Source: UNIVERSITY OF TENNESSEE submitted to
EXPANDING THE FINBIN FARM FINANCIAL DATABASE AND BENCHMARKING TO FARMS IN TENNESSEE
Sponsoring Institution
National Institute of Food and Agriculture
Project Status
EXTENDED
Funding Source
OTHER GRANTS
Reporting Frequency
Annual
Accession No.
1010022
Grant No.
2016-38504-25570
Project No.
TEN02016-06042
Proposal No.
2016-06042
Multistate No.
(N/A)
Program Code
FBMB
Project Start Date
Sep 1, 2016
Project End Date
Aug 31, 2018
Grant Year
2016
Project Director
Boyer, C. N.
Recipient Organization
UNIVERSITY OF TENNESSEE
2621 MORGAN CIR
KNOXVILLE,TN 37996-4540
Performing Department
Agricultural Economics
Non Technical Summary
The objective of this proposal is to expand the well-established, national recognized, and publicly available farm financial management database FINBIN to support improved profitability and competitiveness of producers of a wide variety of crops and livestock in Tennessee. Relative to other states included in the FINBIN database, Tennessee agriculture consists of more small- to medium-sized farms in terms of acreage and economic classification. Furthermore, including Tennessee farm financial data into FINBIN would increase agricultural diversity of enterprises in the database and expand the regional impact of FINBIN to the Southeastern United States. Almost thirty years ago, University of Tennessee Extension and the Department of Agricultural and Resource Economics creating positions titled, Farm Management Specialist (FMS) to help improve producers' farm financial management, profitability, and competitiveness in the state. The FMSs were tasked with assisting farm families with farm financial management through confidential and intensive one-on-one analyses. The objective of this project will be accomplished by leveraging the established relationships of the FMSs have with producers across the state along with their years of experience using the FINPACK software to expand the FINBIN database starting with the 2016 farm financial records. The benchmarking reports generated from these data will help these producers improve the profitability, competitiveness, risk management, and overall financial health. The Center for Farm Financial Management at the University of Minnesota, the developers of FINPACK and FINBIN, has agreed to provide software training, guidance on working with producers, and safety protocols for data management.
Animal Health Component
0%
Research Effort Categories
Basic
0%
Applied
100%
Developmental
0%
Classification

Knowledge Area (KA)Subject of Investigation (SOI)Field of Science (FOS)Percent
60161993010100%
Knowledge Area
601 - Economics of Agricultural Production and Farm Management;

Subject Of Investigation
6199 - Economy, general/other;

Field Of Science
3010 - Economics;
Goals / Objectives
The purpose of this proposed project is to expand the FINBIN database to include farm financial data for a wide variety of crop and livestock producers located in Tennessee, enhancing the profitability, competitiveness, and overall financial health for the many small- medium-sized family farm businesses across the state. This will be accomplished by leveraging the established relationships FMS have with producers across the state along with their years of experience using the FINPACK software to expand the base starting with the 2016 farm financial record. The proposed project will establish an Extension program that will be able to continue expanding FINBIN database in future years, making a long run impact to producers across the state of Tennessee and the southeastern United States. The specific goals and objectives of this proposed project are to:Gather farm financial data from individual farms across Tennessee using FINPACK software;Expand the national FINBIN farm financial benchmarking database;Establish and generate benchmark reports for agricultural producers by commodity and region using FINBIN;Extend benchmark reports to agricultural producers across the state using presentations, workshops, video, and print and social media;Develop, improve, and disseminate software to improve production financial record keeping by producers;Utilize data in conducting applied research on livestock and crop risk management strategies and production decisions to improve future profitability and competitiveness;Enhance classroom teaching in Farm Business Management (Agricultural and Resource Economics 342) and Agricultural Finance (Agricultural and Resource Economics 412) by using the FINBIN database; andExpose undergraduate and graduate students to future career opportunities in Extension.
Project Methods
Safety and identity protection is a very high priority issue of this project, and we will conduct all the necessary protocols to ensure individual data are protected. Prior to starting the project, all individuals associated with this project will complete the Institutional Review Board training on human subjects research to ensure the highest level of safety is provided to producers' identities. This will include the FMSs, graduate student, undergraduate intern, an Extension Specialist, project director, and the co-principal investigators of the project. Additionally, we have drafted a letter and consent form for producers to complete and mail into the Department of Agricultural and Resource Economics at the University of Tennessee. The letter will be presented to producers by the FMSs before they conduct a financial analysis with the farm and will explain the purpose and benefits from making their data available on the FINBIN database. The producer will be given a self-addressed stamped envelope along with a consent form to return to the University of Tennessee Department of Agricultural and Resource Economics. We will conduct training on soliciting producers for their farm financial data and to answer any safety questions that producers might have about making their data available on FINBIN.To insure the confidentiality and proficiency of collecting data, we will have a staff member from the CFFM host a 2-day conference in Nashville, Tennessee for the FMS, graduate student, an Extension Specialist, project director, and the co-principal investigators of the project. The CFFM has agreed to provide software training of FINPACK, RankEm, RankEm Center, and FINBIN; guidance on working with producers; and safety protocols for data management. The CFFM has agreed to cover their cost of travel to the conference and wave the software training fee. They agreed to cover the cost to show their commitment to helping expand the FINBIN database with farm financial data from Tennessee. We have a long working relationship with the CFFM and they believe this proposed project will be valuable to their center. A preliminary draft of the agenda includes training on using FINPACK, FINAN, RankEm, RankEm Center, and FINBIN; soliciting producers for necessary data for FINPACK; and interpreting benchmark reports to help producers make improved decisions. This conference will be completed within the first two months of the proposed project being funded.After the conference, press releases and media blasts will be sent out from the Department of Agricultural and Resource Economics in October and November to inform producers about the new farm financial benchmarking program. The program will be advertised in social media, extension websites and blogs, and producer presentations. FMSs will be provided with promotional materials such as folders that includes example benchmark reports and information about the program. They will make farm visits to pass out these materials to producers as well as distribute the material at producer meetings. We will rely on their personal connections to market the new program. The marketing content will include a unique logo and name for the program. The content will include a list of frequently asked questions and phone numbers to call if they have any other questions or concerns about the project. The Masters level graduate student will work on a review of the literature to determine the extension publications and research topics that need to be addressed in 2016. They will become familiar with farm financial statements for livestock and crop producers. The graduate student will use these data to generate benchmarking reports that can be compared for their thesis research.During the months of November through February, the FMSs will collect farm financial data using the FINPACK software, following the established security protocols and methods. November through February is the time of year that FMSs typically assist producers with developing farm financial statements and whole farm plans for the upcoming year. As shown on the next page, Table 2 displays the projected farm financial datasets collect by FMS by and commodity, and Figure 2 displays the assigned areas for each FMS. Based on the number of financial plans the FMS assisted with in 2015, the project number of farm financial plans that will included into FINBIN will be over 100 in 2016. We expected that the vast majority of the farm financial plans will include more than one enterprise. The graduate student will be sent out on farm visits with the FMS to assist in data collection. This will expose the student to a potential future career in farm financial management and/or extension, which could be training and encouraging the next generation of educators. The existing FMSs cover the entire state of Tennessee and bring a wealth of experience to the purposed project. Each FMS covers the farm financial management requirements for his or her region, however each region has agricultural industries that are more prevalent than in other regions. For example, west Tennessee has the majority of the state's corn, cotton, soybean, and wheat acres, while East Tennessee has well established dairy, tobacco, and tomato industries. This regionalization provides a diverse portfolio of agricultural enterprises that can contribute to the depth of the FINBIN database. Leveraging the relationships and expertise of the FMS will be essential to the success of this project. Currently, four FMS have thirty plus years of experience and have worked with producers through some of the most difficult farm financial situations (1980s) in the past half century. Producers have recognized the value provided by the FMS to their operations and have provided numerous testimonials about the benefits of the extension program (producer comments can be found online at: http://economics.ag.utk.edu/mang.html).During the months of March through May, the graduate student will use these data in FINBIN to generate an annual benchmarking report for livestock production and another benchmarking report for crop production. The student will analyze the farm management practices that result in producers being in the top percentile, for specific financial ratios or measurements, for their enterprises using mathematical programming. For example, the data entered in FINBIN could be used to examine the relationship between cash rents per acre paid by producers and net returns per acre for corn in west Tennessee.

Progress 09/01/16 to 08/31/17

Outputs
Target Audience:The target audience of this project are Tennessee crops and livestock producers with the goal of developing a comprehensive one-on-one farm financial analysis for their farm. Along with producers, we will distribute information to several interested stakeholders such as lenders at Farm Credit Mid-America and United State Department of Agriculture Farm Service Agency to help guide their lending decisions and educate agricultural lenders. In this first year of launching a benchmarking program in Tennessee, we have had made big strides but realize a successful benchmarking program will take time to build. Many producers have been positive towards the possibility of benchmarking their financial data with their peers. However, the main challenge that we have confronted is producers' lack of good (accrual adjusted) financial records. This first year, we have adjusted our aim from complete a benchmarking report to focusing on improving financial records for producers. This has set back our schedule for completing all our objectives in year one, but we believe this will ensure quality data is being included in the FINBIN database. During the past year, we estimate that over 1,500 producers were personally contacted about the project. Many more were also contacted through social media and press releases. Some notable accomplishments including working with 208 producers on improving their financial record keeping, working with 72producers to develop an opening balance sheets of their farm business, and working with 114 producers doing financial analysis and budget analysis. We made presentations to hundreds of agricultural lenders from various banks across Tennessee that were certified FSA lenders. These presentations covered the overview of the project and how they can be helpful in getting this project launched. Lenders were provided promotion material to provide to producers. Changes/Problems:We encountered a problem in 2017 with producers' lack of good (accrual adjusted) financial records. We adjusted our aim from completinga benchmarking report to focusing on improving financial records for producers. This has set back our schedule for completing all our objectives in year one, but we believe this will ensure quality data is being included in the FINBIN database. Also, this means the number of completed financial analyses of high quality will not be as high as we initially thought. We have near our focus on completing a smaller number of high quality financial analyses of farms. This approach will help us in the long-run to develop a respectable and desirable benchmarking program.In our discussions with theUniversity of Minnesota Center of Farm Financial Management faculty, we have identified ways to improve data quality. They have been very helpful in our efforts to developing a benchmarking program. The biggest challenge in the upcoming year will be educating producers on record keeping methods that are necessary for a benchmarking analysis. What opportunities for training and professional development has the project provided?On October 24th and 25th of 2016, Dale Nordquist and Curtis Mahnken from the University of Minnesota Center of Farm Financial Management provided training on FINAN to all eightArea Farm Management Specialists as well as all PIBoyer and Co-PIs Smith and Griffith inMurfreesboro, Tennessee. They went through a full day of doing a complete financial analysis using FINPACK. Co-PI, Aaron Smith and myself attended the National Benchmarking Project Leaders Meeting at the University of Minnesota on November 29th and 30th of 2016. This meeting helped us better understand the best ways to implement a benchmarking program in Tennessee. Faculty and staff from several institutions provided us with helpful input on how to address challenges. We made presentations to hundreds of agricultural lenders across Tennessee that were certified FSA lenders. These presentations covered the overview of the project and how they can be helpful in getting this project launched. Lenders were provided promotion material to provide to producers. Below shows the citations for each training. Boyer, C.N. "Farm Gauge: Creating a Tennessee Benchmarking Database." USDA FSA Tennessee Lender Training, Jackson, TN. January 24, 2017. Boyer, C.N. "Farm Gauge: Creating a Tennessee Benchmarking Database." USDA FSA Tennessee Lender Training, Crossville, TN. January 26, 2017. Morris, D. "Farm Gauge: Creating a Tennessee Benchmarking Database." Farm Credit-Mid America Regional Advisory Council Meeting, Dresden, TN, March 24, 2017. We made presentations to nearly all 95 County Extension Agents for Agriculture and Natural Resources across Tennessee. These presentations covered the overview of the project and how they can be helpful in getting this project launched. Agents were provided promotional material to provide to producers. Boyer, C.N. "Farm Financial Management: Creating a Tennessee Benchmarking Database." Eastern Tennessee Ag Econ Market Outlook In-service, Knoxville, TN. November 1, 2016. Boyer, C.N. "Farm Financial Management: Creating a Tennessee Benchmarking Database." Central Tennessee Ag Econ Market Outlook In-service, Murfreesboro, TN. November 2, 2016. Boyer, C.N. "Farm Financial Management: Creating a Tennessee Benchmarking Database." Western Tennessee Ag Econ Market Outlook In-service, Jackson, TN. November 3, 2016. Boyer, C.N. "Beef Economic Research Project in UTIA." Beef and Forage Center, Knoxville, TN. December 13, 2016. How have the results been disseminated to communities of interest? Nothing Reported What do you plan to do during the next reporting period to accomplish the goals?In 2018, we will work hard to complete objectives two, three, four, and six. Our discussion with faculty and Extension Specialists at the University of Minnesota Center of Farm Financial Management have provided us great insight into improving financial record keeping for producers. They have been very patient this year and have reinforced that starting and developing a high quality benchmarking program will take time. We plan on continuing to use the grant funding to support farm visits to conduct one-on-one financial analysis and data collection.

Impacts
What was accomplished under these goals? Below we show the specific goals and objectives we stated in the proposal of this project. We have provided discussion on our achievements and work to be done in the upcoming year to meet these goals. 1. Gather farm financial data from individual farms across Tennessee using FINPACK software The eight Area Farm Management Specialist reported 322 contacts with producers to help with record keeping, financial planning, and financial analysis of their farm operation. This number is expected to grow in 2018 with the hiring of a ninth Area Farm Management Specialist. 2. Expand the national FINBIN farm financial benchmarking database; 3. Establish and generate benchmark reports for agricultural producers by commodity and region using FINBIN; 4. Extend benchmark reports to agricultural producers across the state using presentations, workshops, video, and print and social media; We are unfortunately not in a place in 2017 to add data to the FINBIN database and conduct a benchmarking report. As previously stated, this first year, we have adjusted our aim to complete a benchmarking report to focusing on improving financial records for producers. because ofproducers' lack of good (accrual adjusted) financial records.The quality of the financial data we recieved this year would berestricted from beingincluded in the FINBIN database.This has set back our schedule for completing all our objectives in year one, but we believe this will ensure quality data is being included in the FINBIN database. 5. Develop, improve, and disseminate software to improve production financial record keeping by producers; The graduate student Nathaniel Bruce wrote and develop the financial data input forms. The undergraduate interns developed publications for producers to help them start developing an income statement and balance sheet. Furthermore, we have developed balance sheet and income statement spreadsheets to help producers' record financial data. The spreadsheets will allow producers to enter cash sales and expenses throughout the year as well as record any changes in their assets and liabilities. Finally, Area Farm Management Specialists helped 208producers set up improved record keeping systems. 6. Utilize data in conducting applied research on livestock and crop risk management strategies and production decisions to improve future profitability and competitiveness; Since financial data was so limited and poor in 2017, no risk analysis or research was conducted on these data. The graduate student Nathaniel Bruce did write and develop the financial data input forms as well as write part of the case study. 7. Enhance classroom teaching in Farm Business Management (Agricultural and Resource Economics 342) and Agricultural Finance (Agricultural and Resource Economics 412) by using the FINBIN database; and Benchmarking was taught and discussed in the Farm Business Management (Agricultural and Resource Economics 342). Benchmarking reports from the FINBIN database were discussed in class. Students were taught how to conduct a comprehensive financial analysis for a farm operation. They used benchmarking reports to interpret the financial health of the farm as well as identify financial strengths and weaknesses of the farm. 8. Expose undergraduate and graduate students to future career opportunities in Extension. ? Nathaniel Bruce, the graduate student funded by this project, has recently started a job as a Caswell County Extension Agents for Agriculture and Natural Resources in North Carolina. This project affirmed his desire to have a career in Extension because he experienced the potential impact of an Extension program on a farm family. We hired two undergraduate interns to developed educational publications for this project.

Publications

  • Type: Other Status: Under Review Year Published: 2017 Citation: Campbell, V., S.A., Smith, C.N. Boyer, and A.P. Griffith. 2017. An Introduction to Basic Farm Financial Statements: Balance Sheet. University of Tennessee Extension Publication
  • Type: Other Status: Under Review Year Published: 2017 Citation: Best, S., S.A., Smith, C.N. Boyer, and A.P. Griffith. 2017. An Introduction to Basic Farm Financial Statements: Income Statement. University of Tennessee Extension Publication
  • Type: Websites Status: Other Year Published: 2016 Citation: Boyer, C.N., S.A. Smith, T. Johnson. 2016. Link: farmgauge.utk.edu
  • Type: Other Status: Under Review Year Published: 2017 Citation: Best, S., V. Campbell, S.A., Smith, C.N. Boyer, and A.P. Griffith. 2017. Row Crop Operation Case Study: Vaughn Farms. University of Tennessee Extension Publication
  • Type: Other Status: Other Year Published: 2017 Citation: Campbell, V., S. Best, S.A., Smith, C.N. Boyer, and A.P. Griffith. 2017. Cow-Calf Operation Case Study: Single G Angus Farms. University of Tennessee Extension Publication