Apply "Best Practices" to Crop Production Centers
Editor's note: This article continues a new series on the "best practices" FBS users have developed to improve effectiveness, efficiency, internal control and compliance from their information system. We'll also be covering a full range of best practices at the 2011 FBS Users Conference. To contribute your best practices visit our blogsite.
Production Centers are the crucial framework for production reporting, inventory control and management accounting in a cropping operation. In order to provide meaningful reports and simplified data entry they need to be organized in a standardized hierarchy based on these levels:
Level I: Commodity
The primary production center definition is commodity (or product). That can be represented generically by "Corn," "Wheat," or "Soybeans," but also be expanded to include "White Corn," "Silage," or "Non-GMO Soybeans." You should consider going beyond the "generic" definition if you desire the following:
- You need to segregate inventories (for example, identity-preserved crops).
- The crop is harvested in different units ("bushels" vs. "tons").
- You want to compare costs and returns between products.
Level II: Crop Year
The next level is crop year, which customarily refers to the year the crop is harvested. What complicates crop year accounting is that the production and marketing periods often overlap the calendar or fiscal years used for tax reporting. Yet it's critical to track crop year because of these requirements:
- Proving yields for FSA and crop insurance.
- Marketing and inventory control.
- Matching costs to production and sales.
Level III: Farm*
The last level incorporates the farm into the production center hierarchy. Why would you consider this?
- Multiple rented farms with significant variations in yields, land costs and operating costs.
- The need, desire and dedication to track costs and margins by commodity and farm.
You should never create separate centers for individual fields; that level of detail is achieved through FBS fields/projects within centers. (This option will be covered in a later chapter.)
* Don't attempt to go to this level of coding and analysis unless you're using Crop Audit for allocating seed and E.CLIPSE for allocating indirect costs and have successfully run at least a year at Level II.
Hierarchy and Coding
Figure 1 illustrates the hierarchy among these three levels.
A coding system using this hierarchy would begin with the commodity, followed by the crop year and conclude with the farm.
| Figure 1 |
Figure 2 shows a four-digit numeric system where the first digit represents the commodity (1 = "Corn" and 2 = "Seed Corn"), the second two digits represent the year ("09") and the last digit represents the farm or operator (for example 2 = "W.N."). This design will accommodate up to ten commodities and ten farms.
| Figure 2 |
Figure 3 incorporates an alpha code in the farm position, increasing the capacity to 52 farms (when including lower-, as well as upper-case letters).
| Figure 3 |
Figure 4 expands the center codes to six digits, with the first digit representing the commodity, the next three digits the farm and the last two the crop year. The effective capacity of this numeric system is 1000 farms. Note, though, that the hierarch here is commodity-farm-crop year versus the commodity-crop year-farm used in the other examples.
| Figure 4 |
Although the solutions vary in each of these examples, all represent "Best Practices" for each of these FBS Users.
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