2. Southwest Risk Management Training for Priority Commodities by Trent Teegerstrom Russell Tronstad Ursula Schuch Dept of Ag. & Resource Economics and Plant Sciences The University of Arizona, Tucson AZ

3. Arizona Risk Management Workshops

4. Topics Covered in Workshops Influence of Quality and Season on Hay Market Decisions Ranch Restocking and Other Mgt Decisions Record Keeping / Financial Risk Management Hands On Computer Training: Some Basics for Any Business Basic Financial Statements

5. Example of Decision Tools Crop Mix/Diversification Long Term Herd Evaluation Animal ID Systems Farm and Ranch Cash Flow Crop Insurance

6. Forage Example

7. Bulkiness of Alfalfa Relative to Other Field Crops, 2003 70% of hay is consumed on the farms & ranches where grown.70% of hay is consumed on the farms & ranches where grown.

8. Location Dairy Feed Demands Quality U.S. Hay Prices by State, 2003 Wtg. Avg. $92.9/ton

9. Alfalfa Prices, Yuma AZ, 1983-04

10. Estimated Yuma Mean Price Seasonality Hay Price is a function of: lagged prices seasonality (polynomial w/ constraints) simultaneous error structure $127 $114 $99 $87 $75 $68

11. Yuma Price Seasonality & Variance

12. Estimated Conditional Covariances Greatest Substitution

13. Substitution: dairy vs. feedlots/horses Prices below (above) long-term averages -- mean reverting Volatility after August (low & OG) Storing alfalfa in April has the lowest expected payout Lower price volatility by going for highest quality -- cost/risk?? Market Implications

14. Livestock Example

15.  Herd Planning -- Multi-Year Restocking Path (5 yrs) -- 20-year returns in current dollars  Multiyear Budgets -- Cash production and management costs  Ranch Investments -- Amortization of assets. Restocking Worksheet

16. Avg. Real Steer Prices: Gila County Sale Inflation Adjusted Prices Declining --

17. Biological Productivity Market Prices

18. Capital Available Restocking Path Initial Herd Biological Productivity Market Prices

19. Grazing Capacity Cummulative Returns

20. Crop Example

21. Inputs: Yields, Prices, & Costs Yields Prices Production Costs

22. Max Profit Subject to Constraints Acreage Capital

23. Monthly Water & Labor Constraints Water Flow Annual Water Limit Water Use

24. Portfolio Risk on Revenues & Acres Revenues Acreage

25. Absolute Dollar Risk Exposure Dollars at Risk Crop Insurance

26. Solver to Maximize Solutions

27. Acreage Mix of 3 Scenarios

28. Profitability of 3 Scenarios

29. Work To Date! 12 Workshops and Presentations Across Arizona 1299 Individuals Attended Workshops and Presentations 694 of the 1299 Were Producers 120 Individuals Received Hands-on Computer Training

30. Western Centers Risk Mgt Project Extended our Focus to Labor Mgt Issues in the Arizona Nursery and Landscape Industries

31. Nursery Work

32. Topics Covered in Workshops Nursery marketing decisions Reducing risk associated with musculo-skeletal disorders (WMSDs) Heat stress management in the workforce Communication between supervisers/foreman/workers

33. Roles and Responsibilities of an Agricultural Employer Need to Be a Manager * Functions of Management * Types of Activity in Managerial Roles Managers’ Theories Recognizing and Managing Risks Managing for Compliance and Beyond Essentials for the Manager Getting up and Keeping up as a Manager of People

34. Convention Demonstrations

35. Work To Date Published and distributed bookmarks on Heat Stress Informational in English and Spanish Heat Stress article in the American Nurseryman (national trade magazine) Five Conference Presentations Over 375 individuals receiving materials and training

36. Questions and Comments?