Project Summary:

Authorized Organizational Representative:

Principal Investigator/Project Director #1:

Principal Investigator/Project Director #2:

Description of the Agricultural Communication Network Project:

1. Project Objectives:


• To improve agricultural research underlying agricultural telecommunications.
  
  
• Make optimal use of available resources for agricultural extension, resident education, and research by sharing resources between participating institutions.
  
  
• Improve the competitive position of United States agriculture in international markets by disseminating information to producers, processors, and researchers.
  
  
  
  Explain how the project relates to the Program Objective(s) and how the Project will contribute to achieving these.
  
  Contributions to Objectives: Our specific intent with this proposal is to accomplish the following:

  1. Using the communicative access of the Internet, provide farm producers with tools and training that will enhance their risk and financial management capacities, and thus their profitability and sustainability. Increased profitability and sustainability will lead to a lower cost, more resilient farm sector that is, as a consequence, more competitive in international markets.

  2. By making analysis tools available to three clientele groups and educating them in their use, farmers, lenders and Cooperative Extension personnel will come closer to operating with the same tools and same bases of information in developing sustainable adaptations to risk. Each client group could see their professional abilities enhanced.

  3. By building these materials from a newly acquired, extensive database on farm loans, the training materials will be current and enterprise specific with respect to farming systems, marketing options, institutional arrangements and other factors of local significance. The research content of information available will be enhanced.

  4. By building upon teaching/training materials and research results already in hand or in process, this project will be cost effective in its own right and add value to products developed earlier. Developed with collaboration from three western Land Grant universities, the project should offer an enhanced data and reference base to potential clients. And, by using Internet dissemination and distance education channels, the project will bring its results to clients in multiple western states.

  The project recognizes the needs 1) of farmers for better risk and financial management tools and training, 2) of agricultural loan officers for better risk assessment methods and an enhanced basis to talk things through with their clients, and 3) of Cooperative Extension for an expanded analytical base for their discussion with and advice to their farmer clients. An existing research relationship (between CSU and FCS) as well as working relationships within the Western States Farm Management Extension Committee will generate outputs that can substantially enhance the interface between farmers and the capital market if they are appropriately embodied in training programs.
  

  
  
  


2. Description of Agricultural Communication Network to be Developed or Utilized.





Describe the Cost/Benefit Analysis for purchasing (or leasing) different types of facilities, equipment, components, hardware and software, or other items. (complete only if applicable to your project).



3. Agricultural Communication Network Programming:


• Agibusiness
  
• Agricultural Communications and Education
  
• Agricultural Economics
  
• Agricultural Profitability and Sustainability
  
• Applied Statistics
  
  
  Describe the Programming and how it will contribute to achieving the Objective(s):
  
  Antecedents: This proposal builds on two recent, but significant activities in the general arena of farm risk appraisal and management. Thus, the project not only can be viewed as intrinsically valuable but also contributing value added to these two prior activities, one of which was USDA funded. In brief the antecedents are as follows:

  1. In 1998/99, Cooperative Extension specialists at Colorado State University (CSU) collaborated with their counterparts at Montana State University (MSU), the University of Wyoming (UW) and staff of the Risk Management Agency of the USDA to produce a volume entitled "Risk and Resilience in Agriculture." This document, a loose leaf bound compendium of more than 230 pages, assembles written materials directed toward identifying and coping with risks facing farm producers. The volume basically assembled "Fact Sheets" and other Cooperative Extension materials on the subject, structured to bring the expertise of three states to bear on the farm risk management problem. The target audience is farm producers. The volume is available only in hard copy at present.

  2. In March 2000, CSU and Farm Credit Services (FCS) (the largest commercial farm lender in Colorado) entered into an agreement whereby FCS provided CSU their complete loan records for more than 6000 farmers. The database covers some 75 percent of farm borrowers in this state. Expectations are that CSU will develop for FCS risk profiles by region, primary enterprise and other borrower stratifications. As a related research thrust, CSU intends to then develop analyses of optimal risk and financial management strategies, given the parameters that emerge from actual farmer behavior as captured in these loan records.

  The Proposed Extension to On-Line Education and Outreach: This project will extend these results to an in-service, on-line education opportunity for three primary clientele groups; farmers, private sector agricultural loan officers and Cooperative Extension personnel, all of whom are concerned with risk management in agricultural production. Initially, due to similarities in crop and livestock systems, this resource will be most useful to clients in the states along the Front Range of the Rockies and in the Inter-Mountain West. Logical extensions thereafter include the tier of Great Plains states along the western border of the Missouri-Mississippi as the next priority.

  Programming under this project will, as its core objective, establish an on-line course in farm/ranch risk appraisal and management coupled with on-line analysis resources for assessing financial risk for individual agricultural producers. The programming will include text materials, additional readings and multiple interactive spreadsheet modules so that farm producers and/or the loan officers or extension agents serving them can develop risk appraisals and explore risk management strategies for the specific farm or ranch in question, using averages drawn from similar operations in their region for illustration. The goal is to provide an on-line resource which agricultural producers can use for learning and as a management tool. Three primary uses are foreseen. First, producers can work their way through the text, readings and the spreadsheet modules in a self-instruction mode. Second, producers can use the modules together with their loan officers and/or extension advisors to jointly assess aspects of financial risk for their own farm and, using "what-if" simulations explore alternatives to lower that risk. Third, the on-line materials can be used to support formal instruction, either in short course format or through distance enrolment in a formal course.
  



Detailed description of methods to be used in producing and/or delivering the programing.

Three identifiable end products are planned. These are:

a. A short conceptual document giving definitions, concepts and a very brief introduction to the subject. This short document (and on-line file) will show i.e. why there is a difference between net cash flow, net cash income and nit income (calculated on an accrual basis) and why these differences are important. It is recognized that most producers are not fully trained in economics or accounting. This introductory document/file will assist to publicize the web-based resources, and get producers and CE agents to buy into the rest of the activity. Thus not only will this conceptual piece provide an introduction to the subject and a sensitization to its importance, it will also double as a marketing tool.

b. A web site which carries the core of the material to be delivered via telecommunications media (see full description below under Programming Specifics).

c. CD-ROM versions of the web based materials to extend access to county Extension or rural bank offices which might have limited Internet access for the next period of time. These CDs could also be used in short course presentations of the basic material.

Programming Specifics: Three linked components of the intended web site can be identified.

a. The core of the electronic resources will be a Producer Risk Appraisal and Management Manual (a user friendly text). Composed of about 12 "weekly" lessons, these will contain the approximate content of a two credit, on-campus course. This material will be drawn and adapted from syllabi and lesson plans currently used in agricultural finance or risk appraisal courses at CSU, MSU and UW. Each lesson will contain an overall theme, stated learning objectives, text and case study materials, research results where appropriate and automatically scored quizes or exams. A supplemental text book will be identified as well should the distance learner desire an additional reference.

b. Supporting these lessons will be a wide range of supplemental readings, available as linked PDF files and possibly in other formats. The central content of this material will be drawn from the "Risk and Resilience in Agriculture" volume mentioned above. Additional materials from the refereed literature or from Cooperative Extension in other western states will be included as needed. This material will, of course, be on-line and accessible via links within the individual weekly lessons.

c. The third important component, also accessed through links from the weekly lessons, will be an extensive set of Excel-based analysis templates built around the regionally and locally specific risk profiles designed to illustrate the content of each particular lesson. Financial and risk management issues will be illustrated by "what-if" simulations within the document. Protected cells will provide representative farm organizations, enterprise mixes, and financial choices drawn from the profiles being developed with the FCS data base. Similar material will be sought from Montana and Wyoming initially. An on-line farmer will be able to select a spreadsheet to evaluate his own operation with respect to enterprise mix and region within the West. The analysis spreadsheets will be interactive such that a farmer alone, or collaboratively with his Extension agent or loan officer, can sit down and build an analysis of his/her own farm situation. This analysis should lead to identified financial issues, risk assessments, and evaluations of alternative management strategies, all the while viewing the "representative" farms answers along side.

d. The farm risk assessment and management web site will be maintained at Colorado State University. When used as an on-line course, the programming will be mounted within the WebCT (Web Course Tools) software which was specifically designed by the University of British Columbia for distance education. More than 300 CSU courses are presently utilizing WebCT as a delivery vehicle so this method is currently well developed and technically supported on campus. Extension Specialists in agricultural finance and farm and ranch management (most likely the identified PIs for this proposal) will backstop the on-line course from the CSU campus initially. Cooperating faculty from MSU and UW are engaged in similar activities, it is possible that within their states backstopping will occur on their campuses. We anticipate developing direct links to similar professionals in other western states in the future so that producers in each participating state can be supported by their own Cooperative Extension personnel.




4. Population to be Served and Target Audience(s):

1. Individual farm producers: who will use the on-line materials to a) increase their skills in financial management, 2) assess their own financial risk situations, either individually or in consort with local farm support agencies, and 3) modify their farming and financial management systems to achieve more viable risk profiles, greater profitability and sustainability.

2. Cooperative Extension (county staff): who will learn enhanced financial risk assessment and management techniques based on actual farm financial records, and thus be better able to assist client farmers.

3. Lending agency staff (loan officers and management): who will be able to share common, enhanced risk assessment methods with client farmers and Cooperative Extension advisors, utilizing risk profiles based on local and regional actual data.

4. Cooperative Extension (on-campus Extension specialists): who will be able to reach a much wider audience more effectively with financial and risk management education.




5. Collaborating Institutions and Other Partners:

1. Colorado State University, Department of Agricultural and Resource Economics specialists in agricultural risk and financial management and agricultural production management
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2. Agricultural economists from Montana State University and the University of Wyoming who participated in the preparation of the Risk and Resilience in Agriculture resource mentioned above. In addition to full collaboration in preparing the on-line materials, these individuals will take the lead in extending the use and applications of the proposed programming into their states and regions.

3. Individuals in items 1 & 2 are participant members of the Western Farm Management Extension Committee which is in process of developing a western risk management library. The resources to be developed under this project will draw on that committees input and, once completed will become an integral part of their library.

3. Farm Credit Services of Colorado Springs, CO; state and regional headquarters staff as well as locally resident loan officers. FCS has provided the raw data base for the research that underpins this proposal. They will continue their involvement through editorial review and by testing prototypes of the web based analytical tools for applicability to the farm loan provision environment.






6. Additional Rationale for Project


Most agricultural producers are trained in animal or crop sciences. Their understanding of financial and risk management is often limited to materials studied in one or two courses, perhaps years ago. It is the impression of participants in this project that the thrust of agricultural policy today, coupled with a globalization of the market place and long-term commodity price trends, strongly suggest that a new sense of awareness of financial and risk management is needed by todays producers. For this, the conceptual piece is suggested above. Beyond awareness, much better skills and tools are required for producers and their support systems to work together to achieve better results. The rest of the offered resources provide these tools. Finally, to the extent that ag producers and their Cooperative Extension agents and/or ag loan officers can work together with the proposed tools, a more effective community of interest should emerge. Transactions costs could be lowered as a result, thus further contributing to international competitiveness.




7. Significant Impacts:

The project should, upon its successful completion, contribute to the following specific objectives of the Agricultural Communication Network:

1. We will assemble and disseminate to an off-campus audience in several states through agricultural telecommunications, the research information presently embodied in on-campus courses in agricultural finance and farm risk appraisal at CSU, MSU and UW. To this will be added new research findings now emerging under the collaborative agreement between CSU and the Farm Credit Services lending institution. An active literature search will be conducted to identify and incorporate other recent relevant research findings as available. Furthermore, to build into the spreadsheet modules the capacity to simulate price and production variability, additional original research will be conducted to determine historic price and yield patterns for different commodities in different regions. These results will allow including various levels of subjective probability of outcomes affecting financial risk into the modules for client use.

2. The manual and simulation modules, by being accessible over the Internet can be considered a common resource for participating institutions and others. As noted, we expect initially that this programming will be of primary use to clients in states along the Front Range of the Rockies as well as those constituting the Intermountain region. Efforts will be made to publicize these resources throughout this region to Cooperative Extension and to agricultural lending institutions.

3. This programming should increase the competitiveness of American agriculture by leading toward better risk management and hence lower cost, more stable production. This will occur as agricultural producers, Cooperative Extension advisors and the agricultural service industry (in this case, farm credit suppliers), using a common tool, move toward a shared and enhanced understanding of risk appraisal and management.

4. The three principal client groups identified herein should experience career enhancement through better decision making ability supported by the proposed programming. In addition, the on-line resources, both the manual and the analytical modules, can be easily incorporated into the classroom/laboratory experiences of on-campus students in agricultural economics, farm and ranch management and agricultural business. Again, efforts will be included to market this resource among faculty in agricultural economics departments throughout the western United States.

5. Interaction among agricultural scientists will be enhanced through the process of jointly developing the materials for the proposed web site. Specifically, fine tuning the analysis modules for regional relevance will cause farm finance experts in several institutions to work together, exchanging insights, methods and results.






8. Describe the plans for research, assessment, evaluation and dissemination as applicable to the project:

Evaluations will be conducted at several points in and after the delivery process. During the development phase, Farm Credit Services will provide peer critique from the lending institution perspective of the utility and accuracy of the analytical tools being prepared. As the on-line materials are used for short course training conducted by Cooperative Extension, evaluations will be conducted after each session. As a group of remote users accumulates, an on-line questionnaire will be administered to collect their evaluations of the usefulness of the programming and whether they modified their decision making as a result. Finally, participating faculty at CSU, MSU and UW will be involved in continuous interchange on the quality and potential usefulness of the product as it develops. Once it is on line and has been in use for some months, a formal evaluation by the participating faculty will also be conducted.

We would anticipate providing ADEC/USDA a preliminary evaluation six months after operationalizing the web site and a final evaluation at the end of the first year.






9. Broader Impacts:

When successful, this project will significantly enhance awareness among agricultural producers of the necessity of better farm financial risk management. It will provide a broad community of producers with tools to complete such analysis, and a choice among instructional modes with which they can be trained in their use. Since these tools will reside on the WWW, and since they are designed to be used by producers and others working together, looking at the same screen in effect, the project should contribute to a shared sense of community focused around farm risk appraisal.

We expect the primary involvement of women to be through their frequent roles as farm accountants and/or business managers for the family operation. These on-line tools will very likely be used as much or more by the wife in the farm family as by the husband.

The interest expressed above in having the materials available in CD-ROM form stems specifically from our concern that minority farmers and ranchers, e.g. Hispanics in the state of Colorado, are less likely to be computerized or to have Internet access or skills. For this reason, it is felt that CD-ROM copies should be available direct to the farm public or through the County offices of Cooperative Extension where an appropriate agent or specialist can assist with its use.





10. Proposed Timetable:

Jul 2000 On-line conferencing among participants to formalize assignments, deliverables, share insights and ideas, etc.

Jul – Sep 2000 Phase I research on FCS database completed, "Borrower Profile" report issued.
Conceptual short paper (product 1 above) drafted, in circulation for review.
Outline of manual drafted and agreed upon. Content materials assembled.

Sept – Dec 2000 Text of manual brought to first draft stage.
Supplemental readings assembled for each learning module, converted to PDF.
Phase II research on FCS database completed. Analytical report issued.

Jan – Mar 2000 All written materials to penultimate draft
Interactive Excel spreadsheets designed, tested, refined

Mar – Apr 2000 Establishment of web site, field testing with client groups, refinement.

May – Jun 2000 Operationalize, publicize.
Begin training programs for Cooperative Extension and/or banking officers

Post June 2000 Evaluate after 6 and 12 months






11. Project Personnel and Time Commitment:



1.5 mo. Prof. Jerry Eckert Agricultural and Resource Economics, CSU, Principal investigator
1.0 mo. Prof. Norm Dalsted Agricultural and Resource Economics, CSU, Co-P.I.
7.5 mo. GRA (to be hired) Agricultural and Resource Economics, CSU
0.8 mo. Dr. Duane Griffith Department of Agricultural Economics, Montana State University
0.8 mo. Dr. John Hewlett Department of Agricultural Economics, University of Wyoming
0.5 mo. Programmer assigned by Office of Instructional Services, CSU