Impact Analysis of Farm Finance Workshops

The 1980s and early 1990s were characterized by detrimental financial pressures and low profitability on many family farms throughout the U.S. In an effort to increase farmer financial management skills, the 1995 farm bill required all farmers financed by the U.S. Deparment of Agriculture Farm Service Agency (FSA-formerly the Farmers Home Administration) to achieve a competency knowledge level of basic financial management (Hansen & Cunningham, 1995). A coordinated program of farm finance workshops was offered in Pennsylvania in 1995 to assist FSA borrowers and other interested farmers. The program expanded in 1996 to include Maryland and New York. The six-day workshops were conducted by Extension agents at 20 sites across the three states. Course materials included pre-taped video presentations linked to workbook reference material and workshop exercises. Three 45-minute satellite downlinks were utilized to motivate farmers enrolled in the course, maintain consistency and training deadlines among the 20 workshop locations, and provide an opportunity for participants to direct questions to an Extension specialist via fax and telephone calls to the uplink television studio at Pennsylvania State University.

At the close of the 1996 workshop farmers received a pass/fail grade. The grade was based on workshop participation and completion of four in-depth homework assignments: a 1995 balance sheet, a 1995 accrual income statement, a 1996 projected monthly farm and family cash flow budget, and a projected farm production and finance plan for 1996-99.

The workshops were evaluated by two separate instruments. All 1995 and 1996 participants were asked to complete an USDA\FSA program evaluation form that asked categorical questions on aspects of the course (Table 1). A second evaluation form was completed by farmers at most locations involved with the 1996 workshops. This form asked for information on the participant's level of financial knowledge prior to and after the workshop, farm sales, profits, and expected change in net worth resulting from the workshop (Tables 2 and 3).

Preliminary evaluation indicated that three fourths of the farmer participants did not attend any Cooperative Extension meetings in the year prior to the workshop. Workshop attendees also had relatively high debt-to-asset ratios consistent with FSA's acknowledged role as the lender of last resort for financially weak farmers. The typical farmer enrolled in the workshops was likely to produce milk (70%) and averaged farm commodity sales of about $180,000. Approximately one half had annual off-farm income of about $14,000 per year, and 13 farms had poultry and/or horticulture contract income averaging about $48,000 annually.

Results from an FSA evaluation form for 1995 and 1996 indicate broad satisfaction with the workshops (Table 1). The participants that responded to the most unfavorable category of each question, for example, "no," "poor," "too easy," "too short," or "too little," ranged from 0-6% in 1995 and from 0-4% in 1996. For all questions other than one and eight, responses to the most positive response category increased 4-19 percentage points between 1995 and 1996.

The percentage of farmers rating the instructor as excellent doubled from 1995 to 1996. County agents indicated that part of the improvement in participant approval of the workshops was due to the agents' increased familiarity and working knowledge of the course materials in the second year of the program. The participants strongly approved the topics covered, level of the course, course length, and amount of outside work. This indicates that the rigorous course format, including the requirement that all work be completed for a passing grade, was successful.

The wide diversity in participant education levels and farm size, in combination with the in-depth, structured format provided an opportunity to assess workshop impacts. Impact analysis is a useful accountability measure for investments in learning in much the same manner as benefit/cost analysis is used to analyze the impact of investments in business. To this end an impact evaluation of the 1996 workshops was completed by 180 participants (one per farm).

Participants' response to Question 1 in Table 2 provided a dollar value of the workshops educational impact: Your application of the budgeting, analysis and farm planning skills taught in the workshop will likely increase your farm net worth by $_______ in a typical year? The 67 farm operators that left question one blank had commodity sales, profits, age, and years managing farm within 2% of the overall sample average. Thus non- response to the impact value question was not believed to be biased by farm size, economic performance or key demographic variables of the participants.

The average response to Question 1 from the 113 remaining farmers was $7,490, or about 4% of gross farm and non-farm income. Break-points of $5,000 and $10,000 were used to distribute the responses among three specific categories for further examination. The workshop impacts averaged $1,023, $5,317, and $14,716 for the three groups and were significantly different.

Participants were asked in the questionnaire to indicate on a 5-point scale ranging from "minimal" to "excellent" their knowledge of financial statements and planning both prior to and upon completion of the workshop. Then the pre-workshop score was subtracted from the post-workshop score. Between 84-98% of the participants indicated an increase in their knowledge level of financial statements. Similarly, 78-100% of the participants indicated an increase in knowledge of financial planning. The highest percentage of participants indicating an increase in questions 2-3 was in the $10,000 or more category of dollar value of impact in Question 1. While the percentage of participants recording an increase regarding the "view of the importance of finance management" was greater than 70% for all categories of question 4, the difference was not significantly related to the dollar value of impact. Nor was presence of a college degree significantly related to the dollar value of educational impact.

However, the remaining questions (6-9) in Table 2 indicate that higher farm sales and profits, more frequent attendance of Extension outreach sessions, and higher satisfaction with the workshop were all significantly related to a higher dollar value of workshop impact. Conclusions from Table 2 are that the educational impact of the workshops were large and significantly different dependent upon socioeconomic variables including farm profit and size. Educational level was not significant.

The unexpected result that impacts were not related to completion of college suggested further exploration of the role of education on workshop impact (Table 3). When survey responses were arrayed by primary, high school and college education, the dollar value of impact or profit level were not significantly related to different education levels (Questions 1 and 8). Only the knowledge of financial statements, among the educational impact Questions 2-4, was significantly related to education level of the participant (note that the average numerical increases on a 5-point qualitative scale are shown in these questions). As expected, higher educational achievement was significantly related to increased age, more years farming, higher farm sales and attendance at other Extension meetings.

An encouraging conclusion from these results is that the workshops achieved substantial impact at all levels of educational attainment. The fact that participants with only primary education registered the highest overall gains in knowledge level from completion of the workshops stems from painstaking efforts to develop straight-forward workshop education materials. The financial knowledge base of this group was also more limited, resulting in a more sharply sloped learning curve. It should be noted that a sizeable number of the primary education group are members of ethnic religious groups that generally embrace agriculture but avoid attending meetings and discourage higher education.

INCORPORATING OWN-FARM HOMEWORK INDIVIDUALIZES COURSE MATERIALS

About 90% of the respondents found the amount of outside work was appropriate. Linking classroom instruction to analysis of the participants' own farm businesses made application of the coursework meaningful in a learning-by-doing framework.

COURSE RIGOR CAN BE HIGHLY BENEFICIAL TO THE WORKSHOP EXPERIENCE

The integration of classroom exercises, exams, and grading, with the requirement that all materials be completed in order to pass the course, contributed to favorable participant evaluations.

IN-DEPTH MULTI-DAY FORMAT A KEY TO OUTREACH IMPACT

Previous experience with 1-day finance workshops has been found to be disappointing (Hanson, Delavan & Power, 1996). The "length" of the 6-day course was viewed to be appropriate by 89% of the participants in 1996.

DOLLAR VALUE OF EDUCATIONAL IMPACTS CAN BE LARGE

Educational impact values averaging about 4% of gross sales and ranging to more than $10,000 indicate the benefit/cost ratio from application of workshop tools can be substantial.

SIGNIFICANT IMPACTS AT ALL EDUCATION AND FARM SIZE LEVELS

Workshop participants with primary school education consistently showed the highest post-workshop increase in knowledge gained. The dollar value of educational impact was proportionately largest, 6% of gross sales of about $100,000, for those with only a primary school education.

A key implication of the impact analysis is that investment in outreach education can result in a large payback in terms of providing farmers useful financial management tools for competing successfully in agriculture. Outreach efforts can be made more meaningful and personally satisfying for both county agents and workshop participants when evidence of educational impacts are found to be substantial. Finally, impact assessment can be useful in other outreach programs, for example, in assessing tax savings resulting from participation in tax management workshops.

Hanson, G.D., & Cunningham, L.C. (1995). A distance learning approach to borrower training. Agricultural Finance Review 55 (1995):August.

Hanson, G.D., Delavan, W. & Power, L. (1996). "Mandated borrower training for FSA/USDA farm borrowers. Journal of Extension 34 (2).