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. 30% State 12% Federal Iowa State University Extension Budget, 2003-04 19% User Fees 20% Grants 2% Gifts 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: www.ManagingCropRisks.com 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 Payment Loan Deficiency Payment 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 IncreaseMPCIRA-HPO/CRC APH150 bu/A Coverage75% Base Price$2.20$2.32 Guarantee112 ½ bu/A$261/A Harvest Yield100 bu/A Harvest Price ‘05-------$3.50/bu New Guarantee-------$393.75/A Indemnity$27.50/A$43.75/A

24. 2005 Corn Strategy using Crop Revenue 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 Source: Wisner, Iowa State Univ. Extension Economist, 4-1-05 $2.55/bu 18%

27. Source: Wisner, Iowa State Univ. Extension Economist, 4-1-05 $2.55/bu 60% $2.05/bu 18% Probability of Cash Corn Price Outlook 2005 – 06 Marketing Year

28. Source: Wisner, Iowa State Univ. Extension Economist, 4-1-05 $2.00/bu$2.55/bu 60% $2.05/bu 22%18% Cash Corn Price Outlook Probability ‘05 – ‘06 Marketing Year

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 site @ $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.iastate.edu/ames Advanced Grain Marketing Financial Decision Making Farmland Ownership Farm Leasing Arrangements Farm Machinery Economics Advanced Livestock Marketing

33. $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ AgDM Home Page What’s New Authors Topics Crops Cost & Return Markets Machinery Other Livestock Cost & Return Markets Other Whole Farm Cost & Return Leasing Land Values Financial Legal & Taxes Transfer Value-Added Ag Other What is it Iowa State University Extension Update Notification Search Questions about AgDM 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. Non-Discrimination & Information Disclosures What is it  Update government bases and yields Copyright  2002 Iowa State University Extension Don Hofstrand, dhof@iastate.edu, 641-423-0844 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. Help with a Business Problem How to use it

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

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

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

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

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

46. “Train the Trainer”

47. Thank You! Steven D. Johnson Farm & Ag Business Management Field Specialist ISU Polk County Extension 5201 NE 14th Street, Suite A Des Moines, IA 50313 (515) 261-4215 sdjohns@iastate.edu www.extension.iastate.edu/polk/ farmmanagement.htm