Collect and analyze the best financial data to aid decisions
The leadership team at Steinert Farms is comprised of “numbers people” who are always aiming to find the balance of analysis and action.
“We’re trying to make value decisions not just cost decisions,” says Autumn Steinert, partner with the diversified operation headquartered in Covington, Okla. “Just because something is costly doesn’t mean you shouldn’t do it if the return is better than doing something that’s cheaper.”
The operation includes Steinert, her husband, Matt; brother-in-law Adam; sister-in-law, Melanie and in-laws, Bill and Rhonda. The guiding framework for the business, which produces wheat, corn, soybeans and cattle, is numbers and analysis, including their accounting system.
“We have a lot of tools that collect data and help us manage the agronomics and inventories,” Steinert says. “And we use those in tandem with our accounting system to give us the information to make better decisions. We try to use every tool we can to get a real picture of how the operation is doing.”
QuickBooks is the accounting tool of choice for the family. “QuickBooks is economical, simple to use and has a lot of flexibility to tailor the program to our needs for the farm and other entities.” This is helpful since the operation also includes a certified seed dealership and center pivot irrigation business.
Listen to hear Autumn Steinert on the Farm CPA Podcast with Paul Neiffer:
Costs By Crop
Crop rotation is key on the farm, so the Steinerts want to know the exact costs and revenues associated with each crop. Then they can weigh the economic and agronomic factors.
To reach that level of analysis, Steinert uses accrual accounting with classes and a custom chart of accounts within QuickBooks. For example, all expenses and income for the 2021 corn crop are assigned to the 2021 corn class, even if inputs are bought in 2020 and grain is sold in 2022.
“Expenses can be assigned for future crops or past crops,” she says. “When we sell grain, we are clear which crop year we’re selling so we can go back and run what the revenue was, and we can tie that back to expenses.”
Once the last bushel is harvested, Steinert does a full analysis, comparing actual costs and revenue to their budgets. “We run financial analysis for the whole enterprise and for each individual crop.”
“That’s when I do the fixed and variable cost allocations,” she says. “I look at equipment costs by acre covered, overhead costs, etc., so we can decide which crops were actually the most profitable and what is driving expenses and profits. We watch the annual details but also the long-term balance sheet and P&L trends.”
This level of accounting acumen is a continual journey, Steinert says.
“Every year we are working on how to make the numbers more accessible and meaningful,” she says. “We could spend a lot of time tracking numbers that don’t add any value. We are constantly watching for where we need more detail vs. where an estimate is close enough to inform the decision. We’re always looking for what can help us make a better decision or evaluate the decisions that we already made.”
Up Your Back Office Game
The process of studying across-the-board data for your farm doesn’t have to be a monumental task, says Peter Martin, finance and growth consultant with K·Coe Isom. “Even a few simple efforts can help set you up to track essential numbers,” he says. Consider adopting some of these simple best practices:
- Focus on your accounting system. This is the core of your back office, through which all your financials — and even field data — will connect. Set up a system that’s scalable to your operation, is cloud-based and can integrate with other software programs.
- Map out your chart of accounts. Code, update and organize your revenue sources, whether they’re corn sales, government payments or rents. Decide how detailed you want line items to be.
- Move to per-crop reporting. Train yourself to separate inputs. That discipline will help you understand your costs for each crop. Some expenses are direct, such as seed and fertilizer. Others, such as labor, equipment, repairs and supplies, require more “art” in determining how to factor them into your system.
Listen to more episodes of the Farm CPA Podcast with Paul Neiffer.
