.
2. The
kiddie tax only applies to unearned income greater than $1,900 for 2009.
3. Third,
there is an exception to the kiddie tax if the child is at least 19 years
old and can show their
earned income for the year is
greater than half of their total support for the year.
4. Accrued
earnings in a child’s 529 high education saving plan is not considered
income if used for higher
education expenses and therefore, avoids
the kiddie tax. For information on
Missouri’s MOST 529 plan go to
https://missourimost.s.upromise.com
(Source: Parman R. Green,
MU Extension Ag Business Mgmt. Specialist)
[This Month in
Ag Connection] [Ag Connection - Other
Issues Online]
It is a delicate task to balance drying grain and minimizing the energy
required for drying. One should consider letting crops dry in the field as
much as possible. In general, in Missouri, one should try to average about
22 to 23% moisture during the harvest season to minimize field losses and
minimize drying costs. This means trying to start harvesting at about 28%
moisture. These figures were developed by Bob George and Ed Constein,
State Agricultural Engineers in the 1970’s, but they still apply today.
Store over winter/6 months
Store more than 6 months
Corn
15
13
Soybean
13
11
Grain Sorghum
15
13
Wheat
13
11
Researchers
at the University of Missouri compared three typical methods of wintering
beef cows. However, nobody has actually done the research, until now, to
see if there truly is a difference in cow and calf performance between these
“typical wintering methods.” The three methods included in this study
compared, feeding only hay (HY), feeding hay with a supplement (HS) or
feeding stockpiled tall fescue (STF) over a two-year period, during the
winters of 2006 and 2007. 
The HS cows seemed to regain their weight losses with spring grass. It is
interesting to note in year 2 that the HS and HY cows had a higher incidence
of calf death due to hypothermia and respiratory diseases. The researchers
observed that the STF treatment didn’t have the mud problems that the other
two treatments had. Cows and calves were constantly being moved in the STF
treatment, which deceased the time they spent in wet and muddy areas.
The
Central Missouri Region agriculture staff would
like to say thank you to
Dee Cooper
for her role in supporting the
agriculture producers our region. Dee has been a part-time livestock
specialist in the Callaway county office. She was assisting Mark Stewart
while he has a special assignment. She has assisted with a safety program
for the Amish, programs for extending winter hay supplies, consultations
with producers and was on the editorial board of Ag Connection. Her last day
with MU Extension was August 19, 2009.
Ag
Connection - Ag Connection Newsletter, September 2009