Record high farm income in 2022 drove Wisconsin farm businesses’ interest in new revenue streams, markets and technology. However, in 2023 producers encountered increased interest expense, increasing debt and reduction in working capital due to lower than expected prices, increase in overall production costs, and a decline in USDA assistance.
As a result, producers must make strategic decisions regarding how well an investment will reduce costs, increase revenue, or both. Additionally, businesses must analyze decisions based on potential volatility in the event of another market shock. Producers need to perform financial analysis, assess feasibility, and employ risk management practices in order to make informed decisions for a profitable business.
In particular, beginning, early career, and specialty crop farms have increased financial and risk management challenges. They typically own fewer assets and experience barriers to accessing financial capital. Research shows a lack of understanding of risk management practices, a need for financial education, and help identifying strengths and weaknesses of their business to assist them in making decisions. They also seek an opportunity to implement newly learned concepts into their decision-making process to assess and improve their farm profitability.
When making business decisions, farmers rely on trusted partners such as consultants, lenders, and other types of service providers as well as agriculture associations and producer peer groups. These partners in turn rely on Extension for objective, research-based farm business management information and resources. They also help improve and increase Extension’s impact by informing program development based on farm business needs and collaborating with Extension specialists to deliver and evaluate programs. These partners are key stakeholders of Extension programs; their relationship is critical to developing and implementing curriculum, tools and resources that result in profitable farm businesses.
Farm Financial Literacy
Extension partnered with 12 agricultural associations and community organizations, including Wisconsin Farm Bureau Federation, Wisconsin Farmers Union, Wisconsin State Cranberry Growers Association and Hmong community organizations, to facilitate focus group discussions with over 120 participants. The discussions explored farm management needs of beginning and early career grain and specialty crop farmers and aided them in identifying strengths and weaknesses of their business that would assist them in making decisions to improve their farm profitability. The collaboration leveraged relationships with key stakeholders to improve program development in financial and risk management that would address the most important issues facing beginning and early career grain and specialty crop producers, including Hmong farmers.
The Extension Farm Pulse: Financial Management and Analysis course is self-paced, online and available year-round to farmers interested in learning how to use their financial data to explore their farm business decisions. Participants follow a case farm of choice throughout the series of eight modules, completing hands-on, interactive financial activities. Participants then transfer these skills to their own farm businesses by identifying and collecting records, developing financial statements, and interpreting financial statements for the analysis of a farm’s financial position and financial performance. Extension collaborated with the USDA Farm Service Agency to offer accreditation upon course completion, helping farmers meet requirements of the USDA Beginning Farmer Program, which provides low-interest farm loans to beginning and early career farmers.
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Categories: Wisconsin, Business