FARM BUSINESS MANAGEMENT TRI-CO. YOUNG FARMER ORGANIZATION

SOURCES OF FARM CREDIT FULL SERVICE BANKS FARM CREDIT CO-OP RURAL ECONOMIC AND COMMUNITY DEVELOPMENT GEORGIA DEVELOPMENT AUTHORITY INSURANCE COMPANIES AGRIBUSINESS INSTALLMENT PLANS

QUALIFICATIONS NEEDED FOR LOANS CHARACTER CREDIT HISTORY COLLATERAL CAPACITY TO REPAY CAPITAL AT RISK BY BORROWER AND CONDITION OF BALANCE SHEET COMPLETION OF A LOAN APPLICATION

GETTING ALONG WITH YOUR LENDER MAKE APPLICATION WELL IN ADVANCE HAVE YOUR RECORDS IN ORDER KEEP YOUR LENDER INFORMED ALL YEAR DO YOUR PART TO MAINTAIN GOOD RELATIONS

GOVERNMENT PROGRAMS CONSERVATION PROVISIONS OF THE 1996 FARM BILL (HANDOUT) ABBREVIATIONS OR ACRONYMS (HANDOUT) NEW FARM BILL BEING WRITTEN

APPLYING FOR A LOAN FINANCIAL STATEMENT BALANCE SHEET, NET WORTH ANNUAL CASH FLOW STATEMENT HISTORICAL & PROJECTED PERIOD INCOME STATEMENT PROFIT & LOSS STATEMENT REVENUES – EXPENSES = NET INCOME

A BALANCE SHEET IS …… A SNAP SHOT OF YOUR BUSINESS

WHEN DO I COMPLETE A BALANCE SHEET? ANYTIME WHEN MAKING A BUSINESS DECISION (PURCHASE OF EQUIPMENT, LAND, ETC.) ON THE LAST DAY OF THE ACCOUNTING PERIOD FOR YOUR BUSINESS

WHY COMPLETE A BALANCE SHEET? GIVES FINANCIAL STRUCTURE OF THE BUSINESS INSIGHT INTO BUSINESS’ LIQUIDTY PART OF A LOAN APPLICATION TAX PURPOSES USED TO DOCUMENT FINANCIAL POSTION TO OUTSIDE PARTIES

WHY COMPLETE AN ANNUAL CASH FLOW STATEMENT? GIVES A PICTURE OF YOUR LAST PRODUCTION PERIOD GIVES YOU AN OPPORTUNITY TO PROJECT YOUR PLANS FOR THE COMING PRODUCTION PERIOD

WHY COMPLETE AN INCOME STATEMENT (PROFIT & LOSS)? GIVES A MORE ACCURATE PICTURE OF NET INCOME USES THE ACCRUAL BASIS FOR PROJECTING NET INCOME ANY TRANSACTION WHICH INCREASES OWNER EQUITY IS INCOME AND ANY TRANSACTION THAT DECREASES EQUITY IS AN EXPENSE.

RISK MANAGEMENT It’s A Whole New Ball Game!

Risk has always been a part of agriculture. But, farming in America is a ball game that has changed dramatically over the past few years. Increasingly, farmers and ranchers are learning that it is now a game with new rules, new stakes, and most of all, new risks

The nation’s most successful farmers are now looking at a deliberate and knowledgeable approach to risk management as a vital part of their game plan. For them, risk management means farming with confidence in a rapidly changing world. It is the ability to deal with risks that come with new, attractive farming opportunities.

FARMING HAS FIVE PRIMARY SOURCES OF RISK PRODUCTION MARKETING FINANCE LEGAL HUMAN RESOURCES

MAJOR SOURCES OF PRODUCTION RISKS WEATHER PESTS DISEASES MACHINERY EFFICIENCY QUALITY OF INPUTS INTERACTION OF TECHNOLOGY WITH OTHER FARM AND MANAGEMENT CHARACTERISTICS

CAUSES OF CROP LOSS

RISK MANAGEMENT STRATEGIES TO LOWER PRODUCTION RISKS ENTERPRISE DIVERSIFICATION CROP INSURANCE CONTRACT PRODUCTION POULTRY LIVESTOCK NEW TECHNOLOGIES GENETICALLY ALTERED SEED PRECISION FARMING

MARKETING IS THAT PART OF YOUR BUSINESS THAT TRANSFORMS PRODUCTION ACTIVITIES INTO FINANCIAL SUCCESS.

REDUCING MARKETING RISKS DEVELOP A MARKETING PLAN THE GOALS AND OBJECTIVES OF YOUR BUSINESS SHOULD DRIVE THE MARKETING PLAN. KNOW YOUR PRODUCTION COSTS. USE ENTERPRISE BUDGETS KEEP GOOD RECORDS DETERMINE BREAK EVEN PRICES

REDUCING MARKETING RISKS CONTINUED EXHIBIT MARKETING PLAN DISCIPLINE HAVE A CONTINGENCY PLAN PRICES MAY BE LOWER YIELDS MAY NOT BE AS GOOD AS EXPECTED LEARN AND USE MARKETING TOOLS STORAGE CASH SALE

MARKETING TOOLS CONTINUED DEFERRED PAYMENT CONTRACTS BASIS CONTRACT DELAYED PRICE CONTRACT HEDGING PUTS AND CALLS MARKETING COOPERATIVES DIRECT SALES CONTRACT PRODUCTION

FINANCIAL RISK HAS THREE BASIC COMPONENTS THE COST AND AVAILABILITY OF DEBT CAPITAL THE ABILITY TO MEET CASH FLOW NEEDS IN A TIMELY MANNER THE ABILITY TO MAINTAIN AND GROW EQUITY

LOWERING FINANCIAL RISKS MAINTAIN GOOD FINANCIAL RECORDS KEEP AN EYE ON INTEREST RATES ENSURE LIQUIDITY AND ADEQUATE CASH FLOW BUY CROP, LIABILITY, AND PERSONAL INSURANCE CONTROL FAMILY LIVING EXPENSES

LEGAL ISSUES ASSOCIATED WITH AGRICUTURE STRUCTURAL ISSUES SOLE PROPRIETORSHIP PARTNERSHIPS CORPORATIONS CONTRACT ARRANGEMENTS LEASES, NOTES, MORTGAGES GOVERNMENT FARM PROGRAMS

LEGAL ISSUES CONTINUED STATUTORY OBLIGATIONS TAX REPORTING SAFETY REQUIREMENTS USE OF PESTICIDES TORT LIABILITY INJURY TORT TOXIC TORT ENVIRONMENTAL LIABILITY

HUMAN RESOURCE ISSUES MANAGING PEOPLE HIRING, JOB DESCRIPTIONS ORIENTATION AND TRAINING EMPLOYER/EMPLOYEE INTERACTION PERFORMANCE APPRAISAL COMPENSATION DISCIPLINE WILLS & ESTATE PLANNING

AG LAW WRITTEN VERSUS ORAL AGREEMENT HANDSHAKE TO CLOSE A DEAL

WHAT IS A CONTRACT? A CONTRACT IS A LEGALLY ENFORCEABLE ARRANGEMENT OR AGREEMENT BETWEEN TWO OR MORE PARTIES.

TYPES OF CONTRACTS EXPRESSED PARTIES STATE THE TERMS OF THE CONTRACT ORALLY OR IN WRITING INFERRED THE ACTIONS OR CONDUCT OF THE PARTIES INDICATE AN INTENTION TO CONTRACT.

ELEMENTS OF A CONTRACT TWO OR MORE PARTIES LEGAL CAPACITY TO ACT, MENTALLY COMPETENT, LEGAL AGE OFFER AND ACCEPTANCE SUFFICIENT CONSIDERATION MONEY, GOODS, PROMISE FOR A PROMISE MUST NOT OFFEND PUBLIC POLICY OR MORALS

LEASES AND LEASING LEGAL AGREEMENTS LANDOWNERS AND FARM OPERATORS USE TO DO BUSINESS. ABOUT 1.5 MILLION LANDOWNERS AND FARMERS IN THE U.S. DEAL WITH LEASING EACH YEAR.

MOST COMMON KINDS OF FARM LEASES CASH SHARE MANAGER OPERATOR OR PARTNERSHIP (SOMETIMES CALLED PROFIT SHARING)

LEGAL LIABILITIES OF FARMERS AND RANCHERS LAWS CAN AFFECT A FARMER OR RANCHER MORE THAN THE AVERAGE CITIZEN PROPERTY MAY BE TAKEN BY THE COURTS TO PAY FOR AN INJURED PARTY NEED LIABILITY INSURANCE REDUCES RISK BY SUBSTITUTING A SMALL, REGULAR PAYMENT FOR A LARGE UNCERTAIN PAYMENT

NEGLIGENCE IN MOST CASES LIABILITY DEPENDS ON NEGLIGENCE BEFORE A FARMER CAN BE HELD LIABLE THERE MUST BE A NEGLIGENT ACTION OR LACK OF ACTION ON HIS PART ALSO TRUE FOR EMPLOYEES ENGAGED IN WORK ON THE FARM

DEFINITION OF NEGLIGENCE THE OMISSION BY AN INDIVIDUAL TO DO SOMETHING WHICH A “RESPONSIBLE PERSON” WOULD DO UNDER SIMILAR CIRCUMSTANCES FAILURE TO USE REASONABLE CARE UNDER THE CIRCUMSTANCES

EXAMPLES OF NEGLIGENCE FAILURE TO REPAIR A HOLE IN THE BARN FLOOR NOT KEEPING FENCES IN GOOD REPAIR SO LIVESTOCK CAN ROAM FREE FAILURE TO COVER AND MARK AN OPEN WELL

DUTIES TOWARD PEOPLE OR PROPERTY ADJACENT TO YOUR LAND MUST EXERCISE REASONABLE CARE TO PREVENT INJURY OR PROPERTY DAMAGE TO A NEIGHBOR

DUTIES TOWARD PEOPLE ON THE LAND THREE GROUPS INVITEES LICENSEES TRESPASSERS

INVITEES A PERSON WHO IS ON YOUR FARM WITH YOUR CONSENT AND FOR YOUR BENEFIT OR FOR YOUR MUTUAL BENEFIT A PERSON BUYING HAY OR RYE SEED A HUNTER WHO PAYS TO HUNT

RESPONSIBILITIES TO INVITEES DUTY TO WARN OF KNOWN HIDDEN DANGERS LIABLE FOR ANY INJURIES FROM THESE KNOWN HIDDEN DANGERS HAVE DUTY TO INSPECT YOUR PROPERTY FOR HIDDEN DANGERS FEED DELIVERY PERSON FALLS THROUGH A ROTTEN BOARD IN YOUR BARN

LICENSEES SOMEONE WHO COMES ONTO YOUR LAND SOLELY FOR THEIR OWN PLEASURE, BENEFIT, OR CONVENIENCE SOMEONE WHO HAS PERMISSION TO HUNT BUT DOES NOT PAY A FEE DELIVERY PERSON MAKING A PERSONAL PHONE CALL

RESPONSIBILITIES TO LICENSEES A LICENSEE HAS A LEGAL DUTY TO BE ON THE LOOKOUT FOR DANGERS IF THEY ARE CARELESS – THEN THE FARMER IS NOT RESPONSIBLE FARMER HAS TO WARN OF ANY HIDDEN DANGERS DO NOT HAVE TO MAKE LAND SAFE OR INSPECT FOR DANGERS

TRESPASSERS SOMEONE WHO IS NEITHER INVITED OR DESIRED ON YOUR LAND

RESPONSIBILITIES TO TRESPASSERS YOU ARE ONLY LIABLE FOR PERSONAL INJURIES IF YOU INTENTIONALLY INFLICT THEM. WIRE ACROSS ROAD NO DUTY TO MAKE LAND SAFE, WARN OF HIDDEN DANGERS, OR INSPECT LAND FOR DANGERS MAY USE REASONABLE FORCE TO REMOVE A TRESPASSER. NO DEADLY FORCE UNLESS FAMILY OR LIFE IS THREATENED

WHEN A TRESPASSER BECOMES A LICENSEE IF SEE A TRESPASSER AND DO NOT ASK TO LEAVE PROPERTY THEY ARE NO LONGER A TRESPASSER THEY HAVE IMPLIED PERMISSION TO BE THERE MAY BE LIABLE FOR ANY PERSONAL INJURIES FROM HIDDEN DANGERS THAT YOU KNOW OF

DOCTRINE OF ATTRACTIVE NUISANCE YOUR RESPONSIBILITY TO CHILDREN IS GREATER THAN FOR ADULTS IF YOU NEGLIGENTLY KEEP AN OBJECT OR CONDITION ON YOUR LAND THAT IS ATTRACTIVE AND DANGEROUS TO CHILDREN, YOU WILL BE LIABLE FOR INJURIES

EXAMPLES OF ATTRACTIVE NUISANCES OLD TRACTORS PLOWS COMBINES BUILDINGS UNDER CONSTRUCTION PILES OF LUMBER POSTS OLD REFRIGERATORS

NO TRESPASSING SIGNS DO NOT COMPLETELY RELEIVE LANDOWNER OF RESPONSIBILITY IF CHILDREN ARE INVOLVED, SIGNS SELDOM PROTECT THE LANDOWNER SOMEONE WHO CAN NOT READ SOMEONE WHO DOES NOT SEE THE SIGN

INJURIES TO EMPLOYEES YOU CAN PREVENT SUCCESSFUL LAW SUITS BY EMPLOYEES BY MEETING YOUR RESPONSIBILITIES AS AN EMPLOYER GUARDS AND SHIELDS IN PLACE TRAIN EMPLOYEES THOROUGHLY WARN AGAINST ANY DANGERS RESONABLE RULES OF CONDUCT

LIVESTOCK AND FENCES IN MOST STATES, A LIVESTOCK OWNER WHO MAINTAINS GOOD FENCES, IS NOT LIABLE FOR DAMAGE CAUSED BY LIVESTOCK OWNER NOT AWARE OF ANIMALS THAT BREAK OUT MUST MAKE ATTEMPT TO CAPTURE ANIMALS IMMEDIATELY