Good farm records are the foundation of good farm management. When farm records can be used by farm managers to quickly analyze situations and reach decisions, they are powerful to use in enhancement of farm profitability.
            The first step in this process is the establishment and maintenance of farm business records. But this is not business records. But this is not enough. Records that are developed, but not understood or not used, make no contribution to the decision making process that is essential to successful farm management.

            A farm is a socio-economic as well as a decision-making unit. It is a socio-economic unit because. It is a socio-economic unit because it provides income to the farmers and also it forms a source of livelihood to the family. It is a decision making unit as it facilitates many alternative uses for the available resources in the form of different crop and livestock enterprises.
            Each farm unit has the capacity to produce a given quantity of crop and livestock products. The contribution of each farm unit in the country when aggregated represent the total agricultural production of a nation. When we say development of agricultural in the country, it is the development of all these individual farm unit. Thus, the prosperity of the country depend up on the prosperity of the farmers. The prosperity of the farmers in turn depends on their ability to make rational decision in the allocation of resources and the adoption of new methods of production. Since agricultural sector supplies raw materials to industries, the prosperity of this sector depends on the farm sector.
            In this case, there is a greater need to improve the managerial abilities of the farmers.
            Good farm business analyses gives out good decision making and give the farmer a good direction which will increase the output of the farmers. The role of farm management, therefore is to supply the information for the farmers for sound Planning. All farm management tools are helpful to the farmers ins solving their managerial problems for successful operation of the farm business. The field of management through research, teaching and training in this has provided the needed decision making skills.

Definition of farm business analysis
Farm business analysis can be defines as the process of retrieving organizing, processing, and analyzing information used inf arm business decision making is a critical ingredient in the management of the modern farm.
            Managers must be able to quickly respond to changes in the process of the inputs they buy and products they sell if they are to maintain farm profitability in today’s rapidly changing market place. Producers are no longer isolated form changes else where in the economic system. They must successful respond to changes in consumers tastes government regulations, and a whole host of other changes that occur in the world beyond the farm gate.
            Detailed and accurate information is a necessary component of the farm managers decision making process. This is why good farm records are the foundation of good farm management.
            The farm manager must be able to use business records in day-to-day decision making. Use of the farm business records in the management requires ability to organize information from the rescores, to select the relevant form that which is less important, and to focus on the areas of the business that need alternation.

Whole farm analysis
Profit-making s one of the major reasons for establishing a business organization or outfit. The consideration of the farm’s profit level in terms of its adequacy in relation to the level of capital invested and the standard of living it can support is the staring point of a whole farm analysis. The profit level of  a farm can be affected on influenced by.
1.         Demand for the farm products
2.         Product and input prices.
3.         Yield rates.
4.         Rates
5.         Rate of turnover
Having considered the profit level of the farm, it is imperative to examine the factors that can affect or influence the level of output in a farm. Output level can be affected by:
1.         Climate
2.         Labour
3.         Pest and diseases
4.         Management.

Meanwhile, the whole-farm components:
Financial analysis

Profitability anal

Farm size analysis

Efficiency analysis

Enterprise analysis.
Detail use of balance sheet to determine the capital position of the farm business as well as its liquidity through the examination of the farm’s financial ratios.
By profitability it means the use of income statement of the farm business to compute the profit and loss of the farm by looking at the returns to various resources used.
Farm -size analysis helps to determine if the size of the farm is adequate enough as to generate sufficient income for the farm. The farm size can be measured by the examination of the following:
— Business
Total capital invested in the farm
The total hectares Controlled by the farmer
The size of labour used in the farm
The value of the farm production
Size of livestock, etc.
Analysis of the farm’s efficiency is measured in terms of the farm technical or economic efficiency. Technically,  Technically, efficiency is measured in its ability to obtain the W output but, economic efficiency is measured in the ability to maximize profit
It is important to state that the whole-farm analysis is crucial in the assessment of farm business because:
• It avoids the splitting of cost among the various
• enterprises on the farm.
• It can be used to compare the performance of similar farm types and sizes in the same locality.

There are numerous different financial tool and analysis methods that can be used when analyzing the profitability of a dairy business. However, as with many other aspects of the dairy business, using the right tool for the job at hand is important. The key financial statements — balance sheets, income statements, and cash flow statements — are very useful and critically important for identifying and measuring the success of your dairy. Likewise, these same statements can provide some useful benchmarking information. However, it is important to remember that when benchmarking individual measures there may be confounding issues that need to be accounted for. If there are confounding effects, an analysis based upon one factor (i.e., a uni-variate analysis) can lead to misleading results. Because of these confounding factors, using financial statements based on historical data to identify why a business is or is not successful can be difficult. That is, financial statements are very useful for identifying if a business is successful, but they are less useful at identifying specific management styles and strategies that led to that success. The exception to this is when financial statement information, specifically income statement information, can be analyzed from a large numbers of operations using a multi-variate analysis methodology that accounts for the many varying characteristics of the dairies.
When insufficient information is available (either numbers of operations or information pertaining to the characteristics of the dairies), it is very difficult to identify cause and effect issues using financial statements. In this case, it is often more useful, and likely more accurate, to use either partial or enterprise/whole-farm budgets. While partial and whole-farm budgets require projections of the various cost and return variables, it is easy to see what assumptions have been made and conduct sensitivity analysis around those where uncertainty exists. This is a preferred case to using actual data when information about confounding effects are unknown meaning you can only guess at what might have been going on.
A key point to keep in mind as a dairy manager when analyzing your business is that basically decisions you make are based on what you expect will happen in the future and thus the most important thing is having confidence in your expectations. Thus, you need to ask yoursell do I have more faith in an analysis of financial statements using actual data or in a budget that is based on historical data and my best projections. We believe that both types of analyses have their place, but it is important to use the right tool and method of analysis for the job at hand.

Dhuyvetter, K.C., J.F. Smith, M. Brouk, and J.P. Harner, III. 2004a “Dairy Enterprise -2,400 Lactating
Cows.” Kansas State Univ. Coop. Ext. Serv. Bull. MF-2442. Available at,livestock
Dhuyvetter, K.C., M. Brouk, J.F. Smith and J.P. Harner, Ill. 2004b. “Dairy Enterprise — 2,400 Lactating Cows (Drylot).” Kansas State Univ. Coop. Ext. Serv. Bull. MF-2540. Available at wv.agmana
Langemeier, M.R. 2004a. “Balance Sheet — A Financial Management Tool.” Kansas State Univ. Coop. Ext. Serv. Bull. MF Available at
Langemeier, M.R. 2004b. “income Statement — A Financial Management Tool.” Kansas State Univ. Coop. Ext. Serv. Bull. MF-294. Available at www.agrnanager,info/farrnmgiifmg/financiai
Langemeier, M.R. 2004c. “Cash Flow Projection for Operating Loan Determination.” Kansas State Univ. Coop. Ext. Serv Bull. MF-275. Available at
Langemeier. M.R. 2004d. “An Integrated Financial Management Package.” Kansas State Univ. Coop. Ext. Serv. Bull. MF-905. Available at wv.aymanag
Langemeier, M.R. 2004e. “Financial Ratios Used inFinancial Management.” Kansas State Univ. Coop. Ext. Sew. Bull. MF-270. Available at v.agmanager.infoffarmmt
Proceedrngs of the 7 Western Qaulity Management Conference March 9-11, 2005• Reno, NV• 117
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