PORK$HOP.08  REAL-TIME RESPONSES TO TODAY'S CHALLENGES

If you're invested in the future of the pork industry, then please join us for the 16th Annual PORK$HOP seminar on Wednesday, June 4, in suburban Des Moines, Iowa.  Sponsored by CPA firm Latta, Harris, Hanon & Penningroth, LLP and FBS Systems, Inc., PORK$HOP is the only seminar scheduled prior to World Pork Expo and will be an excellent opportunity to network with other leading producers and consultants, plus participate in these timely sessions:

•	The release of the latest, most accurate cost of production benchmarks
•	Market outlook and risk management strategies by Steve Meyer and Moe Russell
•	FBS production and managerial accounting software training
•	Demonstrations of a real-time cash-flow/pig-flow/feed-flow decision-support system

Click on this link for agenda and registration information.

Note that this seminar is free, but you must register by Friday, May 30, to qualify.

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Implementing Management Accounting on farms large and small will be the topic of a special seminar to be held in Red Wing, MN, July 17 and 18.  The program is sponsored by the Farm Financial Standards Council and open to anyone who would like to take part.

"The Council introduced Management Accounting Guidelines for Agricultural Producers in very early 2008 and we are looking toward presenting real case histories of how producers are adapting management accounting in their overall financial management practices," explains Ken Hilton, FFSC president and president of Red Wing Software.

The first day of the two-day program will feature presentations on 'muddy boots' implementation on management accounting by large and small farms and operations, says Alan Miller, chairman of planning committee for the meeting. Miller is a farm business management specialist at Purdue University, W. Lafayette, IN.

He explains that since the introduction of the Management Accounting Guidelines there has been an effort by various organizations to explain how producers can adopt the accounting processes to their own production management practices.  "We will be offering a real 'connect-the-dots' presentation that will readily explain how farm and ranch operations can benefit from using management accounting in their systems."

"This will also be an excellent opportunity for those who want to teach others about management accounting," Hilton stressed.  "There will be a session on teaching the teachers and how best to communicate the advantages of adopting a management accounting system for producers."

The second day of the program will focus on activities of the council and will include the organization's annual meeting.  This, too, is open to anyone who wishes to attend.

Pre-registration is required and individuals can sign up for either or both days, Miller notes.  A meeting agenda and registration information will soon be available at www.ffsc.org.

Information on obtaining copies of Management Accounting Guidelines for Agricultural Producers as well as Financial Guidelines for Agricultural Producers is also available at the site.  Participants in the meeting will receive a complimentary copy of the CD containing both programs.

The Council is a non-profit organization consisting of professionals representing producer groups, banking, the Farm Credit System, accounting, insurance companies, academics and others involved with agricultural production and finance.

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You're invited to join FBS users and ag professionals from around the country for the ultimate "refresher course" this coming August 20th and 21st in Moline Illinois.  You'll not only refresh your computer and accounting knowledge, but you'll also refresh your mind, body and spirit at the picturesque Stoney Creek Inn along the banks of the Mississippi, surrounded by bike trails, shopping and John Deere attractions.  This year we'll be offering an evening at a professional dinner theater to enhance your networking and relaxation value.  Watch your mail and e.farmsmart for more details next month.

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The last two chapters of this tutorial have concentrated on the annual crop production and marketing planning processes.  Livestock producers, however, face an even more intricate challenge as their production and marketing cycles are usually complex, dynamic and perpetual, resulting in overlapping calendar years and inventories flows and varying and repeating weights, values and practices.  This process gets even more complicated when tracing growing animal inventory flows through multiple growth stages and locations.

We're going to base our first example on a farrow-to-finish hog operation because it illustrates all the steps involved, plus each of its individual components can be adapted to "single stage" operations as well as other species.

The Big Picture

This flow chart illustrates a typical flow of animals through as many as three feeding stages (breeding, nursery and finishing).  The management information system needs to model and track all the critical events and control points in this process.

Goals

1.	Project and monitor feed requirements
2.	Project and monitor livestock purchases / sales
3.	Project and monitor livestock weights
4.	Allocate and monitor unit-based variable revenues and costs (premiums, vaccines)
5.	Allocate and monitor indirect, but scalable costs (additional buildings and labor)
6.	Perform sensitivity analysis (testing short-term effects of changing a single variable)
7.	Globally adjust livestock purchase/sales prices by period
8.	Evaluate the outcomes of ration and sale weight alternatives
9.	Maintain multiple, concurrent scenarios (modeling the long-term effects from scale/weather/market changes)
10.	Optimize facility utilization
11.	Project cash flow needs
12.	Monitor the effects of price and volume on deviations from the cash flow plan
13.	Project break-even by stage and production center
14.	Refresh the plan with actual data to create a rolling projections
15.	Project across multiple years
16.	Employ a spreadsheet interface for easy viewing and transfer to Excel

Challenges

1.	Animal flows are usually managed and monitored by week; financials are typically managed and monitored by month
2.	Unlike annual crops, animal production centers usually overlap and recur several times within a calendar year
3.	Planned or unexpected production changes in "upstream" centers (i.e. breeding herds) can have long-term effects on "downstream" production centers
4.	Most production systems are in a constant state of flux (expansion, down-sizing, retooling, re-sourcing) so historical accounting records have limited value

Requirements

Here are the software requirements to generate the livestock production plan:

1.	Smart Breeder Planning Module to generate the breeding/farrowing projection and update it with actual data from Smart Breeder, PigCHAMP and other sow programs to create a rolling projection.  (Breeding herds only.)
2.	Smart Feeder to project animal and feed flow for all stages of production.
3.	LifeCycle Budget to convert this production data into financial projections.

Breeding Plan
Setup

For each year for each breeding center (herd), define the planning period (normally 7 days), first pregnancy check days, weaning age and target number of pigs to wean each period.  Year starting dates and weeks in the year will correspond to the breeding stock supplier's standardized weekly calendar.


Build from Actual

To begin projecting pig flow in an existing herd, click on a cell in the current week and press the Build key.  All columns to the left of the current week will be replaced by actual data.


Insert Global or Seasonal Assumptions

Enter a value in any non-calculated cell (Conception %, Weaned/Litter or Replacements and Culls). Replicate that value across the year or build in seasonal expectations. Then press the Calculate button to project weekly weaning through the end of the year and beyond.


Determine Breeding Targets and Replacement Needs

When making projections beyond the gestation cycle of currently bred animals, SB Planning will adjust weekly matings and replacement additions to ensure the weekly weaning target is made.  Note that Pigs Weaned columns to the left of the red line are dependent on the bred animals already in the "pipeline," whereas Pigs Weaned values in the right columns are locked to the weaning target and drive the Sows/Gilts Bred and Gilts Added columns required to make those targets.

Next month we'll turn to the Smart Feeder Planning module and see how it projects pig and feed flow for virtually any species.

Note:  We'll be providing in-depth training on the Smart Breeder/Feeder/LifeCycle Budget planning suite at PORK$HOP.08 (see article above).

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SOFTWARE Q&A – WITH Q'S FROM YOU, OUR CLIENTS! Send us your questions/problems–be they short, long, simple or downright frustratin'!–about SeRVware and we'll handle them right "on the air" for the benefit of all. Q. How do you use the calendar icon on the report parameter screen? A. The calendar function is accessible from most report setup screens.  Click on the calendar icon.  1.   If the report requires a beginning and ending date the following panel will be displayed:  2.   Click the Set Beginning Date radio button.  •  Click on the right arrow button next to month or year to increment these periods.  •  Click on the left arrow button next to month or year to decrement these periods.  •  Select the day by clicking the date directly on the calendar.  3.   To manually set ending date, click the Set Ending Date radio button.  •  Click on the right arrow button next to month or year to increment these periods.  •  Click on the left arrow button next to month or year to decrement these periods.  •  Select the day by clicking the date directly on the calendar.  4.   You can also set ending date through one of these shortcut buttons: Click the Period = 1 day radio button to include only the beginning date in the report. Click the Period = 1 month radio button to include one of the following time periods in the report:  •  The entire month if the beginning date is the first day of a month.  •  30 days if the beginning date is not the first day of a month.       Click the Period = 3 months radio button to include one of the following time periods in the report:  •  The entire 3 month period/quarter if the beginning date is the first day of a month.  •  90 days if the beginning date is not the first day of a month.       Click the Period = 1 year radio button to include one of the following time periods in the report:  •  The entire year if the beginning date is the first day of a year.  •  365 days if the beginning date is not the first day of a year.  5.   Click OKto save your date selection and return to the report setup screen.  6.   Click Cancel to exit without saving changes. Top of Page CLIENT'S CORNER •   In The News Congratulations, Pat Hord, Bucyrus, Ohio, for receiving the Ohio Pork Producers Council Livestock Farmer Neighbor of the Year Award.  According to OPPC Executive Director, Dick Isler, "The Hord family and their team members are easily described as responsible, courteous and respectful of others." Top of Page         sales@fbssystems.com 800.437.7638

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©2008 FBS Systems, Inc.