Dairyfarmers throughout New York State submit business records for summarization and analysis through Cooperative Extension's Farm Business Management Program. Each participating farmer receives an individual farm report containing all the management information found in this publication. Averages from a compilation of the individual farm reports are published in several regional summaries and in one statewide summary. Program Objectives Primary objectives of the dairy farm business management program are to (1) assist farmers in developing and maintaining more complete farm business data for use in management decisions and (2) help farmers improve their management skills through appropriate use of farm record data and application of modern decision-making techniques. This report is prepared in workbook form for use in the systematic study of individual farm business operations. The year ahead will bring increased economic pressures on the dairy farming industry. Milk prices are expected to be down three to five percent while feed and other production costs will increase. Dairyfarmers must continue to place emphasis on operating efficiency and cost control in order to maintain adequate farm incomes. Changes in Computation The interest charge made for using equity capital in the farm business has been reduced to five percent. This real rate of interest is intended to reflect the long time average rate of return that a farmer might expect to earn in investments with comparable risk to farm businesses in an economy with little or no inflation. Labor and management income does not include appreciation of farm assets, therefore, appreciation has been excluded in determining the use charge for equity capital. Renting and leasing farm assets is becoming more common on New York dairy farms. Rental and lease payments are included as cash farm expenses. The discounted values of future financial lease payments have been added to the farm balance sheet to reflect the farmer's committed liability as well as the eventual value of the asset.