FY02 - NDSU Extension Service
PROGRAM #204 - FARM AND FAMILY ECONOMICS

Program Planning Team: 

George Flaskerud (co-chair), Deb Pankow (co-chair), Dwight Aakre, Holly Bastow-Shoop, Tim Becker, Jackie Buckley, Brad Cogdill, Dan Driessen, Roger Egeberg, Wally Eide, Gene Elhard, Margaret Fitzgerald, Brian Gion, Gary Goreham, Merry Green, Ron Haugen, Willie Huot, Sarah Jacobson, Bill Klein, David Kraenzel, Brenda Langerud, Larry Leistritz, Terry Lykken, Wayne Markegaard, Bill Nelson, Frayne Olson, Harvey Peterson, Tim Petry, Richard Rathge, Carmen Rath-Wald, Neil Riveland, Joanne Runner, Mort Sarabakhsh, Dave Saxowsky, Margaret Schaar, Tim Semler, Andy Swenson, Kathy Tweeten, David Twist, Sarah Weishaar

Overall Situation:

North Dakota's economy has depended traditionally on agriculture and energy and these two sectors have been depressed in recent years. In addition, agriculture is undergoing considerable change. Farm families need to adjust and adapt to these rapid changes that are occurring throughout the state, nation, and world. Educational programs are needed to help individuals, farmers, ranchers and families develop competencies to remain financially secure members of North Dakota's economy.

PROGRAM COMPONENT
BEEF CATTLE OUTLOOK AND CALF MARKETING ALTERNATIVES

Key Theme(s):   Agricultural Profitability

Persons Responsible:  Dwight Aakre

Situation:

The beef cattle cycle has likely reached the low point, for this cycle, as measured by the size of the cow herd. If this is correct, we have completed the liquidation phase of this cycle and will begin the rebuilding phase within the next year. The July 1 inventory is nearly identical to last year indicating no major move to herd expansion is underway yet. The July 1 inventory numbers show the smallest total cattle herd since 1991. The calf crop produced this year along with the calf crop produced in 2002 and 2003 will likely be the most profitable calves of this cycle for cow-calf producers. These calf crops will likely set record high prices (nominal). The major reason for this is simply the stage of the cattle cycle, as feed lot operators bid aggressively to fill their lots. In addition, prices for feed grains are likely to remain low resulting in relatively low cost of gain for backgrounding and finishing.

Backgrounding and retained ownership strategies have to be fully evaluated as feeder calf price margins increase considerably more than backgrounded or slaughter cattle prices. Changing relative feeder calf, feeder cattle, and slaughter cattle prices through a cattle cycle, call for changing production strategies through a beef price cycle.

Anticipated Outcomes

Cow-calf producers will have a better understanding of the profit potential of retained ownership of beef calves beyond weaning. They will be able to assess their resources and project the value added benefit of backgrounding or finishing their own calves as well as the potential for feeding additional calves. Marketing strategies to reduce the downside risk of feeder cattle prices as well as risk management strategies to limit exposure to higher feed costs.

Educational Program

Materials will be developed covering the cattle cycle, short and long term outlook and budgets for various retained ownership alternatives. These materials will be available in a teaching packet for any staff wanting to teach this component. Dwight Aakre will also be available for some meeting requests.

Evaluation Plan

Evaluation forms will be utilized at individual meetings as well as feedback from Extension staff working with individual clients.

PROGRAM COMPONENT
ALLIANCES AND PARTNERSHIPS

Key Theme(s):   Agricultural Profitability

Persons Responsible

Dwight Aakre, Andy Swenson, George Flaskerud, Ron Haugen, Willie Huot, Tim Becker, and other Farm Economics Emphasis Agents.

Situation

Ownership costs of farm machinery and other assets have continued to rise in recent years while grain and oilseed prices have clearly not kept pace with production costs. This is reflected in the Adult Farm Business Management Summaries that are published annually. They clearly show that fixed production costs have continued to rise while commodity prices for the most part have continued to decrease in recent years. One management strategy that is getting increasing attention is the formation of partnerships or alliances between producers for the joint ownership and management of farm assets, notably machinery. Producers from across ND are looking to NDSU for some leadership in determining how partnerships at the farm level and beyond can be formulated to help reduce the fixed costs of production for both crop and livestock enterprises.

Anticipated Outcomes

ND farmers and ranchers who enter into any type of partnership/alliance will be able to look towards NDSU as a very important source of information and assistance in developing a partnership that has significant potential to improve the overall financial performance of their operations.

Program participants will learn specifically about:

• What to consider before entering into any type of farm/ranch alliance
• The various types of partnerships that can be effective in for agricultural producers.
• The mechanics of developing partnership/alliances agreements
• Electronic technology that can be very helpful in developing and maintaining such agreements

Educational Program

Develop 1- 3 educational programs to be held specifically for presenting information on farm alliances or the utilize existing educational programs to deliver this information.

Evaluation Plan

Participant evaluation sheets will be collected at each workshop. In addition, a more in depth evaluation within 12 months of the programs will follow with randomly selected participants

PROGRAM COMPONENT
MANAGING RISK AND PROFIT

Key Theme(s):   Agricultural Profitability

Persons Responsible

George Flaskerud, Dwight Aakre and Andy Swenson

Situation

Crop net returns are vital to producers and the North Dakota economy. Crop producers are attempting to improve profitability and income stability through a greater reliance on the marketplace versus government farm programs. To make this transition and to improve net returns, producers need to expand their knowledge in the area of integrated price, production and financial risk management.

Anticipated Outcomes

Producers will use a portion of their Government Transition Payments to reduce price and production risk, since volatile commodity prices and yields are expected to continue. Elevator contracts, futures hedges, options and crop insurance products will be used to minimize price risk. Insurance products will also serve to reduce financial risk. Additionally, producers will be reminded of production risk, the remaining major category of risk, and how they can manage it through diversification.

Educational Program

The educational program will focus on crops. The program will address eight areas:

• The establishment and support of marketing clubs for crops and livestock.
• Four one-day workshops will be held in November for Ag lenders covering outlook and issues.
• A one-day crop insurance conference will be held in January.
• "Marketing Presentation" for 30-60 minutes covering selections from such topics as risk management, breakevens, outlook, marketing plan, marketing strategy, basis, marketing tools, and issues.
• "Marketing Seminar" involving discussion and exercises for three hours on developing and implementing a marketing plan which will cover risk management, breakevens, outlook, marketing plan format, marketing strategies, basis, and relevant tools.
• "Crop Revenue Coverage Presentation" for about 40 minutes, preferably during February-March 10, covering risk management and crop revenue coverage compared to multi-peril crop insurance.
• "Managing Risk and Profit Workshop" for six hours, preferably during January-March, covering marketing seminar content, crop revenue coverage, and a case study integrating marketing and insurance concepts.

Evaluation Plan

Participant evaluation sheets will be collected at each seminar and workshop. Impact surveys will be conducted of a sample of workshop participants during the previous year.

PROGRAM COMPONENT
FARM FINANCIAL MANAGEMENT

Key Theme(s):   Agricultural Profitability

Persons Responsible

Andrew Swenson, Ron Haugen and Dwight Aakre

Situation

Average 2000 net farm income, excluding the Red River Valley, increased to about $54,000, from $52,000 in 1999, because of record levels of government payments, large crop insurance payments, and an increase in beef cow profitability. The spread between high income and low income farms was historically wide. The farms in the low 20 percent profitability group averaged about $-7500 net farm income and the 20 percent high profit farms averaged $142,000. Unless crop prices increase in 2001, there will be continued reliance on non-farm income and additional government payments to avoid a cash deficit. Without non-farm income and prices at $2.90/bu for wheat, $1.80/bu for barley, and oilseeds at loan rate, a 1600 acre east central N.D. crop farm is projected to be $25,000 short of cash obligations (including $35,000 for family living expense). Accurate records and a basic understanding of financial management can help farm families analyze their financial situation and evaluate options for the future.

Anticipated Outcomes

North Dakota farmers and ranchers will improve record keeping and their understanding of basic financial statements to better evaluate their current financial situation and future planning options. Also, computer literacy will be enhanced because record keeping and financial management software will be used.

Educational Programs

Workshops will be held on introduction to computerized accounting, using Quicken software, and farm financial management using Finpack software. Also, workshops may be conducted on completing and using the USDA Farm Service Agency (FSA) farm and home plan forms, which are required of borrowers for direct and guaranteed FSA loans.

Evaluation Plan

Participant evaluation sheets will be collected at each workshop.

PROGRAM COMPONENT
INCOME TAX MANAGEMENT

Key Theme(s):   Agricultural Profitability

Persons Responsible

Andrew Swenson

Situation

Income, social security and Medicare taxes are a major cost of North Dakota farm families. Tax legislation and interpretation change often and can be complex. This makes it difficult for individuals to make informed decisions that impact current and future tax liabilities. For instance, many North Dakota farmers face large deferred tax liabilities if they exit farming. Ongoing education by tax professionals is needed to assist producers with short-term and long-term tax planning.

Anticipated Outcomes

Farmers and tax preparers will better understand recent tax legislation and interpretation which impacts farmers, and make management decisions that increase future "after-tax" financial well-being.

Educational Program

A multi-site interactive video network program on income tax management will be held in late November or early December while producers still have time to implement year end tax management decisions. Information on current important tax topics will be presented by a panel of tax experts. Ample time will be allowed for participants to ask questions about specific tax situations. A tax guide with the presentations and examples will be compiled and provided to participants.

Evaluation Plan

Sheets for evaluating the program and to provide suggestions for future tax topics will be collected at each site.

PROGRAM COMPONENT
LAND ECONOMICS - WHAT CAN I AFFORD TO PAY FOR RENT OR PURCHASE?

Key Theme(s):   Agricultural Profitability

Persons Responsible

Dwight Aakre, Andy Swenson, Ron Haugen, George Flaskerud, and Farm Economics Emphasis Agents.

Situation

Land values and rental rates have been rising steadily across most of North Dakota for the last decade. One reason for this is correcting an over-adjustment on the downside that occurred in the 1980s. A generous farm program has contributed to rising rents as well. The current farm program started with high payments in 1996 when crop prices were near record high. Since then additional money via emergency legislation has compensated for falling crop prices. This has led to a false sense of prosperity for many producers. Land rental negotiation will continue to be heavily influenced by farm program benefits. With a new farm bill likely to be passed before the 2002 crop year, many questions will arise pertaining to expected benefits.

Anticipated Outcomes

North Dakota farmers and ranchers will come to the realization that if they bid land rents too high they will receive no return for their labor, management and equity capital and the farm will contribute very little if at all to family living expenses.

Educational Program

County and area workshops will be offered that will cover the economics of renting and owning land as well as renting or developing irrigation systems. These workshops will cover residual return to land, rental arrangements and land values.

Evaluation Plan

Evaluation forms will be utilized at meetings as well as feedback from field staff working with individual clients.

PROGRAM COMPONENT
AGRICULTURAL LAND VALUATION MODEL

Key Theme(s):   Agricultural Profitability

Persons Responsible

Dwight Aakre

Situation

State statute mandates the Department of Agricultural Economics at NDSU annually compute and estimate (1) the average value per acre of agricultural lands on a statewide and countywide basis, and (2) the average agricultural value per acre for cropland and noncropland. These estimates must be turned over to the State Tax Department by December 1 of each year.

Agricultural land is valued for real estate tax assessment based on the value of crops and livestock produced. All other classes of real property are valued at market value for purposes of real estate tax assessment.

The 1999 Legislature passed two bills that affect the land valuation model. These deal with inundated or flooded farm land and include a cost of production index in the model.

Anticipated Outcomes

This program is intended to increase the awareness of how agricultural land values are determined for tax assessment.

Educational Program

County meetings will be offered that will cover all the parameters included in this model. These meetings are intended for all landowners, but are particularly useful for county commissioners and township officers.

Evaluation Plan

Evaluation forms will be handed out at individual meetings.

PROGRAM COMPONENT
FOOD AND AGRIBUSINESS DEVELOPMENT: VALUE-ADDED MARKETING AND SALES

Key Theme(s):   Adding Value to New and Old Agricultural Products

Persons Responsible:

David Kraenzel, Wally Eide, Rudy Radke, Dale Siebert, Duane Berglund, Ron Smith, Dave Saxowsky.

Situation

Agriculture continues to undergo structural changes requiring an understanding of the agribusiness development process, development of new management skills and awareness/use of market driven approaches to operating agribusinesses. Many producers are realizing they must decide which type of agricultural markets they are capable of operating in: commodity markets (large volume, low cost, price taking), specialty markets (niche market volumes, competitive costing, price negotiating/contracting) or product markets (product lines, competitive costing, price offerings). Participants in this component will improve their business knowledge, skills and competitive attitude for operating in Specialty & Identity Preserved (IP) and Product market environments. A strategic marketing approach provides a very appropriate and viable alternative method for assessing markets, developing market strategies, assessing an agribusiness and then adapting the agribusiness to meet the needs of the market by developing an overall agribusiness strategy (plan).

Anticipated Outcomes

Participants will increase their agribusiness skills in successfully competing in existing and new markets that develop. They will learn a flexible framework for pursuing value-added marketing opportunities that can be used immediately for their own Specialty & IP crops and/or agricultural products and services. They will be able to form market strategies and learn to adapt or build the agribusiness to meet the market. Relationships and relationship building will emphasized as a key success factor to establishing and maintaining an agribusiness.

Educational Program

The educational program will have three major components:

• A series of workshops involving instructional material, case studies, and industry interaction
• Individual consultation/mentoring relationships using the Revolving Client Pool (RCP)
• One annual one-day conference showcasing value-added agribusinesses, topics and subject matter.

Evaluation Plan

Participant evaluation forms will be used to measure various audience impacts. Individual letters of interaction assessment will be utilized when appropriate.

PROGRAM COMPONENT
FINANCIAL DECISION MAKING

Key Theme(s):   Promoting Housing Programs, Family Resource Management, Consumer Management, Retirement Planning, Estate Planning

Persons Responsible

Debb Pankow, Andy Swenson, Farm and Family Economics Emphasis Agents and Other Extension Agents

Situation

Most Americans are not satisfied with their current economic situation and do not feel in control of their personal finances. Many rely on sales-oriented information to make decisions concerning significant resources or have unwise credit use practices. Others let compulsive behaviors interfere with their financial goals.

Recent studies have documented a lack of financial literacy among youth and adults of all ages in our country: Increased personal debt, bankruptcies, lack of emergency savings, and failure to attain financial goals such as an economically secure retirement are a threat to our state's financial well-being. Productivity in the workplace is affected when workers are experiencing financial stress and lack of work/family options.

Anticipated Outcomes

Extension Agents will:

• Identify current trends in the economy and how they affect financial management behaviors.
• Identify fraudulent practices that target consumers.
• Collaborate with other state agencies and professionals available to help in consumer education.
• Become aware of the status of retirement preparation for North Dakota farm and ranch couples.
• Identify retirement planning basics.
• Provide financial management education for Homebuyer education programs.
• Be trained in the Money Sense financial management curriculum.

Consumers will:

• Adopt sound personal and family financial management skills, which contribute to increased financial satisfaction, increased personal savings and reduced debt.
• Identify sound financial products and the professionals who sell them.
• Adopt wise credit use practices.
• Identify and avoid fraudulent practices in the marketplace.
• Identify sources and calculate the amount of retirement income.
• Calculate realistic living expenses for retirement planning.
• Define terms related to retirement and estate planning.
• Learn more about Mutual Fund Investing with the Mutual Fundamentals program.
• Understand investment basics through the Investing for Your Future program.
• Apply financial management concepts to develop a family spending plan.
• Become eligible to receive financial incentives for USDA housing loans after completing Home Buyer Education course.

Educational Program

• The YES mini-society project will be promoted to encourage entrepreneurial activities in youth.
• A packaged program "Dialing to Save Dollars" will be available to educate consumers on choosing and using phone service in the fall of 2001.
• FY 2002 targeted effort (jr. high parents) through guidance counselors re: Saving for Higher Ed. Training will be held in the spring/summer of 2002
• HSFPP Newsletters in September and April.
• Education program (media releases) regarding financial planning for higher education.
• DollarWorks training for agents, professionals and volunteers will be available.
• Promote and educate the public in bankruptcy reform.
• Explore and develop alternative vehicles for transfer of family economics education and managing change in ag (table tents, placemats, bulletin inserts, etc.)
• Media awareness program to highlight results of agricultural household retirement preparation research.
• Money Sense for Teens four part newsletter series will be available for HSFPP participants and others in the state.
• HomeBuyer Education programs.
• Money Sense financial education course.
• Understanding Mutual Funds home study course.
• Investing for Your Future program and home study course.
• Baby Boomers Come of Age curriculum (Purdue) will be introduced during the summer of 2001, and materials will be available for agents/programming.
• Advance Directive publication will be updated.

Evaluation Plan

• Evaluations will measure the Dialing to Save Dollars program impact.
• The HSFPP impact evaluation will become available for the state from NEFE.
• An evaluation tool will be designed for statewide evaluation of the Baby Boomer materials.
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PROGRAM COMPONENT
REACHING LIMITED RESOURCE AUDIENCES

Key Theme(s):   Family Resource Management, Children, Youth and Families at Risk, Workforce Preparation - Youth and Adult

Persons Responsible

Debb Pankow, Sean Brotherson and others

Situation

Unprecedented social and economic change has led to financial vulnerability for many North Dakotans. In addition, welfare reform has created a greater demand for education regarding management of limited resources and life skills specific to successful work force participation.

Despite popular belief, the welfare population is far from homogeneous. Extension's response to addressing needs of families and households must be a collaborative partnership based on need at the local county level. These educational opportunities must provide skills necessary to raise and parent children while preparing individuals to enter or reenter the workplace. For families to be self-sufficient they need skills to effectively obtain, maintain and manage resources. Program efforts must consider the higher-than average educational level, higher-than-average employment status, transportation needs and distances of the audiences in North Dakota.

Anticipated Outcomes

Extension Agents will:

• Identify two activities related to welfare reform in their community.
• Identify two activities related to welfare reform in North Dakota.
• Identify their educational role with limited resource audiences in their community.
• Identify three needs of the limited resource audience.
• Identify four traits of limited resource learners.
• Collaborate with local agencies to offer the Poverty Simulation in their areas.
• Educate families about available health insurance programs.
• Understand the changes in Medicaid and CHIP applications that become effective January 1, 2002.

FNP Professionals will:

• Become aware of hands-on activities to teach limited resource audiences wise food shopping skills.
• Understand the changes in Medicaid and CHIP applications that become effective January 1, 2002.

Consumers will:

• Set short, intermediate and long-term financial goals to meet their needs.
• Increase levels of savings to meet financial goals.
• Understand health insurance programs that they may be eligible for.
• Decrease levels of debt.
• Adopt practices which help in planning spending for an entire month.
• Keep accurate and helpful personal financial records.
• Develop a positive attitude toward life changes.
• Increase communication skills.
• Increase other levels of self-sufficiency.
• Practice wise food shopping and increase the amount of income available within the household to attain financial goals.
• Become aware of the various insurance plans that are available for children in the state.

Educational Program

• FNP program assistants and supervising agents will be trained annually and provided regular updates and resources.
• Extension's Welfare Reform Task Force will provide leadership for Extension's programming.
• Making Ends Meet discussion piece will be revised and updated in Fall 2001.
• The poverty simulation "Life in the State of Poverty" will be used with statewide groups.
• Extension CHIP (Children's Health Insurance Program) educational program.
• DollarWorks training.
• Living on a Shoestring packaged program.
• Develop alternative educational material related to basic resource management skills, such as recordkeeping and shopping skills (table tents, placemats, bulletin inserts).

Evaluation Plan

• Regional FNP evaluation plan is being developed.
• Pre- and post-evaluation of DollarWorks.
• Monthly progress reports from MPU Ext-CHIP Coordinators through August 2002.