Ep. 112 Record Keeping in Busy Seasons with Bruce Clevenger
In this episode of AgCredit Said It, host Phil Young sits down with returning guest Bruce Clevenger, associate professor and field specialist with Ohio State Extension, to dig into one of the most overlooked profit drivers on the farm: record keeping.
Bruce explains why the best numbers for planning your farm’s future are your own, and how to use both “windshield” (forward-looking budgets) and “rearview mirror” (historical performance) views to make better decisions in an uncertain ag economy. They walk through practical options for record systems—from paper ledgers and spreadsheets to full-featured software that integrates production and financial data—and why the “right” system is the one you’ll actually use accurately.
- Transcription
Speaker 1 (00:08):Welcome to AgCredit Said It, your go-to podcast for insights on farm finance and maximizing your return on investment. Join us as we talk to industry leaders, financial experts, and area farmers, bringing you skillful advice and strategies to grow your farm's financial future. AgCredit Said It, where farm finance goes beyond the balance sheet.
Phil Young (00:38):Welcome back to another episode of AgCredit Said It. I'm your host, Phil Young, and with me today is Bruce Clevenger, associate professor and field specialist for Ohio State Extension. So welcome, Bruce.
Bruce Clevenger (00:48):Thanks, Phil. Appreciate the invite to be here.
Phil Young (00:51):Yeah. Is this your second time on the podcast? Second, maybe
Bruce Clevenger (00:54):Third. Third? Okay.
Phil Young (00:54):Yeah,
Bruce Clevenger (00:55):Maybe three.
Phil Young (00:56):Okay. You must be good. We keep having you back. So yeah. So good. Well, welcome. Yeah, so to refresh people, can you go over what your role is at OSU Extension and then what type of work you do with farmers across Ohio?
Bruce Clevenger (01:10):You bet. Some of the best parts of my career has been when I was a county extension educator in Defiance County for 28 years, and I really enjoyed those years every day going to work and working with growers, specifically in Defiance County, but it allowed me to do some things across the state. And so that was fun. Everything from agronomy to farm management, a certified crop advisor, had a county research farm. So really I felt kind of immersed into production agriculture, but at the same time, really, really love the whole aspect of farm management because it's a fun space to work in. And now as a field specialist, I get to focus in some of the areas of farm management. I describe farm management, Phil, as just as diverse as agronomy or animal science or any other discipline of agriculture. The space that I get to work in in farm management, I enjoy working in farm accounting systems, grain marketing, our ag lender seminars that the ag credit colleagues participate in on an annual basis.
(02:15):And we also get to dabble into farm business analysis and benchmarking programs. So there's a lot of other spaces around farm management, everything from transition planning to law and other production economic areas, but really enjoy farm accounting, grain marketing, and ag lender seminars and really that farm business analysis.
Phil Young (02:38):Nice. Yeah, that's a lot. Yeah, you're right. There's a lot there. Yeah. Yeah. So when it comes to farm management, record keeping, that aspect of it, how does that rank, I guess maybe in importance or how much do you think that there's a need out there for farmers to hear about good record keeping and get trained on that?
Bruce Clevenger (02:57):Maybe from extension, maybe farm managers get tired of us saying how important record keeping is, and they know it. Farm managers know that record keeping is important. And so I kind of put
(03:08):A lens on it. Sometimes we're looking at record keeping through the front windshield of where we're heading, but also record keeping through the rear view mirror of where we have been. And I think those two vantage points are really important for record keeping because yeah, we all have access to tools to look in the future, the outlook, the forecast, the budgeting of where we're heading, but what numbers make the best forecast for a farm manager? It is the ones that we might peek in the rear view mirror and say, "Well, how did I do in the last year? How did I do in the last couple of years so I can make a better informed budget moving forward?" Even though we overuse or overhear the word of uncertainty in agriculture, even though there is uncertainty in the future, we can really invest some time into that budgeting and forward-looking and planning ahead.
(04:07):But the best numbers a farm manager is going to have access to are their own numbers that we capture within a record keeping system.
Phil Young (04:18):Is there system, the word system kind of got me thinking. Is there systems or just general Excel file? What have you seen the most success for guys when they're like, "Hey, I'm a terrible record keeper," and you've kind of helped that person start to record keep. Where have you seen the success when the system that they
Bruce Clevenger (04:39):Use? Yeah, I don't know that. I never put a letter grade on somebody where they're at as far as the
Phil Young (04:43):Record
Bruce Clevenger (04:43):Keeping system
Phil Young (04:44):Because
Bruce Clevenger (04:46):The letter grade is kind of just meeting them where they are at. If they are in a paper and pencil ledger system, we've actually done some pretty intense farm business analysis from record keeping systems that are paper and pencil on the farm.
Phil Young (05:03):But
Bruce Clevenger (05:03):Then you have spreadsheets that people have advanced and taken some of those ledgers of rows and columns and either found or made their own spreadsheet, or they have software that operates the financial side of the record keeping system. And then there's those systems that are more inclusive that start to integrate production and financial records in together. And then it gets a little bit more intense and a little more dedication to, well, who's going to operate that robust system and who's capable of doing that? So we just try to meet people where they're at and make sure that as they make a recording of a transaction, that it's accurate and it has all the components that they need regardless if they're writing it down on a paper or they're entering into a digital system.
Phil Young (05:55):Yeah, nice. Yeah. Yeah, there's lots of ways to do it. Yeah, in my experience, I know that it's a working of a muscle to do it. You got a lot of guys in agriculture, they love to farm and sitting down and do paperwork is not what they get excited about. So it's stretching that muscle to do that is important.
Bruce Clevenger (06:17):And I would encourage them to think of it, that muscle can be as profitable as other muscles that we use in the daily activities of production agriculture, whether that's wrenching or doing physical work, feeding livestock, or any of those other things that we physically do. I think our intellectual contribution to the business of agriculture is an important part of profitability.
Phil Young (06:43):Yep. Yeah. Yeah. So I guess we're in, I guess the tail end of planting season here. It can be a stressful time, but most people have it done by now. But I guess record keeping during the planting season, during fall, what are some simple realistic strategies farmers can do when they're in the heat of planting or fall harvest, I guess?
Bruce Clevenger (07:08):Yeah, I think we just have to be reminded and disciplined to keep some of those records in mind. And some farmers over the years have told me that during the busy times of the year, they force themselves to journal at the end of the day, whether that is a note on things that they've come across throughout the day, like a receipt, a seed invoice, and they're making notes on it or they're journaling about it on a per day because maybe Phil, my memory isn't as good as it once was, or we have a lot of irons in the fire. So what kind of things are we trying to capture to record during those busy times of the year? Of course, everything from all the inputs, seeding rates and fertilizer rates, feed use. For example, on a livestock farm, I'm kind of nerded out on our farm.
(08:03):We feed out commercial market lambs and we have enough that we take it pretty seriously. And so feed records on a daily basis, if I want to be able to measure productivity at the end of the year on feed efficiency, how many pounds of feed does it take to produce a pound of protein? I need to have some better or good production records on a daily basis. How efficient can I convert that feed into a final product? I need to have weights of livestock. So even in the livestock, whether it's crops, we need to have our inputs that are part of that daily decision-making. Even the settings, farmers every spring rehash, how am I going to fine-tune this piece of equipment to plant the corn to the best I can to make it picket row fence or the population that I'm really targeting? Making those notes.
(08:59):Sometimes the book that comes with the piece of equipment kind of gets us in the ballpark, but good managers will dial that in. And as we dial it in, how do we make those side notes to make sure that I want to get back to this precision planting practice again in another field or in another year? I want to make sure I can have that note recorded back down. And I think we can't forget about maintenance records as we go through the busy times of the year as we maintain our equipment, whatever that looks like on the farm, keeping that maintenance record so that we know that we did those tasks or that we skipped those tasks and when things do get a little bit less hectic, we can circle back on those maintenance issues for our equipment.
Phil Young (09:46):Yeah. Yeah. So I always learn from people that do things well, and I also maybe when you watch people, you also learn from people that maybe have made mistakes. And so I guess what have you seen from, and hopefully people can maybe listen to maybe you, and what are common record-keeping mistakes that you've seen farmers make? And maybe for listeners like, okay, here's what not to do to learn from that. So have you seen anything like that?
Bruce Clevenger (10:15):Yeah, I think a couple that maybe that get overlooked mistakes, I got maybe three here that I'm thinking of. When it comes to record keeping, specifically the financials, maybe it's not so much the act of recording it, but maybe using the financials only to complete a tax return at the end of the year.
(10:35):I think there's so much more to your farm's numbers, my farm's numbers. The IRS, yes, they want the required numbers on the tax form lines, but we can do a lot better job at that. We want to have our record keeping system, specifically the financials, to do more than just a tax return. And so I think that's pretty important. Another kind of mistake sometimes that farmers might make in their record keeping system when they purchase a system or a software, sometimes they pay too much for features that they do not use. And we've seen this where, well, maybe the farm used to have a need for W-2 employees or invoicing. Well, we're paying a lot for a piece of software that does all those things, but we don't do it as much anymore. And so making sure we have the right record keeping system for the features that we need on the farm.
(11:32):And then one of the mistakes that a manager might overlook is not connecting both the production record and the financial records together at some point in time to make decisions. So yeah, we may have a production issue that comes about, or we may have a financial issue that raises a red flag. Well, I think we have to merge our financial and our production records to really investigate and to diagnose what was the root of that red flag or that yellow flag that has caused some concern. Why is the margin of profit narrowing? Is it only because input costs are high or grain prices are low? Or is there a production issue? And I'm not out yielding my narrow margin. I'm not staying on my trend line production that I could have or should have been at. What has changed in my system? And so we have to make sure that we circle back to the financials and the production records to make the best informed decision on the farm.
Phil Young (12:38):Nice. Okay. I got a couple more questions. What's one habit or system that sets highly organized operations apart from the rest?
Bruce Clevenger (12:51):Yeah, a couple here. The one thing I like about farm managers that really expect a lot out of their partners in the business, and I think of this as a two-way street. So sharing information, let's talk about agronomy where we provide soil test results or we have the co-op collect soil tests, or we provide mapping to our crop consultant. We want that to be a two-way street. We want that information to go into the team that helps us make informed decisions. So we share all that data with our consultants, our extension friends, or whomever that we rely on to help us make decisions. And that one-way street of data actually comes back to us with a conversation of how do we make informed decisions from that? I'll use this in the financial realm as well. And I'm not picking on lending at all, but I think there's an opportunity and AgCredit has supported us in doing farm business analysis for farms.
(14:04):So one thing we want to avoid would be, yeah, we all have to financially, maybe once a year, we fill out a balance sheet, we share our past one or three years of tax returns, and we send those to the lender. And sometimes we get some information back like a yes or a no on the renewal of an operating line. But one thing that I would encourage us to look for more is more of that analysis, more of how am I doing? So let's do the doctor's example. If you go to the doctor and you give blood as a blood test, the doctor's going to have a conversation with you, Bruce, like, "Bruce, how you doing? Your cholesterol is here. Your other numbers are here and here. These are the things that we want you to do different, Bruce, because we have indications that your health could be improved if you change this behavior and pattern." So in the sense of agriculture, I think we can, from a production standpoint, have that two-way conversation with the data that we have on the farm, whether that's agronomy or animal science type of production records.
(15:14):On the farm as well financially, I think we want to also have that two-way conversation, two-way street. We provide information to, but we also get kind of a diagnostics back and kind of a checkup as to how we do. And if the only thing that we share financially is to the IRS, gosh, we know the IRS is never going to give us any feedback on how you're doing profitability-wise, but our friends in lending, our friends in extension, we can get that two-way street and say, "Well, Bruce, how am I doing? Or how are you doing on the farm profitability?" And I think that's a habit that we could see successful farm managers expecting, that two-way street of information and some feedback.
Bruce Clevenger (16:02):A Couple of other ones too would be looking at multi-year data trend. A third one would be benchmarking. And so we're really fortunate at agriculture to have some standards in production, and sometimes it's good for us to benchmark our own performance against others so that we know that, "Hey, maybe these are some areas that I could work on." And then the fourth one, Phil, would be don't wait or delay too long to get financial analysis done. And so if we have some indications, I guess the assumption would be, well, if I ignore it, it'll go away. Is that good financial advice? Probably
Phil Young (16:46):Not.
Bruce Clevenger (16:47):Probably not. So if we are seeing some early indications that there's some financial stress within the farm business, don't be afraid to have those conversations with ag lenders or extension colleagues that can do some of this farm business analysis so that we can get ahead of the curve. I've been accused of saying that the IRS Schedule F, that income, that farm income and loss statement that we send to the IRS, I've been accused of saying it's the worst financial document that anybody could use to make an informed decision about the farm, only because by itself it doesn't do any kind of analysis. It has some good information in it. It has our income and expenses, but by itself, it's not a good indicator of profitability on the farm. We have to take it a step further, and that's where your lender and others can come into place and really help with that farm business analysis.
Phil Young (17:53):Yeah, I think we're obviously in a tight margin environment in agriculture right now. And so doing exactly what you're saying, I think it's important in the good times, but very much important in the tougher slim margin times too, where you just got to diagnose where your issues are and know exactly where you're profitable, where your breakeven point is. So yeah, I think all those things are great. And I guess my last question is what trends, and we talked a little bit about this, I guess in digital record keeping, or maybe even you've dabbled in AI with some of this stuff. I don't know. And how can farmers use AI or technology for record keeping or ask it questions? Have you seen anything in that realm?
Bruce Clevenger (18:39):Yeah, I think there's a lot of opportunity in this space that some farm managers are ready for moving to that all-in-one farm management platform that integrates production and financials into a centralized system. And then it can divvy out and divide out into enterprises, enterprise analysis. That's an interesting place to be in. There's some platforms. I think farms have to upfront know what they're getting into and have to dedicate some people time to that system. Many of them have and have done a very good job of that. I think another trend that we would see in digital technology would be cloud-based or mobile-first record keeping where we would be recording information at the place of production, whether that's in field or in the livestock shoots, the scale tickets, we're weighing livestocks, identify ear tags, all those things that then really just add that data to our cloud space for analysis a little bit later and confirmation that that information is accurate and correct.
(19:49):And then you're right, AI is a place where many of our systems are leaning toward. And with most new technologies, we're going to have a little word of caution to put a little human realistic touch to the results of what AI might generate for us to making sure that we give it the stink test to see if it's really on track or not to what realistic we know about our own farm operation. But there are a lot of AI platforms even within the universities that will essentially upload your tax return and start to build financial statements that you then can share with your team of lenders or other advisors that you might have. So there are some tools out there that are publicly available that I think are worth pursuing. We need to just ground truth them as farm managers.
Phil Young (20:46):Yeah. Yeah. Any other final thoughts maybe we didn't cover or you wanted to share?
Bruce Clevenger (20:52):Well, one of the things that we do on our farm is it's pretty simple, but probably farms already do this. Our cell phone camera is part of our record keeping system because it'll document something that we're doing currently on the farm, whether that's a planter setting, a feed activity, a livestock operation that we're doing. But it puts a picture of whatever we're capturing, but also puts a date stamp on it. And then we share it in a group with our farm team just so that we all are communicating. It's kind of along the lines of that daily journal or a journal record of what activities have happened so that at the end of the week or the end of the busy period of time, we have a record of what we accomplished and we want to reflect back on it. I guess another thing would be consistently decide to prioritize record keeping within the farm business.
(21:51):It's part of whether we want to admit to it or not, it is part of the beginning stages of farm transition to the next generation. A record keeping system that is held in the senior generation's head and is not being communicated to the next junior generation that's going to be managing the farm in the future. That becomes a potential area of concern when it comes to how does this farm transition to the next generation? Because farm transition is not just about transferring land and other assets, it's about transferring the operational intellect of the farm manager's experience from the senior generation to the next generation. And part of that is having that open communication, transparency within the record keeping system so that all generations are able to see and see the value of record keeping and informed decisions that can come about from those record keeping systems.
Phil Young (22:55):Nice. Yep. Good, good. Okay. Well, Bruce, hey, thank you very much for joining us today and your insight and just kind of educating listeners. Appreciate it.
Bruce Clevenger (23:04):You bet, Phil.
Phil Young (23:05):Yep. And listeners, thank you for joining us. Tune in next time to AgCredit Said It where farm financials go beyond the balance sheet. So thank you guys.
Speaker 1 (23:19):Thank you for listening to AgCredit Said It. Be sure to subscribe in your favorite podcast app or join us through our website at agcredit.net so you never miss an episode.