Financial Health Checkup Tuesday, June 2, 2009 Time: 10-5 pm DeWaay Commerce Park, Clive, IA One day prior to World Pork Expo

From feverish feed costs to anemic market prices to pandemic panic, pork producers have endured many economic challenges over the past year.  That's why a financial health checkup is just what the doctor ordered.  Join leading producers and financial experts for PORK$HOP.09, a free seminar sponsored by the Latta, Harris, Hanon & Penningroth, LLP CPA firm and FBS Systems, Inc. that will help diagnose past performance, search for opportunities and prepare for the future.

PORK$HOP SPEAKERS
Mark Greenwood As Vice President, AgriBusiness Capital for AgStar Financial Services, Mark manages an $800 million swine portfolio.
Mark Penningroth, CPA A founding partner of Latta, Harris, Hanon & Penningroth, L.L.P., Mark consults with several of the largest Midwest independent pork producers.
John McNutt, MBA Past president of the National Pork Producers Council, John is a business analyst and consultant; he works frequently with LHHP clients in M.I.S. implementation and training.
Rob Brenneman Owner of Brenneman Pork, which markets pigs from its own 6,000 sows in Iowa as well as weaners from 13,000 sows in Illinois.
Joe Dykhuis Controller at Dykhuis Farms, Inc., a 19,000 sow system, Joe is responsible for production, accounting and financial records and reporting.

Click here for the Agenda

For a copy of the program, click here.  To preregister, e-mail sales@fbssystems.com or call 800.437.7638.

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In the past two issues we addressed three levels of computer applications:

•	Compliance—What We Have to Do
•	Decision Support—Where We Want to Go
•	Business Processes—How We Get Things Done

We used a mountain range metaphor to depict the relationship between these levels—decision support (covered last month) on the peaks, compliance along the smooth valley road and business processes as the rugged path to the top.


Compliance:  the Great Equalizer
Would most farmers keep records if it weren't for the prodding from the banker, IRS, USDA and EPA?  As a result, though, these institutions define the format (1040 Schedule F, Census of Agriculture, FSA-578) and the frequency (annual, at best) that every producer, great and small, must assemble their data.  While a massive amount of output is generated to meet compliance standards, little of it is directly used for internal management decisions.  Some reasons include:

•	Low perceived value of the information.  For a vast majority of producers compiling information for the accountant, banker or Uncle Sam is a rote process performed under duress at the last minute, with no clear appreciation or feedback of what all of it means or how it benefits their operation.
•	Low perceived quality of information.  When records are considered only as a chore dictated by a bureaucracy, producers will naturally do only the minimum necessary to get by; therefore, the resulting information should rightfully be viewed with skepticism, again lowering its perceived value.
•	Generic format.  The simplification and generalization required to fit a complex farming operation into the broad categories on a government form or a non-agricultural accounting program dilute most of the internal management benefits of keeping that data.
•	No continuity.  Most compliance records are "zero-based," i.e. requiring you to start each year with a blank slate with no access or reference to historical data (although the institutions receiving that information likely maintain sophisticated historical databases).

Business Processes:  How We Get Things Done
Compared to the wide adoption of occasional decision support and annual compliance reporting by most producers, only the most intense managers are use computers to monitor day-to-day business processes such as inventory control, purchasing, marketing, production records, human resources and managerial-level accounting.  It's not that the rest of agricultural world doesn't perform these functions, it's just that they're going about these tasks out of habit or in a reactive, off-the-cuff manner as opposed to the formal, standardized business processes demanded by other industries.

Because business processes are often closed, mechanistic systems, the information they provide is much more specific and precise than what's available through stand-alone decision support or generic compliance-based software.  For example, GPS yield data are much more precise than an EPA restricted use pesticide report, and managerial accounting is much more accurate than a partial budget.

However, there are some downsides even to business process applications:

•	Precise and historical, but not actionable  By the time many annual, quarterly and even monthly reports are prepared, crops and livestock have been raised and marketed, investment decisions committed and profit or loss locked in.
•	Single-purpose applications.  "Best of breed" business process applications all need to be fed, and often that means recording the same or overlapping data in multiple systems, degrading the timeliness and value of the resultant information.
•	Conflicting or confusing results.  The output from specialized business process applications, similar to decision support software, is often narrowly-focused, ignoring relevant data from other applications, substituting that information with "plugged" values which are neither current nor accurate.

Here's a graphical representation that depicts the time value of information and where decision support (Economic Analysis), compliance reporting (Tax Accounting) and business processes (Managerial and Accrual Accounting) fit into this picture.

Note that Economic Analysis can be performed within a short time but has limited value because it's not very precise.  Tax Accounting requires a long time and has the lowest value (to the manager) even though it might be precise.  Managerial Accounting, on the other hand, can be both timely and precise, but it requires adaptations which we will cover in a future installment in this series.

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Join us for these free webinars at 10:00 am CST:

•	Crop production and cost analysis on Monday, May 4
•	LifeCycle Budget on Monday, May 11
•	Smart Feeder User Defined Reports on Monday, May 18

If you'd like to attend any of these virtual meetings, e-mail norm@fbssystems.com by 8:00 am CST on the day of the webinar to receive login instructions.

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Within the next couple of weeks FBS users will be receiving invoices for the 2009-2010 TiMEsavr service agreement renewal.  One payment covers technical support and software upgrades/updates for an entire year.  Because we offer five different service plans we encourage you to compare benefits and costs so that all facets of FBS Integrated SeRVware meet your expectations and budget.  Click on this link for the support plans.

Thanks to your continued loyalty and feedback we're beginning our 12^th season of the TiMEsavr service and our 30^th year of providing software, training and support to production agriculture's best managers.

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©2009 FBS Systems, Inc.