July 1983 // Volume 21 // Number 4 // Feature Articles
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Setting Farm Management Priorities
Abstract
Recognizing that Extension's farm audience is becoming more diverse, the authors outline Indiana's program initiatives in farm management for farmers of moderate-scale operations.
Changes in farm numbers and the average acreage per farm continue to receive much attention. Over the past decade, these data for Indiana indicate that the number of small and large-scale farms has increased while a decline in the number of moderate-scale farms has occurred. We define a moderate-scale farm as 200-600 acres. These trends support the idea that Extension's farmer audience is becoming more heterogenous.
Nolan and Lasley contend that for programming purposes, Extension continues to assume that its audience is relatively homogenous and this perception has resulted in a substantial erosion of political support.1 Another concern is the lack of targeted educational materials for those with moderate-scale farms.2
Various states have targeted farm management Extension educational offerings in an effort to help this more heterogenous farm clientele. Special programs for small-scale or part-time farmers have been developed. Some states have also developed educational programs for larger commercial farmers.3 More recently, Indiana developed a distinct Extension program for farmers of moderate-scale operations. To more effectively provide the information this group wanted, 110 Indiana farmers were asked to specify their important management problems.
Methodology
Information on the perceived management problems of moderate-scale operations was obtained by surveying farm operators from nine Indiana counties.4 Those surveyed were asked by an Extension agent to attend a special meeting addressing the problems of moderate-scale farmers.
During this meeting, each farmer was asked to complete a questionnaire. The initial section asked the farmers to rank eight general problem areas in their order of importance. The second section asked them to indicate whether a listed item was an important problem. Each farmer was also asked to suggest important problems that weren't listed. Finally, farmers were asked to suggest their preferred ways of obtaining management help from Extension. After completing the questionnaire, a discussion led to consensus about the important problems.
Because of the way this group was contacted, it was assumed these farmers were reasonably well-acquainted with present Extension programs and could provide useful information about how farm management programs could be made more effective. This approach may also have led to a bias, for only those farmers who were invited and chose to participate in a meeting provided input.
Problems Identified
Marketing, land acquisition, and financial management were the general areas of greatest importance (Table 1).5 Marketing ranked as the most important or second most important for farmers in each of the acreage classes. Land acquisition was an important problem for farmers of the 2 middle acreage classes, but of little importance to operators of less than 200 acres. Financial management was of more concern to those with farms of more than 400 acres than those with farms of 400 acres or less.
Table 1.
Ranking of general problem areas by acreage.
|
Ranking by farmers with farms of
|
||||
|---|---|---|---|---|
| Problem area |
Less than 200 acres
|
200-400
|
401-600
|
Greater than 600 acres
|
| Marketing |
1
|
1
|
1
|
2
|
| Acquisition of land |
7
|
2
|
2
|
3
|
| Financial management |
5
|
5
|
3
|
1
|
| Crop production |
2
|
3
|
4
|
6
|
| Livestock production |
8
|
4
|
7
|
4
|
| Machinery and building services |
6
|
6
|
5
|
5
|
| Acquisitions of annual inputs |
3
|
7
|
6
|
7
|
| Hired labor |
4
|
8
|
8
|
8
|
When asked to specify problems within marketing, choosing a profitable marketing method for grain was cited by 76% of the farmers, while 54% expressed the same problem for livestock (Table 2). In addition, problems suggested during the discussion included determining the profitability of on-farm storage, determining which marketing outlet to use for the sale of grain and livestock, and learning charting techniques for analysis of futures markets.
Estate planning problems were the most frequently cited financial management problems. Getting the estate planning process started when parents don't seem interested was often mentioned by younger farmers. Younger farmers also wanted information on preparing for inheritance taxes when little estate planning was done.
Table 2.
Farmers' perception of top three problem areas.
|
Marketing
|
|
| Grain Marketing | Livestock Marketing |
| Choosing most profitable marketing method (76%)' | Choosing most profitable marketing method (54%) |
| Use of futures markets (76%) | Identifying marketing alternatives (48%) |
|
Financial Management
|
|
| Estate Planning | Tax Management/Record Keeping |
| Keeping transfer as easy as possible (62%) | Keeping tax bill at minimum (54%) |
| Acquiring information needed to discuss plans with lawyer (56%) | Full use of capital gains (47%) |
|
Which records to keep (42%) |
|
| Benefits of computerized records (39%) | |
| Business Organization | Financing Operation |
| Determining the important considerations (36%) | Reducing interest expense (50%) |
| Determining the best business organization (32%) | Using loans of different repayment periods (36%) |
| Tax advantages of various forms of business organization (39%) | Use of financial statements to analyze farm business (34%) |
|
Land Acquisition
|
|
| Determining profit potential of purchase (59%) or cash rental (46%) | |
| Financing a land purchase (55%) | |
| Comparing renting to owning (47%) | |
| Comparing alternative lease arrangements (45%) | |
|
|
|
Other financial problems included keeping the tax bill low, holding down interest expenses, and determining what records to keep. Many of these items have been a part of farm management Extension programs in the past.
Many people have assumed that farmers of moderate-scale operations are less growth-oriented than those of larger operations and thus less concerned about problems associated with land acquisition. These results indicate that's not true. Determining the profit potential and financing a land purchase were cited as important problems by over 50% of the farmers surveyed.
While other problem areas weren't perceived to be as important as marketing, financial management, or land acquisition, some individual problems were frequently cited. Determining the need to apply an insecticide (61%) and which insecticide (53%) or herbicide (54%) to use were often cited. Determining the size of enterprise needed to be competitive in livestock production was listed by 54% of the operators. Evaluating the profit potential of investments in buildings and machinery concerned 56% of the farmers.
... As the Extension audience continues to become more heterogenous, new programs and delivery methods will be needed. Identification of the perceived needs of various audience groups and providing the desired information in a timely and useful manner continues to be a challenge for Extension education.
Educational Programs
To address the perceived problems of farmers of moderate-scale operations, farm management Extension programs must emphasize the areas of marketing, financial management, and land acquisition. Many of the farmers indicated that a series of classes rather than a single class would be helpful in learning more about the futures market. A multiclass approach allows the course work to begin at an elementary level with each additional class building on previously discussed material.
Extension programs in tax management and estate planning continue to be perceived as important. Interest in record keeping and financial planning is increasing. With the current importance of financial planning and the interest in using on-farm microcomputers to keep these records, a new effort in this area is justified.
Educational programs on land economics were also perceived as important by this group. While a traditional area, new aspects associated with financing land must be addressed. Information about the impact of variable interest rate loans and alternative contract terms on the cash flow of a land purchase is needed. Additional information on the return expected under alternative cropland lease arrangements is also needed.
Extension farm management specialists must continue to work closely with their counterparts in other disciplines. Issues related to the use of chemicals were the most frequently cited crop production problems, indicating the need for farm management specialists to work with entomologists, weed specialists, and agronomists on Extension educational programs dealing with pest management. Evaluating the profitability of on-farm storage also provides the opportunity for joint programs between farm management specialists and agricultural engineers.
The county meeting continues to be a popular method of Extension education among farmers of moderate-scale operations. Moreover, 57% of the farmers surveyed indicated they wouldn't travel over 100 miles to attend an Extension meeting. As the cost of this traditional method of conducting Extension education increases, new methods must be explored -especially if multiple-class educational offerings are developed. As the Extension audience continues to become more heterogenous, new programs and delivery methods will be needed. Identification of the perceived needs of various audience groups and providing the desired information in a timely and useful manner continues to be a challenge for Extension education.
Footnotes
- Michael Nolan and Paul Lasley, "Agricultural Extension: Who Uses It?" Journal of Extension, XVI I (September/October, 1979), 21-27.
- James M. Nehiley and Ray D. William, "Targeting Extension Publications," Journal of Extension, XVIII (November/December, 1980),11-17.
- One example of such a program has been Purdue's Top Farmer Extension program.
- The counties included Benton, Marshall, DeKalb, Tipton, Henry, Jefferson, Washington, Dubois, and Clay. The cropland acreage operated by the farmers contacted averaged 355 acres, with 85% reporting between 200 and 600 acres of cropland. Livestock production was reported by 75% of the farmers.
- The results of the survey are only highlighted here. A more detailed report of the survey results is presented in Craig L. Dobbins and Paul R. Robbins, "Management Problems Identified by Mid-Size Farm Operations," Bulletin No. 322 (West Lafayette, Indiana: Purdue University, Agricultural Experiment Station, April, 1981).