Record Keeping is Necessary

Record keeping is a topic few producers care to discuss or do. It can be time-consuming and take valuable time away from your fieldwork.

However, it is becoming a necessary and critical task in production agriculture.

• Government agencies, lenders, and insurance companies currently require better and more accurate records. Bushels per acre, income and expenses, and weather records are becoming increasingly necessary.
• Certification for Good Agricultural Practices (GAP), Good Handling Practices (GHP), third-party certification, or organic production is becoming increasingly important.

These reasons require you to keep good records and provide documentation. Some even dictate a designated person whose job responsibilities include supervising, maintaining, and retaining these records.  

Reasons for Maintaining Good Records

Government Agencies

Many government agencies like the Farm Service Agency (FSA) have programs that require you to report the number of acres you planted, and the crops grown on each acre. FSA keeps these reports for disaster recovery purposes and possible programs that may be available to you now or in the future. Without this reporting, you may not be eligible for their programs unless you can provide adequate documentation of your production. You will have to provide documentation when reporting to them each year. Completing these reports just after harvest when details are fresher in your memory and records are easier to find makes this requirement easier to complete.
If you use pesticides in your operation, you must comply with the necessary record keeping. Wherever you sell your production may require this information before receiving your harvest. Your state pesticide licensing agency may check your operation for these records, especially if they receive a complaint from a neighbor or another person. Documentation of the chemicals used, the time you applied the chemical, and weather conditions may mean the difference between a fine or a warning. Good record keeping on pesticide application may save you valuable time and money.

GAP and GHP

A new initiative born from recent concerns and recalls due to food-borne illnesses is the adoption of GAP and GHP. You should consider becoming certified if you produce fresh fruits and/or vegetables for sale through larger distribution channels such as a packer. Many larger packers of fresh fruits and/or vegetables now require their growers to become certified. They may also require a more stringent food safety certification. This is because their customers (including the Federal government) are demanding that the products they purchase come from GAP, GHP or higher-level certified producers. This will require another level of recordkeeping and documentation. You will want to designate a farm coordinator who will handle all the record keeping needed and work with the certifying agency. You will also need to train your harvest workers regarding safe handling practices, and are required to document the training. Being certified may help alleviate some customer concerns if you direct market any of your production.

Organic Certification

One of the most rapidly increasing methods of production is organic. To become organically certified, you will again need to work with a certifying agency and provide records and documentation of production practices for the three previous years before applying for certification. These records will include what forms of fertilizers and pesticides and all production practices and materials used before applying for certification. You will also need to certify that the inputs are organically certified. Check with the certifying agency for your state for more information concerning what records are needed. Livestock may take more than one generation, and certification of all feed and inputs to be certified organic.

Crop Insurance

Your crop insurance salesperson requires you to report your planted acreage and your production each year. Your salesperson will report this information to the company and use the information to determine your Average Production History (APH) to make recommendations for your policy. If you do not provide the necessary information to your crop insurance company, your policy will not accurately reflect your production. Years without production history may revert to the average yields for your county. Your accurate production records will be invaluable if you have an insurance claim.

These records should include scales weights for crops, documentation that the crop was sold, and at what price. The information should also include test weights and any reason for a yield reduction due to disease or defects. You can use this information to determine trends in your production.

Lenders

Lenders want to see production, income, expenses, and all your financial records. If you have not had a loan with a specific lender before, they will probably want to see at least three years of these records. If you can provide more years of records, it may be very beneficial to you. The more years of records you provide, the better the analysis they can perform. If you currently have loans with a lender, they will need to see records of your most current year. They will use the information to provide analysis to determine trends in your business. They will decide if you are growing your business or becoming stagnant and determine if your business is faltering. All of this can be determined by analyzing your financial trends over time.
Any new and beginning farmer may need to provide documentation of past employment or farm experience. Many lenders require that farmers have farm production or managerial experience prior to approving new loans.

Other Uses

You should use the information derived for your records to analyze your production techniques, rotation of crops, and planning for future production. Vegetable crop production may require that you know where certain crops have been planted over the past few years. Several crop diseases require you not plant a previously infected crop close to where it was the prior year. Tomatoes and peppers come to mind with late blight infections and should be rotated.

Knowing where your business has been may help predict where it will go. History is a good predictor of the possible future. When updating your business plan, having this information available can make the revision much easier.

Methods of Record Keeping

Paper Methods

Many records on small farms are currently kept by the traditional paper method. Just be sure to set aside time to record and review your records. This may involve a ledger book for financial records with a daily list of all debits and credits. If this is your current method and it is adequate for you, that is fine. The most important things are to keep records and to be consistent. Many very successful businesses still use pen and paper record keeping.

Electronic

Software packages for record keeping are becoming as industry specific as production agriculture. This is very apparent in the program crop area. There are several companies that have developed software packages that will assist in record keeping from mapping to profit and loss statements for each field. You will need to spend considerable time on data entry when you begin to use the software; however, entering information after the initial setup can be made very easy by adding smartphone or tablet computer capabilities.

You need to be sure the output of records is what you need. Having a software program produce documents that are not useful to you may not be a good use of funds. For example, if you are a produce grower, having a software package produce a report on inventory may not be necessary. You should know what and when produce was harvested because produce beyond it freshest harvest may be wasted.

Combination  

You may also choose to use a combination of paper and electronic. If you are uncomfortable with computer use, keeping a daily record of events on paper then entering them into a computer may be your option. You may also have another family member (children or grandchildren may enjoy this) or employee assigned to use the computer. Recording all transactions and happenings daily is preferred. However, during busy planting or harvesting seasons, this may not be possible for smaller operations that do not have a dedicated bookkeeper. As previously stated, whatever method you choose, be diligent and consistent.

Conclusion

Most producers do not enjoy the record keeping process. You will need to set aside a specific day or time to work on record keeping. Keep your records in a specific place (except for pesticide records that have a place designated by the regulation), such as an office with a desk, file cabinet or adequately labeled computer files. This will make retrieving your records much easier.

One set of accurate records should be enough to satisfy all your needs. If you keep good records of production, expenses, income, and weather, you should have the required information for any purpose, from crop insurance to lenders to your own needs. You should be able to make informed conclusions regarding the past and to plan for the future. Good records lead to better decisions and hopefully higher returns.