While Kansas Agricultural Mediation Services deals with the difficult chore of negotiating with a lender, another Kansas State University Research and Extension service, the Farm Analyst Program, offers a tool to help farmers examine their operation and analyze what is working and what isn’t.
Duane Hund is the director of the Farm Analyst Program within K-State’s Department of Extension Agricultural Economics. Hund has utilized the FinPack program since the farm crisis of the 1980s. Analysts with the program use a computer program to help producers see what is working in the operation and what isn’t and come up with options that might work better than what they are currently doing.
“We have a lot of producers who have seen serious losses from all the flooding and we are already hearing from some of them,” Hund says. “People are not looking at positive margins and we are in a really frustrating situation. We really need a break from the weather.”
Hund says he is seeing some farmers who are having cash-flow problems and don’t realize that it is weather related.
“Even with crop insurance and government payments, some producers are having to borrow from their line of credit to make payments for machinery or land,” Hund says. “Not a good thing, and a warning sign many producers must address before planting crops next year.
“I know of some cases where brothers are partners and they are blaming each other. They haven’t realized that it isn’t something they did; they are all victims of this situation. The Market Facilitation Payments are helping some. Without those, I think we would be losing more folks. As it is, we’ve seen a bit of an uptick in land sales but not the foreclosures we saw in the ’80s. It’s more people deciding to liquidate some assets to help pay the debt.”
Farmers who are experiencing financial stress could benefit from calling for help from the Farm Analyst Program to give them an idea what they can do to prevent a difficult situation from becoming a crisis. Farmers can get an analysis done at very little cost to them because the Ag Mediation Services grant helps cover it.
“Basically, you separate all the enterprises farmer or rancher has and clearly map out alternatives that might help increase profitability and prevent a worsening financial picture,” Hund says. “The FinPack program is an excellent tool to help them see the alternatives. At the current time, one of those alternatives might be to change what you are growing. Or it might mean converting marginal cropland to forage and increasing livestock operations.”
He says the program also helps producers see what they may be able to do to reduce the costs.
“Working with farm families, the best managers are the ones that control their costs. They only use the processes that are necessary,” Hund says. “When solvency is eroding, you don’t want to use up the working capital too fast. The individual analysis helps give them a way to benchmark themselves, to know what gives the best return and be comfortable knowing they are on the right path.”
kansas farmerSEEKING IDEAS: One of the options some farmers have found useful is adding livestock to their cropping operation, using cover crops for winter forage. Farm Analyst Program director, Duane Hund, said that can be of particular help to producers who already have some livestock operations.
FinPack works for livestock ranchers as well as cropping operations.
“It’s important to see what the best marketing strategy is for your operation,” he says. “Do you retain ownership of calves or sell them directly off the cow? What impact will it have to cull cows or to hold more heifers to add to the herd? The program can tell you what impact those changes might have.”
Hund says there are bankers who are interested in learning to use the FinPack program to help their customers make decisions.
“It’s gratifying to see some lenders getting proactive. They want to train their loan officers to help producers work through their problems and stay in the business,” he says. “Our goal is to help people figure out what they need to do to be profitable. Maybe we can become the state with the fewest farm bankruptcies instead of making the top two.”
More information is available by contacting the Kansas Agricultural Mediation Service 800-321-3276. Trained farm analysts are available across the state to provide confidential assistance.