1. National farm business Management Conference Fargo, ND June 13 – 17, 2010 Kenneth L. Balliet, Sr. Educator Multicounty Extension Director Copyright © 2010 The Pennsylvania State University Long Term Impact of the Farm Financial Analysis Training Curriculum on FSA Borrowers in Pennsylvania

2. Background Financial management training an explicit mandate of the 1990 farm bill Past studies looked at: –Need for training –Described a typical FSA borrower and measured immediate gains in knowledge Since 1993 extension educators in Pa have been using FFAT curriculum in a variety of delivery modes 2

3. Farm Financial Analysis Training(FFAT) Curriculum –Provides relevant instruction in the development and use of three core financial statements, using benchmarks and ratios and fixing broken finances –Incorporates exercises that result in the determination of “own-farm” liquidity, profitability, solvency, and efficiency – Features a pre/post test, and chapter tests for effective program evaluation 3

4. Chapters 1.Balance Sheet 2.Income Statement 3.Cash Flow Statement 4.Understanding ratios 5.Fixing broken finances The workbook 4

5. Pre and post workshop comprehensive test 5 Chapter Quizzes Own-farm homework assignments Class participation and discussion Guest speakers Workshop evaluation form Other features 5

6. State-wide extension programs –varies by FSA office –more difficult due to loss of educators –technology being used Correspondence by producer –mail request to Dr. Hansen for curriculum –mail completed workbook back for grading –receive pass/fail grade from PSU 6 Delivery

7. Identify and measure long term impacts of FFAT as it relates to: –Perceived gains in knowledge –Changes in management behavior –Changes in assets and profitability –Changes in attitude regarding farm finance and lending 7 Goals of the FFAT study

8. 233 pre-tested surveys sent to FFAT attendees 2001 – 2006 Pa only Two follow-ups 69 respondents 8 The survey

9. Over half are less than 40 years old –68% of dairy farmers 57% had a HS diploma 36% had an 8 th grade education 49% had less than 10 years experience in farming 77% male, 23% female About Respondents 9

10. Financial Tool PoorGood to Excellent 12345 Using a Balance SheetBefore25%27%34%9%4% After3% 20%62%12% Using Income StatementsBefore24%26%32%18%0% After5%6%20%59%9% Fixing Broken FinancesBefore16%34% 13%3% After9%8%32%43%8% Using Cash Flow BudgetsBefore22%31%29%16%1% After4%13%25%49%9% Using Finance RatiosBefore48%36%12%3%0% After15%12%41%26%5% Table 4. Percent Respondents (%) Perceived Level of Knowledge by Tool Increase in perceived knowledge

11. Number of Changes in Likert Scale Financial Tool (ranked)012345 Total Changes Balance Sheet13222470091 Income Statement15261760078 Cash Flow Budget23 1740067 Financial Ratios21152270080 Fixing Broken Finances27221230052 Table 3. Number of Respondents by Number of Levels Increased on Likert Scale by Financial Tool Increase in perceived knowledge 11

12. 80% Indicate a gain of at least one step in the Likert Scale 12

13. 84% Rated their level of knowledge as “good to excellent” after FFAT 13

14. 74% are likely to make manage- ment changes 14

15. 54% Discuss their finances more capably 15

16. 64% Report a gain in farm profit as a result Percent of Respondents with Perceived Changes in Attitudes Influenced by FFAT Disagree & Changes in AttitudeNo Change Agree I Discuss My Finances More Capably When Talking To My Lender 46%54% I Feel More Confident About My Financial Management Skills 50% I’m More Confident When Talking To My Lender 54%46% When Costs Rise, I Am Less Discouraged As I Am More On-Top Of My Finances 60%40% Had I Taken The FFAT Earlier, I Would Have Managed My Past Finances Better 71%29% 16

17. FFAT Chapter test results (Balliet)

18. Percent of Respondents with Perceived Changes in Attitudes Influenced by FFAT Disagree & Changes in AttitudeNo Change Agree I Discuss My Finances More Capably When Talking To My Lender 46%54% I Feel More Confident About My Financial Management Skills 50% I’m More Confident When Talking To My Lender 54%46% When Costs Rise, I Am Less Discouraged As I Am More On-Top Of My Finances 60%40% Had I Taken The FFAT Earlier, I Would Have Managed My Past Finances Better 71%29% FFAT Pre/Post test comparison (Balliet)

19. Summary Farm financial training is demonstrated to provide new and at-risk producers with effective educational materials that will significantly increase: their knowledge about financial statements, their use of financial management tools, farm profit and net worth, and improve their comfort and attitudes when dealing with agricultural lenders. Long-Term Impact of the Farm Financial Analysis Training Curriculum on FSA Borrowers in PA, Balliet, K.L., Douglass, M. B., Hanson, G. D. Journal of Extension, February 2010, Vol 48, Number 1 Art 1FEA6 19

20. Contact Dr. Greg Hanson, Professor of Agricultural Economics Email address: gdh3@psu.edu Telephone: 1-814-865-6362gdh3@psu.edu Fax: 1-814-865-3746 Office address: 201C Armsby Building University Park, PA 16802 Kenneth Balliet. CED, Sr. Extension Educator Email address: klb26@psu.edu Telephone: (570) 837-4252klb26@psu.edu Penn State Cooperative Extension Middleburg, PA 17842 Mark Douglass, Extension Educator Email address: mbd10@psu.edu Telephone: (814) 849-7361@psu.edu Penn State Cooperative Extension Brookville, PA 17842 20

21. Thank You! This Publication is available in alternative media on request. The Pennsylvania State University is committed to the policy that all persons shall have equal access to programs, facilities, admission, and employment without regard to personal characteristics not related to ability, performance, or qualifications as determined by University policy or by state or federal authorities. It is the policy of the University to maintain an academic and work environment free of discrimination, including harassment. The Pennsylvania State University prohibits discrimination and harassment against any person because of age, ancestry, color, disability or handicap, national origin, race, religious creed, sex, sexual orientation, or veteran status. Discrimination or harassment against faculty, staff, or students will not be tolerated at The Pennsylvania State University. Direct all inquiries regarding the nondiscrimination policy to the Affirmative Action Director, The Pennsylvania State University, 328 Boucke Building, University Park, PA 16802-5901, Tel 814-865-4700/V, 814-863-1150/TTY 21

22. Appendix A

23. Appendix B