College - Author 1
College of Agriculture, Food and Environmental Sciences
Department - Author 1
Degree Name - Author 1
BS in Agricultural Business
Charles Nicholson, College of Agricultural, Food, and Environmental Sciences, Agribusiness Department
The case study was undertaken to determine whether if it is more financially profitable to become a value-added dairy business in California. This is a frequently discussed issue in agriculture, but there is not a lot of information available of how value-added facilities are doing.
This report uses two highly recognized financial reporting methods including an income statement and balance sheet to determine if the case study was financially profitable. Financial data was gathered from the enterprises, both farm and processing facility, for fiscal year 2010. The information generated made it possible to view financial income and profit for each enterprise individually so that feasibility of value-added dairying could be determined.
Value-added dairying is financially feasible if the entire product can be sold, but not as the enterprise currently stands. This conclusion is based off of the rate of return on assets is 1.6% for farm and negative 14.4% for processing, creating a negative profit for the processing enterprise. But if all the cheese were sold, the processing rate of return increases to 61%, making the processing profitable.