Operating & Capital Expenditures: Section I (and elsewhere)

Transcription

1 Operating & Capital Expenditures: Section I (and elsewhere)

2 Expenditures In the simplest terms, farm income equals gross farm receipts minus farm expenses.

3 Expenditures - General Two Important Distinctions WHO: WHEN:

4 Expenditures General Total Expenses = Operator + Landlord + Contractor. Be SURE to record the expenses in the Correct Column. DO NOT CONTACT THE CONTRACTORS OR LANDLORDS FOR THESE EXPENSES.

5 Contractor Expenses Contractor pays for production expenses. Contractor reimburses the contractee for production expenses.

6 Contractor Expenses Contractor charges the operator for an expense the contractor originally had paid for.

7 Why are Farm Expenditures collected in such significant detail?

8 Operating Expenses

9 Operating Expenses FEED Chemicals Tools Farm Services Insurance Livestock Purchases RENT Irrigation SEED Taxes Fertilizer Fuel Labor I.M

10 Seeds/Fertilizer/Chemicals Items 1 3 Expenses that were PAID for in 2016.

11 Livestock Livestock expenses should be present if there are inventories reported in Section C.

12 Livestock Livestock expenses should be present if there are inventories reported in Section C.

13 Fuel: Example 1

14 Fuel: Example 2 =$12,075

15 Supplies, Repairs & Maintenance Items 13 15: SUPPLIES REPAIRS MAINTENCE of BUILDINGS Item 16: Repairs to Operator s Dwelling (ONLY IF) House is recorded as an asset in record books. Deeded as part of the farm.

16 Labor Expenses ITEMS 23-31

17 Cash Wages NOTE: Table at beginning with clear include & exclude instructions: BREAKOUT OF WAGES Exclude Draws by operators & other workers.

18 Marketing Charges Section I, Item 33 Almost all operations that sell commodities have marketing expenses. If operator reports no marking charges, probe to find out if anything was subtracted out of the total price before the farmer received the check. Get total quantity and unit sold if operator doesn't know the total marketing charges.

19 Expenses not located in Section I Gross rent components: Section A Cash Rent Share rent Grazing fees Livestock contract production fees: Section F TOTAL FEES RECEIVED in 2016 Section F, Item 2, final column

20 Capital Expenditures ITEMS 34-44

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22 Capital Expenditures Purchases of assets for the farm business made during the current year that are normally usable over two or more years Capital assets are usually placed on a depreciation schedule and listed on a statement of assets Is it on the operation s depreciation list? Is it listed on the operation s asset page?

23 Example Operating expense or capital expense? Overhaul of tractor transmission. Cost: $25,000. If listed on depreciation schedule, then it is a capital expense (Item 44: All other capital expenditures). Overhaul of tractor transmission. Cost: $25,000. If not listed on depreciation schedule (expensed), then it is recorded in repair and maintenance (Item 14). Depends on how the operation records the information for tax purposes.

24 Data Relationships

25 You should expect to see particular expenses depending on the type of farm you are surveying. Utilities Taxes Fuel All Farms Farm Supplies Vehicles Insurance Interest Labor

26 Seed Fuel Fertilizer Crops Labor Chemicals Repair Rent

27 Feed Seed Veterinarian Fuel Expenses Livestock Fertilizer Purchases Livestock Crops Repairs Labor Bedding & Chemicals Litter Custom Repair Services

28 Labor Seed Chemicals Fuel Seed Fertilizer Nursery & Crops Greenhouse Fuels Labor Fertilizer Chemicals Utilities Repair

29 Data Relationships, EXAMPLES Debt Reported (Section K) ITEM 18: Interest expenses Land Owned (Section A) ITEM 19: Real estate taxes Real estate taxes paid by the landlord are expected if land rented from others was reported in Section A. Production Contract (Section F) Contractor expenses Largest are usually feed and livestock purchases.

30 Data Relationships, EXAMPLES Dairy operations ITEM 28a: Milk hauling expenses If these expenses were netted out of the operator's milk check, add them back to get the "net" figure If vehicles are owned or leased ITEM 21: Registration fees are expected (Vehicle registration and licensing).

31 GENERAL COMMENTS Encourage use of farm records Most accurate data when records are used. Shorter interview time if the records are used. The IRS Schedule F Tax form contains some information but it will be in summary format and you will have to try to split it out for ARMS III. Operators best estimate is acceptable for responses if no farm records are available.

32 Full Schedule F available in School Kit & on NASDA website

33 ARMS III The Farm Story When the interview is concluded, ask yourself: Does the whole questionnaire make sense? Does it tell a story?

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35 NASS Uses of Expenditure Data

36 Farm Production Expenditures Summary

37 Provides annual weights for NASS s computation of the Prices Paid Indexes, a component of the calculation of Parity Prices required by the 1933 Agricultural Adjustment Act. Bureau of Economic Analysis (BEA). Development of U.S. Gross Domestic Product (GDP). Office of the Chief Economist. Office of Energy Policy and New Uses (OEPNU). Calculation of volume of fuels used by type. Fuel expenditures are broken out by type as always.

38 ERS Uses of Expenditure Data

39 U.S. farm sector financial indicators, F Farm Income Estimates: Net Farm Income United States 11/24/2015 Change F F $ billion Percent Percent Cash income statement a. Cash receipts Crops Livestock b. Direct Government payments 1/ c. Farm-related income 2/ d. Gross cash income (a+b+c) e. Cash expenses f. Net cash income (d-e) Farm income statement g. Gross cash income (a+b+c) h. Nonmoney income 3/ i. Value of inventory adjustment NA NA j. Total gross income (g+h+i) k. Total expenses l. Net farm income (j-k)

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41 Selected expense items, billion dollars, F Feed Fertilizer Pesticides Fuels and Oils Interest Labor Livestock purchases Net rent Seeds

42 Production Expenses: By Type of Expense, F

43 Production Expenses by Type of Farm 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Fuel Fertlizer Seeds Pesticides Rent Feed Livestock Labor Farm Services Interest Taxes All other expenses