1. Managing Crop Risks: A Model Public and Private Partnership
Steven D. Johnson Farm & Ag Business Management Field Specialist

2. | Region 1: Ron Hook | Region 2: Kelvin Leibold | Region 3: Robert Tigner | Region 4: Tom Olsen | Region 5: Steve Johnson | Region 6: Craig Chase | Region 7: Tim Eggers | Region 8: Bob Wells | Region 9: Jim Jensen |

3. Iowa State University Extension Budget, 2003-04 Gifts User Fees2%
Gifts
19%
User Fees
12%
Federal
30%
State
20%
Grants
17%
County

4. Presentation Objectives
Review the history of “Managing Crop Risks” program
Current program and agenda
Program topics
Creating “value” for clients
Show me the “money”
The “road ahead”

5. Educational Deliverables
Conference
Seminars
Workshops
Discussion Groups
One on One
Web-site:
Emerging technologies: video and MacroMedia Breeze

6. The Early Years
Daylong Conference in held one location (November and January)
Sponsored by ISU Extension, Farm Credit Services of America and Wallaces Farmer (Farm Progress Companies)
Outside speakers on a variety of financial and market risk topics
Registration fee of $50 with Farm Credit guaranteeing 50 participants at $30 each

7. The Later Years
Workshops scattered around Iowa with county extension and FCS Market Place offices coordinating (December or January)
Sponsored by ISU Extension and Farm Credit Services of America
Selected speakers on financial, market and weather risk topics
Registration fee of $10 with Farm Credit inviting customers and prospects

8. ISU Extension Corn Train: Managing Crop Risks

12. Current Program Risk Management Workshop in January
Sponsored by Farm Credit Services of America in cooperation with ISU Extension
2 ½ hour program with a complimentary meal
Nineteen locations statewide
Phone register 48 hours in advance
Farm Credit invites customers, prospects and Extension field staff to attend
All programs are listed on Extension calendar

13. Locations for 2005 Managing Crop Risks

14. Program Agenda “Risk Free Crop Farming” including a video:
“Weather Outlook for 2005” with Elwynn Taylor
Utilizing Crop Insurance Tools
Outside speaker invited by Farm Credit Services
Meal prior to program or afterwards
Registration and door prizes

16. $ Government Farm Program Crop Insurance Products Crop Marketing
Strategies

18. Four Types of Government Farm Program Payments
Direct payment (DP)
Counter-cyclical payment (CCP)
Loan deficiency payment (LDP) or marketing loan gain (MLG)
Subsidized crop insurance premiums
38% to 59% paid by Government

19. Government Payments for Corn
Source: Edwards, ISU Extension Economist

20. Structure of Program Payments for Corn
Target Price
Fixed
Payment
Loan Rate
Counter-Cyclical
Loan Deficiency
Not
Tied To
Prod
Req.
$2.63
$0.28
$2.35
$1.95
Regardless
Of Market
Only If…
$0.40
Maximum
CCP

23. Corn Insurance Comparison
Price Increase
MPCI
RA-HPO/CRC
APH
150 bu/A
Coverage
75%
Base Price
$2.20
$2.32
Guarantee
112 ½ bu/A
$261/A
Harvest Yield
100 bu/A
Harvest Price ‘05
$3.50/bu
New Guarantee
$393.75/A
Indemnity
$27.50/A
$43.75/A
Now let look at the price going to $7.30 in the fall – look familiar. With a higher fall price, you get an increased revenue guarantee. It’s the same math we used before to figure the base, 42 bu x 75% x $7.30 the new fall price give a new guarantee of $ Then to calculate the indemnity you multiply 25 bushels time $7.30 and subtract from the new guarantee.

24. 2005 Corn Strategy using Crop Revenue Revenue Assurance w/HPO
Coverage or
Revenue Assurance w/HPO
150 bu/A APH
X 75% level of coverage
112 ½ bu/A Guaranteed Yield
X $2.32/bu Dec. Corn Futures in Feb.
$ 261/A Guaranteed Revenue

26. Probability of Cash Corn Price Outlook
2005 – 06 Marketing Year
$2.55/bu
18%
Source: Wisner, Iowa State Univ. Extension Economist,

27. Probability of Cash Corn Price Outlook
2005 – 06 Marketing Year
$2.05/bu
60%
$2.55/bu
18%
Source: Wisner, Iowa State Univ. Extension Economist,

28. Cash Corn Price Outlook Probability
‘05 – ‘06 Marketing Year
$2.05/bu
60%
$2.55/bu
$2.00/bu
18%
22%
Source: Wisner, Iowa State Univ. Extension Economist,

29. $ Pre-Harvest Crop Marketing Plan Crop Insurance Revenue Tools
Execution of
Your Marketing
Plan

30. Show me the money Revenue Generation at $36/hour
Conceptualization and Development – 1 hour per site
Travel – 3 hours per site
Set-up and presentation – 5 hours per site
Office staff time of 2 hours per $25/hour
Campus support of $50 per site for video and development
Total of $400 per site for development and training
Revenue Generation of $300 sent to ISU

31. Cross Promote other Extension Programs

32. Ag Management e-School (AMES) Non-Credit Web Courses www. extension
Ag Management e-School (AMES) Non-Credit Web Courses
Advanced Grain Marketing
Financial Decision Making
Farmland Ownership
Farm Leasing Arrangements
Farm Machinery Economics
Advanced Livestock Marketing
AGM is the first in a series of courses. We are starting with courses that:
build skills our clients say they need (demand side), and
fit our core competencies (supply side).
AGM was piloted in February It had a summer run from June-August We are promoting the course for the January-March 2002 run.
Stress that the courses are internally reviewed prior to piloting.
External review from other land grant ag economists and ag professionals is part of the pilot process.
Courses are intended to be used by Midwest producers and landowners. Sponsorship through the offering of scholarships to clients enrolled in the course(s) is encouraged.
AGM has a $100 registration fee.

33. Non-Discrimination & Information Disclosures
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Topics
Crops
Cost & Return
Markets
Machinery
Other
Livestock
Whole Farm
Leasing
Land Values
Financial
Legal & Taxes
Transfer
Value-Added Ag
Iowa State University Extension
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Non-Discrimination & Information Disclosures
Dedication
Welcome to Ag Decision Maker (AgDM). The information and analysis provided at this web site will help you find solutions to many of the business, economic, and financial decisions facing farmers and agribusinesses.
Update government bases and yields
Copyright  2002
Iowa State University Extension
Don Hofstrand,
All rights reserved
Web site design by Liisa Jarvinen
This site is Bobby Approved and Disability Accessible. The site
has passed P-1 accessibility standards.

35. The Road Ahead Iowa programs in January 2006
Nebraska and South Dakota programs in December 2005
Similar theme, agenda and use of web site
Beyond 2006
Driven by the Market Place
Must continue to “add value” to clients
University role as objective 3rd party

36. Small Group Discussions

37. Group Interaction

38. Ask the “Expert”

39. Sample Farm APH = 150/bu A Corn
Use Revenue Assurance w/HPO at 75% level of coverage
Total Production Cost = $350/A
Marketing Plan
Sell 50% of new crop corn in the spring
Average futures price of $2.50/bu
Average basis at harvest of $ .25/bu under
No Marketing Plan
Average cash price of $2/bushel at harvest on all bushels
Compare APH Yields vs. High Yield vs. Low Yield

40. 150 bu/A Average Corn Yield (Marketing Plan)
Copyright© 2004 with Permission

41. 150 bu/A Average Corn Yield (No Marketing Plan)
Copyright© 2004 with permission.

42. 180 bu/A Average Corn Yield (Marketing Plan)
Copyright© 2004 with permission.

43. 180 bu/A Average Corn Yield (No Marketing Plan)
Copyright© 2004 with permission.

44. 131 bu/A Average Corn Yield (Marketing Plan)
Copyright© 2004 with permission.

45. 131 bu/A Average Corn Yield (No Marketing Plan)
Copyright© 2004with permission.

46. “Train the Trainer”

47. Farm & Ag Business Management
Thank You!
Steven D. Johnson
Farm & Ag Business Management
Field Specialist
ISU Polk County Extension
5201 NE 14th Street, Suite A
Des Moines, IA
(515)
farmmanagement.htm