Farm Financial Management Course kicks off in Slippery Rock

By: Michelle Kowalewski, Penn State Extension Educator, Susquehanna County

This week Penn State Extension Educators kicked off their first session of Farm$en$e in Slippery Rock, Butler County for the 2015-16 program year.  

Farm$en$e is a four session workshop that teaches farmers how to understand financial statements such as the cash flow statement, the balance sheet, and the income statement.  Course participants will learn how to use financial records to make informed financial and production decisions.  These skills will strengthen the farm business partners.  All agricultural businesses including: Livestock, Dairy, Crops, Horticulture Operations including Orchards, Greenhouses, and Vegetable Operations can benefit from Farm$en$e. 

Farm$ense will be offered across Pennsylvania in five locations during 2015-16.  Locations and dates for the program are as follows:

Butler County (Registration Closed - Program In-Progress)

Sustainable Enterprise Accelerator
165 Elm Street, Slippery Rock
Tuesdays – November 3, 10, 17, 24
10 am – 3 pm

Adams County
Penn State Extension - Adams County
670 Old Harrisburg Road, Gettysburg
Fridays – January 9, 15, 22, 29
10 am – 3 pm

Mifflin County
Penn State Lewistown
152 E. Market Street, Lewistown
Thursdays – January 14, 21, 28, February 4
10 am – 3 pm

Lancaster County
Shady Maple Smorgasbord
Vintage 2 Meeting Room
129 Toddy Drive, East Earl
Thursdays – February 11, 18, 25, March 3
10 am – 3 pm

Bradford County
Stoll Natural Resources Center
200 Lake Road, Towanda
Thursdays – March 24, 31, April 7, 14
10 am – 3 pm

Pre-registration for the program is required online by clicking on the links above or by calling 877-489-1398.  The cost of the program is $225 per farm (limited to two individuals per farm, each additional person is $90/each).  Lunch is provided at all classes.

For participants of all four sessions who have drafted a set of financial statements for your farm this program satisfies the requirements for Pennsylvania borrowers of the USDA Farm Service Agency Borrower Training requirements for both production and financial modules.   Additionally, this program qualifies for four SmartStart credits from AgChoice Farm Credit.   

For more information about Farm$en$e please contact Penn State Extension Educator Juliette Enfield at 814-563-9388 or jse15@psu.edu.

Farm$en$e: Farm Management tools for Financial Success

Are you looking for a farm business management class to help brush up your financial and production planning skills?  Penn State Extension’s Agricultural Entrepreneurship Team will offer Farm$en$e across the state at various locations starting in December and running through early April.

Farm$en$e is a finance and production education class for Pennsylvania farm businesses.  Farming is a complex business.  The key to running a successful farm business is the ability to manage scarce financial resources and plan farm production accordingly.  This short course teaches participants how to organize and use financial records; develop and analyze financial statements; and make informed decisions regarding finances and production. The concepts covered promote better internal decisions for farm management and stronger relationships with external partners, such as lenders.  The adoption of farm records and the use of financial statements, such as the balance sheet, cash flow, and income statement significantly impact farm financial performance.  This course satisfies the requirements for borrowers of the Farm Service Agency, but is also available to borrowers and lenders of any private agricultural bank.

Farm$en$e will be offered in the following locations:

December 12^th, 17^th, 19th

The use of financial statements can significantly
impact a farm's financial performance. 

Somerset County

9:30 am to 2:30 pm

January 7^th, 21^st, 28^th

Blair County

9:30 am to 2:30 pm

January 9^th, 16^th, 23^rd, 30^th

Berks County

10:00 am to 2:00 pm

January 31^st, February 7^th, 21^st, 28^th

Lancaster County

10:00 am – 2:00 pm

February 3^rd, 10^th, 24^th

Mercer County

9:30 am – 2:30 pm

February 4^th, 11^th, 18^th

Crawford County

9:30 am – 2:30 pm

  

March 3^rd, 10^th, 17^th

Bradford County

9:30 am – 2:30 pm

March 7^th, 14^th, 21^st, 28^th

Cumberland County

10:00 am – 2:00 pm

March 21^st, 28^th, April 3^rd

Union County

9:30 am – 2:30 pm

Register online for the session in your area by clicking on the link above or by phone by calling Kathy Shaffer at 814-445-8911, ext. 7.  The cost of the program is $225 per participant, pre-registration is required for all those attending.  For more information contact Miguel Saviroff, mas60@psu.edu or 814-445-8911, ext. 144.

Financial Management Invaluable for Farm Success

by Miguel Saviroff, Extension Educator, Somerset County

A farm business depends on its finances!  Financial management is as critical as the other components of the business, such as crop, labor, nutrient, and pest management.  Lenders expect farmers to manage the funds they lend to them, so a farmer-lender relationship is very important.  Credit institutions will rarely extend credit when there is no visible record of your past income or when a financial plan cannot be prepared to convience them of the ability to use funds efficiently and repay the loans.  Financial literacy and management are a must for anyone aspiring to be a successful farmer.

Miguel Saviroff leads a Farm$en$e workshop

The Farm$en$e program trains farm managers who receive financial assistance from the USDA Farm Service Agency.  The course is 25 hours spread over 4 days.  Making decisions on the farm is a daily activity, but buying land or equipment requires informed decisions and the use of financial statements.  The program covers the use of the balance sheet, a "snapshot" of the farm financial condition at a single point in time.  In order for the balance sheet to balance, total assets on one side have to equal total liabilities plus shareholders' equity on the other.  The accrual income statement is a summary of the revenues, and the expense associated with generating those revenues, during a production cycle.  The accrual concept applies directly to agriculture; farm managers in the program learn that changes in inventory are part of the farm revenues.  The cash flow budget statement allows producers to project cash flows for each month of the upcoming year; it is the best financial planning tool.  Participants are required to prepare these statements for their own farm.

The workshop is designed to teach farmers how to assess their financial strengths and weaknesses, to identify the specific goals of the farm, and how to prepare a production plan that outlines the changes required to improve profitability.  Enterprise budgets are used to better analyze short and long run fiscal impacts and evaluate profitability.  Managing risks like price, cost, and interest rates are considered in this plan.

Monitoring financial ratios can be useful to adjust operations throughout the year, rather than once a year.  Borrowers attending the program learn to calculate their farm's financial ratios obtaining them from the key financial statements.  The liquidity ratio measures the ability to pay bills when due, the solvency ratio indicates the amount of debt relative to equity, and the profitability ratio indicates the true financial performance of the business.  These ratios are applied to troubleshoot and fix financial and production problems.

As many beginning farmers, Orlo St. Clair, attendee of the program, lacked land, equipment, managerial experience and access to financial resources.  St. Clair started as a herd manager on a farm in Indiana County.  "I asked the owner if I could raise my own heifers, and he accepted," St. Clair said.  "I wanted to have a base to start with."

Orlo St. Clair and his girlfriend review some of his financial records

"Since I am a production guy, usually it is my sister helping me with the financial accounting, but now I enjoy planning my year's cash flow," said St. Clair, who milks 90 cows and crops 175 acres.  "Thanks to the Farm$en$e program, I am able to plan my goals, changes, and measure the impact on the net income due to these changes."

Penn State Extension and the FSA assist farmers in adopting the financial tools necessary to become active managers.  For more information about Farm$en$e, contact Miguel Saviroff at the Somerset Extension office at 814-445-8911 ext. 144.