Oregon Risk Management Program to Help Producers Create Farm-Level Business Plans

1. Oregon Risk Management Program to Help Producers Create Farm-Level Business Plans Bart Eleveld Clark Seavert Oregon State University Extension Service

2. Outline • The Need • Justification • The Project—three main components • The Workshops • Content of sessions • Outlines for business plans • On-site Visits • Key to success of project • Business Plan Critiques • Evaluations • Summary of surveys • Success stories • Spin-offs • Changes for future

3. The Need (Justification) • Agriculture at strategic crossroad • Klamath Falls—long term water allocations • Orchard crops—low prices/low returns, foreign competition • Wheat/small grains/cattle—low prices/low returns, continuity of government programs • Vegetable/row crops—loss of markets/processing facilities • Succession issues—pressure to expand or intensify • Business plan a difficult hurdle for producers • Producers short on time • Complexity of financial analysis is intimidating • Integration of all the farm’s information • Must be comprehensive, yet useable and accessible • Need for individual, professional assistance to get producers “over the threshold”

4. The Project • End product is long-term strategic business plan • First draft, beginning of continuing process • 3 main components: • Workshops to teach financial planning concepts • FINPACK • Enterprise Budgets (On-line Excel Spreadsheets) • Homework assignments to gather data for ….. • Implementation assistance • On-site visits by farm advisors • FINPACK financial analysis and planning • 4 to 5 visits of 2 to 3 hrs. • E-mail data exchange • Assist in completing plan submitted for …. • Review/critique of plans • Critique by panel (lender, accountant, extension agent/specialist) • Written summary of evaluation given during one-on-one session

5. The Workshops • Where are we now ? • Where do we want to be ? • How do we get there? • Critique of plan • Review and debriefing

6. Where Are We Now ? • Goals, objectives and mission statement • Business Plan outline • Balance sheet: liquidity and solvency • Enterprise costs and returns (crop and/or livestock budgets) • Total resource inventory

7. Where Do We Want to Go ? • Income Statement (with accrual adjustments) • Profitability • Efficiency • Term Debt Repayment • Scenario analysis with long-run prices, yields, costs and enterprise quantities • FINLRB or FINFLO of alternative futures depending on farm situation • Review a regionally appropriate case study • FINLRB for predominantly annual crops, stable perennial crops or livestock • FINFLO for perennial crops with rapidly changing establishment

8. How Do We Get There ? • Implementation plan with short-run to long-run projected prices, yields, costs and enterprise quantities • Cash flow budgeting and management of the operating loan • FINFLO of “best” scenario • Monthly or annual, single or multi-year, depending on the specifics for the producer

9. On-Site Visits • Key to success of program • Largest cost component for project • Farm advisors help producers organize data and do the financial analysis • Occur starting immediately after first session, through just before the critique • Purpose is to encourage producers and keep them on schedule

10. Critique of Plan • Assemble panel of “experts” • Ag lender (hopefully pro bono) • Accountant with ag experience (usually paid a stipend) • Farm management person (part of the job) • Extension FM specialist • Community College Farm Business Management instructor • Extension agent with rich FM experience • Individual meeting to review panel’s comments • Farm management person compiles reviews • Meet individually with producer for about 1 – 1.5 hours

11. Review and Debriefing • Summarize and wrap up loose ends • Panel discussion by reviewers • General observations and recommendations • Strategies for continuing the process • Celebrate the accomplishment • Share a meal • Evaluations

12. Evaluations • Producers found financial concepts difficult and frustrating • Emphasized importance of specific homework assignments to prepare for farm visits • On-site visits were most appreciated component • Overcame difficulties of financial analysis • Appreciated the “getting it done” aspect • Creates concerns that producers see it as a “one-shot” experience rather than ongoing process.

13. Quotes from Participants • This class forced us to “get things done”. Have found several uses of it already because I have everthing in one place. • It finally forced me to do what I’ve always needed to do…create a business plan, even though it still needs improvement. • Forced us to get and deal with information. • I have the skills after this seminar to compose an excellent business plan.

14. Spin-Offs and Related Programs • Interest in alternative enterprises, agrotourism • Example—Pear Ridge Orchards, Tree Lease Program • Succession basics—collaboration with Austin Family Business Program • Alternative enterprise economics—RMA funded cooperative agreement • Training on spreadsheet enterprise budgets used on OSU website • Marketing and Entrepreneurship for new and alternative enterprises—also with A.F.B.P. • FINPACK training for producers who purchased the software

15. Future changes • More website information • Example case studies • Homework assignments • More skill building • Follow-up support—business plan is a process, not a product • Extension? • Community Colleges? • More on succession and business organization • Have all generations participate