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Budgeting assistance for catfish growers

Like most in other business sectors in the agricultural industry, catfish producers are faced with constant time constraints. Persuading them to take time out away from their production ponds to attend a technical assistance meeting can be challenging.

But, Extension agents in the Mississippi Delta are working to overcome such reluctance.

Mississippi State University Extension agent Terry Hanson, speaking at a recent financial workshop for catfish producers at the Thad Cochran National Warmwater Aquaculture Center in Stoneville, Miss., said he’s hopeful word will spread about the benefits of attending such meetings.

“These programs are important because their aim is to help support growers and to teach them how they can better manage their farms,” he said.

While many cotton, soybean and other farmers routinely attend Extension meetings, similar programs are relatively new for catfish growers. In fact, the programs in the Delta started just last year thanks to a federal grant initiative.

Beginning in 2003, the federal government’s Trade Adjustment Act expanded to include the catfish sector into its umbrella of assistance to business owners suffering hardships due to foreign import competition. The change led to the formation of Extension-managed public meetings for catfish growers.

Hanson said catfish farmers in a limited number of states could qualify, after registration, to receive a reimbursement from attending meetings.

But because of the agency’s complex formula, the reimbursement is not a high dollar amount, and that remains another reason attendance thus far has been minimal, according to Hanson.

“I’d say its borderline incentive. The money amount is not attractive. There is a lot of red tape for farmers to go through to get it and in the best-case scenario, the highest reimbursement would be about $1,000,” he said. “So a farmer can quickly see that time spent away from work is probably not worth the money.”

Nevertheless, Extension agents want to not only present new, on-going production scientific research for producers, they want to empower them with the budgeting tools needed to evaluate the economics of incorporating such research on a farm-by-farm basis.

“We want to present a comparison of present operations with something different. If they can learn the budgeting techniques, they can use them with anything because at some point they will be faced with new research,” he said.

One current misconception in the catfish industry, Hanson observed, is that there are not a lot of impact changes happening.

He said there are, and the meeting not only presented one example, it outlined how a farmer could critique the cost benefits of it — if applied to his or her farm — through examining partial budgeting models.

The new research discussed pertained to moving from a multiple-batch stocking system to a single batch three-phase catfish production system. It’s a change speakers at the meeting said is already happening with some producers in parts of the Delta.

MSU Extension aquaculture specialist Jim Steeby said up to about five years ago, catfish processors preferred smaller fish, but now their demand is for a larger fish.

“Processing plants are moving more toward a fillet product and what they really don’t want are fish smaller than 1.25 pounds or larger than 3 pounds.”

That change in demand is causing producers to alter their business models.

John Anderson, MSU Extension agent, discussed partial budget models and the value of them for the growers faced with changes, such as converting to a three-batch system.

“The partial budget gives you a tool to look at this (change) in a long-run situation,” he said. “How would the long-run profitability and the long-run liability of the operation be affected by a change?

“Will a long-run profitability be improved by this change? That’s not the only question, but it’s the first one to ask.”

On one hand, Anderson said, the concept of partial budgeting is rather simple: “It’s an instrument that summarizes all of the financial changes that would come about as a result of a proposed change to the production system.”

But, he added, practically speaking, a partial budget is complicated: “A complex production system, as catfish farms tend to be, only add to this.”

Other topics at the meeting included a step-by-step financial analysis of farm operations as well as reducing variable costs through partial budget models.

Attendance at both meetings, which were paid for by a grant from the Southern Regional Risk Management Education Center, averaged about 20 participants.

Of those in attendance at the meeting in Stoneville, one was Robert Burford, a certified public accountant in Hollandale, Miss., who works with producers.

“A lot of the information at the meeting was good and useful,” he said. “I wish more producers had have been here.

“Nowadays, producers often make decisions based on what is working for their neighbors, and not on solid research. But I think the word will spread about these meetings.”

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