DOCUMENT RESUME
ED 286 706
RC 016 447
AUTHOR
Lasley, Paul, Comp.; And Others
TITLE
Farm Crisis Response: Extension and Research
Activities in the North Central Region.
INSTITUTION
North Central Regional Center for Rural Development,
Ames, Iowa.
PUB DATE
86
NOTE
73p.; A network organized by Paul Lasley and Rand
Conger, Iowa State University.
PUB TYPE
Guides - Non-Classroom Use (055) -- Collected Works -
General (020)
EDRS PRICE
MF01/PCC3 Plus Postage.
DESCRIPTORS
Agriculture; Community Action; Community Problems;
*Economic Status; Extension Agents; *Extension
Education; Family Problems; *Farmers; Higher
Education; Institutional Role; *Land Grant
Universities; Program Descriptions; Program
Effectiveness; Regional Characteristics; Regional
Programs; Rescrch Needs; Responses; Rural Areas;
*Rural Extension; Stress Management
IDENTIFIERS
Cooperative Extension Service; Economic Impact; *Farm
Crisis; Illinois; Indiana; Iowa; Kansas; Michigan;
Minnesota; Missouri; Nebraska; North Dakota; Ohio;
Response Patterns; South Dakota; *United States
(North Central); Wisconsin
ABSTRACT
The 12 states comprising the North Central Region
have been affected in similar ways by the farm crisis of the 1980s.
Statewide surveys show sizeable proportions of farm operations that
are experiencing moderately high levels of financial stress. The
problems caused by chronic stress on family structure and
functioning, the loss of mainstreet businesses, and bank closing are
felt throughout the region. The Cooperative Extension Agencies in the
states have approached the problems in similar ways. They have
developed new programs with long- and short-term efforts, and they
have adapted existing programs with short-term or temporary
activities and long-term commitments. Extension has been most heavily
involved iu developing new, relatively short-term programs such as
the use of hotlines, crisis intervention teams, and bankrupcy or bank
closing response teams. New
long-term programs include projects and
research designed to achieve economic and agricultural
diversification. The addition of resources to the existing farm
management programs is a good example of an existing short-run
program. Many existing, long-term Extension and research programs
have been helpful in meeting immediate needs. This document provides
12 papers summarizing the farm crisis and programs designed to deal
with it in each of the North Central states. Research needs are
enumerated. (JHZ)
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Reproductions supplied by EDRS are the best that can be made
from the original document.
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C
N
4O
Co
C
L I
Farm Crisis Response:
Extension and Research
Activities in the
North Central Region
"PERMISSION TO REPRODUCE THIS
MATERIAL HAS BEEN GRANTED BY
TO THE EDUCAIIONAL RESOURCES
INFORMATION CENTER (ERIC)"
U S DEPARTMENT OF EDUCATION
Oltice of Educational Research and Improvement
EDU
TIONAL RESOURCES INFORMATION
CENTER (ERIC)
This document has been reproduced
as
received from the person or organization
oroginahng it
Mono, changes have been made to improve
reproduction QualItY
Points of view or opinions stated in this docu
mint do not necessarily represent official
OERI position or poky
The North Central Regional Center for Rural Development
Iowa State University
BEST COPY AVAILABLE
Farm Crisis Response:
Extension and Research
Activities in the
North Central Region
A Network Organized by
Paul Las ley and Rand Conger,
Iowa State University
cl C:1 ni
Cgo 9 EA The North Central Regional Center for Rural Development
1968
CD
CM
C) ECil
3
Contents
Contributors
iii
Foreword
iv
Summary and Conclusions
1
Paul Las ley, Rand Conger, Curtis Stofferahn
Extension and Research Programs
on Rural Financial Stress in Iowa
Kathleen Beery and Robert W. Jolly
Illinois Extension and Research
Response to the Farm Crisis
H. J. Schweitzer
Farm Crisis Response: Indiana
Extension and Research Activities
David C. Petritz and Dixie Porter Johnson
Farm Crisis Response in Kansas
William M. Eberle and S. L. Ward
Responses to the Farm Crisis:
Michigan Report
Julie Hales
Project Support Tackles Rural
Problems in Minnesota
Kathy Mangum
5
Missouri Extension and Research
Activities in the Rural Crisis
John T. Pelham and Judy Heffernan
37
Short-term and Long-term Approaches 42
to Easing the Farm Crisis: The
University of Nebraska's Response
Deborah Rood and John De Frain
Coping with the Farm Crisis
in North Dakota
14
F. Larry Leistritz, Arlen Leholm,
and Harlan Hughes
Ohio Farm Financial
19
Management Programs
David R. Miskell and LeRoy Hushak
Responses to Farm Crisis by
22
South Dakota Institutions
Ardelle Lundeen
50
53
57
26
Farm Crisis Response: University of 61
Wisconsin-Madison Extension and Research
Jess Gilbert and Glenn S. Thompson
32
a 4
Contributors
Kathleen Beery, Assistant State Leader,
Cooperative Extension Service, Iowa State
University
John DeFezin, Associate Professor of Family
Studies, Department of Human Development
and
Family, and Researcher, Agricultural Research
Division, Institute of Agriculture and Natural
Resources, University of Nebraska-Lincoln
William M. Eberle, Assistant Director, Community
Development, Kansas State University
Cooperative Extension Service
Jess Gilbert, Assistant Professor, Department of
Rural Sociology, University of Wisconsin-
Madison
Julie Hales, Evaluation Specialist, Michigan
State University
Judy Heffernan, Research Associate, Rural
Sociology, University of Missouri
Harlan Hughes, Extension Livestock Economist,
North Dakota State University
Leroy Hushak, Professor, Agricultural Economics
and Rural Sociology, The Ohio State University
Dixie Porter Johnson, Associate Professor of
Consumer Science and Retailing, Extension
Specialist, Purdue University
Robert W. Jolly, Assistant Dean of Agriculture,
Iowa State University
Arlen Leholm, Extension Farm Management
Economist, North Dakota State University
UI
F. Larry Leistritz, Professor of Agricultural
Economics, North Dakota State University
Ardelle Lundeen, Professor of Agricultural
Economics, South Dakota State University
Kathy Mangum, Coordinator, Project Support,
University of Minnesota
David R. Miskell, Associate State Leader,
Agricultural Industry, The Ohio State
University
John T. Pelham, Associate Director, Missouri
Cooperative Extension Service, University of
Missouri and Lincoln University
David C. Petritz, Professor of Agricultural
Economics, Extension Specialist, Purdue
University
Deborah Rood, Communications Associate, Managing
for Tomorrow Program, Department of
Agricultural Economics, University of Nebraska-
Lincoln
H. J. Schweitzer, Assistant Director, Agriculture
Experiment Station, University of Illinois at
Urbana-Champaign
Glenn S. Thompson, Assistant State Program
Leader, Agriculture and Agribusiness Program,
University of Wisconsin-Madison
S. L. Ward, Director, Kansas Farmers Assistance,
Counseling, and Training Service, Kansas State
University
5
Foreword
The magnitude and speed with which the
present farm crisis has hit the midwestern states
is perhaps unparalleled.
The depressed financial
and economic condition of agriculture in the
North Central Region is well documented.
How the
farm crisie affects rural communities and rural
residents, especially farm families in the
region, is generally less well documented and
understood.
Because of the severe consequences
of the farm crisis and the need for the
land-grant university system to respond to this
new set of conditions, the North Central Regional
Center for Rural Development provided funds to
bring together a group of Extension personnel and
Agricultu.al Experiment Station scientists to
examine and compare how the various land-grant
institutions in the North Central region are
responding to the needs of farmers and rural
communities experiencing the present changes in
agriculture.
Specifically, the objectives of the
Farm Crisis Network ince (1) to review the
activities of the land-grant universities in the
North Central region designed to help
individuals, families, institutions, and
commurIties adjust to the new economic climate;
and (1) to identify areas needing additional
research and resources.
In talking with individuals from around the
region, we became aware that many land-grant
Universities were developing ameliorative
programs on their own and that there was a reed
for researchers and Extension staff to exchange
program ideas to estimate program effectiveness,
and to communicate appropriate research findings.
The project identified key individuals from each
of the 12 North Central land-grant universities
who were knowledgeable about both the research
and Extension programs that had been initiated in
response to the farm crisis.
The task proved to be a difficult one
because of the number of people who are involved
in each of the states.
The Extension directors
and Agricultural Experiment Station directors
were each asked to appoint a person to serve on
the network.
Without the directors' cooperation
and support this project would not have been
possible.
The network participants who wrote and
presented reports often relied heavily on the
work of colleagues and peers.
We certainly
appreciate the cooperation of all who shared
their ideas and data with this project.
In mid-February, 1986, the network met for
two days in Des Moines to review and evaluate the
involvement of each North Central institution in
helping meet the farm crisis.
A goal of this
project was to explore and stimulate mutual
interest in those areas where collaborative
Efforts between the North Central land-grant
universities might be possible.
As the farm
crisis broadens into other regions of the United
States, we feel that many of the lessons the
North Central states have learned may benefit
those in other regions.
As one reviews the
responses of each institution, it is evident that
the magnitude and the consequences of the farm
crisis in regard to rural life has been
dramatic.
The follrwing reports were written to share
with others the diversity of Extension and
research activities.
The authors were asked to
limit their reports to 10 pages; thus the
chapters are overviews or summaries of the
activities.
Many observers have noted that the farm
crisis has often resulted in families and
communities "pulling together."
The cooperation
of the Experiment Stations, Extension Services,
and the network representatives in the North
Central region is evidence of a definite pulling
together.
We believe this volume contains the
most current and comprehensive listing of the
activities that have been initiated within the
land-grant universities.
6
iv
Paul Lesley
Rand Conger
Curtis Stofferahn
Summary and Conclusions
The authors of individual reports in this
volume note that farming has traditionally been a
high risk enterprise.
The analysis of present
prc;lems must recognize that the history of rural
society and farming is characterized by crisis.
A theme of env'xonmental challenges pervaded such
of the westward settlement--droughts, insects,
disease, and other natural disasters.
The early
20th century has experienced, also, economic
crises.
The 4gri,
tural stagnation in the
1917-1920 period was closely followed by the
Great Depression.
These periods of economic and
natural crises might have accustomed farm people
to misfortune.
Yet the relatively stable period
from the close of World War II to the early 1970a
created a false sense of security prior to the
period of great expansion in the mid-to-late
1970s which abruptly ended in the early 1980s and
led to the present crisis.
Unlike previous periods of economic
hardship, the farm crisis of the 1980s is unique
in a number of important ways that makes
tnterventton difficult.
Some of the unique
features of the farm crisis identified by the
network participants include the following:
1.
There is a lack of consensus that there is
a crisis.
Extension has placed effort
into educational activities designed
specifically to raise awareness of the
magnitude of the problem and its likely
consequences.
In many areas some people
still deny that a farm crisis exists.
2.
There is a lack of understanding
concerning the crisis' dimensions and
magnitude.
Unlike many disasters in
farming where the consequences are readily
visible and can often be objectively
assessed, such as number of acres lost,
number of diseased livestock, and so on,
it is very difficult to obtain objective
indicators of the extent of current
difficulties.
3.
The problem of labeling the crisis springs
from the ambiguity of its causes.
The
farm crisis means different things to
different people and is referred to as a
farm, a rural, an agricultural, or a
credit crisis.
4.
There is a ,lck of agreement concerning
the true victius of the crisis.
Often
those being adversely affected are viewed
as "high rollers" or "poor farm managers."
The "blaming-the-victim" syndrome is an
element often identified in various types
of crisis.
Because there is no consensus
that certain farm families are victims of
events beyond their control, response
efforts have been hampered or delayed.
Previous difficulties in agriculture
typically did not have to overcome this
hurdle of convincing the public that it is
tndeed a crisis situation.
5.
Closely related to the issue of societal
definition that there are victims
deserving of public support is the added
burden of identifying the victims.
In
many previous agricultural crises, it was
relatively simple to identify the victims.
They were the people who lost their crops
or had experienced another significant
loss.
Victims of these crises were
generally quite visit e and there was
public agreement that they needed and
deserved help.
In the current economic
downturn, it is very difficult to identify
those who are being adversely affected
from those who do not need assistance
unless detailed financial information is
available.
6.
Another important dimension of the farm
crisis is the problem that the victims are
in different stages.
Some farm families
were adversely affected four or five years
ago, while others are just now being
impacted.
Intervention strategies must
recognize the subtle but Important
differences among farm families.
7.
The diversity of victims in terms of farm
size, enterprises, geographic location,
and in terms of family characteristics
such as number of children, stage in life
cycle, level of education, and so on
further complicates intervention
strategies.
8.
And finally, it is important to recognize
that while the farm problem has been
called a crisis, it is necessary to
recognize that it is a chronic condition.
Normally, crises are define as short-term,
traumatic events, contrary to the
long-term problem we face today.
Already
the farm crisis has existed four or five
years, and recent estimates project that
it will continue for another four or five
years.
It is quite likely the events we
have called farm crisis may last a decade
or more, which suggests it may become a
chronic problem.
As a result,
intervention strategies must be able to
respond both to immediate, short-run needs
that develop as well as to the longer term
problems that emerge.
Continuities of Concern
The uniqueness of the present economic
difficulties in agriculture is reflected in the
chapters in this volume.
Each of the authors
describes a very similar set of problems
resulting from this extraordinary situation.
Many authors report the results of statewide
surveys that show sizeable proportions of farm
operations that are experiencing moderately high
levels of financial stress.
The magnitude of the
financial problem is roughly the same across the
North Central states.
Each of the authors report
on growing incidences of familial and community
7
problems that have been ::iggered by the economic
upheaval.
Much of what the authors describe can be
portrayed as the ripple effect of the fare
crisis.
The farm crisis has ever-widening
circles of consequences.
The problems of chronic
stress on family structure and functioning, the
loss of mainstreet businesses, bank closings, and
the toll on community services and facilities are
included in the ripple effect.
While the L2 North Central states each have
approached the set of problems a little
differently, there are many similarities tn their
responses.
Some of the activities are new
program thrusts with planned terminations (Cell
1), other programs are new directions but are
viewed as long-term efforts (Cell 2).
Within
existing programs, some of the responses are
viewed as short-run or temporary activities (Cell
3) that are part of a long-term commitment to the
program area (Cell 4).
Short Run
Long Run
Program Thrust
New
Existing
Cell
1
Cell 3
Cell 2
Cell 4
New, Short-run Programs (Cell 1)
Extension has been most heavily involved in
responding to the farm crisis in new program
efforts, many of which are being viewed as
relatively short-term efforts that eventually
will be terminated.
Many of the activities in
this model are emergency or intervention
strategies which have been designed specifically
for unique problems stemming from the farm
crisis.
Strategies such as the use of hot lines,
crisis intervention teams, and bankruptcy or bank
closing response teams would fall within Cell 1.
New, Long-run ;rogram (Cell 2)
In several instances, states have initiated
new programs which are viewed as long-run
efforts.
Included in this cell would be new
Extension projects and research designed to
achieve economic and agricultural
diversification helping displaced families find
new careers, and other such efforts to which a
multi-year commitment has been made.
Several
new, long-term programs have been initiated or
are being planned to address the long-term
implications of the current crisis and to help
2
individuals and communities adjust to the
economic realities of the depressed agricultural
economy.
Existing, Short-run Program (Cell 3)
Within existing Extension and research
programs, new resources have often been provided
for renewed emphasis or reinforcement of
continuing efforts.
Perhaps the best example of
efforts falling into this area is the financial
counseling that is a part of the farm management
programs.
Each of the states has had a sustained
commitment to farm management; however, with the
onset of the farm crisis, resources have been
added to handle the increased demand for farm
financial counseling.
Each of the states has
developed short-run programs to respond to the
needs for financial counseling.
Generally it was
felt that these programs would be continued tn
the future; but, as the demand for them wanes,
the programs would be folded into continuing farm
management activities.
Similarly, several states
have redirected their stress research and
Extension programs to fit the uniqueness of the
farm crisis.
The farm stress thrust, however, is
generally thought to be a part of the continuing
program effort.
Existing, Long-run Programs (Cell 4)
The reports include a wide breadth of
continuing, long-run Extension and research
efforts that have been helpful in meeting short-
run and immediate needs.
Many states have been
able to dries, upon existing Extension and research
knowledge in designing intervention efforts.
It
is essential that existing thrusts in home
economics, agriculture and natural resources,
community resource development, and youth be
continued.
There are numerous examples of creative
responses to the farm crisis which combine
elements of Extension and research.
In many
cases, there are examples where inter- program
teams have been formed to develop broad based
responses to diverse needs.
Numerous examples of
states' responses highlight the benefits of the
inter-program efforts.
Another similarity across
many of the activities has been inter-agency
cooperation and the involvement of other groups
with land-grant personnel.
Extension personnel
and agricultural scientists have frequently
involved state and federal agencies, farm
organizations, churches, voluntary organizations
and local leaders in developing appropriate
responses to unique needs of subgroups.
Reconbandationo
One of the great difficulties in developing
an effective response to the current downturn in
the rural economy has been our lack of knowledge
about the nature, course, and individual
adaptations (successful and unsuccessful) to
previous crises of a similar nature.
While there
are unique features in the current situation,
economic cycles are a repetitive part of rural
history and, just as we are likely to recover
from the decade of the 1980s, there will be other
economic reversals in the future.
The failure to
systematically study individual, family,
community, state, and regional adaptations to the
economic difficulties of the 1920s and 30s left
us with few skills in our repertoire of
idterventions to meet the current crisis.
We
need to immediately develop comprehensive
programs of applied and basic research to Improve
our understanding of which strategies at the
individual or community level lead to the most
successful outcomes in response to rural economic
hardship.
Such research has important
implications for the present as well as for
future fluctuations in economic conditions.
To assist in effective planning for such
future research and programming, in addition
to
describing the activities their states have
.nitiated, the participants were asked
to
identify future research and Extension
priorities.
Just as rural communities were
ill-prepared to adjust to the economic upheaval,
researchers and Extension staff have often found
an "empty cabinet" when they have gone to their
"tool chest" for answers about specific
questions.
The farm crisis has brought new
challenges to the land grant system.
But it has
also unearthed many important research and
Extension questions which can be viewed
as
opportunities.
There are many fruitful areas of
inquiry identified by the network members.
Listed below is a summary of their
recommendations for future research and
Extension program focuses.
1.
What can be done to ease the transition of
the displaced farm families?
What coping skills are needed?
How can career options be identified?
How can large numbers of displaced
farmers be retrained?
How do family ties and relationships
facilitate successful transitions?
What are transition paths of displaced
farm families?
2.
What are the policy linkages between the
farm crisis with international and
national decisions?
What role should Extension perform in
public policy education and
formulation?
What will be the impact of the changing
structure of agriculture on rural
communities?
How can we assess the consequences of
policy choices?
3.
What can be done to promote community
viability?
What is meant by a viable community?
What is needed to achieve a viable
community?
9
How can volunteers, local leaders, and
visitation teams be used to achieve
local development?
4.
How can small business development be
promoted?
How can "entrepreneurship" be
developed?
Is retention and expansion of local
business a viable strategy and how can
it be developed?
Is economic development and
diversification a viable strategy and
how should it be promoted?
How can and how should small business
Management skills be improved?
5.
How can profitability in agriculture be
regained?
How can the input factor mix of capital,
labor, and management be used more
efficiently?
Can export markets be expanded and at
what cost to farmers?
How can we increase the value added
component of agricultural commodities?
6.
What will be the impacts of technology for
rural communities and the structure of
agriculture?
Will biotechnology only add to our
already existing problems of
overproduction and overcapitalization?
7.
How can communities adjust to the new
economic conditions?
How can the community population be
retained?
How can local employment opportunities
be expanded?
How can chronic poverty be alleviated?
How can the emergence of social problems
be effectively addressed?
8.
How can local leadership be developed to
address the new economic conditions?
What can local leaders do to promote
agricultural development?
How can intra-community linkages be used
to promote regional development?
Can Extension address the type of
structure of agriculture rural areas
want through leadership development?
How can leadership development promote
local economic viability?
What part should leadership development
play in public policy education?
9.
How can Extension increase its outreach to
new audiences?
What techniques can Extension use to
reach new clients?
How can Extension make use of
volunteers?
3
What creative delivery methods can
Extension use?
10.
What are our professional responsibilities
as Extension personnel and Experiment
Station researchers?
What should be our role as professionals
in Cie context of the farm crisis?
Do
we help advocate, adjust, ameliorate, or
cope?
Where do our professional obligations
lie?
What goals should guide our research,
programs, and policies?
11.
How can we help farm families to cope with
financial difficulties?
What are effective intervention
strategies?
What are effective delivery systems?
12.
How do we measure program effectiveness?
How should programs be evaluated?
How should program evaluation be built
into existing and new programs?
Each of these topics have important research
and Extension components.
While this is
undoubtedly an incomplete listing of the issues,
the Farm Crisis Network participants felt these
were some of the major issues that will confront
rural America well into the 21st century.
If you
have an interest in developing an Extension or
research project on one of the many issues
identified by the network, you are encouraged to
contact the members.
The future of the term economy is uncertain,
but the future of the land-grant syste
ests
upon our ability to respond to the need!: of our
client groups.
This project hopes to stimulate
further collaboration and dialogue on the
important transition underway in American
agriculture and rural communities.
4
10
Extension and Research Programs
on Rural Financial Stress in Iowa
by Kathleen Beery and Robert W. Jolly
CURRENT CONDITIONS
Financial conditiocl of Iowa farmers
in 1985
conformed closely to national averages.
Approximately 30 percent of farmers were
experiencing financial stress--cash-flow
problems, sharp losses in net worth, and
reductions in standards of living.
This group of
financially stressed operators controlled more
than two-thirds of the outstanding farm debt.
Information on Iowa farm financial conditions is
given in Table 1.
Recent research indicates 15
to 20 percent of Towa's agricultural assets will
be liquidated, as farmers either restructure
their businesses or fail and leave the
sector.
The total lose in commercial farm operations
could be as high as 25 percent per year.
If
asset markets function at their historical rate
of 2 to 4 percent, financial stress may continue
until the end of the decade.
This adjustment
process would be accompanied by direct financial
losses to lenders and agricultural businesses
that had extended credit to farmers.
In turn,
mainstreet businesses and local governments would
experience the impact of reduced income and tax
revenues.
NERDS AND PROBLEMS OF FARM FAMILIES AND RURAL
COMMUNITIES
rarm families, when faced with rapid and
unexpected economic change, may require
assistance.
Farm businesses must be adjusted.
The management changes may be relatively modest-
-
improving cost control in certain enterprises--or
they may require extensive financial
restructuring--selling assets, renegotiating land
contracts, or obtaining off-farm work.
These
changes are difficult to plan, often have tax or
legal dimensions, and require adjustment in
family goals and relationships.
Policy makers and government officials have
little experience in dealing with widespread
financial stress.
At the outset of the financial
crisis in the early 1980s, data were not
available to assess farm and rural financial
conditions.
Nor were there any proven policies
that might be used to ameliorate financial
stress.
Agriculture had not experienced this
type of problem for at least 50 years.
Rural communities were also not prepared for
rapid economic change.
Many agricultural
businesses, such as machinery dealers or
shoreline equipment manufacturers, essentially
disappeared over a two-year period.
With them
11
went off-farm work opportunities and a rural
payroll.
Mainstreet businesses that geared up
during the 1970s boom needed management
assistance just as farmers did to adjust to lower
sales and greater debt service.
Declining tax
revenues and increasing demands for social
assistance caught community officials and leaders
in a cost/price squeeze farmers would readily
recognise.
The financial impacts on communities and
farms have created tremendous problems for the
individuals and families involved.
Increasingly,
families have experienced despair as they
attempted to save their farms and rural way of
life.
The uncertain future in agriculture has
caused stress and anxiety for nearly all Iowa
farmers.
Family and individual problems have been
evidenced in many ways.
Farm family members
expressed concern about their increasing levels
of stress in an Iowa State University farm poll.
The following statistics pertaining to use of
human services indicate increasing problems for
rural families:
Respondents in a random survey of
approximately 1,800 farm families in the
Iowa Farm and Rural Life Poll (Lasley, 1985)
indicated that stress had become an everyday
problem.
Increased levels of stress were
felt by seven out of ten respondents in the
last three years.
About 60 percent said
they experienced either a great deal or some
stress every day.
A majority were
moderately or very concerned about their
personal stress levels.
Families have felt increased levels of
stress due to the deteriorating financial
conditions and forced changes in their
lifestyles.
The majority of families
perceived that their financial condition had
worsened from 1984 to 1985.
According to
the poll, only 6 percent said their
financial position had improved.
Families
postponed major purchases and decreased
spending for family living, including
adjustments to transportation,
entertainment, food, and utilities.
Ten
percent were not able to pay property taxes.
In order to manage the budget, slightly more
than one-fourth said they sold possessions,
cashed in insurance policies, or postponed
medical care.
The number of farm families receiving food
stamps is at an all-time high in Iowa.
Farm
recipients increased from 500 in July 1984
to over 2,000 in March 1986.
Maintaining
basic family needs has beam, a severe
problem for these families.
Many farm
families who need this program do not
qualify due to financial guidelines which
are restrictive for self-employed persons.
Iowa 5
L
6 lows
Table 1.
Average 1985 Financial Condition of Sample Iowa Farm Operators by
1985 Debt-to-Asset Ratio
Debt-to-Asset Ratio (2)
0-10
10-40
40-70
70-100
100+
All
Financial Characteristics
Assets ($1000)
Non-Real Estate
136
166
236
156
85
166
Real Estate
282 375
420 348
152 340
Total 418
541
656 504
237
506
Debts ($1000)
Non-Real Estate
6
44
121
143
190 60
Real Estate
4
82 238
251
124 101
Total
10
126
359
394
314
161
Net Worth ($1000)
408 415
297
110
-77 345
Debt-to-Asset Ratio (2)
2.4
23.3 54.7
78.2 132.5
31.8
Operator Characteristics
Age
59 54 48
46
L5
54
Years in Farming
35 29 25
23 22
29
Dependents
2.4
3.1
3.5
3.7 3.3
3.0
Dependents under 18 years
0.3
0.8 1.1 1.4
1.2
0.7
Husband Education*
2.2
2.3 2.4
2.3 2.4 2.3
Wife Education*
2.4 2.4 2.5
2.4 2.4 2.4
Acres Owned
235
280 295
271
159
261
Acres Rented 114
172 285
302 326
193
Acres Operated
327
430 562 539
484
433
Off-Farm Income
$7738
$5795 $6621
$5574
$9426
$6779
Percentage Distribution
2 Operators
35 32
21
7
4
100
2 Assets
29
34 28
7
2
100
2 Debts
2
25 48
17 8 100
*Educational attainment, highest level attended
1 * grade school; 2 * high school; 3 * college or vocational
SOURCE:
1985 Iowa Farm Finance Survey.
12
During 1985 client contacts with mental
health centers increased dramatically in
some 'ira'. areas of Iowa.
Statewide data on
client contsets at community mental health
centers were .lot available because the
system is decentralized.
In a survey of
5 out of 34 mental health centers, however,
a 30 percint increase in demand for services
was repotted.
Jne could speculate that this
was due to increased needs for this service,
but it also may have teen an artifact of
increasing acceptance of mental health
assistance. In the past farm families have
not typically sought mental health
assistance.
The need for assistance in coping with
financial stress has been pervasive throughout
Iowa.
Major needs include reliable information
on financial, economic, and social conditions;
assistance in planning and decision making;
emotional support for families and individuals
experiencing stress; legal services; upgrading of
professional skills for financial and helping
professions; coordination of human and
education services for farm families; assistance
in policy design and evaluation; and direct
financial aid.
RESEARCH AND EXTENSION RESPONSE
8' .torical Background
In January and Febru,:y 1980 a series of
statewide Extension program
for farm families
was organized.
This effort
as in response to
rising interest rates, siemming from the Federal
Reserve's October 1979 decision to severely
restrict the rate of money supply growth.
Credit
for spring planting was in short supply and the
cost of operating money rose sharply.
The
objective of this Extension program was to
familiarize farmers with cost control options,
use of commodity programs, debt restructuring,
and related ad!ustment strategies.
From 1980 to 1983 Extension programa on
financial adjustment continued using traditional
delivery methods.
A series of articles on cost
control and financial management was prepared for
Wallace's Farmer in 1982.
Regular Extension
meetings such as crop clinics or catrle feeder
program began to emphasize cost-reducing
technologies as a response to financial stress.
In the fall of 1983, with widespread drought
in southern Iowa, financial conditions took a
significant turn for the worse.
Farmers and
lenders began to require direct assistance in
financial planning.
Consequently a pilot
financial counseling program was developed for
Iowa counties south of Interstate 80.
Area
management specialists and selected county
agriculturalists were trained in financial
adjustment planning.
The FINPACK computer
program developed at the University of Minnesota
was employed in this project.
At that time
FINPACK was a mainframe program and could only .2
accessed through telephone connections.
Soft are
was developed to permit Extension microcomputers
to serve as intelligent terminals.
Several hundred formers were assisted during
the winter of 1983-84.
It became obvious that
financiz.' counseling played a critical role in
helping ismUies cope with change.
However, area
Human Development specialists began to recognize
needs that were not being completely met by the
financial clunseling.
Management specialists
needed help in communicating with stressed farm
families.
The families sometimes seemed to
benefit from financi: counseling and on other
occasions scarcely participated in the analysis
process.
Clearly a better understanding was
needed of the impact financial failure had on
farm families.
Area and state specialists in
Family Environment and Child Development began to
dev.'lop a comprehensive Extension program on
emotional stress in farm families, communication,
grieving models, and related topics.
After some urging from Extension, the state
legislature appropriated $200,000 in 1984 to
support programs directed toward the farm
financial crisis.
The ASSISI program was
developed by a task force of Extension
specialists in response to this special
appropriation.
ASSIST built on earlier experiences in
programs for financially stressed families. Four
major thrust areas were initially defined:
(1) Awareness efforts to inform local community
leaders about the scope and impact of the
deepening farm crisis on rural Iowa, (2) Indepth
financial counseling for farmers that helped them
explore possible restructuring or reorganization
plans, (3) A series of agricultural credit short
courses for lenders and other professionals that
emphasised farm financial planning and stress
management, and (4) Development of community
resource committees to assist individuals,
agencies, and volunteer or,
nizations to deal
effectively with farm finimmial difficulties.
These major program areas have been revised and
strengthened bared on research findings and
in-field teachi,41 experience.
Research Activities - -Sconomi.s
In January 19e4 the Dean of the College of
Agriculture appointed the Farm Financial Stress
Task Force.
The charge to this group was to
document financial conditions in Iowa, examine
the need for public intervention, and design and
*valuate prototype policy instruments should
intervention seem appropriate.
The task force
has been active since its inception.
Major
accomplishments include:
Documentation of financial conditions of
farmers, agricultural businesses, mainstreet
businesses, and communities.
The task force
conducted one of the, if not the, first farm
financial surveys in the United States.
This report was released early in 1984 and
provided information about the extent of
financial stress and the characteristics of
involved farm families.
Similar surveys
were conducted for agricultural and
mainstreet businesses.
13
lows 7
Analysis of sectoral restructuring
requirements for the Pnited States and Iowa.
This project used survey data in conjunction
with financial simulation models to estimate
the impact of financial stress on the
agricultural sector.
Estimates included the
volume of asset liquidation, financial loss,
and farm failure rates.
Design and evaluation of financial policy.
The financial crisis caught policy makers
without data and without proven intervention
techniques.
Members of the task force were
actively involved in identifying needed
forms of assistance, conceptualizing
programs, and estimating the costs and
benefits of interventions.
Impact of financial failure on farm
families.
The fate of displaced farmers in
Iowa was examined through an ongoing survey
conducted by task force members with the
cooperation of the Extension field staff.
This unique data set gave insight into
out - migration and unemployment among
displaced farmers.
It also provided
preliminary information on the disposition
of thetr assets and the likely structural
impacts of financial stress.
Research Activities -- Stress
A number of research projects have been
undertaken to study the incidence and effects of
stress on those affected by the farm crisis.
These projects include:
Stress among farm wives.
Indepth interviews
with a sampling of Iowa farm wives indicated
increasing levels of stress among those who
have traditionally been the caretakers in
families.
Harmelink (1986) interviewed
11 farm women across Iowa during the fall
and winter of 1985-86.
Aside from the
financial concerns, the major stresses of
these farm women were a result of thetr
multiple roles and of not having enough time
and emotional support for themselves.
In
10 of 11 interviews the women felt like
equal partners in farm operation.
But even
though they fell equally involved, their
stresses were different from male farmers'.
Being the primary caregiver for others
resulted in additional stresses arising from
concern for who will care for them.
Family stress in the middle years.
Iowa
State University participated in the North
Central regional research project to study
stress in families.
A teaching packet
entitled "Dealing with Blame:
Help for Farm
Families in Crisis, Leader's Cuide and
Lesson Plan" was developed based on the
findings.
Farm family ri.ress.
A study of farm :elated
stress was zonducted by Randy Weigel, from
which a publication series on farm stress
was developed (Weigel 1983).
8 lows
Intergenerational farm stress was examined
in a study conducted by Dan Weigel, Randy
Weigel, and Joan Blundell, Extension
specialists in Child and Human Development
(Blundell, Weigel, and Weigel 1986).
PROGRAMS FOR FARM FAMILIES IN FINANCIAL
DIFFICULTY
This section summarizes the educational
programs which the Iowa State University
Extension Service has initiated in meeting the
needs of families, individuals, and communities
affected by the financial problems of
agriculture.
The programs reported here were
supported by regular Extension funds from
federal, state, and county sources; special
project funds from USDA;
special appropriation
from the Iowa General Assembly; and donations
from private organizations and individuals.
Extension's programs targeted to distressed
rural families are included under the response
called ASSIST.
It currently consists of four
parts:
(1) FarmAidindividualized financial
analysis, (2) personal support and stress-
management programs, (3) community action groups,
and (4) educational sessions for professionals
and community leaders.
The Rural Concern Hotline
was developed to serve as an interagency response
to farm families.
It is integrated not only with
Extension's program plans but also with the other
public and private responses to the farm crisis.
The ASSIST program has evolved from the
original plan as problems and issues faced by
farm families and rural communities were
identified.
Program efforts pertaining to
personal support, stress management, and
community response were difficult to
conceptualize and have required multiple,
creative approaches.
Staff members have been
crossing disciplinary lines and working in new
arenas.
Extension has examined other resources
for rural families and as a result established
collaborative efforts, such as the Rural Concern
Hotline.
Accomplishments of the different programs
are summarized below.
A general overview of
the
number of clients participating in various
programs is listed in Table 2 for the period
October 1984 through December 1985.
A total of
99,800 client contacts were documented as a part
of the ASSIST effort.
The largest number of
contacts (34,387) came through awareness
meetings.
During the same period stress-management and
stress-related program contacts totaled 20,184.
Financial information and assistance was provided
to more than 10,000 fari families.
The contacts
were fairly evenly divided among those served via
the Rural Concern Hotline, those participating in
the computerized farm financial counseling
program, and those helped through traditional
programming for financially distressed farm
families.
14
train small groups to use learning packets,
provide subject matter assistance upon
request from the group, and help link these
groups with other helping professionals.
In
theory, the groups are designed to be
organised and maint'ined by lay people.
A
self-help group is defined as any group
which offers emotional support and practical
help with a problem that is common to all
members.
There are other types of support groups
functioning in Iowa.
Those coordinated
through community mental health centers
typically are facilitated by mental health
professionals.
Others tend to focus more on
advocacy and empowerment of individuals and
groups.
Stress among youth.
Young people are
exhibiting many signs of stress, ranging
from atypical behavior in school to
troublesome relationships in the home.
Some
programming efforts have been for the youth
themselves, but the majority have been for
adults working with youth.
A teaching module entitled "Rural
Crisis Comes to School" has been used with
significant number of public school
teachers.
The purposes of this program
include:
(1) creating an awareness of the
problems in Iowa's agricultural community,
(2) developing an understanding among
professionals of the symptoms of stress in
youth, and (3) assisting educators in
developing their helping skills.
An outgrowth of this' activity has been
special programs for yo, ,n on stress
management led by classroom teachers.
Extension staff have provided supportive
teaching materials.
A 4-H program entitled
"The Natural Me" has been piloted in twelve
areas across the state.
This program
focuses on enhancement of self-esteem and
personal decision-making.
Community Action and Involvement
The farm crisis evolved from actions and
policies external to local communities.
Rural
families caught up in the crisis have a sense of
powerlessness.
Further significant economic
ass:stance to families in crisis is unlikely to
be provided by the government.
Consequently, it
is critically important that local communities
respond to local needs.
Community resource
committees or action groups were suggested as a
means of mobilizing local resources.
over 34,000 people have r
,icipated in awareness
meetings.
County resource directories have been
developed in the majority of counties. These
were developed not only to create awareness of
private and public resources but also to foster
interaction among the various groups.
In many
cases it has provided a reason for discourse
among groups.
In some counties, community
resource committee members have been actively
involved in developing and disseminatirg the
directories.
Elected officials have requested
copies and have found them to be of great use.
The directories have been a good vehicle for
extending the visibility of the Extension
Service.
Community resource committees have been
formed in over one-half of Iowa's counties.
These groups have used their own creativity and
resources in initiating projects and activities
to address local issues and concerns.
Similar
groups are present in most other counties and are
assisted by the Extension staff as requested.
Community resource committees have carried
out a variety of activities.
One of the more
a
ingenious activities was the "Pass the Potatoes"
project of the Marshall/Tama counties committee.
Twice in the past year they have obtained over
40,000 pounds of potatoes from the Society of St.
Andrew and distributed them to families in less
than 72 hours.
This same group has also raised
$10,000 for a farm family emergency medical fund.
In Taylor County, resource packets including
directories have been prepared and hand delivered
to every farm household in the county by clergy
and lay people.
Two committees in southern Iowa
developed a proposal for a VISTA grant to help
area farmers and citizens adversely affected by
the agricultural crisis.
The proposal was funded
for hiring 10 VISTA volunteers and a supervisor
to help in eight southern Iowa counties.
One of Extension's initial efforts was to
conduct area awareness meetings.
The meetings'
primary objective was to educate Iowans about the
nature and extent of farm financial problems and
their impact on the rural farming community.
After the initial set of meetings, lay people
involved with the resource committees helped to
plan many others.
In the past year and a half
10 loss
Other projects which community resource
committees have carried out during the past year
have included:
Establishing a ccnty-wide development
corporation
Conducting surveys on labor availability and
needs assessment
Establishing peer counseling groups
Conducting public awareness meetings
Establishing food banks or pantries
Conducting food stamp registration
opportunities for farmers
Writing and obtaining grants for small,
interest-free loans
Assessing family stress needs and how stress
is affecting youth in their county
16
In January 1985 a two-hour videotape
entitled "Rural Families:
Taking Charge in
Cnanging Times" was cooperatively produced by
state agencies and delivered to over 24 sites in
Iowa via satellite downlinks.
Over 1,500 people
viewed the program and had an opportunity to talk
with local resource people.
The video included
the following topics:
stress and grief, legal
and tax issues, economic update, and services
available to rural families.
County resource committees have been action-
oriented in some counties and advisory in others.
They have accomplished tasks which Extension
staff could not do alone.
Educational Sessions for Professionals and
Community Leaders
The economic difficulties have altered
business, personal, and family relationships.
New information and skills are needed as
professionals and community volunteers work with
farm families.
One of the ways that Extension
can extend its resources is to provide training
for others so that they can more effectively work
in this arena.
Clergy have requested programs on
communication, helping skills, and background
Information on the economic problems.
Mental
health professionals have cooperated with these
educational sessions.
Some of the clergy have
become actively involved in individual counseling
and support groups.
A unique newsletter for
clergy was developed to create a grea er
understanding of these problems and explore
options for supporting rural families.
Peer listeners have been trained by
Extension and mental health professionals.
The
volunteers list their phone numbers in
newspapers, agency newsletters, and through the
hotline.
Various educational sessions have been
conducted for lenders.
Some have dealt with
financial, legal, and communication topics.
A
teaching packet entitled "Farmers and Lenders
Working Together" includes a videotape and
teaching outline.
It focuses not only on
managing the lender's personal stress but also on
working with highly stressed clientele.
4-H club volunteers have received training
in working with youth who are under stress.
A
special television program via satellite
broadcast dealt with alternative options for 4-H
projects which were lower in cost.
A teaching packet which included a videotape
entitled "Communication Skills for Office
Assistants" was developed to help secretaries and
receptionists work with farm families.
The
importance of their role as the first contact was
emphasized.
Communication and other helping
skills were covered.
The four programming areas of ASSIST have
been complementary.
Experience with farm
families has indicated that a variety of
information and support systems is necessary as
they cope with these rapid changes.
Rural Concern Hotline
In December 1984, public and private groups
recognized that farm families needed immediate
help in coping with their rapidly escalating
problems.
Families were not well aware of
existing resources in the public and private
sector.
The Rural Concern Hotline was developed to
provide information, referrals, and counseling
for farm and family financial problems, legal
problems, individual and family problems, job
questions, and basic needs for food, fuel,
shelter, and medical assistance.
Rural Concern
is a confidential service administered by Iowa
State University Extension in cooperation with
the Iowa Department of Human Services and United
Way of Central Iowa.
Funding is provided from
several public and private sector sources.
Since February 1985, Rural Concern operators
have handled over 14.000 calls from Iowa farm
families and rural residents.
Callers have
multiple problems, but the majority involve
financial/legal issues and their ramifications.
Accompanying the financial concerns are a variety
of intermeshed problems, including marital
discord, parent/child conflicts, substance abuse,
and physical ailments.
Families are faced with
critical decisions about continuing the family
farm operation or seeking other career
opportunities.
The number of phone calls has varied
depending on the time of year.
The average
number of calls for June through August 1985 was
500 per month.
For January through March 1986,
as farmers were seeking credit and making plans
for the next season, the monthly average
increased to 1,600 calls.
The number of
emotionally stressed callers increased, from 10
percent of the total in June 1985 to 20 percent
in March 1986.
The higher stress levels
coincided with the period of intensive decision-
making.
Nature of calls
Following is a list of the types of calls
handled by operators in March 1986.
The figures
represent what percentage each type was of the
total number of calls.
The percentages exceed
100 percent be' _use any one call may be listed
under various categories.
Financial 88
Legal
68
Emotional 22
Basic Needs
7
17
Policy Issues
7
Educational/Employment
5
Family
7
loves 11
Referral system
Hotline operators refer callers to various
Iowa organizations and agencies.
Many callers
are referred directly to Extension's ASSIST
program for financial management consultation and
stress-management help.
Lender referrals are
made to the Farm Credit System, the Iowa Bankers
Association, and the Farmers Home Administration.
Most legal calls are handled by the Extension
staff attorney.
In many cases Rural Concern is
linking farm families with serviceu unfamiliar to
them, such as the Iowa Dislocated Worker Program,
community action programs, mental health centers,
and the Iowa Department of Human Services for
basic needs of food, shelter, and medical help.
Following are the total numbers of referrals
made to other groups since the beginning of Rural
Concern:
Legal (staff attorney and volunteer
attorneys)
5,003
Family/personal needs
Mental health center
257
Human services
514
Comm. action programs
206
County health RN
87
Support groups
232
Extension (ASSIST)
1,020
Job-related
Dislocated worker
204
College/university
183
Job service
189
Placement agencies
189
Lenders
AIWA
265
Farm Credit System
104
Iowa Bankers Associ.ition
9
Current needs and direction
During the past year many callers have not
been able to face their problems and explore
alternatives.
They have been in a stage of loss
called denial.
While in the stage of denial the
person wants to avoid thinking about or dealing
with the situation.
Hotline operators are now
talking with more people who are moving out of
the denial phase and are seeking information on
alternatives.
The need for Rural Concern is strong and
will likely continue to increase as agricultural
debt problems intensify in 1986.
Rural Concern
provides an immediate, confidential, and
nonpartisan linkage of private and public
services to farm families in distress.
RICOMMDRD PROGRAM AND RISRARCR IFPORTS
The financial and social transition of rural
communities and farm families in response to the
financial crisis will continue in Iowa for at
12 lows
least the next four to five years.
The potential
loss in the number of farm families will have a
significant impact on rural communities.
Coping
with financial adjustment problems presents the
most immediate challenge.
Others remain to be
confronted.
Challenges Facing Rural Iowa
Rural Iowa faces an extended period of
change.
Forces within Iowa and outside will
impact families, communities, and the
agricultural sector in general.
The following
issues will need to be considered:
Many of the human and social costs are just
beginning to surface. Human service support
systems such as the food stamp program,
mental health counseling, fuel assistance,
and medical programs will be in greater
demand as families make lifestyle changes.
Programs will be needed to help people
develop new career, and lifestyle plans.
Stress-management and communication
programs, as well as personal support
systems, will be needed during these times
of change and loss.
Excess capacity in agriculture must be
resolved, either through expansion of
markets or withdrawal of resources.
The
latter course of action requires long-term
land retirement and the transfer of farm
labor to other industries.
New technologies that will enhance
agricultural productivity may imprc "e Iowa's
competitive position in the long run but
will certainly exacerbate excess capacity
problems in the near term.
Changes in national economic policy will
affect Iowa's ability to earn income, to
compete in foreign markets, and to service
debt. We need to understand the economic
linkages between the national economy and
Iowa.
Economic development probably offers the
most opportunity for maintaining a high
quality of life in rural Iowa.
Farms will
continue to move toward the extremes--very
large or very small. Consequently many
Iowans who remain in rural areas will need
off-farm jobs.
We know very little about
why and how rural areas like Iowa develop
economically.
Preservation of soil and water resources
will strongly influence long-term
agricultural productivity in the state.
These issues are easily overlooked in the
short run but result in almost irrevocable
change in the long run.
Dealing with these issues and dilemmas will
require a multidisciplinary approach. Extension
has technical information and support systems to
deal with some issues and for the others it will
provide alternatives on policy direction.
18
Direction for Extension and Research Programs
Future program efforts
The following programs will be continued and
strengthened for rural families facing economic
difficulties:
interagency educational programs to assist
families with career and life transitions
development of self-help groups and peer
listeners to provide support to families
experiencing financial difficulty
educational programs to help other
professionals and community leaders better
deal with the affected youth and adults
farm and family financial management
assistance
facilitation and support of community
resource committees
Much cf Extension's program efforts have
been directed toward those families who
are in
financial jeopardy.
The next step is to take a
proactive stance and assist those families with a
high likelihood of remaining in farming.
Educational materials for a program called the
Farm and Family Management Program are currently
under development.
The program will be targeted
to younger farm couples who need improved
management skills.
Participants will attend
meetings, participate in small group work
sessions, and consult individually with staff.
The educational program will cover farm and
family financial management, production
management, marketing, goal setting and decision-
making, and leadership development.
Future research directions
Research studies in the following areas would
provide support for needed Extension
programming:
assess social and economic impacts of
financial stress on rural communities
examine the effects of rapid social and
economic change on family systems
design and evaluate economic development
strategies for rural Iowa
develop farm management techniques
appropriate for the 1990s
examine the impacts of financial adjustment
on the structure of Iowa agriculture
The challenges facing rural Iowa are
significant.
We believe, however, that Iowa
State University can play an important role in
helping Iowa meet these challenges.
Research and
Extension programs that assist families in
solving problems and improving their quality of
life must be supported and developed.
MATERIALS FOR PUBLIC DISTRIBUTION
Publications, film strips, and slide/tape
programs are available on many topics within the
following categories:
Agriculture and Natural Resources
Business
Financial Management
Food and Nutrition
4 -H and Youth
Housing and Energy
Human Development and Stress
Marketing
These materials are available free or at low zost
from county Extension offices or Publications
Distribution, Iowa State University, Ames, Iowa
50011.
Publications to support the Neighbor-to-
Neighbor Self-Help Support Group program are
available from the same sources.
Financial management computer software
packages, each containing a diskette and
documentation, are available from county
Extension offices or 108 Computer Center, Iowa
State University.
Most sets are priced at $15.
A number of videotapes addressing the farm
crisis are available for purchase or rental from
Wilma Myers, Media Resources, Iowa State
University (515-294-1540).
Purchase prices vary
but rentals are $8.50 4. shipping.
Tapes come in
3/4" or 1/2" VHS.
REFERENCES
Blundell, J., D. Weigel, and R. Weigel.
1986.
Stresses and
Satisfaction of Two-Generation Farm Families.
Journal of
Extension Forthcoming, Summer.
Narmelink, R.
1986.
Farm Women:
Who Nurtures and Nurturer?
Paper presented at Iowa State University Extension
lnservice, Ames, March.
Lesley, P.
1985.
Iowa Farm and Rural life Poll:
Spring
1985 (Pm- 1209).
Ames:
Iowa State University, Publications
Distribution.
Otto, P.
1985.
Analysis of Farmers Leaving Agriculture for
Financial Reasons:
Summary of Survey Results from 1984
(Pm-1207).
Ames:
inwa State University, Publications
Distribution.
Weigel, R.
1983.
Stress on the Farm (NCR -192a -40.
Ames:
Iowa State University, Publications Distribution.
19
Iowa 13
illinois Extension and Research Response to the Farm Crisis
by H. J. Schweitzer
II TRODOCTIOR
Overview of Situatioa
Crop Reporting Service Survey
About 5 percent of 885 Illinois farmers
responding to a survey by the Illinois
Cooperative Crop Reporting Service in early
January indicated that they would be leaving
farming during 1986.
Among the 95 percent who
indicated they planned to stay in farming,
however, about 3C percent carried debt-to-asset
ratios above 40 percent and faced moderate to
severe financial stress.
Slightly more than
one-fourth (26.2 percent) of the farmers reported
no debt; 44.3 percent had debt-to-asset ratios
below 40 percent; 18.2 percent had ratios between
40 and 69 percent; and 11.2 percent were in the
70 percent and above category.
The highest
debt-to-asset ratios were for those in the
northwest, west, east, southeast, and southwest
crop-reporting districts.
The average farm had gross sales of $89,286,
production expenses of $68,798, and a net farm
income of $20,489 from an average of 418
acres.
The income figure represents the average
disposable income that farmers had available for
living expenses and to make capital replacement
and debt principal payments.
It does not,
however, take depreciation into account.
If an
average of $30 per acre for depreciation is
deducted, the income figure drops to $7,948 for
the 418 acres.
Total debt per farm averaged
$116,911; real estate debt averaged $71,357 per
farm; all other debt averaged $45,554.
Total
assets per farm averaged $379,912--$221,266 in
real estate assets and $158,646 in all other
assets.
Average interest paid per farm was
$11,113 and accounted for 16.2 percent of the
average total expenditures.
Farm Business Farm Management Records
Studies of 1985 records from 3,607 farms in
the Illinois Faris Business Farm Management
Service show that farm operator "salaries"--what
they earn for their labor and management- -
remained relatively low for the state as a whole.
Labor and management income, the operator's cash
wage, is defined as net-farm income reduced by an
interest charge for use of debt-free or equity
capital. Operator labor and management income for
the 3,607 farms averaged $9,035 for 1985.
There were wide fluctuations, however,
depending on location and type of farm.
For
example, 512 central Illinois grain farmers, on
the higher-rated soils, harvested record high
corn (171 bushels per acre) and soybean (54
14 Misch'
bushels per acre) crops, resulting in labor sad
management incomes that averaged more than
$20,000 per operator.
Labor and management
incomes for northern, western, and southern
Illinois operators, however, were lower, ranging
from $0 to $10,000 per operator.
Cash interest payments remained high during
1985, even though interest rates declined.
Cash
interest payments averaged $18,863 per operator
in 1985, compared to $18,491 for the same farms
in 1984.
Land Prices
The decline in land prices is a major factor
in the current farm financial crisis in Illinois,
as in other midwestern states.
In a January 1986
land-value survey conducted in the University of
Illinois Department of Agricultural Economics,
the average value of above-average Iilinois
farmland was $1,580, an 18 percent decline over
the past 12 months.
The average value of below-
average farmland was $924, down 21 percent from a
year earlier. reclines projected for the next 12
months for above- and below-average farmland were
9 and 11 percent, respectively.
Family and Community Impacts
The farm financial situation brings
increased stress upon individuals and families.
Farmers' contacts with Extension's Rural Route
program verify the severity and diversity of
impacts.
Agribusinesses in the community are likewise
affected.
Farm implement dealers have suffered
more than other service industries, according to
our agricultural economists.
Loss of a
dealership has an economic impact on the entire
farm community as jobs and income are lost.
Local government's ability to provide needed
facilities and services is impaired by the
decline in land prices, lower farm returns, and
loss of jobs.
Major Reteasies and Research Thrusts
The Rural koute program is currently
Extension's major effort to deal with the
financial and family stress experienced by many
farm families.
This and related programs are
described in the following section.
Much applied
research and data gathering is being done to
support these programs.
Several longer-term
research programs are undergoing shifts in
emphasis to deal with the current farm financial
situation.
Extension staff and researchers are
cooperating closely across discipline lines on
programs in farm management, financial
counseling, legal matters, and family and
20
individual stress management.
Additional
programs involving farm family members dealing
with the interrelationships between farm and
family and farm and family decision-making
are
needed.
Community support programs and programs
to retain and strengthen local businesses are
likewise needed.
These will require
cross-disciplinary efforts and research-Extension
collaboration.
EITINSION PROGRAMS
Rural Route Program
Program Description
In January 1985 the University of Illinois
Cooperative Extension Service received an $87,500
grant from Extension Service (ES)/USDA to begin a
special project to assist financially distressed
farm families.
The funds were used to (1) hire
one full-time and one part-time financial
counselor to head the efforts at two Rural Route
financial counseling centers--one at Macomb in
western Illinois and one at Benton in southern
Illinois, (2) install and maintain a toll-free
hotline, (3) train more than 200 Extension
advisers, Agriculture and Rome Economics, to
serve as teachers and counselors for financially
distressed farm families, and (4) pay
out-of-county travel expenses for advisers
serving as counselors.
The Rural Route program focuses on people
and families rather than on farms.
An underlying
philosophy is that while farms will be lost,
families need not be.
The primary entry point
for Rural Route's assistance continues to be the
toll-free hotline.
That line, answered on the
University of Illinois Urbana-Champaign
campus,
is staffed by agricultural and home economics
advisers from nearby counties and some state
Extension specialists.
The telephone counselors
help the caller articulate his/her major problems
or concerns and then arrange to have an Extension
adviser, or in some cases a state specialist,
recontact the caller and set up a more intensive
counseling session.
During the cirst full year of operation
(March 1, 1985 - February 28, 1986) the Rural Route
program reached more than 1,500 families through
more than 3,000 personal or telephone contacts.
Nearly 1,500 calls were made to the hotline
number.
Hore thaa one-third of those calls (578
out of a total 1,460) have been received since
December 4, 1985, evidence that Illinois farm
families still need and want the type of
assistance Rural Route can provide.
During the first year Rural Route counselors
held more than 2,000 face-to-face sessions for
an
estimated 5,500 contact hours.
Typical
assistance involves helping farm families prepare
and analyse financial statements; explore
alternatives for restructuring debt, cost
containment, and off-farm employment; and deal
with personal and family stresses and emotional
needs associated with financial difficulty.
Some continuing, unmet needs of farm
families that are influencing the direction and
content of Extension programs include the
following:
Many borrowers do not have copies of notes
and other security papers they have signed
with financial institutions and do not
understand the contents or agreements.
Most families need the assistance of an
attorney to better understand their options
and liabilities when taking bankruptcy,
foreclosure, and/or liquidating capital
items.
Several families need counseling for marital
problems, alcohol and drug abuse, and
seeking other employment and/or public
assistance.
Many families face problems in
communication, finances, and leasing
arrangements.
Rural Route's Multiplier Effect
In its first year of operation Rural Route
has become recognized as a responsive and
effective program by participating families, farm
organizations, the mass media, legislators, and
the Office of the Governor. This recognition has
resulted in important multiplier effects that
have allowed Rural Route to continue and expand
its services by creation of other much-needed
non-Extension support programs to serve the needs
of financially distressed farm families.
The Illinois General Assembly and the
governor have approved nearly $2 million in
special funding to aid financially strapped farm
families.
That total includes an annual $400,000
appropriation for Rural Route which is now being
used to continue the hotline telephone service
and to establish two new centers--one at Dixon in
northwestern Illinois and one at Springfield in
central Illinois--to coordinate one-on-one and
small-group counseling activities.
Other special funds are being used to
provide stress and substance-abuse counselors
through an arrangement with the Illinois
Department of Mental Health and legal counseling
through an arrangement with the Illinois Ear
Association.
An additional one-time allocation
of $200,000 will support greatly expanded
Extension efforts in legal education for lawyers,
lenders, and farm families.
In addition, Rural Route helped generate
awareness that resulted in $30 million from the
state legislature to guarantee operating loans
for the state's most needy farmers.
Also,
$59,400 was received from the Illinois Farm
Development Authority to evaluate state credit
programs for agriculture.
Pioneer Hi-Bred
International, Inc. contributed more than $10,000
to support development of teaching materials for
two programs.
Early in 1986, the Illinois Cooperative
Extension Service received another $58,600 grant
21
Illinois 15
from ES/USDA for Rural Route and related
activities.
Rural Route's Impact on the Illinois Extension
System
Rural Route has had a positive impact on the
entire Cooperative Extension Service system.
The
program has renewed the field staff's enthusiasm
and commitment and reestablished the primary role
of the Extension adviser as teacher through
one-on-one and small group contacts.
The
Extension specialist's role as teacher-of-
teachers also has been reinforced.
Extension advisers is Agriculture, Home
Economics, and Youth working with the Rural Route
center at Macomb identified in April 1985 five
major reasons for liking their work with Rural
Route: (1) the opportunity to meet clearly
identified needs of farm families, (2) the
challenge of using personal and professional
skills and knowledge, (3) the opportunity for
working closely with others in the Extension
family, (4) personal learning experiences
(inservice and on-the-job), and (5) The
satisfaction of having helped.
The same advisers also described major
difficulties in working with Rural Route,
including: (1) the emotional strain of intensive
involvement with people's problems, (2) helping
people recognise the limited choices available
and make difficult decisions, and (3) finding
time for regular office work and other
responsibilities.
Other Ceeety aid Regime Programs
Following are examples of Extension programs
that have been planned and adapted to the special
needs of farm families in financial distress:
FACT (Facing Agricultural Crises Together)
Nine counties in northwestern Illinois have
initiated a program of information, peer-group
support, community involvement, and counseling to
deal with the region's farm situation.
Your Financial Condition
Last year 2,000 farm families took part in
this program of training to prepare and
understand balance sheets and other financial
statements.
Analyzing the Financial Strength of Your Farm
Business
This basic six-session course, taught by
state farm financial management and agricultural
finance specialists, covers financial management
goals, analysing balance sheets and cash-flow
statements, and implementing and monitoring a
financial management plan.
16 Illinois
Farm Financial Information Management and
Analysis
This is a two-day workshop specifically
designed to give agricultural leaders the
knowledge and skills they need to efficiently
collect and organize data and set up systems for
their borrowers to prepare financial statements.
Farm Management Workshops
During the last year 216 farm operators and
spouses interested in basic farm management
skills and tools participated in this series of
four three-hour workshop sessions.
Agricultural Options
Three hundred seventy-two individuals
participated in ten one-day multicounty workshops
designed to improve understanding of agricultural
options and how they can be used to manage the
price-related risks of grain and livestock
production.
Improving Your Grain Marketing Skills
This program of seven two-hour workshops,
attended by 200 individuals last year, is
designed to help farmers, landowners, and others
develop a marketing plan, evaluate pricing
alternatives, and develop price expectations.
Farm and Family Business Management Schools
A team of specialists in farm management and
family resource management have developed a
comprehensive set of teaching materials and
provided inservice training for county staff to
use in county programs.
Topics include setting
family goals, inventorying farm and family
resources, evaluating the present farm plan,
managing family expenditures, and developing and
implementing management plans.
111111MICH
Activities in the Rural Route program and
inquiries from farmers, agribusiness people,
financial managers, and government officials are
resulting in much data collection and analysis of
an applied-research nature.
Many formal, longer-
term, Hatch-supported research projects are
undergoing shifts in emphasis to deal with the
current farm financial situation.
This is
especially true for projects dealing with farm
management, marketing, financial institutions,
and agricultural policy.
Much of the research relevant to the farm
financial situation is being conducted by
agricultural economists, rural sociologists, and
agricultural lawyers in the Department of
Agricultural Economics and by staff in Family and
Consumer Economics in the School of Human
Resources and Family Studies.
Several of the
researchers involved have joint Extension-
research appointments in their respective
departments.
Others are working closely
22
with full-time Extension specialists, financial
institutions, commodity /marketing groups, or
governmental agencies making their data, models,
etc., available for use in educational programa,
management decisions, and policy formulations.
Farm Maaagesaat Records
Analysis of business records kept by nearly
8,000 farmers cooperating with the University of
Illinois Cooperative Extension Service and the
Department of Agricultural Economics in the
Illinois Farm Business Farm Management Service is
invaluable in monitorirg the :tate* farm
economy, identifying the nature and extent of the
farm financial crisis in the state, and helping
farmers develop plans for future farming
operations.
Ten associations in 102 counties are
serviced by 70 full-time field staff.
Participation in this farm - business analysis
program is voluntary and cooperating farmers pay
a fee for the educational services.
Records are
available to farmrmanagement researchers for
statewide and regional enterprise analysis while
at the same time the confidentiality of
individual records is protected.
Financial Management Strategies
Commodity prices, initial debt-to-asset
ratios, and the tenure position of farmers have
been taken into account in a four-year financial
projection made in the Department of Agricultural
Economics.
To examine the importance of these
factors, the financial situation of an Illinois
cash-grain farm was projected under three
different tenure patterns (fc11 owner, part
owner, and full tenant) with three different
initial debt-to-asset ratios (20, 50, and 70
percent) and three different sets of commodity
prices.
Economic models were also constructed
for Illinois dairy and cattle-feeding farms.
Resulting publications distributed throughout the
state deal with the topic of what it will take to
survive in Illinois agriculture and strategies
farmers can employ to regain profitability.
Legal and Tax Implications
Research by the agricultural lawyers in the
Department of Agricultural Economics, coupled
with Extension programs, has focused on the
application of the Federal Bankruptcy Code
governing farm bankruptcy proceedings.
In
particular, the status of the installment land
contract and the Coie requirement of adequate
protection for sclured creditors is being
investigated under a Hatch research project.
Several provisions of commercial law are
undergoing severe tests during the current period
of finer.Lial stress in agriculture.
These laws
are being reex.eined as questions arise regarding
who bears the losses under a variety of
circumstances.
Financial Markets--Risk Management Strategiea
Two current Hatch projects deal with
evaluation of financial markets for agriculture
and economic analysis of risk-management
strategies for agricultural production firms.
The first project involves, among other things,
an examination of the ability of various existing
financial markets to provide for the capital and
credit demands in agriculture.
The second
project includes identification, analysis, and
evaluation of production, marketing, and
financial strategies that farmers use or can use
in risk-management programs.
A third Hatch project deals more
specifically with price risk management
strategies, including options and futures, for
grain and livestock producers.
Financing Public Services
With many rural communities and counties
coming under increasing financial pressure
because of the farm crisis, an analysis of the
Illinois public infrastructure, management, and
tax-base adequacy is essential if remedial action
is to be taken.
Several projects are currently
underway in the Department of Agricultural
Economics dealing with public finance and tax
policies:
(1) building on the national study of
use-value farmland assessment policies completed
last year, a broader effort is underway to look
at the link between agriculture and the
performance of state and local public finance
systems; (2) road services provided by county
governments are now under study with the support
of the USDA Office of Transportation; and
(3) with support from the Illinois Tax
Foundation, a major study of the Illinois real
property assessment system is nearing
completion.
Rural Communities and Agriculture
Research is underway by rural sociologists
in the Department of Agricultural Economics to
examine the relative importance that changes in
agriculture have to the demographic, commercial,
and institutional changes small communities have
experienced over the past several decades.
The
analysis is focusing on almost 900 rural
communities in Illinois.
Off-Farm Income - -Buell and Part -Timm Farmers
A comprehensive study of off-farm income to
Illinois farmers was made in the Department of
Agricultural Economics in 1971.
A new Hatch
project is just getting underway to assess the
current off-farm income situation, determine
relationships between off-farm income and
selected economic and social factors, and
evaluate findings for public policy.
This study
is particularly relevant because of the
seriousness of the economic situation in Illinois
23
Ilknois 17
agriculture and the growing reliance of farm
families on off-farm income.
Research by rural sociologists in the
Department has been conducted for several years
on small, part-time farmers and small-scale
agriculture.
Emphasis is on social integration
of these farm families into the community,
occupational identity of operators, and various
aspects of the farm enterprise, such as the role
of farm income and land ownership in the farm
family's financial plans.
Iatergeaeratiosal tolatioaships --Fara Wives
External Imployasat
A new Hatch- and Extension-supported project
deals with the relationships between adult
children and the parent generation in farm
families.
An important aspect is a study of how
the current economic situation in agriculture is
affecting families, including conflicts and
stress generated, as well as helping and caring
patterns developed, between generations.
A regional project in the School of Human
Resources and Family Studies is assessing the
relationships between external employment of
wives and the economic and interpersonal
functioning of the farm family.
Ongoing Research -- Physical and Biological
Sciences
Ongoing research in agronomy, animal
sciences, forestry, horticultnre, agricultural
engineering, entomology, and plant pathology that
lead to production efficiencies, alternative
enterprises, and improved practices are too
numerous to mention.
Advances in computer
technology and biotechnology are accelerating
rapidly.
Improved decision-making and increased
profitability on farms often results as Extension
brings these developments to farm families
through educational programs.
CONTACT PIRS01111
Further information about Extension or
research programs in the College of Agriculture
at the University of Illinois may be obtained by
contacting the following persons:
Extension programs:
Dr. Peter D. Bloome
Assistant Director
Cooperative Extension Sevice
116 Mumford Hall
University of Illinois
1301 West Gregory Drive
Urbana, IL 61801
(217)333-9025
Research programs:
Dr. Harvey J. Schweitzer
Assistant Director
Illinois Agricultural Experiment Station
213 Mumford Hall
University of Illinois
1301 West Gregory Drive
Urbana, IL 61801
(217)333-6494
Farm Crisis Response: Indiana Extension and Research
Activities
by David C. Perritz and Dixie Porter Johnson
INTRODUCTION
Many farm families continue to face
difficult times.
A survey conducted by the
Departments of Agricultural Economics and
Agricultural Statistics in March 1985 indicated
that nearly one-third of Indiana's 25,000
commercial. farms (those with gross sales over
$40,000) have financial problems, as indicated by
the magnitude of their debts relative to their
assets.
The researchers concluded that a period
of continued low agricultural profits would cause
these farms to have increasingly serious
financial problems in the future.
Indiana farm families need assistance in
evaluating alternatives for improving their net
income and preventing further loss of equity in
the farm business.
ether farm families are
evaluating whether this is an opportune time to
intensify or expand the farm business.
Many farm
families are not aware of the alternatives and/or
do not have the information and analytical tools
available to aid them in an objective and
consistent evaluation of these alternatives.
In a survey of Indiana agricultural agents
made in September 1985 it was learned that an
average of 90 farm families per county needed
assistance in adjusting to the economic
environment.
More than 90 percent of the agents
believed that these families would need
individualized assistance in developing and
evaluating alternative farm plans for their
future.
Farming is more than lust a business. It is
a family unit in which the individual family
members are undergoing varying degrees of stress
as they adjust and react to the changing
environment.
Families need more information on
how to handle stress in order to prevent more
serious mental problems.
Families also need assistance in developing
the skills and techniques needed for allocating
their financial resources in a manner consistent
with the goals established by the family unit.
All members of the family will more likely
participate in the achievement of the family's
financial goals if they have had a role in
establishing the goals.
Communities are an important segment of the
rural setting.
By assisting community leaders
in the development of programs that will help
them understand and react to the current
situation in a planned and widely-supported
fashion, we can help these communities remain a
part of the landscape of Indiana.
EXTENSION RESPONSE
The Cooperative Extension Service (CES) in
Indiana is responding to the crisis in several
major thrusts.
The first was a series of
"awareness" meetings held in February and March
of 1985.
The purposes of these were to create an
awareness in farm families and others associated
with agriculture of what the economic environment
may be during the next five years and what
strategies (financial r-aagement, legal, crop and
livestock economics, family decision making, and
stress-management) ought to be considered.
Approximately 1,700 attended the 23 Better
Farming-Better Living meetings.
This initial
response was supported in part by a Special
Project Grant from Extension Service (ES)/USDA.
The CES has closely coordinated activities
with the Farmers Home Administration (FMRA).
The
CES cooperated with the FNMA in the training of
its borrowers in the use of Coordinated Financial
Statements in December 1984.
In May 1985 the
Department of Agricultural Economics trained 40
of the Fah contractors on the use of
computerized financial planning models.
As it became increasingly clear that farm
families needed individualized assistance, the
Extension Service developed the FARM project.
FARM is an acronym for Family and Agricultural
Resource Management.
The purposes of this
project were to provide information and methods
for farm families to gather, organize, and
analyze data which describe alternative
directions for their farm businesses, as well as
to provide an opportunity for the agent to
provide information on family goals and
objectives.
Forty-two agricultural agents were
trained on the use of FINPACK last November.
Thirty-three of these were provided with portable
computer systems.
Almost 500 farm families have
participated in these individualized counseling
sessions.
A second project proposal submitted to
ES/USDA contained a variety of activities
designed to assist farm families in farm
planning, record keeping, and understanding and
handling stress in the context of the family unit
and the rural school systems.
Funds were awarded
to the project in mid-February of 1986.
Funding
of this project will support several additional
responses.
Additional activities now being formulated
include:
A program entitled "Lenders and Farmers:
Working through Crisis."
Developed by
Iowa State University, this program is
being adapted for use in Indiana and will
be the basis for a series of educational
workshops beginning in the summer of 1986.
25
The purpose of this program is to help
agricultural lenders and suppliers
Indiana 19
maintain a proper balance with their
farmer customers while both struggle to
deal with the problems created by the
current farm crisis.
This program is a
cooperative venture of Agriculture and
Home Economics, with the workshops being
taught by teams of Ag and Home Economics
agents.
A program for teachers, guidance
counselors, and rural youth.
The purpose
of this is to assist those who work with
rural youth in understanding the changing
rural environment and the resulting stress
placed on farm youth and how they may
react to this stress.
This program is
being carried out by 4-H, in cooperation
with Home Economics.
A program for community leaders.
The
purpose of this program will be to assist
community leaders in identifying the needs
of their communities, the resources
available, and the alternative actions
which they should consider as their
communities react to the changing rural
environment.
A program to assist families in assessing
their goals and values.
As farm families
evaluate their financial plans they must
consider the goals of the family members.
The materials developed by the University
of Nebraska will be adopted for use in
Indiana.
Short -term, this program will
be used by home economists in a
one-on-one situation with select FARM
Project families.
Long-term, this
program will be integrated into family
management workshops that will be taught
cooperatively by Agriculture and Rome
Economics.
A program to assist farm families in
developing farm business and family
consumption records. As agents have
worked with farm families during this
crisis, it is apparent farm families are
not keeping records that would be useful
to assess farm efficiency and
profitability.
An educational program on
record keeping is being developed for
Extension agents to use in a workshop
setting.
A program to assist Extension agents in
leading workshops on farm and family
business planning.
While many of these
activities are a short-term response to
the changing farm economy, farm families
need to understand the basics of farm
planning, regardless of which way the
economy turns in the future.
Good
planning skills will always be useful.
A set of six programs related to stress
management.
These will be offered by Home
Economics agents during the next
programming year.
Resources from the
North Central region will be used.
20 Indium
AGRIGULTIIRI RISBARCR
Several research activities are underway
within 01 Department of Agricultural Economics
in response to the farm crisis.
A survey designed to gauge the financial
condition of Indiana farm families was made in
March 1985.
This survey will be repeated again
this March/April to determine what changes, if
any, have taken place in the past 12 months.
A project to evaluate the economic impact of
diversifying farm businesses through alternative
farm ente prises for Indiana is being coordinated
by Dr. Craig Dobbins.
These alternative
enterpri 4s are being evaluated in light of risk,
income potential, resource requirements, and
coordination with off-farm employment.
Dr. Dobbins' second research project is designed
to examine the potential impact of expert systems
on farm decision-making.
The objective of the
project is to provide greater understanding of
how computerized support systems can be
profitably utilized in the management of crop-
hog farms.
Dr. Tim Baker has two research projects
underway.
One is to examine the effect of
removing price and income supports from feed
grains on the wealth, income, financial leverage,
and investment of representative midwestern
farms, as compared to continuation of current
policies.
The second project examines the
risk-return aspects of farm assets within the
context of investment portfolios containing
stocks, bonds, and T-5ills.
These results will
be useful to nonfarm equity investors.
Dr. Freddie Barnard has an ongoing project
designed to develop a credit-scoring model tu
evaluate agricultural loans.
Discriminant
analysis is being used to estimate the credit-
:coring model.
The objectives of the project are
(1) to determine characteristics common among
financially successful and unsuccessful farmers;
(2) to develop a credit-scoring model for
differentiating, in terms of loan quality, among
loan applications; and (3) to test the accuracy
of the model by comparing outcomes against known
outcomes of selected loans.
Dr. George Patrick is collaborating in the
S-180 research project that Involves 16 states.
The objective is to analyze the effect of various
proposed alternatives (loan writedown, reduced
interest, sale of assets, sale-leaseback, etc.)
on typica. farm !usinesses.
A project designed
to analyze: the effects of government policy on
farm income variability is also underway.
Dr. Jess Lowenberg-DeBoer has a research
project underway which involves modeling the
response of farm firms to financial incentives.
Current work focuses on land price risk and the
impact of land price changes on farm
diversification.
A book, Microeconomic Roots of
the Farm Crisis, is being completed.
Most
authors have focused on the macroeconomic sources
of the farm -level financial and production
26
decisions which made farmers vulnerable in the
1980s.
Dr. Janet Ayres has a research project
underway which is examining the structural/
functional changes of rural communities in
Indiana and their relationship with agriculture.
A typology of rural communities will be
developed.
Economic alternatives relevant to
each category will be examined.
State polic
regarding rural communities will also be
examined.
27
Indiana 21
Farm Crisis Response in Kansas
by William M. Eberle and S. L. Ward
The state of the farm economy has been of
considerable concern nationwide and has tat.eived
extensive media attention during the past year.
Farm financial conditions have deteriorated
over the past four years, as agriculture has
experienced
prolonged period of excess supply
with persistent pressures on income and net worth
of farmers.
The inflationary period of the 1970s
provided an increasing financial base for
borrowing, but since 1981 farmland values have
declined drastically and lower farm incomes have
reduced the farmer's ability to service existing
debt.
Significant numbers of farmers,
particularly owners of commercial -sire farms
(those with gross sales over $100,000), face
problems in obtaining credit and many face
liquidation or foreclosure.
In Kansas, as in
ether states where agriculture represents a major
portion of the state economy, the problem of
individuals and families being dislocated from
rural communities has reached crisis
proportions.
As an example of the problems in Kansas, a
farm financial survey conducted by the Crop and
Livestock Reporting Service (February 1986)
indicated that 12.5 percent (9,000) of Kansas'
farms are in critical financial trouble with
debt-to-asset ratios of 70 percent or more--a
strong sign that their survival is in jeopardy.
And 5.5 percent (4,000 farms) have already made
the decision to quit during 1986.
Along the same lines, agricultural
economists at Kansas State University predict
that an additional 25 percent of Kansas' family
farms likely will be lost during the next five
years.
And to make a gloomy situation even
worse, it is estimated that for every seven farms
that fail, one rural Matn Street business
establishment will also close.
Thirteen Kansas banks and two credit unions
failed during 1985.
Ten of those banks could be
considered agricultural banks.
Two banks have
failed so far in 1986.
A number of other banks
are vulnertibl.. because of losses on leas.
Other factors have added to the agricultural
situation having an adverse impact on the Kansas
economy. There have been JO recent manufacturing
plant or facility closings (aircraft, metal,
rubber, and agricultural manufacturing) resulting
in 11,000 worker dislocations.
That trend is
projected to continue through 1986. Kansas is a
major oil-producing state and recent events have
further aggravated the economic situation in
counties with high oil production. These
negative conditions not only impact the general
economy, but also reduce nonfarm employment
opportunities.
28
22 Kansas
Conservative estimates of the numbers of
Kansans likely to be affected by the agricultural
situation over the next 12 months and the
following five years would suggest that perhaps
as many as 200,000 rural residents, or
approximately 25 percent of Kansas' rural
population, could be displaced by 1991. The
implications of this type of displacement may be
devastating for many rural communities.
The most
immediate impact, howcver, is on individuals and
families who are faced with the loss of not only
a livelihood, but also a way of life.
For many rural residents facing the
deteriorating economic climate, the broad
distances that once represented their livelihood
and their freedom now isolate them from potential
assistance.
Time, distance, lack of program
availability, shortages of trained helping
professionals, and insufficient supporting
revenues are usually cited as the major barriers
to providing assistance in most rural
communities.
But work at Kansas State University
and the Menninger Foundation over the past few
years has suggested that lack of access to
information about existing programs is perhaps an
even greater obstacle than the traditional
barriers to rural residents seeking assistance
with personal and family problems.
FARMER'S ASSISTANCE, cowman, AND TRAINIENC
SERVICE (PACTS)
One program attempting to address the
information hairier is the Kansas Farmer's
Assistance, Counseling, and Training Service
(FACTS).
The program was established by the 1985
Kansas legislature and is designed to assist
Kansas farmers, ranchers, agribusinesses, and
their families in avoiding or alleviating the
problems and distress resulting from the current
agricultural economic crisis. More specifically,
the legislative mandate hirected the FACTS
program to
(1) help Kansas farmers, ranchers,
and agribusinessmen save the family farm/
business operation whenever humanly possible,
(2) help individuals and families cope with the
problems imposed by the current farm economy,
and (3) when absolutely no way can be found to
save the farm/business, help families make a
successful transition to another livelihood.
In simpler terms, the FACTS program was
developed to serve as the state's point of first
assistance for rural individuals and families in
crisis.
In this capacity, the program was
envisioned primarily as a statewide, toll-free
telephone hotline to provide information and
referrals for farm production, financial
management, and family stress problems.
But in
fact, the FACTS program has evolved into much
more than just a hotli..
referral source for farm
families. It has become the point of focus
around which many sources of direct assistance to
farm families and businesses is coordinated.
While the program is a joint program of the
Kansas State Board of Agriculture and the Kansas
Cooperative Extension Service, it has often been
the contact through which Extension programs have
been initiated.
Thl FACTS program staff currently consists
of four full-time and two half-time positions,
including a program director with experience in
business and program development, an attorney
with an ag law background, a Farm Management
specialist with a farm finance background, a
Family Needs specialist, a family therapist with
a strong crisis intervention background, and an
Employment/Retraining specialist with extensive
experience in dislocated worker programs.
After an initial contact, each situation is
assessed and prioritized and a determination is
made as to which staff member can provide the
most effective counseling.
That person then
calls the individual and spends as much time as
necessary to help determine specific needs,
examine options, and provide referrals to
additional sources of direct assistance as
necessary.
With the qualified staff immediately
available, a number of services can be provided
directly by the FACTS program, including:
Farm credit counseling in farm plan
reorganization and debt restructuring
assistance
Legal assistance at no cost through contract
with Kansas Legal Services, Inc. (a
noaprofit legal assistance corporation) at
eleven locations across the state
Documentation of innovative approaches to
specific problems that might be transferable
to other situations
Assistance directories of statewide
emergency assistance resources for use by
both the FACTS staff and other helping
professionals
Community response assistance to local
communities and organizations in developing
local response to specific situations and
needs
Master calendar of state, regional, and
local events that might be of value to
either those with problems or other helping
agencies
Documentation and research of radical and
extremist organizations and activities
Thus while the FACTS program is able to
offer immediate response to many needs, its
capabilities provide the basis for many Exr.,:eion
an4 research efforts at the University.
Just as
importantly, FACTS has established relationships
with the following agencies in providing services
statewide:
Kansas Cooperative Extension Service- -
provides one-on-one farm financial analysis
t, all farmers requesting such assistance,
assists communities with economic
development programs, provides
entrepreneurial training seminars for
dislocated farmers wanting to establish a
private business, provides training for
individuals and organizations wanting to
establish interpersonal support networks,
and cooperates in the development of local
farm stress seminars and rural issues
forums.
Kansas Attorney General--investigates and
provides legal assistance in cases involving
loan fraud and consumer protection.
Consultation of Cooperating Churches in
Kansas--provides immediate cash grants for
families needing temporary emergency
assistance for food, medical problems,
utilities, etc.
Kansas Rural Issues Ecumenical Coalition- -
assists organizations and communities in the
development of rural issues forums and other
education programs.
Regional Mental Health Centers--provide
long-term professional mental health
counseling as well as providing local
backup, as necessary, in suicide
intervention situations.
Area Agencies on Aging--provide special
services to individuals 55 and over, as
well as providing employment/retraining
assistance.
Small Business Development Centers- -
provides one-on-one financial counseling for
rural nonfarm businesses and also provides
assistance to communities in developing
plans for adapting to long-term business
pattern changes.
All of these agencies frequently interface
with Extension programs in providing assistance
to those facing economic and family stress at the
local, regional, or state levels.
EXTANSIOR PROGRAMS
All Extension program areas have adapted
their programs, at least to some degree, in
response to the current agricultural and rural
situation.
A number of specific programs or
relationships have been established that have
been particularly helpful.
Fars Fissacial ftsagement
Farm financial management, utilizing the
FINPACK computerized analysis program, has been a
major program during the past year.
During that
time, more than 1,000 farm families have
participated in farm financial management
29
Kansas 23
workshops using FINPACK to analyze their farm
operation.
Probably that many more have
undergone FINPACK analysis on a one-on-one basis.
For those going through workshops the analysis
has uncovered an average of $8,000 per farm in
adjustments (cost cuts or altered enterprise mix)
for a total of $8,000,000 in potential
efficiencies.
In addition to Agricultural
Economics specialists, 50 county Extension agents
have been trained in using the FINPACK program.
Others trained include Farmers Rome
Administration, farm credit, and commercial bank
personnel.
K-FARM it another computerized
program now on-line that is more extensive than
FINPACK in doing enterprise-by-enterprise
analysis.
It is designed more for farmers with
their own microcomputers.
The farm financial
management effort interfaces with the FACTS
program in that, when appropriate, callers to
FACTS are referred for a FINPACK analysis.
Farmers initially going rrough FINPACK analysis
are, when appropriate, directed to resources for
follow-up help, including the FACTS program.
Friends in Deed
Many persons come into contact with
individuals who are in the midst of a crisis and
are uncertain of how they can react or offer
assistance.
Friends in Deed is a program of
Extension Home Economics to improve the helping
skills of persons who, though not necessarily in
a crisis situation themselves, wish to be better
able to help friends, relatives, or acquaintances
who are.
Workshops have been held across the
state during the past few months.
Family Financial Management
Though not a program just in response to the
agricultural and rural economic situation, family
financial management programs help families do a
better job of managing scarce financial
resources, especially during times of financial
stress.
Entrepreneurship for Displaced Farmers
Extension programs on starting a business
are being specifically designed to help farm
family members who wish to start a business to
either replace or supplement their far, incomes.
Programs are not intended to give individuals new
skills, but rather to show them how to put skills
to use in private business either in or outside
the home.
Topics include business organization,
financial record keeping, time management, taxes,
insurance, and other related topics.
One
workshop has been held for a group of farmers who
plan to become home weatherization contractors
for a weatherization program.
Plans are being
made to greatly expand this program through a
grant from the Kansas Department of Human
Resources utilizing U.S. Department of Labor
Displaced Workers Program funds.
This program,
being designed to help move displaced farm family
members into the work force, will ale, include
24 Kama
funds for Extension home economists to provide
seminars and workshops designed to ease the
transition from farm to workplace.
Funds are
also planned to supplement the FINPACK analysts
effort and to further expand the FACTS program.
Economic Development and Small Business Programs
Economic development programs are aimed, to
a great extent, toward communities undergoing
stress as a result of the rural economic
situation.
They are generally intended to help
communities move through a long-range economic
planning process toward appropriate economic
restructuring.
The programa are based on the
growth-from-within concept of retention and
expansion of existing firms.
Programs include
assistance with economic analysis to help in
determination of potential viable economic
development strategies.
Small business programs
are designed for owner-managers of small Main
Street businesses.
The programs are intended to
improve the decision-making capabilities of
business persons so that they will be able to
manage better under difficult economic
conditions.
Response to Sank Closures
The closing of a local bank causes great
uncertainty across the community and can bring on
an immediate economic crisis for persons who have
outstanding loans with the bank.
The situation
reaches dramatic proportions when the closing
bank is the only one in town and it is not
purchased and taken over by new management.
Informational programs have been conducted,
primarily under the leadership of the FACTS
program, both for farmers and for businesses.
Emphasis is on alternative options available for
those affected by bank closing, particularly
those whose loans are being called in.
These are only some of the more significant
Extension efforts in response to the agricultural
and rural crisis.
New program adaptations are
regularly added in response to specific needs.
Great emphasis is placed on being careful not to
adversely affect important ongoing programs that
will reduce thn chances of failure of farms,
businesses, and communities that are still
competing successfully.
RESEARCH FEMME
Research programa tend to be long-term
projects and are influenced by the availability
of funds.
Most research projects have not been
initiated solely in response to the agricultural
and rural economic crisis.
Some do have specific
applications, however, to the problems brought
about by the crisis.
There are a host of
research projects that are directed toward
production, management, and marketing efficiency.
These have been and will continue to be important
for solving problems on those farms already
having difficulty and for preventtng dIfftcnIty
30
on those not yet in trouble.
The importance of
continuing this type of research canot be
overemphasized.
Research projects with some
application to the current economic situation are
too numerous to mention.
There are several,
however, that would seem to be of particular
relevance.
The Farm Crisis and Decatur County
The objective of this case study of a
dryland wheat-livestock county in northwestern
Kansas is to assess the impact of the farm sector
on the economy and social organization of a
county which has historically depended on
agriculture for its livelihood and to learn about
the incipient effects of the current farm crisis
on an agricultural community.
With the
completion of this study, two additional counties
are being selected to further expand the research
project.
The study has been particularly useful
in identifying where the agricultural economic
crisis impacts the local economy.
Agricultural Impact Analysis Model
This applied research project is designed to
develop a model for analysis of the impact of
agriculture on the local economy.
When complete,
the computerized model will enable Extension
staff and others to examine various "if-then"
scenarios to estimate potential economic impacts
on various sectors of the local economy.
Development of K-FARM
The utilization of this computerized farm
financial analysis tool was described earlier in
this paper.
DEVELOPMENT OF CORN-PRO, WHEAT -PRO, BEEF-PRO
This major research effort will enable the
producer to examine production efficiency through
all phases of the production cycle, with the goal
of maximizing profits.
A series of modules is
being developed for each of the three
enterprises.
The results of the research effort
will be to improve production efficiency and to
reduce the probability of financial failure due
to inefficient production management.
Improved Local Economic Analysis
This is not a single specific research
project, but rather a process of reviewing and
refining various techniques for analyzing the
local economic s tuation to predict trends and to
suggest alternative economic development
strategies.
SUMMARY
Much has been done to mobilize assistance to
individuals and families being impacted by the
agricultural and rural economic situation.
In
Kansas the FACTS program has played a major role
in coordinating the various resources and
bringing appropriate ones to bear where needed.
Extension programs have been developed or adapted
to meet many needs of people and communities in
crisis.
And there are some research efforts that
contribute to the overall effort.
There is still more that is needed, however.
There is still a need to develop effective caring
and support networks.
And there is a need for
more research on individual, family, and
community reactions to stress and change.
Finally, as a result of the agricultural and
rural economic situation, significant changes
appear to be evolving across rural Kansas.
There
is a need for research to determine the
directions and magnitude of social and economic
change and to produce programs to enable rural
people to influence and prepare f r those
changes.
31
Kansas 25
Responses to the Farm Crisis: Michigan Report
by Julie Hales
urranscrios
Michigan's diverse agriculture provides it
the opportunity to become a major growth area in
world agriculture.
Michigan Cooperative
Extension Service (MCES), the Michigan
Agricultural Experiment Station (MARS), and the
Michigan Department of Agriculture (MDA) are all
cooperating to help Michigan farmers take
advantage of their opportunities.
But future
growth opportunities are available only to those
Michigan farmers who can survive the current and
past financial difficulties created by reduced
export earnings, high interest rates,
deteriorating land values, and failing commodity
prices.
The financial stress in Michigan
agriculture, like a atone tossed into the pond,
creates waves of consequences.
Consequences that
affect the frrm business are increased leverage,
cash-flow difficulties, and, in some cases,
insolvency and bankruptcy.
These business-
related consequences, like secondary ripples in
the pond, produce emotional distress and loss of
self-esteem--sometimes leading to child or wife
abuse, divorce, and, in severe cases, suicide.
The problems of the farm financial crisis
and the emotional ripples it has created for the
principal farm sector participant--the farm
family--are multifaceted.
Consequently, the
response by MCES, MARS, and MDA has been and will
continue to be multifaceted.
The MCES research and outreach programs a:e
intended to: (1) identify for those involved the
extent of, and the resources available to meet,
the Michigan farm financial crisis, (2) study
alternatives to farming and establish the job
training and counseling needed to meet the
adjustments required by current conditions,
(3) provide training that will help those who
stay in farming to do so succes.fully by adopting
efficient production and financial planning
methods so that the farming experience in
-cficient and financially profitable, and
(4) assist the communities, which are extensions
of the farm families, to adjust operations and
services to survive and meet the needs of the
farm families and nonfarm residents that depend
on their services.
OVERVIEW OF FARM SITUATION IN =RICAN
According to a Farm Financial Situation
Survey conducted by the MDA and the MCES in
spring 1985, net farm income in Michigan has
dropped substantially since 1981.
According to
survey results, this income drop has pushed many
family farms into less secure financial
positions, as evidenced by their debt/asset
26 Mid6.6
ratios.
Mine percent of the farmers surveyed are
highly leveraged, with a debt-to-asset ratio over
70 percent, and another 16 percent have a
debt-to-asset ratio between 41 and 70 percent.
Compared to national figures, Michigan has a
greater percentage of highly leveraged farmers in
the 40 to 70 percent range:
16 percent compared
to only 7 percent of the nation's farms.
Dairy, cash-crop, and fruit farms are the
major farm types in Michigan and are experiencing
higher loan delinquency rates than livestock or
specialty farms.
Fifteen to 20 percent of the
dairy and cash-crop production in the state is
subject to severe liquidity problems.
Since milk
and cash-crop prices have continued to decrease,
the financial position of these farmers has
gotten worse during 1985.
Prices of agricultural commodities have
dropped 10 to 30 percent during the last four
years and income loss is affecting all farmers,
regardless of debt position.
MICNIGAN COOPERATIVE IMMO' SERVICE MISFONSI
TO TUR FARM CRISIS
A Smeary f Research aad Isteasiou Thrusts
The MCES responded in 1985 to the financial
crisis in agriculture with a multifaceted
program. A special inservice training program
for staff on the current agricultural situation
was conducted in early January. This was
followed by a mass-media emphasis on the general
economic outlook, credit availability, trade
outlook, agricultural policy options, money
management, farmland prices, and commodity price
outlook.
The overall goal of educational and
supportive efforts for Michigan farmers has been
and continues to be to challenge families to
reevaluate their family goals and commitment to
agriculture as a way of life and a business
venture. The objectives and strategies under the
umbrella program call "Regaining Profitability on
Michigan Farms" are:
To help financially stressed farm families,
as well as those currently financially
viable, to analyze alternatives resulting in
better decisions about their future in or
out of agriculture. Projects in this area
include regional seminars, held in February
and March, with the theme "Management
2000."
To develop a series of materials for use in
meetings and with the mass media outlining
relevant information on family and
farm business goal setting and stress
adaptation, the background of the future
agricultural situation, and necessary
32
management, marketing, and technological
production adjustments for agriculture.
To provide a series of intensive workshops
by type of farm, in which farmers receive
information and guidance to develop a
projected financial and production plan for
1986 and beyond.
To provide retraining opportunities for farm
families deciding to terminate their
agricultural employment.
To provide intensive individualized family
and farm business assistance through
continuation of the Extension Management
Assistance Teams (EMAT).
More detail on these projects is found under
the section entitled Extension Projects.
Suggested Areas of Research and Program
Development
Recognizing the relationship between vision
and reality in planning, the MASS and MCES joined
forces in 1985 to undertake an intensive review
and comprehensive long-range planning effort,
This effort is a review of the post, an analysis
of the present, and a practical strategy for the
future.
Input came from Michigan citizens from
all counties of the state, key community leaders,
industry and agribusiness decision aakers, and
university faculty and staff.
Enriching
Michigan's Future:
A Planning Document outlines
strategies to meet challenges in our state, a
critical one, of course, being the current farm
situation.
This planning document, with its
thorough development and background work, was one
of the sources for the following suggestions for
future research and programs:
Establish and develop multi- and
interdisciplinary research and extension
teams that mobilize the expertise needed to
address strategic issues for a coordinated
response.
This would include (1) studying
the adjustment problems facing Michigan
agriculture; (2) coordinating advice to
commercial and part-time producers on
appropriate technologies and farm systems,
institutional services, credit, taxation and
regulatory policies, development and use of
new production systems, and management of
finances, marketing, and personnel; and
(3) promoting and rewarding
interdisciplinary action teams that will
work together to solve complex biological,
economic, and social problems related to
agricultural systems.
Expand integrated decision support systems
(IDSS) to provide assistar
in activities
related to predictive or m nagement
information, farm efficiency and
profitability, and information
dissemination.
Study coping mechanisms within farm families
experiencing economic distress.
Establish research projects in the area of
rural development.
Local communities are
important to the survival of farm families
and farm businesses through off-farm
employment opportunities and social and
psychological support systems.
What
strategies can be utilized to help farm
families and rural communities adapt to both
economic and social changes that are
occurring?
EXTENSION PROJECTS AND RELATED RESIARCN- -NEN AND
ONGOING PROJECTS
Assistance Betties
In April 1985, the MDA and MCES combined
efforts to establish the Agricultural Assistance
Network, a toll-free hotline to provide a liaison
and referral service for farmers and agribusiness
people in economic distress.
Since start-up
almost one year ago, 1,296 farmers have utilized
the hotline.
The vast majority of these callers
have been seeking information about loans or
problems surrounding access to loan monies.
Human services requests or problems have been the
object of approximately 10 percent of the calls,
with another 10 percent seeking information on
legal services.
Over 200 of the callers have
requested contact with EMAT services.
The vast
majority are full-time farmers and average
acreage runs approximately 380 acres.
MUT
A team approach and one-to-one work with
farm families was needed to provide intensive
assistance to farmers and their families.
To
provide for this need, EMAT teams were formed.
These teams are made up of county and district
Extension staff members, including district farm
management agents, agricultural agents, and home
economists.
They meet with families who require
their services to develop strategies for dealing
both financially and emotionally with their
economic problems.
Currently 14 teams are
working throughout the state.
The EMAT process
usually begins when a farmer contacts an agent
and asks for help. The agent then works with the
family to gather the required information and
farm records.
The standing team is augmented
with specialists in subjects pertinent to
particular farm or family problems and areas of
production.
The team visits with the family for
a day, reviewing financial records and facilities
and analyzing the farm/family situation.
Strengths and weaknesses are outlined and
opportunities and options are explained to the
family. The family is sent a written summary of
the visit, including analyses and recommendations.
At the family's request follow-up can also take
the form of further visits and phone
consultations.
To date more than 300 farm
families have been involved with EMATs across the
state.
33
Michipn 27
Agents involved in EMAT utilise many sources
for updating their expertise and broadening their
skills.
Inservice training has been provided for
team members, as well as a monthly newsletter
produced by state staff.
Resource materials
developed at Michigan State University (MSU) and
other state universities are included in the
newsletters, as well as updates and announcements
on conferences and workshops related to the farm
situation.
An evaluation of the BMA? process is
currently in its final stages.
Using a case
study approach, the process evaluation seeks to
explore the effectiveness of this strategy of
helping farm families.
Preliminary results
reflect very positively on the program.
'MAT for Aeribesimese
A similar approach has been utilized within
Michigan agribusinesses.
Teams led by MCES but
composed of state and local business retention
experts, community college faculty and staffs,
out-of-state regional cooperatives, trade
associations, and lending institutions have worked
intensively with 42 businesses this year and only
one assisted firm has failed.
As the program
becomes better known the requests increase.
In
nearly every instance the problems arcs increased
by the inability of the customers of these
businesses to pay their bills and the actions of
secured creditors of farmers who are customers.
Especially hard hit are farmer-owned cooperatives.
The opinion of agribusiness specialists within the
state is that local farmer-owned cooperatives in
the elevator and farm - supply industry are harder
hit in Michigan they in adjoining states.
Most of
the firma involved with the EMAT for agribusiness
are family-owned or controlled businesses.
These
people are involved in the business both
personally and professionally, and the stress is
every bit as great as on the family farm.
MCES and FeRA--Werkieg as a Team
MCES and AMA have a history of cooperation;
the newest program, aimed at assisting limited
resource farm families critically in need of
help, expands on the EMAT concept utilizing PmRA
input and staff.
As with EMAT, the goal is to
enable families to deal effectively with and gain
control of various financial factors affecting
their lives.
Dislocated Necker Pregrar-JTFA
The goal of this program is to improve the
economic solvency of dislocated farm family
members and their employees through off-farm
employment.
The need for such off-farm
employment arises from the well-documented,
long-term trend of out-migration from farm
employment.
This trend is intensified by current
farm financial factors, ma....ag farming no longer
viable for many Michigan residents.
Farming as an occupation has experienced
serious employment declines for decades.
Seventeen percent of the Michigan Farm Financial
28 bechigin
Survey respondents in spring 1985 said they plan
to discontinue farming in the sear future.
Job
placement and job training are high priority
needs, according to 55 percent of the
respondents.
Supporting evidence as to the
importance of this program also came from the
Gratiot County Skills Inventory Project.
This
pilot project inventoried skills of farm family
members to assess their proficiencies for
off-farm employment.
In response to this need for retraining, a
statewide program hem been developed to focus on
job retraining opportunities for farm families
and fare employees who are forced out of
agricultural employment.
Although the proposed
system is complex, utilising a wide variety of
services, institution., and deliverers, the basic
structure consists of the use of the 80 statewide
offices of MCES and 15 Extension agents trained
in farm financial stress and in assessment of
eligible fan clientele. Referrals for this
program come from the Extension offices and the
hotline mentioned previously. The program has
already signed 115 participants; this response is
much greater than ever anticipated at start-up
just one month ago.
Type-of-Farm Workshops and Materials Development
Crop Production
Research projects within the Agricultural
Economics Department on crop production are
generating invaluable information on
profitability of specific agronomic practices and
providing crop farmers with business analysis
tools to enable thee to make more profitable
agronomic and marketing decisions.
These
research results are being used as reference
materials for crop production workshops being
held across the state. Specific research top:us
include:
(1) development of a decision support
system for pest management and tillage
alternatives in corn production, specifically the
economic impact of switching from conventional
tillage to no-till corn production; (2) applying
economics to weed interference data to determine
economic thresholds for postemergence weed
control in soybeans; and (3) addressing the
optimum input levels for ag chemicals, including
herbicides, biological inoculants, and fertilizer
products.
Evolving from research such as this and
cross-departmental input, Extension efforts have
included: development of resource materials on
management practices to increase yield without
increasing cost, preparation of a series of
position papers on emerging techno,ogical changes
in crop production and how these changes may
impact on future management practices, and three
two-day crop production workshops held since
January at different locations across the state.
These represent combined efforts of county and
state staff. Staff perception was that
attendance and discussion were promising and well
worth the efforts.
34
Dairy
The Agricultural Economics and Animal
Science Departments have teamed to present
ongoing workshops and training sessions focusing
on dairy farm business analysis and planning.
The Dairy Farm Analysis Workbook, developed by
dairy field staff and campus specialists as
an
organisational and record-keeping tool,
was used
as a basis for instruction and discussion
focusing on farm business analysis and planning.
Data from a sampling of dairy farmers has shown
that this workbook is very useful for short- and
long-range planning and control of a dairy
operation.
Early in February an intensive training
session for agents was held to apprise them of
dairy adjustment alternatives under the 1985
Farm
Bill.
Research support for this training and
ensuing workshops came from a unique research
committee formed in November 1985 and charged
with formulating materials that could be widely
used in CES to help dairy farmers, lenders, and
other industry groups better understand and make
decisions relative to the new Milk Production
Termination Program.
This multistate study
involved a group of agricultural economists
representing six land grant universities.
Much
effort has surrounded this issue here at MCES
as
we continue to meet demand for information on
this timely topic.
Regional Meetings - -"Management 2000"
Three regional eeminars were held in January
and February for financially stressed and
financially strong commercial farmers.
"Management 2000," focusing on long-range
planning.
These well-attended seminars included
instruction and generated enlightening discussion
on these topics:
(1) economic framework for
agriculture through the year 2000; (2) family
dynamics in handling stress and farm and family
decision making and goal setting; (3) emerging
technological changes in livestock production and
management implications for producers;
(4) emerging technological changes in
crop
production and management implications for
producers; (5) the application of artificial
intelligence, management support systems, models
of management science, and computer technology in
helping farm managers in the year 2000 make
timely, correct, and profitable management
decisions; (6) long range financial and business
planning; and (7) resource and environmental
quality issues affecting agriculture.
Research and reference support for these and
future seminars comes from many different
departments within Extension and MSU.
The
seminars are conducted through the efforts of
county and state agents and specialists.
This
cross-discipline, crost-departmental effort is in
the process of being evaluated using mailed
postsession questionnaires.
Farming is one family business where work
and family life are very closely meshed.
While
these seminars explore operational goals and
planning for production, they also address an
issue often overlooked by farm families--setting
family goals.
Since the farm and the household
are resources for one another, how does a farm
family work toward setting goals that balance
both farm and family?
Answering this question
was the object of a new Extension bulletin with
worksheet utilized at the Management 2000
seminars.
Entitled "Working Together:
Managing
Change in Farm and Family," the bulletin and
worksheets are used to provide information on
family goal setting, priority setting, and
planning for farm families.
Microcomputer Workshops
Using microcomputers in a group workshop
setting with farm families, agribusiness persons,
and field staff was the objective of cash-flow
planning workshops begun in 1985.
These early
projects included Extension specialists and
financial analysis instructors who traveled all
over the state with vans loaded with IBM-PC
portable systems with printers.
An evaluation of
the series showed an overwhelmingly positive
response to the workshops by participants.
This
year will see a continuation of these workshops
conducted by county or district personnel using
the financial analysis microcomputer templates
designed to build monthly cash-flow projections
and loan applications.
Many of these projections
are being made by county staff in individual
consultations with farm families.
Use of these
templates has been very successful with EMAT
families for planning purposes and support when
they are meeting requirements for loan
applications.
County-Level Workshops - -Joint Effort
Too numerous to list are the many county-
level workshops and farm family meetings.
These
programs often involve campus and field staff and
specialists, as well as community leaders, health
care and legal professionals, and church leaders.
In one instance a panel was arranged including
farm family members who responded to questions
and concerns of their neighbors in the community.
Farm family stress and strengthening
communication are often the focus of these
meetings, although farm and family management and
planning are also important components.
These county-level workshops and meetings
are extremely important for several reasons.
First, county agents and home economists are in
touch with the needs within their own areas, thus
they are able to respond with information
pertinent to these needs.
Also, these agents and
home economists have often had personal contact
with farm families and can invite them to attend.
This personal touch is often the only successful
means of drawing farm families out into the open
to share problems and fears they have about their
own situations.
35
Michipn29
Churches in rural coumunities and church
councils statewide have recently begun to
actively organize meetings using Extension
specialists as resource persons and utilizing
Extension mateials.
As recent research
suggests, churcaes have the potential to provide
a great deal of support and counsel for farm
families.
The rural community churches are
traditionally a fundamental social and spiritual
center for farm families.
Many agencies and groups in our state are
sponsoring meetings for farm families utilizing
Extension specialists as speakers and
facilitators.
An Extension Home Economics
specialist reported that she has presented 7-10
workshops a month on farm family stress and
communication skills development for groups such
as this.
Specialists and field staff within
Extension Home Economics have developed a wide
range of resource materials to be used at
workshops and classes.
(See end of chapter for a
listing of resource materials.)
RESZAILCI PROJECTS
Thus far objectives and strategies have been
discussed.
It would be negligent, however, to
attempt to categorize these projects only as
programmatic responses to the farm situation,
since much of what was discussed would also fall
under applied or problem-solving research.
In
the following examples, problem-solving research
as well as subject-matter research will be
summarized.
Providing benchmark data
it
answer to the
question, "How serious is the farm financial
crisis in Michigan?" was the goal of subject-
matter research carried out at MSU in cooperation
with the MDA.
The study, Farm Financial
Situation Survey, conducted in spring of 1985,
found that indeed a number of Michigan farmers
are experiencing financial distress.
The
information and clarification provided by this
study of Michigan farmers has proven an
invaluable reference for programmatic responses
throughout Extension.
Program planning in the
areas of financial and production management, as
well as the Displaced Worker JTPA program, drew
important information from the findings from this
survey.
Broadly, research thrusts have been targeted
toward improved farm and agribusiness management
training, profit optimization rather than
maximization of production, and basic research on
biological processes and interactions of plants
and animals, as well as exploratory work on
stress in farm families.
Clearly, achieving
these goals requires interdisciplinary, cross-
departmental efforts and this cooperation is in
evidence at MSU.
Response to the farm situation is not
limited to the agricultural expertise within
MCES.
One example of a cross-disciplinary
research project carried out by the Sociology,
Human Ecology, and Agriculture and Natural
30Michler
Resources Departments is the Family Farm Project.
Research and Extension teams are functioning in
five major areas:
family systems, community
infrastructures, home industries, agricultural
production, and facility development/energy.
Although this far-reaching study was not
originally developed in response to the farm
situation, many of its ongoing components are now
adapting their strategies and methodologies to
gather information very relevant to the farm
situation in Michigan today.
Computer models are becoming increasingly
valuable tools for efficient and economic
agricultural production systems and MSU is a
leader in their development.
A cooperative
effort underway at Kellogg Biological Station
involves a multidisciplinary research effort to
design a computer-assisted management approaco.
The Agricultural Economics Department, along with
Agricultural Engineering, Crop and Soil Sciences,
and Animal Science, have teamed to develop an
integrated "smart" decision-maker aid.
Extension
staff members have also developed such computer-
assisted aids as land valuation packages, crop
budgets, and budgets to determine cash/crop share
leases.
Extension Rome Economics is the base for an
exciting research study of financially stressed
farm families in our state.
Utilizing a
longitudinal design, this five-year study will
include 300 families chosen by the local county
Extension staff.
Health risk appraisals,
including evaluation of blood pressure and serum
cholesterol levels, will be done in years 1 and 5
of the study.
In addition, both husband and wife
will complete individual aurvey questionnaires
each year.
The purpose of the study is to:
(1) document short- and long-term effects of
physical and emotional stress on those farm
families experiencing financial difficulty,
(2) determine whether or not there are
significant differences between families that
access additional external resources available to
them in crisis and those who do not, and
(3) assess any reduction in stress- related
consequences experienced by families who receive
assistance compared to those who do not.
COIICLOS1011111
Michigan agriculture is facing substantial
challenges.
The overall picture for agriculture
in the short run is not too bright.
Adverse
cost/price ratios are driving some producers into
bankruptcy.
The mid-sized farm in Michigan is
vanishing.
From 1974 to 1982 producer expenses
per dollar of gross income rose from 72 to 90
cents, farm debt per Michigan farm tripled, and
interest on the mortgage debt increased the
fastest of any expense item in the producer's
budget.
Farming is a family business.
Farm families
derive their very identity from working the land
and, as one author noted, "many farmers today are
being plowed under."
Faris families hold a deep
commitment to family life and work and close
36
connections with neighbors.
These attachments
and values together form a rural ideology that is
lived, loved, and taught to the next generation.
Their sense of failure when unable to live up to
these commitments is devastating and the
prevalence of depression is certainly not
surprising.
The challenge is clear--support for
financial and emotional stress must be provided
for these farm families.
Whether it be problems
in production on the farm or communication across
the dinner table, tools must be provided to
empower these farm families to survive and grow.
MCES is doing its best to provide these tools and
will continue to do so.
MATERIALS TO SUPPORT PROGRAMMING IN FARM FAMILY
STISS3--FAMMI COMMUNICATION DURING STRESS AND
CRISIS
These materials are designed for
professionals interested in helping families
develop more effective communication and
interaction patterns as resources for coping with
stress.
To order contact Anne Soderman, Rumen
Development Specialist, 203 Human Ecology
Building, Michigan State University, East
Lansing, Michigan 48824.
Prices include shipping
and handling.
"Teaching Family Communication During Stress
and Crisis."
Included are six 1 1/2-hour
planned sessions.
Each contains a warm-up
activity, minilecture, overhead
transparencies to support the lecture, a
group experiential exercise, and
camera-ready handouts.
The sessions are
divided as follows:
Session I:
Family Structures that Impact
on Communication
Session II:
Nonverbal Communication
Session III:
Effective Listening Skills
Session IV:
Five Verbal Response Skills
Session V:
Ego States:
Understanding
Communication Transactions
Session VI:
Communicating During Crisis
Two books are included in the packet for
ready background reading:
Robert Bolton's
People Skills and Kathleen Galvin and
Bernard J.
Brommel's Family Communication.
$55.00
Videotape, "Family Communication During
Stress and Crisis."
Fifteen minutes in
length (VHS 1/2"), the video features Dr.
Donald Hamachek, author of Encounters with
the Self and Encounters with Others, talking
about the negative and positive approaches
families take when trying to communicate
during periods of stress.
A farm family is
depicted trying to decide whether or not to
take a loan to finance an additional
operation.
At first we see them interacting
very negatively, with Hamachek pointing out
examples of faulty communication.
We then
watch the same family discussing the problem
in more positive and productive terms, with
final comments by Dr. Ramachek. $20.00
Audiotape, "Family Communication During
Stress and Crisis." 30 minutes in length
(cassette), the tape features the six
minilecturea included in the teaching
packet.
$3.00
"Work and Family Stress" (E-1698).
This
27-page booklet explores the work/family
interface, including the nature of the
stress reaction, a discussion of the
compounding of stress when work and family
responsibilities are combined, and a final
section on how to keep stress under control.
A group exercise is included in the
contents.
$1.75
"Divorce and Family Stress" (E-1733).
This
29-page booklet includes an introduction to
divorce and family stress and includes the
following sections:
Marrying and
Unmarrying, Arranging Custody, Effects of
Divorce on Children, Reducing Fallout,
Helping Children Cope, The Rome-School
Connection, Living the Single Life Again,
Handling the Stress of Separation and
Divorce, and Check Your Own Stress Level.
$1.75
The Stress Press, Volumes I and II.
Included here are 20 individual issues of a
two-sided newsletter focusing on such topics
as family stress, hurried children, single
parenting, work and family stress, and
stress and marital meltdown.
$5.00
"Farm Family Stress" (E-1697).
Developed by
Sally A. Middleton, this 29-page booklet
focuses on stress in agriculture,
understanding stress, stress symptoms,
managing stress, farm family communication,
and farm family goals.
$1.75
Audiotape, "Relaxation Exercises."
This
tape contains guided experiences in
relaxation.
Five different exercises, each
approximately 5 to 10 minutes in length, are
provided as alternative techniques for
acquiring personal stress-management
expertise.
$3.00
37
Michipn 31
Prcject Support Tackles Rural Problems
in Minnesota
by Kathy Mangum
IITIOO5CTION
Minnesota farm families are making tough
decisions--decisions that set the course for
their futures.
For many, the choices they make
today will determine whether they stay in
farming.
Individual circumstances vary and so do
the options.
Each family most base its decisions
on its own unique situation.
The financial condition of many Minnesota
farms has been deteriorating since the late 1970s
and was recognised as a crisis in the making IT
early as 1981 by Extension economists and other
Extension staff working closely with farm
families.
These developing conditions had their
roots in the general deterioration of the overall
economy and were specifically related to the
growing federal deficits and the rising value of
the dollsr, with its accompanying effect on
international money flows and other economies of
the world.
U.S. agriculture was impacted by
deteriorating commodity prices and escalating
costs on most input items, especially the cost of
money (interest).
These conditions, affixed on top of the ag
boom mentality of the early 1970s, caused many
farmers to overspend by producing a now lower-
valued stream of products and overinvesting in
production capacity.
Lower returns at higher
costs, with more dollars going to cover the
investment in capacity, soon drove many into a
downward spiral, unable to provide cash flow for
expenses and at the same time meet obligated debt
payments.
Under these condition!, returaa io
capital invested in agriculture declined and
impacted on the value of the assets used in
agriculture, most specifically - -bit not alone- -
the value of land.
Declining asset values caused
many debt commitments made under previous
conditions to be undersecured.
This condition
has continued to deteriorate.
In some cases it
has advanced to the point where annual operating
credit cannot be obtained because of lack of
a sufficient security base and repayment capacity
to handle already committed debt obligations.
Surveys indicated that this was the situation for
about 25 percent (25,000) of Minnesota farms by
October 1984.
The impact of the farm crisis on the state
can be illustrated by the following conditions:
The author gratefully acknowidges the
previous work of a number of Extension staff.
Much of this report was written from their
writings found ta the final report, Project
Support Impact Study, February 28, 1986.
32 Minnesota
A 1984 USDA study indicated that the Lake
states of Minnesota, Michigan, and Wisconsin
had 15.8 percent of their farms with debt-
to-asset ratios of 40 to 70 percent; 9.8
percent had over 70 percent and 3.3 percent
were insolvent, with debts greater than
assets.
A Minnesota study conducted later
showed Minnesota estimates to be higher than
the 1984 USDA study.
Minnesota led the nation in the number of
farms lost from June 1, 1984 through July 1,
1985 (Minnesota Agricultural Statistics
Service).
During this period, the number of
farms in the state fell from 101,000 to
96,000.
The Minnesota farm-price index hit a
seven-year low in September 1985.
Sy mid-
December it was 8 percent below its previous
year level.
The dollar volume of farm loans issued in
Minnesota by the TWA more than doubled from
October 1, 1984 to September 30, 1985.
Loan
volume increased to $437.6 million, compared
with $207 million in the previous 12-month
period.
Six rural banks were declared insolvent and
closed during 1985, the most for any year
in the state since the Depression.
In each
failure the declining farm economy was
listed as the contributing cause.
In
addition, 42 agricultural-dependent banks
are on the state's trouble list.
In addition, family service professionals report
an increase of chemical abuse, family violence,
and depression among rural residents.
These
symptoms of stress reflect the impact of the farm
economic distress on the farm family.
The long-term survival of rural Minnesota is
based not only on improved personal decision
making by farm families concerning farm and
family management questions, but also on a
renewed focus on community economic development.
In order to make the hard decisions needed for
today and tomorrow, farm families and rural
communities need reliable and pertinent
information about their economic and social
choices.
In the fall of 1984, the Minnesota Extension
service launched Project Support, an intensive
statewide effort, to address the crisis in cural
Minnesota.
The Director of Extension appointed a
task force to develop the plan.
Forty county and
area agents had 25 to 50 percent of their time
reassigned to provide multicounty leadership in
Project Support programs.
Project Support also
includes a statewide toll-free hotline and a
statewide coordinator.
This position is filled
by an Extension specialist on a temporary special
assignment.
38
The goals were to help farm families
(1) develop and analyze long-range alternative
farm plans, (2) develop cash-flow plans for 1985
to be used in negotiating with their lenders,
(3) be equipped to better analyze their
situations after their 1985 business year;
(4) cope effectively with stress, and (5) utilize
community resources.
Project Support is a success in a number of
aspects.
The program provides sound educational
information on farm management, family resource
and stress management, and community development
to thousands of Minnesota citizens.
A recent
impact evaluation took an in-depth look at the
type and nature of help provided to Minnesota
citizens and concluded that the Extension Service
clearly met its goals.
Not only did thousands
receive helpful vital educational assistance, but
the Minnesota Extension Service was able to
implement this "crash program" with considerable
speed and extremely limited resources.
The success of the Minnesota Extension
Service in Project Support can be attributed to
several factors:
the university's capability for
research and program development, the advent of
lower-cost microcomputers, the experience of
Extension staff in farm financial management,
legislative funding to make software and hardware
available to Extension offices and other
agricultural educators, and to a large number of
financially distressed farmers.
IDOCATION III ACTION
Project Support uses a program development
model that combines research from Agriculture,
Home Economics-Youth Development, and Community
Resource Development.
A key component of Project
Support is a package of farm business management
computer programs called FINPACK that allow
farmers to see the financial consequences of
various management practices on their farm
operations.
The program was developed over a
period of two decades by Extension experts for
use by county Extension staff, vocational
agriculture instructors, FmRA loan officers, and
bankers.
With this program a county agent
anywhere in Minnesota can turn a portable
microcomputer into an invaluable tool for helping
the farmer analyze 'xisting circumstances and
make choices for the future.
But the Extension action went beyond
analysis of farm management plans.
The 19708 and
'808 research in personal and family stress
produced data that was used to develop stress
management programs for Extension staff, farm
families, and community decision makers.
Minnesota Extension Service garnered a wide
range of resource people and expertise from the
university community to assist in research and
program development.
Units with participating
faculty members include:
the Departments of
Agricultural and Applied Economics and Family
Social Science, the Center for Youth Development
and Research, the Medical School, the Law School,
the School of Social Work, and the Hubert
Humphrey Public Policy Institute.
These
collaborative efforts have provided the
foundation for Project Support programs.
Future research and program efforts should
include:
1.
Baseline research data on farm families
2.
Data on what research is needed in the
future
3.
Research on implications of dual-career
farm families
4.
Continuing research on farming systems,
including implications for family and
community
5.
More research on models for community
economic development that focus on a
win/win situation, rather than a
competitive win/lose situation
6.
Data on the kind of support and services
county Extension agents need to prevent
job burnout
7.
Study of interorganizational relationships
between Extension and other organizations
RESEARCH AID PROJECT SUPPORT
This report is not meant to summarize the
entirety of the research efforts at the
University of Minnesota.
Rather, it is meant to
highlight some of the research that has been
utilized in the first year (1985) of Project
Support.
The following information describes
some of the major efforts.
It includes a
research project that looks at the stress in our
own staff--normative stressors and stress
precipated by work overload due to the farm
crisis.
Farm Fiaaacial HaAasoment
Research and testing over a period of two
decades by the university's Department of
Agricultural and Applied Economics and Extension
farm financial management experts has led to the
development of FINPACK, a computerized financial
planning and analysis package.
The four
programs--FINAN, FINLRB, FINTRAN, and FINFLO --
provide a comprehensive and understandable
framework for individual farm decision making.
FINLRB identifies and compares the long-
range profitability, debt repayment ability, and
financial soundness of alternative farm plans.
FINFLO projects farm cash flows monthly for one
year of business.
FINTRAN projects farm cash
flows for three years of business.
It is most
useful in projecting cash flows for the
transitional period when a major change is being
tmplemented.
FINAN analyzes the financial
performance of the farm business for the past
year.
39
Minnesota 33
When used together the FIMPACK programs
become an even more effective educational tool.
They teach financial concepts through their
application on individual farms.
The programs
aim at strengthening the management ability of
the farm manager as well as the decirion-making
ability of the ag lender.
FIMPACK is designed for use with any record-
keeping system.
In fact, experience indicates
that the record-keeping ability of farm managers
improves as they discover the usefulness and
importance of complete records for financial
planning and analysis.
Family Stress is Middle Years
University-based researchers in nine states
participated in a study on family stress in the
middle years.
Data was collected from over 1,900
idwestern families, including some in Minnesota,
from urban and rural, farm and nonfarm sectors.
The study examined the relationship between the
stressful experiences of families and their
psychological and physical health.
The findings
have clarified the understanding of family stress
and have assisted Extension in providing more
effective stress intervention and prevention
programs for community decision-makers and
families.
Teems is Distress:
Stress, bspressios, sad
Suicide
The Minnesota Extension Service and the
University Medical School have embarked on a
major research study to look at the degree of
stress and depression experienced by Minnesota
youth and the degree to which they are
contemplating and attempting suicide.
Questionnaires have been collected from over
4,300 high school students in 52 counties.
4-H
agents worked with the schools to collect this
data base.
Preliminary findings have been
reported to the schools and the more complete
data analysis is underway.
A final report should
be available by September 1986.
Six conferences entitled "Teens in Distress"
were held in Minnesota in 1985-86 in response to
community concerns about teenage stress,
depression, and suicide.
The audience was
primarily youth-serving professionals--teachers,
school administrators, mental health workers,
counselors, clergy, social service professionals,
nurses, and county Extension agents.
The keynote
presentation addressed adolescent suicide, with
attention to identification of high-risk young
people as well as an overview of research
findings on the topic.
Workshops were presented
by local resource people who shared models for
peer support programs, helping teens deal with
stress, interventions with depressed youth, and
school-based programs addressing self-destructive
behavior.
Minnesota 4-H has produced three fact sheets
to provide information to adults working with
34 Menem*
youth.
"Teen Suicide" gives factual information,
warning sips, and primary intervention
techniques.
"Helping Friends in Trouble" is
designed for young people discussing ways they
can be helpful to other teens whom they know to
be stressed, depressed, or considering suicide.
"Supporting Distressed Young People" helps ads:Its
understand appropriate communication and
intervention techniques when dealing with
distressed teenagers.
4-H is providing leadership for an Extension
Service teleconference that will provide
statewide follow-up to the "Teens in Distress"
conferences in October 1986.
Community support
teams working on programs for prevention,
intervention, and education on the topics of
stress, depression, and suicide will gather at
six vocational school locations in the state to
share their plans, programs, and questions via
satellite teleconference.
Expert resource people
will be located on the university campus in
St. Paul to respond to concerns and questions.
Special attention will be given to cooperative
coemunity programs involving 4-0 and the
schools.
Dynamics of Farm and Business Families
Paul Rosenblatt and graduate students
working with him in Family Social Science have
carried out a series of studies on farm and
business families.
They have published papers on
the relationship consequences of economic stress
in farm couples and the dynamics of farm families
involved in intergenerational transfer of the
farm, and a book (The Family in Business,
San Francisco:
Jossey-Bass, 1985) on the
tensions of families in business.
They are
currently studying family relationships and grief
in families that have recently had to leave
farming.
Values of Rural Families
In the Department of Rural Sociology, James
Krile has been studying the values of rural
families.
The study has illuminated how problems
such as those of farm families in economic
trouble are defined and how helping persons and
help are perceived.
Krile has used his research
as a basis for educational programs aimed at
helping professionals and bankers, among others.
Rural Church Research Project
The rural church study, under Jim Krile in
the Department of Rural Sociology, started in
1979 and focused on 131 Roman Catholic, United
Methodist, United Church of Christ, Episcopalian,
United Presbyterian, American Lutheran Church,
Lutheran Church in America, and Lutheran Church-
Missouri Synod congregations in and along the
corridor of the highly controversial powerline in
central Minnesota.
During this first phase,
interest centered on how characteristics of the
congregation, the clergy, and the denomination
40
affected the manner in which pastors and/or
oarishes. dealt with potentially conflictual
issues.
These findings were shared with
denominational leaders in the fall of 1980 at
a
conference held on the St. Paul campus.
The second phase of the project focused
on
two issues that emerged from the analysis of the
1979 data.
One issue was the effect th.t yoking
or creating multiplepoint parishes, has on the
ways in which pastors and congregations respond
to community needs.
The other issue was the
impact of differing lay leadership
structures on
the churches' roles in the community.
The third phase of the research examined the
local power structures in eight of the
communities within the study area.
Special
attention was given to the extent to which
congregations and/or pastors were seen as part of
the local power structure,
the extent to which
locally powerful people were affiliated with
a
particular church, and the extent to which
members of the community power structure
were
also leaders in their churches.
Based on a survey of 1,610 households of
church members in the 'tudy area, the fourth
phase focused on the *. /s in which church members
devote their time to church, family, and
community activities.
Special emphasis was
placed on the effects that the various stages of
family development might have
on different types
of organizational involvement.
It has been the practice throughout the
project to try to share the findings with
the
denominations, congregations, and communities in
the study, as well as with other members of
the
profession.
Much of the material has bees
summarized in various issues of Sociology of
Rural Life, a quarterly publication of the Rural
Sociology unit.
The project is preparing to gather data this
tall in both northeastern and southwester.t
Minnesota.
The primary interest this time is
on
how the attitudes, values, and perceptions of
clergy and laity affect church response to local
economic crises.
rangy Stress, Coping, and Adaptation
Pauline Boss, Family Social Science, has
included displaced farm families in her studies
of family stress.
She has written Extension
publications (e.g., "Denial," "Ambiguity:
A
Factor in Family Stress Management," and has
collaborated with Ron Pitzer, Extension Family
Life Specialist, Rural Sociology, on family
stress programming.
They have produced
videotaped talks and a film drama on a distressed
farm family.
Pauline's Extension writing and
programming arises in part from participation,
with Gerald-..e Gage, Family Social Science, in
the regional study of stress management in mid
life families.
Professionals in Outreach:
Managing Stress in an
Era of Change
Serving the people of Minnesota has been and
will continua to be one of the major objectives
of the University of Minnesota Extension Service
and its professional staff of county agents,
specialists, and administrators.
Thes:
professionals, however, are also faced with the
everpresent challenges of serving many,
responding to crises, anticipating the future,
and facing competing demands in the face of
limited resources and an everchanging economic
and social situation.
While under stress, these
professionals are able to cope, to manage, and to
develop in this challenging situation.
Conducted
by the Department of Family Social Science, this
research study was designed to document what
stressors and strains they experience, as well as
the coping strategies, appraisals, and
adaptations county agents, specialists, and
administrators make in an effort to provide
outreach services to the people of Minnesota.
Results
Benefits to individuals and families
Critical support for fundamental farm businesP
decisions.
Extension's farm financial software,
FINPACK, has enabled over 12,000 Minnesota farm
families to analyze their farm businesses;
100
of these worked directly with county Extensiot.
staff.
Each family reached by Extension received
2 to 16 hours of individualized consultation in
a
riskfree, confidential learning environment.
FINPACK provided a framework for decision making
by helping identify options based on the family's
unique goals.
Reliable information about real ,roblems.
Information derived from university research
on
farm business, stress, and family resource
management was presented to over 142,000 people
in group meetings and individual consultations.
Realistic action strategies developed.
Following
contacts with Extension, over 6,900 people
developed strategies to continue farming, about
1,500 planned to seek offfarm income, 730
decided to move out of farming, and 9,400 people
worked to cope more effectively with stress.
Rural Minnesota better informed.
Minnesotans who
participated in Project Support activities
were
perceived
more prepared and informed than
others when they sought additional help from
financial and social service agencies.
According to one bank loan officer:
The borrowers who have previously been to
the Extension office were much more in
control and seemed to understand their
situation much better....
Benefits to communities
Helping others help.
Extension staff trained
over 33,000 people in other community groups and
41
Minnesota 35
agencies.
This training focused on farm
financial analysis, stress management, teenage
stress and suicide, and family resource
management.
People attending included;
representatives
from financial institutions,
human service organisations, employment services,
farm groups, and commodity organizations;
vocational agriculture instructors; attorneys;
business leaders; local government
representatives; clergy; and farm advocates.
Extension staff worked with an additional 26,500
people in communities to encourage the
development and maintenance of community support
networks.
Extension Projects
In addition to programs already mentioned in
this section, the following programs are in
place:
Helping Others Cope with Change, a stress-
management series of workshops for
professionals in mental health, counseling,
teaching, ministry, and social service
Farm Couple Support Groups, for discussion
with clientele about stress management
Radio tapes designed to help families adjust
to their changing environments and life-
styles
A four-part television series, titled
"Living Resourcefully," that focuses on
concepts of financial management, housing,
noncash resources, and communications
Volunteer Budget Consultants, Extension-
trained consultants who provide families
with household financial management
information in one-to-one consultations
Project Survive, a ten-week television
series exploring the depth of human hardship
caused by economic limitations of families
County Task Forces, which organize to
discuss the farm crisis and develop a plan
of action for their counties
Community Resource Directories, developed
for farm families, which list agencies'
names, addresses, functions, and telephone
numbers
Statewide Efforts in Agricultural Policy
Education, which included: (1) a conference
at Spring's Hill Center in Wayzata, where
250 banVers, community leaders, and
educators gathered to update themselves on
the national and Minnesota agricultural
situation; (2) three community development
workshops on "Agriculture and Economy of
Northwestern Minnesota" which involved over
200 people, including representatives from
farm organizations, 1
ng institutions,
churches, human servi
agencies, and
farmers; (3) a Farm Family Awareness
36 Mknesota
workshop at the Red River Valley Winter
Shows, featuring work trade, agriculture,
and small town impact topics; and (4) a
series of small business workshops conducted
in three locations in northeastern
Minnesota, with at least 140 people in
attendance.
PEOPLE TO CONSULT FOR FURTNER INFORMATIOW
Please contact the following people for more
information on Minnesota's efforts:
FIRPACK and Farm Financial Management:
Richard O. Hawkins, Professor and Extension
Ec000mist, Agricultural and Applied
Economics
249C Classroom Office Building
St. Paul, 55108
(612) 373-1145
Family Stress in Middle Years (Support Groups)
Ron Pitser, Extension Specialist
Rural Sociology
74 Classroom Office Puilding
St. Paul, 55108
(612) 376-3851
Family Stress
Pauline Boss, Associate Professor
Family Social Science
290 McNeal Hall
St. Paul, 55108
(612) 376-2455 and 373-1578
Values of Rural Families, Rural Church Project
Jim Krile, Research Fellow
Rural Sociology
64 Classroom Office Building
St. Paul, 55108
(612) 376-3854
Teens in Distress
Joyce Walker, Assistant Professor
Minnesota 4-H Youth Development
340 Coffey Hall
St. Paul, 55108
(612) 373-1083
Impact Study of Project Support
Kathy Mangum, Coordinator, Project Supporr
433 Coffey Hall
St. Paul, 55108
(612) 373-5168
Project Survive, Volunteer Budget Consultants
"Living Resourcefully," Radio Tapes on Life-
styles
Irene Ott, Program Leader, Home Economics/
Family Living
48D McNeal Hall
St. Paul, 55108
(612) 373-1863
Studies on Extension Staff's Stress and Coping
Patrick J. Borich, Dean and Director, Minnesota
Extension Service
240 Coffey Hall
St. Paul, 55108
(612) 373-1223
42
Missouri Extension and Research Activities in the Rural Crisis
by John T. Pelham and Judy Heffernan
INTRODUCTION
The current farm crisis continued to deepen
in Missouri during 1985.
The price of
armland
declined 23 percent during the year.
.ie total
decline since 1981 is now more than 40 percent
for the state.
The declines in northern Missouri
were even more severe.
At the same time, prices
for many of the grains produced in the state
declined substantially during the year.
The net
result has been that a substantial number of farm
families lost their farms during the year and
another large group of farm families is facing
major financial difficulty.
This has accelerated one of the major trends
in agriculture during this century, that of a
continuing decline in the number of farms.
The
trend toward fewer farms is not new, but recent
conditions have brought the rate and amount of
decline to the point that it has become
a threat
to many rural communities.
Missouri had
approximately 112,000 farms in 1982, less than
half as many as the peak number in 1935.
During
1985 it
is estimated that about 5 percent of the
commercial farms stopped farming operations
in
the state.
The current forecasts are for at
least that many farms to cease operations
in the
state in 1986.
The rate of decline was rapid during the
1950s and 1960s, but the numbers stabilized
during the 1970s.
Much of this earlier reduction
in the number of farm families resulted from
attrition as farm youth selected nonfarming
occupations and the old folks retired.
During
times of unusual distress, such as now
when the
"cost/price squeeze" has become so
severe that
farm families are faced with involuntary
foreclosure and bankruptcy, many families
are
forced from farming in mtdcareer.
During five of the last seven years Missouri
farm operators have experienced difficult weather
conditions.
Major droughts and floods have
characterized four of these years.
Some counties
have experienced both problems in the same
year.
The 1985 cash-grain crop in the northern part of
the state is a case in point.
Early and
mtdseason weather co.ditione were the most
favorable in the past several years slid
a good-
to-excellent crop was forecast.
An extremely wet
fall and early winter made it very difficult for
farmers to harvest their crops in a number of
counties.
As late as December 20, it was
estimated that 50 percent or more of the soybean
crop and 20 percent or so of the corn crop was
still in the fields in several counties in the
north-central part of the state.
Many farmers
who might survive the larger economic problems
described above are finding it difficult to
cope
with the additional hardships prod! Jed by the
weather.
Not surprisingly, the farmers most
vulnerable to the financial crisis are those with
the largest debt-to-equity ratios.
An analysis
of recent data from the Missouri Mail-In Records
Program grouped members into three categories on
the basis of equity-to-value ratio.
The top
one-third had 91 percent or more equity in their
farm, the middle group had 61 percent equity, and
the bottom third had 27 percent equity.
The
group with the greatest equity-to-value ratio had
an average cash income of $43,595.
The middle
category had $39,036 and the third category
reported a net of $17,680.
These figures do not
include inventory changes or depreciation.
When
these are included the net profit was negative
for two of the three categories.
The highest
equity category had a small positive return
($1,486), the second had a substantial loss
(-$26,163), and the third even more (-$33,912).
In total, the annut
net worth change was a
substantial decline for all farm operators.
The
highest equity category lost $10,228, the second
$49,747, and the third $51,377.
Remarkably, the
farmers in the third category appear to the most
efficient producers by such traditional measures
of efficiency as bushels of grain per acre or
pounds of milk per cow.
Percent equity and lack
of income source diversification, rather than
inferior production ability, seem to be the
primary determinants of farm insolvency on
some
farms.
This contradicts the common suggestion
that the current farm crisis is the result of the
free market weeding out poor managers.
In the fall of 1985, 2,146 responses from a
randomly drawn sample of Missouri farmers were
received.
Forty-three percent of the respondents
reported no farm debt.
However, only 21 percent
of the medium-sized farms and 13 percent of the
large farms reported no debts.
For each of the
groups the percent of farms debt-free has
declined for each of the last three years.
Furthermore, 55 percent of the operators of large
farms and 45 percent of the operators of medium-
sized farms indicated that they were
very
concerned with the debt on their farming
operation.
Again, these figures are a
substantial incremae over the previous years.
Past polls have indicated that more than
three-fourths of the young farmers (less than 45
years old) with large farm operations indicated
that they were "very concerned" with the level of
their farm debt.
In general, the younger farm
families and those without nonfarm income
expressed the most concern.
The perceptions of farmers are quite
consistent with the views of the financial
community.
Surveys of farm lenders in the state
indicate that they expect as many as one-third of
all northern Missouri farm operations to face
involuntary liquidation in the next three
years.
43
Miuouri 37
The financial community itself is in some
difficulty.
The situation of the Farm Credit
System has been widely described in the media.
A
considerable number of Missouri farm banks are
facing increasing financial difficulties.
More
banks failed in Missouri in 1985 than at any time
since the depression of the 1930s.
The FmNA took
"into inventory" more than 120 farms in Missouri
in 1985.
The vast majority of these were through
"voluntary conveyances."
At present more than
3,000 farm operators in the state are behind in
their loan payments.
The effect of the current crisis is not
restricted to farmers and their lenders.
Agricultural and consumer goods suppliers are
also being affected.
The Federal Reserve Bank of
Kansas City reported last year a survey of Tenth
District bankers that indicated 13 percent of
rural nonfarm businesses were having severe
financial troubles.
Many rural families are suffering from the
crisis in ways that go far beyond farm finances.
The suicide rate among Missouri farmers has
increased markedly during the last three years.
Other stress-related problems, such as marital
difficulty, child abuse, and alcoholism, have
been found to accompany the level of financial
stress many Missouri farm families are now
facing.
The impact of financial stress in
agriculture varies across the state.
It varies
from region to region and from farm to farm,
depending as much on local weather conditions
during the last four years as on macroeconomic
factors.
Reports from the Extension field staff
and other sources, however, indicate that the
counties in the northern half of the state have a
disproportionate n, AWW of financially distressed
farms, althoo
where are counties elsewhere in
Missouri wi
ems just as severe.
It is r
ng in one sense tc call the
current situat
in these particularly
distressed areas a farm crisis or even a farm
family crisis.
In these instances it is a crisis
of the total rural community, a crisis resulting
from factors largely beyond the control of the
farm families or the rural population.
Many of
the affected farm families are good producers who
have simply been caught with too much debt to
service under existing economic conditions.
As
their equity in land and other assets has eroded
and their debt has increased, cash-flow problems
have mounted.
Undoubtedly some will be unable to
maintain their farming operations and will have
to make a transition out of agriculture.
Others
may remain farmers if they act promptly in making
the appropriate management decisions.
Many
nonfarm rural families in agriculture-related
businesses are facing similar choices since there
will be a ripple effect throughout the community
that will negatively affect small businesses that
rely in part on the success of the farm
enterprise.
Thus both farm and nonfarm families
in rural Missouri face an increasing burden of
economic hardship and personal stress.
38 Mimed
It is important to recognize that the scope
of the farm crisis situation is very broad and
dependent upon the status of the United States
economy.
The Missouri Extension Service cannot
solve the fundamental problems in United States
agriculture.
However, the program being offered
by Extension represents
reasonable response and
commitment to help the individual families and
communities make more informed decisions and
related adjustments to a changing agricultural
environment.
The situation briefly described above is the
context in which Extension and research
activities oriented toward the rural crisis have
been developed.
The two sections which follow
are descriptive, not completely inclusive, of the
response of the University of Missouri and
Lincoln University toward assisting farm
producers, farm and rural families, and small
communities in dealing with and overcoming these
adverse circumstances.
EITSESION ACTIVITIES
A recent USDA report recognized the Missouri
Cooperative Extension Service as one of the
nation's most active in providing assistance to
distressed farm families.
Extension specialists
representing the University of Missouri and
Lincoln University have combined forces to
develop a number of innovative strategies for
meeting the rural crisis head on.
MOURNS Provides Pieeaciel Meuagemeat Counseling
Instituted in the fall of 1984, MOFARMS is a
not-for-profit corporation funded for two years
through the Missouri Department of Agriculture
and the University of Missouri to provide free
financial counseling to farm families.
Twenty-six consultants, mostly retired
professionals with backgrounds in agriculture and
finance, were trained at University of Missouri-
Columbia to visit farm families in their homes
and assist them in analyzing their financial
situations.
A toll-free hotline at the MOFARMS
referral center received 633 calls, from farmers
in 94 of Missouri's 114 counties, in its first
six months of operation.
To date mire i.et 800
farm families have taken advantage of the
service.
Callers asked not only for financial
assistance, but also for legal counseling,
information on social services and educational
and vocational training, and emotional support.
When staff members were unable to answer requests
directly, they referred callers to other sources.
By November 1985 MOFARMS had provided individual
consultation for more than 700 families.
Community Support Croups Aid Emotionally
Distressed Families
Increased incidence of suicide, divorce, and
child abuse is an unfortunate byproduct of the
farm crisis.
The need to involve other local
leaders and agencies in combatting farm families'
44
feelings of isolation and despair was recognized
early by the Extension staff.
Meetings organized
by Extension specialists were held around the
state to raise the awareness of ministers,
Extension councils, farm organisation
representatives, homemaker club members, elected
officials, lenders, and 4-H leaders.
Linkages
with these groups resulted in a variety of
service., including presentations about stress
and the movie "Country" as springboards for
discussion, training for clergy, training for
farmers and others in dealing with federal
agencies, and emotional support groups.
In
northern Missouri, the area of the state hit
hardest by the crisis, one Extension staff member
helped a farm family with an ?MA appeal
process.
The appeal kept the family in its house and
on
its land for at least an additional year.
Support groups and Extension task force
members also developed and produced more than
75,000 social service resource directories, which
were distributed through church bulletins, ba nk
statements, and Extension contacts.
By November
1985 total participation in the community support
groups was 2,675 persons at 61 meetings.
Extension not only helps people directly,
but also helps Missourians help themselves by
enlisting community sectors to aid each other
during the rural crisis.
Home economists in
northwestern Missouri, for example, worked with
local churches and other agencies to organize
a
free "stone soup supper" at the Maysville High
School.
Volunteers brought vegetables and
prepared the soup.
Local businesses and churches
donated eating utensils.
Families were
encouraged to bring their favorite games and
movies were provided for the children.
An
objective of the program ras to create
opportunities for families to come together and
share in life's joys as well as its sorrows.
Farness Explore Alternative Income-Generation
Projects
The rural crisis has forced farmers
accustomed to thinking only in terms of
traditional sources of revenue, such
as beef,
hog, sheep, and soybean production, to consider
new ways of generating income.
To stimulate
experimental income - producing activities,
university Extension in 1985 funded six
innovative proposals Oat brought fertile ideas
to fruition.
The projects, submitted by rural
Missourians, included production of
a special
type of mushroom for consumption in domestic and
foreign markets, a unique design for construction
of a low-cost utility building, invention of a
device to keep farm ponds free of ice,
development of a rural secretarial service, and
formation of a craft guild.
The maximum funding
for any project was $2,500.
One central Missouri recipient, Ron Macher,
once a conventional livestock farmer, now raises
catfish and prepares them for market in his newly
converted machine shed.
His processing plant is
state-approved so he can sell his own produce and
that of other fish farmers to restaurants and
grocery stores as well as individuals.
As of November 1985 approximately 400
Missourians had been aided by university
Extension in developing off-farm employment
opportunities.
Farmers' markets were created in
40 communities across the state.
In southern
Missouri a four-part training program called
"Ozark Income Opportunities" addressed essential
aspects of starting a new business.
Alternatives for the '80s
Under the banner of "Alternatives for the
'80s," a multidisciplinary group from the
University of Missouri-Columbia Colleges of
Agriculture, Home Economics, and Public and
Community Service, Lincoln University, and
University of Missouri Extension began exploring
a variety of ways to help rural Missourians
develop alternative and supplemental income
sources.
The home-based business project, designed to
assist Missourians who want to establish income-
producing businesses at home, began work on a
craft catalog, "The Best of Missouri's Hands."
The catalog will feature the juried works of 200
artisans and will be sold to galleries and to
retail and wholesale buyers across the nation.
Videotapes for use by would-be entrepreneurs on
how to establish a home-based business, including
marketing, record keeping, and legal
considerations, also are being developed.
Another "Alternatives for the '80s" project,
begun last year and continuing through 1986,
explores the possibility of increasing the
quantity and quality of alfalfa production in the
state.
In a related project early in 1985 an
Extension team began work on alfalfa-pelleting
operations.
Also in the planning :.*-ages is a project to
increase forage-based beef production in
Missouri.
Since 90 percent of M:ssouri's beef
cattle are sent out of state for finishing,
raising lean, low-cholesterol beef cattle
finished on forage rather than gre. n would
considerably increase incomes for Missouri
farmers.
In the early 1900s, Missouri was a leading
producer of horticultural products.
In these
economically distressed times some farmers are
again considering production of strawberries,
blueberries, melons, grapes, and other fruits and
vegetables as a cash-generating alternative.
Under the direction of Lincoln University
horticulturalists, a computer data base of
research and production information is being
developed as a resource for interested growers
around the state.
Demonstration test sites for
horticultural products also are planned.
An alternatives referral center and
clearinghouse, established in 1985, will become
fully operational this year.
A computer software
package, to be distributed to Extension centers
45
Missouri 39
and made available for purchase by individuals,
will list myriad ideas for economic development
used successfully by individuals and communities
around the nation.
In addition, a "Catalogue of
Ideas" is being printed to guide groups through
the process of exploring economic development
alternatives in their communities.
Employment Workshops
In 1985 a series of 12 employment workshops,
sponsored by an interdisciplinary team of
Extension specialists in cooperation with
community groups, offered help in personal skill
assessment, resume writing, and interviewing.
Counselors from the University of
Missouri-Columbia Career Planning and Placement
Center offered tips on networking and other job
search skills.
Panels composed of local
employers shared their expectations of employees
and employment prospects in their companies.
The
employment workshops were just one avenue of
education offered by Extension specialists to aid
victims of the farm crisis.
RESEARCH ACTIVITIES
The major research efforts of the University
of Missouri that have focused directly on the
impact of the rural crisis on families and
communities have come primarily from the
Department of Agricultural Economics and the
Department of Rural Sociology.
Related research
is taking place in the School of Social Work, the
College of Home Economics and the School of
Medicine.
A brief overview of some of the major
research follows.
Information on available
reports and publication of results of the
projects can be obtained by contacting the
researchers listed.
Department of Agricultural Economics
Missouri Agricultural Finance Survey 1986
Professor J. Bruce Bullock--314-882-3545
The recent study of over 2,000 farmers and
other studies by Bullock and his colleagues have
sought to identify the number and characteristics
of farmers and farms affected by the rural
crisis.
The data have been analyzed to show
differences in impact by regions of the state, by
principal farm enterprise and by age of the
farmers.
Food sad Agricultural Policy 'Research Institute
(FAPRI)
Professor Abner W. Womack-314-882-3576
The Food and Agricultural Policy Research
Institute (FAPRI) is a joint university project
with the Center for National Food and
Agricultural Policy at the University of
Missouri-Columbia and the Center for Agricultural
and Rural Development at Iowa State University.
In general, FAPRI has been involved on an
active basis in major policy research at the
national level.
It has the capacity to
quantitatively evaluate national and
international economic factors that impact U.S.
agriculture and the consequence of alternative
farm policy and program proposals and different
segments of the society.
Womack and his staff have provided both a
detailed analysis of the present situation (who
is affected, in what ways, to what extent are
they affected, etc.), as well as projections for
the likely length of the crisis given various
sets of circumstances and/or policy
implementations.
The numerous and timely reports produced by
FAPRI are used by extension farm management
specialists to help farm families evaluate their
present and future situations.
The reports and
congressional testimonies have also been used in
policy deliberations and for public education
through the media.
Department of Rural Sociology
Professor William D. Heffernan--314-882-4563
Research Associate Judith B. Heffernan- -
314 -882 -7232
A study was done of the social, emotional,
and psychological consequences for farmers and
their families of being forced out of farming for
financial reasons.
In this first-of-its-kind
study, the data were obtained during lengthy
personal interviews with 40 of the 44 families
identified as having been financially forced out
of farming from January 1,
1980, to January 1,
1985, in a major agricultural county of the
state.
The data showed extremely high levels of
stress and depression in the families.
The study
documented the tremendous personal pain
associated with losing the family farm that is
experienced by the farm couple as well as their
children of all ages.
Wide variations in support received by the
families was noted.
Without major assistance,
between one-third and one-half of the families
may never again be able to fully function as the
productive members of society they once were.
Missouri Farm and Rural Life Poll
Professor Rex R. Campbell--314-882-6358
Professor William D. Heffernan--314-882-4563
This annual statewide poll with a response
from over 2,000 farmers has focused on farmers
attitudes, perception of the ?roblems facing
farmers and policy options farmers favor.
Data
have been collected over a three-year period on
the farmers' concern with farm debt and farming
plans for the next five years.
46
College of Nome Economics
North-Central Region Committee 164
Professor David R. Imig--314-882-3025
A study conducted cooperatively in nine
states looks at family stress in the middle
years.
While no attempt was node to focus on
the rural crisis, results of this research are
applicable to farm families under stress.
Materials are being developed from this project
for use by extension personnel who work with
stressed families.
Other Related Research
Professor Marion Typpo--314-882-4649
Research by Typpo on families and especially
children impacted by alcohol abuse and family
violence is increasingly relevant as rural
families under stress exhibit these reactions.
Professor Robert Weagley--314-882-6270
Weagley is beginning a long-term study of
the financial behaviors of farming families.
School of Social. Work
Professor Joanne Mermelstein--314-882-6206
Professor Paul Sundet--314-882-6206
Professors Mermelstein and Sundet are
examining various aspects of rural social
services evolving from the rural crisis.
Attention has focused on the special needs
professionals in mental health organizations
perceive as resulting from the farm crisis and
the resources needed to meet these special needs
of a rural community.
School of Medicine
Professor Barry Kling--314-882-4105
Rural health delivery systems face many
challenges as a result of population shifts and
changes in technology.
The current rural crisis
leads to additional strains.
Professor Kling is
working with other health agencies to determine
the consequences of the financial crisis in rural
areas on the health of the people and
implications for the delivery system.
47
Missouri 41
Short-term and Long -term Approaches
to Easing the Farm Crisis:
The University of Nebraska's Response
by Deborah Rood and John De Frain
Nebraska has always been known as Si
agricultural state.
It follows, then, that when
agriculture is in a crisis so is Nebrasxa.
In a
survey conducted by the Nebraska State Department
of Agriculture in January 1986, the
avarage
debt-to-asset ratio for farmers in the state
was
34.3 percent.
Twenty-three percent of Nebraska
operators have a debt/asset ratio between 40 and
69 percent.
Another 13.8 percent him a debt/
asset ratio of over 69 percent.
Of the
respondents to the survey, 6.4 percent do not
plan to operate in 1986 and 15,8 percent do not
plant to operate in 1987.
This has a staggering impact on today's
agriculture, as well as on the future of
agriculture in Nebraska.
The needs and problems
that come to the forefront for individuals,
families, and communities are as many and varied
as there are people.
While we feel that each
family and each situation is different, there
are
projects that can provide basic information and
help to these people.
It is hard to discuss the needs and problems
of an individual without talking about the
family.
What touches the individual, be it a
farmer, farm wife, or child, also touches the
family.
In Nebraska, the needs of individuals
and families include financial planning, legal
advice, stress management, communication
avenues,
emotional support, and transitional help when a
family must leave farming.
Communities are also
seeing the impact that the farm crisis is having
on main street business.
Churches are seeing a
decline in giving and a drop in attendance.
Many
rural people are feeling a sense of quiet
desperation and have no idea of whom to turn to
for help.
The fern crisis has also given people in
farm management and human development that
"teachable moment," so while we need to work with
the families who are undergoing great financial
stress, it is also an opportune time to work with
families who may not be "feeling the heat"
as
much as others.
The time is right to put into
place good management prezt-ices that will have
long-term benefits to agriculture in Nebraska.
The following report talks about the
programs in Extension and the research projects
underway at the University of Nebraska.
The
Extension programs are divided into two groups:
short-term "emergency-type" programs, and
long-term programs that will benefit families in
the future as well as the present.
42 Nebraska
SHORT-TRIM OR EMERGENCY PROGRAMS
Farm Financial Information Line
Farm and ranch families have two main
methods of contacting the Extension Service when
they need help.
In addition to the traditional
approach of contacting their local Extension
agent, they can .all the farm financial
information line.
This is a toll-free call for
anyone in Nebraska.
Since this line was opened
September 1, 1984, over 3,000 calls have been
received.
Ca!lars typically need additional
information on the Managing for Tomorrow program,
want a financial counselor to call on them, or
have a financial question that can be answered on
the phone.
Farm and Ranch Financial Counseling
Financial counseling is provided free of
charge to families who need immediate help in
assessing their financial situation and
evaluating alternative solutions to their
problems.
Four hundred fifty families were given
assistance through this program from February to
April 1983.
Counselors assisted them in
preparing balance sheets and cash-flow plans,
evaluating alternative plans, and filling out
FuBA loan application forms.
Families
appreciated this assistance, but most often they
said they appreciated having an unbiased person
to talk with about their farm business
situation.
Funds for the variable cost of operating
this program were provided by the Nebraska
Department of Agriculture.
Fourteen persons
served as counselors.
They worked from all five
of the university's research and Extension
centers as shown in Figure 1.
Following are some examples of how
counselors met the needs of the farm and ranch
families:
farmer was unsure of what his records
were saying.
Our counselor was able to
assure him that he was interpreting them
correctly.
Another client was having difficulty
getting an operating loan from his bank.
After working with our counselor in putting
together a financial package, the operating
loan was approved.
Many farmers and ra chers were looking
for help in working Pith their lenders.
Our
counselors helped each work with their
records and the producers felt that they
were better prepared and had more numbers to
back them up when they met with their
lenders.
48
In cases where the decision was whether
a farmer would stay on the farm, a counselor
helped them do a financial analysis of their
operation and, just as importantly, gave
them moral support in making a hard
decision.
The Farm and Ranch Financial Counseling
program is being offered again this winter.
This
program began December 1.
Funds for the variable
costs of the program are being provided by the
University of Nebraska Foundation and it will
again be available at no cost to farm and ranch
families requesting the service.
Ten of the
fourteen counselors who served last winter will
continue as financial counselors.
Szteasioa Staff Iasernice !relates
One hundred thirty Extension agents in
Agriculture and Rome Economics participated in
three days of intensive training in early
October.
The topic of the training session was
"Dealing with the Farm Crisis."
They gained
skills in counseling and financial analysis
through work with case studies.
Response to
this training was very positive and another
two-day training session has been requested for
December.
Training sessions such as these are
enhancing the skills of those who have been
working with financially stressed families and
giving basic training to those who feel they need
some training before they work directly with
families on their finances.
This redirection of Extension agent's
efforts represents a major reallocation of
existing resources.
Agents are developing
programs to address problems unique to their
counties.
Examples of activities planned for
this winter include:
teaching financial
management and farm record keeping, developing
and publicizing community resource inventories,
encouraging the growth of support groups, and
organizing a network of neighborhood hotlines.
Dr. Lucas, Dean and Director of the Nebraska
Cooperative Extension Service, has suggested to
the county staff that at least 50 percent of
their resources should be directed to helping
farm and ranch families with financial
management.
Farm Stress Workshops
As shown in Figure 2, Extension specialists
have conducted numerous farm stress workshops
during the past two years.
Some of these
sessions were specifically for training helping
professionals (clergy, mental health workers, and
Extension agent1), who in turn work directly with
people in rural areas.
The majority of the
sessions helped farm and ranch families recognize
symptoms of stress 'verload and how they could
develop skills for remaining in control of their
lives.
Since October 1983, 2,347 people have
participated in these farm stress workshops;
since October 1984 the number is 1,630.
Dr. Leon Rottmann, a Rumen Development and
Realth specialist in Cooperative Extension, has
44 Nebraska
facilitated 270 stress-management workshops
across Nebraska in the past decade--48 workshops
last year alone.
Rottmann reports the demand for
such workshops is literally overwhelming,.
Assistaace to Castomera of Failed Racks
Assistance was provided to clients of failed
banks in eleven communities.
Extension agents
and specialists assisted families in preparing
their "financial portfolios" for presentation to
other lenders, filling out FmliA loan application
forms, and evaluating alternatives for
reorganizing their operations.
A set of
guidelines for an Extension agent's response to a
bank closing were developed and distributed to
agents in September.
Sebgeide Series ea Legal 'saws Relating to
liainicial Stress
Drafts of six Nebguides are currently being
reviewed.
These guides address commonly asked
questions about legal and tax problems associated
with financial stress.
Additional Nebguides will
be added to this aerie,.
The purpose of this
series is to provide an unbiased source of
information on sensitive topics such as
bankruptcy, tax implications of loan write-offs,
property interests, and how to select a lawyer.
LOIIG-TERX PROGRAM
Meaning for Tomorrow
The Nebraska Cooperative Extension Service
has developed a comprehensive education/
consultation program to help families improve the
long-term profitability of their farm or ranch
business.
Six hundred farm and ranch families
participated in Managing for Tomorrow last
winter.
Managing for Tomorrow is continuing this
winter.
The Managing for Tomorrow program is helping
farm and ranch families develop long-term
management strategies for survival and profit.
Financial analysts instruct, encourage, and coach
the families in evaluating their personal and
financial situations.
Family members jointly
develop goals for their business and family.
These goals become the measuring sticks for
determining their success.
This process was a
valuable experience for many families.
Comments
such as, "We haven't talked about the farm this
much in twelve years of marriage," and, "I had no
idea my husband felt that way about the farm,"
were heard often.
Following is a brief case
history which demonstrates the value that goal
setting had for one family:
A south central Nebraska farmer in his
mid-50s was relating a story to illustrate
his satisfaction with having participated in
Managing for Tomorrow.
A paraphrased
version of his remarks is presented here.
My wife and I and our two single sons
who are in their late 20s were enrolled in
50
Managing for Tomorrow.
At the end of the
first workshop, when nearly half the time
had been spent on GOALS, I went home
thinking that it wasn't worth going back.
But I did go back, and at the end of the
second workshop, when we had again spent
nearly half the time working on GOALS, I
went home convinced that I wouldn't go back.
But I did go back, and all of us completed
the four workshops.
The real story, though, is this.
For
the last several years the wife and I have
just assumed that anything we wanted the
boys were against, and that anything the
boys wanted we would be against.
As we
worked on the GOALS, we came to realize that
deep down we all wanted the same things and
that we really were headed in the same
direction.
Around our place it's been the most
peaceful summer that we've had in years.
And I'd recommend Mauaging for Tomorrow to
anyone without qualification.
Everyone in
farming ought to be in it.
The goal-setting process was also valuable
for families who found that it was necessary to
scale down operations or to get out of farming.
"The Managing for Tomorrow program helped us in
establishing new goals and to maintain a
positive attitu4e toward our transition," was a
comment from one family who decided, after
analyzing several alternatives, that they should
not continue in farming.
Guiding families through the process of
evaluating their human and financial resources
takes time.
Four all-day workshops, each a week
apart, compose the first part of the program.
Financial analysts then meet with families
individually to guide them through the analysis
of their personal situation.
Managing for
Tomorrold 111 an educational program.
The goal of
the program is to provide families with the tools
and skills they need to repeat this planning and
evaluation process on their own year after year.
The financial analysts do not tell the families
what to do.
They help the families through a
decision-making process.
"We knew we had
problems, but didn't know that we needed to take
action immediately," was the comment from a
family whose financial analysis showed that their
$200,000 net worth was eroding at the rate of
$50,000 per year.
The participating families pay a fee of $200
each.
The actual cost of the program is about
$1,000 per family.
The remainder of the cost is
paid from grant funds and reallocation of
Extension staff resources.
Grants have been
received from state legislative appropriat4.ons,
the Nebraska Department of Agriculture, and the
Extension Service (ES)/USDA.
We hope that grant
funding will continue so that more families can
take advantage of this program in years to come.
We feel that this program will produce a positive
impact on the Nebraska agricultural sector
through the development of a core group of farm
and ranch operators who will be "managing for
tomorrow."
Women is Agriculture - -Building the Future
Farm/ranch women are interested in taking a
more active role in the management of farms and
ranches.
This became apparent in the evaluations
received in the Managing for Tomorrow program.
The women generally felt that they would like to
learn some management skills in an environment
which included other women like themselves.
A
conference was held in Kearney in September,
"Women in Agriculture--Building the Future." The
conference was planned for 100 persons.
Two
hundred eighty women attended, representing more
than two-thirds of the counties in Nebraska.
The
interest in this type of conference was so great
that Extension agents held six more conferences
in their districts.
It is certainly logical for the farm/ranch
woman to get involved in management.
When we
consider the wide range of management skills that
are required in producing, financing, and
marketing on a diversified farm, it is more than
one person can stay on top of at all times.
There are gains to be realized from division of
management, just as there are from division of
labor.
These conferences are helping develop a
valuable resource.
Coals Conference
Another outgrowth of the Managing for
Tomorrow program was a conference in September in
which 45 persons from 12 states and Canada came
to Lincoln to be trained in the use of the goal-
setting materials.
The concept of helping
families establish realistic goals as the first
step in working with them is sound.
The
materials developed for the Managing for Tomorrow
program are the most comprehensive and effective
set of goal-setting materials that has ever been
developed specifically for use by farm and ranch
families.
Two states, Ohio and South Carolina, have
held training sessions on the goals riaterial
taught by members of our Managing for Tomorrow
staff.
Farm Business Association
The Cooperative Extension Service continues
its sponsorship of the Nebraska Farm Business
Association.
This is a self-supporting group of
330 farm families who are dedicated to keeping
records and using them for better management of
their businesses.
This program began in 1976 and
continues to be a valuable resource for those
enrolled.
A consultant, hired by the families,
works with each of them on analyzing and
interpreting their records.
51
Nebraska 45
Operative Shoehorn
Many families who participated in Managing
for Tomorrow realised that they needed better
records.
They wanted to learn to do their own
records.
Operation Shoebox has been developed to
meet this need and will begin in January 1986.
It is a do-it-yourself records system.
Instructors will provide instruction and computer
resources for the families.
The participating
families will pay the variable costs of this
program.
Managing for Tomorrow II
Many of the families participating in
Managing for Tomorrow expressed a need for a
continuing relationship with the program.
There
were areas of subject matter in which they would
like additional training and they wanted an
opportunity to update their analyses each year.
A two-day program was offered to Managing for
Tomorrow alumni in January.
It gave them a
refresher on goal setting, computerized financial
analysis, and a day of instruction on marketing.
Interactive Videodisc Instruction in Cash-Flow
Planning
Our staff is developing an interactive
videodisc instruction program which is on the
cutting edge of technology.
The videodisc will
teach farmers and ranchers how to develop and use
a cash-flow plan.
This project is funded with a
grant from ES/USDA.
The motion and color of the
videodisc, combined with the capabilities of the
microcomputer, make effective, realistic
instruction possible at any time and place.
Evaluations of previous instructional efforts
with interactive video have shown that subjects
learn faster and retain more than with live
instruction.
This, and possible future
videodiscs, should make it possible for farmers
and ranchers to learn and relearn procedures,
like cash-flow planning, without the time and
travel expense of Extension specialists.
This is
a long-run investment and is a national
demonstration project.
It is an example of the
leadership role of the Nebraska staff.
Tracking Household Expenses
Dr. Kathy Prochaska-Cue, an Extansion Family
Economics specialist, has worked with the Ag
specialists on their Managing for Tomorrow
program and put together program ideas for better
tracking of household expenses, cutting costs in
time of crisis, and finding community resources.
Rome-Based Businesses
Dr. Janet Wilson, a Consumer Education
Extension specialist at the University of
Nebraska-Lincoln (UN-L), has developed a workshop
on starting a home-based business, and has
presented her program at 20 different conferences
46 Nebraska
all over the state of Nebraska.
Farm women are
especially interested in the program.
EESEARCE
Building Family Strengths
Under the direction of Dr. Nick Stinnett and
other researchers in the Department of Human
Development and the Family, 30 different master's
theses and doctoral dissertations have focused on
family strengths and strong families; 4,000
families, from every state in the United States,
have participated in these studies.
One recent
study, by Dr. George Rowe and Dr. Herb Lingren,
focused on the strengths and stresses of 500
rural families.
The most significant finding of
the family strengths research over the years has
been the qualities of strong families:
commitment, appreciation, communication, time
together, spiritual wellness, and the ability to
cope with stress and crisis.
The research is best summarized in a
recently published book, Secrets of Strong
Families (Boston:
Little, Brown & Co.
.
The
family strengths research at Nebraska and other
universities was the subject of a recent
congressional hearing before the Select Committee
on Children, Youth and Families in the U.S.
capital.
Dr. Herb Lingren, a Family Life specialist
in Cooperative Extension, conducts four to five
major conferences on building family strengths in
Nebraska each year.
The Department of Human
Development and the Family also sponsors the
National Symposium on Building Family Strengths
in Lincoln each May, drawing several hundred
presenters and participants from 35 to 40 states.
Sister conferences on family strengths have been
established at Pennsylvania State University and
Pepperdine University in Los Angeles.
The family strengths research is seen as a
long-term approach to enhancing the crisis-
meeting resources of families.
The Changing Structure of Rural Nebraska
Communities:
Evaluating Economic, Sociological,
and Psychological Impacts from the Current
Agricultural Crisis
This research will evaluate the effects of
the farm crisis on rural Nebraskans and their
communities, and delineate possible longer-term
structural changes occurring in rural
communities.
Faculty involved in the research
project include:
Dr. Bruce Johnson, Department
of Agricultural Economics, UN-L; Dr. Duane Olson,
Department of Agricultural Economics, UN-L;
Dr. John Yanagida, Department of Agricultural
Economics, UN-L; Dr. David Scott Hargrove,
Department of Psychology, UN-L; and Dr. Richard
Meile, Department of Sociology, UN-L.
52
Family Strengths in the Middle Tears
Finally, it
is important to mention the work
of the North Central Regional Research Project
(NC-164).
The project has findings which are
very germaine to those involved in trying to ease
the farm crisis.
University-based researchers in nine states
are in the final stages of a study on family
stress in the middle years.
More than 1,900
families responded to a 27-page questionnaire
which looked at the stressors families faced and
how they responded.
The study is the largest of
its kind ever undertaken and its preliminary
results are worthy of serious study.
The research focused on intact families with
husband, wife, and at least one child still
living at home.
The parents were in their middle
years and children were about to leave home or
had recently left.
Past studies tended to focus
on families with young children or families of
the elderly.
This study dubbed the middle-aged parent
"the sandwich generation" and found that it is
difficult for couples in this period to find the
time and energy for their own wants and needs.
Types of Stressors
The researchers studied families in Indiana,
Iowa, Kansas, Kentucky, Louisiana, Michigan,
Minnesota, Missouri, and Nebraska and found that
the families who had large numbers of changes
occurring during the last three years experienced
higher levels of stress than other families.
The
families rated each type of change according to
their perceptions of the stress they cause.
Below is the ranking the 3,800 individual parents
in 1,900 families gave to each stressort
1.
Family member involved with the courts
2.
Family takes a major financial loss
3.
Member experiences major emotional
problems
4.
Child has serious illness/accident
5.
Major wage earner has serious accident!
illness
6.
Marital separation
7.
Death of adult brother or sister
8.
Major wage earner loses/quits job
9.
Death of husband or wife's parents
10.
Aged parent becomes ill
11.
Expenses exceed total family income
12.
Relatives become intrusive
Both husbands and wives reported these events to
be stressful, but they ranked the events in
slightly different order:
wives perceived
family-related matters as more stressful, in
general, while husbands saw job-related and
financial concerns as more stressful.
The researchers found that stressors have an
additive effect.
That is, if they tend to pile
up, one on top of the other, the final straw can
break the camel's back.
The higher the stressors
pile up, the more likely a family is to
experience emotional, relational, and health
difficulties.
In short, the more troubles we
have, the more likely we are to become physi,ally
and emotionally sick.
And our family
relationships suffer because of the stress.
The researchers found that one typical
scenario in the middle years goes like this:
A
family with teenagers experiences the typical
adolescent problem we all can describe,
including pimples, dating, busy schedules, and
everyday worries.
About the time the oldest
youngster is to leave home and the family has to
adjust emotionally and financially to molft, a
grandparent falls and injures a hip.
This
requires hospitalization and at least temporary
placement in a nursing home.
If a parent loses a
job at this time due to an economic downturn, or
the family business goes to pot, the family may
feel overwhelmed by problems.
Stress-Related Symptoms
The middle-aged parents in the study were
asked to report symptoms of stress they saw in
themselves and in each child still living at
home.
The list below begins with the most common
symptoms of stress and proceeds to the least
commonly reported symptoms:
1.
Irritability
2.
Problems with weight
3.
Muscle tension and anxiety
4.
Use of prescription drugs
5.
Difficulty relaxing
6.
Use of tobacco
7.
Depression
8.
Headaches
9.
Frequent colds or flu
10.
Difficulty sleeping
11.
Use of alcohol
12.
Accident proneness
Parents generally reported more symptoms of
stress than children.
Wives reported more
symptoms than husbands.
53
Nebrulis 47
Financial Pressure
The data for the study were collected in
1982, mainly in the Midwest, and are still being
analyzed.
This was in the midst of an economic
down-turn foie the midwestern agricultural sconomy
in general and the United States as a whole.
Many families experienced financial pressures and
developed a number of ways for saving money in
tight times:
1.
Eat at home more often
2.
Spend less on entertainment and
recreation
3.
Spend less on clothing
4.
Spend less on personal improvement
5.
Spend 'ess on laundry and dry cleaning
6.
Do more clothing repairs and alterations
7.
Seek less medical care
Other tips the families offered for saving
money included:
using store coupons more often,
using self-serve gas, increasing spending for
store refunds, buying on sale and specials,
calling long distance at cheaper rates, home
growing fruits and vegetables, increasing canning
and freezing of foods, making gifts instead of
buying them, servicing and repairing the car
yourself.
Coping with Stress
The families were asked how they coped with
the many life stresses in general.
They ranked
their stress-management techniques in descending
order:
1.
Attending church services
2.
Sharing concerns with close friends
3.
Facing problems head-on and trying to find
solutions
4.
Participating in church activities
5.
Sharing difficulties and doing things with
relatives
6.
Seeking information and advice from the
family doctor
7.
Seeking information and advice from
persons in other families who have faced
similar problems
8.
Asking for and accepting help from
neighbors
9.
Seeking help from community agencies and
programs
10.
Seeking professional counseling
48 Nebroka
The researchers concluded that physical and
emotional problems can be indicators of high
stress levels and if the signs appear in a
family, people need to find help.
First and
foremost the researchers recommended talking.
Don't try to do it all alone;
it simply can't be
done.
Talk to other family members, to
relatives, to friends.
Counselors and support
groups in the community can also be helpful.
The
researchers also stressed the importance of
proper nutrition, adequate rest and sleep, plenty
of exercise, and fun activities in what can get
to be a dreary, repetitive life.
(The source for
this section was the North Central Regional
Committee 164, Agricultural Research Service,
U.S. Department of Agriculture, Washington, D.C.
The material was adapted from a preliminary
report by the Cooperative Extension Service, Iowa
State University, Apes.)
EXTENSION PROGRAMS AND RESEARCH PROJECTS FOR THE
FUTONS
The possible areas of study and programming
are limitless.
In Nebraska we see a potential
for a number of research projects and Extension
programs.
The future in Nebraska will include
continuing the programs that we now have in place
and, as funds allow, adding new programs and
research projects.
The major research area that we see is a
"rural refugee" study, dealing with displaced
farm/ranch families.
This study would look at
how families cope with the stress of change,
where they go for support, how they deal with
reassessing their goals, and how they go about
finding a job.
This study could give us insight
into dealing with the large number of families
that will be displaced by this farm crisis.
An
interesting aspect could be the difference
between states where displaced farmers have ready
opportunities for employment within commuting
distance and states where families will have to
relocate to find work.
The effect of the farm crisis on communities
needs to be researched.
A program that helps
assess the strengths and weaknesses of a
community is needed.
If a community can decide
what their needs are &no how they can meet them,
they would then have goals that they could work
toward.
In the area of Extension programs we see a
great need in facilitating the sharing of
solutions.
In Nebraska we have found that farm
families are their own best teachers.
Families
can be very creative in finding solutions on how
to stay in farming, how to get back into farming
once they have sold out, and how to adjust to
life without farming.
While we must continue to
teach the basics of farm management to farm and
ranch families, we also need to address the
personal side with the help of people who have
been through "the fire" and have come out on top
with their family life and self-esteem.
54
The farm crisis has given us fertile ground
for research and Extension programming.
The
topics discussed above are just a few of the
pressing problems ag families are facing.
Our
resources do not permit us to do everything we
would like to.
We must set priorities and move
on.
Every day that we waste, another family is
not helped.
We must be aware of the human toll
this crisis is taking and how we are impeding the
process by not reaching out.
Extension and
research staff 'embers need to work closely so
that Extension specialists can usa preliminary
research tesults in helping families now.
We
must break down the old boundaries of waiting
five to seven years for results; the cost is too
high.
We must use the knowledge that is gained
the first year and the second year to help the
families that are going through the process.
Now
is the perfect time to blend research and
Extension together for the good of the families
in the farm crisis.
55
Nebraska 49
Coping with the Farm Crisis in North Dakota
by F. Larry Leistritz, Arlen Leholm, and Harlan Hughes
INTRODUCTION
The farm debt, high interest rates, and the
cost-price squeeze in agriculture have caused a
financial crisis for many North Dakota farm
families.
Many farm families, as well as many
families in rural towns, are faced with declining
income and the related problem of inadequate
family living incomes.
North Dakota farmers and
rancher. are facing their most severe financial
crisis since the 1930s.
A 1985 telephone survey of randomly selected
North Dakota farm and ranch operators identified
key financial and demographic characteristics of
farm operators and their families.
Nine hundred
thirty-three farmers completed the survey for a
response rate of 77 percent.
Initial screening
questions were used to ensure that all
respondents were less than age 65, were operating
a farm, considered farming to be their primary
occupation, and sold at least $2,500 of farm
produce in 1984.
Some of the findings of the
survey are:
1.
Seventy-two percent of the farms had gross
incomes in the range of $40,000 to
$250,000.
2.
Although net cash farm income averaged
$14,897, 24 percent of farm operators in
North Dakota experienced zero or negative
net cash farm income in 1984.1
3.
Respondents' estimates of the value of
their total assets as of January 1, 1985
averaged $423,042 and their debts averaged
$139,870.
The average North Dakota
operator was carrying approximately 33
cents of debt for every dollar of assets
he controlled.
4.
At current prices, input costs, and asset
values, most commercial farmers begin to
experience difficulty meeting principal
repayment commitments at debt-to-asset
ratios (debt ratios) around 40 percent.
Above 70 percent, most farmers have
difficulty meeting even their interest
payments and other current expenses.
As
indicated below, approximately 38 percent
of the North Dakota farmers had debt
1
Net cash farm income is defined as gross farm
income less gross cash farm expenses and
depreciation.
Net cash farm income does not take
into account principal payments or changes in
inventory of grain and livestock products during
the year.
50 North Dakota
ratios in the ranges generally associated
with considerable financial stress.
Debt-to-Asset Ratios
No Debt
1-40 percent
41-70 percent
71-100 percent
16.7%
45.2
23.4
14.7
5.
The relationship between the debt-to-asset
ratio and farm families' ability to meet
cash-flow needs is summarized in Table 1.
Two-fifths of all farm operators surveyed
had levels of total family income which
were insufficient to cover family living
expenses.
For farm operators with no
debt, about 20 percent appear to be
experiencing problems in meeting immediate
cash-flow needs.
Sixty percent of those
with debt ratios over 70 percent are
experiencing cash flow problems.
When principal payments were also taken
int account (see bottom half of Table 1),
more than half of the operators surveyed
had income levels insufficient to cover
operating costs, family living expenses,
and principal parments.
Of those with
debt ratios over ,0 percent, about 90
percent could not cover these cash
expenses.
It has been estimated that $375
million would have been needed in North
Dakota alone to offset the shortfall
experienced by these farm operators in
1984.
The significance of this becomes
quite apparent when one considers the fact
that the current annual general fund
budget for North Dakota is about $563
million (Leistritz et al. 1985).
6.
The debt ratio is strongly associated with
the age of the operator and the year that
he started farming.
Of the North Dakota
operators with no debt, 60 percent are
over age 35 and 82 percent are over 45.
On the other hand, 67 percent of those
with debt ratios over 70 percent are under
age 45.
of the operators with
no debt,
70 percent began farming before
1959, 'while out 64 percent of those with
debt ratios over 70 percent began farming
after 1969.
7.
When the education levels of North Dakota
farm operators and spouses are categorized
by debt ratio, it is evident that the more
highly leveraged famili2s (whA tend to be
younger than averag,' generally have
attained h;;her levers of education.
This
additional ew.ca.ion should prove
ad "sntageous if and when these operators
and their families consider leaving the
farm for other employment.
56
8.
A major concern to the public services in
rural communities, such as school systems,
is the impact that farm families leaving
the community will have.
The more highly
leveraged farmers have above-average
numbers of school-age children.
If farm
families from the more highly leveraged
groups are forced to leave their rural
communities, the reductions in school
enrollments could be substantial.
9.
Approximately 25 percent of the operators
were employed off the farm in 1984 (Table
2).
An association between off-farm work
and the farm's debt ratio is obvious.
The
percentage of operators working off the
farm ranges from 16 percent for farms with
no debt to 36 percent for those with debt
ratios over 70 percent.
Similar patterns
of off-farm employment were noted for farm
operators' spouses.
IITEESION PROJECTS
The objectives of North Dakota's Cooperative
Extension Service's program in financial
management are to help farmers and farm families
better ut.derstand a 'road range of management
topics, including:
financial management and
decision making, risk management, enterprise
analysis, determining costs of production,
crop
and livestock budgets, farm records, economic
value of land, rental rates and leases, farm
business organizations, partnerships, estate
planning, income tax management, and other topics
related to achieving farm and family goals.
Specific program emphases in farm financial
management during the 1984/85 and 1985/86
Extension years were:
1.
Two-day financial management workshops:
Approximately 45 two-day and several
one-day financial management workshops for
farmers and farm couples were held over
the state in the 1984/85 program year.
Over 2,000 people attended these intensive
workshops.
Five two-man teaching teams
were comprised of farm management,
marketing, and community development
faculty, and two area farm management
agents.
Thirty-one additional workshops
were held in the 1985/86 program year.
Major subject matter for these
workshops included farm financial
management, using the balance sheet,
income statements and cash-flow budget,
setting farm and family goals, and
understanding family financial
management.
2.
Farm financial analyst program:
In
1984/85 North Dakota's Cooperative
Extension Service initiated the Farm
Financial Analyst Program in response to
the financial crisis on many North Dakota
farms.
Grant funds were received to help
support the program which was implemented
with the cooperation of the agricultural
credit agencies.
Fifty-six analysts were
trained to work with farm families on an
individual basis to help analyze farmers'
financial situations and to identify
alternative solutions to farmers'
financial problems.
The analysts worked
with about 700 farm families, averaging 16
hours per farm family.
This program is
being continued in 1985/86 with
approximately 50 analysts and we expect to
serve over 1,000 farm families.
3.
Farm and family goals and family financial
management:
This program was initiated in
cooperation with the Extension Home
Economics faculty.
It includes emphasis
on a procedure to encourage families to
identify farm and family goals and to use
family financial management to help
achieve these goals.
This was included as
part of the two-day financial management
workshops.
Also, field staff were trained
to conduct local meetings for farm
couples.
4.
One-day farm management, enterprise
analysis, and credit use workshops:
Workshops include enterprise budgeting,
cost analysis, time value of money,
coordinating management, and developing
written marketing plans.
5.
Farm records and analysis:
County agent
training on farm records were conducted so
that these agents could teach farm records
to local clientele and provide information
on record keeping and analysis to farmers.
A new record book was developed this past
summer in cooperation with adult vo-ag
staff.
This new record book corresponds
directly to the cash-flow record keeping
and the financial analysis that was taught
in the finance 1 management workshops.
6.
Annual two-day Northwest Farm Managers
Conference:
This annual event, which
includes invited speakers on current farm
management concerns, is implemented by
research and Extension staff in
cooperation with the Farm Managers Board
of Directors.
7.
Conferences with agricultural credit
agency staff:
Six conferences are held
over the state each fall for agricultural
credit staff from banks, PCA, FmHA, and
Fede-al Land Banks.
These are afternoon-
evening sessions for discussion of
financial conditions of farmers, commodity
price outlook, and an overview of
Extension programs on farm management and
marketing.
8.
Economic input for production agriculture
programs:
Cooperate with Extension staff
in production disciplines for economic
analysis of crop and livestock production
practices.
57
North Dakota 51
WW= ACTIVITIES
Major research activities which have been
undertaken to deal with the current financial
crisis in North Dakota's agriculture are:
1.
A telephone survey of randomly selected
farm operators conducted March and April
1985 to identify key characteristics of
farm operators and their families and to
provide insights concerning (a) adjust-
ments likely to be faced by the affected
farm operators and their families and
(b) impacts likely to be experienced by
agriculturally dependent rural
communities.
Results from this study were
summarized above and considerably more
detail is available in several research
reports and papers (Lehol et al., 1985;
Leistritz et al., 1985).
2.
A study of farm - dependent communities in
North Dakota was initiated October 1, 1985
with partial support from the Agricultural
and Rural Economic Division of the
Economic Research Service, USDA.
This
research will focus on the relationships
between the farm sector, the agribusiness
sector, and rural communities, with
special emphasis on the relationship
between farm financial stress and
community economic well-being.
3.
North Dakota State University researchers
have cooperated in analysing results of
the Farm Finance Surveys conducted by the
Statistical Reporting Service (SRS) in
cooperation with the North Dakota
Department of Agriculture (Pederson
et al., 1985).
4.
A program of legal-economic research has
focused on alternatives for financially
stressed farmers.
An early product of
this work is a report on "Tax Implications
of Liquidating a Farm Operation"
(Saxowsky et al., 1985).
CONTACT !MOSS
A. Research
1.
Larry Leistritz (701-237-7455)
2. David Watt (701-237-7470)
3.
David Saxowsky (701-237-7466)
S. Extension
1. Arlen Leholm (701-237-7379)
2. Harlan Hughes (701-237-7380)
52 Nosh
Dakota
Table 1.
Cash-flow Analyses by Debt-to-Asset Ratio, North
Dakota
No Debt I-40% 41-70% 71-100% Total
Simulation I
Total farm family
Income less family
living expense
Average
530,023 513,243
5701
S-5,258 $10,102
Distribution:
Negative 19.9%
35.9% 53.6%
60.1%
42.0%
0 to $19,999
35.4 37.0 35.2 32.1 35.6
520,000 and
WNW
44.9 27.1 11.2
7.8
23.5
Simulation 2
Total farm family
income less family
living expense and
principal payments
Average
530,023
$4,909 S-19,9'0
5-31.496 5-2,075
Distribution:
Negative
19.8% 51.2% 80.5% 89.1% 59.2%
0 to 519,999 35.4 28.6
15.1 9.31
23.9
520,000 and
over
44.9
20.3
4.4
1.6 18.0
Table 2.
Off-Farm Work Participation of North Dakota Farm
Operators and Spouses by Debt-to-Asset Ratio
No Debt 1-40% 41-70% 71-100% Total
-----------------Percent
Operator amp toyed
off the farm In
1964 15.7
22.3
27.9 36.2
24.6
Spouse employed
off the farm In
1984
21.0 30.3
34.6 38.0 31.0
REF MEWLS
Tare Finance Survey, January 1986."
1986.
North Dakota
Crop and Livestock Reporting Service, February.
Leholm, Arlen 8., F. Larry Leistritz, Brenda L. Ekstrom, and
Hervey G. Vreodhenhil. 1985. Selected Financial and Other
Socioeconomic Characteristics of North Dakota Farm and
Ranch Operations. Ag. Econ. Report No. 199. Fargo:
North Dakota Agricultural Experiment Station.
Leistritz, F. Larry, Harvey G. Vreugdenhil, Brenda L.
Ekstrom, and Arlen G. Leholm. 1985. Off-Farm Income end
Employment of North Dakota Farm Families.
Ag. Econ. Misc.
Report No. 88.
Fargo:
North Dakota Agricultural
Experiment Station.
Pederson, Glees, David Watt, and Harvey Vreugdenhil. 1985.
Term Financial Stress In North Dakota." North Dakota
Research 43(41:3-6.
Saxowsky, David M., and David Watt. 1985. IIIILvlications
of Liquidating Farm Operation. Ag. Econ. Misc. Report No.
87, Fargo:
North Dakota Agricultural Experiment Station.
58
Ohio Farm Financial Management Programs
by David R. Miskell and LeRoy Hushak
INTRODUCTION
The farm financial crisis in Ohio is a major
concern to farmers, agricultural lenders, rural
community leaders, and many farm, civic, and
religious organizations.
The news media have
devoted considerable attention to the farm
crisis.
Weather conditions in Ohio since 1980 have
had an impact; severe hail and wind storms one
year and extremely dry hot weather during two
other years hurt a number of farmers.
Relatively
low crop prices, increasing production costs, and
deteriorating land values have forced a number of
farmers to liquidate as of 1985.
Ohio has many part-time farmers; over 50
percent of the income to Ohio farmers comes from
nonfarm sources.
As a result, small part-time
farmers may have a negative farm income, but the
off-farm income subsidizes the farm operation and
provides for family living expenses.
Farmers in
Ohio and/or their spouses have the opportunity
to obtain off-farm employment without having to
commute long distances.
There are, however,
several thousand farm families facing serious
financial problems.
This influences family
relationships, including the attitudes of the
children.
Although a few agribusinesses, including
banks, have suffered losses due to farmers going
bankrupt, there has not been a major problem with
agriculture-related and dependent businesses.
Most farm organizations, and to a great
extent church groups, have expressed concern over
the farm situation.
These organizations and
groups are at a loss for what to do.
Situation
A March 1985 survey revealed that among
Ohio's approximately 22,000 family-sized
commercial farms (gross annual sales $40,000 or
above) approximately 10 percent or 2,200 farms
were having extreme financial problems
(debt/asset ratios above 70 percent) (Lines and
Pelly, 19851.
Nineteen percent (4,700 farms)
were having serious financial difficulties
(debt/asset ratios of 40 to 70 percent).
This
indicated that approximately 71 percent or 15,600
farms had no apparent serious financial problems
(debt/asset ratios under 40 percent).
When all
of Ohio's 90,000 census farms were included, 24
percent with non-real estate debt and 16 percent
of those with real estate loans were delinquent
in their payments.
Three percent or 2,700 farms
were involved in some type of legal action in
connection with delinquent loans.
Ohio's larger
commercial farmers were experiencing much more
stress than the smaller part-time farmers, as
farms with debt/asset ratios above 40 percent
range from 12 percent of farms under 100 acres to
59 percent of farms of 750-1,000 acres.
The
proportion of all Ohio farms with debt/asset
ratios above 40 percent varied across different
parts of the state; the eastern part of the
state, where most of the small farms are located,
had the lowest debt/asset ratios, whereas in the
western, and particularly southwestern, part we
found the highest debt/asset ratios.
A similar survey done in February 1986
indicated that there were approximately 20,000
farms with cash farm sales of $40,000 to
$500,000. This implies there were 2,000 fewer
commercial farmers one year later (Ohio Crop
Reporting Service 1986). Of these 20,000
commercial farmers, 9 percent had debt/asset
ratios exceeding 70 percent.
Twenty-one percent
had debt/asset ratios of 40 to 70 percent, and 70
percent of the farms had debt/asset ratios of
under 40 percent.
The survey also indicated that
approximately 5 percent of all farmers in Ohio
are planning to quit operating in 1986, 3 percent
of them because of financial difficulties.
The
study also revealed that 4 percent or
approximately 800 farmers are delinquent on real
estate loan payments and 7 percent or 1,400
farmers are delinquent on their non-real estate
loan payments.
Based on this data, as many as 30
percent of Ohio's family-sized commercial farms
are having serious cash-flow problems and 9
percent of these have extremely severe financial
problems and are moving towards insolvency.
Summary
The Extension Service in Ohio has launched
an extensive farm financial management
educational program over the past several years,
starting with workshops on coordinated financial
statements.
This has been followed up with
additional computer programs to assist farmers in
better realizing where they stand financially
with their farm operations.
On March 1, 1985 a
CES Farm Program, which included the creation of
a toll-free hotline and the organization of
"immediate response" teams, was set in motion to
assist farmers facing financial crises.
The CES
Farm Program involved the county Extension
agents, Agriculture, Home Economics, and
Community and Natural Resource Development
(CNRD), and district personnel working together
with farm families who requested assistance
either through their local county Extension
office or through the hotline.
The state task
force gave leadership to the program and in each
of the five Extension districts in Ohio a
district task force was organized to coordinate
activities within the Extension district.
59
Ohio 53
A number of Extension educational and
research efforts have been underway to assist
farm families facing severe financial crises.
These programs have been multi-disciplinary and
have involved state, district, and county faculty
working jointly with farm families who have their
backs to the wall.
Much of the Extension
program was directed to the CES Farm Program,
which involved one-on-one consultation with farm
families.
In addition, workshops were planned
utilizing the FINPACK computer program to assist
farm families needing a better understanding of
their financial picture and possible alternatives
available to them.
The CES Farm Program has been
given much acclaim and, as a result of the
initial success of the program, tbt state
legislature in Ohio appropriated funds primarily
for what is known as a "credit mediation
division" as a part of a Farm Financial
Management Institute.
The Farm Financial
Management Institute has conducted three
workshops which train agricultural lenders,
county agents, and vocational agriculture
teachers to assist farmers with better
understanding their financial situation.
"'TENSION FINANCIAL NAMAGEININT MOMS
Major Extension projects began with
inservice training of Extension agents in the
early 1980s.
The coordinated financial statement
was the central focus of the initial farm
financial management program.
It was critical
that county Extension agents be able to aid
farmers in preparation of a balance sheet in
order to assist the farmer in knowing where he
stood.
Use of the coordinated financial
statement was somewhat discouraging; workshops
were held in many counties and attendance was
poor.
Nonetheless, many of the agents did work
individually with a number of farmers as well as
with small groups of farmers in an effort to
help farmers determine their net worth.
In
October 1985, a two-day training session on the
use of the FINLRB component of the FINPACR
computer program was taught to approximately 70
county Agriculture Extension agents.
A two-day
follow-up session in December was held to assist
agents in better understanding the FINFLO and the
FINTRAN.
In addition, several agents who did not
attend the initial FINLRB training were given
specialized training to equip them to work with
farmers on the use of the FINLRB program.
As a
result of this training, a number of counties
developed what is known as the "Managing for the
Future" program.
This involves four all-day
sessions incorporating goals and needs assessment
in addition to the FINPACK program.
County
agents, Agriculture, Home Economics, and CNRD,
at ag with the district specialists, have given
leadership to this training program.
Even with the designated group sessions, it
was determined in February 1985 that additional
efforts to help families facing severe crises
were needed.
As a result, the CES Farm Program
was initiated on March 1, 1985.
A toll-free
hotline was installed at the university, and
publicity was increased to encourage farmers to
contact the local county Extension office for
financial assistance.
"Immediate response" teams
54 Ohio
were organized, consisting of three county
Agriculture agents, one Home Economics agent, and
district specialists in Farm Management, CNRD,
and Home Economics.
Five of these district teams
served the state.
In addition, a state task
force provided leadership to the overall
program.
In the first month of the program there were
398 calls for assistance, of which 286 were to
the hotline.
There were additional calls that
went directly to county agents' offices and were
never reported by some of the counties.
A
computerized program was set up to record all
calls on which either the hotline or the local
Extension office filed a report. These have been
summarized to assist with an evaluation of the
program.
The toll-free hotline was publicized
through a press conference and wide distribution
of a brochure throughout the state.
The
statewide farm organisations were also used to
alert farmers to the opportunity of seeking
financial help through the CES Farm Program.
In
order to assist the immediate response team
members with their county programs, special
funding was provided to these counties to assist
with hiring part-time help to replace the efforts
of the county agents when they were involved with
the CES Farm Program outside of the county.
Due to the success and recognition of the
CBS Farm Program, the state legislature in Ohio
passed what was known as the "State Agricultural
Bill."
It included, among other things, a link
deposit program whereby farmers were provided
credit at approximately 3 percent under the going
interest rate.
The major portion of the bill
which affected the Extension Service was the
establishment of a Farm Financial Management
Institute to provide training for agricultural
lenders, Extension agents, and vocational
agriculture teachers in assisting farmers.
One
provision for the Institute and the Cooperative
Extension Service was to provide credit mediation
on an optional basis for either lenders or
borrowers that requested the voluntary mediation.
A special training program was held to equip
credit mediators for their responsibilities,
since this was a new venture for Extension.
The Rome Economics :gents worked closely
with a number of local agencies in providing
counseling on stress management. A directory of
various agencies available at the local level was
prepared for each county and provided not only to
the immediate response teams but also to all
counties throughout the state.
The agents
working in CNRD provided assistance to
communities by helping them identify some
employment opportunities, potential impact of
farm foreclosures, or other agribustnesses that
may face bankruptcy.
The Ag Law Institute was established at The
Ohio State University. The Institute faculty
were instrumental in helping identify members of
the bar who had experience or were interested In
working with farmers who were facing legal
problems.
Although the Extension Service was not
in a position to recommend any lawyers, we were
able to identify lawyers who expressed interest
in working with farmers on financial-legal
problems.
The Ohio Council of Churches and many
60
other farm organizations offered their assistance
in trying to help identify farm families facing
financial crises and referring these families to
the Extension Service for consultation.
Close
working relationships were maintained with the
Ohio Department of Agriculture, the Farm Credit
System, and the Ohio Bankers, as these groups
were vitally interested in providing whatever
assistance was needed.
The Farm Credit System
and the Farmers Home Administration declined to
participate in credit mediation.
This did limit
the effectiveness of the credit mediation.
The
primary success of the program was the ability of
our Extension agents to sit down and work with
the farm family to help identify options which
they had regarding their delinquent payments.
In early 1986 the CES Farm Program brochure
was revised and widely distributed along with
posters to alert farmers to the opportunity of
requesting assistance through the CES Farm
Program.
With nearly every county Agriculture
Extension agent now trained to be more effective
in farm financial management, fewer referrals are
being made to the immediate response team.
The
local Extension agents are more active is working
with farmers within the county.
Confidentiality
is maintained.
At the farmer's request, he may
work directly with an immediate response team
member rather than the local agent.
Most of the
help provided through the CES Farm Program is
done one-on-one at the time and place suggested
by the farmer.
Very little counseling is
attempted by telephone.
COMMUNITY ECONOMICS EXTENSION PROGRAMS'
Another means of assisting farmers in crises
is through improved nonfarm employment
opportunities in rural communities.
CNRD
Extension programs in Agricultural Economics and
Rural Sociology (AERS) have focused on a broad
range of public policies at the state,
multi-county region, county, or community level.
Since the goal has been to provide educational
programs that assist rural people and
communities, the emphasis has frequently been on
programs and policies for nonagricultural
industries.
The economic well-being of many
rural Ohio communities and the vast majority of
many Ohio farm families requires a rapid
expansion of the analysis and extension of
community economic development issues, and
especially of programa and policies related to
nonagricultural industries.
There is relatively little attention given
to the 26,000 agricultural firms outside farming.
The potential contribution of AERS (and potential
clientele and political support) for expanded
programs in agribusiness management appears very
large relative to the current audiences.
'This section draws heavily
on material
provided by George W. Morse.
The four program thrusts of Extension
educational programs are:
(1) Attraction of New
Industry, (2) Starting a New Business,
(3) Retention and Expansion of Existing Firms,
and (4) Economic Impact Analysis.
Programs 1, 3,
and 4 emphasize the role and activities
communities can take in encouraging economic
development.
The participants for these programs
are public officials and local economic
development practitioners.
Program 2 is focused
on individuals wishing to start new businesses.
Attraction of Now Industry
This program, started in 1976, has reached
the largest number of Ohio citizens
(approximately 883).
Since nearly all of these
programs focus on community leaders, the number
of citizens influenced by these educational
programs is actually much larger than the direct
participants.
A large number of additional
people have received publications and information
with less depth than these major projects.
Two major educational events are used in
this program:
(1) Community Economic Development
Correspondence Course and Seminar, and (2) Ohio
Basic Economic Development Course.
These courses
focus on a wide range of topics necessary for
local practitioners to develop a strong program
for attracting new industry.
The first course
has a ten-week correspondence course followed by
a two-day workshop.
The second course is a five-
day workshop accredited by the American Economic
Development Council.
These two workshops are
sponsored by the Ohio Cooperative Extension
Service in cooperation with the Chamber of
Commerce Executives of Ohio, Ohio Banker's
Association, Ohio Chamber of Commerce, Ohio
Development Association, Ohio Economic
Development, Ohio Planning Conference, Department
of Development, and Ohio Development Financing
Commission.
A number of regional programs have
also been conducted on how to attract new
industry.
Starting a New Business
This topic lots been very popular during the
last two years.
Suggestions for encouraging
entrepreneurship are given in Extension Bulletin
677 (Crawford, n.d.).
Additional educational
materials are supplied by the Small Business
Administration and local businesspersons and
professionals.
A series of local workshops have
been held starting home businesses.
The fact
sheet series "Starting a Business in Your Home"
(Passewitz et al.) was developed.
Retention sad Expansion of Existing Industry
An educational program for the retention and
expansion of existing industry was initiated in
1982.
This local community program is aimed at
improving the efficiency and profitability of
existing industry.
Through improved profits, the
probability of growth and survival is enhanced.
61
Ohio 55
A series of newsletters, a slide set, and
two bulletins have been used to deliver the
program.
Although this program is in its early
stages, approximately 1,500 persons have received
information on the R and E program.
Fifteen
communities have started new ongoing development
programs as a result of our educational work.
konanic Impact Analysis
Two economic impact models have been
developed for use in Ohio communities.
These
are:
(1) The Ohio Job Impact Model (OJIM), and
(2) Ohio County Input-Output Models (I-10).
The
OJIM model helps communities estimate the
benefits and costs of using economic development
incentives.
This model has been used in six
local case studies.
Input-Output models have
been used in three local case studies.
These
case studies, using these two models, are no
longer being conducted through Extension because
of their heavy resource requirements.
Research
projects using the input-output model will
continue for state policy issues and agricultural
policy questions or for local issues when funding
is available for the research project.
Ifficiesty is Delivery
Several steps have been taken to improve the
efficiency of information delivery.
First, the
newsletter Economic Development Notes is being
used to help create awareness of the program as
well as to deliver specific educational items.
While we mail only 500 copies per month, this
newletter reaches nearly another 9,500 persons
each month in the magazine Ohio Cities and
Villages.
Second, the slide set "Retention and
Expansion:
Vanguard of Economic Development" is
being used to provide information to community
groups that are interested in retention and
expansion topics.
Groups that wish to have an
opportunity for interchange are encouraged to use
the telelecture units after showing the slide
set.
While every group and county agent would
prefer to have state specialists or district
specialists attend the meeting in person, this is
not possible.
EC01110/11C DIRLOPMUT 11181ARCH
The Ohio State University faculty in AERS
participated in several research efforts to
facilitate nonfarm employment growth in rural
areas.
First, regional input-output models have
been used to examine the economic linkages among
the industrial sectors of regional economies.
Several models of substate regions have been
developed and used to estimate employment impacts
(e.g., Hushak it al., 1983 and Ro et al., 1985).
A current effort involves estimation of the
economic impact of changes in agricultural
sectors in a multi-state input-output model.
56 Ohio
Second, econometric models of linkages
between employment in county industrial sectors
and local tax and expenditure policies, county
demographic characteristics, and county location
characteristics were estimated for the East North
Central region of the United States (Aki et al.
1984).
Finally, assessment of the effectiveness
of local retention and expansion programs is
ongoing in Ohio and in several other states (New
Jersey and Wisconsin).
Morse (1985) found that
business visitation programs generated positive
net payroll benefits over a sample of 20
programs.
RWERENCES
Aki, Charles F., Leroy J. Hushak, and George Y. Norse.
1984.
"Employment Growth Impact of Local Fiscal Policies In
Non.Netro Counties of East North Central States." ESS -609.
Department of Agricultural Economics and Rural Sociology,
The Ohio State University, Columbus.
Crawford, Sam. N.A.
"Economic Development Through
Retention, Expansion, and Creation of Local Firm."
Extension Bulletin 677.
The Ohio State University,
Columbus.
Henderson, Dennis and Stuart D, Frank. 1986.
Term
Transition Under Financial Stress.. -An Ohio Case Study."
Department of Agricultural Economics and Rural Sociology,
The Ohio Stets University, Columbus.
Hushak, Leroy J., Young Key Ro, and Zafar Y. Husain.
1983.
"An Input-Output Analysis of Regional Economic
Development." Research Bulletin 1155.
Ohio Agricultural
Research and Development Center, The Ohio State
University, Columbus.
Lines, Allan E. and Robert Polly.
1985. "1985 Ohio Farm
Finance Survey Results." ESO 1214.
Department of
Agricultural Economics and Rural Sociology, The Ohio State
University, Columbus.
Norse, George W.
1985.
"The Benefits and Costs of Retention
and Expansion Visitation Programa."
Paper presented at the
Conference on Community Economic Development Through the
Retention and Expansion of Existing Businesses, ColumbuS,
Ohio. Department of Agricultural Economics and Rural
Sociology, The Ohio State University, Columbus.
Ohio Crop Reporting Service.
1986.
"1985 Ohio Feem Finance
Survey Results."
Report, February 24.
Passewitz, Greg, Barbara Drake, William Owen, and E. T.
Shaudys,
Various dates. "Starting a Business in Your
Home." Fact Sheet Series.
Ro, Young Kay, D. Lynn Forster, Leroy J. Hushak, and George
W. Morse.
1985.
"Environmental Regulation and Regional
Economic Growth:
An Input-Output Analysis of the Ohio Coal
Mining Region."
Research Bulletin 1170.
Ohio Agricultural
Research and Development Center, The Ohio State
University, Columbus.
62
Responses to Farm Crisis by South Dakota Institutions
by Ardelle Lundeen
INTRODUCTION
Overview of Crisis Situation is South Dakota
Headlines in South Dakota daily newspapers
speak of farm auctions and foreclosures, the
demise of small rural banks, and the ills of the
Farm Credit System.
Dan Rather brought CBS
Evening News to South Dakota for three days to
give national coverage to the farm crisis.
All
of this is appropriate since agriculture is the
largest single industry in the state.
While no general survey of farm producers
has been undertaken by researchers at South
Dakota State University (SDSU), information
gleaned from studies of credit conditions,
farmland market trends, and farm bankruptcies
indicates that the proportion of South Dakota
farmers experiencing problems is similar to that
found in most Midwest *times.
For example, in some recent years farm
production expenses exceeded cash receipts from
firm marketings (USDA 1985).
Farmland values
hive declined 34 percent from the 1981-82 peak.
Wile the percentage decline may not be as great
as that observed in some states, farmland prices
had not inflated to the extent they had in those
states.
In real terms, farmland prices in
mid-1984 had fallen to 1975 levels (Swinson and
Janssen, 1985).
Declining farmland values contribute to the
current financial stress.
Buyers who purchased
land during
'ae late 19700 have had much--in some
cases all--of their equity erased.
They still
must meet financing obligations which have
remained the same.
Without taking on any new
debt, producers have seen their debt/asset ratio
increase.
Another less-discussed, but equally
worrisome result of declining farmland values, is
the reduction in wealth for older landowners who
relied on their equity in land to provide for
their retirement years.
An increase in the quantity of land put on
the market may further decrease land prices if
most producers are not in a strong enough
financial position to expand their holdings.
The
result may be more nonfarm investment in
farmland.
Results of two farm lender surveys completed
during November of 1984 and 1985 indicated that
24 and 25 percent, respectively, of farm
borrowers were in the weak or inferior risk
categories in each of those years.
The position
of producers varied among regions in the state
during 1985 (Schmiesing, 1986).
Another indicator of the farm crisis is the
increase in farm bankruptcies from 37 in 1981 to
193 in the first seven months of 1985.
A
continuation of the current rate for all of 1985
would mean an 800 percent increase from 1981 to
1985.
Overview of Research sad Ritteasioa Activities
Most of the research on the farm crisis is
linked to ongoing long-term research projects
funded by the Agricultural Experiment Station.
Information relevant to the farm crisis has
emerged from these projects and is being utilized
by Extension and other personnel responding to
farmers' needs.
Scientists in plant and animal research feel
that ongoing research to improve productivity and
lower costs is more important than ever in this
time of financial crisis.
Some short-term research in the Economics
Department has been undertaken in specific
response to the farm crisis.
The results of the
surveys indicated areas where additional
education is needed. The extent of the research
undertaken is dependent on the availability of
funds from outside sources, however.
The major thrust of Extension programs has
been in the area of farm financial management,
with some work in family stress, rural
development, and family finances.
The South Dakota State Department of
Agriculture has instituted two state-wide
programs which are utilizing Extension personnel
and skills.
A hotline has been activated, which
producers can call for counseling help.
Individual counselors with farm management or ag
lending experience have been trained, in part, by
Extension specialists to meet with producers on a
one-to-one basis to confidentially review the
producer's situation. The counselors will
provide information, support, and assistance in
working with lenders.
The second major program has been titled
"Rural Renaissance" and is an attempt to draw
together sources of assistance for those who need
help to remain in farming and for those who will
be forced out and need assistance in making a
transition to a new career.
Assistance is
provided by ongoing agencies such as vocational
schools, employment services, mental health
facilities, lawyers, and Extension personnel. The
main contact points are the county Extension
offices.
63
South Dakota 57
Ileeded isseardi and Extessios
More specific information is needed on the
financial condition of farmers, including data
on
debt/asset ratios, inability to secure financing
for spring planting, farm foreclosures,
etc.
Very little work appears to have been done in
researching family relations (e.g., divorce,
abuse, depression).
The effects on rural
communities, both financial and social,
are also
areas of needed research.
Of particular need in Extension are
personnel to work with family stress and rural
development.
An Extension Family Life specialist
position remains unfilled and the Extension work
in rural development is being phased out.
Surveys have also indicated an urgent need
for marketing education by producers within the
state
This is an area where research and
Extension activities are being carefully
coordinated and targeted.
Initiatives are being
taken to expand SDSU's work in this area.
The role of farm women remains undocumented
and unresearched.
To develop complete programs,
work is needed in this area.
EXTENSION PROJECTS
One of the major programs instituted by
Extension in 1985 was the FINPACK program, also
called the "Planning for Tomorrow--Today"
program.
Workshops have been held in eight
counties with about 50 couples participating.
Workshops are scheduled in four more counties.
Producers are encouraged to assess goals and
priorities of the farm business, develop a
goal-oriented management plan, analyze their
financial position, and develop alternative
operating plans for the future.
Several programs initiated in prior years
are continuing.
One such program deals with farm
management, inc..ding farm business structure and
organization.
Programs include dealing with land
and livestock lease and share arrangements to
lessen capital outlay and risk positions of
agricultural producers, as well as alternative
machinery financing and acquisition offers.
Additional specialist positions are being added
in the farm management area.
Management "TIPS" meetings were co'ponsored
by the SDSU Cooperative Extension Service and
agricultural lenders in 1984 and 1985.
Extension
specialists from marketing, finance, animal
science, and agronomy addressed producer
clientele in day-long meetings to emphasize the
importance of management in all phases of
agricultural production.
The meetings were
designed to stress what better management could
mean in terms of "bottom- line" profits.
Another
title for these meetings was "Row to Save
$15,000."
Extension specialists in technical
disciplines are conducting "how to" meetings
dealing with specific topics such as seed
58 South Dakota
varieties, pesticides, irrigation, etc.
AGNET
also offers help through a diversity of
programs.
Marketing education is being carried out,
although a recent survey by SDSU economists
indicated that the predominant marketing
technique used by South Dakota producers is that
of cash marketing.
"Beefed-up" programs to
educate producers about marketing alternatives
and analysis of marketing alternatives are being
designed.
Implementation is contingent upon
funding.
Extension Home Economics specialists
developed and piloted a program on "Your Home
Business," which an Economics specialist later
joined.
The program was designed to aid in
evaluating the economic feasibility and
management aspects of starting home-based
businesses, which farm and small-town families
may be considering to supplement their farm
incomes.
Multi-county workshops covering the
entire state were conducted.
Newsletters and
handouts were prepared and distributed (Dobbs
1985).
Economic development activities consisted of
multi-county meetings, indepth workshops, and
individual consultations.
Many of the workshops
were tied to the farm crisis concerns and
possible impacts on small South Dakota farms and
were titled "Small Town Economic Development
Options."
Participants included business
persons, loan officers, farm and other community
leaders, and concerned citizens.
Economics znd Family Life specialists
cooperated on programs on family stress.
With a
current vacancy in the Family Life specialist
position, activity in the area has ceased.
The major thrust of Extension programs has
been in farm management and related areas where
the emphasis has been on families.
Limited work
has been conducted on community impacts.
RESEARCH PROJECTS
No large integrated research programs on the
farm crisis currently exist at SDSU but a number
of specific research projects are responding to
the needs of the crisis.
Much of the specific
research is occurring in the Economics and Rural
Sociology Departments.
It is felt, however, that
ongoing research in some of the other College of
Agriculture and Biological Science Departments
(e.g., Plant and Animal Science) may help
producers become more efficient.
I will outline
some of the research efforts carried out at
SDSU.
Economic Research
Within the past few years, the Economics
Department has initiated projects in the area of
finance, land prices, and bankruptcy.
Agricultural Lender Surveys
An initial survey in November 1984 and a
follow-up survey a year later were sent to
commercial banks, Production Credit Associations,
Federal Land Banks, and Farmers Rome
anmintstration county offices.
The survey was
designed to document credit evaluation
procedures, financial warning signals, and
management information needs of borrowers so that
SDSU could tailor its programs to meet these
needs most effectively.
Results of the 1984 survey showed that 24
percent of farmer and rancher borrowers were
classified as being in a weak financial position
and lenders believed that total debt had
increased for almost half of their farm customers
in that year (Schmiesing, 1985).
Lenders indicated that financial planning
and marketing were skills most in need of
improvement.
Specific skills needing improvement
included projecting cash-flow needs, enterprise
profit and loss analysis, understanding financial
statewents, record keeping for decision-making,
and marketing strategies.
The approaches favored
by lenders were workshops, management clubs, and
one-to-one counseling.
Lenders stated that, of married borrowers,
almost 60 percent of the wives kept the records.
Indications also were that more than half of the
records were inadequrte for financial planning.
These findings would suggest that a coordinated
effort should be made to reach and/or include
farm wives in financial and management training.
About 99 percent of the lenders agreed that
farmers must be able to show that they have
developed a farm financial management plan to
repay debt if they wish to receive credit in the
future.
The latest survey, undertaken in November
1985, showed that the financial condition of many
South Dakota farmers and ranchers had
deteriorated in the past year.
Only slightly
more borrowers were classified as in a weak
financial condition than in the previous survey,
but the percentage in the "superior" or "good"
categories had declined by about 5 percent.
About 7 percent of the farmers have liquidated
their debt in the past year (Schmiesing, 1986).
The 1985 survey also showed that producers
west of the Missouri River were in considerably
worse financial condition than "East River"
producers.
"West River" has primarily livestock
production and had been severely buffeted by
drought and an early winter.
Lenders indicated they would not make either
operating or real estate loans to "weak"
borrowers, and some would not make loans to new
customers in any category.
The results of the two surveys have been
used to design and implement agricultural
marketing management workshops and seminars.
Farmland Market Trends
Research on farmland market trends in South
Dakota has been carried out on a statewide and
regional basis.
Results of the survey showed
that farmland prices have declined for the past
three years, with the average price per acre of
land sold from January to June 1985 being 34
percent less than the price during the peak of
1981-1982 (Janssen 1985). Regions of the state
fared differently, with the largest decrease
occurring in the southeastern part of the state.
Reasons for and implications of declining
farmland prices were also analyzed.
A second ongoing project to analyze farm
real estate developments in South Dakota has
relevance for the farm crisis. The objectives of
the research are to analyze (1) annual estimates
o! per acre agricultural land sale prices, (2)
changes in farmland financing terms and
conditions, and (3) impact of factors explaining
market price of farmland.
Relationships between
farmland financing terms, real estate market
prices, and debt repayment ability will also be
examined.
Insights provided by the research will
be useful to farm lenders, individual producers,
and farm management Extension personnel.
A project on land rentals is currently being
initiated.
Farm Bankruptcy Proposal
Of direct relevance to the farm crisis is a
research proposal to provide management
information on farm bankruptcies through analysis
of farm bankruptcy filings in South Dakota since
1983. Specifically, the objectives are (1) to
determine the financial and other characteristics
of farmers filing Chapters 7, 11, and 13
bankruptcy; (2) to examine the differences
between approved and unapproved reorganization
plans under Chapter 11; (3) to determine the time
required from filing the reorganization plan
approval, conversion, or dismissal under Chapter
11;
(4) to examine characteristics of secured and
unsecured creditors under Chapter 11 filings; and
(5) to examine legal fees charged for Chapter 11
bankruptcy filings.
Research results will be made available to
farm lenders and individual producers.
Researchers are awaiting word on funding at this
time.
Rural Sociology Research
A dissertation, which examined the role mat
the church during the farm crisis, has been
completed in the Rural Sociology Department.
The
researcher focused on farm families and the
extent to which churches mediated in order to
relieve pressure and stress on the families.
Peripherally, the role of neighbors and Extension
personnel were also examined.
65
South Dakota 59
Reteesioe-Related Research
As part of Extension-related research,
analysis of farmers' responses in ?MAK
workshops will be undertaken shortly.
Strategies
undertaken or contemplated by participant farmers
in those meetings will be used in counseling
other farmers.
$ #
SY
SUISIART
While SDSU has developed no large
comprehensive programs to meet the farm crisis,
much is being done through many specific ongoing
programs.
Farm management is an area of special
focus but attention is also being given to
families and to economic development for small
towns.
Additional information can be obtained
from Extension Economics specialists at the
Economics Department at SDSU.
60 South Dakota
REFENEICE1
Dobbs, T.
1965.
Economies of Home-Based Businesses.
Economics Dept. Newsietter 5223.
South Dakota State
University, Brookings, June 5.
Janssen, L.
1965.
Reasons for and Isvilestions of Declining
Farmland Fticee.
Economies Dept. Newsletter 5239. South
Dakota State University, Brookings, November 12.
Schmiesing, B.
1965.
Debt Capital:
A Ler
Risk then
Everyon. goy Realize.
memos es
.
meTTer
South Dakota State University. Brookings, Noy 27.
Schmiesing. B.
1586.
Financial Conditions of and
Availability of Credit to South Dakota Producers.
Economics Dept.
Newsletter 0231.
South Dakota State
University, Brookings, January 30,
Swinson, C. end L. Janssen.
1965.
Lon
Term end Recent
Farm lend Market Developments in South
elkote. tconomics
Dept. Newsletter OZTO.
South Dakota State University,
Brookings, March
USDA. 1985.
Economic Indicators of the Form Sector:
State
income end Balance Sheet Statistics, 1963.
Washington, DC:
USDA NI-AVERS.
ECIFS 3-4, January.
66
Farm Crisis Response: University of WisconsinMadison
Extension and Research
by Jess Gilbert and Glenn S. Thompson
INTRODOCTION
The current farm crisis in Wisconsin stems
directly from economic problems but has broad
implications for individuals, families,
communities, and the larger society.
In 1981 the
average farm debt-to-asset ratio for the state
was 19 percent; by 1984 it had increased to 34
percent; and in January 1986 remained at 33
percent.
Of the farms with debt, over one-fourth
have a debt/asset ratio of 40 percent or more,
with seven percent of those having a ratio
greater than 69 percent.
Younger farmers and
dairy farmers tend to have higher ratios.
Over
four percent of Wisconsin farmers expect to quit
farming in 1986, with ten percent more expecting
to quit in 1987.
The state lost an estimated
3,000 farms between 1984 and 1985.
(The above
data are from the Wisconsin Agriculture Reporting
Service, "Agricultural Finance Survey," May 1984
and February 1986.)
The problems caused by the current crisis,
however, are not adequately captured by
statistics.
Farm foreclosures and bankruptcies
are on the rise.
Individual and family stress
has increased dramatically.
Rural businesses are
being hurt.
Communities feel the strain.
The
current structure of agriculture may well be
significantly changed by the present crisis.
The
University of Wisconsin (UW) at Madison is
responding to the crisis on a number of fronts.
This report summarizes the efforts of the
University's Cooperative Extension Service (CES)
and the College of Agricultural and Life Sciences
(CALS).
Strategies on Survival (SOS) is a special
CES educational program for Wisconsin farm
families and agribusinesses facing financial
distress.
This major program thrust is designed
to provide a comprehensive educational campaign
that ties together the efforts of the four CES
program areas--Agriculture/Agribusiness,
Community Natural Resource and Economic
Development, 4-R Youth Development, and Family
Living Education.
The program focuses on three
key groups:
farm families, agribusiness, and
farm lenders.
SOS teams, consisting of Extension
agents and specialists and farm and family
financial analysts, help individuals, families,
agribusiness, and community groups through
short-term and indepth counseling.
Assistance is
provided on a variety of problems, including farm
and family finances, managing family stress, farm
profitability alternatives, referrals to other
agencies, and evaluating possibilities for
off-farm income.
67
Researchers in the CALS have a number of
projects related to the current farm crisis.
The
Department of Agricultural Economics recently
released a report on the financial condition of
Wisconsin farms; it estimates that between 2,000
and 7,000 farmers will liquidate for financial
reasons in 1986.
That department contributed
significantly to the recent Governor's Commission
on Agriculture.
UW agricultural economists are
also studying the effects of the crisis on family
farmers and local communities.
In addition,
other departments in CALS (e.g., Agricultural
Journalism, Landscape Architecture, Continuing
and Adult Education) are investigating dairy
farmers' policy preferences and comparative
approaches to traditional dairy areas.
Finally,
the Department of Rural Sociology has several
research projects relevant to the farm crisis:
an historical analysis of the trade-offs between
debt and tenancy in Wisconsin agriculture, a
study of the contradiction between
publicly-supported research that enhances
productivity and federal price and income
programs, and an examination of changes in
farmland ownership and control.
While CALS has
begun to respond to the farm crisis with all of
these research projects, it needs to encourage
further research efforts that address long-term
structural issues as well as Immediate policy
concerns of the people of Wisconsin.
EXTENSION
In the late fall of 1984, Extension's CES
program leaders, concerned with the deepening
farm crisis, discussed ways CES could help
affected Wisconsin citizens. The concern was
generated by county Extension agents and
statewide specialists who were receiving calls
from farmers and ag lenders concerned about
farmers who weren't servicing their debts.
Farm
suppliers called, nervous about overdue accounts.
It wasn't just the chronic nonpayer; they said
reliable paying customers weren't paying.
Disturbing reports also came from the clergy.
Some families weren't coming to church; they
didn't want to show their faces in public.
An
estimated 6,000 farmers in the state were facing
critical financial difficulty.
Bankruptcy rates
were increasing.
CES realized that individual farmers could
not do much about some of the main causes of
their financial problems.
There was little a
farmer could do on his own about the high
interest rates which drive up operating costs, or
about low commodity prices, or about the strong
dollar that makes U.S. farm products too
expensive for foreign buyers.
At the same time,
CES realized that farmers and agribusinesses can
get involved in collective action through
organizations and the political process to deal
with these broader issues.
Wisconsin 61
CIS staff also realised Cisme were steps the
individual farmers could take to ease their
financial stress.
Part of the solution lay in
ideas CES Agriculture/Agribusiness staff had been
teaching all along--farm management and
production ideas which could help farmers cut
;Bete, increase efficiency, and improve profits.
est as important was family stress and budget
information available from CES Family Living and
4-H Youth Development staff.
Much could be done
to ease the burden on agribusiness through the
University Center for Cooperatives and the CES
Seel Business Development Center.
With this realisation, CES, with its county
and state faculty from four statewide program
areas (Agriculture/Agribusiness, Community
Natural Resource and Economic Development, 4 -H
Youth Development, and Family Living Education),
undertook an ambitious educational program
initiative entitled Strategies on Survival
(SOS).
The idea of the SOS program was to
provide a comprehensive educational campaign that
would coordinate the efforts of the four
statewide program areas and help agents reach
farm families, including those who hadn't taken
advantage of CES rrogramm in the past.
The SOS program focuses on three key groups:
(1) Farm Families receive intensive one-on-one
counseling and small group instruction.
These
programs focus on farms and family financial
analysis and planning, managing debt, farm
profitability, resolving conflicts and reducing
stress, identifying sources of alternative
income, and related topics; (2) Aaribusinevsfs, a
large sector of Wisconsin's rural economy which
depends heavily on agriculture, are provided
counseling and workshops on planning, marketing,
cash flow, inventory, and related areas of
business management; and (3) Agricultural Lenders
receive programs focusing on farm business
analysis, repayment capacity, farm production and
marketing, family financial management, and
related legal issues.
Prior to the initiation of SOS, faculty were
devoting 25 percent of their planned time to
economic improvement program efforts that fit the
objectives of SOS.
When staff developed their
1985-86 program plans, 44 percent of their total
planned time was devoted to SOS-type programing.
CES county-based faculty have been mobilized in
team clusters encompassing two or three counties
to offer a comprehensive range of educational
services to farm families in need.
Having staff
from several counties working together has
several advantages.
The can share expertise,
make more effective use of scarce resources such
as microcomputers, and plan and implement
larger-scale programs.
A number of actions have been initiated to
implement the SOS program:
In March and November 1985, three-day
orientation/training workshops for 104
county and 50 campus-based Extension faculty
focused on the background of the farm
crisis, scope of planned SOS activities, and
intensified training in farm business and
family financial management, family stress,
62 Wiscoasin
and counseling skills.
Special training
materials (SOS Handbook I) and 3,000
"Survival Kits" for use with farm families
in one-on-one counseling were distributed to
agents.
A statewide communication group was
organized under the leadership of the CES
Agriculture/Agribusiness program area. The
group was composed of representatives from
CES; Farm Credit System; Wisconsin
Department of Agriculture; Trade and
Consumer Protection; Wisconsin Bankers
Association; Wisconsin Board of Vocational,
Technical and Adult Education; Wisconsin
Department of Health and Social Services;
and the Department of Industry, Labor and
Human Relations.
The goal was to develop
communication linkages, share programs, and
develop a systematic referral procedure.
Farm or family financial analysts were hired
in 15 clusters on an ad hoc basis to assist
agents in working with farm families.
Analysts' past experiences included work
with Extension and leading institutions and
as vocational/technical instructors and farm
management consultants.
Microcomputers were placed in the cluster
offices for use in counseling farm families.
FINPAK training was provided at May,
September, and December workshops for
county-based faculty.
As part of a cooperative effort to develop a
five-state agency resource directory, CES
prepared lists of contacts in each county
Extension office which provided help in six
areas:
farm financial management and farm
profitability, family financial management,
family stress and family support networks,
youth-related concerns, community economic
development, and alternative small business
opportunities.
A farm crisis info-line
(telephone) was also established in
cooperation with the Wisconsin Department of
Agriculture Trade and Consumer Protection.
The Department and CES are presently -loving
to employ legal counsel for the info-line
operation.
Attorneys are presently
volunteering legal counsel to farmers
needing services.
Many educational materials have been
developed or obtained for use in individual
and group counseling sessions and workshops
with farm families.
They include eleven
con.uter software programs, a aeries of
videotapes on farm profitability and
marketing, special counseling materials, six
booklets related to increasing profits from
specific farm enterprises, and a guide for
organizing small group family education and
support and action groups.
A project proposal was submitted to
Extension Service-USDA, CES was awarded a
$55,000 grant to work with 10 pilot
counties, and CES reallocated $185,000 of
its existing budget for SOS programming.
An administrative/program leader team was
organised to coordinate ongoing SOS
activities and to provide counsel to a larLe
CES steering committee.
In cooperation with the staff of Health and
Human Services Outreach (UW-Madison), CES
released the Neighbor- to-Neighbor program,
a
do-it-yourself guide for organizing Farm
Family Education/Support Action GroupP.
A special quarterly reporting system is
underway to document a profile of SOS
counseling contacts, group teaching
contacts, and organizational contacts.
RESEARCH
Researchers at the University of Wisconsin
have conducted a number of research projects that
deal with the current farm crisis.
These
projects are summarized below.
All share the
common theme of policy relevance even as they
range widely in terms of approaches to and
perspectives on the crisis.
In February 1986 the Department of
Agricultural Economics and CES published
a
special report, Financial Status of Wisconsin
Farming, 1986, edited by Edward V. Jesse.
It
offers economic analyses of the roots of the
current problem (massive decapitalization caused
by changes in macroeconomic policies)
as well as
its magnitude:
an estimated 2.S to 10 percent
(2,000 to 7,000) of Wisconsin farmers :All
liquidate for financia7 reasons in 1986.
Moreover, simulation analysis reveals the types
of dairy farms most likely to survive.
Not
surprisingly, a high debt-to-asset ratio
seams to
b, the best predictor of failure.
Finally, the
report analyzes the consequences of various
possible solutions, including "doing nothing,"
tax and credit policies, transition programa out
of farming, and federal farm program options
("free market" vs. production controls).
Trade-
offs between these alternative policies
are
mentioned, with no particular policy option being
endorsed.
The twenty-two member Governor's Commission
on Agriculture, which issued its final report in
June 1985, was co-chaired by the Dean of
Agriculture at UW-River Falls and included the
Dean of UW-CES and a member of the Department of
Rural Sociology, UW-Madison.
Richard Barrows, of
the UW-Madison's Department of Agricultural
Economics, served as Executive Director of the
Governor's Commission.
Eight other Agricultural
Economics professors and one Rural Sociology
professor, worked as technical advisors to the
commission.
The final report, strongly
supportive of a family farm system of
agriculture, included recommendations in four
general areas:
(1) state agricultural policies
(e.g., provision of operating credit, creation of
an agricultural council, establishment of a
direct marketing program); (2) state taxation
policies (e.g., reform of the property
tax
system, farmland preservation tax credits,
restrictions on tax-loss farming); (3) state
rural development policies (e.g., creation of a
state rural development council to coordinate
such efforts); and (4) federal policy decisions
(e.g., targeting benefits to family farms, not
disadvantaging Wisconsin dairy farms under the
federal milk marketing system).
The 198,2 Wisconsin Family Farm Survey
(n
529) covered eight counties that are similar
to 300 other U.S. counties regarding
concentration in dairying, small-to-medium-sized
farms, and family provision of labor and
management.
Directed by Priscilla Salant
(Economic Research Service, USDA) and William E.
Saupe (Agricultural Economics, UW-Madison), the
survey is relevant to the -urrent farm crisis in
several ways.
Salant and Saupe constructed a
"viability ratio" to evaluate farm household
financial well-being.
It consists of total net
family income from the farm plus all nonfarm
income divided by the sum of three types of
financial obligations (consumption, principal
payments on farm loans, and capital replacement
costs).
Farm households with a ratio of less
than 1.0 will be unable to meet financial
obligations in the long run.
*,aced on this
measure, one-third of the entire sample were
nonviable; 47 percent of the dairy farms were
nonviable.
These estimates are based on data for
1982, when the current criaLs was just beginning.
Salant and Saupe have used a simulation technique
to predict how many of the survey farms would be
both nonviable and technically insolvent in 1986;
their estimate was over 11 percent of the farms.
Further, Salanr and Saupe have analyzed the
survey data on five different types of farms:
(1) those that expect to stop farming by 1988,
(2) dairy farms, (3) nondairy, part-time farms,
(4) nondairy, full-time farms with sales less
than $20,000, and (5) nondairy, full-time farms
with sales of $20,000 or more.
For each type,
they discuss public and private options.
Another agricultural economist, Mary
McCarthy, is studying the implications and
incidence of the current farm financial crisis
on local economies in Wisconsin.
The primary aim
of this research is to examine the economic
repercussions of changes in the farm sector on
local rural and urban Wisconsin communities.
This involves an analysis of county data on
employment, income, and sales tax revenues, and
1982 Census of Agriculture data on firm-type
income and ei..ployment.
A secondary aim is to
focus on the employment prospects of displaced
farmers and their families in rural communities.
This is to be facilitated by conducting a sample
survey of displaced fern families in
farm-dependent communities.
In late Septer' r Ind early October 1985,
Mike Read (a gradtt
cudent in the Department
of Continuing and Adult Education), along with
Hernando Gonzalez and Len Maurer (both
Agricultural Journalism professors), conducted a
random sampre survey (a
557) of Wisconsin dairy
farmers.
The aim was to obtain their opinions
concerning two divergent approaches to federal
dairy legislation:
free market vs. supply
69
Wisconsin 63
management.
Funded by the College of Ageculture
and Life Sciences, the Cooperative Extension
Service, agribusiness firms and farm magazines,
the study went from initial conceptualization to
final report in one month. The findings
indicated that 64 percent of Wisconsin dairy
farmers favored supply management, 25 percent
preferred a free market approach, and 10 percent
had no preference.
In addition, 50 percent
supported mandatory production quotas on U.S.
dairy farmers, 22 percent "may be" in favor, and
28 percent opposed such controls.
Read is
currently continuing his research in the College
pf Agriculture and Life Sciences.
Herman Felstehausen (Natural Resources and
Landscape Architecture, UW-Madison) has work
gpderway that emphasizes comparative approaches
tp the rural adjustment and structural crises in
the state.
For example, the success in
sustaining owner-operated dairy farms in Clark
County, Wisconsin, is being compared with a
matched county in New York State.
Delaware
County, New York, was ve:y similar to Clark
County, Wisconsin, in 1940.
Since then, both
counties show large losses in dairy farms, with
Delaware County representing the advanced case.
Most milk handling and processing plants have
closed; some rural communities have become
vacation and recreation centers.
The key
question is, will Clark County follow the same
course or can an alternative dairy-based program
be worked out in Wisconsin before the majority of
the owner-operated units fail? A second area of
Felstehausen's comparative work addresses the
environmental and structural consequences of
center pivot irrigation.
Antelope County,
Nebraska, is being studied as a "typical" center
pivot irrigation county in that state. Antelope
County is located away from the Platt River thus
making it more diverse in agriculture and
irrigation than valley farms.
Irrigation impacts
in Portage County, Wisconsin, will be compared
with the Nebraska experience.
Pat Mooney, in work based on his
dissertation in Rural Sociology at UW-Madison
(1985), has developed an historical political-
economic analysis of debt-and-tenancy cycles on
Wisconsin farms.
The 1930s presented U.S.
agriculture as a whole with a "tenancy crisis."
At that time, 42 percent of U.S. and 23 percent
of Wisconsin farmers were full tenants, i.e.,
they owned none of the land they operated.
Both
nationally and at the state level tenancy
declined steadily after 1940 to the low-point in
1974 (to 11 percent in the United States and 6
percent in Wisconsin). While the radical
decrease of tenancy had a number of causes, it
was accomplished in significant part by an
increase in credit provided by the federal
government (e.g., EWA, FLB).
The problem of
tenancy, then, was "solved" by growing debt
loads.
At the same time, the decline in tenants
was not accompanied by an increase in full-owner
operators but rather by a rise of part-owner
operators (who own some and rent some of the land
they operate).
Mooney's historical analytic
raises the question of whether the current "debt
crisis" may be "solved" by a rebirth of tenancy.
64 Wisconsin
Indeed, both the United States and Wisconsin have
experienced a modest increase in tenancy
(1-3
percent) along with a more rapid growth of
part-owner operatorship (2-10 percent) since
1974. This recent rise in farm rentals has
disproportionately affected younger farmers, who
are more likely to be landless operators.
Mooney
examines both short-term options to the curr%nt
farm crisis (higher price support, off-farm work)
and long-term proposals.
For instance, the fact
that farmland is a commodity may be seen as a
fundamental problem in the debt-tenancy cycle.
One alternative to the current situation, then,
would be to view land as a unique means of
production that should not be an object of
financial speculation.
This policy option would
entail restrictions on the land market such as
exist in Western Europe.
Jack Rloppenburg (Department of Rural
Sociology, UW-Madison) is examining the ways in
which scientific research contributes to
agricultural transformation.
It appears that tne
public agricultural research system has tended to
act in a contradictory fashion with certain other
components of state intervention in agriculture.
There is a fundamental contradiction in the
relation between research-driven productivity
advances and expenditures on price and income
support programs.
There is embedded in thin
relation a permanent tendency to fiscal cr.,is.
The state cannot indefinitely increase its
investment in research designed to provide new
output-enhancing inputs if it must also
underwrite the valorization of the increased
output that those inputs produce. Kloppenburg is
investigating ways in which agricultural research
might be redirected from its current
"output-enhancing" orientation to an
"input-minimizing" emphasis.
Such a redirection
would slow the rate at which the "technological
treadmill" is turning.
While it is important to
address the immediate problems facing farmers in
r'
curent crisis, it is also important to
unuerstand the structural roots of the problem.
Jess Gilbert (Department of Rural Sociology,
UW-Madison) is presently investigating farmland
tenure changes in Wisconsin.
This project is an
update of two township-level studies of tenure
processes done in the 1940s. The objectives are
to describe the changes that have occurred since
World War II, to examine the separation of land
ownership and control, and to discover the
reasons that people own farmland. This research
is relevant to the farm crisis in that it will
focus as well on ownership changes in the 1980s,
on managerial decision-making concerning the
laid, and on individuals' subjective meanings
attached to land ownership.
ZITENSION IMMO minium
SOS Handbook I (Agent Workshop I)
Macroeconomics
Farm Financial Management
Stress Management
Helping Skills
70
Community Helping Resources/Support
Organization
Case Studies
SOS Handbook II (Agent Workshop II)
Equity Financing for Agriculture
Less* vs. Purchase
Machine, System and Crop Production
Cost
Managing the Farmr-L-'ty Feeding
Strategies--Feed Cost
Farm Enterprise Budgets
FINLRB
Managing the Financial Future of Your
Dairy Farm
Case Study Materials
Self Assessment
Cost of Food
Life Insurance Learning Series
Family Living Expense Planning
Bankruptcy, Foreclosures
Creative Financing
Moving out of Agriculture
Curriculum- -Small Groups
SOS Survival KitDesigned to Help Agents
Counsel
Family Records
Cash Flow Planning Guide
Managing Farm Financial Future
Building Emotionally Healthy Families
Family Living Expenses
Capital Debt Repayment Capacity
Financial and Production Performance,
Guide--Dairy Farm
Enterprise Booklet--Designed to Help Farmers
Increase Farm Profitability
Dairy
Forage Crops
Sheep
Beef
Swine
Grain Crops
Farm Profitability Videotapes
Pricing Standing Crops
Feed Inventory--Quality and Quantity
Considerations
Grain By-Products in Dairy Rations
Feeding the Dairy Herd when Forages
are
Limited
Marketing Hay as a Cash Crop
Grain Situation and Outlook
Dairy Situation and Outlook
Cattle Situation
Family Living Videotapes
Making Ends Meet
Tracking Ycur Spending
Microcomputer Software
FINLRB
FINTRAN
Loan Calculator
Partial Budget
Badger Balance
Total Mixed Ration
Community Economic Analysis
Food SS
Decision-Maker
Steps into Spending
Additional computer software available
via mainframe--WISPLAN Computer
Service, 302 Hiram Smith Hall, 1545
Observatory Drive, Madison, Wf 53706
Counseling and Support Group Materials
Neighbor-to-Neighbor
Counseling Issues and Strategies
Counseling Process Analysis
Farmers Resource Guide--A County/Community-
Based Information and Assistance Guide
Agriculture Finance Survey--February 1986
Contacts for Resource Materials:
Robert E. Rieck
Associate Dean
Cooperative Extension Service
615 Extension Building
432 N. Lake Street
Madison, WI 53706
(608) 262-7965
Glenn S. Thompson
Asst. State Program Leader
Agriculture/Agribusiness, CES
637 Extension Building
432 N. Lake Street
Madison, WI 53706
(608) 262-7321
RESEARCH usovacz masons
Richard L. Barrows
Dept. of Agricultural Economics
Henry Taylor Hall
427 Lorch Street
University of Wisconsin
Madison, WI 53706
(608) 262-6871
Herman Feletehausen
Dept. of Landscape Architecture
25 Agriculture Hall
University of Wisconsin
Madison, WI 53706
(608) 262-7922
Jess Gilbert
Dept. of Rural Sociology
350 Agriculture Hall
University of Wisconsin
Madison, WI 53706
(608) 262-9530
71
Wisconsin 65
Ward V. Jesse
Dept. of Agricultural Economics
Henry Taylor Mall
427 Lorch Street
University of Wisconsin
Madison, WI 53706
008) 263-4472
Jack Eloppenburg
Dept. of Rural Sociology
350 Agriculture Rall
University of Wisconsin
Madison, WI 53706
(608) 262-6867
Mary McCarthy
Dept. of Agricultural Economics
Henry Taylor Hall
427 Lorch Street
University of Wisconsin
Madison, WI 53706
(608) 262-9479
66 Viscoesin
Mike lead
Dept. of Continuing Education
112 Teacher Education Bldg.
University of Wisconsin
Madison, WI 53706
(608) 263-1154
William E. Saupe
Dein. of Agricultural Economics
Henry Taylor Mall
427 Lorch Street
University of Wisconsin
Maason, WI 53706
(608) 262-9480
72
North Central Region Rural Development Center
Sponsoring Institutions
Cooperative Extension Service
Agricultural & Home Economics Experiment Station
IOWA STATE UNIVERSITY
Ames, IA 50011
Cooperative Extension Service
Agricultural Experiment Station
KANSAS STATE UNIVERSITY
Manhattan, KS 66506
Cooperative Extension Service
Agricultural Experiment Station
MICHIGAN STATE UNIVERSITY
East Lansing, MI 4E823
Cooperative Extension Service
Agricultural Experiment Station
NORTH DAKOTA STATE UNIVERSITY
Fargo, ND 58105
Cooperative Extension Service
Ohio Agricultural Research and Development Center
OHIO STATE UNIVERSITY
Columbus, OH 43210
Cooperative Extension Service
Agricultural Experiment Station
PURDUE UNIVERSITY
West Lafayette, IN 47907
Cooperative Extension Service
Agricultural Experiment Station
SOUTH DAKOTA STATE UNIVERSITY
Brookings, SD 57006
Cooperative Extension Service
Agricultural Experiment Stat on
UNIVERSITY OF ILLINOIS
tirbana, IL 61801
Minnesota Extension Service
Agricultural Experiment Station
UNIVERSITY OF MINNESOTA
St Paul, MN 55108
Cooperative Extension Service
Agricultural Experiment Station
UNIVERSITY OF MISSOURI
Columbia, MO 65211
Cooperative Extension Service
Agricultural Experiment Station
UNIVERSITY OF NEBRASKA
Lincoln, NE 68583
Cooperative Extension Service
Agricultural Experiment Station
UNIVERSITY OF WISCONSIN
Madison, WI 53706
The North Central Regional Center for Rural Development programs are available to all potential cliunleleb
without regard to
race, color, sex, or national origin
NORTH CENTRAL REGIONAL CENTER FOR RURAL DEVELOPMENT
73
IOWA SIM 12. PNIV FIN! IN
Ilf Si 'flue atul
II 1
Iteuellogy
211, 1...1%t
Hall
A1111,
Iowa 50011