COLLEGE STATION — In response to the severe financial stress faced by many of the state’s farmers and ranchers, the Texas Agricultural Extension Service is expanding a innovative pilot program called the Financial and Risk Management Assistance (FARM Assist) program statewide.
FARM Assist offers individualized financial and risk management planning assistance.
“In times of financial hardship of this magnitude, we must act quickly to commit agency resources to provide access by all Texas farmers and ranchers to the newly-developed economic analysis tools that can assist them in making the strategic decisions necessary for economic viability,” said Dr. Ed Hiler, vice chancellor for agriculture and life sciences for the Texas A&M University System.
“While Extension has always worked toward improving agricultural production and profitability, we must now also lead in incorporating a strong focus on risk management,” Hiler said.
The economic livelihood of agriculture is too important not to pursue every opportunity to help producers with their economic and financial planning in these tough times, Hiler said.
“Given the urgency of the situation, we have decided that we cannot wait any longer to expand our FARM Assist concept statewide. Today, we are working with our Extension agricultural economists to offer this financial and risk management program to all producers in the state just as soon as humanly possible.”
The Texas Legislature, recognizing the added risk and its possible impact, funded the development of the Texas Risk Management Education Program through a pilot effort of the Extension service two years ago. The Texas Legislature, however, could not have foreseen the economic challenges to an already vulnerable Texas agricultural economy brought on by this year’s drought conditions, Hiler said.
While not as visible as the destruction associated with floods, tornadoes and wildfires, economic loss to agricultural producers is equally as devastating. The federal farm income safety net has been lowered, commodity prices have fallen dramatically and Texas agricultural producers have suffered through two major droughts in the last three years. Drought alone has resulted in direct losses of more than $4 billion; the total impact to the state’s economy is nearly $11 billion.
“The economic risk associated with producing and marketing the food and fiber for Texas consumers is obvious,” Hiler said.
For Texas agriculture to be profitable and competitive, farmers and ranchers must be better able to weigh the risk of alternative management and financial choices and their impacts on the preservation of their business, said Dr. Chester Fehlis, associate vice chancellor and deputy director of the Texas Agricultural Extension Service.
“This is a long term goal to be addressed over a period of years but we must start immediately to respond to the financial stress resulting from this year’s production losses and low prices,” Fehlis said.
Strategic planning is an integral part of any sound management system; FARM Assist is a one-of-a-kind decision support system that helps individual producers quantify the likely economic impacts of alternative management decisions and various risk management options on a farm’s operation.
“Every producer is different, therefore the impact on the operation of different risky outcomes also will vary by individual,” said Dr. Joe Outlaw, Extension agricultural economist. “Solutions have never been more situational. Many producers will want to take a serious look at their financial condition, re-examine their long-term goals and develop a course of action to achieve those goals in a risky environment.”
FARM Assist has been designed to complement on-going Extension risk management education programs, such as Master Marketer and others, yet focus on the uniqueness of each farm and ranch operation.
Agricultural lenders are particularly interested in the positive impact that risk assessment and management planning can have on cash flow projections, loan documentation, and debt servicing, Outlaw said.
For information on FARM Assist, educational materials and other risk management programs, producers may contact Extension economists in the department of agricultural economics at (979) 845-1751.