1. R. Brent Young, Ph.D. Agriculture and Business Management Specialist

2. Agriculture & Business Management  Production  Marketing  Financial  Human  Legal

3. Agriculture & Business Management  Whole Farm Revenue Protection  Alternative enterprises  Conservation crops

4. Agriculture & Business Management  Whole Farm Revenue Protection  Relearn old skills – marketing & negotiation

5. Agriculture & Business Management  Cash reserves in savings or liquidation of assets without changing the operation  Increase working capital by marketing stored crops or livestock  Tap into credit reserves  Use equity in long term assets to refinance current excess liabilities  Lengthen repayment period on machinery or breeding livestock

6. Agriculture & Business Management  Take advantage of FSA guaranteed loans to reduce credit risk and lower payments  Increase off farm earnings. Use your shop facilities to preform tasks for others during your down time  Decrease nonfarm/ranch expenses  Always think capital preservation

7. Agriculture & Business Management  Talk to you family  Talk to your banker and landlords  Don’t ignore the future. Make time, set a schedule and report to someone  Estate planning and transfer

8. Agriculture & Business Management  Cancel or renegotiate leases  Estate planning and transfer

9. Agriculture & Business Management  A risk management safety net for all commodities on the farm under one insurance policy. ◦ For any farm up to $8.5 million in insured revenue ◦ Diversified farms producing two or more commodities  Both crops and livestock  Organic and conventional  Revenue for livestock coverage is limited to $1 million

10. Agriculture & Business Management  Submit 5 yrs. Schedule F ◦ Determine average farm revenue  Submit Farm Operations Report (intended) ◦ Crops grown, expected yields, expected prices  Revenue to be covered lessor of 5 yr. Schedule F average or intended Farm Operations Report  Select Coverage level 50 to 85%  Losses are determined after you file your Schedule F for the production year

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13.  5years Schedule F Tax Forms ◦ 3ys if Beginning Farmer or Rancher  Farm Operations Report ◦ Crops grown, expected yields, expected prices  Intended, Revised, Final  Summaries of other crop insurance policies  Marketing records if you use direct marketing  Inventory records of crops and livestock  Accounts payable/receivable

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15.  Low input, low value crops ◦ Produced to reduce per acre losses ◦ Produced to maintain soil fertility ◦ Produced to control weeds  May help meet diversity requirement for WFRP ◦ Example: Corn belt – corn – soybeans – oats ◦ Colorado – grain sorghum - millet

16. Agriculture & Business Management  1. Reluctance to pre-harvest price crops  2. Failure to understand and track local basis  3. Failure to have an exit strategy  4. Don’t hold un-priced grain past July 1 st  5. Trying to avoid storage cost by cash marketing grain and buying a call option

17. Agriculture & Business Management 20102011201220132014 ($ Billions) Total Farm Expenditures$289$319$360$367$398 (8.6% increase 2013 to 2014) (38% increase 2010 to 2014) 4 Largest Expenditures ($188.3 billion) Feed Farm Services Livestock, Poultry, Related Labor 16.0% 11.4% 11.3% 8.6%

18. Agriculture & Business Management  2014 - $191,500  2013 - $175,270  60% of expenditures occur within top two categories of farm sales ◦ $5,000,000+26% of total expenditures ◦ $1,000,000 - $5,000,00034% of total expenditures Increase of 9.3%

19. Agriculture & Business Management Category20132014Change < $10,000$15,370$15,771+ 2.60% $10,000 - $50,000$36,977$38,291+ 3.50% $50,000 - $100,000$91,254$88,990- 2.40% $100,000 - $249,000$183,416$175,206- 4.50% $250,000 - $500,000$358,756$369,164+3.00% $500,000 - $1,000,000$688,043$691,898+0.01% $1,000,000 - $5,000,000$1,602,379$1,644,396+ 0.03% > $5,000,000$8,238,790$10,936,763+33.00%

20. Agriculture & Business Management A.Increased more than 50% B.Increased 21% to 50% C.Increased 1% to 20% D.Did not change E.Decreased 1% to 20% F.Decreased 21% to 50% G.Decreased more than 50%

21. Agriculture & Business Management Ratios 201020112012201320142015F Asset Turn Over0.170.18 0.170.160.15 Operating Expense0.710.660.690.650.680.72 Rate of Return of Farm Assets10.99.815.47.97.2 Net Farm Income $74.4$111.9$91.4$123.8$91.1$58.3 (53% decline 2013 – 2015F) (Billion Dollars) Colorado Cash Receipts$5.9$6.9$7.6$7.0$7.5n/a

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24.  Investment in nonproductive assets.  High family living costs or withdrawals from the business.  Spending your way out of income taxes.  Poor financial record systems.  Co-mingling business and personal expenses.

25. Agriculture & Business Management  Bigness on the brain!  Mismanagement of family members return.  Skipping the details.  Attempting to hit a home run each time at bat!  Refusal to learn.

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28.  NO!!!! ◦ Radically different interest rate and lending environment ◦ The level of indebtedness has been reduced ◦ Ag Sector Income has remained above historic averages ◦ The dramatic changes in the crop insurance program ◦ The current capitalization rate of farmland is consistent with other investments

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31.  ABM Website  Website URL ◦ http://www.coopext.colostate.edu/ABM/ http://www.coopext.colostate.edu/ABM/

32. Agriculture & Business Management

33. R. Brent Young, Ph.D. Agriculture & Business Management Specialist Ph. 970.522.7207 brent.young@colostate.edu