Dairy

Dairy

Dairy

The dairy industry is an important part of our life at Frazer. We’ve been serving and helping dairy farmers and milk production professionals for more than half a century.

Whether a family-run farm or a large corporation, we help guide our dairy business clients through all of their tax and assurance issues, as well as going through the risk management process – key components to keeping a business on the right track to growth. We also help address and provide solutions to the business succession challenges especially important to family-run operations

We’re adept at dairy tax planning, accrual-based financial statements and entity formation – all of which allows you to focus on running your operation. In addition to our dairy tax expertise, we’re also there to cover the range of strategic planning that your business requires, and that you demand.

Services for Dairies

Assurance and Accounting:

  • Audits, reviews, and compilations
  • Budgeting and cash flow management
  • Fair market value financial statements
  • Payroll
  • Preparation of cash or accrual basis financial statements
  • QuickBooks and payroll services

Tax Planning and Compliance:

  • Estate tax and gifting strategies
  • Optimizing tax strategies
  • Research tax credits
  • Strategic planning for ownership changes
  • Tax return preparation

Consulting and Business Advisory Services:

  • Asset purchase consulting
  • Entity selection
  • Lease or buy consulting
  • Loan packaging and debt restructuring
  • Tax deferred exchanges

Two times per year Frazer, LLP produces its Dairy Farm Operating Trends, recognized as the top industry source for relevant dairy statistics. The data is compiled from dairy operations in California, Arizona, Idaho, New Mexico, Washington and Oregon. This publication is designed as a reference tool and a management aid for dairy farm managers and advisors. This report is provided to and widely utilized by dairy farmers, lending institutions, universities, colleges and other agribusiness industries.

Members of our team are frequent authors for industry publications, including Dairy Business West, Progressive Dairyman, and Dairy Today eUpdate.

Frazer LLP also shows its commitment to the dairy industry by supporting and participating in industry organizations, including:

If your primary focus is dairy farming, or milk processing and distribution, Frazer’s team of experts will add a wealth of knowledge to your own team. Frazer LLP: With You. For You.

Contact:

In Visalia:

Mike Edwards, CPA
medwards@frazerllp.com
559.732.4135

Bob Matlick, Consultant
bmatlick@frazerllp.com
559.732.4135

David Bekedam, CPA
dbekedam@frazerllp.com
559.732.4135

In Brea:

Sharon Davis, CPA
sdavis@frazerllp.com
714.990.1040

Tim Gulling, CPA
tgulling@frazerllp.com
714.990.1040

Ralph Lizardo, CPA
rlizardo@frazerllp.com
714.990.1040

 

Webinar: How Do World Markets Impact My Dairy?

Presented by Frazer, LLP; Commodities Plus; and, High Ground Dairy Risk Management.
View the webinar (on demand)
Frazer, LLP Handout
Commodities Plus Handout
High Ground Dairy Risk Management Handout

Complimentary Downloads:

5 Critical Questions cover3

5 Critical Questions for Your Dairy: Your Answers Will Help You Run Your Dairy like a Business  

It’s all about the numbers.

Every dollar you spend has both short-term and long-term implications – and impacts other parts of your dairy.

If you cannot project future cash flow you will more likely make uninformed decisions and your dairy’s profitability may fail. This is not the outcome you’ve worked so hard to achieve. Download 5 Critical Questions for Your Dairy and answer these important questions today!

 

Archived Articles:

February 2017 – Employee Management and Real Reform, DairyBusiness & Holstein World
Employee management is key in any business’ success. This is no secret and having motivated, knowledgeable and happy employees with real room for growth and advancement in their fields always adds to the bottom line. Read this article for two ideas to simplify the employee and immigration system.

September 2016 – What’s new with the IRS for 2016? – Progressive Dairyman
There are two very generous tax breaks business owners have relied upon: bonus depreciation and Section 179 expensing. Read this article to learn how these tax breaks may impact your dairy as well as the new tax return filing deadlines.

June 2016 – Financial Statement Measurements – DairyBusiness & Holstein World
It is important to understand the business finances of your dairy. Financial records are used to track the performance of your operation. There are generally three objectives of maintaining these records: profitability, reduction of risk and liquidity. Read this article for a description of how to conduct a financial analysis of your dairy.

April 18, 2016 – Your heifer-rearing costs: A great place for a fine-tooth comb, Progressive Dairyman
With pregnancy rates, facility constraints, feed availability, lending relationships and working capital in play, there are many factors that need to be considered when developing a game plan for your heifer-raising operations. Read this article for five important questions for your heifer program.

March 2016 – March 2016 – Cash In on Effective Cash Management, DairyBusiness West
Volatility remains a constant challenge in today’s dairy business. Rapid fluctuations in commodity prices and milk markets require constant monitoring and informed decision making. Read this article for smart and effective cash management ideas, which are essential to keep your dairy running as smoothly as possible.

March 2016 – March 2016 – PATH ACT-What Does It Mean For Your Dairy?, DairyBusiness West
On December 18, 2015 President Obama signed into law the Protecting Americans from Tax Hikes Act of 2015, which not only extended 50 tax provisions but made some of these provisions permanent. Read this article to learn more about Section 179 Expensing, bonus depreciation, and other PATH Act tax provisions.

February 24, 2016 – Considering a renewable energy project? This is the year to act, Progressive Dairyman
With the growing costs of utilities, more dairy owners across the nation are turning to renewable energy alternatives. There are many benefits to using renewable energy, such as the long-term savings, less maintenance, decreasing your carbon footprint and even saving money on your taxes. Read this article for information on energy tax credits and other incentives.

February 2016 – Paid Sick Leave-It’s the Law in California, DairyBusiness West
It’s here! The new paid sick leave law signed by the governor last September took effect on July 1, 2015. With a few exceptions, California employers must allow their eligible employees to accrue at least 24 hours or three paid sick days per year paid at the employee’s regular paid rate. Read this article for the answers to the most frequently asked questions. 

November 2015 – Drought-Plagued Western Agriculture: Hopes for 2015-2016 El Nino, Is It the Answer?, DairyBusiness West
Although El Nino may help, it has always been just a temporary solution for the West, as drought years will continue to persist in greater numbers than wet years. Water management practices and new technological solutions are the only real answer. Read on.

November 6, 2015 – Light at the end of the retirement tunnel, Progressive Dairyman
Retirement is not an easy decision to make. Most farmers and ranchers have been farming most of their lives, and just the thought of retiring from the work they love is difficult. Once you’ve crossed that hurdle and decide to retire, what do you do with the farming business? Read this article for a few options.

June 2015 – Are You in Compliance With California’s New Paid Sick Leave Law, DairyBusiness.com 
Starting July 1, 2015, California employers must allow their eligible employees to accrue at least three paid sick days per year. The new law was signed by California Governor Jerry Brown last September. The law as well as posting requirements became effective January 1, 2015. Read this article to learn how it works.

June 2015 – Large Estate and Appreciating Assets-Look at an IDGT, Progressive Dairyman
Using an intentionally defective grantor trust (“IDGT”) might just be the estate planning tool you are looking for. An IDGT is an estate planning tool used to freeze certain assets of an individual for estate tax purposes but not for income tax purposes. Read this article if you want to make sure your assets are passed down to your children and not Uncle Sam by using an IDGT.

June 2015 – Understanding Your Tax Responsibilities as an EmployerDairyBusiness West
As a manager or business owner of a farming or dairy operation, it is important that you understand the labor laws that may affect you and your employees. The IRS has specific rules and regulations that affect all employees in the agriculture industry. Read this article for important points to consider.

April 2015 – Evaluating your operation to measure profitability, DairyBusiness West
Milk income remains one of the dairy industry’s greatest drivers of profitability, often leading to the common question among dairy producers, “How many cows should I milk?” The answer is not as simple as it seems; I think the real question is, “What business model is right for this dairy?” The number of cows is a major part of every dairy’s business model, but it is not the only part. Read on.

April 2015 – Do you know the cost of your self-raised feed, Progressive Dairyman
Feed costs are the largest cost of production for a dairy operation and play a key role in getting your company the best bottom line. Knowing your costs will help you decide which crops to grow, what quality of feed you need and how much is needed to match your feeding rations. Read this article for ideas on how to track crop costs.

February 2015 – Tax Extenders of 2014, DairyBusiness West
The Tax Increase Prevention Act of 2014 extends certain expiring tax provisions relating to individuals, businesses and the energy sector. The bill only extended to 2014 and expired on December 31, 2014. Therefore, it is only a temporary tax break for one more year. Read this article to learn about potential tax breaks for farmers and dairymen.

November 2014 – Check again if Obamacare employer mandate applies to you, Progressive Dairyman
Under the employer mandate you must have an insurance policy available; offer the insurance to employees, which they have the option to accept or decline; and, make it affordable. Is it better to offer coverage or pay the penalty? Read this article to help you decide.

October 2014 – ObamaCare Employer Mandate 2015, Eastern Dairy Business
The employer Obamacare health insurance mandate goes into effect on January 1, 2015 for employers with more than 100 full-time equivalent employees. This means that employers must offer health insurance for all their employees or pay an employer shared responsibility payment, referred to as a “fee” which is a penalty that is not tax deductible to the employer. Read this article to learn how this impacts your dairy.

August 2014 – The Basics of Qualified Personal Residence Trust, Western Dairy Business
Your personal residence is one of your most valuable assets. With rising home prices, transferring a residence to a qualified personal residence trust (QPRT) becomes a popular estate planning technique. When properly structured, a QPRT freezes the value of the residence at the time the trust is created. This results in significant estate tax savings and also helps to keep the value of many estates below the taxable estate threshold. Read this article to learn how QPRT works and other considerations.

August 2014 – I have money left over; what do I do with it?, Progressive Dairyman
If you are making milk these days, then you are making money. Now that there is some extra cash in the bank account, the question is: What to do with it? The answer is: “It depends.” Read this article for a few alternatives and how to take advantage of the margins now to better your position later.

June 2014 – Does the Margin Protection Program Cast its Net Wide Enough, DairyBusiness
There has been a lot of talk about the Margin Protection Program (MPP) introduced in the new Farm Bill. The MPP replaces the Milk Income Loss Contract (MILC), Dairy Product Price Support Incentive Program. These programs were considered mostly ineffective because they focused solely on prices and not costs. As most dairymen know, this logic is flawed. The industry has seen drastic volatility in the feed marketplace with break-even prices rocketing higher for most producers in the last 10 years. Read this article to determine whether the MPP is a solution or another so-called “safety net”.

April 2014 – Consultants or Management Teams, DairyBusiness West
For a consultant or consulting team to be effective, they must respect the knowledge of other consultants involved with the operation. Read this article for guidelines on conducting meetings with your dairy consulting team.

March 2014 – What should I do with a healthy milk check, Progressive Dairyman
Milk checks in 2014 look like they will more than cover my feed and operating expenses. Since this hasn’t happened for some time, and since I’m still gun-shy after 2009, how much cash should I hold liquid in a bank account after I pay some bills and build back a little equity? What should I do? Read this article for Bob Matlick’s response.

February 2014 – To Pay or Not to Pay?, DairyBusiness West
If you own a business as an individual, or are a partner or member in a partnership or limited liability company (LLC) using a cash method of accounting for tax purposes, there is immense value in controlling your own tax fate. Ideally, wouldn’t everyone want to control how much – or how little – they pay in income taxes to the IRS or state taxing authority? Read this article to take matters into your own hands and regulate how much or how little you want to pay in taxes.

November 2013 – Obamacare – Ready or not, it’s here, Progressive Dairyman
The Affordable Care Act, which is better known as Obamacare, was signed into law on March 23, 2010, and was upheld by the Supreme Court on June 28, 2012. Regardless of where you stand on this issue, the most controversial requirement of Obamacare will take effect on January 1, 2014. Read this article to learn more.

October 2013 – ObamaCare Changes, Western Dairy Business
Most of you have heard a lot about the Affordable Care Act (commonly known as “ObamaCare”), but recent changes may have raised more questions. Read this article for a summary of the most important tax developments occurring in the past three months that may affect you, your family, your investments and your livelihood.

September 2013 – Basics to Understanding your Financial Statements, Progressive Dairyman
There are four main financial statements: the balance sheet, the income statement, the statement
of equity, and the statement of cash flows. In addition, dairy financials usually include supplementary schedules such as a schedule of farming operations, operating expenses and statistical data. Read this article to understand how each of these relates to the other and the information to take away from each.

July 2013 – ‘Top Line’ Management Impacts Bottom Line, Dairy Today eUpdate
I have seen many of my dairy farmer clients negotiate hard on feed and supply purchases—sometimes down to what seems like pennies. They have squeezed, skimped, or just plain dropped many expense items. Rarely, however, do I have a client react to the ‘top line’ of the income statement when finances are a struggle. Read this article to consider evaluating your income rather than your expenses when the checkbook gets tight.

March 2013 – Know Your Own Dairy’s Numbers, Dairy Today eUpdate
Many dairy operators want to look at benchmarking or peer-group statistics to identify weak spots in their own operations. Read this article to learn the importance of benchmarking against your own dairy operation to make continual improvements.

March 2013 – Tax Law Changes You Should Know for 2013, Progressive Dairyman
The American Taxpayer Relief Act of 2012 was signed into law on January 2, 2013. Read this article for some of the changes you should be aware of in 2013.

February 2013 – After the Fiscal Cliff, Western Dairy Business
President Obama signed the 2012 Taxpayer Relief Act into law on Jan. 3, 2013. The Act will impose tax increases affecting about 2% of individuals and 3% of small businesses, and makes other changes to the tax code. Read this article to learn how the new law could directly affect you and your business.

November 2012 – Tax consequences when it comes time to hang up the gloves, Progressive Dairyman
By the end of 2011, the dairy industry thought it had taken a turn to better days, but instead it was just a “U-turn” to higher feed prices and dropping milk prices in 2012. Some operations still experiencing weak legs from the 2009 downturn might not be able to pick themselves up off the mat this time. Read this article if all of your options have been exhausted, including reorganization under Chapter 11, about the tax implications of liquidation.

November 2012 – Tax Planning – More important than ever, Progressive Dairyman
With the uncertainty of market conditions that many dairy farmers are facing today, saving a dollar here and a dollar there is more crucial to the survival of the dairy operation than ever. Many dairy farmers have looked at their operation with a fine-tooth comb and made the tough decisions on where to cut expenses. Read this article for a proactive approach in minimizing your tax liability.

October 2012 – Estate Tax Time Bomb’s Clock is Ticking!, Western Dairy Business
The federal lifetime exemption of $5 million per person is set to expire on December 31, 2012 and revert back to $1 million per person. This is a ticking time bomb for most farm estates in this country, as a $1 million gift exemption really doesn’t go very far in succession planning. Read this article to learn how estate and succession planning can be beneficial and possible with the right team in place.

August 2012 – How to Project Your Dairy’s Working Capital Needs, Dairy Today eUpdate
Working capital is the amount of readily available cash a business has available to meet its operating needs and any unexpected volatility related to its own business cycle. In the past, a dairy producer has relied on bank lines of credit for his or her working capital needs. With increasing volatility in the milk output and feed input side of the dairy business, a dairy owner should be keenly aware of his own personal working capital position. Read this article to accomplish this by forecasting business operations.

June 2012 – More than a Way of Life…, Western Dairy Business
If I think about my 34 years in agriculture finance and consulting, I realize running a dairy is now a business, and not just a way of life. To be competitive, producers must understand air and water regulations, labor laws, cash flow projections, hedging on futures exchanges, and how international markets affect local markets. Read this article for Bob Matlick’s thoughts on the issues of running a dairy business.

May 2012 – Smart Money Management – Accept the Business of Dairy, Dairy Today eUpdate
I see many producers who keep immaculate herd, reproductive and production records; however, many of those same producers have poor quality financial and money management records that may in turn lead to poor business decisions. I will many times drive home asking myself this very simple question, “Why?” Read this article to learn why financial records, both historically and looking forward, is critical to manage your dairy business.

April 2012 – Where is the Train Headed?, Western Dairy Business
Does your dairy operation have enough cash and available credit to make it through a downturn before hitting certain loan-to-value (LTV) limits? Dairymen should be asking themselves how long it will take before banks are unwilling to extend any further credit. Read this article to learn about the value of a cash flow projection for your dairy.

March 2012 – Business plan, marketing plan or liquidation plan, Progressive Dairyman
Do you have a business plan, a marketing plan or a liquidation plan? In general, agriculture has always been a price taker (in both inputs and outputs), and dairy is no exception, perhaps even the leader. When milk price volatility brings negative margins, the typical producer seems to focus on cost cutting, as opposed to revenue generation. The cost cutting is then usually done without a plan and is more of a knee-jerk reaction. Read this article to learn how to reduce the risk associated with areas under your control, such as inputs and outputs, by creating a business plan for your dairy.

February 2012 – What to expect in this Volatile Market, Western Dairy Business
The dairy industry has suffered record losses since the Great Depression in 2009. This year is one that everyone wants to forget. Have we recovered from such large losses? Read this article for ways to increase production and manage feed rations to combat lower milk prices and higher feed prices.

January 2012 – Is the Money Really Lost, Dairy Today eUpdate
Producers have a different risk profile based on their own balance sheet, management style, banking relationship and overall personality. Read this article for information about developing a business and marketing plan for your dairy that projects your individual operation for 12-24 months. The plan should include anticipated milk production, any herd increase or decrease, seasonality of milk production, anticipated feed costs (including physical hedges-inventory and forward contracts), capital improvements and debt structure.