LUBBOCK — Farmers and livestock producers know change is risky. They also know they must embrace a certain amount of necessary change and manage the risk involved if they are going to survive and thrive financially.
Texas producers now are being introduced to a solid decision- making guide to help them analyze different production options and the risks that come with them.
“FARM Assist is a long-term strategic planning program for the whole farm offered by the Texas Agricultural Extension Service,” said Craig Fincham, Extension economist for risk management in Lubbock. “Long-term economic survival in agriculture depends on good planning. FARM Assist is designed to help producers gauge the likely outcome of strategic management decisions by applying ‘what if’ scenarios to their current operation.
“What if I adopt a new tillage system? What if I decide not to upgrade my equipment? What if I decide to diversify and add other crops or livestock? What if I decide to lease more land rather than buy?”
FARM Assist is just one tool offered to producers by the Texas Risk Management Education Program (TRMEP). The Extension Service created TRMEP after Congress mandated risk management education for producers as part of the 1996 farm bill.
The goal of TRMEP is to help producers improve their financial bottom lines and their staying power in agriculture by providing decision-making information on alternative production, marketing and financial management stategies. Kansas State University’s Agricultural Extension Service is helping Texas A&M develop educational materials for TRMEP.
A $1 million appropriation from the Texas Legislature in 1997 funds many of TRMEP’sinitiatives, including FARM Assist.
The pilot program will first be offered to Panhandle, South Plains and Rolling Plains producers. If it succeeds there, FARM Assist may one day be made available statewide, and perhaps nationally, according to Joe Outlaw, Extension economist, College Station.
More than 250 producers are expected to participate in the pilot program. Fincham will coordinate FARM Assist on the South Plains; Jim Sartwelle, III, Extension economist-risk management, Amarillo, will work with Panhandle participants, and Rob Borchardt, Extension economist-risk management, Vernon, will coordinate the Rolling Plains effort.
“A key part of FARM Assist is a computer program designed with the help of farmers and ranchers,” Fincham noted. “This software will help us analyze all types and sizes of farms and livestock operations up to 10 years into the future.
“The main component, however, are Extension economists. We will visit with participating producers in our district and help them gather pertinent financial data, such as cash flow statements, financial statements, tax returns and depreciation schedules. With our help, producers will place this data in a notebook for each farm. We will then plug their data into the software to generate an overall financial picture of the producer’s current operation.”
Producers then will identify at least two “what if” alternatives that may help improve their profitability. Their consulting economist will perform a financial analysis on these alternatives, compile a report on each one and then discuss the alternatives with the producer.
“The producer then has a decision-making guide based on sound financial data rather than gut-feelings about where the market might go, or what the neighbors may be doing to boost their profitability,” Fincham said. “All of a producer’s financial data and information will be kept strictly confidential each producer and economist will sign a confidentiality agreement.”
Producers will pay a $250 fee to participate in FARM Assist. The fee covers their baseline financial profile and analysis of two “what if” scenarios. Producers can add other scenarios for $50 each, and receive a report and consultation on these alternatives, too, Fincham said.
FARM Assist’s computer software is too complex for today’s home computers, but Outlaw said participating producers may one day be able to access the software at a password-secured Internet site. That is a long-term goal of the program.
Meanwhile, Fincham, Sartwelle and Borchardt are prepared to hit the ground running in their districts with the pilot version of FARM Assist. If producers outside of the pilot districts also want to participate, Extension economists in College Station will be brought into play.
FARM Assist economists will try to keep information turn-around at about two to three weeks at most, Fincham said.
For more information on FARM Assist, farmers and livestock producers can call Fincham at (806) 746-4056, Jim Sartwelle at (806) 359-5401, Rob Borchardt at (940) 552-9941, Joe Outlaw at (979) 845- 3062, or their county Extension office.