Program Planning Team: George Flaskerud (co-chair), Debb Pankow (co-chair), Dwight Aakre, Holly Bastow-Shoop, Tim Becker, Jackie Buckley, Brad Cogdill, Dan Driessen, Roger Egeberg, Wally Eide, Gene Elhard, Bill Ferris, Margaret Fitzgerald, Brian Gion, Gary Goreham, Merry Green, Ron Haugen, Willie Huot, Sarah Jacobson, Bill Klein, David Kraenzel, Brenda Langerud, Larry Leistritz, 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

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 numbers show the smallest total cattle herd since 1991. The calf crop produced this year along with the calf crop produced in 2001 will likely be the most profitable calves of this cycle for cow-calf producers. 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 the 2000 feed grains are likely to be the lowest since 1986, 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 Measurable Outcomes (Objectives)

• 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.
• Producers will utilize 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

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 Farm Business Management Education Program 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 Measurable Outcomes (Objectives)
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 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 one to three educational programs to be held specifically for presenting information on farm alliances or utilize existing educational programs to deliver this information. Topics to be covered include machinery joint ownership and sharing of individually owned equipment. Purchasing and marketing alliances may be covered. Emphasis will be on what to include in an agreement to reduce the chances of disagreements between parties and to insure both parties benefit.
• Workshops will be held in different locations of the state. Presenters will include extension specialists, agents, farm accountants, attorneys, agribusiness representatives, and farm operators currently involved in alliances.
• Develop and distribute educational materials on alliances including a power point presentation and fact sheets on overview of alliances in agriculture, land, and livestock alliances.

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

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 Measurable Outcomes (Objectives)

• 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 seven areas:

• The establishment and support of marketing clubs.
• 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

Persons Responsible
Andrew Swenson, Ron Haugen and Dwight Aakre

Situation
Average 1999 net farm income, excluding the Red River Valley, increased to about $52,000, from $28,000 in 1998, 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 $140,000. Unless crop prices increase in 2000, 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 Measurable Outcomes (Objectives)

• 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

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.

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?

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 throughout the 1990s across North Dakota. This is due to a number of reasons. Land values dropped significantly in the 1980s and part of the current rise is due to the over adjustment that occurred during that time. Much of the state experienced above average yields for many crops, along with high quality, primarily in the western half of the state. Generally improving prices over the last five years were capped with record prices for wheat and corn prior to harvest in 1996. Favorable prices occurred at the same time as the first and largest payments were made under the Federal Agricultural Improvement and Reform Act of 1996. This farm bill removed the linkage between prices and government payments, resulting in relatively large government payments at a time when prices were above target for wheat and feed grains. Under previous farm bills, the result would have been no government payments. This has led to a false sense of prosperity on the part of many producers.

Research by the NDSU Ag Economics department projects falling net farm incomes as we progress thought the seven-year farm bill. This translates into lower land values and lower land rents if based on the ability of the land to generate income. Clearly, North Dakota agriculture is headed on a collision course.

Anticipated Measurable Outcomes (Objectives)
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

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 Measurable Outcomes (Objectives)
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 VALUE-ADDED MARKETING AND SALES

Persons Responsible
David Kraenzel, Rudy Radke, George Flaskerud, Dwight Aakre, Andy Swenson, Willie Huot and Wally Eide.

Situation
In the past few years, North Dakota farmers and ranchers have experienced shrinking profit margins at the farmgate marketing level. As this margin between prices received and costs incurred narrows and the food market is increasingly driven by consumer demand, producers are faced with a decision. Do we do more of the same? Do we differentiate our product at the farmgate? Do we get closer to the consumer beyond the farmgate? Or, do we do some of each? Any decision other than more of the same means the producer has selected a value-added marketing opportunity.

Value-added opportunities are one avenue available to producers for increasing profits and business solvency. It is a risk versus return decision. Some call it vertical integration. Some call it survival in a structurally changing agricultural industry. In any case, it offers the chance for farm solvency, enhanced economic opportunity in the community, more jobs, a larger tax revenue base, a higher quality of life and the hope of being a significant factor in North Dakota's agricultural market presence. The key success factors in these ventures are efficient production, processing, marketing/distribution, professional management and ample capitalization.

A good example study is the state beef industry as illustrated in the food value chain below:

                                   A                      B              C                  D                  E

cow/calf         > backgrounder      > finisher     > packer      > retailer     > consumer
producer

Each level of the chain offers the opportunity for additional profit or loss. The cow/calf producer captures the profit or loss "A" in the sale of the calf to the backgrounder, who in turn captures the profit or loss "B" in the sale to the finisher and so on up the chain. "B" profit or loss is a result of adding value to the product received (the backgrounder adds 200 to 250 lbs. of weight to the calf). The producer must choose how far up the food value chain they want to go in order to capture potential profit margins which are now going to other people. One might ask, "where am I going to stake my claim along the food value chain?" This then poses a new competitive challenge for the producer's management ability, quality control, capital demands and role in the distribution channel. These are also new challenges for the North Dakota State University Extension Service.

Important areas to address are marketing/sales management skill development, the use of timely and accurate information, and business relationship skills. Additional areas include general agribusiness development, high value and specialty crop production, processing, distribution, packaging, food industry characteristics and food trends. Collaboration is critical if these challenges are to be met and benefit the agricultural economic vitality of North Dakotans.

Anticipated Measurable Outcomes (Objectives)

• Participants will increase their marketing/sales knowledge and skills in food and agribusiness.
• They will learn a framework for pursuing value-added marketing and sales that can be used immediately for the marketing and sale of their own commodities, products or services or for use in effectively evaluating another individual or firm who will perform the function for them.
• Participants will establish a working relationship with the specialist and each other for immediate and future business, marketing and sales dialogue.

Educational Program
This educational program will have two components:

• Workshops involving instructional material and case studies of actual food and agribusiness situations.
• Individual consultation/mentoring relationships.

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

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 Measurable Outcomes (Objectives)
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.
• Pledge to increase savings and/or reduce debt by using the Money 2000 campaign.
• Understand investment basics through the Money 2000 and Beyond 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 Money 2000 campaign will continue throughout FY '99 and until December 31, 2000. It will focus on increasing the savings rate/reducing debt of North Dakotans. Quarterly newsletters will be provided to citizens who pledge to take part.
• The YES mini-society project will be promoted to encourage entrepreneurial activities in youth.
• A packaged program "Armchair Shopping" will be available to educate consumers on living on less in the fall of 2000.
• FY 2001 targeted effort (jr. high parents) through guidance counselors re: Saving for Higher Ed.
• 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.)
• Revise Family Economics Resource list, for agents and for HSFPP.
• 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.

Evaluation Plan

• Postcard evaluations will measure the Money 2000 program impact.
• The HSFPP impact evaluation will become available for the state.
• A statewide evaluation to measure the impact of the HSFPP program will be developed for use in the 2000-2001 school year.

PROGRAM COMPONENT
REACHING LIMITED RESOURCE AUDIENCES

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 Measurable Outcomes (Objectives)
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.

FNP Professionals will:

• Participate in the Poverty Simulation.
• Become aware of hands-on activities to teach limited resource audiences wise food shopping skills.

Consumers will:

• Set short, intermediate and long-term financial goals to meet their needs.
• Increase levels of savings to meet financial goals.
• 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.

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 2000.
• The poverty simulation "Life in the State of Poverty" is available for statewide replication.
• 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.