Good records are important, real important, and getting more important every day in agriculture. ACRE and SURE payments depend on good and accurate records. Crop insurance payments depend upon good and accurate records. Getting financing depends upon good and accurate records. So, based on this alone, we would assume that farmers are keeping good and accurate records, right?
Wrong, for the most part.
There is a great void it seems between those who are keeping good and accurate records and those that are not. First, the problem is that a lot of farmers only understand IRS accounting. That is the accounting processes necessary to prepare and file a tax return. Cash accounting if you will. But so much of our eligibility for a SURE payment is tied to a crop year, not a fiscal or calendar year. Figuring break-evens for marketing and cost analysis is also tied to crop year, not a fiscal year. If you purchased fertilizer last year, you take it off of last years taxes, but it is an investment in this years growing crop. The cost counts against the crop growing this year, not last year.
Accurate records are also necessary for yields when it comes to crop insurance. Without accurate records of yield for fields and farms, or units, you may be short-changing yourself in your coverage. Or worse yet, as happened this last year, you may end up having to pay back insurance payments if you get audited and you can’t prove the yields you claimed.
This has been a focus of mine with some producers the last few years because I have seen the need for better record keeping. Even what fertilizer you put and where is necessary so you don’t over-fertilize or double-up because you are unable to remember what or where you fertilized. I remember the time last summer when a farmer realized that he had forgotten to apply N to one field on his farm. Everyone thought the “other guy” did it and no one (without a list or records to check) knew otherwise.
Good, accurate records tied to crop year production (managerial accounting) is necessary.
That is why I was thrilled tonight to have been asked to make a short presentation at a meeting in a few weeks on what needs to be done to keep accurate records. Now, I just have to put together a good presentation that will get the job done in 20 minutes!