Standardized Performance Analysis for Multiple Enterprise Farms

Standardized Performance Analysis (SPA) is an integrated production, marketing, and financial analysis program for enhancing farm level decision making.

Standardized Performance Analysis is a management tool designed to enable producers to complete an integrated financial, production, and marketing analysis of their entire farming operation using farm financial statements and other data. By integrating the SPA method of farm analysis with their current record keeping system, producers can calculate their unit cost of production and measures of profitability, and thereby be better informed to meet their business and marketing objectives.

The original SPA program was designed as a management tool for the beef cattle industry. The program was designed by the Texas Cooperative Extension Service in response to a request from the National Cattlemen’s Association. The idea was to help producers improve performance by identifying areas in which they could make adjustments within their operations. The use of the Cow-Calf Standardized Performance Analysis has provided a meaningful collection of production and financial information for use by cow/calf producers in Texas and the U.S.

The Standardized Performance Analysis for Multiple Enterprises (SPA-ME) program was developed by the Texas Cooperative Extension Service and Texas Tech University  to analyze farm and ranch operations with both crop and livestock enterprises.  The SPA-ME program has been tested and utilized by the Department of Agricultural and Applied Economics at Texas Tech University to conduct individual farm operation analysis in the High Plains and Costal Bend Regions of Texas.  A database of costs of production and profitability results has been complied for cotton and grain sorghum enterprises.

The SPA-ME program analyzes the whole farm financial performance of an agricultural operation using accrual adjusted financial statements constructed from the farm’s records. In addition to the whole farm analysis, the SPA-ME program also compiles an analysis of the individual crop enterprises within the farming operation. This includes an analysis of total crop production, unit cost of production, and profitability of the crop enterprises. The information from the crop enterprise analysis is then further broken down into a sub-enterprise analysis which focuses on the performance of specific farms or fields within each crop enterprise.

• Ability to analyze the performance of specific crops within the farm

• Ability to analyze the performance of specific farming units within the total farm operation

• Calculation of the unit cost of production and other measures of profitability for the enterprises

• Improved financial information (including accrual adjusted balance sheet and income statement preparation)

Currently, all SPA analyses in the Texas High Plains region are conducted by the Department of Agricultural and Applied Economics, Texas Tech University. The analysis, along with a detailed explanation of the results, are provided to each participant. The results are added to a regional data base so participants can compare their results to other operations in the region. All individual results remain confidential, and there is no reporting of individual results.

• Crop and livestock production information for each farm enterprise including planting rates, irrigation and chemical application rates, etc.
• IRS Tax Schedules
• Loan and debt repayment schedules
• Beginning and ending fiscal year balance sheets
• Income statements prepared in addition to IRS schedules
• End of year inventories of crops in storage
• Enterprise revenue and expenses, if available
• General ledger for the farming operation, if available
• Quality information for crops, including gin summaries, etc.

For additional information or to participate in the SPA Analysis Program please contact:

Dr. Phillip N. Johnson
Dept of Agricultural and Applied Economics
Texas Tech University
Lubbock, TX
Phone: (806) 742-0261 Ext. 237
Fax: (806) 742-1099 Fax
E-mail: phil.johnson@ttu.edu