Financial and Environmental Sustainability of Farms in the Future

<p>NON-TECHNICAL SUMMARY: <br/>Farm management has always been and will always be a complicated and demanding task. The farm, whether it is a large commercial farm or a small subsistence farm, is surrounded by uncertainties, regulations, and changing conditions in a very competitive environment. Tomorrow's farm manager will have greater pressures than in the past due to greater financial requirements, increasing integration of the global economy, greater exposure to product and input price fluctuations, the development of new products, structural adjustments in the general economy, changes in and increasing government policies and regulations, an increasing world population with changing demographics, and greater instability in critical areas in the world. Other forces and trends affecting farmers now and into the future include climate change; developments in energy and
bioenergy; biotechnology; societal concerns about the environment, animal welfare and farmers' methods of production; development of new production technologies; policy changes at all levels of government; labor availability; food safety; and how companies and institutions in the agribusiness value chain are responding to these same forces. In the midst of these forces, changes, and resulting uncertainties, farmers still need to make decisions that affect the financial and environmental sustainability of their farms. In the light of this need, this project will involve the study of the impacts of the forces, trends, and policies associated with new technologies, economy-wide structural adjustments, increased market volatility, new financial rules and regulations, climate change, energy, bioenergy, biotechnology, as well as other trends affecting farmers in the U.S. and around the world.
The project has the aim of helping farmers (and those people, businesses, and agencies working with farmers) better understand the forces, trends, and policies affecting them; how best to take advantage of opportunities and minimize negative impacts resulting from these forces, trends, and policies; and how to adapt their farms to achieve private and public goals in the future.
APPROACH: 1. Financial sustainability will be evaluated by monitoring key variables and indicators of financial position and performance. This work will mainly involve the analysis of data in FINBIN, a farm record database collected and maintained by the Center for Farm Financial Management in the Department of Applied Economics at the University of Minnesota, external sources of data such as USDA's ARMS dataset, and international databases such as those available from CGIAR centers such as ILRI's data on crop residue use by crop-livestock farmers. Opportunities for improvement in sustainability will be identified and evaluated using static and dynamic economic models, econometric methods and strategic management analysis. 2. A subset of the management and production alternatives available to farmers will be chosen and analyzed based on the potential they hold to
improve the financial and environmental sustainability of farmers. Analysis methods will include static and dynamic budgeting, mathematical programming, simulation models, risk analysis, econometric modeling, and other appropriate procedures. These alternatives will be evaluated and compared to current practices in terms of economic returns, social acceptability, and environmental concerns. Many of the projects within this objective have been and will continue to be multidisciplinary in nature. Another aspect of this objective is to understand better why farmers adopt or do not adopt new technologies and management strategies. We will work with growers to expand our qualitative knowledge and understanding of how they make decisions in diverse situations and conditions. 3. Important policy alternatives will be identified through review of published alternatives and discussion with
agricultural and community leaders as well as federal and state leaders involved in farm policy. Base budgets and models of representative farm types in major production regions of Minnesota will be developed using data collected by farm business management associations; discussions with farmers and others involved in production; and other sources such as USDA data sets. These budgets and models will be used to estimate impacts of alternative policy proposals on the representative farms.
<p>PROGRESS: 2013/01 TO 2013/09<br/>Target Audience: Farmers; policy makers; agribusiness; financial institutions; academic researchers, teachers, and students Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided? Nothing Reported How have the results been disseminated to communities of interest? Results have been reported through journal articles and manuscripts, blogs, press releases, popular media articles,professional talks, and phone discussions with media. What do you plan to do during the next reporting period to accomplish the goals? Nothing Reported
<p>PROGRESS: 2012/01/01 TO 2012/12/31<br/>OUTPUTS: Kent Olson was on sabbatical from August 1, 2011, through July 31, 2012. He focused on issues surrounding managing the farm in the future. Since returning, he has been formulating reports and work but these have not been finalized nor published in 2012. Some results were disseminated through popular media such as newspapers, media interviews and oral presentations at meetings. PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: Farmers, policy makers, agribusiness, financial institutions, academic researchers and teachers. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
<p>PROGRESS: 2011/01/01 TO 2011/12/31<br/>OUTPUTS: Results were disseminated by newspaper articles, media interviews, paper and electronic reports, and oral presentations at several meetings. Reports are also available on the web. PARTICIPANTS: Dale Nordquist, Center for Farm Financial Management, University of Minnesota; Jim Kurtz, Rob Holcomb, Gary Hachfeld, David Bau, William Craig, and Don Nitchie are Extension, University of Minnesota, Kurtz and Nitchie are field representatives of the SW Assn; Garen Paulson is an employee and Froslan is an officer of the SW Assn. We attended the annual meetings of the American Agricultural Economics Association. TARGET AUDIENCES: Farmers, policy makers, agribusiness, financial institutions, academic researchers and teachers. Reports were mailed to audience members as well as posted on the web. Many articles were written and
interviews made for the popular press. Oral presentations were made at many meetings of farmers, lenders, agribusiness, and academic meetings. Letters and reports with results of the analysis of policy alternatives were mailed, faxed, and called to elected representatives in Congress when done and again in a timely manner near vote times. PROJECT MODIFICATIONS: No major changes are anticipated.
<p>PROGRESS: 2011/01/01 TO 2011/12/31<br/>OUTPUTS: Results were disseminated by newspaper articles, media interviews, paper and electronic reports, and oral presentations at several meetings. Reports are also available on the web. PARTICIPANTS: Dale Nordquist, Center for Farm Financial Management, University of Minnesota; Jim Kurtz, Rob Holcomb, Gary Hachfeld, David Bau, William Craig, and Don Nitchie are Extension, University of Minnesota, Kurtz and Nitchie are field representatives of the SW Assn; Garen Paulson is an employee and Froslan is an officer of the SW Assn. We attended the annual meetings of the American Agricultural Economics Association. TARGET AUDIENCES: Farmers, policy makers, agribusiness, financial institutions, academic researchers and teachers. Reports were mailed to audience members as well as posted on the web. Many articles were written and
interviews made for the popular press. Oral presentations were made at many meetings of farmers, lenders, agribusiness, and academic meetings. Letters and reports with results of the analysis of policy alternatives were mailed, faxed, and called to elected representatives in Congress when done and again in a timely manner near vote times. PROJECT MODIFICATIONS: No major changes are anticipated.
<p>PROGRESS: 2010/01/01 TO 2010/12/31<br/>OUTPUTS: Results were disseminated by journal articles, newspaper articles, media interviews, paper and electronic reports, and oral presentations at several meetings. Reports are also available on the web. PARTICIPANTS: Dale Nordquist, Center for Farm Financial Management, University of Minnesota; Thaddee Badibanga, Linh Vu, graduate students in Applied Economics Department; Jim Kurtz, Rob Holcomb, Gary Hachfeld, David Bau, William Craig, and Don Nitchie are Extension, University of Minnesota, Kurtz and Nitchie are field representatives of the SW Assn; Garen Paulson is an employee and Froslan is an officer of the SW Assn. We attended the annual meetings of the American Agricultural Economics Association. TARGET AUDIENCES: Farmers, policy makers, agribusiness, financial institutions, academic researchers and teachers. Reports were
mailed to audience members as well as posted on the web. Many articles were written and interviews made for the popular press. Oral presentations were made at many meetings of farmers, lenders, agribusiness, and academic meetings. Letters and reports with results of the analysis of policy alternatives were mailed, faxed, and called to elected representatives in Congress when done and again in a timely manner near vote times. PROJECT MODIFICATIONS: No major changes are anticipated.
<p>PROGRESS: 2010/01/01 TO 2010/12/31<br/>OUTPUTS: Results were disseminated by journal articles, newspaper articles, media interviews, paper and electronic reports, and oral presentations at several meetings. Reports are also available on the web. PARTICIPANTS: Dale Nordquist, Center for Farm Financial Management, University of Minnesota; Thaddee Badibanga, Linh Vu, graduate students in Applied Economics Department; Jim Kurtz, Rob Holcomb, Gary Hachfeld, David Bau, William Craig, and Don Nitchie are Extension, University of Minnesota, Kurtz and Nitchie are field representatives of the SW Assn; Garen Paulson is an employee and Froslan is an officer of the SW Assn. We attended the annual meetings of the American Agricultural Economics Association. TARGET AUDIENCES: Farmers, policy makers, agribusiness, financial institutions, academic researchers and teachers. Reports were
mailed to audience members as well as posted on the web. Many articles were written and interviews made for the popular press. Oral presentations were made at many meetings of farmers, lenders, agribusiness, and academic meetings. Letters and reports with results of the analysis of policy alternatives were mailed, faxed, and called to elected representatives in Congress when done and again in a timely manner near vote times. PROJECT MODIFICATIONS: No major changes are anticipated.
<p>PROGRESS: 2009/01/01 TO 2009/12/31<br/>OUTPUTS: Results were disseminated by journal articles, newspaper articles, media interviews, paper and electronic reports, and oral presentations at several meetings. Results were sent to U.S. Senators and Representatives from Minnesota. Reports are also available on the web. PARTICIPANTS: Dale Nordquist, Center for Farm Financial Management, University of Minnesota; Thaddee Badibanga, Matt DalSanto, Linh Vu, graduate students in Applied Economics Department; Jim Kurtz, Rob Holcomb, Gary Hacfeld, David Bau, and William Craig are Extension, University of Minnesota, and representatives of the SW Assn; Garen Paulson is an employee of the SW Assn. We attended the annual meetings of the American Agricultural Economics Association. TARGET AUDIENCES: Farmers, policy makers, agribusiness, financial institutions, academic researchers and
teachers. Reports were mailed to audience members as well as posted on the web. Many articles were written and interviews made for the popular press. Oral presentations were made at many meetings of farmers, lenders, agribusiness, and academic meetings. Letters and reports with results of the analysis of policy alternatives were mailed, faxed, and called to elected representatives in Congress when done and again in a timely manner near vote times. PROJECT MODIFICATIONS: No major changes are anticipated.
<p>PROGRESS: 2008/01/01 TO 2008/12/31<br/>OUTPUTS: Results were disseminated by journal articles, newspaper articles, media interviews, paper and electronic reports, and oral presentations at several meetings. Results were sent to U.S. Senators and Representatives from Minnesota. Reports are also available on the web. PARTICIPANTS: Dale Nordquist, Center for Farm Financial Management, University of Minnesota; Thaddee Badibanga, Matt DalSanto, Linh Vu, graduate students in Applied Economics Department; Chris DiFonzo, Entomology, University of Michigan. Jim Kurtz and Rob Holcomb are Extension, University of Minnesota, and representatives of the SW Assn. Garen Paulson is an employee of the SW Assn. We attended the annual meetings of the American Agricultural Economics Association. TARGET AUDIENCES: Farmers, policy makers, agribusiness, financial institutions, academic
researchers and teachers. Reports were mailed to audience members as well as posted on the web. Many articles were written and interviews made for the popular press. Oral presentations were made at many meetings of farmers, lenders, agribusiness, and academic meetings. Letters and reports with results of the analysis of policy alternatives were mailed, faxed, and called to elected representatives in Congress when done and again in a timely manner near vote times. PROJECT MODIFICATIONS: No major changes are anticipated.
<p>PROGRESS: 2007/01/01 TO 2007/12/31<br/>
OUTPUTS: Results were disseminated by journal articles, newspaper articles, media interviews, paper and electronic reports, and oral presentations at several meetings. Results were sent to U.S. Senators and Representatives from Minnesota. Reports are also available on the web.
PARTICIPANTS: Dale Nordquist, Center for Farm Financial Management, University of Minnesota; Thaddee Badibanga, Matt DalSanto, Linh Vu, graduate students in Applied Economics Department; Jennifer Skuza, Extension, and Charlie Blin, Natural Resources, University of Minnesota; Chris DiFonzo, Entomology, University of Michigan. Jim Kurtz, Rob Holcomb, and Lorin Westman are Extension, University of Minnesota, and representatives of the SE and SW Assns. Garen Paulson is an employee of the SW Assn. We attended the annual meetings of the American Agricultural Economics Association. Carl Johan Lagerkvist is an associate professor and Karin Larsen is a graduate student student at the Department of Economics, Swedish Agricultural University, Uppsala.
TARGET AUDIENCES: Farmers, policy makers, agribusiness, financial institutions, academic researchers and teachers. Reports were mailed to audience members as well as posted on the web. Many articles were written and interviews made for the popular press. Oral presentations were made at many meetings of farmers, lenders, agribusiness, and academic meetings. Letters and reports with results of the analysis of policy alternatives were mailed, faxed, and called to elected representatives in Congress when done and again at timely manners near vote times.
PROJECT MODIFICATIONS: No major changes are anticipated.
<p>PROGRESS: 2006/01/01 TO 2006/12/31<br/>Nordquist et al. reported financial performance for 2 record associations in southern Minnesota. Average accrual net farm income for the 107 farms included in the annual report of the Southwestern Minnesota Farm Business Management Association was $147,862 in 2005. In constant dollars, 2005 was the most profitable year for SW Assn farmers in the past 20 years. Government payments of all types totaled $56,461 in 2005, a 103% increase from 2004. Average accrual net farm income for the 45 farms included in the annual report of the Southeastern Minnesota Farm Business Management Association was $116,688 in 2005. In constant dollars, 2005 was slightly less profitable than 2004 but still the second most profitable year for SE Assn farmers in the past 20 years. Government payments of all types averaged $55,750 in 2005, a 67% increase
from 2005. The reports provide additional information on profitability, liquidity, and solvency as well as other whole-farm information and detailed information on crop and livestock enterprises. Porter et al. present an overview of the agronomic and economic impact of adopting organic production practices. In unpublished work, the second annual survey of soybean farmers on their IPM implementation and adoption for control of soybean aphids showed an improved understanding of soybean aphids and their impact on soybean growth and yield. Olson, Radcliffe, Badibanga, and Ragsdale report the results from a survey of seed potato producers in Minnesota and North Dakota that show a very strong, positive correlation between the use of crop borders to protect the seed from virus infection, specifically PVY, and the seed lot passing the winter test for PVY infection. The issues and conditions
surrounding organic food are discussed in the book edited by Canavari and Olson. The 13 chapters cover topics on markets, marketing, demand, production, and policies as well as an overview of future issues. Olson, Skuza, and Blinn report the results of a survey of Extension Educators and their views of scholarship within their work. In other, yet unpublished work, programs related to farm transfer and estate planning were developed and presented to farmers; trends in Minnesota farms and factors related to those trends are presented and discussed; the risk and efficiency of holding farm and nonfarm assets were evaluated; the AGR-Lite insurance program was evaluated for Minnesota farmers; and the economic, technical, allocative, and scale efficiencies of Minnesota farms were estimated. A new project estimating the impact of alternative federal farm policies was started in 2006.
<p>PROGRESS: 2005/01/01 TO 2005/12/31<br/>Nordquist et al. reported financial performance for 2 record associations in southern Minnesota. Average accrual farm income for the 125 farms report in the annual report of the Southwestern Minnesota Farm Business Management Association was $98,362 in 2004. In constant dollars, 2004 was the third most profitable year for SW Assn farmers in the past 20 years. Government payments of all types totaled $27,798 in 2004, a 7.5% increase from 2003. Average accrual farm income for the 46 farms included in the annual report of the Southeastern Minnesota Farm Business Management Association was $113,462 in 2004. In constant dollars, 2004 was the most profitable year for SE Assn farmers in the past 20 years. Government payments of all types averaged $33,294 in 2004, a 4% increase from the previous year. The reports provide additional
information on profitability, liquidity, and solvency as well as other whole-farm information and detailed information on crop and livestock enterprises. Olson and Badibanga report on 2 surveys. In the first of a series of annual surveys designed to track changes in IPM implementation and adoption over time, 742 farmers in Iowa, Michigan, and Minnesota were surveyed in early 2005. Overall, the farmers showed a fairly good understanding of soybean aphids and their impact on soybeans. 84% of the farmers said the most important information for making a decision to treat soybean aphids was scouting reports; 54% said plant growth stage was very important in their decision. In the second survey, seed potato producers in Minnesota and North Dakota were surveyed to assess their perception of the profitability and risks associated with using crop borders to manage PVY in seed borders and the
likelihood that producers will continue to use crop borders or plan to do so in the future. Of the 23 producers who responded (a 25% response rate), 5 said they had used crop borders in 2004. Nine producers said they had tried using crop borders in the past but had quit using them. Those who were using crop borders indicated that damage caused by PVY infection was very important relative to other problems in seed potato production. Those producers who had used crop borders but had quit were more likely to say the damage was important than very important. Only those who were using crop borders agreed with the statement that using crop borders [fit] very well with my current production system. Those who had used crop borders but then quit disagreed with that statement. In other, yet unpublished work, the decision to treat for soybean aphids is found to be very sensitive to the infestation
level and whether the population is growing or under control; future issues related to organic food in the U.S. are discussed; programs related to farm transfer and estate planning were developed; trends in Minnesota farms and factors related those trends are presented and discussed; the risk and efficiency of holding farm and nonfarm assets are evaluated; and an evaluation of the AGR-Lite insurance program was staarted. A new project evaluating the economic, technical, allocative, and scale efficiency of farm production over time was started in 2005.
<p>PROGRESS: 2004/01/01 TO 2004/12/31<br/>Nordquist et al. reported financial performance for 2 record associations in southern Minnesota. Average accrual farm income for the 175 farms report in the annual report of the Southwestern Minnesota Farm Business Management Association was $96,404 in 2003. In constant dollars, 2003 was the most profitable year for SW Assn farmers since 1987. Government payments of all types totaled $25,855 in 2003, a 62 percent increase from 2002. Average accrual farm income for the 50 farms included in the annual report of the Southeastern Minnesota Farm Business Management Association was $85,669 in 2003. In constant dollars, 2003 was the most profitable year for SE Assn farmers since 1995. Government payments of all types averaged $31,195 in 2003, a 65 percent increase from the previous year. The reports provide additional information on
profitability, liquidity, and solvency as well as other whole-farm information and detailed information on crop and livestock enterprises. Due to concerns about poor harvest conditions and lost yield in parts of Minnesota, Hachfeld et al. describe how to estimate indemnity payments from crop insurance. Using experimental data from 1990-1999 in southwestern Minnesota, Mahoney et al. found that, with premiums, the organic strategy in a 4-year rotation had net returns significantly higher than conventional strategies using both 2 and 4-year rotations. Without premiums, the net returns were statistically equal (p=0.05). Thus, the 4-year organic strategy was not less profitable nor its net return more variable than the conventional strategies in this study. Olson et al. is an analysis of reducing organophosphate use in seed potato production by scouting and treating only the field borders for
aphids (versus the entire field) show a possible cost reduction of about $24 per acre.
<p>PROGRESS: 2003/01/01 TO 2003/12/31<br/>Olson (2004) is a new farm management textbook published in 2003. In addition to traditional farm management topics, this text covers new topics including strategic management, quality management, and some new techniques and tools in production and operations management. The chapters are The Scope of Farm Management, Strategic Management, Marketing Plan, Budgeting, Production and Operations Management, Quality Management and Control, Financial Analysis, Financial Management, Investment Analysis, Land Purchase and Rental, Risk Management, Production Contract Evaluation, Staffing and Organization, and The Future Farm Manager. A companion website includes lesson overviews, objectives, key terms, reading assignments, study notes, examples, worksheets, virtual field trips (complete with video and audio), and links to background
material and other pertinent sites. Nordquist et al. reported financial performance for 2 record associations in southern Minnesota. Average accrual farm income for the 188 farms report in the annual report of the Southwestern Minnesota Farm Business Management Association was $70,007 in 2002. This was a sharp increase from the average of $36,614 in the previous year. Government payments of all types totaled $15,927 in 2002, a 67% reduction from 2001. Average accrual farm income for the 54 farms included in the annual report of the Southeastern Minnesota Farm Business Management Association was $64,666 in 2002, an increase of 6% from the previous year. Government payments of all types averaged $19,375 in 2002, a 50% reduction from the previous year. The reports provide additional information on profitability, liquidity, and solvency as well as other whole-farm information and detailed
information on crop and livestock enterprises. Using experimental data from 1990-1999 in southwestern Minnesota, Mahoney et al. found that, with premiums, the organic strategy in a 4-year rotation had net returns significantly higher than conventional strategies using both 2 and 4-year rotations. Without premiums, the net returns were statistically equal (p=0.05). Thus, the 4-year organic strategy was not less profitable nor its net return more variable than the conventional strategies in this study. Olson et al. report the results of a farm and market survey for Hmong specialty crop farmers in the metro area. The median size of the surveyed farms was 3 acres. Forty-two percent of those farmers responding reported total farm product sales between $3,000 and $8,999. Many other survey results can be found in the report. In preliminary, unpublished analysis of reducing organophosphate use
in seed potato production by scouting and treating only the field borders for aphids (versus the entire field) show a possible cost reduction of about $24 per acre, however, quantitative analysis of virus infection levels will not be known until after tests in winter 2004.
<p>PROGRESS: 2002/01/01 TO 2002/12/31<br/>Olson (2003) is a new farm management textbook delivered to the publisher in 2002 and will be available in summer 2003. This text includes new material not in traditional farm management texts such as strategic management, quality management, production and operations management, and production contract evaluation. The text also covers the traditional topics of budgeting, financial analysis and management, marketing, investment, land purchase and rental, risk management, staffing and organization. The text concludes with a discussion of the future farm manager. Olson et al. reported financial performance for 2 record associations in southern Minnesota. Average accrual farm income for the 207 farms report in the annual report of the Southwestern Minnesota Farm Business Management Association was $36,614 in 2001. The median or
middle income was $29,040. This was a sharp drop from 2000 and 1999 but not as low as the extremely low levels of 1998. Government payments of all types totaled $48,208 per average farm in 2001-a slight decrease from $50,567 in 2000 but still higher than the $44,674 in 1999, $30,021 in 1998, and $12,257 in 1997. Average accrual farm income for the 59 farms report in the annual report of the Southeastern Minnesota Farm Business Management Association was $60,978 in 2001, down 21% from the previous year. The median or middle income was $31,577. Government payments of all types were $40,227 in 2001. They were $50,496 in 2000, $50,700 in 1999, $23,322 in 1998, and $12,907 in 1997. The reports provide additional information on profitability, liquidity, and solvency as well as other whole-farm information and detailed information on crop and livestock enterprises. Eidman and Olson examine
farmers' risk management choices and alternatives and the evidence of their use by farmers. Westra, Easter, and Olson evaluate the impacts of alternative policies for reducing phosphorus loading from farmland. Other, as yet, unpublished work included risk and profitability of organic farming (with P. Mahoney, P. Porter, D. Huggins, C. Perillo, and K. Crookston) and the impacts on precision agriculture on rates of return to farming (with P. Elisabeth).
<p>PROGRESS: 2001/01/01 TO 2001/12/31<br/>Olson (2001) explains the basic process of strategic management for farmers: evaluation of both the external business environment and the internal situation as well as developing a vision and mission, setting objectives, crafting and testing a strategy for your farm, implementing that strategic plan, evaluating performance, and making corrective adjustments, as needed. Olson et al. reported financial performance for 2 record associations in southern Minnesota. Average accrual farm income for the 212 farms report in the annual report of the Southwestern Minnesota Farm Business Management Association was $81,750 in 2000. The median or middle income was $69,414. This is the second annual increase from the extremely low levels of 1998. Government payments of all types increased again to $50,567 per average farm in 2000-an increase
from $44,674 in 1999, $30,021 in 1998, and $12,257 in 1997. Average accrual farm income for the 58 farms report in the annual report of the Southeastern Minnesota Farm Business Management Association was $77,672 in 2000, up 17% from the previous year. The median or middle income was $39,675. Government payments of all types were $50,496 in 2000. They were $50,700 in 1999, $23,322 in 1998, and $12,907 in 1997. The reports provide additional information on profitability, liquidity, and solvency as well as other whole-farm information and detailed information on crop and livestock enterprises. Eidman and Olson examine farmers' risk management choices and alternatives and the evidence of their use by farmers. Other, as yet, unpublished work included risk and profitability of organic farming (with P. Mahoney, P. Porter, D. Huggins, C. Perillo, and K. Crookston), and evaluation of the impacts
of policy alternatives for reducing phosphorus loading from farmland (with J. Westra and W. Easter).
<p>PROGRESS: 2000/01/01 TO 2000/12/31<br/>This work was under the AREERA plan of work goal #1. Olson et al. reported financial performance for 2 record associations in southern Minnesota. Average accrual farm income for the 216 farms report in the annual report of the Southwestern Minnesota Farm Business Management Association was $43,762 in 1999, up from $8,616 in the previous year. Government payments of all types were $44,674 in 1999 which was 102% of the average accrual farm income for the southwestern association. Average accrual farm income for the 62 farms report in the annual report of the Southeastern Minnesota Farm Business Management Association was $66,412 in 1999, up 1% from the previous year. Government payments of all types were $50,700 in 1999 which was 76% of the average accrual farm income for the southeastern association. The reports provide additional
information on profitability, liquidity, and solvency as well as other whole-farm information and detailed information on crop and livestock enterprises. Olson presented ideas on alternatives that farmers are implementing to survive in the future. Other, as yet, unpublished work included explanation and examination of risk management choices and alternatives available and evidence of their use by farmers (with V. Eidman), risk and profitability of organic farming (with P. Mahoney, P. Porter, D. Huggins, C. Perillo, and K. Crookston), and evaluation of the impacts of policy alternatives for reducing phosphorus loading from farmland (with J. Westra and W. Easter).
<p>PROGRESS: 1999/01/01 TO 1999/12/31<br/>Olson et al. report financial performance records for 2 record associations in southern Minnesota. Average accrual farm income in the Southeastern Association was $65,739 in 1998, down 12% from 1997. In the Southwestern Association average accrual farm income was $8,616 in 1998, down 79% from 1997. The reports provide additional information on profitability, liquidity, and solvency as well as other whole-farm information and detailed information on crop and livestock enterprises. Due to continuing low prices, Olson projected income for 1999 and spent considerable time presenting and discussing these income estimates and management alternatives at various meetings and with many members of the media. Olson also presented ideas on alternatives that farmers are implementing to survive in the future; a paper will be published in 2000.
Uhlin and Olson discuss agriculture being an almost- constant cost industry and the implications for policy and farmers' decisions.
<p>PROGRESS: 1998/01/01 TO 1998/12/31<br/>
Olson et al. report financial performance records for 2 record associations in southern Minnesota. Average accrual farm income in the Southeastern Association was $73,311 in 1997, up 8.5 percent from 1996. In the Southwestern Association average accrual farm income was $40,598 in 1997, down 35 percent from 1996. The reports provide additional information on profitability, liquidity, and solvency as well as other whole-farm information and detailed information on crop and livestock enterprises. Due to dropping product prices, Olson (1998a) estimated in August how ow income may fall and then made a revised estimate in October (Olson, 1998b,c). In August, Olson presented the early estimate at a hearing of the Agriculture Committee of the Minnesota House. Olson, Nordquist and Weness describe several financial management alternatives for farmers facing low incomes. Considerable time has been spent presenting and discussing these income estimates and management alternatives at various meetings and many members at the media. Ohlmer et al. found that farmers need more and with better information and assistance in the processes of problem detection and finding ideas for options. To improve farmers' creativity in idea generation, it is important to improve farmers' ability and motivation. Farmers' low interest in information management services and tools can be explained by their design for quantifying versus qualitative farmers. Farmers prefer incremental adoption and small scale tests of alternatives.
<p>PROGRESS: 1997/01/01 TO 1997/12/31<br/>
Olson et al. report financial performance records for 2 record associations in southern Minnesota. Average accrual farm income in the Southeastern Association was $67,579 in 1996, down 8% from 1995. In the Southwestern Association average accrual farm income was $62,699 in 1996, up 9% from 1995. The reports provide additional information on profitability, liquidity, and solvency as well as other whole-farm information and detailed information on crop and livestock enterprises. Olson and Westra (1997) found farmers were more apt to adopt conservation tillage if they were larger, concerned about erosion, had made a recent major investment in the farm, use other producers for tillage information, have the management skills for conservation tillage, and believe conservation tillage will fit their production goals and the physical setting of their farm. Olson and Lohano found production costs to vary both between farm sizes and within size groups. Nordquist and Olson show how financial measures have varied over time and for different farm sizes and types. Ohlmer et al. found that farmers need more and better information and assistance in the processes of problem detection and finding ideas for options. To improve farmers' creativity in idea generation, it is important to improve farmers' ability and motivation. Farmers' low interest in information management services and tools can be explained by their design for quantifying versus qualitative farmers. Farmers prefer incremental adoption and small scale tests of alternatives.
<p>PROGRESS: 1996/01 TO 1996/12<br/>
Olson et al. report financial performance records for 2 record associations in southern Minnesota. Average accrual farm income in the Southeastern Association was $71,382 in 1995, up 27% from 1994. In the Southwestern Association average accrual farm income was $57,276 in 1995, up 80% from 1994. The reports provide additional information on profitability, liquidity, and solvency as well as other whole-farm information and detailed information on crop and livestock enterprises. Olson and Westra (1996b) found farmers were more apt to adopt conservation tillage if they were larger, they were concerned about erosion, and they were more willing to consider alternative technologies. #hlm#r et al. found that farmers need more and better information and assistance in the processes of problem detection and finding ideas for options. To improve farmers' creativity in idea generation, it is important to improve farmers' ability and motivation. Farmers' low interest in information management services and tools can be explained by their design for quantifying versus qualitative farmers. Farmers prefer incremental adoption and small scale tests of alternatives. Using stochastic dominance, Olson et al. found the high purchased input strategy in a 2-year rotation of corn and soybean to be preferred over other strategies and rotations. Talley found that a higher intensity of the land rental market caused low quality land to be bid higher than its productivity would indicate compared to high quality land. O.
<p>PROGRESS: 1995/01 TO 1995/12<br/>
Olson et al. report financial performance records for 2 record associations in southern Minnesota. Average accrual farm income in the Southeastern Association was $56,192 in 1994 for the 64 farms. This was 30% higher than 1993. In the Southwestern Association, average accrual farm income was $31,915 for the 202 farms. This was a 1% increase from 1993. The reports provide additional information on profitability, liquidity, and solvency as well as other whole-farm information and detailed information on crop and livestock enterprises. Andersson and Olson use and compare alternative methods of testing the statistical representativeness of the membership of farm record associations. Association farms were larger in terms of tillable acreage, cash sales, assets, expenditures, debt, and income; had a higher proportion of rented land; and were more efficient as measured by a modified rate of return. Olson and Westra use a logit model to explain farm success on the basis of nonfinancial variables. Significant and positive variables were: having received a bachelor's degree, soil quality, diversification, management time, new machinery, and letting neighbors try new technology first. #hlm#r et al. found that farmers need more and better information and assistance in the processes of problem detection and in finding ideas for options. They also found that to improve farmers' creativity in idea generation, it is important to improve farmers' ability and motivation.
<p>PROGRESS: 1994/01 TO 1994/12<br/>
Olson et al. report financial performance records for 2 record associations. Dueto very wet, cool weather during the growing season in 1993, crop yields were reduced or lost completely; in some cases the crop could not be planted due to wet conditions. Average accrual farm income in the Southeastern Association was $43,246 in 1993 for the 65 farms. This was 8% higher than in 1992. In the Southwestern, average accrual farm income was $31,567 for the 202 farms. This was 16% lower than in 1992. The reports provide additional information on profitability, liquidity, and solvency as well as other whole-farm information and detailed information on crop and livestock enterprises. Olson and Destro develop an accounting framework which allows a more accurate evaluation and comparison of conventional and alternative agriculture by accounting for both traditional market transactions and the use of environmental assets on individual farms. This framework is analogous to the work on national accounts. Andersson and Olson use and compare alternative methods of testing the statistical representativeness of the membership of farm record associations. #hlm#r et al. develop a conceptual model of farmers' decision making and test that model in a series of case studies. They found that managerial assistance does not agree with farmers' decision processes and, thus, suggested some ideas for improving that assistance.
<p>PROGRESS: 1993/01 TO 1993/12<br/>
Farm income and related data were monitored and reported by NORDQUIST et al. fortwo associations with a total of 264 farms. In SW Minnesota, 1992 farm income was up 27% from 1991; SE Minnesota suffered a decrease of 21%. In both associations, 1992 income was below the levels in 1987-1990 in both nominal and constant dollars. OLSON and WENESS answer some common questions on how to deal with the wet conditions of 1993. In other work, data was collected on the characterization of the high, middle and low profit farms in the SW association; analysis of that data will be done in 1994. OHLMER et al. present a conceptual model of farmers' decision process which is tested through case studies. They point out areas for expansion and improvement in the model as well as potential areas for improving management assistance. They found that farmers needed more assistance in problem detection and definition and in information search and paying attention. OLSON and STANTON review past projections and project future U.S. farm numbers and their distribution over size classes. The size class of $40,000-99,999 (which has been identified with small, family farms) is expected to decline in absolute number but continue to be the largest group of commercial farms; however, they will produce a smaller share of total production. Other work, as yet unpublished, has been done on the impact of practices associated with sustainable agriculture; this work has an international collaboration with colleagues at the University of Padova, Italy.
<p>PROGRESS: 1992/01 TO 1992/12<br/>
Farm income and related data were monitored and reported by OLSON et al. for twoassociations with a total of about 250 farms. Farm income in 1991 was down slightly from 1990 levels, but 1990 had been at record levels so a decrease was expected. As part of a regional survey, OLSON and SAUPE discuss farmer's plans to change and their needs for the future. OLSON and STANTON review past projections and project future U.S. farm numbers and their distribution over size classes. The size class of $40,000 99,999 (which has been identified with small, family farms) is expected to decline in absolute number but continue to be the largest group of commercial farms; however, they will produce a smaller share of total production. OLSON, GRANDE, and BJORNSTAD and OLSON, BJORNSTAD, and GRANDE found that the past trends towards fewer and larger livestock farms can be expected to continue and that Minnesota's hog industry appears to be the most competitive livestock industry compared to other regions in the U.S. OLSON and EIDMAN estimated that the variability of returns was more important than policy changes (e.g., taxes and benefits) in influencing a farmer to choose herbicides than the higher expected returns in a nonherbicide system. Other work, as yet unpublished, has been done on the impact of practices associated with low-input, sustainable agriculture (LISA); this work has an international collaboration with colleagues at the University of Padova, Italy.
<p>PROGRESS: 1991/01 TO 1991/12<br/>
Olson and Stanton review past projections and project future U.S. farm numbers and their distribution over size classes. The size class of $40,000-99,999 (which has been identified with small, family farms) is expected to decline in absolute number but continue to be the largest group of commercial farms; however, they will produce a smaller share of total production. In a related study, the future structure of the livestock industry in Minnesota is being analyzed (Olson, Bjornstad, and Grande; Olson, Grande, Bjornstad; Grande; Bjornstad). Olson and Eidman estimated that the variability of returns was more important than policy changes (e.g., taxes and benefits) in influencing a farmer to choose herbicides than the higher expected returns in a nonherbicide system. Olson et al. found that an annual forage may be a viable alternative in a corn-soybean farming system depending upon a farmer's risk preferences. A farmer's decision to adapt to declining labor supply, soil conservation needs, and lowering debt requirements is presented as a case by Olson, Lyman, and Eidman. On-farm research results are being used to study the impact of practices associated with low-input, sustainable agriculture (LISA): these results are, as yet unpublished. Boehlje and Olson discuss current and potential linkages between farm and financial management.
<p>PROGRESS: 1990/01 TO 1990/12<br/>
Olson and Stanton review past projections and develop a current protection of the structure of American agriculture. The U.S. Census of Agriculture reported there were 2.1 million farms in 1987. Extending the percentage change in farm numbers by sales size class between 1978 and 1987 results in a projection of 1.9 million farms in the year 2000. Using 1982 through 1987 as the base, the projection is 1.8 million farms in 2000. In 1987, farms with sales of $40,000 or more constituted 28% of the total number of farms. By 2000, farms with sales of $40,000 are projected to constitute 30% of all farms using 1978 to 1987 for the base period. Using 1982 to 1987 as the base period, this size class is projected to contain 27% of all farms. The size class of $40,000-$99,999 (which has been identified with small, family farms) is expected to decline in absolute number but continue to be the most important group in terms of total numbers among all farms with sales of $40,000 or more. Olson and Mikesell report the results of a survey of farm families' opinions on community and economic conditions, quality of life, farm family adjustments, risk reduction behaviors, participation in government programs, information and training needs, spouse's involvement in farm operation, and family decision-making behavior, pressures experienced and coping strategies used by spouses, and participation in farm and local organizations.
<p>PROGRESS: 1989/01 TO 1989/12<br/>
Financial variables from southwest Minnesota farmers' were analyzed using data from 1985 and the results verified with 1986 and 1987 data by Tvedt, Olson, and Hawkins. In summary, seven variables were found to be significant predictors of the rate of return on assets (ROA). The number of acres, corn yield ratio, asset turnover rate, beginning debt-to-asset ratio, a cash rent indicator, and a beef finishing indicator, were positively related with ROA. The gross ratio (total expenses divided by value of production) was negatively related with ROA. The number of acres, corn yield ratio, and gross ratio had significant quadratic effects which were opposite their linear effect. Liquidity and marketing efficiency measures were not found to be significant predictors of ROA. The memberships of the SE and SW Minnesota Farm Business Management Associations have been compared to the USDA's Farm Costs and Returns Survey (FCRS) data. The report is in draft form. The usefulness and accuracy of an expert system for financial analysis is being evaluated by usingAssociation data. Olson and Boehlje have analyzed the relationship between the trends in farm income from the Associations and the trends in land prices and values as reported by Phil Raup and colleagues.
<p>PROGRESS: 1988/01 TO 1988/12<br/>
Financial variables from Southwest Minnesota farmers' were analyzed using data from 1985 and verified with 1986 and 1987 data. Seven variables were found to be significant predictors of the rate of return on assets (ROA). The number of acres, corn yield ratio, asset turnover rate, beginning debt-to-asset ratio, a cash rent indicator, and a beef finishing indicator were positively related with ROA. The gross ratio (total expenses divided by value of production) was negatively related with ROA. The number of acres, corn yield ratio, and gross ratio had significant quadratic effects which were opposite their linear effect. Liquidity and marketing efficiency measures were not found to be significant predictors of ROA.
<p>PROGRESS: 1987/01 TO 1987/12<br/>
The financial trends of southern Minnesota farms from 1970 to 1985 were analyzed. These trends generally followed national trends of improved financial conditions throughout the 1970s and severe financial problems in the 1980s. By 1985, the condition had improved from 1981-82 for most farms. In all years, there were wide differences between the high profit and low profit farms. In "Family Farm Adjustments to Financial Stress," financial analysis procedures were outlined and actual adjustments were discussed. This covered options that were available, how adjustments could be analyzed, and examples of what adjustments have been made. A paper on new crops and products also was written. Current research underway is evaluating the differentiating characteristics between high profit and low profit farms using a LOGIT analysis.
<p>PROGRESS: 1986/01 TO 1986/12<br/>
A report analyzing the financial trends of the members of the S.E. & S.W. Minnesota Farm Business Management Associations from 1970 to 1985 has been prepared. It looks at the changes in the assets, liabilities and net worth as well as the net farm income and its components. The financial ratio analysis includes trends in the rates of return to investment, the debt to asset ratio, and other pertinent measures. The report covers capital asset purchases and sales. Family living expenses are included also. Research under way includes testing how well the association members represented the population of farmers as described in the census of agriculture; testing the correlation between the debt service coverage ratio & the debt-to-asset ratio; and testing potential early indicators of financial trouble.
<p>PROGRESS: 1985/01 TO 1985/12<br/>
Three minor activities were undertaken this year. First FINANX software, which is used to conduct the farm business and enterprise analysis for about 250 members of the Southeastern and Southwestern Minnesota Farm Business Management Associations, was slightly modified to include more financial measures to permit closer tracking of financial progress over time. Second, the NOMAD data base management software routine used to construct the Minnesota Farm Business Records was likewise modified to include the new financial measures. Third, preliminary analysis of U.S. Census of Agriculture data was begun in order to identify the proportional representation of each type of farm by size in the Minn. Farm Business Records Data Base in the population of all farms in each county of Minnesota in which the S.W. and S.E. Assoc. have members.
<p>PROGRESS: 1984/01 TO 1984/12<br/>
Work is still in the initial stages. The Farm Sector Economics Branch of ERS ishelping to obtain unpublished data from the 1978 Census of Agriculture to use in correlating the farm record keeping farms to counties and groups of counties comprising agroeconomic regions of interest. Record keeping farms will be classified by type, identified as specialized by the proportion of sales from a single enterprise, i.e., hog farms, dairy farms, cash grain farms, etc. When this phase of identifying the representativeness of the farm records data base by type of farm is completed, then work will start on the actual calculations of indicators. The first batch of data has been received from ERS and is being analyzed.
<p>PROGRESS: 1983/07 TO 1983/12<br/>
Work is only in the initial stages. The Farm Sector Economics Branch of ERS hasagreed to help in obtaining unpublished data from the 1978 Census of Agriculture to use in correlating the farm record keeping farms to counties and groups of counties comprising agroeconomic regions of interest. Record keeping farms will be classified by type, identified as specialized by the proportion of sales from a single enterprise, i.e., hog farms, dairy farms, cash grain farms, etc. When this phase of identifying the representativeness of the farm records data base by type of farm is completed, then work will start on the actual calculations of indicators.