1. Steven L. Klose Financial And Risk Management Assistance Department of Agricultural Economics Texas Cooperative Extension The Texas A&M University System FARM Assistance: Texas Strategic Planning Services National Farm Management Conference June 2007 Rochester, MN

2. What is FARM Assistance?  Analysis service provided by Texas Cooperative Extension  A strategic planning tool for the farm or ranch manager, consisting of: 10-year pro-forma financial analysis Stochastic simulation risk analysis Producer specific Professional analyst

3. How do producers use FARM Assistance? Long-Range Planning Tool Production planning Financial planning (feasibility and profitability) Accounting for Risk Strategic Decision Support Tool What’s my best alternative Is a particular plan worth the trouble? Communication Tool Family management Bank

4. FARM Assistance & Long-Range Planning

5. FARM Assistance & Strategic Decision Support

6. FARM Assistance & Communication

7. Methodology Challenges  Program Flexibility Enterprises (any crop, livestock, non-traditional production) Multiple production locations Business Structure (types of and multiple entities) Management Decisions  Simulation Methods Spatial Correlation Stochastic Futures Prices  Illustrating Results Effectively

10. Broader Program Scope Creating an Asset for Texas Agriculture What can we learn/teach?  Benchmarking  Characteristics of Success  Characteristics of Failure Policy Analysis  Farm Bill  School Finance/Tax Reform  Water Conservation

11. Benchmarking a Forecast  Budget or Planning Data  ProScore Index of Financial Outlook 10 year average ROA 10 year average equity growth rate Penalty for liquidity risk

12. FARM Assistance Database 65 Cotton Producers

13. Results & Program Output  Over 1,000 Individual Analyses 150/year  Program Partnerships  Annual Database Report  FARM Assistance Focus Series  Newsletters

14. Communicating Impacts Subjective  Evaluations/comments  Client repeat rate can imply value Objective  People contacted  Equity difference in alternatives studied $250,000 in real net worth over 10 years $ 25,000/year equity impact Values decisions… Not Analysis Suggestions ?????

15. Discussion/Questions Steven L. Klose Financial And Risk Management Assistance Department of Agricultural Economics Texas Cooperative Extension The Texas A&M University System