DOCUMENT RESUME

ED 286 706 RC 016 447

AUTHOR Lasley, Paul, Comp.; And OthersTITLE Farm Crisis Response: Extension and Research

Activities in the North Central Region.INSTITUTION North Central Regional Center for Rural Development,

Ames, Iowa.PUB DATE 86NOTE 73p.; A network organized by Paul Lasley and Rand

Conger, Iowa State University.PUB TYPE Guides - Non-Classroom Use (055) -- Collected Works -

General (020)

EDRS PRICE MF01/PCC3 Plus Postage.DESCRIPTORS Agriculture; Community Action; Community Problems;

*Economic Status; Extension Agents; *ExtensionEducation; Family Problems; *Farmers; HigherEducation; Institutional Role; *Land GrantUniversities; Program Descriptions; ProgramEffectiveness; Regional Characteristics; RegionalPrograms; Rescrch Needs; Responses; Rural Areas;*Rural Extension; Stress Management

IDENTIFIERS Cooperative Extension Service; Economic Impact; *FarmCrisis; Illinois; Indiana; Iowa; Kansas; Michigan;Minnesota; Missouri; Nebraska; North Dakota; Ohio;Response Patterns; South Dakota; *United States(North Central); Wisconsin

ABSTRACTThe 12 states comprising the North Central Region

have been affected in similar ways by the farm crisis of the 1980s.Statewide surveys show sizeable proportions of farm operations thatare experiencing moderately high levels of financial stress. Theproblems caused by chronic stress on family structure andfunctioning, the loss of mainstreet businesses, and bank closing arefelt throughout the region. The Cooperative Extension Agencies in thestates have approached the problems in similar ways. They havedeveloped new programs with long- and short-term efforts, and theyhave adapted existing programs with short-term or temporaryactivities and long-term commitments. Extension has been most heavilyinvolved iu developing new, relatively short-term programs such asthe use of hotlines, crisis intervention teams, and bankrupcy or bankclosing response teams. New long-term programs include projects andresearch designed to achieve economic and agriculturaldiversification. The addition of resources to the existing farmmanagement programs is a good example of an existing short-runprogram. Many existing, long-term Extension and research programshave been helpful in meeting immediate needs. This document provides12 papers summarizing the farm crisis and programs designed to dealwith it in each of the North Central states. Research needs areenumerated. (JHZ)

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L I

Farm Crisis Response:Extension and Research

Activities in theNorth Central Region

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This document has been reproduced asreceived from the person or organizationoroginahng it

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The North Central Regional Center for Rural Development

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BEST COPY AVAILABLE

Farm Crisis Response:Extension and Research

Activities in theNorth Central Region

A Network Organized byPaul Las ley and Rand Conger,

Iowa State University

cl C:1 ni

Cgo 9 EA The North Central Regional Center for Rural Development

1968CD CMC) ECil

3

Contents

Contributors iii

Foreword iv

Summary and Conclusions 1

Paul Las ley, Rand Conger, Curtis Stofferahn

Extension and Research Programson Rural Financial Stress in IowaKathleen Beery and Robert W. Jolly

Illinois Extension and ResearchResponse to the Farm CrisisH. J. Schweitzer

Farm Crisis Response: IndianaExtension and Research ActivitiesDavid C. Petritz and Dixie Porter Johnson

Farm Crisis Response in KansasWilliam M. Eberle and S. L. Ward

Responses to the Farm Crisis:Michigan ReportJulie Hales

Project Support Tackles RuralProblems in MinnesotaKathy Mangum

5

Missouri Extension and ResearchActivities in the Rural CrisisJohn T. Pelham and Judy Heffernan

37

Short-term and Long-term Approaches 42to Easing the Farm Crisis: TheUniversity of Nebraska's ResponseDeborah Rood and John De Frain

Coping with the Farm Crisisin North Dakota

14 F. Larry Leistritz, Arlen Leholm,and Harlan Hughes

Ohio Farm Financial19 Management Programs

David R. Miskell and LeRoy Hushak

Responses to Farm Crisis by22 South Dakota Institutions

Ardelle Lundeen

50

53

57

26 Farm Crisis Response: University of 61Wisconsin-Madison Extension and ResearchJess Gilbert and Glenn S. Thompson

32

a 4

Contributors

Kathleen Beery, Assistant State Leader,Cooperative Extension Service, Iowa StateUniversity

John DeFezin, Associate Professor of FamilyStudies, Department of Human Development and

Family, and Researcher, Agricultural ResearchDivision, Institute of Agriculture and NaturalResources, University of Nebraska-Lincoln

William M. Eberle, Assistant Director, CommunityDevelopment, Kansas State UniversityCooperative Extension Service

Jess Gilbert, Assistant Professor, Department of

Rural Sociology, University of Wisconsin-Madison

Julie Hales, Evaluation Specialist, MichiganState University

Judy Heffernan, Research Associate, RuralSociology, University of Missouri

Harlan Hughes, Extension Livestock Economist,North Dakota State University

Leroy Hushak, Professor, Agricultural Economics

and Rural Sociology, The Ohio State University

Dixie Porter Johnson, Associate Professor ofConsumer Science and Retailing, ExtensionSpecialist, Purdue University

Robert W. Jolly, Assistant Dean of Agriculture,Iowa State University

Arlen Leholm, Extension Farm ManagementEconomist, North Dakota State University

UI

F. Larry Leistritz, Professor of AgriculturalEconomics, North Dakota State University

Ardelle Lundeen, Professor of AgriculturalEconomics, South Dakota State University

Kathy Mangum, Coordinator, Project Support,University of Minnesota

David R. Miskell, Associate State Leader,Agricultural Industry, The Ohio StateUniversity

John T. Pelham, Associate Director, MissouriCooperative Extension Service, University ofMissouri and Lincoln University

David C. Petritz, Professor of AgriculturalEconomics, Extension Specialist, PurdueUniversity

Deborah Rood, Communications Associate, Managingfor Tomorrow Program, Department of

Agricultural Economics, University of Nebraska-Lincoln

H. J. Schweitzer, Assistant Director, AgricultureExperiment Station, University of Illinois atUrbana-Champaign

Glenn S. Thompson, Assistant State ProgramLeader, Agriculture and Agribusiness Program,University of Wisconsin-Madison

S. L. Ward, Director, Kansas Farmers Assistance,

Counseling, and Training Service, Kansas StateUniversity

5

Foreword

The magnitude and speed with which thepresent farm crisis has hit the midwestern statesis perhaps unparalleled. The depressed financialand economic condition of agriculture in theNorth Central Region is well documented. How thefarm crisie affects rural communities and ruralresidents, especially farm families in theregion, is generally less well documented andunderstood. Because of the severe consequencesof the farm crisis and the need for theland-grant university system to respond to this

new set of conditions, the North Central RegionalCenter for Rural Development provided funds tobring together a group of Extension personnel andAgricultu.al Experiment Station scientists toexamine and compare how the various land-grantinstitutions in the North Central region areresponding to the needs of farmers and rural

communities experiencing the present changes inagriculture. Specifically, the objectives of theFarm Crisis Network ince (1) to review theactivities of the land-grant universities in theNorth Central region designed to helpindividuals, families, institutions, andcommurIties adjust to the new economic climate;and (1) to identify areas needing additionalresearch and resources.

In talking with individuals from around theregion, we became aware that many land-grantUniversities were developing ameliorativeprograms on their own and that there was a reedfor researchers and Extension staff to exchangeprogram ideas to estimate program effectiveness,and to communicate appropriate research findings.

The project identified key individuals from eachof the 12 North Central land-grant universities

who were knowledgeable about both the researchand Extension programs that had been initiated inresponse to the farm crisis.

The task proved to be a difficult onebecause of the number of people who are involvedin each of the states. The Extension directorsand Agricultural Experiment Station directorswere each asked to appoint a person to serve onthe network. Without the directors' cooperationand support this project would not have beenpossible. The network participants who wrote andpresented reports often relied heavily on thework of colleagues and peers. We certainlyappreciate the cooperation of all who sharedtheir ideas and data with this project.

In mid-February, 1986, the network met fortwo days in Des Moines to review and evaluate theinvolvement of each North Central institution inhelping meet the farm crisis. A goal of thisproject was to explore and stimulate mutualinterest in those areas where collaborativeEfforts between the North Central land-grant

universities might be possible. As the farmcrisis broadens into other regions of the UnitedStates, we feel that many of the lessons theNorth Central states have learned may benefitthose in other regions. As one reviews theresponses of each institution, it is evident thatthe magnitude and the consequences of the farmcrisis in regard to rural life has beendramatic.

The follrwing reports were written to sharewith others the diversity of Extension andresearch activities. The authors were asked tolimit their reports to 10 pages; thus thechapters are overviews or summaries of theactivities.

Many observers have noted that the farmcrisis has often resulted in families andcommunities "pulling together." The cooperationof the Experiment Stations, Extension Services,

and the network representatives in the NorthCentral region is evidence of a definite pullingtogether. We believe this volume contains themost current and comprehensive listing of theactivities that have been initiated within theland-grant universities.

6iv

Paul LesleyRand CongerCurtis Stofferahn

Summary and Conclusions

The authors of individual reports in thisvolume note that farming has traditionally been ahigh risk enterprise. The analysis of presentprc;lems must recognize that the history of ruralsociety and farming is characterized by crisis.A theme of env'xonmental challenges pervaded suchof the westward settlement--droughts, insects,disease, and other natural disasters. The early20th century has experienced, also, economiccrises. The 4gri, tural stagnation in the1917-1920 period was closely followed by theGreat Depression. These periods of economic andnatural crises might have accustomed farm peopleto misfortune. Yet the relatively stable periodfrom the close of World War II to the early 1970acreated a false sense of security prior to theperiod of great expansion in the mid-to-late1970s which abruptly ended in the early 1980s andled to the present crisis.

Unlike previous periods of economichardship, the farm crisis of the 1980s is uniquein a number of important ways that makestnterventton difficult. Some of the uniquefeatures of the farm crisis identified by thenetwork participants include the following:

1. There is a lack of consensus that there isa crisis. Extension has placed effortinto educational activities designedspecifically to raise awareness of themagnitude of the problem and its likelyconsequences. In many areas some peoplestill deny that a farm crisis exists.

2. There is a lack of understanding

concerning the crisis' dimensions andmagnitude. Unlike many disasters infarming where the consequences are readilyvisible and can often be objectivelyassessed, such as number of acres lost,

number of diseased livestock, and so on,it is very difficult to obtain objectiveindicators of the extent of currentdifficulties.

3. The problem of labeling the crisis springsfrom the ambiguity of its causes. Thefarm crisis means different things todifferent people and is referred to as afarm, a rural, an agricultural, or acredit crisis.

4. There is a ,lck of agreement concerningthe true victius of the crisis. Oftenthose being adversely affected are viewedas "high rollers" or "poor farm managers."

The "blaming-the-victim" syndrome is anelement often identified in various typesof crisis. Because there is no consensusthat certain farm families are victims ofevents beyond their control, responseefforts have been hampered or delayed.Previous difficulties in agriculturetypically did not have to overcome thishurdle of convincing the public that it istndeed a crisis situation.

5. Closely related to the issue of societaldefinition that there are victimsdeserving of public support is the addedburden of identifying the victims. In

many previous agricultural crises, it wasrelatively simple to identify the victims.They were the people who lost their cropsor had experienced another significantloss. Victims of these crises weregenerally quite visit e and there waspublic agreement that they needed anddeserved help. In the current economicdownturn, it is very difficult to identifythose who are being adversely affectedfrom those who do not need assistanceunless detailed financial information isavailable.

6. Another important dimension of the farmcrisis is the problem that the victims arein different stages. Some farm familieswere adversely affected four or five yearsago, while others are just now beingimpacted. Intervention strategies mustrecognize the subtle but Importantdifferences among farm families.

7. The diversity of victims in terms of farmsize, enterprises, geographic location,and in terms of family characteristicssuch as number of children, stage in lifecycle, level of education, and so onfurther complicates interventionstrategies.

8. And finally, it is important to recognizethat while the farm problem has beencalled a crisis, it is necessary torecognize that it is a chronic condition.Normally, crises are define as short-term,traumatic events, contrary to thelong-term problem we face today. Alreadythe farm crisis has existed four or fiveyears, and recent estimates project thatit will continue for another four or fiveyears. It is quite likely the events wehave called farm crisis may last a decadeor more, which suggests it may become achronic problem. As a result,

intervention strategies must be able torespond both to immediate, short-run needsthat develop as well as to the longer termproblems that emerge.

Continuities of Concern

The uniqueness of the present economicdifficulties in agriculture is reflected in thechapters in this volume. Each of the authorsdescribes a very similar set of problemsresulting from this extraordinary situation.Many authors report the results of statewidesurveys that show sizeable proportions of farmoperations that are experiencing moderately highlevels of financial stress. The magnitude of thefinancial problem is roughly the same across theNorth Central states. Each of the authors reporton growing incidences of familial and community

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problems that have been ::iggered by the economicupheaval.

Much of what the authors describe can beportrayed as the ripple effect of the farecrisis. The farm crisis has ever-wideningcircles of consequences. The problems of chronicstress on family structure and functioning, theloss of mainstreet businesses, bank closings, andthe toll on community services and facilities areincluded in the ripple effect.

While the L2 North Central states each haveapproached the set of problems a littledifferently, there are many similarities tn theirresponses. Some of the activities are newprogram thrusts with planned terminations (Cell1), other programs are new directions but areviewed as long-term efforts (Cell 2). Withinexisting programs, some of the responses areviewed as short-run or temporary activities (Cell3) that are part of a long-term commitment to theprogram area (Cell 4).

Short Run

Long Run

Program Thrust

New Existing

Cell 1 Cell 3

Cell 2 Cell 4

New, Short-run Programs (Cell 1)

Extension has been most heavily involved inresponding to the farm crisis in new programefforts, many of which are being viewed asrelatively short-term efforts that eventuallywill be terminated. Many of the activities inthis model are emergency or intervention

strategies which have been designed specificallyfor unique problems stemming from the farmcrisis. Strategies such as the use of hot lines,crisis intervention teams, and bankruptcy or bankclosing response teams would fall within Cell 1.

New, Long-run ;rogram (Cell 2)

In several instances, states have initiatednew programs which are viewed as long-runefforts. Included in this cell would be newExtension projects and research designed toachieve economic and agriculturaldiversification helping displaced families findnew careers, and other such efforts to which amulti-year commitment has been made. Severalnew, long-term programs have been initiated orare being planned to address the long-term

implications of the current crisis and to help

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individuals and communities adjust to theeconomic realities of the depressed agriculturaleconomy.

Existing, Short-run Program (Cell 3)

Within existing Extension and researchprograms, new resources have often been providedfor renewed emphasis or reinforcement ofcontinuing efforts. Perhaps the best example ofefforts falling into this area is the financialcounseling that is a part of the farm managementprograms. Each of the states has had a sustainedcommitment to farm management; however, with theonset of the farm crisis, resources have beenadded to handle the increased demand for farmfinancial counseling. Each of the states hasdeveloped short-run programs to respond to theneeds for financial counseling. Generally it wasfelt that these programs would be continued tnthe future; but, as the demand for them wanes,the programs would be folded into continuing farmmanagement activities. Similarly, several stateshave redirected their stress research andExtension programs to fit the uniqueness of thefarm crisis. The farm stress thrust, however, isgenerally thought to be a part of the continuingprogram effort.

Existing, Long-run Programs (Cell 4)

The reports include a wide breadth ofcontinuing, long-run Extension and researchefforts that have been helpful in meeting short-run and immediate needs. Many states have beenable to dries, upon existing Extension and researchknowledge in designing intervention efforts. It

is essential that existing thrusts in homeeconomics, agriculture and natural resources,community resource development, and youth becontinued.

There are numerous examples of creativeresponses to the farm crisis which combineelements of Extension and research. In manycases, there are examples where inter- programteams have been formed to develop broad basedresponses to diverse needs. Numerous examples ofstates' responses highlight the benefits of theinter-program efforts. Another similarity acrossmany of the activities has been inter-agencycooperation and the involvement of other groupswith land-grant personnel. Extension personneland agricultural scientists have frequentlyinvolved state and federal agencies, farmorganizations, churches, voluntary organizationsand local leaders in developing appropriateresponses to unique needs of subgroups.

Reconbandationo

One of the great difficulties in developingan effective response to the current downturn inthe rural economy has been our lack of knowledgeabout the nature, course, and individualadaptations (successful and unsuccessful) toprevious crises of a similar nature. While there

are unique features in the current situation,economic cycles are a repetitive part of ruralhistory and, just as we are likely to recoverfrom the decade of the 1980s, there will be othereconomic reversals in the future. The failure tosystematically study individual, family,community, state, and regional adaptations to theeconomic difficulties of the 1920s and 30s leftus with few skills in our repertoire ofidterventions to meet the current crisis. Weneed to immediately develop comprehensive

programs of applied and basic research to Improveour understanding of which strategies at theindividual or community level lead to the mostsuccessful outcomes in response to rural economichardship. Such research has importantimplications for the present as well as forfuture fluctuations in economic conditions.

To assist in effective planning for suchfuture research and programming, in addition todescribing the activities their states have.nitiated, the participants were asked toidentify future research and Extensionpriorities. Just as rural communities wereill-prepared to adjust to the economic upheaval,researchers and Extension staff have often foundan "empty cabinet" when they have gone to their"tool chest" for answers about specificquestions. The farm crisis has brought newchallenges to the land grant system. But it hasalso unearthed many important research andExtension questions which can be viewed asopportunities. There are many fruitful areas ofinquiry identified by the network members.Listed below is a summary of theirrecommendations for future research andExtension program focuses.

1. What can be done to ease the transition ofthe displaced farm families?

What coping skills are needed?How can career options be identified?How can large numbers of displacedfarmers be retrained?How do family ties and relationshipsfacilitate successful transitions?What are transition paths of displacedfarm families?

2. What are the policy linkages between thefarm crisis with international andnational decisions?

What role should Extension perform inpublic policy education andformulation?What will be the impact of the changingstructure of agriculture on ruralcommunities?How can we assess the consequences ofpolicy choices?

3. What can be done to promote communityviability?

What is meant by a viable community?What is needed to achieve a viablecommunity?

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How can volunteers, local leaders, andvisitation teams be used to achievelocal development?

4. How can small business development bepromoted?

How can "entrepreneurship" bedeveloped?

Is retention and expansion of localbusiness a viable strategy and how canit be developed?

Is economic development anddiversification a viable strategy andhow should it be promoted?How can and how should small businessManagement skills be improved?

5. How can profitability in agriculture beregained?

How can the input factor mix of capital,labor, and management be used moreefficiently?

Can export markets be expanded and atwhat cost to farmers?How can we increase the value addedcomponent of agricultural commodities?

6. What will be the impacts of technology forrural communities and the structure ofagriculture?

Will biotechnology only add to ouralready existing problems ofoverproduction and overcapitalization?

7. How can communities adjust to the neweconomic conditions?

How can the community population beretained?How can local employment opportunitiesbe expanded?

How can chronic poverty be alleviated?How can the emergence of social problemsbe effectively addressed?

8. How can local leadership be developed toaddress the new economic conditions?

What can local leaders do to promoteagricultural development?How can intra-community linkages be usedto promote regional development?Can Extension address the type ofstructure of agriculture rural areaswant through leadership development?How can leadership development promotelocal economic viability?What part should leadership developmentplay in public policy education?

9. How can Extension increase its outreach tonew audiences?

What techniques can Extension use toreach new clients?

How can Extension make use ofvolunteers?

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What creative delivery methods canExtension use?

10. What are our professional responsibilitiesas Extension personnel and ExperimentStation researchers?

What should be our role as professionalsin Cie context of the farm crisis? Do

we help advocate, adjust, ameliorate, orcope?Where do our professional obligationslie?

What goals should guide our research,programs, and policies?

11. How can we help farm families to cope withfinancial difficulties?

What are effective interventionstrategies?What are effective delivery systems?

12. How do we measure program effectiveness?

How should programs be evaluated?How should program evaluation be builtinto existing and new programs?

Each of these topics have important researchand Extension components. While this isundoubtedly an incomplete listing of the issues,the Farm Crisis Network participants felt thesewere some of the major issues that will confrontrural America well into the 21st century. If youhave an interest in developing an Extension or

research project on one of the many issuesidentified by the network, you are encouraged tocontact the members.

The future of the term economy is uncertain,but the future of the land-grant syste estsupon our ability to respond to the need!: of ourclient groups. This project hopes to stimulatefurther collaboration and dialogue on theimportant transition underway in Americanagriculture and rural communities.

410

Extension and Research Programs on Rural Financial Stress in Iowa

by Kathleen Beery and Robert W. Jolly

CURRENT CONDITIONS

Financial conditiocl of Iowa farmers in 1985conformed closely to national averages.Approximately 30 percent of farmers wereexperiencing financial stress--cash-flowproblems, sharp losses in net worth, andreductions in standards of living. This group offinancially stressed operators controlled morethan two-thirds of the outstanding farm debt.Information on Iowa farm financial conditions isgiven in Table 1. Recent research indicates 15to 20 percent of Towa's agricultural assets willbe liquidated, as farmers either restructuretheir businesses or fail and leave the sector.The total lose in commercial farm operationscould be as high as 25 percent per year. Ifasset markets function at their historical rateof 2 to 4 percent, financial stress may continueuntil the end of the decade. This adjustmentprocess would be accompanied by direct financiallosses to lenders and agricultural businessesthat had extended credit to farmers. In turn,mainstreet businesses and local governments wouldexperience the impact of reduced income and taxrevenues.

NERDS AND PROBLEMS OF FARM FAMILIES AND RURALCOMMUNITIES

rarm families, when faced with rapid andunexpected economic change, may requireassistance. Farm businesses must be adjusted.The management changes may be relatively modest--improving cost control in certain enterprises--orthey may require extensive financial

restructuring--selling assets, renegotiating landcontracts, or obtaining off-farm work. Thesechanges are difficult to plan, often have tax orlegal dimensions, and require adjustment infamily goals and relationships.

Policy makers and government officials havelittle experience in dealing with widespreadfinancial stress. At the outset of the financialcrisis in the early 1980s, data were notavailable to assess farm and rural financialconditions. Nor were there any proven policiesthat might be used to ameliorate financialstress. Agriculture had not experienced thistype of problem for at least 50 years.

Rural communities were also not prepared forrapid economic change. Many agriculturalbusinesses, such as machinery dealers orshoreline equipment manufacturers, essentiallydisappeared over a two-year period. With them

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went off-farm work opportunities and a ruralpayroll. Mainstreet businesses that geared upduring the 1970s boom needed managementassistance just as farmers did to adjust to lowersales and greater debt service. Declining taxrevenues and increasing demands for socialassistance caught community officials and leadersin a cost/price squeeze farmers would readilyrecognise.

The financial impacts on communities and

farms have created tremendous problems for theindividuals and families involved. Increasingly,families have experienced despair as theyattempted to save their farms and rural way oflife. The uncertain future in agriculture hascaused stress and anxiety for nearly all Iowafarmers.

Family and individual problems have beenevidenced in many ways. Farm family membersexpressed concern about their increasing levelsof stress in an Iowa State University farm poll.

The following statistics pertaining to use ofhuman services indicate increasing problems forrural families:

Respondents in a random survey ofapproximately 1,800 farm families in theIowa Farm and Rural Life Poll (Lasley, 1985)indicated that stress had become an everydayproblem. Increased levels of stress werefelt by seven out of ten respondents in thelast three years. About 60 percent saidthey experienced either a great deal or somestress every day. A majority weremoderately or very concerned about theirpersonal stress levels.

Families have felt increased levels ofstress due to the deteriorating financialconditions and forced changes in theirlifestyles. The majority of familiesperceived that their financial condition hadworsened from 1984 to 1985. According tothe poll, only 6 percent said theirfinancial position had improved. Familiespostponed major purchases and decreasedspending for family living, includingadjustments to transportation,entertainment, food, and utilities. Tenpercent were not able to pay property taxes.In order to manage the budget, slightly morethan one-fourth said they sold possessions,cashed in insurance policies, or postponedmedical care.

The number of farm families receiving foodstamps is at an all-time high in Iowa. Farmrecipients increased from 500 in July 1984to over 2,000 in March 1986. Maintainingbasic family needs has beam, a severeproblem for these families. Many farmfamilies who need this program do notqualify due to financial guidelines whichare restrictive for self-employed persons.

Iowa 5

L

6 lows

Table 1. Average 1985 Financial Condition of Sample Iowa Farm Operators by1985 Debt-to-Asset Ratio

Debt-to-Asset Ratio (2)0-10 10-40 40-70 70-100 100+ All

Financial Characteristics

Assets ($1000)Non-Real Estate 136 166 236 156 85 166Real Estate 282 375 420 348 152 340Total 418 541 656 504 237 506

Debts ($1000)Non-Real Estate 6 44 121 143 190 60Real Estate 4 82 238 251 124 101

Total 10 126 359 394 314 161

Net Worth ($1000) 408 415 297 110 -77 345

Debt-to-Asset Ratio (2) 2.4 23.3 54.7 78.2 132.5 31.8

Operator Characteristics

Age 59 54 48 46 L5 54Years in Farming 35 29 25 23 22 29Dependents 2.4 3.1 3.5 3.7 3.3 3.0Dependents under 18 years 0.3 0.8 1.1 1.4 1.2 0.7Husband Education* 2.2 2.3 2.4 2.3 2.4 2.3Wife Education* 2.4 2.4 2.5 2.4 2.4 2.4Acres Owned 235 280 295 271 159 261Acres Rented 114 172 285 302 326 193Acres Operated 327 430 562 539 484 433Off-Farm Income $7738 $5795 $6621 $5574 $9426 $6779

Percentage Distribution

2 Operators 35 32 21 7 4 1002 Assets 29 34 28 7 2 1002 Debts 2 25 48 17 8 100

*Educational attainment, highest level attended1 * grade school; 2 * high school; 3 * college or vocational

SOURCE: 1985 Iowa Farm Finance Survey.

12

During 1985 client contacts with mentalhealth centers increased dramatically insome 'ira'. areas of Iowa. Statewide data onclient contsets at community mental healthcenters were .lot available because thesystem is decentralized. In a survey of5 out of 34 mental health centers, however,a 30 percint increase in demand for serviceswas repotted. Jne could speculate that thiswas due to increased needs for this service,but it also may have teen an artifact of

increasing acceptance of mental healthassistance. In the past farm families havenot typically sought mental healthassistance.

The need for assistance in coping withfinancial stress has been pervasive throughoutIowa. Major needs include reliable informationon financial, economic, and social conditions;assistance in planning and decision making;emotional support for families and individualsexperiencing stress; legal services; upgrading ofprofessional skills for financial and helpingprofessions; coordination of human and

education services for farm families; assistancein policy design and evaluation; and directfinancial aid.

RESEARCH AND EXTENSION RESPONSE

8' .torical Background

In January and Febru,:y 1980 a series ofstatewide Extension program for farm familieswas organized. This effort as in response torising interest rates, siemming from the FederalReserve's October 1979 decision to severelyrestrict the rate of money supply growth. Creditfor spring planting was in short supply and thecost of operating money rose sharply. Theobjective of this Extension program was tofamiliarize farmers with cost control options,use of commodity programs, debt restructuring,and related ad!ustment strategies.

From 1980 to 1983 Extension programa onfinancial adjustment continued using traditionaldelivery methods. A series of articles on costcontrol and financial management was prepared forWallace's Farmer in 1982. Regular Extensionmeetings such as crop clinics or catrle feederprogram began to emphasize cost-reducingtechnologies as a response to financial stress.

In the fall of 1983, with widespread droughtin southern Iowa, financial conditions took asignificant turn for the worse. Farmers andlenders began to require direct assistance infinancial planning. Consequently a pilotfinancial counseling program was developed forIowa counties south of Interstate 80. Areamanagement specialists and selected countyagriculturalists were trained in financialadjustment planning. The FINPACK computerprogram developed at the University of Minnesotawas employed in this project. At that timeFINPACK was a mainframe program and could only .2accessed through telephone connections. Soft arewas developed to permit Extension microcomputersto serve as intelligent terminals.

Several hundred formers were assisted duringthe winter of 1983-84. It became obvious thatfinanciz.' counseling played a critical role inhelping ismUies cope with change. However, areaHuman Development specialists began to recognizeneeds that were not being completely met by thefinancial clunseling. Management specialistsneeded help in communicating with stressed farmfamilies. The families sometimes seemed tobenefit from financi: counseling and on otheroccasions scarcely participated in the analysisprocess. Clearly a better understanding wasneeded of the impact financial failure had onfarm families. Area and state specialists inFamily Environment and Child Development began todev.'lop a comprehensive Extension program on

emotional stress in farm families, communication,grieving models, and related topics.

After some urging from Extension, the statelegislature appropriated $200,000 in 1984 tosupport programs directed toward the farmfinancial crisis. The ASSISI program wasdeveloped by a task force of Extensionspecialists in response to this specialappropriation.

ASSIST built on earlier experiences inprograms for financially stressed families. Fourmajor thrust areas were initially defined:(1) Awareness efforts to inform local communityleaders about the scope and impact of thedeepening farm crisis on rural Iowa, (2) Indepthfinancial counseling for farmers that helped themexplore possible restructuring or reorganizationplans, (3) A series of agricultural credit shortcourses for lenders and other professionals thatemphasised farm financial planning and stressmanagement, and (4) Development of communityresource committees to assist individuals,

agencies, and volunteer or, nizations to dealeffectively with farm finimmial difficulties.

These major program areas have been revised andstrengthened bared on research findings andin-field teachi,41 experience.

Research Activities - -Sconomi.s

In January 19e4 the Dean of the College ofAgriculture appointed the Farm Financial StressTask Force. The charge to this group was todocument financial conditions in Iowa, examinethe need for public intervention, and design and*valuate prototype policy instruments shouldintervention seem appropriate. The task forcehas been active since its inception. Majoraccomplishments include:

Documentation of financial conditions offarmers, agricultural businesses, mainstreetbusinesses, and communities. The task forceconducted one of the, if not the, first farmfinancial surveys in the United States.This report was released early in 1984 andprovided information about the extent offinancial stress and the characteristics ofinvolved farm families. Similar surveyswere conducted for agricultural andmainstreet businesses.

13 lows 7

Analysis of sectoral restructuringrequirements for the Pnited States and Iowa.This project used survey data in conjunctionwith financial simulation models to estimatethe impact of financial stress on theagricultural sector. Estimates included thevolume of asset liquidation, financial loss,and farm failure rates.

Design and evaluation of financial policy.The financial crisis caught policy makerswithout data and without proven interventiontechniques. Members of the task force wereactively involved in identifying neededforms of assistance, conceptualizing

programs, and estimating the costs andbenefits of interventions.

Impact of financial failure on farmfamilies. The fate of displaced farmers inIowa was examined through an ongoing surveyconducted by task force members with thecooperation of the Extension field staff.This unique data set gave insight intoout - migration and unemployment among

displaced farmers. It also providedpreliminary information on the dispositionof thetr assets and the likely structuralimpacts of financial stress.

Research Activities -- Stress

A number of research projects have beenundertaken to study the incidence and effects ofstress on those affected by the farm crisis.These projects include:

Stress among farm wives. Indepth interviewswith a sampling of Iowa farm wives indicatedincreasing levels of stress among those whohave traditionally been the caretakers infamilies. Harmelink (1986) interviewed11 farm women across Iowa during the falland winter of 1985-86. Aside from thefinancial concerns, the major stresses ofthese farm women were a result of thetrmultiple roles and of not having enough timeand emotional support for themselves. In

10 of 11 interviews the women felt likeequal partners in farm operation. But eventhough they fell equally involved, theirstresses were different from male farmers'.Being the primary caregiver for othersresulted in additional stresses arising fromconcern for who will care for them.

Family stress in the middle years. Iowa

State University participated in the NorthCentral regional research project to studystress in families. A teaching packetentitled "Dealing with Blame: Help for FarmFamilies in Crisis, Leader's Cuide andLesson Plan" was developed based on the

findings.

Farm family ri.ress. A study of farm :elatedstress was zonducted by Randy Weigel, fromwhich a publication series on farm stresswas developed (Weigel 1983).

8 lows

Intergenerational farm stress was examinedin a study conducted by Dan Weigel, RandyWeigel, and Joan Blundell, Extensionspecialists in Child and Human Development(Blundell, Weigel, and Weigel 1986).

PROGRAMS FOR FARM FAMILIES IN FINANCIALDIFFICULTY

This section summarizes the educationalprograms which the Iowa State UniversityExtension Service has initiated in meeting theneeds of families, individuals, and communitiesaffected by the financial problems ofagriculture. The programs reported here weresupported by regular Extension funds fromfederal, state, and county sources; specialproject funds from USDA; special appropriationfrom the Iowa General Assembly; and donationsfrom private organizations and individuals.

Extension's programs targeted to distressedrural families are included under the responsecalled ASSIST. It currently consists of fourparts: (1) FarmAidindividualized financialanalysis, (2) personal support and stress-management programs, (3) community action groups,and (4) educational sessions for professionalsand community leaders. The Rural Concern Hotlinewas developed to serve as an interagency responseto farm families. It is integrated not only withExtension's program plans but also with the otherpublic and private responses to the farm crisis.

The ASSIST program has evolved from theoriginal plan as problems and issues faced byfarm families and rural communities wereidentified. Program efforts pertaining topersonal support, stress management, andcommunity response were difficult toconceptualize and have required multiple,creative approaches. Staff members have beencrossing disciplinary lines and working in newarenas. Extension has examined other resourcesfor rural families and as a result establishedcollaborative efforts, such as the Rural ConcernHotline.

Accomplishments of the different programsare summarized below. A general overview of thenumber of clients participating in variousprograms is listed in Table 2 for the periodOctober 1984 through December 1985. A total of99,800 client contacts were documented as a partof the ASSIST effort. The largest number ofcontacts (34,387) came through awarenessmeetings.

During the same period stress-management andstress-related program contacts totaled 20,184.Financial information and assistance was providedto more than 10,000 fari families. The contactswere fairly evenly divided among those served viathe Rural Concern Hotline, those participating inthe computerized farm financial counselingprogram, and those helped through traditionalprogramming for financially distressed farmfamilies.

14

Table 2. ASSIST Clients by Type of SubjectMatter Contact--October 1, 1984 toDecember 30, 1985

Awareness meetings 34,387Public policy meetings 410Stress-management/support groups 20,184Farm financial analysis 9,470Financial and legal assistancekuralConcern Hotline 11,900

Agricultural credit short course 507Community resource committee

participation 1,176Production agriculture 11,803Family resource management 7,572Other 2,391

TOTAL CONTACTS 99,800

FarmAid- -Farm and Family financial Management

FarmAid is a major component of Extension'sASSIST program. FarmAid provides individual farmfinancial assistance with the aid of the FINPACKmicrocomputer software package. Business andenterprise records are used to project outcomesof different decisions and alternatives.

Both individual counseling sessions andgroup meetings have been used successfully withclients. The majority of consultations have beenon an indinclual basis. Clients have the optionof meeting at a county Extension office or ontheir own farm. For reasons of confidentialitymany chose to have the agricultural staff membercome to their farm. Different staff membersconduct the analysis sessions, including areafarm management specialists, temporary Extensionassociates who have a background in farmmanagement, and county agriculturalists.

At least two sessions are held--one torecord the necessary information for analysis anda second to review the findings from the farmoperator. The sessions last 2-6 hours, with manyfamilies returning for additional help. The HomeEconomics staff member may become involved duringthis time on problems related to stressmanagement and family budgeting.

During FY85, 3,142 farming operations

received detailed individual counseling throughFarmAid using a computer. From October 1985 toMarch 1986 staff worked individually with anadditional 2,600 families. During that entireperiod of time an additional 3,728 families whowere experiencing financial difficulties receivedfinancial management assistance without the aidof a computer.

A sample of clients in FY85 was contacted todetermine the usefulness of the program.Approximately 90 percent said they received bothanswers to questions and help in makingdecisions. Ninety percent noted the value of theprogram as "moderate" to "high." The followingtable shows some of the benefits participants

identified and the percentage of participants whoidentified each:

BenefitsPercentage of

Participants

Improved planning

Increased Analytical skillsImproved moraleIncreased confidenceImproved decisionsReduced family stress

83

75

65

72

78

56

As a result of participating in FarmAid, 77percent said they had made minor adjustments intheir farming operation and 41 percent said theyhad made major adjustments. Many clientsinformally indicated that they would not havebeen able to secure further loans without theassistance received through the Extension FarmAidprogram.

Personal Support and Stress-Management Programs

One of the ripple effects of the financialcrisis is the emotional toll on farmers, theirfamilies, youth, and others who are affected inthe rural community. Farm and other ruralfamilies have needed assistance incommunications, decision making, and stressmanagement. Local professionals who work withfarm felonies have not always understood thedynamics involved in attempting to cope withthese problems, nor how they might be ofassistance to those affected.

This programming area has been difficult toconceptualize and implement. Initial effortsincluded workshops and a home-study course onstress management. Programs have since becomemore focused in terms of problems and specificaudiences. The following is a summary of thepersonal support and stress-management programs:

15

Stress-management workshops and individualassisisnce. A home-study course entitled"Stress on the Farm" was developed. Home-study materials as a delivery method have anadvantage over meetings in that people donot have to publicly acknowledge that theyare affected by personal stress levels.

Meetings and workshops have also beenconducted on stress-management. A majorityof the meetings have been agriculturallyoriented, with a section included on stressmanagement.

Self-help groups for farm families. Thedevelopment of self-help groups has beenfostered by Extension through thedevelopment of a learning packet andtraining in use of the materials. Extensionstaff assume various roles with theself-help groups; they recruit members,

lows 9

train small groups to use learning packets,provide subject matter assistance uponrequest from the group, and help link thesegroups with other helping professionals. In

theory, the groups are designed to beorganised and maint'ined by lay people. Aself-help group is defined as any groupwhich offers emotional support and practicalhelp with a problem that is common to allmembers.

There are other types of support groupsfunctioning in Iowa. Those coordinatedthrough community mental health centerstypically are facilitated by mental healthprofessionals. Others tend to focus more onadvocacy and empowerment of individuals andgroups.

Stress among youth. Young people areexhibiting many signs of stress, rangingfrom atypical behavior in school totroublesome relationships in the home. Someprogramming efforts have been for the youththemselves, but the majority have been foradults working with youth.

A teaching module entitled "RuralCrisis Comes to School" has been used withsignificant number of public schoolteachers. The purposes of this programinclude: (1) creating an awareness of theproblems in Iowa's agricultural community,(2) developing an understanding amongprofessionals of the symptoms of stress inyouth, and (3) assisting educators indeveloping their helping skills.

An outgrowth of this' activity has beenspecial programs for yo, ,n on stressmanagement led by classroom teachers.Extension staff have provided supportiveteaching materials. A 4-H program entitled"The Natural Me" has been piloted in twelveareas across the state. This programfocuses on enhancement of self-esteem andpersonal decision-making.

Community Action and Involvement

The farm crisis evolved from actions andpolicies external to local communities. Ruralfamilies caught up in the crisis have a sense ofpowerlessness. Further significant economicass:stance to families in crisis is unlikely tobe provided by the government. Consequently, itis critically important that local communitiesrespond to local needs. Community resourcecommittees or action groups were suggested as ameans of mobilizing local resources.

over 34,000 people have r ,icipated in awarenessmeetings.

County resource directories have beendeveloped in the majority of counties. Thesewere developed not only to create awareness ofprivate and public resources but also to fosterinteraction among the various groups. In manycases it has provided a reason for discourseamong groups. In some counties, communityresource committee members have been activelyinvolved in developing and disseminatirg thedirectories. Elected officials have requestedcopies and have found them to be of great use.The directories have been a good vehicle forextending the visibility of the ExtensionService.

Community resource committees have beenformed in over one-half of Iowa's counties.These groups have used their own creativity andresources in initiating projects and activitiesto address local issues and concerns. Similargroups are present in most other counties and areassisted by the Extension staff as requested.

Community resource committees have carriedout a variety of activities. One of the more

a ingenious activities was the "Pass the Potatoes"project of the Marshall/Tama counties committee.Twice in the past year they have obtained over40,000 pounds of potatoes from the Society of St.Andrew and distributed them to families in lessthan 72 hours. This same group has also raised$10,000 for a farm family emergency medical fund.In Taylor County, resource packets includingdirectories have been prepared and hand deliveredto every farm household in the county by clergyand lay people. Two committees in southern Iowadeveloped a proposal for a VISTA grant to helparea farmers and citizens adversely affected bythe agricultural crisis. The proposal was fundedfor hiring 10 VISTA volunteers and a supervisorto help in eight southern Iowa counties.

One of Extension's initial efforts was toconduct area awareness meetings. The meetings'primary objective was to educate Iowans about thenature and extent of farm financial problems andtheir impact on the rural farming community.After the initial set of meetings, lay peopleinvolved with the resource committees helped toplan many others. In the past year and a half

10 loss

Other projects which community resourcecommittees have carried out during the past yearhave included:

Establishing a ccnty-wide developmentcorporation

Conducting surveys on labor availability andneeds assessment

Establishing peer counseling groups

Conducting public awareness meetings

Establishing food banks or pantries

Conducting food stamp registrationopportunities for farmers

Writing and obtaining grants for small,interest-free loans

Assessing family stress needs and how stressis affecting youth in their county

16

In January 1985 a two-hour videotapeentitled "Rural Families: Taking Charge inCnanging Times" was cooperatively produced bystate agencies and delivered to over 24 sites inIowa via satellite downlinks. Over 1,500 peopleviewed the program and had an opportunity to talkwith local resource people. The video includedthe following topics: stress and grief, legaland tax issues, economic update, and servicesavailable to rural families.

County resource committees have been action-oriented in some counties and advisory in others.They have accomplished tasks which Extensionstaff could not do alone.

Educational Sessions for Professionals andCommunity Leaders

The economic difficulties have alteredbusiness, personal, and family relationships.New information and skills are needed as

professionals and community volunteers work withfarm families. One of the ways that Extensioncan extend its resources is to provide trainingfor others so that they can more effectively workin this arena.

Clergy have requested programs oncommunication, helping skills, and backgroundInformation on the economic problems. Mentalhealth professionals have cooperated with theseeducational sessions. Some of the clergy havebecome actively involved in individual counselingand support groups. A unique newsletter forclergy was developed to create a grea erunderstanding of these problems and exploreoptions for supporting rural families.

Peer listeners have been trained byExtension and mental health professionals. Thevolunteers list their phone numbers innewspapers, agency newsletters, and through thehotline.

Various educational sessions have beenconducted for lenders. Some have dealt withfinancial, legal, and communication topics. Ateaching packet entitled "Farmers and LendersWorking Together" includes a videotape andteaching outline. It focuses not only onmanaging the lender's personal stress but also onworking with highly stressed clientele.

4-H club volunteers have received trainingin working with youth who are under stress. Aspecial television program via satellite

broadcast dealt with alternative options for 4-Hprojects which were lower in cost.

A teaching packet which included a videotapeentitled "Communication Skills for OfficeAssistants" was developed to help secretaries andreceptionists work with farm families. Theimportance of their role as the first contact wasemphasized. Communication and other helpingskills were covered.

The four programming areas of ASSIST havebeen complementary. Experience with farmfamilies has indicated that a variety ofinformation and support systems is necessary asthey cope with these rapid changes.

Rural Concern Hotline

In December 1984, public and private groupsrecognized that farm families needed immediatehelp in coping with their rapidly escalatingproblems. Families were not well aware ofexisting resources in the public and privatesector.

The Rural Concern Hotline was developed toprovide information, referrals, and counselingfor farm and family financial problems, legal

problems, individual and family problems, jobquestions, and basic needs for food, fuel,shelter, and medical assistance. Rural Concernis a confidential service administered by IowaState University Extension in cooperation withthe Iowa Department of Human Services and UnitedWay of Central Iowa. Funding is provided fromseveral public and private sector sources.

Since February 1985, Rural Concern operatorshave handled over 14.000 calls from Iowa farmfamilies and rural residents. Callers havemultiple problems, but the majority involvefinancial/legal issues and their ramifications.

Accompanying the financial concerns are a varietyof intermeshed problems, including marital

discord, parent/child conflicts, substance abuse,and physical ailments. Families are faced withcritical decisions about continuing the familyfarm operation or seeking other careeropportunities.

The number of phone calls has varieddepending on the time of year. The averagenumber of calls for June through August 1985 was500 per month. For January through March 1986,as farmers were seeking credit and making plansfor the next season, the monthly averageincreased to 1,600 calls. The number ofemotionally stressed callers increased, from 10percent of the total in June 1985 to 20 percentin March 1986. The higher stress levelscoincided with the period of intensive decision-making.

Nature of calls

Following is a list of the types of callshandled by operators in March 1986. The figuresrepresent what percentage each type was of thetotal number of calls. The percentages exceed100 percent be' _use any one call may be listedunder various categories.

Financial 88Legal 68Emotional 22

Basic Needs 7

17

Policy Issues 7

Educational/Employment 5

Family 7

loves 11

Referral system

Hotline operators refer callers to variousIowa organizations and agencies. Many callersare referred directly to Extension's ASSISTprogram for financial management consultation andstress-management help. Lender referrals aremade to the Farm Credit System, the Iowa BankersAssociation, and the Farmers Home Administration.Most legal calls are handled by the Extensionstaff attorney. In many cases Rural Concern islinking farm families with serviceu unfamiliar tothem, such as the Iowa Dislocated Worker Program,community action programs, mental health centers,and the Iowa Department of Human Services forbasic needs of food, shelter, and medical help.

Following are the total numbers of referralsmade to other groups since the beginning of RuralConcern:

Legal (staff attorney and volunteerattorneys) 5,003

Family/personal needsMental health center 257

Human services 514Comm. action programs 206County health RN 87

Support groups 232Extension (ASSIST) 1,020

Job-relatedDislocated worker 204College/university 183

Job service 189

Placement agencies 189

LendersAIWA 265Farm Credit System 104Iowa Bankers Associ.ition 9

Current needs and direction

During the past year many callers have notbeen able to face their problems and explorealternatives. They have been in a stage of losscalled denial. While in the stage of denial theperson wants to avoid thinking about or dealingwith the situation. Hotline operators are nowtalking with more people who are moving out ofthe denial phase and are seeking information onalternatives.

The need for Rural Concern is strong andwill likely continue to increase as agriculturaldebt problems intensify in 1986. Rural Concernprovides an immediate, confidential, andnonpartisan linkage of private and publicservices to farm families in distress.

RICOMMDRD PROGRAM AND RISRARCR IFPORTS

The financial and social transition of ruralcommunities and farm families in response to thefinancial crisis will continue in Iowa for at

12 lows

least the next four to five years. The potentialloss in the number of farm families will have asignificant impact on rural communities. Copingwith financial adjustment problems presents themost immediate challenge. Others remain to beconfronted.

Challenges Facing Rural Iowa

Rural Iowa faces an extended period ofchange. Forces within Iowa and outside willimpact families, communities, and theagricultural sector in general. The followingissues will need to be considered:

Many of the human and social costs are justbeginning to surface. Human service supportsystems such as the food stamp program,mental health counseling, fuel assistance,and medical programs will be in greaterdemand as families make lifestyle changes.Programs will be needed to help peopledevelop new career, and lifestyle plans.Stress-management and communicationprograms, as well as personal supportsystems, will be needed during these timesof change and loss.

Excess capacity in agriculture must beresolved, either through expansion ofmarkets or withdrawal of resources. Thelatter course of action requires long-termland retirement and the transfer of farmlabor to other industries.

New technologies that will enhanceagricultural productivity may imprc "e Iowa'scompetitive position in the long run butwill certainly exacerbate excess capacityproblems in the near term.

Changes in national economic policy willaffect Iowa's ability to earn income, tocompete in foreign markets, and to servicedebt. We need to understand the economiclinkages between the national economy andIowa.

Economic development probably offers themost opportunity for maintaining a highquality of life in rural Iowa. Farms willcontinue to move toward the extremes--verylarge or very small. Consequently manyIowans who remain in rural areas will needoff-farm jobs. We know very little aboutwhy and how rural areas like Iowa developeconomically.

Preservation of soil and water resourceswill strongly influence long-termagricultural productivity in the state.These issues are easily overlooked in theshort run but result in almost irrevocablechange in the long run.

Dealing with these issues and dilemmas willrequire a multidisciplinary approach. Extensionhas technical information and support systems todeal with some issues and for the others it willprovide alternatives on policy direction.

18

Direction for Extension and Research Programs

Future program efforts

The following programs will be continued andstrengthened for rural families facing economicdifficulties:

interagency educational programs to assistfamilies with career and life transitions

development of self-help groups and peerlisteners to provide support to familiesexperiencing financial difficulty

educational programs to help otherprofessionals and community leaders betterdeal with the affected youth and adults

farm and family financial managementassistance

facilitation and support of communityresource committees

Much cf Extension's program efforts havebeen directed toward those families who are infinancial jeopardy. The next step is to take aproactive stance and assist those families with ahigh likelihood of remaining in farming.Educational materials for a program called theFarm and Family Management Program are currentlyunder development. The program will be targetedto younger farm couples who need improvedmanagement skills. Participants will attendmeetings, participate in small group worksessions, and consult individually with staff.The educational program will cover farm andfamily financial management, productionmanagement, marketing, goal setting and decision-making, and leadership development.

Future research directions

Research studies in the following areas wouldprovide support for needed Extensionprogramming:

assess social and economic impacts offinancial stress on rural communities

examine the effects of rapid social andeconomic change on family systems

design and evaluate economic developmentstrategies for rural Iowa

develop farm management techniquesappropriate for the 1990s

examine the impacts of financial adjustmenton the structure of Iowa agriculture

The challenges facing rural Iowa aresignificant. We believe, however, that IowaState University can play an important role inhelping Iowa meet these challenges. Research andExtension programs that assist families insolving problems and improving their quality oflife must be supported and developed.

MATERIALS FOR PUBLIC DISTRIBUTION

Publications, film strips, and slide/tapeprograms are available on many topics within thefollowing categories:

Agriculture and Natural Resources

Business

Financial Management

Food and Nutrition

4 -H and Youth

Housing and Energy

Human Development and Stress

Marketing

These materials are available free or at low zostfrom county Extension offices or PublicationsDistribution, Iowa State University, Ames, Iowa50011. Publications to support the Neighbor-to-Neighbor Self-Help Support Group program areavailable from the same sources.

Financial management computer softwarepackages, each containing a diskette anddocumentation, are available from countyExtension offices or 108 Computer Center, IowaState University. Most sets are priced at $15.

A number of videotapes addressing the farmcrisis are available for purchase or rental fromWilma Myers, Media Resources, Iowa StateUniversity (515-294-1540). Purchase prices varybut rentals are $8.50 4. shipping. Tapes come in3/4" or 1/2" VHS.

REFERENCES

Blundell, J., D. Weigel, and R. Weigel. 1986. Stresses andSatisfaction of Two-Generation Farm Families. Journal ofExtension Forthcoming, Summer.

Narmelink, R. 1986. Farm Women: Who Nurtures and Nurturer?Paper presented at Iowa State University Extension

lnservice, Ames, March.

Lesley, P. 1985. Iowa Farm and Rural life Poll: Spring1985 (Pm- 1209). Ames: Iowa State University, PublicationsDistribution.

Otto, P. 1985. Analysis of Farmers Leaving Agriculture forFinancial Reasons: Summary of Survey Results from 1984(Pm-1207). Ames: inwa State University, PublicationsDistribution.

Weigel, R. 1983. Stress on the Farm (NCR -192a -40. Ames:Iowa State University, Publications Distribution.

19Iowa 13

illinois Extension and Research Response to the Farm Crisis

by H. J. Schweitzer

II TRODOCTIOR

Overview of Situatioa

Crop Reporting Service Survey

About 5 percent of 885 Illinois farmersresponding to a survey by the IllinoisCooperative Crop Reporting Service in earlyJanuary indicated that they would be leavingfarming during 1986. Among the 95 percent whoindicated they planned to stay in farming,however, about 3C percent carried debt-to-assetratios above 40 percent and faced moderate tosevere financial stress. Slightly more thanone-fourth (26.2 percent) of the farmers reportedno debt; 44.3 percent had debt-to-asset ratios

below 40 percent; 18.2 percent had ratios between40 and 69 percent; and 11.2 percent were in the70 percent and above category. The highestdebt-to-asset ratios were for those in thenorthwest, west, east, southeast, and southwestcrop-reporting districts.

The average farm had gross sales of $89,286,production expenses of $68,798, and a net farmincome of $20,489 from an average of 418 acres.The income figure represents the averagedisposable income that farmers had available forliving expenses and to make capital replacementand debt principal payments. It does not,however, take depreciation into account. If anaverage of $30 per acre for depreciation isdeducted, the income figure drops to $7,948 forthe 418 acres. Total debt per farm averaged$116,911; real estate debt averaged $71,357 perfarm; all other debt averaged $45,554. Totalassets per farm averaged $379,912--$221,266 inreal estate assets and $158,646 in all otherassets. Average interest paid per farm was$11,113 and accounted for 16.2 percent of theaverage total expenditures.

Farm Business Farm Management Records

Studies of 1985 records from 3,607 farms inthe Illinois Faris Business Farm ManagementService show that farm operator "salaries"--whatthey earn for their labor and management- -remained relatively low for the state as a whole.Labor and management income, the operator's cashwage, is defined as net-farm income reduced by aninterest charge for use of debt-free or equitycapital. Operator labor and management income forthe 3,607 farms averaged $9,035 for 1985.

There were wide fluctuations, however,depending on location and type of farm. Forexample, 512 central Illinois grain farmers, onthe higher-rated soils, harvested record highcorn (171 bushels per acre) and soybean (54

14 Misch'

bushels per acre) crops, resulting in labor sadmanagement incomes that averaged more than$20,000 per operator. Labor and managementincomes for northern, western, and southernIllinois operators, however, were lower, rangingfrom $0 to $10,000 per operator.

Cash interest payments remained high during1985, even though interest rates declined. Cashinterest payments averaged $18,863 per operatorin 1985, compared to $18,491 for the same farmsin 1984.

Land Prices

The decline in land prices is a major factorin the current farm financial crisis in Illinois,as in other midwestern states. In a January 1986land-value survey conducted in the University ofIllinois Department of Agricultural Economics,the average value of above-average Iilinoisfarmland was $1,580, an 18 percent decline overthe past 12 months. The average value of below-average farmland was $924, down 21 percent from ayear earlier. reclines projected for the next 12months for above- and below-average farmland were9 and 11 percent, respectively.

Family and Community Impacts

The farm financial situation bringsincreased stress upon individuals and families.Farmers' contacts with Extension's Rural Routeprogram verify the severity and diversity ofimpacts.

Agribusinesses in the community are likewiseaffected. Farm implement dealers have sufferedmore than other service industries, according toour agricultural economists. Loss of adealership has an economic impact on the entirefarm community as jobs and income are lost.

Local government's ability to provide neededfacilities and services is impaired by thedecline in land prices, lower farm returns, andloss of jobs.

Major Reteasies and Research Thrusts

The Rural koute program is currentlyExtension's major effort to deal with thefinancial and family stress experienced by manyfarm families. This and related programs aredescribed in the following section. Much appliedresearch and data gathering is being done tosupport these programs. Several longer-termresearch programs are undergoing shifts inemphasis to deal with the current farm financialsituation.

Extension staff and researchers arecooperating closely across discipline lines onprograms in farm management, financialcounseling, legal matters, and family and

20

individual stress management. Additionalprograms involving farm family members dealingwith the interrelationships between farm andfamily and farm and family decision-making areneeded. Community support programs and programsto retain and strengthen local businesses arelikewise needed. These will requirecross-disciplinary efforts and research-Extensioncollaboration.

EITINSION PROGRAMS

Rural Route Program

Program Description

In January 1985 the University of Illinois

Cooperative Extension Service received an $87,500grant from Extension Service (ES)/USDA to begin aspecial project to assist financially distressedfarm families. The funds were used to (1) hireone full-time and one part-time financialcounselor to head the efforts at two Rural Routefinancial counseling centers--one at Macomb inwestern Illinois and one at Benton in southernIllinois, (2) install and maintain a toll-freehotline, (3) train more than 200 Extensionadvisers, Agriculture and Rome Economics, toserve as teachers and counselors for financially

distressed farm families, and (4) payout-of-county travel expenses for advisersserving as counselors.

The Rural Route program focuses on peopleand families rather than on farms. An underlyingphilosophy is that while farms will be lost,families need not be. The primary entry pointfor Rural Route's assistance continues to be thetoll-free hotline. That line, answered on theUniversity of Illinois Urbana-Champaign campus,is staffed by agricultural and home economicsadvisers from nearby counties and some stateExtension specialists. The telephone counselorshelp the caller articulate his/her major problems

or concerns and then arrange to have an Extensionadviser, or in some cases a state specialist,

recontact the caller and set up a more intensivecounseling session.

During the cirst full year of operation(March 1, 1985 - February 28, 1986) the Rural Routeprogram reached more than 1,500 families throughmore than 3,000 personal or telephone contacts.Nearly 1,500 calls were made to the hotlinenumber. Hore thaa one-third of those calls (578out of a total 1,460) have been received sinceDecember 4, 1985, evidence that Illinois farmfamilies still need and want the type ofassistance Rural Route can provide.

During the first year Rural Route counselorsheld more than 2,000 face-to-face sessions for anestimated 5,500 contact hours. Typicalassistance involves helping farm families prepareand analyse financial statements; explore

alternatives for restructuring debt, costcontainment, and off-farm employment; and dealwith personal and family stresses and emotionalneeds associated with financial difficulty.

Some continuing, unmet needs of farmfamilies that are influencing the direction and

content of Extension programs include thefollowing:

Many borrowers do not have copies of notesand other security papers they have signedwith financial institutions and do notunderstand the contents or agreements.

Most families need the assistance of anattorney to better understand their optionsand liabilities when taking bankruptcy,foreclosure, and/or liquidating capitalitems.

Several families need counseling for maritalproblems, alcohol and drug abuse, andseeking other employment and/or publicassistance.

Many families face problems incommunication, finances, and leasingarrangements.

Rural Route's Multiplier Effect

In its first year of operation Rural Routehas become recognized as a responsive andeffective program by participating families, farmorganizations, the mass media, legislators, andthe Office of the Governor. This recognition hasresulted in important multiplier effects thathave allowed Rural Route to continue and expandits services by creation of other much-needednon-Extension support programs to serve the needsof financially distressed farm families.

The Illinois General Assembly and thegovernor have approved nearly $2 million inspecial funding to aid financially strapped farmfamilies. That total includes an annual $400,000appropriation for Rural Route which is now beingused to continue the hotline telephone serviceand to establish two new centers--one at Dixon innorthwestern Illinois and one at Springfield incentral Illinois--to coordinate one-on-one andsmall-group counseling activities.

Other special funds are being used toprovide stress and substance-abuse counselorsthrough an arrangement with the IllinoisDepartment of Mental Health and legal counselingthrough an arrangement with the Illinois EarAssociation. An additional one-time allocationof $200,000 will support greatly expandedExtension efforts in legal education for lawyers,lenders, and farm families.

In addition, Rural Route helped generateawareness that resulted in $30 million from thestate legislature to guarantee operating loansfor the state's most needy farmers. Also,$59,400 was received from the Illinois FarmDevelopment Authority to evaluate state creditprograms for agriculture. Pioneer Hi-BredInternational, Inc. contributed more than $10,000to support development of teaching materials fortwo programs.

Early in 1986, the Illinois CooperativeExtension Service received another $58,600 grant

21Illinois 15

from ES/USDA for Rural Route and relatedactivities.

Rural Route's Impact on the Illinois ExtensionSystem

Rural Route has had a positive impact on theentire Cooperative Extension Service system. Theprogram has renewed the field staff's enthusiasmand commitment and reestablished the primary roleof the Extension adviser as teacher throughone-on-one and small group contacts. TheExtension specialist's role as teacher-of-teachers also has been reinforced.

Extension advisers is Agriculture, HomeEconomics, and Youth working with the Rural Routecenter at Macomb identified in April 1985 fivemajor reasons for liking their work with RuralRoute: (1) the opportunity to meet clearlyidentified needs of farm families, (2) thechallenge of using personal and professionalskills and knowledge, (3) the opportunity forworking closely with others in the Extensionfamily, (4) personal learning experiences(inservice and on-the-job), and (5) Thesatisfaction of having helped.

The same advisers also described majordifficulties in working with Rural Route,including: (1) the emotional strain of intensive

involvement with people's problems, (2) helpingpeople recognise the limited choices availableand make difficult decisions, and (3) findingtime for regular office work and otherresponsibilities.

Other Ceeety aid Regime Programs

Following are examples of Extension programsthat have been planned and adapted to the specialneeds of farm families in financial distress:

FACT (Facing Agricultural Crises Together)

Nine counties in northwestern Illinois haveinitiated a program of information, peer-groupsupport, community involvement, and counseling todeal with the region's farm situation.

Your Financial Condition

Last year 2,000 farm families took part inthis program of training to prepare andunderstand balance sheets and other financialstatements.

Analyzing the Financial Strength of Your FarmBusiness

This basic six-session course, taught bystate farm financial management and agriculturalfinance specialists, covers financial managementgoals, analysing balance sheets and cash-flowstatements, and implementing and monitoring afinancial management plan.

16 Illinois

Farm Financial Information Management andAnalysis

This is a two-day workshop specificallydesigned to give agricultural leaders theknowledge and skills they need to efficientlycollect and organize data and set up systems fortheir borrowers to prepare financial statements.

Farm Management Workshops

During the last year 216 farm operators andspouses interested in basic farm managementskills and tools participated in this series offour three-hour workshop sessions.

Agricultural Options

Three hundred seventy-two individualsparticipated in ten one-day multicounty workshopsdesigned to improve understanding of agriculturaloptions and how they can be used to manage theprice-related risks of grain and livestockproduction.

Improving Your Grain Marketing Skills

This program of seven two-hour workshops,attended by 200 individuals last year, isdesigned to help farmers, landowners, and othersdevelop a marketing plan, evaluate pricingalternatives, and develop price expectations.

Farm and Family Business Management Schools

A team of specialists in farm management andfamily resource management have developed acomprehensive set of teaching materials andprovided inservice training for county staff touse in county programs. Topics include settingfamily goals, inventorying farm and familyresources, evaluating the present farm plan,managing family expenditures, and developing andimplementing management plans.

111111MICH

Activities in the Rural Route program andinquiries from farmers, agribusiness people,financial managers, and government officials areresulting in much data collection and analysis ofan applied-research nature. Many formal, longer-term, Hatch-supported research projects areundergoing shifts in emphasis to deal with thecurrent farm financial situation. This isespecially true for projects dealing with farmmanagement, marketing, financial institutions,and agricultural policy.

Much of the research relevant to the farmfinancial situation is being conducted byagricultural economists, rural sociologists, andagricultural lawyers in the Department ofAgricultural Economics and by staff in Family andConsumer Economics in the School of HumanResources and Family Studies. Several of theresearchers involved have joint Extension-research appointments in their respectivedepartments. Others are working closely

22

with full-time Extension specialists, financial

institutions, commodity /marketing groups, orgovernmental agencies making their data, models,etc., available for use in educational programa,management decisions, and policy formulations.

Farm Maaagesaat Records

Analysis of business records kept by nearly8,000 farmers cooperating with the University ofIllinois Cooperative Extension Service and theDepartment of Agricultural Economics in theIllinois Farm Business Farm Management Service isinvaluable in monitorirg the :tate* farmeconomy, identifying the nature and extent of thefarm financial crisis in the state, and helpingfarmers develop plans for future farmingoperations. Ten associations in 102 counties areserviced by 70 full-time field staff.

Participation in this farm - business analysisprogram is voluntary and cooperating farmers paya fee for the educational services. Records areavailable to farmrmanagement researchers forstatewide and regional enterprise analysis whileat the same time the confidentiality ofindividual records is protected.

Financial Management Strategies

Commodity prices, initial debt-to-assetratios, and the tenure position of farmers havebeen taken into account in a four-year financialprojection made in the Department of AgriculturalEconomics. To examine the importance of thesefactors, the financial situation of an Illinoiscash-grain farm was projected under threedifferent tenure patterns (fc11 owner, partowner, and full tenant) with three different

initial debt-to-asset ratios (20, 50, and 70percent) and three different sets of commodityprices. Economic models were also constructedfor Illinois dairy and cattle-feeding farms.

Resulting publications distributed throughout thestate deal with the topic of what it will take tosurvive in Illinois agriculture and strategiesfarmers can employ to regain profitability.

Legal and Tax Implications

Research by the agricultural lawyers in theDepartment of Agricultural Economics, coupledwith Extension programs, has focused on theapplication of the Federal Bankruptcy Codegoverning farm bankruptcy proceedings. Inparticular, the status of the installment landcontract and the Coie requirement of adequateprotection for sclured creditors is beinginvestigated under a Hatch research project.

Several provisions of commercial law areundergoing severe tests during the current periodof finer.Lial stress in agriculture. These lawsare being reex.eined as questions arise regardingwho bears the losses under a variety ofcircumstances.

Financial Markets--Risk Management Strategiea

Two current Hatch projects deal withevaluation of financial markets for agricultureand economic analysis of risk-managementstrategies for agricultural production firms.The first project involves, among other things,an examination of the ability of various existingfinancial markets to provide for the capital andcredit demands in agriculture. The secondproject includes identification, analysis, andevaluation of production, marketing, andfinancial strategies that farmers use or can usein risk-management programs.

A third Hatch project deals morespecifically with price risk managementstrategies, including options and futures, forgrain and livestock producers.

Financing Public Services

With many rural communities and countiescoming under increasing financial pressurebecause of the farm crisis, an analysis of theIllinois public infrastructure, management, andtax-base adequacy is essential if remedial actionis to be taken. Several projects are currentlyunderway in the Department of AgriculturalEconomics dealing with public finance and taxpolicies: (1) building on the national study ofuse-value farmland assessment policies completedlast year, a broader effort is underway to lookat the link between agriculture and theperformance of state and local public financesystems; (2) road services provided by countygovernments are now under study with the supportof the USDA Office of Transportation; and(3) with support from the Illinois TaxFoundation, a major study of the Illinois realproperty assessment system is nearingcompletion.

Rural Communities and Agriculture

Research is underway by rural sociologistsin the Department of Agricultural Economics toexamine the relative importance that changes inagriculture have to the demographic, commercial,and institutional changes small communities haveexperienced over the past several decades. Theanalysis is focusing on almost 900 ruralcommunities in Illinois.

Off-Farm Income - -Buell and Part -Timm Farmers

A comprehensive study of off-farm income toIllinois farmers was made in the Department ofAgricultural Economics in 1971. A new Hatchproject is just getting underway to assess thecurrent off-farm income situation, determinerelationships between off-farm income andselected economic and social factors, andevaluate findings for public policy. This studyis particularly relevant because of theseriousness of the economic situation in Illinois

23Ilknois 17

agriculture and the growing reliance of farmfamilies on off-farm income.

Research by rural sociologists in theDepartment has been conducted for several yearson small, part-time farmers and small-scaleagriculture. Emphasis is on social integrationof these farm families into the community,occupational identity of operators, and variousaspects of the farm enterprise, such as the roleof farm income and land ownership in the farmfamily's financial plans.

Iatergeaeratiosal tolatioaships --Fara WivesExternal Imployasat

A new Hatch- and Extension-supported projectdeals with the relationships between adultchildren and the parent generation in farmfamilies. An important aspect is a study of howthe current economic situation in agriculture isaffecting families, including conflicts andstress generated, as well as helping and caringpatterns developed, between generations.

A regional project in the School of HumanResources and Family Studies is assessing therelationships between external employment ofwives and the economic and interpersonalfunctioning of the farm family.

Ongoing Research -- Physical and BiologicalSciences

Ongoing research in agronomy, animalsciences, forestry, horticultnre, agriculturalengineering, entomology, and plant pathology thatlead to production efficiencies, alternativeenterprises, and improved practices are toonumerous to mention. Advances in computertechnology and biotechnology are acceleratingrapidly. Improved decision-making and increasedprofitability on farms often results as Extensionbrings these developments to farm familiesthrough educational programs.

CONTACT PIRS01111

Further information about Extension orresearch programs in the College of Agricultureat the University of Illinois may be obtained bycontacting the following persons:

Extension programs:

Dr. Peter D. BloomeAssistant DirectorCooperative Extension Sevice116 Mumford HallUniversity of Illinois1301 West Gregory DriveUrbana, IL 61801

(217)333-9025

Research programs:

Dr. Harvey J. SchweitzerAssistant DirectorIllinois Agricultural Experiment Station213 Mumford HallUniversity of Illinois1301 West Gregory DriveUrbana, IL 61801(217)333-6494

Farm Crisis Response: Indiana Extension and Research Activities

by David C. Perritz and Dixie Porter Johnson

INTRODUCTION

Many farm families continue to facedifficult times. A survey conducted by theDepartments of Agricultural Economics andAgricultural Statistics in March 1985 indicatedthat nearly one-third of Indiana's 25,000commercial. farms (those with gross sales over$40,000) have financial problems, as indicated bythe magnitude of their debts relative to theirassets. The researchers concluded that a periodof continued low agricultural profits would causethese farms to have increasingly serious

financial problems in the future.

Indiana farm families need assistance inevaluating alternatives for improving their netincome and preventing further loss of equity inthe farm business. ether farm families areevaluating whether this is an opportune time tointensify or expand the farm business. Many farmfamilies are not aware of the alternatives and/ordo not have the information and analytical toolsavailable to aid them in an objective andconsistent evaluation of these alternatives.

In a survey of Indiana agricultural agents

made in September 1985 it was learned that anaverage of 90 farm families per county neededassistance in adjusting to the economicenvironment. More than 90 percent of the agentsbelieved that these families would needindividualized assistance in developing andevaluating alternative farm plans for theirfuture.

Farming is more than lust a business. It isa family unit in which the individual familymembers are undergoing varying degrees of stressas they adjust and react to the changingenvironment. Families need more information onhow to handle stress in order to prevent moreserious mental problems.

Families also need assistance in developingthe skills and techniques needed for allocatingtheir financial resources in a manner consistentwith the goals established by the family unit.All members of the family will more likelyparticipate in the achievement of the family'sfinancial goals if they have had a role inestablishing the goals.

Communities are an important segment of therural setting. By assisting community leadersin the development of programs that will helpthem understand and react to the currentsituation in a planned and widely-supported

fashion, we can help these communities remain apart of the landscape of Indiana.

EXTENSION RESPONSE

The Cooperative Extension Service (CES) inIndiana is responding to the crisis in severalmajor thrusts. The first was a series of"awareness" meetings held in February and Marchof 1985. The purposes of these were to create anawareness in farm families and others associatedwith agriculture of what the economic environmentmay be during the next five years and what

strategies (financial r-aagement, legal, crop andlivestock economics, family decision making, andstress-management) ought to be considered.Approximately 1,700 attended the 23 BetterFarming-Better Living meetings. This initialresponse was supported in part by a SpecialProject Grant from Extension Service (ES)/USDA.

The CES has closely coordinated activitieswith the Farmers Home Administration (FMRA). TheCES cooperated with the FNMA in the training ofits borrowers in the use of Coordinated FinancialStatements in December 1984. In May 1985 theDepartment of Agricultural Economics trained 40of the Fah contractors on the use ofcomputerized financial planning models.

As it became increasingly clear that farmfamilies needed individualized assistance, theExtension Service developed the FARM project.FARM is an acronym for Family and AgriculturalResource Management. The purposes of thisproject were to provide information and methodsfor farm families to gather, organize, andanalyze data which describe alternative

directions for their farm businesses, as well asto provide an opportunity for the agent toprovide information on family goals andobjectives. Forty-two agricultural agents weretrained on the use of FINPACK last November.Thirty-three of these were provided with portablecomputer systems. Almost 500 farm families haveparticipated in these individualized counselingsessions.

A second project proposal submitted toES/USDA contained a variety of activitiesdesigned to assist farm families in farmplanning, record keeping, and understanding andhandling stress in the context of the family unitand the rural school systems. Funds were awardedto the project in mid-February of 1986. Fundingof this project will support several additionalresponses.

Additional activities now being formulatedinclude:

A program entitled "Lenders and Farmers:Working through Crisis." Developed byIowa State University, this program isbeing adapted for use in Indiana and willbe the basis for a series of educationalworkshops beginning in the summer of 1986.

25 The purpose of this program is to helpagricultural lenders and suppliers

Indiana 19

maintain a proper balance with theirfarmer customers while both struggle todeal with the problems created by thecurrent farm crisis. This program is acooperative venture of Agriculture andHome Economics, with the workshops beingtaught by teams of Ag and Home Economicsagents.

A program for teachers, guidancecounselors, and rural youth. The purposeof this is to assist those who work withrural youth in understanding the changingrural environment and the resulting stressplaced on farm youth and how they mayreact to this stress. This program isbeing carried out by 4-H, in cooperationwith Home Economics.

A program for community leaders. Thepurpose of this program will be to assistcommunity leaders in identifying the needsof their communities, the resourcesavailable, and the alternative actions

which they should consider as theircommunities react to the changing ruralenvironment.

A program to assist families in assessingtheir goals and values. As farm familiesevaluate their financial plans they mustconsider the goals of the family members.The materials developed by the Universityof Nebraska will be adopted for use inIndiana. Short -term, this program willbe used by home economists in aone-on-one situation with select FARMProject families. Long-term, thisprogram will be integrated into family

management workshops that will be taughtcooperatively by Agriculture and RomeEconomics.

A program to assist farm families indeveloping farm business and familyconsumption records. As agents haveworked with farm families during thiscrisis, it is apparent farm families arenot keeping records that would be usefulto assess farm efficiency andprofitability. An educational program onrecord keeping is being developed forExtension agents to use in a workshopsetting.

A program to assist Extension agents inleading workshops on farm and familybusiness planning. While many of theseactivities are a short-term response tothe changing farm economy, farm familiesneed to understand the basics of farmplanning, regardless of which way theeconomy turns in the future. Goodplanning skills will always be useful.

A set of six programs related to stressmanagement. These will be offered by HomeEconomics agents during the nextprogramming year. Resources from theNorth Central region will be used.

20 Indium

AGRIGULTIIRI RISBARCR

Several research activities are underwaywithin 01 Department of Agricultural Economicsin response to the farm crisis.

A survey designed to gauge the financialcondition of Indiana farm families was made inMarch 1985. This survey will be repeated againthis March/April to determine what changes, ifany, have taken place in the past 12 months.

A project to evaluate the economic impact ofdiversifying farm businesses through alternativefarm ente prises for Indiana is being coordinatedby Dr. Craig Dobbins. These alternativeenterpri 4s are being evaluated in light of risk,income potential, resource requirements, andcoordination with off-farm employment.Dr. Dobbins' second research project is designedto examine the potential impact of expert systemson farm decision-making. The objective of theproject is to provide greater understanding ofhow computerized support systems can beprofitably utilized in the management of crop-hog farms.

Dr. Tim Baker has two research projectsunderway. One is to examine the effect ofremoving price and income supports from feedgrains on the wealth, income, financial leverage,and investment of representative midwesternfarms, as compared to continuation of currentpolicies. The second project examines therisk-return aspects of farm assets within thecontext of investment portfolios containingstocks, bonds, and T-5ills. These results willbe useful to nonfarm equity investors.

Dr. Freddie Barnard has an ongoing projectdesigned to develop a credit-scoring model tuevaluate agricultural loans. Discriminantanalysis is being used to estimate the credit-:coring model. The objectives of the project are(1) to determine characteristics common amongfinancially successful and unsuccessful farmers;(2) to develop a credit-scoring model fordifferentiating, in terms of loan quality, amongloan applications; and (3) to test the accuracyof the model by comparing outcomes against knownoutcomes of selected loans.

Dr. George Patrick is collaborating in theS-180 research project that Involves 16 states.The objective is to analyze the effect of variousproposed alternatives (loan writedown, reducedinterest, sale of assets, sale-leaseback, etc.)on typica. farm !usinesses. A project designedto analyze: the effects of government policy onfarm income variability is also underway.

Dr. Jess Lowenberg-DeBoer has a researchproject underway which involves modeling theresponse of farm firms to financial incentives.Current work focuses on land price risk and theimpact of land price changes on farmdiversification. A book, Microeconomic Roots ofthe Farm Crisis, is being completed. Mostauthors have focused on the macroeconomic sourcesof the farm -level financial and production

26

decisions which made farmers vulnerable in the1980s.

Dr. Janet Ayres has a research projectunderway which is examining the structural/functional changes of rural communities inIndiana and their relationship with agriculture.A typology of rural communities will bedeveloped. Economic alternatives relevant toeach category will be examined. State policregarding rural communities will also beexamined.

27Indiana 21

Farm Crisis Response in Kansas

by William M. Eberle and S. L. Ward

The state of the farm economy has been ofconsiderable concern nationwide and has tat.eived

extensive media attention during the past year.Farm financial conditions have deterioratedover the past four years, as agriculture hasexperienced prolonged period of excess supplywith persistent pressures on income and net worthof farmers.

The inflationary period of the 1970sprovided an increasing financial base forborrowing, but since 1981 farmland values havedeclined drastically and lower farm incomes havereduced the farmer's ability to service existingdebt. Significant numbers of farmers,particularly owners of commercial -sire farms(those with gross sales over $100,000), faceproblems in obtaining credit and many faceliquidation or foreclosure. In Kansas, as inether states where agriculture represents a majorportion of the state economy, the problem ofindividuals and families being dislocated fromrural communities has reached crisisproportions.

As an example of the problems in Kansas, afarm financial survey conducted by the Crop andLivestock Reporting Service (February 1986)indicated that 12.5 percent (9,000) of Kansas'farms are in critical financial trouble withdebt-to-asset ratios of 70 percent or more--astrong sign that their survival is in jeopardy.And 5.5 percent (4,000 farms) have already madethe decision to quit during 1986.

Along the same lines, agriculturaleconomists at Kansas State University predictthat an additional 25 percent of Kansas' familyfarms likely will be lost during the next fiveyears. And to make a gloomy situation evenworse, it is estimated that for every seven farmsthat fail, one rural Matn Street businessestablishment will also close.

Thirteen Kansas banks and two credit unionsfailed during 1985. Ten of those banks could beconsidered agricultural banks. Two banks havefailed so far in 1986. A number of other banksare vulnertibl.. because of losses on leas.

Other factors have added to the agriculturalsituation having an adverse impact on the Kansaseconomy. There have been JO recent manufacturingplant or facility closings (aircraft, metal,rubber, and agricultural manufacturing) resultingin 11,000 worker dislocations. That trend isprojected to continue through 1986. Kansas is amajor oil-producing state and recent events havefurther aggravated the economic situation incounties with high oil production. Thesenegative conditions not only impact the generaleconomy, but also reduce nonfarm employmentopportunities.

2822 Kansas

Conservative estimates of the numbers ofKansans likely to be affected by the agriculturalsituation over the next 12 months and thefollowing five years would suggest that perhapsas many as 200,000 rural residents, orapproximately 25 percent of Kansas' ruralpopulation, could be displaced by 1991. Theimplications of this type of displacement may bedevastating for many rural communities. The mostimmediate impact, howcver, is on individuals andfamilies who are faced with the loss of not onlya livelihood, but also a way of life.

For many rural residents facing thedeteriorating economic climate, the broaddistances that once represented their livelihoodand their freedom now isolate them from potentialassistance. Time, distance, lack of programavailability, shortages of trained helpingprofessionals, and insufficient supportingrevenues are usually cited as the major barriersto providing assistance in most ruralcommunities. But work at Kansas State Universityand the Menninger Foundation over the past fewyears has suggested that lack of access toinformation about existing programs is perhaps aneven greater obstacle than the traditionalbarriers to rural residents seeking assistancewith personal and family problems.

FARMER'S ASSISTANCE, cowman, AND TRAINIENCSERVICE (PACTS)

One program attempting to address theinformation hairier is the Kansas Farmer'sAssistance, Counseling, and Training Service

(FACTS). The program was established by the 1985Kansas legislature and is designed to assistKansas farmers, ranchers, agribusinesses, andtheir families in avoiding or alleviating theproblems and distress resulting from the currentagricultural economic crisis. More specifically,the legislative mandate hirected the FACTSprogram to (1) help Kansas farmers, ranchers,and agribusinessmen save the family farm/business operation whenever humanly possible,(2) help individuals and families cope with theproblems imposed by the current farm economy,and (3) when absolutely no way can be found tosave the farm/business, help families make asuccessful transition to another livelihood.

In simpler terms, the FACTS program wasdeveloped to serve as the state's point of firstassistance for rural individuals and families in

crisis. In this capacity, the program wasenvisioned primarily as a statewide, toll-freetelephone hotline to provide information andreferrals for farm production, financialmanagement, and family stress problems. But infact, the FACTS program has evolved into muchmore than just a hotli.. referral source for farmfamilies. It has become the point of focusaround which many sources of direct assistance to

farm families and businesses is coordinated.While the program is a joint program of theKansas State Board of Agriculture and the KansasCooperative Extension Service, it has often beenthe contact through which Extension programs havebeen initiated.

Thl FACTS program staff currently consistsof four full-time and two half-time positions,including a program director with experience inbusiness and program development, an attorneywith an ag law background, a Farm Managementspecialist with a farm finance background, aFamily Needs specialist, a family therapist witha strong crisis intervention background, and anEmployment/Retraining specialist with extensiveexperience in dislocated worker programs.

After an initial contact, each situation isassessed and prioritized and a determination ismade as to which staff member can provide themost effective counseling. That person thencalls the individual and spends as much time asnecessary to help determine specific needs,examine options, and provide referrals toadditional sources of direct assistance asnecessary.

With the qualified staff immediatelyavailable, a number of services can be provideddirectly by the FACTS program, including:

Farm credit counseling in farm planreorganization and debt restructuringassistance

Legal assistance at no cost through contractwith Kansas Legal Services, Inc. (anoaprofit legal assistance corporation) ateleven locations across the state

Documentation of innovative approaches tospecific problems that might be transferableto other situations

Assistance directories of statewide

emergency assistance resources for use byboth the FACTS staff and other helpingprofessionals

Community response assistance to localcommunities and organizations in developinglocal response to specific situations andneeds

Master calendar of state, regional, andlocal events that might be of value toeither those with problems or other helpingagencies

Documentation and research of radical andextremist organizations and activities

Thus while the FACTS program is able tooffer immediate response to many needs, itscapabilities provide the basis for many Exr.,:eionan4 research efforts at the University. Just asimportantly, FACTS has established relationshipswith the following agencies in providing servicesstatewide:

Kansas Cooperative Extension Service- -provides one-on-one farm financial analysist, all farmers requesting such assistance,assists communities with economicdevelopment programs, providesentrepreneurial training seminars fordislocated farmers wanting to establish aprivate business, provides training forindividuals and organizations wanting toestablish interpersonal support networks,and cooperates in the development of local

farm stress seminars and rural issuesforums.

Kansas Attorney General--investigates andprovides legal assistance in cases involvingloan fraud and consumer protection.

Consultation of Cooperating Churches inKansas--provides immediate cash grants forfamilies needing temporary emergencyassistance for food, medical problems,utilities, etc.

Kansas Rural Issues Ecumenical Coalition- -assists organizations and communities in thedevelopment of rural issues forums and othereducation programs.

Regional Mental Health Centers--providelong-term professional mental healthcounseling as well as providing localbackup, as necessary, in suicideintervention situations.

Area Agencies on Aging--provide specialservices to individuals 55 and over, aswell as providing employment/retrainingassistance.

Small Business Development Centers- -

provides one-on-one financial counseling forrural nonfarm businesses and also providesassistance to communities in developingplans for adapting to long-term businesspattern changes.

All of these agencies frequently interfacewith Extension programs in providing assistanceto those facing economic and family stress at thelocal, regional, or state levels.

EXTANSIOR PROGRAMS

All Extension program areas have adaptedtheir programs, at least to some degree, inresponse to the current agricultural and ruralsituation. A number of specific programs orrelationships have been established that havebeen particularly helpful.

Fars Fissacial ftsagement

Farm financial management, utilizing theFINPACK computerized analysis program, has been amajor program during the past year. During thattime, more than 1,000 farm families haveparticipated in farm financial management

29Kansas 23

workshops using FINPACK to analyze their farmoperation. Probably that many more haveundergone FINPACK analysis on a one-on-one basis.For those going through workshops the analysishas uncovered an average of $8,000 per farm inadjustments (cost cuts or altered enterprise mix)for a total of $8,000,000 in potentialefficiencies. In addition to Agricultural

Economics specialists, 50 county Extension agentshave been trained in using the FINPACK program.Others trained include Farmers RomeAdministration, farm credit, and commercial bankpersonnel. K-FARM it another computerizedprogram now on-line that is more extensive thanFINPACK in doing enterprise-by-enterpriseanalysis. It is designed more for farmers withtheir own microcomputers. The farm financialmanagement effort interfaces with the FACTSprogram in that, when appropriate, callers toFACTS are referred for a FINPACK analysis.Farmers initially going rrough FINPACK analysisare, when appropriate, directed to resources forfollow-up help, including the FACTS program.

Friends in Deed

Many persons come into contact withindividuals who are in the midst of a crisis andare uncertain of how they can react or offerassistance. Friends in Deed is a program ofExtension Home Economics to improve the helpingskills of persons who, though not necessarily ina crisis situation themselves, wish to be betterable to help friends, relatives, or acquaintanceswho are. Workshops have been held across thestate during the past few months.

Family Financial Management

Though not a program just in response to theagricultural and rural economic situation, familyfinancial management programs help families do abetter job of managing scarce financialresources, especially during times of financialstress.

Entrepreneurship for Displaced Farmers

Extension programs on starting a businessare being specifically designed to help farmfamily members who wish to start a business toeither replace or supplement their far, incomes.Programs are not intended to give individuals newskills, but rather to show them how to put skillsto use in private business either in or outsidethe home. Topics include business organization,financial record keeping, time management, taxes,insurance, and other related topics. Oneworkshop has been held for a group of farmers whoplan to become home weatherization contractorsfor a weatherization program. Plans are beingmade to greatly expand this program through agrant from the Kansas Department of HumanResources utilizing U.S. Department of LaborDisplaced Workers Program funds. This program,being designed to help move displaced farm familymembers into the work force, will ale, include

24 Kama

funds for Extension home economists to provideseminars and workshops designed to ease thetransition from farm to workplace. Funds arealso planned to supplement the FINPACK analystseffort and to further expand the FACTS program.

Economic Development and Small Business Programs

Economic development programs are aimed, toa great extent, toward communities undergoingstress as a result of the rural economicsituation. They are generally intended to helpcommunities move through a long-range economicplanning process toward appropriate economicrestructuring. The programa are based on thegrowth-from-within concept of retention andexpansion of existing firms. Programs includeassistance with economic analysis to help indetermination of potential viable economicdevelopment strategies. Small business programsare designed for owner-managers of small MainStreet businesses. The programs are intended toimprove the decision-making capabilities ofbusiness persons so that they will be able tomanage better under difficult economicconditions.

Response to Sank Closures

The closing of a local bank causes greatuncertainty across the community and can bring onan immediate economic crisis for persons who haveoutstanding loans with the bank. The situationreaches dramatic proportions when the closingbank is the only one in town and it is notpurchased and taken over by new management.Informational programs have been conducted,primarily under the leadership of the FACTSprogram, both for farmers and for businesses.Emphasis is on alternative options available forthose affected by bank closing, particularlythose whose loans are being called in.

These are only some of the more significantExtension efforts in response to the agriculturaland rural crisis. New program adaptations areregularly added in response to specific needs.Great emphasis is placed on being careful not toadversely affect important ongoing programs thatwill reduce thn chances of failure of farms,businesses, and communities that are stillcompeting successfully.

RESEARCH FEMME

Research programa tend to be long-termprojects and are influenced by the availabilityof funds. Most research projects have not beeninitiated solely in response to the agriculturaland rural economic crisis. Some do have specificapplications, however, to the problems broughtabout by the crisis. There are a host ofresearch projects that are directed towardproduction, management, and marketing efficiency.

These have been and will continue to be importantfor solving problems on those farms alreadyhaving difficulty and for preventtng dIfftcnIty

30

on those not yet in trouble. The importance ofcontinuing this type of research canot beoveremphasized. Research projects with someapplication to the current economic situation aretoo numerous to mention. There are several,however, that would seem to be of particularrelevance.

The Farm Crisis and Decatur County

The objective of this case study of adryland wheat-livestock county in northwesternKansas is to assess the impact of the farm sectoron the economy and social organization of acounty which has historically depended onagriculture for its livelihood and to learn aboutthe incipient effects of the current farm crisison an agricultural community. With thecompletion of this study, two additional countiesare being selected to further expand the researchproject. The study has been particularly usefulin identifying where the agricultural economiccrisis impacts the local economy.

Agricultural Impact Analysis Model

This applied research project is designed todevelop a model for analysis of the impact ofagriculture on the local economy. When complete,the computerized model will enable Extensionstaff and others to examine various "if-then"scenarios to estimate potential economic impactson various sectors of the local economy.

Development of K-FARM

The utilization of this computerized farmfinancial analysis tool was described earlier inthis paper.

DEVELOPMENT OF CORN-PRO, WHEAT -PRO, BEEF-PRO

This major research effort will enable theproducer to examine production efficiency throughall phases of the production cycle, with the goalof maximizing profits. A series of modules isbeing developed for each of the threeenterprises. The results of the research effortwill be to improve production efficiency and toreduce the probability of financial failure dueto inefficient production management.

Improved Local Economic Analysis

This is not a single specific researchproject, but rather a process of reviewing andrefining various techniques for analyzing thelocal economic s tuation to predict trends and tosuggest alternative economic developmentstrategies.

SUMMARY

Much has been done to mobilize assistance toindividuals and families being impacted by theagricultural and rural economic situation. InKansas the FACTS program has played a major rolein coordinating the various resources andbringing appropriate ones to bear where needed.Extension programs have been developed or adaptedto meet many needs of people and communities incrisis. And there are some research efforts thatcontribute to the overall effort.

There is still more that is needed, however.There is still a need to develop effective caringand support networks. And there is a need formore research on individual, family, andcommunity reactions to stress and change.Finally, as a result of the agricultural andrural economic situation, significant changesappear to be evolving across rural Kansas. Thereis a need for research to determine thedirections and magnitude of social and economicchange and to produce programs to enable ruralpeople to influence and prepare f r thosechanges.

31Kansas 25

Responses to the Farm Crisis: Michigan Report

by Julie Hales

urranscrios

Michigan's diverse agriculture provides itthe opportunity to become a major growth area inworld agriculture. Michigan CooperativeExtension Service (MCES), the MichiganAgricultural Experiment Station (MARS), and theMichigan Department of Agriculture (MDA) are allcooperating to help Michigan farmers takeadvantage of their opportunities. But futuregrowth opportunities are available only to thoseMichigan farmers who can survive the current andpast financial difficulties created by reducedexport earnings, high interest rates,deteriorating land values, and failing commodityprices.

The financial stress in Michiganagriculture, like a atone tossed into the pond,creates waves of consequences. Consequences thataffect the frrm business are increased leverage,cash-flow difficulties, and, in some cases,insolvency and bankruptcy. These business-related consequences, like secondary ripples inthe pond, produce emotional distress and loss ofself-esteem--sometimes leading to child or wifeabuse, divorce, and, in severe cases, suicide.

The problems of the farm financial crisisand the emotional ripples it has created for theprincipal farm sector participant--the farmfamily--are multifaceted. Consequently, theresponse by MCES, MARS, and MDA has been and willcontinue to be multifaceted.

The MCES research and outreach programs a:eintended to: (1) identify for those involved theextent of, and the resources available to meet,the Michigan farm financial crisis, (2) studyalternatives to farming and establish the jobtraining and counseling needed to meet the

adjustments required by current conditions,(3) provide training that will help those whostay in farming to do so succes.fully by adoptingefficient production and financial planningmethods so that the farming experience in-cficient and financially profitable, and

(4) assist the communities, which are extensionsof the farm families, to adjust operations andservices to survive and meet the needs of thefarm families and nonfarm residents that dependon their services.

OVERVIEW OF FARM SITUATION IN =RICAN

According to a Farm Financial SituationSurvey conducted by the MDA and the MCES inspring 1985, net farm income in Michigan hasdropped substantially since 1981. According tosurvey results, this income drop has pushed manyfamily farms into less secure financialpositions, as evidenced by their debt/asset

26 Mid6.6

ratios. Mine percent of the farmers surveyed arehighly leveraged, with a debt-to-asset ratio over70 percent, and another 16 percent have adebt-to-asset ratio between 41 and 70 percent.Compared to national figures, Michigan has agreater percentage of highly leveraged farmers in

the 40 to 70 percent range: 16 percent comparedto only 7 percent of the nation's farms.

Dairy, cash-crop, and fruit farms are themajor farm types in Michigan and are experiencinghigher loan delinquency rates than livestock orspecialty farms. Fifteen to 20 percent of thedairy and cash-crop production in the state issubject to severe liquidity problems. Since milkand cash-crop prices have continued to decrease,the financial position of these farmers hasgotten worse during 1985.

Prices of agricultural commodities havedropped 10 to 30 percent during the last fouryears and income loss is affecting all farmers,regardless of debt position.

MICNIGAN COOPERATIVE IMMO' SERVICE MISFONSITO TUR FARM CRISIS

A Smeary f Research aad Isteasiou Thrusts

The MCES responded in 1985 to the financialcrisis in agriculture with a multifacetedprogram. A special inservice training programfor staff on the current agricultural situationwas conducted in early January. This wasfollowed by a mass-media emphasis on the generaleconomic outlook, credit availability, tradeoutlook, agricultural policy options, moneymanagement, farmland prices, and commodity priceoutlook.

The overall goal of educational andsupportive efforts for Michigan farmers has beenand continues to be to challenge families toreevaluate their family goals and commitment toagriculture as a way of life and a businessventure. The objectives and strategies under theumbrella program call "Regaining Profitability onMichigan Farms" are:

To help financially stressed farm families,as well as those currently financiallyviable, to analyze alternatives resulting inbetter decisions about their future in orout of agriculture. Projects in this areainclude regional seminars, held in Februaryand March, with the theme "Management2000."

To develop a series of materials for use inmeetings and with the mass media outliningrelevant information on family andfarm business goal setting and stressadaptation, the background of the futureagricultural situation, and necessary

32

management, marketing, and technologicalproduction adjustments for agriculture.

To provide a series of intensive workshopsby type of farm, in which farmers receiveinformation and guidance to develop aprojected financial and production plan for1986 and beyond.

To provide retraining opportunities for farmfamilies deciding to terminate theiragricultural employment.

To provide intensive individualized familyand farm business assistance throughcontinuation of the Extension ManagementAssistance Teams (EMAT).

More detail on these projects is found underthe section entitled Extension Projects.

Suggested Areas of Research and ProgramDevelopment

Recognizing the relationship between visionand reality in planning, the MASS and MCES joinedforces in 1985 to undertake an intensive reviewand comprehensive long-range planning effort,This effort is a review of the post, an analysisof the present, and a practical strategy for thefuture. Input came from Michigan citizens fromall counties of the state, key community leaders,industry and agribusiness decision aakers, anduniversity faculty and staff. EnrichingMichigan's Future: A Planning Document outlinesstrategies to meet challenges in our state, acritical one, of course, being the current farmsituation. This planning document, with itsthorough development and background work, was oneof the sources for the following suggestions forfuture research and programs:

Establish and develop multi- andinterdisciplinary research and extensionteams that mobilize the expertise needed toaddress strategic issues for a coordinatedresponse. This would include (1) studyingthe adjustment problems facing Michiganagriculture; (2) coordinating advice tocommercial and part-time producers onappropriate technologies and farm systems,institutional services, credit, taxation andregulatory policies, development and use ofnew production systems, and management offinances, marketing, and personnel; and(3) promoting and rewardinginterdisciplinary action teams that willwork together to solve complex biological,economic, and social problems related toagricultural systems.

Expand integrated decision support systems(IDSS) to provide assistar in activitiesrelated to predictive or m nagementinformation, farm efficiency andprofitability, and informationdissemination.

Study coping mechanisms within farm familiesexperiencing economic distress.

Establish research projects in the area ofrural development. Local communities areimportant to the survival of farm familiesand farm businesses through off-farmemployment opportunities and social andpsychological support systems. Whatstrategies can be utilized to help farmfamilies and rural communities adapt to botheconomic and social changes that areoccurring?

EXTENSION PROJECTS AND RELATED RESIARCN- -NEN ANDONGOING PROJECTS

Assistance Betties

In April 1985, the MDA and MCES combinedefforts to establish the Agricultural AssistanceNetwork, a toll-free hotline to provide a liaisonand referral service for farmers and agribusinesspeople in economic distress. Since start-upalmost one year ago, 1,296 farmers have utilizedthe hotline. The vast majority of these callershave been seeking information about loans orproblems surrounding access to loan monies.Human services requests or problems have been theobject of approximately 10 percent of the calls,with another 10 percent seeking information onlegal services. Over 200 of the callers haverequested contact with EMAT services. The vastmajority are full-time farmers and averageacreage runs approximately 380 acres.

MUT

A team approach and one-to-one work withfarm families was needed to provide intensiveassistance to farmers and their families. Toprovide for this need, EMAT teams were formed.These teams are made up of county and districtExtension staff members, including district farmmanagement agents, agricultural agents, and homeeconomists. They meet with families who requiretheir services to develop strategies for dealingboth financially and emotionally with theireconomic problems. Currently 14 teams areworking throughout the state. The EMAT processusually begins when a farmer contacts an agentand asks for help. The agent then works with thefamily to gather the required information andfarm records. The standing team is augmentedwith specialists in subjects pertinent toparticular farm or family problems and areas ofproduction. The team visits with the family fora day, reviewing financial records and facilitiesand analyzing the farm/family situation.Strengths and weaknesses are outlined andopportunities and options are explained to thefamily. The family is sent a written summary ofthe visit, including analyses and recommendations.At the family's request follow-up can also takethe form of further visits and phoneconsultations. To date more than 300 farmfamilies have been involved with EMATs across thestate.

33Michipn 27

Agents involved in EMAT utilise many sourcesfor updating their expertise and broadening theirskills. Inservice training has been provided forteam members, as well as a monthly newsletterproduced by state staff. Resource materialsdeveloped at Michigan State University (MSU) andother state universities are included in thenewsletters, as well as updates and announcementson conferences and workshops related to the farmsituation.

An evaluation of the BMA? process iscurrently in its final stages. Using a casestudy approach, the process evaluation seeks toexplore the effectiveness of this strategy ofhelping farm families. Preliminary resultsreflect very positively on the program.

'MAT for Aeribesimese

A similar approach has been utilized withinMichigan agribusinesses. Teams led by MCES butcomposed of state and local business retentionexperts, community college faculty and staffs,out-of-state regional cooperatives, tradeassociations, and lending institutions have workedintensively with 42 businesses this year and onlyone assisted firm has failed. As the programbecomes better known the requests increase. In

nearly every instance the problems arcs increasedby the inability of the customers of thesebusinesses to pay their bills and the actions ofsecured creditors of farmers who are customers.Especially hard hit are farmer-owned cooperatives.The opinion of agribusiness specialists within thestate is that local farmer-owned cooperatives inthe elevator and farm - supply industry are harderhit in Michigan they in adjoining states. Most ofthe firma involved with the EMAT for agribusinessare family-owned or controlled businesses. Thesepeople are involved in the business both

personally and professionally, and the stress isevery bit as great as on the family farm.

MCES and FeRA--Werkieg as a Team

MCES and AMA have a history of cooperation;the newest program, aimed at assisting limitedresource farm families critically in need ofhelp, expands on the EMAT concept utilizing PmRAinput and staff. As with EMAT, the goal is toenable families to deal effectively with and gaincontrol of various financial factors affectingtheir lives.

Dislocated Necker Pregrar-JTFAThe goal of this program is to improve the

economic solvency of dislocated farm familymembers and their employees through off-farmemployment. The need for such off-farmemployment arises from the well-documented,long-term trend of out-migration from farmemployment. This trend is intensified by currentfarm financial factors, ma....ag farming no longerviable for many Michigan residents.

Farming as an occupation has experiencedserious employment declines for decades.

Seventeen percent of the Michigan Farm Financial

28 bechigin

Survey respondents in spring 1985 said they planto discontinue farming in the sear future. Jobplacement and job training are high priorityneeds, according to 55 percent of therespondents. Supporting evidence as to theimportance of this program also came from theGratiot County Skills Inventory Project. Thispilot project inventoried skills of farm familymembers to assess their proficiencies foroff-farm employment.

In response to this need for retraining, astatewide program hem been developed to focus onjob retraining opportunities for farm familiesand fare employees who are forced out ofagricultural employment. Although the proposedsystem is complex, utilising a wide variety ofservices, institution., and deliverers, the basicstructure consists of the use of the 80 statewideoffices of MCES and 15 Extension agents trainedin farm financial stress and in assessment ofeligible fan clientele. Referrals for thisprogram come from the Extension offices and thehotline mentioned previously. The program hasalready signed 115 participants; this response ismuch greater than ever anticipated at start-upjust one month ago.

Type-of-Farm Workshops and Materials Development

Crop Production

Research projects within the AgriculturalEconomics Department on crop production aregenerating invaluable information onprofitability of specific agronomic practices andproviding crop farmers with business analysistools to enable thee to make more profitableagronomic and marketing decisions. Theseresearch results are being used as referencematerials for crop production workshops beingheld across the state. Specific research top:usinclude: (1) development of a decision supportsystem for pest management and tillagealternatives in corn production, specifically theeconomic impact of switching from conventionaltillage to no-till corn production; (2) applyingeconomics to weed interference data to determineeconomic thresholds for postemergence weedcontrol in soybeans; and (3) addressing theoptimum input levels for ag chemicals, includingherbicides, biological inoculants, and fertilizerproducts.

Evolving from research such as this andcross-departmental input, Extension efforts haveincluded: development of resource materials onmanagement practices to increase yield withoutincreasing cost, preparation of a series ofposition papers on emerging techno,ogical changesin crop production and how these changes mayimpact on future management practices, and threetwo-day crop production workshops held sinceJanuary at different locations across the state.These represent combined efforts of county andstate staff. Staff perception was thatattendance and discussion were promising and wellworth the efforts.

34

Dairy

The Agricultural Economics and AnimalScience Departments have teamed to presentongoing workshops and training sessions focusingon dairy farm business analysis and planning.The Dairy Farm Analysis Workbook, developed bydairy field staff and campus specialists as anorganisational and record-keeping tool, was usedas a basis for instruction and discussionfocusing on farm business analysis and planning.Data from a sampling of dairy farmers has shownthat this workbook is very useful for short- and

long-range planning and control of a dairyoperation.

Early in February an intensive trainingsession for agents was held to apprise them ofdairy adjustment alternatives under the 1985 FarmBill. Research support for this training andensuing workshops came from a unique researchcommittee formed in November 1985 and chargedwith formulating materials that could be widelyused in CES to help dairy farmers, lenders, andother industry groups better understand and makedecisions relative to the new Milk ProductionTermination Program. This multistate studyinvolved a group of agricultural economists

representing six land grant universities. Mucheffort has surrounded this issue here at MCES aswe continue to meet demand for information onthis timely topic.

Regional Meetings - -"Management 2000"

Three regional eeminars were held in Januaryand February for financially stressed andfinancially strong commercial farmers.

"Management 2000," focusing on long-rangeplanning. These well-attended seminars includedinstruction and generated enlightening discussionon these topics: (1) economic framework foragriculture through the year 2000; (2) familydynamics in handling stress and farm and familydecision making and goal setting; (3) emergingtechnological changes in livestock production andmanagement implications for producers;(4) emerging technological changes in cropproduction and management implications forproducers; (5) the application of artificialintelligence, management support systems, modelsof management science, and computer technology inhelping farm managers in the year 2000 maketimely, correct, and profitable managementdecisions; (6) long range financial and businessplanning; and (7) resource and environmentalquality issues affecting agriculture.

Research and reference support for these andfuture seminars comes from many differentdepartments within Extension and MSU. Theseminars are conducted through the efforts ofcounty and state agents and specialists. Thiscross-discipline, crost-departmental effort is inthe process of being evaluated using mailedpostsession questionnaires.

Farming is one family business where workand family life are very closely meshed. While

these seminars explore operational goals andplanning for production, they also address anissue often overlooked by farm families--settingfamily goals. Since the farm and the householdare resources for one another, how does a farmfamily work toward setting goals that balanceboth farm and family? Answering this questionwas the object of a new Extension bulletin withworksheet utilized at the Management 2000seminars. Entitled "Working Together: ManagingChange in Farm and Family," the bulletin andworksheets are used to provide information onfamily goal setting, priority setting, andplanning for farm families.

Microcomputer Workshops

Using microcomputers in a group workshopsetting with farm families, agribusiness persons,and field staff was the objective of cash-flowplanning workshops begun in 1985. These earlyprojects included Extension specialists and

financial analysis instructors who traveled allover the state with vans loaded with IBM-PCportable systems with printers. An evaluation ofthe series showed an overwhelmingly positiveresponse to the workshops by participants. Thisyear will see a continuation of these workshopsconducted by county or district personnel usingthe financial analysis microcomputer templatesdesigned to build monthly cash-flow projectionsand loan applications. Many of these projectionsare being made by county staff in individualconsultations with farm families. Use of thesetemplates has been very successful with EMATfamilies for planning purposes and support whenthey are meeting requirements for loanapplications.

County-Level Workshops - -Joint Effort

Too numerous to list are the many county-level workshops and farm family meetings. Theseprograms often involve campus and field staff andspecialists, as well as community leaders, healthcare and legal professionals, and church leaders.In one instance a panel was arranged includingfarm family members who responded to questionsand concerns of their neighbors in the community.Farm family stress and strengthening

communication are often the focus of thesemeetings, although farm and family management andplanning are also important components.

These county-level workshops and meetingsare extremely important for several reasons.First, county agents and home economists are intouch with the needs within their own areas, thusthey are able to respond with informationpertinent to these needs. Also, these agents andhome economists have often had personal contactwith farm families and can invite them to attend.This personal touch is often the only successfulmeans of drawing farm families out into the opento share problems and fears they have about theirown situations.

35Michipn29

Churches in rural coumunities and churchcouncils statewide have recently begun toactively organize meetings using Extensionspecialists as resource persons and utilizingExtension mateials. As recent researchsuggests, churcaes have the potential to providea great deal of support and counsel for farmfamilies. The rural community churches aretraditionally a fundamental social and spiritualcenter for farm families.

Many agencies and groups in our state aresponsoring meetings for farm families utilizingExtension specialists as speakers andfacilitators. An Extension Home Economicsspecialist reported that she has presented 7-10workshops a month on farm family stress andcommunication skills development for groups suchas this. Specialists and field staff withinExtension Home Economics have developed a widerange of resource materials to be used atworkshops and classes. (See end of chapter for alisting of resource materials.)

RESZAILCI PROJECTS

Thus far objectives and strategies have beendiscussed. It would be negligent, however, toattempt to categorize these projects only asprogrammatic responses to the farm situation,since much of what was discussed would also fallunder applied or problem-solving research. Inthe following examples, problem-solving researchas well as subject-matter research will besummarized.

Providing benchmark data it answer to thequestion, "How serious is the farm financialcrisis in Michigan?" was the goal of subject-matter research carried out at MSU in cooperationwith the MDA. The study, Farm FinancialSituation Survey, conducted in spring of 1985,found that indeed a number of Michigan farmersare experiencing financial distress. Theinformation and clarification provided by thisstudy of Michigan farmers has proven aninvaluable reference for programmatic responsesthroughout Extension. Program planning in theareas of financial and production management, aswell as the Displaced Worker JTPA program, drewimportant information from the findings from thissurvey.

Broadly, research thrusts have been targetedtoward improved farm and agribusiness managementtraining, profit optimization rather thanmaximization of production, and basic research onbiological processes and interactions of plantsand animals, as well as exploratory work onstress in farm families. Clearly, achievingthese goals requires interdisciplinary, cross-departmental efforts and this cooperation is inevidence at MSU.

Response to the farm situation is notlimited to the agricultural expertise withinMCES. One example of a cross-disciplinaryresearch project carried out by the Sociology,Human Ecology, and Agriculture and Natural

30Michler

Resources Departments is the Family Farm Project.Research and Extension teams are functioning infive major areas: family systems, communityinfrastructures, home industries, agriculturalproduction, and facility development/energy.Although this far-reaching study was notoriginally developed in response to the farmsituation, many of its ongoing components are nowadapting their strategies and methodologies togather information very relevant to the farmsituation in Michigan today.

Computer models are becoming increasinglyvaluable tools for efficient and economicagricultural production systems and MSU is aleader in their development. A cooperativeeffort underway at Kellogg Biological Stationinvolves a multidisciplinary research effort todesign a computer-assisted management approaco.The Agricultural Economics Department, along withAgricultural Engineering, Crop and Soil Sciences,and Animal Science, have teamed to develop anintegrated "smart" decision-maker aid. Extensionstaff members have also developed such computer-assisted aids as land valuation packages, cropbudgets, and budgets to determine cash/crop shareleases.

Extension Rome Economics is the base for anexciting research study of financially stressedfarm families in our state. Utilizing alongitudinal design, this five-year study willinclude 300 families chosen by the local countyExtension staff. Health risk appraisals,including evaluation of blood pressure and serumcholesterol levels, will be done in years 1 and 5of the study. In addition, both husband and wifewill complete individual aurvey questionnaireseach year. The purpose of the study is to:(1) document short- and long-term effects of

physical and emotional stress on those farmfamilies experiencing financial difficulty,(2) determine whether or not there aresignificant differences between families thataccess additional external resources available tothem in crisis and those who do not, and(3) assess any reduction in stress- relatedconsequences experienced by families who receiveassistance compared to those who do not.

COIICLOS1011111

Michigan agriculture is facing substantialchallenges. The overall picture for agriculturein the short run is not too bright. Adversecost/price ratios are driving some producers intobankruptcy. The mid-sized farm in Michigan isvanishing. From 1974 to 1982 producer expensesper dollar of gross income rose from 72 to 90cents, farm debt per Michigan farm tripled, andinterest on the mortgage debt increased thefastest of any expense item in the producer'sbudget.

Farming is a family business. Farm familiesderive their very identity from working the landand, as one author noted, "many farmers today arebeing plowed under." Faris families hold a deepcommitment to family life and work and close

36

connections with neighbors. These attachmentsand values together form a rural ideology that islived, loved, and taught to the next generation.

Their sense of failure when unable to live up tothese commitments is devastating and theprevalence of depression is certainly notsurprising.

The challenge is clear--support forfinancial and emotional stress must be providedfor these farm families. Whether it be problemsin production on the farm or communication acrossthe dinner table, tools must be provided toempower these farm families to survive and grow.MCES is doing its best to provide these tools andwill continue to do so.

MATERIALS TO SUPPORT PROGRAMMING IN FARM FAMILYSTISS3--FAMMI COMMUNICATION DURING STRESS ANDCRISIS

These materials are designed forprofessionals interested in helping familiesdevelop more effective communication andinteraction patterns as resources for coping withstress. To order contact Anne Soderman, RumenDevelopment Specialist, 203 Human EcologyBuilding, Michigan State University, EastLansing, Michigan 48824. Prices include shippingand handling.

"Teaching Family Communication During Stressand Crisis." Included are six 1 1/2-hourplanned sessions. Each contains a warm-upactivity, minilecture, overheadtransparencies to support the lecture, agroup experiential exercise, andcamera-ready handouts. The sessions aredivided as follows:

Session I: Family Structures that Impacton Communication

Session II: Nonverbal CommunicationSession III: Effective Listening SkillsSession IV: Five Verbal Response SkillsSession V: Ego States: Understanding

Communication TransactionsSession VI: Communicating During Crisis

Two books are included in the packet forready background reading: Robert Bolton'sPeople Skills and Kathleen Galvin andBernard J. Brommel's Family Communication.$55.00

Videotape, "Family Communication DuringStress and Crisis." Fifteen minutes inlength (VHS 1/2"), the video features Dr.Donald Hamachek, author of Encounters withthe Self and Encounters with Others, talkingabout the negative and positive approachesfamilies take when trying to communicateduring periods of stress. A farm family isdepicted trying to decide whether or not totake a loan to finance an additionaloperation. At first we see them interactingvery negatively, with Hamachek pointing outexamples of faulty communication. We thenwatch the same family discussing the problem

in more positive and productive terms, withfinal comments by Dr. Ramachek. $20.00

Audiotape, "Family Communication DuringStress and Crisis." 30 minutes in length(cassette), the tape features the sixminilecturea included in the teachingpacket. $3.00

"Work and Family Stress" (E-1698). This27-page booklet explores the work/familyinterface, including the nature of thestress reaction, a discussion of thecompounding of stress when work and familyresponsibilities are combined, and a finalsection on how to keep stress under control.A group exercise is included in thecontents. $1.75

"Divorce and Family Stress" (E-1733). This29-page booklet includes an introduction todivorce and family stress and includes thefollowing sections: Marrying andUnmarrying, Arranging Custody, Effects ofDivorce on Children, Reducing Fallout,Helping Children Cope, The Rome-SchoolConnection, Living the Single Life Again,Handling the Stress of Separation andDivorce, and Check Your Own Stress Level.$1.75

The Stress Press, Volumes I and II.Included here are 20 individual issues of atwo-sided newsletter focusing on such topicsas family stress, hurried children, singleparenting, work and family stress, andstress and marital meltdown. $5.00

"Farm Family Stress" (E-1697). Developed bySally A. Middleton, this 29-page bookletfocuses on stress in agriculture,understanding stress, stress symptoms,managing stress, farm family communication,and farm family goals. $1.75

Audiotape, "Relaxation Exercises." Thistape contains guided experiences inrelaxation. Five different exercises, eachapproximately 5 to 10 minutes in length, areprovided as alternative techniques foracquiring personal stress-managementexpertise. $3.00

37Michipn 31

Prcject Support Tackles Rural Problems in Minnesota

by Kathy Mangum

IITIOO5CTION

Minnesota farm families are making toughdecisions--decisions that set the course fortheir futures. For many, the choices they maketoday will determine whether they stay infarming. Individual circumstances vary and so dothe options. Each family most base its decisionson its own unique situation.

The financial condition of many Minnesotafarms has been deteriorating since the late 1970sand was recognised as a crisis in the making ITearly as 1981 by Extension economists and otherExtension staff working closely with farmfamilies. These developing conditions had theirroots in the general deterioration of the overalleconomy and were specifically related to thegrowing federal deficits and the rising value ofthe dollsr, with its accompanying effect oninternational money flows and other economies ofthe world. U.S. agriculture was impacted bydeteriorating commodity prices and escalatingcosts on most input items, especially the cost ofmoney (interest).

These conditions, affixed on top of the agboom mentality of the early 1970s, caused manyfarmers to overspend by producing a now lower-valued stream of products and overinvesting inproduction capacity. Lower returns at highercosts, with more dollars going to cover theinvestment in capacity, soon drove many into adownward spiral, unable to provide cash flow forexpenses and at the same time meet obligated debtpayments. Under these condition!, returaa iocapital invested in agriculture declined andimpacted on the value of the assets used inagriculture, most specifically - -bit not alone- -the value of land. Declining asset values causedmany debt commitments made under previousconditions to be undersecured. This conditionhas continued to deteriorate. In some cases ithas advanced to the point where annual operatingcredit cannot be obtained because of lack ofa sufficient security base and repayment capacityto handle already committed debt obligations.Surveys indicated that this was the situation forabout 25 percent (25,000) of Minnesota farms byOctober 1984.

The impact of the farm crisis on the statecan be illustrated by the following conditions:

The author gratefully acknowidges theprevious work of a number of Extension staff.Much of this report was written from theirwritings found ta the final report, ProjectSupport Impact Study, February 28, 1986.

32 Minnesota

A 1984 USDA study indicated that the Lakestates of Minnesota, Michigan, and Wisconsinhad 15.8 percent of their farms with debt-to-asset ratios of 40 to 70 percent; 9.8percent had over 70 percent and 3.3 percentwere insolvent, with debts greater thanassets. A Minnesota study conducted latershowed Minnesota estimates to be higher thanthe 1984 USDA study.

Minnesota led the nation in the number offarms lost from June 1, 1984 through July 1,1985 (Minnesota Agricultural StatisticsService). During this period, the number offarms in the state fell from 101,000 to96,000.

The Minnesota farm-price index hit aseven-year low in September 1985. Sy mid-December it was 8 percent below its previousyear level.

The dollar volume of farm loans issued inMinnesota by the TWA more than doubled fromOctober 1, 1984 to September 30, 1985. Loanvolume increased to $437.6 million, comparedwith $207 million in the previous 12-monthperiod.

Six rural banks were declared insolvent andclosed during 1985, the most for any yearin the state since the Depression. In eachfailure the declining farm economy waslisted as the contributing cause. In

addition, 42 agricultural-dependent banksare on the state's trouble list.

In addition, family service professionals reportan increase of chemical abuse, family violence,and depression among rural residents. Thesesymptoms of stress reflect the impact of the farmeconomic distress on the farm family.

The long-term survival of rural Minnesota isbased not only on improved personal decisionmaking by farm families concerning farm andfamily management questions, but also on arenewed focus on community economic development.In order to make the hard decisions needed fortoday and tomorrow, farm families and ruralcommunities need reliable and pertinentinformation about their economic and socialchoices.

In the fall of 1984, the Minnesota Extensionservice launched Project Support, an intensivestatewide effort, to address the crisis in curalMinnesota. The Director of Extension appointed atask force to develop the plan. Forty county andarea agents had 25 to 50 percent of their timereassigned to provide multicounty leadership inProject Support programs. Project Support alsoincludes a statewide toll-free hotline and astatewide coordinator. This position is filledby an Extension specialist on a temporary specialassignment.

38

The goals were to help farm families(1) develop and analyze long-range alternativefarm plans, (2) develop cash-flow plans for 1985to be used in negotiating with their lenders,

(3) be equipped to better analyze theirsituations after their 1985 business year;(4) cope effectively with stress, and (5) utilizecommunity resources.

Project Support is a success in a number ofaspects. The program provides sound educationalinformation on farm management, family resourceand stress management, and community developmentto thousands of Minnesota citizens. A recentimpact evaluation took an in-depth look at thetype and nature of help provided to Minnesotacitizens and concluded that the Extension Serviceclearly met its goals. Not only did thousandsreceive helpful vital educational assistance, butthe Minnesota Extension Service was able toimplement this "crash program" with considerablespeed and extremely limited resources.

The success of the Minnesota ExtensionService in Project Support can be attributed toseveral factors: the university's capability forresearch and program development, the advent oflower-cost microcomputers, the experience ofExtension staff in farm financial management,legislative funding to make software and hardwareavailable to Extension offices and otheragricultural educators, and to a large number offinancially distressed farmers.

IDOCATION III ACTION

Project Support uses a program developmentmodel that combines research from Agriculture,Home Economics-Youth Development, and CommunityResource Development. A key component of ProjectSupport is a package of farm business managementcomputer programs called FINPACK that allowfarmers to see the financial consequences ofvarious management practices on their farmoperations. The program was developed over aperiod of two decades by Extension experts foruse by county Extension staff, vocational

agriculture instructors, FmRA loan officers, andbankers. With this program a county agentanywhere in Minnesota can turn a portablemicrocomputer into an invaluable tool for helpingthe farmer analyze 'xisting circumstances andmake choices for the future.

But the Extension action went beyondanalysis of farm management plans. The 19708 and'808 research in personal and family stressproduced data that was used to develop stressmanagement programs for Extension staff, farmfamilies, and community decision makers.

Minnesota Extension Service garnered a widerange of resource people and expertise from theuniversity community to assist in research andprogram development. Units with participatingfaculty members include: the Departments ofAgricultural and Applied Economics and FamilySocial Science, the Center for Youth Development

and Research, the Medical School, the Law School,the School of Social Work, and the HubertHumphrey Public Policy Institute. These

collaborative efforts have provided thefoundation for Project Support programs.

Future research and program efforts shouldinclude:

1. Baseline research data on farm families

2. Data on what research is needed in thefuture

3. Research on implications of dual-careerfarm families

4. Continuing research on farming systems,including implications for family andcommunity

5. More research on models for communityeconomic development that focus on awin/win situation, rather than acompetitive win/lose situation

6. Data on the kind of support and servicescounty Extension agents need to preventjob burnout

7. Study of interorganizational relationshipsbetween Extension and other organizations

RESEARCH AID PROJECT SUPPORT

This report is not meant to summarize theentirety of the research efforts at theUniversity of Minnesota. Rather, it is meant tohighlight some of the research that has beenutilized in the first year (1985) of ProjectSupport. The following information describessome of the major efforts. It includes a

research project that looks at the stress in ourown staff--normative stressors and stressprecipated by work overload due to the farmcrisis.

Farm Fiaaacial HaAasoment

Research and testing over a period of twodecades by the university's Department ofAgricultural and Applied Economics and Extensionfarm financial management experts has led to thedevelopment of FINPACK, a computerized financialplanning and analysis package. The fourprograms--FINAN, FINLRB, FINTRAN, and FINFLO --provide a comprehensive and understandableframework for individual farm decision making.

FINLRB identifies and compares the long-range profitability, debt repayment ability, andfinancial soundness of alternative farm plans.FINFLO projects farm cash flows monthly for oneyear of business. FINTRAN projects farm cashflows for three years of business. It is mostuseful in projecting cash flows for thetransitional period when a major change is beingtmplemented. FINAN analyzes the financialperformance of the farm business for the pastyear.

39Minnesota 33

When used together the FIMPACK programsbecome an even more effective educational tool.They teach financial concepts through theirapplication on individual farms. The programsaim at strengthening the management ability ofthe farm manager as well as the decirion-makingability of the ag lender.

FIMPACK is designed for use with any record-keeping system. In fact, experience indicatesthat the record-keeping ability of farm managersimproves as they discover the usefulness andimportance of complete records for financialplanning and analysis.

Family Stress is Middle Years

University-based researchers in nine statesparticipated in a study on family stress in themiddle years. Data was collected from over 1,900idwestern families, including some in Minnesota,from urban and rural, farm and nonfarm sectors.The study examined the relationship between the

stressful experiences of families and theirpsychological and physical health. The findingshave clarified the understanding of family stressand have assisted Extension in providing moreeffective stress intervention and preventionprograms for community decision-makers andfamilies.

Teems is Distress: Stress, bspressios, sadSuicide

The Minnesota Extension Service and theUniversity Medical School have embarked on amajor research study to look at the degree ofstress and depression experienced by Minnesotayouth and the degree to which they arecontemplating and attempting suicide.Questionnaires have been collected from over4,300 high school students in 52 counties. 4-Hagents worked with the schools to collect thisdata base. Preliminary findings have beenreported to the schools and the more completedata analysis is underway. A final report shouldbe available by September 1986.

Six conferences entitled "Teens in Distress"were held in Minnesota in 1985-86 in response tocommunity concerns about teenage stress,depression, and suicide. The audience wasprimarily youth-serving professionals--teachers,

school administrators, mental health workers,counselors, clergy, social service professionals,nurses, and county Extension agents. The keynotepresentation addressed adolescent suicide, withattention to identification of high-risk youngpeople as well as an overview of researchfindings on the topic. Workshops were presentedby local resource people who shared models forpeer support programs, helping teens deal withstress, interventions with depressed youth, andschool-based programs addressing self-destructivebehavior.

Minnesota 4-H has produced three fact sheetsto provide information to adults working with

34 Menem*

youth. "Teen Suicide" gives factual information,warning sips, and primary interventiontechniques. "Helping Friends in Trouble" isdesigned for young people discussing ways theycan be helpful to other teens whom they know tobe stressed, depressed, or considering suicide."Supporting Distressed Young People" helps ads:Itsunderstand appropriate communication andintervention techniques when dealing withdistressed teenagers.

4-H is providing leadership for an ExtensionService teleconference that will providestatewide follow-up to the "Teens in Distress"conferences in October 1986. Community supportteams working on programs for prevention,

intervention, and education on the topics ofstress, depression, and suicide will gather atsix vocational school locations in the state toshare their plans, programs, and questions viasatellite teleconference. Expert resource peoplewill be located on the university campus inSt. Paul to respond to concerns and questions.Special attention will be given to cooperativecoemunity programs involving 4-0 and theschools.

Dynamics of Farm and Business Families

Paul Rosenblatt and graduate studentsworking with him in Family Social Science havecarried out a series of studies on farm andbusiness families. They have published papers onthe relationship consequences of economic stressin farm couples and the dynamics of farm familiesinvolved in intergenerational transfer of thefarm, and a book (The Family in Business,San Francisco: Jossey-Bass, 1985) on thetensions of families in business. They arecurrently studying family relationships and griefin families that have recently had to leavefarming.

Values of Rural Families

In the Department of Rural Sociology, JamesKrile has been studying the values of ruralfamilies. The study has illuminated how problemssuch as those of farm families in economictrouble are defined and how helping persons andhelp are perceived. Krile has used his researchas a basis for educational programs aimed athelping professionals and bankers, among others.

Rural Church Research Project

The rural church study, under Jim Krile inthe Department of Rural Sociology, started in1979 and focused on 131 Roman Catholic, UnitedMethodist, United Church of Christ, Episcopalian,United Presbyterian, American Lutheran Church,Lutheran Church in America, and Lutheran Church-Missouri Synod congregations in and along thecorridor of the highly controversial powerline incentral Minnesota. During this first phase,interest centered on how characteristics of thecongregation, the clergy, and the denomination

40

affected the manner in which pastors and/oroarishes. dealt with potentially conflictualissues. These findings were shared withdenominational leaders in the fall of 1980 at a

conference held on the St. Paul campus.

The second phase of the project focused ontwo issues that emerged from the analysis of the1979 data. One issue was the effect th.t yokingor creating multiplepoint parishes, has on theways in which pastors and congregations respondto community needs. The other issue was theimpact of differing lay leadership structures onthe churches' roles in the community.

The third phase of the research examined thelocal power structures in eight of thecommunities within the study area. Specialattention was given to the extent to which

congregations and/or pastors were seen as part ofthe local power structure, the extent to whichlocally powerful people were affiliated with a

particular church, and the extent to whichmembers of the community power structure werealso leaders in their churches.

Based on a survey of 1,610 households ofchurch members in the 'tudy area, the fourthphase focused on the *. /s in which church membersdevote their time to church, family, andcommunity activities. Special emphasis wasplaced on the effects that the various stages offamily development might have on different typesof organizational involvement.

It has been the practice throughout theproject to try to share the findings with thedenominations, congregations, and communities inthe study, as well as with other members of theprofession. Much of the material has beessummarized in various issues of Sociology ofRural Life, a quarterly publication of the RuralSociology unit.

The project is preparing to gather data thistall in both northeastern and southwester.tMinnesota. The primary interest this time is onhow the attitudes, values, and perceptions ofclergy and laity affect church response to localeconomic crises.

rangy Stress, Coping, and Adaptation

Pauline Boss, Family Social Science, hasincluded displaced farm families in her studiesof family stress. She has written Extensionpublications (e.g., "Denial," "Ambiguity: AFactor in Family Stress Management," and hascollaborated with Ron Pitzer, Extension FamilyLife Specialist, Rural Sociology, on familystress programming. They have producedvideotaped talks and a film drama on a distressedfarm family. Pauline's Extension writing andprogramming arises in part from participation,with Gerald-..e Gage, Family Social Science, inthe regional study of stress management in midlife families.

Professionals in Outreach: Managing Stress in anEra of Change

Serving the people of Minnesota has been andwill continua to be one of the major objectivesof the University of Minnesota Extension Serviceand its professional staff of county agents,specialists, and administrators. Thes:professionals, however, are also faced with theeverpresent challenges of serving many,responding to crises, anticipating the future,and facing competing demands in the face oflimited resources and an everchanging economicand social situation. While under stress, theseprofessionals are able to cope, to manage, and todevelop in this challenging situation. Conductedby the Department of Family Social Science, thisresearch study was designed to document what

stressors and strains they experience, as well asthe coping strategies, appraisals, andadaptations county agents, specialists, andadministrators make in an effort to provideoutreach services to the people of Minnesota.

Results

Benefits to individuals and families

Critical support for fundamental farm businesPdecisions. Extension's farm financial software,FINPACK, has enabled over 12,000 Minnesota farmfamilies to analyze their farm businesses; 100of these worked directly with county Extensiot.staff. Each family reached by Extension received2 to 16 hours of individualized consultation in a

riskfree, confidential learning environment.FINPACK provided a framework for decision makingby helping identify options based on the family'sunique goals.

Reliable information about real ,roblems.Information derived from university research onfarm business, stress, and family resourcemanagement was presented to over 142,000 peoplein group meetings and individual consultations.

Realistic action strategies developed. Followingcontacts with Extension, over 6,900 peopledeveloped strategies to continue farming, about1,500 planned to seek offfarm income, 730decided to move out of farming, and 9,400 peopleworked to cope more effectively with stress.

Rural Minnesota better informed. Minnesotans whoparticipated in Project Support activities wereperceived more prepared and informed thanothers when they sought additional help fromfinancial and social service agencies.According to one bank loan officer:

The borrowers who have previously been to

the Extension office were much more incontrol and seemed to understand theirsituation much better....

Benefits to communities

Helping others help. Extension staff trainedover 33,000 people in other community groups and

41Minnesota 35

agencies. This training focused on farmfinancial analysis, stress management, teenagestress and suicide, and family resourcemanagement. People attending included;representatives from financial institutions,human service organisations, employment services,farm groups, and commodity organizations;vocational agriculture instructors; attorneys;business leaders; local governmentrepresentatives; clergy; and farm advocates.Extension staff worked with an additional 26,500people in communities to encourage thedevelopment and maintenance of community supportnetworks.

Extension Projects

In addition to programs already mentioned inthis section, the following programs are inplace:

Helping Others Cope with Change, a stress-management series of workshops forprofessionals in mental health, counseling,teaching, ministry, and social service

Farm Couple Support Groups, for discussionwith clientele about stress management

Radio tapes designed to help families adjustto their changing environments and life-styles

A four-part television series, titled"Living Resourcefully," that focuses onconcepts of financial management, housing,noncash resources, and communications

Volunteer Budget Consultants, Extension-trained consultants who provide familieswith household financial managementinformation in one-to-one consultations

Project Survive, a ten-week televisionseries exploring the depth of human hardshipcaused by economic limitations of families

County Task Forces, which organize todiscuss the farm crisis and develop a planof action for their counties

Community Resource Directories, developedfor farm families, which list agencies'names, addresses, functions, and telephonenumbers

Statewide Efforts in Agricultural PolicyEducation, which included: (1) a conferenceat Spring's Hill Center in Wayzata, where250 banVers, community leaders, andeducators gathered to update themselves onthe national and Minnesota agriculturalsituation; (2) three community developmentworkshops on "Agriculture and Economy ofNorthwestern Minnesota" which involved over200 people, including representatives fromfarm organizations, 1 ng institutions,churches, human servi agencies, andfarmers; (3) a Farm Family Awareness

36 Mknesota

workshop at the Red River Valley WinterShows, featuring work trade, agriculture,and small town impact topics; and (4) aseries of small business workshops conductedin three locations in northeasternMinnesota, with at least 140 people inattendance.

PEOPLE TO CONSULT FOR FURTNER INFORMATIOW

Please contact the following people for moreinformation on Minnesota's efforts:

FIRPACK and Farm Financial Management:Richard O. Hawkins, Professor and ExtensionEc000mist, Agricultural and AppliedEconomics

249C Classroom Office BuildingSt. Paul, 55108(612) 373-1145

Family Stress in Middle Years (Support Groups)Ron Pitser, Extension SpecialistRural Sociology74 Classroom Office PuildingSt. Paul, 55108(612) 376-3851

Family Stress

Pauline Boss, Associate ProfessorFamily Social Science290 McNeal HallSt. Paul, 55108(612) 376-2455 and 373-1578

Values of Rural Families, Rural Church ProjectJim Krile, Research FellowRural Sociology64 Classroom Office BuildingSt. Paul, 55108(612) 376-3854

Teens in DistressJoyce Walker, Assistant ProfessorMinnesota 4-H Youth Development340 Coffey Hall

St. Paul, 55108(612) 373-1083

Impact Study of Project Support

Kathy Mangum, Coordinator, Project Supporr433 Coffey Hall

St. Paul, 55108(612) 373-5168

Project Survive, Volunteer Budget Consultants"Living Resourcefully," Radio Tapes on Life-styles

Irene Ott, Program Leader, Home Economics/Family Living

48D McNeal HallSt. Paul, 55108(612) 373-1863

Studies on Extension Staff's Stress and CopingPatrick J. Borich, Dean and Director, Minnesota

Extension Service240 Coffey Hall

St. Paul, 55108(612) 373-1223

42

Missouri Extension and Research Activities in the Rural Crisis

by John T. Pelham and Judy Heffernan

INTRODUCTION

The current farm crisis continued to deepenin Missouri during 1985. The price of armlanddeclined 23 percent during the year. .ie totaldecline since 1981 is now more than 40 percentfor the state. The declines in northern Missouriwere even more severe. At the same time, pricesfor many of the grains produced in the statedeclined substantially during the year. The netresult has been that a substantial number of farmfamilies lost their farms during the year andanother large group of farm families is facingmajor financial difficulty.

This has accelerated one of the major trendsin agriculture during this century, that of acontinuing decline in the number of farms. Thetrend toward fewer farms is not new, but recentconditions have brought the rate and amount ofdecline to the point that it has become a threatto many rural communities. Missouri hadapproximately 112,000 farms in 1982, less thanhalf as many as the peak number in 1935. During1985 it is estimated that about 5 percent of thecommercial farms stopped farming operations inthe state. The current forecasts are for atleast that many farms to cease operations in thestate in 1986.

The rate of decline was rapid during the1950s and 1960s, but the numbers stabilizedduring the 1970s. Much of this earlier reductionin the number of farm families resulted fromattrition as farm youth selected nonfarmingoccupations and the old folks retired. Duringtimes of unusual distress, such as now when the"cost/price squeeze" has become so severe thatfarm families are faced with involuntaryforeclosure and bankruptcy, many families areforced from farming in mtdcareer.

During five of the last seven years Missourifarm operators have experienced difficult weatherconditions. Major droughts and floods havecharacterized four of these years. Some countieshave experienced both problems in the same year.The 1985 cash-grain crop in the northern part ofthe state is a case in point. Early andmtdseason weather co.ditione were the mostfavorable in the past several years slid a good-to-excellent crop was forecast. An extremely wetfall and early winter made it very difficult forfarmers to harvest their crops in a number ofcounties. As late as December 20, it wasestimated that 50 percent or more of the soybeancrop and 20 percent or so of the corn crop wasstill in the fields in several counties in thenorth-central part of the state. Many farmerswho might survive the larger economic problemsdescribed above are finding it difficult to copewith the additional hardships prod! Jed by theweather.

Not surprisingly, the farmers mostvulnerable to the financial crisis are those withthe largest debt-to-equity ratios. An analysisof recent data from the Missouri Mail-In RecordsProgram grouped members into three categories onthe basis of equity-to-value ratio. The topone-third had 91 percent or more equity in theirfarm, the middle group had 61 percent equity, andthe bottom third had 27 percent equity. Thegroup with the greatest equity-to-value ratio hadan average cash income of $43,595. The middlecategory had $39,036 and the third categoryreported a net of $17,680. These figures do notinclude inventory changes or depreciation. Whenthese are included the net profit was negativefor two of the three categories. The highestequity category had a small positive return($1,486), the second had a substantial loss(-$26,163), and the third even more (-$33,912).

In total, the annut net worth change was asubstantial decline for all farm operators. Thehighest equity category lost $10,228, the second$49,747, and the third $51,377. Remarkably, thefarmers in the third category appear to the mostefficient producers by such traditional measuresof efficiency as bushels of grain per acre orpounds of milk per cow. Percent equity and lackof income source diversification, rather thaninferior production ability, seem to be theprimary determinants of farm insolvency on somefarms. This contradicts the common suggestionthat the current farm crisis is the result of thefree market weeding out poor managers.

In the fall of 1985, 2,146 responses from arandomly drawn sample of Missouri farmers werereceived. Forty-three percent of the respondentsreported no farm debt. However, only 21 percentof the medium-sized farms and 13 percent of thelarge farms reported no debts. For each of thegroups the percent of farms debt-free hasdeclined for each of the last three years.Furthermore, 55 percent of the operators of largefarms and 45 percent of the operators of medium-sized farms indicated that they were veryconcerned with the debt on their farmingoperation. Again, these figures are asubstantial incremae over the previous years.

Past polls have indicated that more thanthree-fourths of the young farmers (less than 45years old) with large farm operations indicated

that they were "very concerned" with the level oftheir farm debt. In general, the younger farmfamilies and those without nonfarm incomeexpressed the most concern.

The perceptions of farmers are quiteconsistent with the views of the financialcommunity. Surveys of farm lenders in the stateindicate that they expect as many as one-third ofall northern Missouri farm operations to faceinvoluntary liquidation in the next three years.

43 Miuouri 37

The financial community itself is in somedifficulty. The situation of the Farm CreditSystem has been widely described in the media. Aconsiderable number of Missouri farm banks arefacing increasing financial difficulties. Morebanks failed in Missouri in 1985 than at any timesince the depression of the 1930s. The FmNA took"into inventory" more than 120 farms in Missouriin 1985. The vast majority of these were through"voluntary conveyances." At present more than3,000 farm operators in the state are behind intheir loan payments.

The effect of the current crisis is notrestricted to farmers and their lenders.Agricultural and consumer goods suppliers arealso being affected. The Federal Reserve Bank ofKansas City reported last year a survey of TenthDistrict bankers that indicated 13 percent ofrural nonfarm businesses were having severefinancial troubles.

Many rural families are suffering from thecrisis in ways that go far beyond farm finances.The suicide rate among Missouri farmers hasincreased markedly during the last three years.Other stress-related problems, such as maritaldifficulty, child abuse, and alcoholism, havebeen found to accompany the level of financialstress many Missouri farm families are nowfacing.

The impact of financial stress inagriculture varies across the state. It variesfrom region to region and from farm to farm,

depending as much on local weather conditionsduring the last four years as on macroeconomicfactors. Reports from the Extension field staffand other sources, however, indicate that thecounties in the northern half of the state have adisproportionate n, AWW of financially distressedfarms, althoo where are counties elsewhere inMissouri wi ems just as severe.

It is r ng in one sense tc call thecurrent situat in these particularlydistressed areas a farm crisis or even a farmfamily crisis. In these instances it is a crisisof the total rural community, a crisis resultingfrom factors largely beyond the control of thefarm families or the rural population. Many ofthe affected farm families are good producers whohave simply been caught with too much debt toservice under existing economic conditions. Astheir equity in land and other assets has erodedand their debt has increased, cash-flow problemshave mounted. Undoubtedly some will be unable tomaintain their farming operations and will haveto make a transition out of agriculture. Othersmay remain farmers if they act promptly in makingthe appropriate management decisions. Manynonfarm rural families in agriculture-relatedbusinesses are facing similar choices since therewill be a ripple effect throughout the communitythat will negatively affect small businesses thatrely in part on the success of the farmenterprise. Thus both farm and nonfarm familiesin rural Missouri face an increasing burden ofeconomic hardship and personal stress.

38 Mimed

It is important to recognize that the scopeof the farm crisis situation is very broad anddependent upon the status of the United Stateseconomy. The Missouri Extension Service cannotsolve the fundamental problems in United Statesagriculture. However, the program being offeredby Extension represents reasonable response andcommitment to help the individual families andcommunities make more informed decisions andrelated adjustments to a changing agriculturalenvironment.

The situation briefly described above is thecontext in which Extension and researchactivities oriented toward the rural crisis havebeen developed. The two sections which followare descriptive, not completely inclusive, of theresponse of the University of Missouri andLincoln University toward assisting farmproducers, farm and rural families, and smallcommunities in dealing with and overcoming theseadverse circumstances.

EITSESION ACTIVITIES

A recent USDA report recognized the MissouriCooperative Extension Service as one of thenation's most active in providing assistance todistressed farm families. Extension specialistsrepresenting the University of Missouri andLincoln University have combined forces todevelop a number of innovative strategies formeeting the rural crisis head on.

MOURNS Provides Pieeaciel Meuagemeat Counseling

Instituted in the fall of 1984, MOFARMS is anot-for-profit corporation funded for two yearsthrough the Missouri Department of Agricultureand the University of Missouri to provide freefinancial counseling to farm families.Twenty-six consultants, mostly retiredprofessionals with backgrounds in agriculture andfinance, were trained at University of Missouri-Columbia to visit farm families in their homesand assist them in analyzing their financialsituations. A toll-free hotline at the MOFARMSreferral center received 633 calls, from farmersin 94 of Missouri's 114 counties, in its firstsix months of operation. To date mire i.et 800farm families have taken advantage of theservice. Callers asked not only for financialassistance, but also for legal counseling,information on social services and educationaland vocational training, and emotional support.When staff members were unable to answer requestsdirectly, they referred callers to other sources.By November 1985 MOFARMS had provided individualconsultation for more than 700 families.

Community Support Croups Aid EmotionallyDistressed Families

Increased incidence of suicide, divorce, andchild abuse is an unfortunate byproduct of thefarm crisis. The need to involve other localleaders and agencies in combatting farm families'

44

feelings of isolation and despair was recognizedearly by the Extension staff. Meetings organizedby Extension specialists were held around thestate to raise the awareness of ministers,

Extension councils, farm organisationrepresentatives, homemaker club members, electedofficials, lenders, and 4-H leaders. Linkageswith these groups resulted in a variety ofservice., including presentations about stressand the movie "Country" as springboards fordiscussion, training for clergy, training for

farmers and others in dealing with federalagencies, and emotional support groups. Innorthern Missouri, the area of the state hithardest by the crisis, one Extension staff memberhelped a farm family with an ?MA appeal process.The appeal kept the family in its house and onits land for at least an additional year.

Support groups and Extension task forcemembers also developed and produced more than75,000 social service resource directories, whichwere distributed through church bulletins, ba nkstatements, and Extension contacts. By November1985 total participation in the community supportgroups was 2,675 persons at 61 meetings.

Extension not only helps people directly,but also helps Missourians help themselves by

enlisting community sectors to aid each otherduring the rural crisis. Home economists innorthwestern Missouri, for example, worked withlocal churches and other agencies to organize afree "stone soup supper" at the Maysville HighSchool. Volunteers brought vegetables andprepared the soup. Local businesses and churchesdonated eating utensils. Families wereencouraged to bring their favorite games andmovies were provided for the children. Anobjective of the program ras to create

opportunities for families to come together andshare in life's joys as well as its sorrows.

Farness Explore Alternative Income-GenerationProjects

The rural crisis has forced farmersaccustomed to thinking only in terms oftraditional sources of revenue, such as beef,hog, sheep, and soybean production, to considernew ways of generating income. To stimulateexperimental income - producing activities,

university Extension in 1985 funded sixinnovative proposals Oat brought fertile ideasto fruition. The projects, submitted by ruralMissourians, included production of a specialtype of mushroom for consumption in domestic andforeign markets, a unique design for constructionof a low-cost utility building, invention of adevice to keep farm ponds free of ice,development of a rural secretarial service, andformation of a craft guild. The maximum fundingfor any project was $2,500.

One central Missouri recipient, Ron Macher,once a conventional livestock farmer, now raisescatfish and prepares them for market in his newlyconverted machine shed. His processing plant isstate-approved so he can sell his own produce and

that of other fish farmers to restaurants andgrocery stores as well as individuals.

As of November 1985 approximately 400Missourians had been aided by universityExtension in developing off-farm employmentopportunities. Farmers' markets were created in40 communities across the state. In southernMissouri a four-part training program called"Ozark Income Opportunities" addressed essentialaspects of starting a new business.

Alternatives for the '80s

Under the banner of "Alternatives for the'80s," a multidisciplinary group from theUniversity of Missouri-Columbia Colleges ofAgriculture, Home Economics, and Public andCommunity Service, Lincoln University, andUniversity of Missouri Extension began exploringa variety of ways to help rural Missouriansdevelop alternative and supplemental incomesources.

The home-based business project, designed toassist Missourians who want to establish income-producing businesses at home, began work on acraft catalog, "The Best of Missouri's Hands."The catalog will feature the juried works of 200artisans and will be sold to galleries and toretail and wholesale buyers across the nation.Videotapes for use by would-be entrepreneurs onhow to establish a home-based business, includingmarketing, record keeping, and legalconsiderations, also are being developed.

Another "Alternatives for the '80s" project,begun last year and continuing through 1986,explores the possibility of increasing thequantity and quality of alfalfa production in thestate. In a related project early in 1985 anExtension team began work on alfalfa-pelletingoperations.

Also in the planning :.*-ages is a project toincrease forage-based beef production inMissouri. Since 90 percent of M:ssouri's beefcattle are sent out of state for finishing,raising lean, low-cholesterol beef cattlefinished on forage rather than gre. n wouldconsiderably increase incomes for Missourifarmers.

In the early 1900s, Missouri was a leadingproducer of horticultural products. In theseeconomically distressed times some farmers areagain considering production of strawberries,blueberries, melons, grapes, and other fruits andvegetables as a cash-generating alternative.Under the direction of Lincoln Universityhorticulturalists, a computer data base ofresearch and production information is beingdeveloped as a resource for interested growersaround the state. Demonstration test sites forhorticultural products also are planned.

An alternatives referral center andclearinghouse, established in 1985, will becomefully operational this year. A computer softwarepackage, to be distributed to Extension centers

45Missouri 39

and made available for purchase by individuals,will list myriad ideas for economic developmentused successfully by individuals and communitiesaround the nation. In addition, a "Catalogue ofIdeas" is being printed to guide groups throughthe process of exploring economic developmentalternatives in their communities.

Employment Workshops

In 1985 a series of 12 employment workshops,sponsored by an interdisciplinary team ofExtension specialists in cooperation with

community groups, offered help in personal skillassessment, resume writing, and interviewing.Counselors from the University ofMissouri-Columbia Career Planning and PlacementCenter offered tips on networking and other jobsearch skills. Panels composed of localemployers shared their expectations of employeesand employment prospects in their companies. Theemployment workshops were just one avenue ofeducation offered by Extension specialists to aidvictims of the farm crisis.

RESEARCH ACTIVITIES

The major research efforts of the Universityof Missouri that have focused directly on theimpact of the rural crisis on families and

communities have come primarily from theDepartment of Agricultural Economics and theDepartment of Rural Sociology. Related researchis taking place in the School of Social Work, theCollege of Home Economics and the School ofMedicine. A brief overview of some of the majorresearch follows. Information on availablereports and publication of results of theprojects can be obtained by contacting theresearchers listed.

Department of Agricultural Economics

Missouri Agricultural Finance Survey 1986Professor J. Bruce Bullock--314-882-3545

The recent study of over 2,000 farmers andother studies by Bullock and his colleagues havesought to identify the number and characteristicsof farmers and farms affected by the ruralcrisis. The data have been analyzed to showdifferences in impact by regions of the state, byprincipal farm enterprise and by age of thefarmers.

Food sad Agricultural Policy 'Research Institute(FAPRI)

Professor Abner W. Womack-314-882-3576

The Food and Agricultural Policy ResearchInstitute (FAPRI) is a joint university projectwith the Center for National Food andAgricultural Policy at the University ofMissouri-Columbia and the Center for Agriculturaland Rural Development at Iowa State University.

In general, FAPRI has been involved on anactive basis in major policy research at thenational level. It has the capacity toquantitatively evaluate national andinternational economic factors that impact U.S.agriculture and the consequence of alternativefarm policy and program proposals and differentsegments of the society.

Womack and his staff have provided both adetailed analysis of the present situation (whois affected, in what ways, to what extent are

they affected, etc.), as well as projections forthe likely length of the crisis given varioussets of circumstances and/or policyimplementations.

The numerous and timely reports produced byFAPRI are used by extension farm managementspecialists to help farm families evaluate theirpresent and future situations. The reports andcongressional testimonies have also been used inpolicy deliberations and for public educationthrough the media.

Department of Rural Sociology

Professor William D. Heffernan--314-882-4563Research Associate Judith B. Heffernan- -

314 -882 -7232

A study was done of the social, emotional,and psychological consequences for farmers andtheir families of being forced out of farming forfinancial reasons. In this first-of-its-kindstudy, the data were obtained during lengthypersonal interviews with 40 of the 44 familiesidentified as having been financially forced outof farming from January 1, 1980, to January 1,1985, in a major agricultural county of thestate.

The data showed extremely high levels ofstress and depression in the families. The studydocumented the tremendous personal painassociated with losing the family farm that isexperienced by the farm couple as well as theirchildren of all ages.

Wide variations in support received by thefamilies was noted. Without major assistance,between one-third and one-half of the familiesmay never again be able to fully function as theproductive members of society they once were.

Missouri Farm and Rural Life Poll

Professor Rex R. Campbell--314-882-6358Professor William D. Heffernan--314-882-4563

This annual statewide poll with a responsefrom over 2,000 farmers has focused on farmersattitudes, perception of the ?roblems facingfarmers and policy options farmers favor. Datahave been collected over a three-year period onthe farmers' concern with farm debt and farmingplans for the next five years.

46

College of Nome Economics

North-Central Region Committee 164Professor David R. Imig--314-882-3025

A study conducted cooperatively in ninestates looks at family stress in the middleyears. While no attempt was node to focus onthe rural crisis, results of this research areapplicable to farm families under stress.Materials are being developed from this projectfor use by extension personnel who work withstressed families.

Other Related Research

Professor Marion Typpo--314-882-4649

Research by Typpo on families and especiallychildren impacted by alcohol abuse and familyviolence is increasingly relevant as ruralfamilies under stress exhibit these reactions.

Professor Robert Weagley--314-882-6270

Weagley is beginning a long-term study ofthe financial behaviors of farming families.

School of Social. Work

Professor Joanne Mermelstein--314-882-6206Professor Paul Sundet--314-882-6206

Professors Mermelstein and Sundet areexamining various aspects of rural socialservices evolving from the rural crisis.Attention has focused on the special needsprofessionals in mental health organizationsperceive as resulting from the farm crisis andthe resources needed to meet these special needsof a rural community.

School of Medicine

Professor Barry Kling--314-882-4105

Rural health delivery systems face manychallenges as a result of population shifts andchanges in technology. The current rural crisisleads to additional strains. Professor Kling isworking with other health agencies to determinethe consequences of the financial crisis in ruralareas on the health of the people andimplications for the delivery system.

47Missouri 41

Short-term and Long -term Approaches to Easing the Farm Crisis:The University of Nebraska's Response

by Deborah Rood and John De Frain

Nebraska has always been known as Siagricultural state. It follows, then, that whenagriculture is in a crisis so is Nebrasxa. In asurvey conducted by the Nebraska State Departmentof Agriculture in January 1986, the avaragedebt-to-asset ratio for farmers in the state was34.3 percent. Twenty-three percent of Nebraskaoperators have a debt/asset ratio between 40 and69 percent. Another 13.8 percent him a debt/asset ratio of over 69 percent. Of therespondents to the survey, 6.4 percent do notplan to operate in 1986 and 15,8 percent do notplant to operate in 1987.

This has a staggering impact on today'sagriculture, as well as on the future ofagriculture in Nebraska. The needs and problemsthat come to the forefront for individuals,

families, and communities are as many and variedas there are people. While we feel that eachfamily and each situation is different, there areprojects that can provide basic information andhelp to these people.

It is hard to discuss the needs and problemsof an individual without talking about thefamily. What touches the individual, be it afarmer, farm wife, or child, also touches thefamily. In Nebraska, the needs of individualsand families include financial planning, legaladvice, stress management, communication avenues,emotional support, and transitional help when afamily must leave farming. Communities are alsoseeing the impact that the farm crisis is havingon main street business. Churches are seeing adecline in giving and a drop in attendance. Manyrural people are feeling a sense of quietdesperation and have no idea of whom to turn tofor help.

The fern crisis has also given people infarm management and human development that"teachable moment," so while we need to work withthe families who are undergoing great financialstress, it is also an opportune time to work withfamilies who may not be "feeling the heat" asmuch as others. The time is right to put intoplace good management prezt-ices that will havelong-term benefits to agriculture in Nebraska.

The following report talks about theprograms in Extension and the research projectsunderway at the University of Nebraska. TheExtension programs are divided into two groups:short-term "emergency-type" programs, andlong-term programs that will benefit families inthe future as well as the present.

42 Nebraska

SHORT-TRIM OR EMERGENCY PROGRAMS

Farm Financial Information Line

Farm and ranch families have two mainmethods of contacting the Extension Service whenthey need help. In addition to the traditionalapproach of contacting their local Extensionagent, they can .all the farm financialinformation line. This is a toll-free call foranyone in Nebraska. Since this line was openedSeptember 1, 1984, over 3,000 calls have beenreceived. Ca!lars typically need additionalinformation on the Managing for Tomorrow program,want a financial counselor to call on them, orhave a financial question that can be answered onthe phone.

Farm and Ranch Financial Counseling

Financial counseling is provided free ofcharge to families who need immediate help inassessing their financial situation andevaluating alternative solutions to theirproblems. Four hundred fifty families were given

assistance through this program from February toApril 1983. Counselors assisted them inpreparing balance sheets and cash-flow plans,evaluating alternative plans, and filling outFuBA loan application forms. Familiesappreciated this assistance, but most often theysaid they appreciated having an unbiased personto talk with about their farm businesssituation.

Funds for the variable cost of operatingthis program were provided by the NebraskaDepartment of Agriculture. Fourteen personsserved as counselors. They worked from all fiveof the university's research and Extensioncenters as shown in Figure 1.

Following are some examples of howcounselors met the needs of the farm and ranchfamilies:

farmer was unsure of what his recordswere saying. Our counselor was able toassure him that he was interpreting themcorrectly.

Another client was having difficulty

getting an operating loan from his bank.After working with our counselor in puttingtogether a financial package, the operatingloan was approved.

Many farmers and ra chers were lookingfor help in working Pith their lenders. Ourcounselors helped each work with theirrecords and the producers felt that theywere better prepared and had more numbers toback them up when they met with theirlenders.

48

Figure 1:

'WEE VGJIM VOLCUMILLELJECCOULAJCLIO

HOOPER1FortCalhouni

%

* RESEARCH AND EXTENSION CENTERSFINANCIAL COUNSELORS

Figure 2:

VOUN OVE0000 LIVEEMOOLUO*

*O'Neill*Ainsworth

OVerdi re

MayneNeligh 0_2Walthill1

W

Nor.1folk West*Stanton Pointcottsbluff

B sportarrisburgOshkosh Blair

%

°kings*Minden

1984*1985

1986 PLANNED Includes training of Extension Agents end other profossionals

49 Nebraska 43

In cases where the decision was whethera farmer would stay on the farm, a counselorhelped them do a financial analysis of theiroperation and, just as importantly, gavethem moral support in making a harddecision.

The Farm and Ranch Financial Counselingprogram is being offered again this winter. Thisprogram began December 1. Funds for the variablecosts of the program are being provided by theUniversity of Nebraska Foundation and it willagain be available at no cost to farm and ranchfamilies requesting the service. Ten of thefourteen counselors who served last winter willcontinue as financial counselors.

Szteasioa Staff Iasernice !relates

One hundred thirty Extension agents inAgriculture and Rome Economics participated inthree days of intensive training in earlyOctober. The topic of the training session was"Dealing with the Farm Crisis." They gainedskills in counseling and financial analysisthrough work with case studies. Response tothis training was very positive and anothertwo-day training session has been requested forDecember. Training sessions such as these areenhancing the skills of those who have beenworking with financially stressed families andgiving basic training to those who feel they needsome training before they work directly withfamilies on their finances.

This redirection of Extension agent'sefforts represents a major reallocation ofexisting resources. Agents are developingprograms to address problems unique to theircounties. Examples of activities planned forthis winter include: teaching financialmanagement and farm record keeping, developingand publicizing community resource inventories,encouraging the growth of support groups, andorganizing a network of neighborhood hotlines.Dr. Lucas, Dean and Director of the NebraskaCooperative Extension Service, has suggested tothe county staff that at least 50 percent oftheir resources should be directed to helpingfarm and ranch families with financialmanagement.

Farm Stress Workshops

As shown in Figure 2, Extension specialistshave conducted numerous farm stress workshopsduring the past two years. Some of thesesessions were specifically for training helpingprofessionals (clergy, mental health workers, andExtension agent1), who in turn work directly withpeople in rural areas. The majority of thesessions helped farm and ranch families recognizesymptoms of stress 'verload and how they coulddevelop skills for remaining in control of theirlives. Since October 1983, 2,347 people haveparticipated in these farm stress workshops;since October 1984 the number is 1,630.

Dr. Leon Rottmann, a Rumen Development andRealth specialist in Cooperative Extension, has

44 Nebraska

facilitated 270 stress-management workshopsacross Nebraska in the past decade--48 workshopslast year alone. Rottmann reports the demand forsuch workshops is literally overwhelming,.

Assistaace to Castomera of Failed Racks

Assistance was provided to clients of failedbanks in eleven communities. Extension agentsand specialists assisted families in preparingtheir "financial portfolios" for presentation toother lenders, filling out FmliA loan applicationforms, and evaluating alternatives forreorganizing their operations. A set ofguidelines for an Extension agent's response to abank closing were developed and distributed toagents in September.

Sebgeide Series ea Legal 'saws Relating toliainicial Stress

Drafts of six Nebguides are currently beingreviewed. These guides address commonly askedquestions about legal and tax problems associatedwith financial stress. Additional Nebguides willbe added to this aerie,. The purpose of thisseries is to provide an unbiased source ofinformation on sensitive topics such asbankruptcy, tax implications of loan write-offs,property interests, and how to select a lawyer.

LOIIG-TERX PROGRAM

Meaning for Tomorrow

The Nebraska Cooperative Extension Servicehas developed a comprehensive education/

consultation program to help families improve thelong-term profitability of their farm or ranchbusiness. Six hundred farm and ranch familiesparticipated in Managing for Tomorrow lastwinter. Managing for Tomorrow is continuing thiswinter.

The Managing for Tomorrow program is helpingfarm and ranch families develop long-termmanagement strategies for survival and profit.Financial analysts instruct, encourage, and coachthe families in evaluating their personal andfinancial situations. Family members jointlydevelop goals for their business and family.These goals become the measuring sticks fordetermining their success. This process was avaluable experience for many families. Commentssuch as, "We haven't talked about the farm thismuch in twelve years of marriage," and, "I had noidea my husband felt that way about the farm,"were heard often. Following is a brief casehistory which demonstrates the value that goalsetting had for one family:

A south central Nebraska farmer in hismid-50s was relating a story to illustratehis satisfaction with having participated inManaging for Tomorrow. A paraphrasedversion of his remarks is presented here.

My wife and I and our two single sonswho are in their late 20s were enrolled in

50

Managing for Tomorrow. At the end of thefirst workshop, when nearly half the timehad been spent on GOALS, I went homethinking that it wasn't worth going back.But I did go back, and at the end of thesecond workshop, when we had again spentnearly half the time working on GOALS, Iwent home convinced that I wouldn't go back.But I did go back, and all of us completedthe four workshops.

The real story, though, is this. Forthe last several years the wife and I havejust assumed that anything we wanted theboys were against, and that anything theboys wanted we would be against. As weworked on the GOALS, we came to realize thatdeep down we all wanted the same things andthat we really were headed in the samedirection.

Around our place it's been the mostpeaceful summer that we've had in years.And I'd recommend Mauaging for Tomorrow toanyone without qualification. Everyone infarming ought to be in it.

The goal-setting process was also valuablefor families who found that it was necessary toscale down operations or to get out of farming."The Managing for Tomorrow program helped us inestablishing new goals and to maintain apositive attitu4e toward our transition," was acomment from one family who decided, afteranalyzing several alternatives, that they shouldnot continue in farming.

Guiding families through the process ofevaluating their human and financial resourcestakes time. Four all-day workshops, each a weekapart, compose the first part of the program.Financial analysts then meet with familiesindividually to guide them through the analysisof their personal situation. Managing forTomorrold 111 an educational program. The goal ofthe program is to provide families with the toolsand skills they need to repeat this planning andevaluation process on their own year after year.The financial analysts do not tell the familieswhat to do. They help the families through adecision-making process. "We knew we hadproblems, but didn't know that we needed to takeaction immediately," was the comment from afamily whose financial analysis showed that their$200,000 net worth was eroding at the rate of$50,000 per year.

The participating families pay a fee of $200each. The actual cost of the program is about$1,000 per family. The remainder of the cost ispaid from grant funds and reallocation ofExtension staff resources. Grants have beenreceived from state legislative appropriat4.ons,the Nebraska Department of Agriculture, and theExtension Service (ES)/USDA. We hope that grantfunding will continue so that more families cantake advantage of this program in years to come.We feel that this program will produce a positiveimpact on the Nebraska agricultural sectorthrough the development of a core group of farm

and ranch operators who will be "managing for

tomorrow."

Women is Agriculture - -Building the Future

Farm/ranch women are interested in taking amore active role in the management of farms andranches. This became apparent in the evaluationsreceived in the Managing for Tomorrow program.The women generally felt that they would like tolearn some management skills in an environmentwhich included other women like themselves. Aconference was held in Kearney in September,"Women in Agriculture--Building the Future." The

conference was planned for 100 persons. Twohundred eighty women attended, representing morethan two-thirds of the counties in Nebraska. Theinterest in this type of conference was so greatthat Extension agents held six more conferencesin their districts.

It is certainly logical for the farm/ranchwoman to get involved in management. When weconsider the wide range of management skills thatare required in producing, financing, andmarketing on a diversified farm, it is more thanone person can stay on top of at all times.There are gains to be realized from division ofmanagement, just as there are from division oflabor. These conferences are helping develop avaluable resource.

Coals Conference

Another outgrowth of the Managing forTomorrow program was a conference in September inwhich 45 persons from 12 states and Canada cameto Lincoln to be trained in the use of the goal-setting materials. The concept of helpingfamilies establish realistic goals as the firststep in working with them is sound. Thematerials developed for the Managing for Tomorrowprogram are the most comprehensive and effectiveset of goal-setting materials that has ever beendeveloped specifically for use by farm and ranchfamilies.

Two states, Ohio and South Carolina, haveheld training sessions on the goals riaterialtaught by members of our Managing for Tomorrowstaff.

Farm Business Association

The Cooperative Extension Service continuesits sponsorship of the Nebraska Farm BusinessAssociation. This is a self-supporting group of330 farm families who are dedicated to keepingrecords and using them for better management oftheir businesses. This program began in 1976 andcontinues to be a valuable resource for thoseenrolled. A consultant, hired by the families,works with each of them on analyzing andinterpreting their records.

51Nebraska 45

Operative Shoehorn

Many families who participated in Managingfor Tomorrow realised that they needed betterrecords. They wanted to learn to do their ownrecords. Operation Shoebox has been developed tomeet this need and will begin in January 1986.It is a do-it-yourself records system.

Instructors will provide instruction and computerresources for the families. The participatingfamilies will pay the variable costs of thisprogram.

Managing for Tomorrow II

Many of the families participating in

Managing for Tomorrow expressed a need for acontinuing relationship with the program. Therewere areas of subject matter in which they wouldlike additional training and they wanted anopportunity to update their analyses each year.A two-day program was offered to Managing forTomorrow alumni in January. It gave them arefresher on goal setting, computerized financialanalysis, and a day of instruction on marketing.

Interactive Videodisc Instruction in Cash-FlowPlanning

Our staff is developing an interactive

videodisc instruction program which is on thecutting edge of technology. The videodisc willteach farmers and ranchers how to develop and usea cash-flow plan. This project is funded with agrant from ES/USDA. The motion and color of thevideodisc, combined with the capabilities of themicrocomputer, make effective, realisticinstruction possible at any time and place.Evaluations of previous instructional effortswith interactive video have shown that subjectslearn faster and retain more than with liveinstruction. This, and possible futurevideodiscs, should make it possible for farmersand ranchers to learn and relearn procedures,like cash-flow planning, without the time andtravel expense of Extension specialists. This isa long-run investment and is a nationaldemonstration project. It is an example of theleadership role of the Nebraska staff.

Tracking Household Expenses

Dr. Kathy Prochaska-Cue, an Extansion FamilyEconomics specialist, has worked with the Agspecialists on their Managing for Tomorrowprogram and put together program ideas for bettertracking of household expenses, cutting costs intime of crisis, and finding community resources.

Rome-Based Businesses

Dr. Janet Wilson, a Consumer EducationExtension specialist at the University ofNebraska-Lincoln (UN-L), has developed a workshopon starting a home-based business, and haspresented her program at 20 different conferences

46 Nebraska

all over the state of Nebraska. Farm women areespecially interested in the program.

EESEARCE

Building Family Strengths

Under the direction of Dr. Nick Stinnett andother researchers in the Department of HumanDevelopment and the Family, 30 different master'stheses and doctoral dissertations have focused onfamily strengths and strong families; 4,000families, from every state in the United States,have participated in these studies. One recentstudy, by Dr. George Rowe and Dr. Herb Lingren,focused on the strengths and stresses of 500rural families. The most significant finding ofthe family strengths research over the years hasbeen the qualities of strong families:

commitment, appreciation, communication, timetogether, spiritual wellness, and the ability tocope with stress and crisis.

The research is best summarized in arecently published book, Secrets of StrongFamilies (Boston: Little, Brown & Co. . Thefamily strengths research at Nebraska and otheruniversities was the subject of a recentcongressional hearing before the Select Committeeon Children, Youth and Families in the U.S.capital.

Dr. Herb Lingren, a Family Life specialistin Cooperative Extension, conducts four to fivemajor conferences on building family strengths inNebraska each year. The Department of HumanDevelopment and the Family also sponsors theNational Symposium on Building Family Strengthsin Lincoln each May, drawing several hundredpresenters and participants from 35 to 40 states.Sister conferences on family strengths have beenestablished at Pennsylvania State University andPepperdine University in Los Angeles.

The family strengths research is seen as along-term approach to enhancing the crisis-meeting resources of families.

The Changing Structure of Rural NebraskaCommunities: Evaluating Economic, Sociological,and Psychological Impacts from the CurrentAgricultural Crisis

This research will evaluate the effects ofthe farm crisis on rural Nebraskans and theircommunities, and delineate possible longer-termstructural changes occurring in ruralcommunities. Faculty involved in the researchproject include: Dr. Bruce Johnson, Departmentof Agricultural Economics, UN-L; Dr. Duane Olson,Department of Agricultural Economics, UN-L;Dr. John Yanagida, Department of AgriculturalEconomics, UN-L; Dr. David Scott Hargrove,Department of Psychology, UN-L; and Dr. RichardMeile, Department of Sociology, UN-L.

52

Family Strengths in the Middle Tears

Finally, it is important to mention the workof the North Central Regional Research Project(NC-164). The project has findings which arevery germaine to those involved in trying to easethe farm crisis.

University-based researchers in nine statesare in the final stages of a study on familystress in the middle years. More than 1,900families responded to a 27-page questionnairewhich looked at the stressors families faced andhow they responded. The study is the largest ofits kind ever undertaken and its preliminaryresults are worthy of serious study.

The research focused on intact families withhusband, wife, and at least one child stillliving at home. The parents were in their middleyears and children were about to leave home orhad recently left. Past studies tended to focuson families with young children or families ofthe elderly.

This study dubbed the middle-aged parent

"the sandwich generation" and found that it isdifficult for couples in this period to find thetime and energy for their own wants and needs.

Types of Stressors

The researchers studied families in Indiana,Iowa, Kansas, Kentucky, Louisiana, Michigan,

Minnesota, Missouri, and Nebraska and found thatthe families who had large numbers of changesoccurring during the last three years experiencedhigher levels of stress than other families. Thefamilies rated each type of change according totheir perceptions of the stress they cause.Below is the ranking the 3,800 individual parentsin 1,900 families gave to each stressort

1. Family member involved with the courts

2. Family takes a major financial loss

3. Member experiences major emotionalproblems

4. Child has serious illness/accident

5. Major wage earner has serious accident!illness

6. Marital separation

7. Death of adult brother or sister

8. Major wage earner loses/quits job

9. Death of husband or wife's parents

10. Aged parent becomes ill

11. Expenses exceed total family income

12. Relatives become intrusive

Both husbands and wives reported these events tobe stressful, but they ranked the events inslightly different order: wives perceivedfamily-related matters as more stressful, ingeneral, while husbands saw job-related andfinancial concerns as more stressful.

The researchers found that stressors have anadditive effect. That is, if they tend to pileup, one on top of the other, the final straw canbreak the camel's back. The higher the stressorspile up, the more likely a family is toexperience emotional, relational, and healthdifficulties. In short, the more troubles wehave, the more likely we are to become physi,allyand emotionally sick. And our familyrelationships suffer because of the stress.

The researchers found that one typicalscenario in the middle years goes like this: Afamily with teenagers experiences the typicaladolescent problem we all can describe,including pimples, dating, busy schedules, andeveryday worries. About the time the oldestyoungster is to leave home and the family has toadjust emotionally and financially to molft, agrandparent falls and injures a hip. Thisrequires hospitalization and at least temporaryplacement in a nursing home. If a parent loses ajob at this time due to an economic downturn, orthe family business goes to pot, the family mayfeel overwhelmed by problems.

Stress-Related Symptoms

The middle-aged parents in the study wereasked to report symptoms of stress they saw inthemselves and in each child still living athome. The list below begins with the most commonsymptoms of stress and proceeds to the leastcommonly reported symptoms:

1. Irritability

2. Problems with weight

3. Muscle tension and anxiety

4. Use of prescription drugs

5. Difficulty relaxing

6. Use of tobacco

7. Depression

8. Headaches

9. Frequent colds or flu

10. Difficulty sleeping

11. Use of alcohol

12. Accident proneness

Parents generally reported more symptoms ofstress than children. Wives reported moresymptoms than husbands.

53Nebrulis 47

Financial Pressure

The data for the study were collected in1982, mainly in the Midwest, and are still beinganalyzed. This was in the midst of an economicdown-turn foie the midwestern agricultural sconomyin general and the United States as a whole.

Many families experienced financial pressures anddeveloped a number of ways for saving money intight times:

1. Eat at home more often

2. Spend less on entertainment andrecreation

3. Spend less on clothing

4. Spend less on personal improvement

5. Spend 'ess on laundry and dry cleaning

6. Do more clothing repairs and alterations

7. Seek less medical care

Other tips the families offered for savingmoney included: using store coupons more often,using self-serve gas, increasing spending forstore refunds, buying on sale and specials,calling long distance at cheaper rates, homegrowing fruits and vegetables, increasing canningand freezing of foods, making gifts instead ofbuying them, servicing and repairing the caryourself.

Coping with Stress

The families were asked how they coped withthe many life stresses in general. They rankedtheir stress-management techniques in descendingorder:

1. Attending church services

2. Sharing concerns with close friends

3. Facing problems head-on and trying to findsolutions

4. Participating in church activities

5. Sharing difficulties and doing things withrelatives

6. Seeking information and advice from thefamily doctor

7. Seeking information and advice frompersons in other families who have facedsimilar problems

8. Asking for and accepting help fromneighbors

9. Seeking help from community agencies andprograms

10. Seeking professional counseling

48 Nebroka

The researchers concluded that physical andemotional problems can be indicators of highstress levels and if the signs appear in afamily, people need to find help. First andforemost the researchers recommended talking.Don't try to do it all alone; it simply can't bedone. Talk to other family members, torelatives, to friends. Counselors and supportgroups in the community can also be helpful. Theresearchers also stressed the importance ofproper nutrition, adequate rest and sleep, plentyof exercise, and fun activities in what can getto be a dreary, repetitive life. (The source forthis section was the North Central RegionalCommittee 164, Agricultural Research Service,U.S. Department of Agriculture, Washington, D.C.The material was adapted from a preliminaryreport by the Cooperative Extension Service, IowaState University, Apes.)

EXTENSION PROGRAMS AND RESEARCH PROJECTS FOR THEFUTONS

The possible areas of study and programmingare limitless. In Nebraska we see a potentialfor a number of research projects and Extensionprograms. The future in Nebraska will includecontinuing the programs that we now have in placeand, as funds allow, adding new programs andresearch projects.

The major research area that we see is a"rural refugee" study, dealing with displacedfarm/ranch families. This study would look athow families cope with the stress of change,where they go for support, how they deal withreassessing their goals, and how they go aboutfinding a job. This study could give us insightinto dealing with the large number of familiesthat will be displaced by this farm crisis. Aninteresting aspect could be the differencebetween states where displaced farmers have readyopportunities for employment within commutingdistance and states where families will have torelocate to find work.

The effect of the farm crisis on communitiesneeds to be researched. A program that helpsassess the strengths and weaknesses of acommunity is needed. If a community can decidewhat their needs are &no how they can meet them,they would then have goals that they could worktoward.

In the area of Extension programs we see agreat need in facilitating the sharing ofsolutions. In Nebraska we have found that farmfamilies are their own best teachers. Familiescan be very creative in finding solutions on howto stay in farming, how to get back into farmingonce they have sold out, and how to adjust tolife without farming. While we must continue toteach the basics of farm management to farm andranch families, we also need to address thepersonal side with the help of people who havebeen through "the fire" and have come out on topwith their family life and self-esteem.

54

The farm crisis has given us fertile groundfor research and Extension programming. Thetopics discussed above are just a few of thepressing problems ag families are facing. Ourresources do not permit us to do everything wewould like to. We must set priorities and moveon. Every day that we waste, another family isnot helped. We must be aware of the human tollthis crisis is taking and how we are impeding theprocess by not reaching out. Extension andresearch staff 'embers need to work closely sothat Extension specialists can usa preliminaryresearch tesults in helping families now. Wemust break down the old boundaries of waitingfive to seven years for results; the cost is toohigh. We must use the knowledge that is gainedthe first year and the second year to help thefamilies that are going through the process. Nowis the perfect time to blend research andExtension together for the good of the familiesin the farm crisis.

55Nebraska 49

Coping with the Farm Crisis in North Dakota

by F. Larry Leistritz, Arlen Leholm, and Harlan Hughes

INTRODUCTION

The farm debt, high interest rates, and thecost-price squeeze in agriculture have caused afinancial crisis for many North Dakota farmfamilies. Many farm families, as well as manyfamilies in rural towns, are faced with decliningincome and the related problem of inadequatefamily living incomes. North Dakota farmers andrancher. are facing their most severe financialcrisis since the 1930s.

A 1985 telephone survey of randomly selectedNorth Dakota farm and ranch operators identifiedkey financial and demographic characteristics offarm operators and their families. Nine hundredthirty-three farmers completed the survey for aresponse rate of 77 percent. Initial screeningquestions were used to ensure that all

respondents were less than age 65, were operatinga farm, considered farming to be their primaryoccupation, and sold at least $2,500 of farmproduce in 1984. Some of the findings of thesurvey are:

1. Seventy-two percent of the farms had grossincomes in the range of $40,000 to$250,000.

2. Although net cash farm income averaged$14,897, 24 percent of farm operators inNorth Dakota experienced zero or negativenet cash farm income in 1984.1

3. Respondents' estimates of the value oftheir total assets as of January 1, 1985averaged $423,042 and their debts averaged$139,870. The average North Dakotaoperator was carrying approximately 33cents of debt for every dollar of assetshe controlled.

4. At current prices, input costs, and assetvalues, most commercial farmers begin toexperience difficulty meeting principalrepayment commitments at debt-to-assetratios (debt ratios) around 40 percent.Above 70 percent, most farmers havedifficulty meeting even their interestpayments and other current expenses. Asindicated below, approximately 38 percentof the North Dakota farmers had debt

1Net cash farm income is defined as gross farmincome less gross cash farm expenses anddepreciation. Net cash farm income does not takeinto account principal payments or changes ininventory of grain and livestock products duringthe year.

50 North Dakota

ratios in the ranges generally associatedwith considerable financial stress.

Debt-to-Asset Ratios

No Debt

1-40 percent41-70 percent71-100 percent

16.7%

45.223.414.7

5. The relationship between the debt-to-assetratio and farm families' ability to meetcash-flow needs is summarized in Table 1.Two-fifths of all farm operators surveyedhad levels of total family income whichwere insufficient to cover family livingexpenses. For farm operators with nodebt, about 20 percent appear to beexperiencing problems in meeting immediatecash-flow needs. Sixty percent of thosewith debt ratios over 70 percent areexperiencing cash flow problems.

When principal payments were also takenint account (see bottom half of Table 1),more than half of the operators surveyedhad income levels insufficient to coveroperating costs, family living expenses,and principal parments. Of those withdebt ratios over ,0 percent, about 90percent could not cover these cashexpenses. It has been estimated that $375million would have been needed in NorthDakota alone to offset the shortfallexperienced by these farm operators in1984. The significance of this becomesquite apparent when one considers the factthat the current annual general fundbudget for North Dakota is about $563million (Leistritz et al. 1985).

6. The debt ratio is strongly associated withthe age of the operator and the year thathe started farming. Of the North Dakotaoperators with no debt, 60 percent areover age 35 and 82 percent are over 45.On the other hand, 67 percent of thosewith debt ratios over 70 percent are underage 45. of the operators withno debt, 70 percent began farming before1959, 'while out 64 percent of those withdebt ratios over 70 percent began farmingafter 1969.

7. When the education levels of North Dakotafarm operators and spouses are categorizedby debt ratio, it is evident that the morehighly leveraged famili2s (whA tend to beyounger than averag,' generally haveattained h;;her levers of education. Thisadditional ew.ca.ion should provead "sntageous if and when these operatorsand their families consider leaving thefarm for other employment.

56

8. A major concern to the public services inrural communities, such as school systems,is the impact that farm families leavingthe community will have. The more highlyleveraged farmers have above-averagenumbers of school-age children. If farmfamilies from the more highly leveragedgroups are forced to leave their ruralcommunities, the reductions in schoolenrollments could be substantial.

9. Approximately 25 percent of the operatorswere employed off the farm in 1984 (Table2). An association between off-farm workand the farm's debt ratio is obvious. Thepercentage of operators working off thefarm ranges from 16 percent for farms withno debt to 36 percent for those with debtratios over 70 percent. Similar patternsof off-farm employment were noted for farmoperators' spouses.

IITEESION PROJECTS

The objectives of North Dakota's CooperativeExtension Service's program in financialmanagement are to help farmers and farm familiesbetter ut.derstand a 'road range of managementtopics, including: financial management anddecision making, risk management, enterpriseanalysis, determining costs of production, cropand livestock budgets, farm records, economicvalue of land, rental rates and leases, farmbusiness organizations, partnerships, estateplanning, income tax management, and other topicsrelated to achieving farm and family goals.

Specific program emphases in farm financialmanagement during the 1984/85 and 1985/86Extension years were:

1. Two-day financial management workshops:Approximately 45 two-day and severalone-day financial management workshops forfarmers and farm couples were held overthe state in the 1984/85 program year.Over 2,000 people attended these intensiveworkshops. Five two-man teaching teamswere comprised of farm management,marketing, and community developmentfaculty, and two area farm managementagents. Thirty-one additional workshopswere held in the 1985/86 program year.

Major subject matter for theseworkshops included farm financialmanagement, using the balance sheet,income statements and cash-flow budget,setting farm and family goals, andunderstanding family financialmanagement.

2. Farm financial analyst program: In1984/85 North Dakota's CooperativeExtension Service initiated the FarmFinancial Analyst Program in response tothe financial crisis on many North Dakotafarms. Grant funds were received to helpsupport the program which was implementedwith the cooperation of the agriculturalcredit agencies. Fifty-six analysts were

trained to work with farm families on anindividual basis to help analyze farmers'financial situations and to identifyalternative solutions to farmers'financial problems. The analysts workedwith about 700 farm families, averaging 16hours per farm family. This program isbeing continued in 1985/86 withapproximately 50 analysts and we expect toserve over 1,000 farm families.

3. Farm and family goals and family financialmanagement: This program was initiated incooperation with the Extension HomeEconomics faculty. It includes emphasison a procedure to encourage families toidentify farm and family goals and to usefamily financial management to helpachieve these goals. This was included aspart of the two-day financial managementworkshops. Also, field staff were trainedto conduct local meetings for farmcouples.

4. One-day farm management, enterpriseanalysis, and credit use workshops:Workshops include enterprise budgeting,cost analysis, time value of money,coordinating management, and developingwritten marketing plans.

5. Farm records and analysis: County agent

training on farm records were conducted sothat these agents could teach farm recordsto local clientele and provide informationon record keeping and analysis to farmers.A new record book was developed this pastsummer in cooperation with adult vo-agstaff. This new record book correspondsdirectly to the cash-flow record keepingand the financial analysis that was taughtin the finance 1 management workshops.

6. Annual two-day Northwest Farm ManagersConference: This annual event, whichincludes invited speakers on current farmmanagement concerns, is implemented byresearch and Extension staff incooperation with the Farm Managers Boardof Directors.

7. Conferences with agricultural creditagency staff: Six conferences are heldover the state each fall for agriculturalcredit staff from banks, PCA, FmHA, andFede-al Land Banks. These are afternoon-evening sessions for discussion offinancial conditions of farmers, commodityprice outlook, and an overview ofExtension programs on farm management andmarketing.

8. Economic input for production agricultureprograms: Cooperate with Extension staffin production disciplines for economicanalysis of crop and livestock productionpractices.

57 North Dakota 51

WW= ACTIVITIES

Major research activities which have beenundertaken to deal with the current financialcrisis in North Dakota's agriculture are:

1. A telephone survey of randomly selectedfarm operators conducted March and April1985 to identify key characteristics offarm operators and their families and toprovide insights concerning (a) adjust-ments likely to be faced by the affectedfarm operators and their families and(b) impacts likely to be experienced byagriculturally dependent ruralcommunities. Results from this study weresummarized above and considerably moredetail is available in several researchreports and papers (Lehol et al., 1985;Leistritz et al., 1985).

2. A study of farm - dependent communities in

North Dakota was initiated October 1, 1985with partial support from the Agriculturaland Rural Economic Division of theEconomic Research Service, USDA. Thisresearch will focus on the relationshipsbetween the farm sector, the agribusinesssector, and rural communities, withspecial emphasis on the relationshipbetween farm financial stress andcommunity economic well-being.

3. North Dakota State University researchershave cooperated in analysing results ofthe Farm Finance Surveys conducted by theStatistical Reporting Service (SRS) incooperation with the North DakotaDepartment of Agriculture (Pedersonet al., 1985).

4. A program of legal-economic research hasfocused on alternatives for financiallystressed farmers. An early product ofthis work is a report on "Tax Implicationsof Liquidating a Farm Operation"(Saxowsky et al., 1985).

CONTACT !MOSS

A. Research

1. Larry Leistritz (701-237-7455)2. David Watt (701-237-7470)3. David Saxowsky (701-237-7466)

S. Extension

1. Arlen Leholm (701-237-7379)2. Harlan Hughes (701-237-7380)

52 Nosh Dakota

Table 1. Cash-flow Analyses by Debt-to-Asset Ratio, North

Dakota

No Debt I-40% 41-70% 71-100% Total

Simulation I

Total farm family

Income less familyliving expense

Average 530,023 513,243 5701 S-5,258 $10,102

Distribution:

Negative 19.9% 35.9% 53.6% 60.1% 42.0%

0 to $19,999 35.4 37.0 35.2 32.1 35.6

520,000 andWNW 44.9 27.1 11.2 7.8 23.5

Simulation 2

Total farm family

income less family

living expense and

principal payments

Average 530,023 $4,909 S-19,9'0 5-31.496 5-2,075

Distribution:

Negative 19.8% 51.2% 80.5% 89.1% 59.2%

0 to 519,999 35.4 28.6 15.1 9.31 23.9

520,000 and

over 44.9 20.3 4.4 1.6 18.0

Table 2. Off-Farm Work Participation of North Dakota Farm

Operators and Spouses by Debt-to-Asset Ratio

No Debt 1-40% 41-70% 71-100% Total

-----------------PercentOperator amp toyed

off the farm In

1964 15.7 22.3 27.9 36.2 24.6

Spouse employed

off the farm In

1984 21.0 30.3 34.6 38.0 31.0

REF MEWLS

Tare Finance Survey, January 1986." 1986. North DakotaCrop and Livestock Reporting Service, February.

Leholm, Arlen 8., F. Larry Leistritz, Brenda L. Ekstrom, and

Hervey G. Vreodhenhil. 1985. Selected Financial and Other

Socioeconomic Characteristics of North Dakota Farm and

Ranch Operations. Ag. Econ. Report No. 199. Fargo:

North Dakota Agricultural Experiment Station.

Leistritz, F. Larry, Harvey G. Vreugdenhil, Brenda L.

Ekstrom, and Arlen G. Leholm. 1985. Off-Farm Income end

Employment of North Dakota Farm Families. Ag. Econ. Misc.Report No. 88. Fargo: North Dakota Agricultural

Experiment Station.

Pederson, Glees, David Watt, and Harvey Vreugdenhil. 1985.

Term Financial Stress In North Dakota." North DakotaResearch 43(41:3-6.

Saxowsky, David M., and David Watt. 1985. IIIILvlicationsof Liquidating Farm Operation. Ag. Econ. Misc. Report No.87, Fargo: North Dakota Agricultural Experiment Station.

58

Ohio Farm Financial Management Programs

by David R. Miskell and LeRoy Hushak

INTRODUCTION

The farm financial crisis in Ohio is a majorconcern to farmers, agricultural lenders, ruralcommunity leaders, and many farm, civic, andreligious organizations. The news media havedevoted considerable attention to the farmcrisis.

Weather conditions in Ohio since 1980 havehad an impact; severe hail and wind storms oneyear and extremely dry hot weather during twoother years hurt a number of farmers. Relativelylow crop prices, increasing production costs, and

deteriorating land values have forced a number offarmers to liquidate as of 1985.

Ohio has many part-time farmers; over 50percent of the income to Ohio farmers comes fromnonfarm sources. As a result, small part-timefarmers may have a negative farm income, but theoff-farm income subsidizes the farm operation andprovides for family living expenses. Farmers inOhio and/or their spouses have the opportunityto obtain off-farm employment without having tocommute long distances. There are, however,several thousand farm families facing seriousfinancial problems. This influences familyrelationships, including the attitudes of thechildren.

Although a few agribusinesses, includingbanks, have suffered losses due to farmers goingbankrupt, there has not been a major problem withagriculture-related and dependent businesses.

Most farm organizations, and to a greatextent church groups, have expressed concern overthe farm situation. These organizations andgroups are at a loss for what to do.

Situation

A March 1985 survey revealed that amongOhio's approximately 22,000 family-sizedcommercial farms (gross annual sales $40,000 orabove) approximately 10 percent or 2,200 farmswere having extreme financial problems(debt/asset ratios above 70 percent) (Lines andPelly, 19851. Nineteen percent (4,700 farms)were having serious financial difficulties(debt/asset ratios of 40 to 70 percent). Thisindicated that approximately 71 percent or 15,600farms had no apparent serious financial problems(debt/asset ratios under 40 percent). When allof Ohio's 90,000 census farms were included, 24percent with non-real estate debt and 16 percentof those with real estate loans were delinquentin their payments. Three percent or 2,700 farmswere involved in some type of legal action in

connection with delinquent loans. Ohio's largercommercial farmers were experiencing much morestress than the smaller part-time farmers, asfarms with debt/asset ratios above 40 percentrange from 12 percent of farms under 100 acres to59 percent of farms of 750-1,000 acres. Theproportion of all Ohio farms with debt/assetratios above 40 percent varied across differentparts of the state; the eastern part of thestate, where most of the small farms are located,had the lowest debt/asset ratios, whereas in the

western, and particularly southwestern, part wefound the highest debt/asset ratios.

A similar survey done in February 1986indicated that there were approximately 20,000farms with cash farm sales of $40,000 to$500,000. This implies there were 2,000 fewercommercial farmers one year later (Ohio CropReporting Service 1986). Of these 20,000commercial farmers, 9 percent had debt/assetratios exceeding 70 percent. Twenty-one percenthad debt/asset ratios of 40 to 70 percent, and 70percent of the farms had debt/asset ratios ofunder 40 percent. The survey also indicated thatapproximately 5 percent of all farmers in Ohioare planning to quit operating in 1986, 3 percentof them because of financial difficulties. Thestudy also revealed that 4 percent orapproximately 800 farmers are delinquent on realestate loan payments and 7 percent or 1,400farmers are delinquent on their non-real estateloan payments. Based on this data, as many as 30percent of Ohio's family-sized commercial farmsare having serious cash-flow problems and 9percent of these have extremely severe financialproblems and are moving towards insolvency.

Summary

The Extension Service in Ohio has launchedan extensive farm financial managementeducational program over the past several years,starting with workshops on coordinated financialstatements. This has been followed up withadditional computer programs to assist farmers inbetter realizing where they stand financiallywith their farm operations. On March 1, 1985 aCES Farm Program, which included the creation ofa toll-free hotline and the organization of"immediate response" teams, was set in motion toassist farmers facing financial crises. The CESFarm Program involved the county Extensionagents, Agriculture, Home Economics, andCommunity and Natural Resource Development(CNRD), and district personnel working togetherwith farm families who requested assistanceeither through their local county Extensionoffice or through the hotline. The state taskforce gave leadership to the program and in eachof the five Extension districts in Ohio adistrict task force was organized to coordinateactivities within the Extension district.

59 Ohio 53

A number of Extension educational andresearch efforts have been underway to assistfarm families facing severe financial crises.These programs have been multi-disciplinary andhave involved state, district, and county facultyworking jointly with farm families who have theirbacks to the wall. Much of the Extensionprogram was directed to the CES Farm Program,which involved one-on-one consultation with farmfamilies. In addition, workshops were plannedutilizing the FINPACK computer program to assistfarm families needing a better understanding oftheir financial picture and possible alternativesavailable to them. The CES Farm Program has beengiven much acclaim and, as a result of theinitial success of the program, tbt statelegislature in Ohio appropriated funds primarilyfor what is known as a "credit mediationdivision" as a part of a Farm FinancialManagement Institute. The Farm FinancialManagement Institute has conducted threeworkshops which train agricultural lenders,county agents, and vocational agricultureteachers to assist farmers with betterunderstanding their financial situation.

"'TENSION FINANCIAL NAMAGEININT MOMS

Major Extension projects began withinservice training of Extension agents in theearly 1980s. The coordinated financial statementwas the central focus of the initial farmfinancial management program. It was criticalthat county Extension agents be able to aidfarmers in preparation of a balance sheet inorder to assist the farmer in knowing where hestood. Use of the coordinated financialstatement was somewhat discouraging; workshopswere held in many counties and attendance waspoor. Nonetheless, many of the agents did workindividually with a number of farmers as well aswith small groups of farmers in an effort tohelp farmers determine their net worth. InOctober 1985, a two-day training session on theuse of the FINLRB component of the FINPACRcomputer program was taught to approximately 70county Agriculture Extension agents. A two-dayfollow-up session in December was held to assistagents in better understanding the FINFLO and theFINTRAN. In addition, several agents who did notattend the initial FINLRB training were givenspecialized training to equip them to work withfarmers on the use of the FINLRB program. As aresult of this training, a number of countiesdeveloped what is known as the "Managing for theFuture" program. This involves four all-daysessions incorporating goals and needs assessmentin addition to the FINPACK program. Countyagents, Agriculture, Home Economics, and CNRD,at ag with the district specialists, have givenleadership to this training program.

Even with the designated group sessions, itwas determined in February 1985 that additionalefforts to help families facing severe criseswere needed. As a result, the CES Farm Programwas initiated on March 1, 1985. A toll-freehotline was installed at the university, andpublicity was increased to encourage farmers tocontact the local county Extension office forfinancial assistance. "Immediate response" teams

54 Ohio

were organized, consisting of three countyAgriculture agents, one Home Economics agent, anddistrict specialists in Farm Management, CNRD,and Home Economics. Five of these district teamsserved the state. In addition, a state taskforce provided leadership to the overallprogram.

In the first month of the program there were398 calls for assistance, of which 286 were tothe hotline. There were additional calls thatwent directly to county agents' offices and werenever reported by some of the counties. Acomputerized program was set up to record allcalls on which either the hotline or the localExtension office filed a report. These have beensummarized to assist with an evaluation of theprogram. The toll-free hotline was publicizedthrough a press conference and wide distributionof a brochure throughout the state. Thestatewide farm organisations were also used toalert farmers to the opportunity of seekingfinancial help through the CES Farm Program. In

order to assist the immediate response team

members with their county programs, specialfunding was provided to these counties to assistwith hiring part-time help to replace the effortsof the county agents when they were involved withthe CES Farm Program outside of the county.

Due to the success and recognition of theCBS Farm Program, the state legislature in Ohiopassed what was known as the "State AgriculturalBill." It included, among other things, a linkdeposit program whereby farmers were providedcredit at approximately 3 percent under the goinginterest rate. The major portion of the billwhich affected the Extension Service was theestablishment of a Farm Financial ManagementInstitute to provide training for agriculturallenders, Extension agents, and vocationalagriculture teachers in assisting farmers. Oneprovision for the Institute and the CooperativeExtension Service was to provide credit mediationon an optional basis for either lenders orborrowers that requested the voluntary mediation.A special training program was held to equipcredit mediators for their responsibilities,since this was a new venture for Extension.

The Rome Economics :gents worked closelywith a number of local agencies in providingcounseling on stress management. A directory ofvarious agencies available at the local level wasprepared for each county and provided not only tothe immediate response teams but also to allcounties throughout the state. The agentsworking in CNRD provided assistance tocommunities by helping them identify someemployment opportunities, potential impact offarm foreclosures, or other agribustnesses thatmay face bankruptcy.

The Ag Law Institute was established at TheOhio State University. The Institute facultywere instrumental in helping identify members ofthe bar who had experience or were interested Inworking with farmers who were facing legalproblems. Although the Extension Service was notin a position to recommend any lawyers, we wereable to identify lawyers who expressed interestin working with farmers on financial-legalproblems. The Ohio Council of Churches and many

60

other farm organizations offered their assistancein trying to help identify farm families facingfinancial crises and referring these families tothe Extension Service for consultation. Closeworking relationships were maintained with theOhio Department of Agriculture, the Farm CreditSystem, and the Ohio Bankers, as these groupswere vitally interested in providing whateverassistance was needed. The Farm Credit Systemand the Farmers Home Administration declined toparticipate in credit mediation. This did limitthe effectiveness of the credit mediation. Theprimary success of the program was the ability ofour Extension agents to sit down and work withthe farm family to help identify options whichthey had regarding their delinquent payments.

In early 1986 the CES Farm Program brochurewas revised and widely distributed along withposters to alert farmers to the opportunity of

requesting assistance through the CES FarmProgram. With nearly every county AgricultureExtension agent now trained to be more effectivein farm financial management, fewer referrals arebeing made to the immediate response team. Thelocal Extension agents are more active is workingwith farmers within the county. Confidentialityis maintained. At the farmer's request, he maywork directly with an immediate response teammember rather than the local agent. Most of thehelp provided through the CES Farm Program isdone one-on-one at the time and place suggestedby the farmer. Very little counseling isattempted by telephone.

COMMUNITY ECONOMICS EXTENSION PROGRAMS'

Another means of assisting farmers in crisesis through improved nonfarm employmentopportunities in rural communities. CNRDExtension programs in Agricultural Economics andRural Sociology (AERS) have focused on a broadrange of public policies at the state,

multi-county region, county, or community level.Since the goal has been to provide educationalprograms that assist rural people andcommunities, the emphasis has frequently been onprograms and policies for nonagriculturalindustries. The economic well-being of manyrural Ohio communities and the vast majority ofmany Ohio farm families requires a rapidexpansion of the analysis and extension ofcommunity economic development issues, andespecially of programa and policies related tononagricultural industries.

There is relatively little attention givento the 26,000 agricultural firms outside farming.The potential contribution of AERS (and potentialclientele and political support) for expandedprograms in agribusiness management appears verylarge relative to the current audiences.

'This section draws heavily on materialprovided by George W. Morse.

The four program thrusts of Extensioneducational programs are: (1) Attraction of NewIndustry, (2) Starting a New Business,(3) Retention and Expansion of Existing Firms,and (4) Economic Impact Analysis. Programs 1, 3,and 4 emphasize the role and activitiescommunities can take in encouraging economicdevelopment. The participants for these programsare public officials and local economicdevelopment practitioners. Program 2 is focusedon individuals wishing to start new businesses.

Attraction of Now Industry

This program, started in 1976, has reachedthe largest number of Ohio citizens(approximately 883). Since nearly all of theseprograms focus on community leaders, the numberof citizens influenced by these educationalprograms is actually much larger than the directparticipants. A large number of additionalpeople have received publications and informationwith less depth than these major projects.

Two major educational events are used inthis program: (1) Community Economic DevelopmentCorrespondence Course and Seminar, and (2) OhioBasic Economic Development Course. These coursesfocus on a wide range of topics necessary forlocal practitioners to develop a strong programfor attracting new industry. The first coursehas a ten-week correspondence course followed bya two-day workshop. The second course is a five-day workshop accredited by the American EconomicDevelopment Council. These two workshops aresponsored by the Ohio Cooperative ExtensionService in cooperation with the Chamber ofCommerce Executives of Ohio, Ohio Banker'sAssociation, Ohio Chamber of Commerce, OhioDevelopment Association, Ohio EconomicDevelopment, Ohio Planning Conference, Departmentof Development, and Ohio Development FinancingCommission. A number of regional programs havealso been conducted on how to attract newindustry.

Starting a New Business

This topic lots been very popular during thelast two years. Suggestions for encouragingentrepreneurship are given in Extension Bulletin677 (Crawford, n.d.). Additional educationalmaterials are supplied by the Small BusinessAdministration and local businesspersons andprofessionals. A series of local workshops havebeen held starting home businesses. The factsheet series "Starting a Business in Your Home"(Passewitz et al.) was developed.

Retention sad Expansion of Existing Industry

An educational program for the retention andexpansion of existing industry was initiated in1982. This local community program is aimed atimproving the efficiency and profitability ofexisting industry. Through improved profits, theprobability of growth and survival is enhanced.

61 Ohio 55

A series of newsletters, a slide set, andtwo bulletins have been used to deliver theprogram. Although this program is in its earlystages, approximately 1,500 persons have receivedinformation on the R and E program. Fifteencommunities have started new ongoing developmentprograms as a result of our educational work.

konanic Impact Analysis

Two economic impact models have beendeveloped for use in Ohio communities. Theseare: (1) The Ohio Job Impact Model (OJIM), and(2) Ohio County Input-Output Models (I-10). TheOJIM model helps communities estimate thebenefits and costs of using economic developmentincentives. This model has been used in sixlocal case studies. Input-Output models havebeen used in three local case studies. Thesecase studies, using these two models, are nolonger being conducted through Extension becauseof their heavy resource requirements. Researchprojects using the input-output model willcontinue for state policy issues and agriculturalpolicy questions or for local issues when fundingis available for the research project.

Ifficiesty is Delivery

Several steps have been taken to improve theefficiency of information delivery. First, thenewsletter Economic Development Notes is beingused to help create awareness of the program aswell as to deliver specific educational items.While we mail only 500 copies per month, this

newletter reaches nearly another 9,500 personseach month in the magazine Ohio Cities andVillages.

Second, the slide set "Retention andExpansion: Vanguard of Economic Development" isbeing used to provide information to communitygroups that are interested in retention andexpansion topics. Groups that wish to have anopportunity for interchange are encouraged to usethe telelecture units after showing the slideset. While every group and county agent wouldprefer to have state specialists or districtspecialists attend the meeting in person, this isnot possible.

EC01110/11C DIRLOPMUT 11181ARCH

The Ohio State University faculty in AERSparticipated in several research efforts tofacilitate nonfarm employment growth in ruralareas. First, regional input-output models havebeen used to examine the economic linkages amongthe industrial sectors of regional economies.

Several models of substate regions have beendeveloped and used to estimate employment impacts(e.g., Hushak it al., 1983 and Ro et al., 1985).A current effort involves estimation of theeconomic impact of changes in agriculturalsectors in a multi-state input-output model.

56 Ohio

Second, econometric models of linkagesbetween employment in county industrial sectorsand local tax and expenditure policies, countydemographic characteristics, and county locationcharacteristics were estimated for the East NorthCentral region of the United States (Aki et al.1984). Finally, assessment of the effectivenessof local retention and expansion programs isongoing in Ohio and in several other states (NewJersey and Wisconsin). Morse (1985) found thatbusiness visitation programs generated positivenet payroll benefits over a sample of 20programs.

RWERENCES

Aki, Charles F., Leroy J. Hushak, and George Y. Norse. 1984.

"Employment Growth Impact of Local Fiscal Policies In

Non.Netro Counties of East North Central States." ESS -609.

Department of Agricultural Economics and Rural Sociology,The Ohio State University, Columbus.

Crawford, Sam. N.A. "Economic Development Through

Retention, Expansion, and Creation of Local Firm."

Extension Bulletin 677. The Ohio State University,Columbus.

Henderson, Dennis and Stuart D, Frank. 1986. TermTransition Under Financial Stress.. -An Ohio Case Study."

Department of Agricultural Economics and Rural Sociology,The Ohio Stets University, Columbus.

Hushak, Leroy J., Young Key Ro, and Zafar Y. Husain. 1983.

"An Input-Output Analysis of Regional Economic

Development." Research Bulletin 1155. Ohio Agricultural

Research and Development Center, The Ohio StateUniversity, Columbus.

Lines, Allan E. and Robert Polly. 1985. "1985 Ohio Farm

Finance Survey Results." ESO 1214. Department of

Agricultural Economics and Rural Sociology, The Ohio State

University, Columbus.

Norse, George W. 1985. "The Benefits and Costs of Retentionand Expansion Visitation Programa." Paper presented at the

Conference on Community Economic Development Through the

Retention and Expansion of Existing Businesses, ColumbuS,

Ohio. Department of Agricultural Economics and Rural

Sociology, The Ohio State University, Columbus.

Ohio Crop Reporting Service. 1986. "1985 Ohio Feem Finance

Survey Results." Report, February 24.

Passewitz, Greg, Barbara Drake, William Owen, and E. T.

Shaudys, Various dates. "Starting a Business in Your

Home." Fact Sheet Series.

Ro, Young Kay, D. Lynn Forster, Leroy J. Hushak, and George

W. Morse. 1985. "Environmental Regulation and Regional

Economic Growth: An Input-Output Analysis of the Ohio CoalMining Region." Research Bulletin 1170. Ohio Agricultural

Research and Development Center, The Ohio State

University, Columbus.

62

Responses to Farm Crisis by South Dakota Institutions

by Ardelle Lundeen

INTRODUCTION

Overview of Crisis Situation is South Dakota

Headlines in South Dakota daily newspapersspeak of farm auctions and foreclosures, thedemise of small rural banks, and the ills of theFarm Credit System. Dan Rather brought CBSEvening News to South Dakota for three days togive national coverage to the farm crisis. Allof this is appropriate since agriculture is thelargest single industry in the state.

While no general survey of farm producershas been undertaken by researchers at SouthDakota State University (SDSU), informationgleaned from studies of credit conditions,farmland market trends, and farm bankruptciesindicates that the proportion of South Dakota

farmers experiencing problems is similar to thatfound in most Midwest *times.

For example, in some recent years farmproduction expenses exceeded cash receipts fromfirm marketings (USDA 1985). Farmland valueshive declined 34 percent from the 1981-82 peak.Wile the percentage decline may not be as greatas that observed in some states, farmland priceshad not inflated to the extent they had in thosestates. In real terms, farmland prices inmid-1984 had fallen to 1975 levels (Swinson andJanssen, 1985).

Declining farmland values contribute to thecurrent financial stress. Buyers who purchasedland during 'ae late 19700 have had much--in somecases all--of their equity erased. They stillmust meet financing obligations which haveremained the same. Without taking on any newdebt, producers have seen their debt/asset ratioincrease.

Another less-discussed, but equallyworrisome result of declining farmland values, isthe reduction in wealth for older landowners whorelied on their equity in land to provide fortheir retirement years.

An increase in the quantity of land put onthe market may further decrease land prices ifmost producers are not in a strong enoughfinancial position to expand their holdings. Theresult may be more nonfarm investment infarmland.

Results of two farm lender surveys completedduring November of 1984 and 1985 indicated that24 and 25 percent, respectively, of farmborrowers were in the weak or inferior riskcategories in each of those years. The position

of producers varied among regions in the stateduring 1985 (Schmiesing, 1986).

Another indicator of the farm crisis is theincrease in farm bankruptcies from 37 in 1981 to193 in the first seven months of 1985. Acontinuation of the current rate for all of 1985would mean an 800 percent increase from 1981 to1985.

Overview of Research sad Ritteasioa Activities

Most of the research on the farm crisis islinked to ongoing long-term research projectsfunded by the Agricultural Experiment Station.Information relevant to the farm crisis hasemerged from these projects and is being utilizedby Extension and other personnel responding tofarmers' needs.

Scientists in plant and animal research feelthat ongoing research to improve productivity andlower costs is more important than ever in thistime of financial crisis.

Some short-term research in the EconomicsDepartment has been undertaken in specificresponse to the farm crisis. The results of thesurveys indicated areas where additionaleducation is needed. The extent of the researchundertaken is dependent on the availability offunds from outside sources, however.

The major thrust of Extension programs hasbeen in the area of farm financial management,with some work in family stress, ruraldevelopment, and family finances.

The South Dakota State Department ofAgriculture has instituted two state-wideprograms which are utilizing Extension personneland skills. A hotline has been activated, whichproducers can call for counseling help.Individual counselors with farm management or aglending experience have been trained, in part, byExtension specialists to meet with producers on aone-to-one basis to confidentially review theproducer's situation. The counselors willprovide information, support, and assistance inworking with lenders.

The second major program has been titled"Rural Renaissance" and is an attempt to drawtogether sources of assistance for those who needhelp to remain in farming and for those who willbe forced out and need assistance in making atransition to a new career. Assistance isprovided by ongoing agencies such as vocationalschools, employment services, mental healthfacilities, lawyers, and Extension personnel. Themain contact points are the county Extensionoffices.

63 South Dakota 57

Ileeded isseardi and Extessios

More specific information is needed on thefinancial condition of farmers, including data ondebt/asset ratios, inability to secure financingfor spring planting, farm foreclosures, etc.Very little work appears to have been done inresearching family relations (e.g., divorce,abuse, depression). The effects on ruralcommunities, both financial and social, are alsoareas of needed research.

Of particular need in Extension arepersonnel to work with family stress and ruraldevelopment. An Extension Family Life specialistposition remains unfilled and the Extension workin rural development is being phased out.

Surveys have also indicated an urgent needfor marketing education by producers within thestate This is an area where research andExtension activities are being carefullycoordinated and targeted. Initiatives are beingtaken to expand SDSU's work in this area.

The role of farm women remains undocumentedand unresearched. To develop complete programs,work is needed in this area.

EXTENSION PROJECTS

One of the major programs instituted byExtension in 1985 was the FINPACK program, alsocalled the "Planning for Tomorrow--Today"program. Workshops have been held in eightcounties with about 50 couples participating.

Workshops are scheduled in four more counties.Producers are encouraged to assess goals andpriorities of the farm business, develop agoal-oriented management plan, analyze theirfinancial position, and develop alternativeoperating plans for the future.

Several programs initiated in prior yearsare continuing. One such program deals with farmmanagement, inc..ding farm business structure andorganization. Programs include dealing with landand livestock lease and share arrangements tolessen capital outlay and risk positions ofagricultural producers, as well as alternativemachinery financing and acquisition offers.Additional specialist positions are being addedin the farm management area.

Management "TIPS" meetings were co'ponsoredby the SDSU Cooperative Extension Service andagricultural lenders in 1984 and 1985. Extensionspecialists from marketing, finance, animalscience, and agronomy addressed producer

clientele in day-long meetings to emphasize theimportance of management in all phases ofagricultural production. The meetings weredesigned to stress what better management couldmean in terms of "bottom- line" profits. Anothertitle for these meetings was "Row to Save$15,000."

Extension specialists in technicaldisciplines are conducting "how to" meetingsdealing with specific topics such as seed

58 South Dakota

varieties, pesticides, irrigation, etc. AGNETalso offers help through a diversity ofprograms.

Marketing education is being carried out,although a recent survey by SDSU economistsindicated that the predominant marketingtechnique used by South Dakota producers is thatof cash marketing. "Beefed-up" programs toeducate producers about marketing alternatives

and analysis of marketing alternatives are beingdesigned. Implementation is contingent uponfunding.

Extension Home Economics specialistsdeveloped and piloted a program on "Your HomeBusiness," which an Economics specialist laterjoined. The program was designed to aid inevaluating the economic feasibility andmanagement aspects of starting home-basedbusinesses, which farm and small-town familiesmay be considering to supplement their farmincomes. Multi-county workshops covering theentire state were conducted. Newsletters andhandouts were prepared and distributed (Dobbs1985).

Economic development activities consisted ofmulti-county meetings, indepth workshops, andindividual consultations. Many of the workshopswere tied to the farm crisis concerns andpossible impacts on small South Dakota farms andwere titled "Small Town Economic DevelopmentOptions." Participants included businesspersons, loan officers, farm and other communityleaders, and concerned citizens.

Economics znd Family Life specialistscooperated on programs on family stress. With acurrent vacancy in the Family Life specialistposition, activity in the area has ceased.

The major thrust of Extension programs has

been in farm management and related areas wherethe emphasis has been on families. Limited workhas been conducted on community impacts.

RESEARCH PROJECTS

No large integrated research programs on thefarm crisis currently exist at SDSU but a numberof specific research projects are responding tothe needs of the crisis. Much of the specificresearch is occurring in the Economics and RuralSociology Departments. It is felt, however, thatongoing research in some of the other College ofAgriculture and Biological Science Departments(e.g., Plant and Animal Science) may helpproducers become more efficient. I will outlinesome of the research efforts carried out atSDSU.

Economic Research

Within the past few years, the EconomicsDepartment has initiated projects in the area offinance, land prices, and bankruptcy.

Agricultural Lender Surveys

An initial survey in November 1984 and afollow-up survey a year later were sent to

commercial banks, Production Credit Associations,Federal Land Banks, and Farmers Romeanmintstration county offices. The survey wasdesigned to document credit evaluationprocedures, financial warning signals, andmanagement information needs of borrowers so thatSDSU could tailor its programs to meet theseneeds most effectively.

Results of the 1984 survey showed that 24percent of farmer and rancher borrowers wereclassified as being in a weak financial positionand lenders believed that total debt hadincreased for almost half of their farm customersin that year (Schmiesing, 1985).

Lenders indicated that financial planningand marketing were skills most in need ofimprovement. Specific skills needing improvementincluded projecting cash-flow needs, enterpriseprofit and loss analysis, understanding financialstatewents, record keeping for decision-making,and marketing strategies. The approaches favoredby lenders were workshops, management clubs, andone-to-one counseling.

Lenders stated that, of married borrowers,almost 60 percent of the wives kept the records.

Indications also were that more than half of therecords were inadequrte for financial planning.These findings would suggest that a coordinatedeffort should be made to reach and/or includefarm wives in financial and management training.

About 99 percent of the lenders agreed thatfarmers must be able to show that they havedeveloped a farm financial management plan torepay debt if they wish to receive credit in thefuture.

The latest survey, undertaken in November1985, showed that the financial condition of manySouth Dakota farmers and ranchers haddeteriorated in the past year. Only slightlymore borrowers were classified as in a weakfinancial condition than in the previous survey,but the percentage in the "superior" or "good"categories had declined by about 5 percent.About 7 percent of the farmers have liquidatedtheir debt in the past year (Schmiesing, 1986).

The 1985 survey also showed that producerswest of the Missouri River were in considerablyworse financial condition than "East River"producers. "West River" has primarily livestockproduction and had been severely buffeted bydrought and an early winter.

Lenders indicated they would not make eitheroperating or real estate loans to "weak"borrowers, and some would not make loans to newcustomers in any category.

The results of the two surveys have beenused to design and implement agriculturalmarketing management workshops and seminars.

Farmland Market Trends

Research on farmland market trends in SouthDakota has been carried out on a statewide andregional basis. Results of the survey showedthat farmland prices have declined for the pastthree years, with the average price per acre ofland sold from January to June 1985 being 34percent less than the price during the peak of1981-1982 (Janssen 1985). Regions of the statefared differently, with the largest decreaseoccurring in the southeastern part of the state.Reasons for and implications of decliningfarmland prices were also analyzed.

A second ongoing project to analyze farmreal estate developments in South Dakota hasrelevance for the farm crisis. The objectives ofthe research are to analyze (1) annual estimateso! per acre agricultural land sale prices, (2)changes in farmland financing terms andconditions, and (3) impact of factors explainingmarket price of farmland. Relationships betweenfarmland financing terms, real estate marketprices, and debt repayment ability will also beexamined. Insights provided by the research willbe useful to farm lenders, individual producers,and farm management Extension personnel.

A project on land rentals is currently beinginitiated.

Farm Bankruptcy Proposal

Of direct relevance to the farm crisis is aresearch proposal to provide managementinformation on farm bankruptcies through analysisof farm bankruptcy filings in South Dakota since1983. Specifically, the objectives are (1) todetermine the financial and other characteristicsof farmers filing Chapters 7, 11, and 13bankruptcy; (2) to examine the differencesbetween approved and unapproved reorganizationplans under Chapter 11; (3) to determine the timerequired from filing the reorganization planapproval, conversion, or dismissal under Chapter11; (4) to examine characteristics of secured andunsecured creditors under Chapter 11 filings; and(5) to examine legal fees charged for Chapter 11bankruptcy filings.

Research results will be made available tofarm lenders and individual producers.Researchers are awaiting word on funding at thistime.

Rural Sociology Research

A dissertation, which examined the role matthe church during the farm crisis, has beencompleted in the Rural Sociology Department. Theresearcher focused on farm families and theextent to which churches mediated in order torelieve pressure and stress on the families.Peripherally, the role of neighbors and Extensionpersonnel were also examined.

65South Dakota 59

Reteesioe-Related Research

As part of Extension-related research,

analysis of farmers' responses in ?MAKworkshops will be undertaken shortly. Strategiesundertaken or contemplated by participant farmersin those meetings will be used in counselingother farmers.$ #

SY

SUISIART

While SDSU has developed no largecomprehensive programs to meet the farm crisis,much is being done through many specific ongoingprograms. Farm management is an area of specialfocus but attention is also being given tofamilies and to economic development for smalltowns. Additional information can be obtainedfrom Extension Economics specialists at theEconomics Department at SDSU.

60 South Dakota

REFENEICE1

Dobbs, T. 1965. Economies of Home-Based Businesses.Economics Dept. Newsietter 5223. South Dakota State

University, Brookings, June 5.

Janssen, L. 1965. Reasons for and Isvilestions of DecliningFarmland Fticee. Economies Dept. Newsletter 5239. South

Dakota State University, Brookings, November 12.

Schmiesing, B. 1965. Debt Capital: A Ler Risk thenEveryon. goy Realize. memos es . meTTerSouth Dakota State University. Brookings, Noy 27.

Schmiesing. B. 1586. Financial Conditions of andAvailability of Credit to South Dakota Producers.

Economics Dept. Newsletter 0231. South Dakota StateUniversity, Brookings, January 30,

Swinson, C. end L. Janssen. 1965. Lon Term end Recent

Farm lend Market Developments in South elkote. tconomicsDept. Newsletter OZTO. South Dakota State University,Brookings, March

USDA. 1985. Economic Indicators of the Form Sector: Stateincome end Balance Sheet Statistics, 1963. Washington, DC:USDA NI-AVERS. ECIFS 3-4, January.

66

Farm Crisis Response: University of WisconsinMadisonExtension and Research

by Jess Gilbert and Glenn S. Thompson

INTRODOCTION

The current farm crisis in Wisconsin stemsdirectly from economic problems but has broadimplications for individuals, families,communities, and the larger society. In 1981 theaverage farm debt-to-asset ratio for the statewas 19 percent; by 1984 it had increased to 34percent; and in January 1986 remained at 33percent. Of the farms with debt, over one-fourthhave a debt/asset ratio of 40 percent or more,with seven percent of those having a ratiogreater than 69 percent. Younger farmers anddairy farmers tend to have higher ratios. Overfour percent of Wisconsin farmers expect to quitfarming in 1986, with ten percent more expectingto quit in 1987. The state lost an estimated3,000 farms between 1984 and 1985. (The abovedata are from the Wisconsin Agriculture Reporting

Service, "Agricultural Finance Survey," May 1984and February 1986.)

The problems caused by the current crisis,however, are not adequately captured bystatistics. Farm foreclosures and bankruptciesare on the rise. Individual and family stresshas increased dramatically. Rural businesses arebeing hurt. Communities feel the strain. Thecurrent structure of agriculture may well besignificantly changed by the present crisis. TheUniversity of Wisconsin (UW) at Madison isresponding to the crisis on a number of fronts.This report summarizes the efforts of theUniversity's Cooperative Extension Service (CES)and the College of Agricultural and Life Sciences(CALS).

Strategies on Survival (SOS) is a specialCES educational program for Wisconsin farmfamilies and agribusinesses facing financialdistress. This major program thrust is designedto provide a comprehensive educational campaignthat ties together the efforts of the four CESprogram areas--Agriculture/Agribusiness,

Community Natural Resource and EconomicDevelopment, 4-R Youth Development, and FamilyLiving Education. The program focuses on threekey groups: farm families, agribusiness, andfarm lenders. SOS teams, consisting of Extensionagents and specialists and farm and familyfinancial analysts, help individuals, families,agribusiness, and community groups throughshort-term and indepth counseling. Assistance isprovided on a variety of problems, including farmand family finances, managing family stress, farmprofitability alternatives, referrals to otheragencies, and evaluating possibilities foroff-farm income.

67

Researchers in the CALS have a number ofprojects related to the current farm crisis. TheDepartment of Agricultural Economics recentlyreleased a report on the financial condition ofWisconsin farms; it estimates that between 2,000and 7,000 farmers will liquidate for financialreasons in 1986. That department contributedsignificantly to the recent Governor's Commissionon Agriculture. UW agricultural economists arealso studying the effects of the crisis on familyfarmers and local communities. In addition,other departments in CALS (e.g., AgriculturalJournalism, Landscape Architecture, Continuingand Adult Education) are investigating dairyfarmers' policy preferences and comparativeapproaches to traditional dairy areas. Finally,the Department of Rural Sociology has severalresearch projects relevant to the farm crisis:an historical analysis of the trade-offs betweendebt and tenancy in Wisconsin agriculture, astudy of the contradiction betweenpublicly-supported research that enhancesproductivity and federal price and incomeprograms, and an examination of changes infarmland ownership and control. While CALS hasbegun to respond to the farm crisis with all ofthese research projects, it needs to encouragefurther research efforts that address long-termstructural issues as well as Immediate policyconcerns of the people of Wisconsin.

EXTENSION

In the late fall of 1984, Extension's CESprogram leaders, concerned with the deepeningfarm crisis, discussed ways CES could helpaffected Wisconsin citizens. The concern wasgenerated by county Extension agents andstatewide specialists who were receiving callsfrom farmers and ag lenders concerned aboutfarmers who weren't servicing their debts. Farmsuppliers called, nervous about overdue accounts.It wasn't just the chronic nonpayer; they saidreliable paying customers weren't paying.Disturbing reports also came from the clergy.Some families weren't coming to church; theydidn't want to show their faces in public. Anestimated 6,000 farmers in the state were facingcritical financial difficulty. Bankruptcy rateswere increasing.

CES realized that individual farmers couldnot do much about some of the main causes oftheir financial problems. There was little afarmer could do on his own about the highinterest rates which drive up operating costs, orabout low commodity prices, or about the strongdollar that makes U.S. farm products tooexpensive for foreign buyers. At the same time,CES realized that farmers and agribusinesses canget involved in collective action throughorganizations and the political process to dealwith these broader issues.

Wisconsin 61

CIS staff also realised Cisme were steps theindividual farmers could take to ease theirfinancial stress. Part of the solution lay inideas CES Agriculture/Agribusiness staff had beenteaching all along--farm management andproduction ideas which could help farmers cut;Bete, increase efficiency, and improve profits.

est as important was family stress and budgetinformation available from CES Family Living and4-H Youth Development staff. Much could be doneto ease the burden on agribusiness through theUniversity Center for Cooperatives and the CESSeel Business Development Center.

With this realisation, CES, with its countyand state faculty from four statewide programareas (Agriculture/Agribusiness, CommunityNatural Resource and Economic Development, 4 -HYouth Development, and Family Living Education),undertook an ambitious educational programinitiative entitled Strategies on Survival(SOS). The idea of the SOS program was toprovide a comprehensive educational campaign thatwould coordinate the efforts of the fourstatewide program areas and help agents reachfarm families, including those who hadn't takenadvantage of CES rrogramm in the past.

The SOS program focuses on three key groups:(1) Farm Families receive intensive one-on-onecounseling and small group instruction. Theseprograms focus on farms and family financialanalysis and planning, managing debt, farm

profitability, resolving conflicts and reducingstress, identifying sources of alternative

income, and related topics; (2) Aaribusinevsfs, alarge sector of Wisconsin's rural economy whichdepends heavily on agriculture, are providedcounseling and workshops on planning, marketing,cash flow, inventory, and related areas ofbusiness management; and (3) Agricultural Lendersreceive programs focusing on farm businessanalysis, repayment capacity, farm production andmarketing, family financial management, andrelated legal issues.

Prior to the initiation of SOS, faculty weredevoting 25 percent of their planned time toeconomic improvement program efforts that fit theobjectives of SOS. When staff developed their1985-86 program plans, 44 percent of their totalplanned time was devoted to SOS-type programing.CES county-based faculty have been mobilized inteam clusters encompassing two or three countiesto offer a comprehensive range of educationalservices to farm families in need. Having stafffrom several counties working together hasseveral advantages. The can share expertise,make more effective use of scarce resources suchas microcomputers, and plan and implementlarger-scale programs.

A number of actions have been initiated toimplement the SOS program:

In March and November 1985, three-dayorientation/training workshops for 104county and 50 campus-based Extension facultyfocused on the background of the farmcrisis, scope of planned SOS activities, andintensified training in farm business andfamily financial management, family stress,

62 Wiscoasin

and counseling skills. Special trainingmaterials (SOS Handbook I) and 3,000"Survival Kits" for use with farm familiesin one-on-one counseling were distributed toagents.

A statewide communication group wasorganized under the leadership of the CESAgriculture/Agribusiness program area. Thegroup was composed of representatives fromCES; Farm Credit System; WisconsinDepartment of Agriculture; Trade andConsumer Protection; Wisconsin BankersAssociation; Wisconsin Board of Vocational,Technical and Adult Education; WisconsinDepartment of Health and Social Services;and the Department of Industry, Labor andHuman Relations. The goal was to developcommunication linkages, share programs, anddevelop a systematic referral procedure.

Farm or family financial analysts were hiredin 15 clusters on an ad hoc basis to assistagents in working with farm families.Analysts' past experiences included workwith Extension and leading institutions andas vocational/technical instructors and farmmanagement consultants.

Microcomputers were placed in the clusteroffices for use in counseling farm families.FINPAK training was provided at May,September, and December workshops forcounty-based faculty.

As part of a cooperative effort to develop afive-state agency resource directory, CESprepared lists of contacts in each countyExtension office which provided help in sixareas: farm financial management and farmprofitability, family financial management,family stress and family support networks,youth-related concerns, community economicdevelopment, and alternative small businessopportunities. A farm crisis info-line(telephone) was also established incooperation with the Wisconsin Department ofAgriculture Trade and Consumer Protection.The Department and CES are presently -lovingto employ legal counsel for the info-lineoperation. Attorneys are presentlyvolunteering legal counsel to farmersneeding services.

Many educational materials have beendeveloped or obtained for use in individualand group counseling sessions and workshopswith farm families. They include elevencon.uter software programs, a aeries ofvideotapes on farm profitability andmarketing, special counseling materials, sixbooklets related to increasing profits fromspecific farm enterprises, and a guide fororganizing small group family education andsupport and action groups.

A project proposal was submitted toExtension Service-USDA, CES was awarded a$55,000 grant to work with 10 pilotcounties, and CES reallocated $185,000 ofits existing budget for SOS programming.

An administrative/program leader team wasorganised to coordinate ongoing SOS

activities and to provide counsel to a larLeCES steering committee.

In cooperation with the staff of Health andHuman Services Outreach (UW-Madison), CESreleased the Neighbor- to-Neighbor program, a

do-it-yourself guide for organizing FarmFamily Education/Support Action GroupP.

A special quarterly reporting system isunderway to document a profile of SOScounseling contacts, group teachingcontacts, and organizational contacts.

RESEARCH

Researchers at the University of Wisconsinhave conducted a number of research projects thatdeal with the current farm crisis. Theseprojects are summarized below. All share thecommon theme of policy relevance even as theyrange widely in terms of approaches to andperspectives on the crisis.

In February 1986 the Department of

Agricultural Economics and CES published a

special report, Financial Status of WisconsinFarming, 1986, edited by Edward V. Jesse. It

offers economic analyses of the roots of thecurrent problem (massive decapitalization causedby changes in macroeconomic policies) as well asits magnitude: an estimated 2.S to 10 percent(2,000 to 7,000) of Wisconsin farmers :Allliquidate for financia7 reasons in 1986.Moreover, simulation analysis reveals the typesof dairy farms most likely to survive. Notsurprisingly, a high debt-to-asset ratio seams tob, the best predictor of failure. Finally, thereport analyzes the consequences of variouspossible solutions, including "doing nothing,"tax and credit policies, transition programa out

of farming, and federal farm program options("free market" vs. production controls). Trade-offs between these alternative policies arementioned, with no particular policy option beingendorsed.

The twenty-two member Governor's Commission

on Agriculture, which issued its final report inJune 1985, was co-chaired by the Dean ofAgriculture at UW-River Falls and included theDean of UW-CES and a member of the Department ofRural Sociology, UW-Madison. Richard Barrows, ofthe UW-Madison's Department of AgriculturalEconomics, served as Executive Director of theGovernor's Commission. Eight other AgriculturalEconomics professors and one Rural Sociologyprofessor, worked as technical advisors to thecommission. The final report, stronglysupportive of a family farm system of

agriculture, included recommendations in fourgeneral areas: (1) state agricultural policies(e.g., provision of operating credit, creation ofan agricultural council, establishment of adirect marketing program); (2) state taxationpolicies (e.g., reform of the property taxsystem, farmland preservation tax credits,

restrictions on tax-loss farming); (3) staterural development policies (e.g., creation of astate rural development council to coordinatesuch efforts); and (4) federal policy decisions(e.g., targeting benefits to family farms, not

disadvantaging Wisconsin dairy farms under thefederal milk marketing system).

The 198,2 Wisconsin Family Farm Survey(n 529) covered eight counties that are similarto 300 other U.S. counties regardingconcentration in dairying, small-to-medium-sizedfarms, and family provision of labor andmanagement. Directed by Priscilla Salant(Economic Research Service, USDA) and William E.Saupe (Agricultural Economics, UW-Madison), thesurvey is relevant to the -urrent farm crisis inseveral ways. Salant and Saupe constructed a"viability ratio" to evaluate farm householdfinancial well-being. It consists of total netfamily income from the farm plus all nonfarmincome divided by the sum of three types of

financial obligations (consumption, principalpayments on farm loans, and capital replacementcosts). Farm households with a ratio of lessthan 1.0 will be unable to meet financialobligations in the long run. *,aced on thismeasure, one-third of the entire sample werenonviable; 47 percent of the dairy farms werenonviable. These estimates are based on data for1982, when the current criaLs was just beginning.Salant and Saupe have used a simulation techniqueto predict how many of the survey farms would beboth nonviable and technically insolvent in 1986;their estimate was over 11 percent of the farms.Further, Salanr and Saupe have analyzed thesurvey data on five different types of farms:(1) those that expect to stop farming by 1988,(2) dairy farms, (3) nondairy, part-time farms,

(4) nondairy, full-time farms with sales lessthan $20,000, and (5) nondairy, full-time farmswith sales of $20,000 or more. For each type,they discuss public and private options.

Another agricultural economist, MaryMcCarthy, is studying the implications andincidence of the current farm financial crisison local economies in Wisconsin. The primary aimof this research is to examine the economicrepercussions of changes in the farm sector onlocal rural and urban Wisconsin communities.

This involves an analysis of county data onemployment, income, and sales tax revenues, and1982 Census of Agriculture data on firm-typeincome and ei..ployment. A secondary aim is tofocus on the employment prospects of displacedfarmers and their families in rural communities.

This is to be facilitated by conducting a samplesurvey of displaced fern families infarm-dependent communities.

In late Septer' r Ind early October 1985,Mike Read (a gradtt cudent in the Departmentof Continuing and Adult Education), along withHernando Gonzalez and Len Maurer (bothAgricultural Journalism professors), conducted arandom sampre survey (a 557) of Wisconsin dairyfarmers. The aim was to obtain their opinionsconcerning two divergent approaches to federaldairy legislation: free market vs. supply

69 Wisconsin 63

management. Funded by the College of Agecultureand Life Sciences, the Cooperative ExtensionService, agribusiness firms and farm magazines,the study went from initial conceptualization tofinal report in one month. The findingsindicated that 64 percent of Wisconsin dairy

farmers favored supply management, 25 percentpreferred a free market approach, and 10 percenthad no preference. In addition, 50 percentsupported mandatory production quotas on U.S.dairy farmers, 22 percent "may be" in favor, and28 percent opposed such controls. Read iscurrently continuing his research in the Collegepf Agriculture and Life Sciences.

Herman Felstehausen (Natural Resources andLandscape Architecture, UW-Madison) has workgpderway that emphasizes comparative approachestp the rural adjustment and structural crises inthe state. For example, the success insustaining owner-operated dairy farms in ClarkCounty, Wisconsin, is being compared with amatched county in New York State. DelawareCounty, New York, was ve:y similar to ClarkCounty, Wisconsin, in 1940. Since then, bothcounties show large losses in dairy farms, withDelaware County representing the advanced case.Most milk handling and processing plants haveclosed; some rural communities have becomevacation and recreation centers. The keyquestion is, will Clark County follow the samecourse or can an alternative dairy-based programbe worked out in Wisconsin before the majority ofthe owner-operated units fail? A second area ofFelstehausen's comparative work addresses theenvironmental and structural consequences ofcenter pivot irrigation. Antelope County,Nebraska, is being studied as a "typical" centerpivot irrigation county in that state. AntelopeCounty is located away from the Platt River thusmaking it more diverse in agriculture andirrigation than valley farms. Irrigation impactsin Portage County, Wisconsin, will be comparedwith the Nebraska experience.

Pat Mooney, in work based on hisdissertation in Rural Sociology at UW-Madison(1985), has developed an historical political-economic analysis of debt-and-tenancy cycles onWisconsin farms. The 1930s presented U.S.

agriculture as a whole with a "tenancy crisis."At that time, 42 percent of U.S. and 23 percentof Wisconsin farmers were full tenants, i.e.,they owned none of the land they operated. Both

nationally and at the state level tenancydeclined steadily after 1940 to the low-point in1974 (to 11 percent in the United States and 6percent in Wisconsin). While the radicaldecrease of tenancy had a number of causes, itwas accomplished in significant part by anincrease in credit provided by the federalgovernment (e.g., EWA, FLB). The problem oftenancy, then, was "solved" by growing debtloads. At the same time, the decline in tenantswas not accompanied by an increase in full-owneroperators but rather by a rise of part-owneroperators (who own some and rent some of the landthey operate). Mooney's historical analyticraises the question of whether the current "debtcrisis" may be "solved" by a rebirth of tenancy.

64 Wisconsin

Indeed, both the United States and Wisconsin haveexperienced a modest increase in tenancy (1-3percent) along with a more rapid growth ofpart-owner operatorship (2-10 percent) since1974. This recent rise in farm rentals hasdisproportionately affected younger farmers, whoare more likely to be landless operators. Mooneyexamines both short-term options to the curr%ntfarm crisis (higher price support, off-farm work)and long-term proposals. For instance, the factthat farmland is a commodity may be seen as afundamental problem in the debt-tenancy cycle.One alternative to the current situation, then,would be to view land as a unique means ofproduction that should not be an object offinancial speculation. This policy option wouldentail restrictions on the land market such asexist in Western Europe.

Jack Rloppenburg (Department of RuralSociology, UW-Madison) is examining the ways inwhich scientific research contributes toagricultural transformation. It appears that tnepublic agricultural research system has tended toact in a contradictory fashion with certain othercomponents of state intervention in agriculture.There is a fundamental contradiction in therelation between research-driven productivityadvances and expenditures on price and incomesupport programs. There is embedded in thinrelation a permanent tendency to fiscal cr.,is.The state cannot indefinitely increase itsinvestment in research designed to provide newoutput-enhancing inputs if it must alsounderwrite the valorization of the increasedoutput that those inputs produce. Kloppenburg isinvestigating ways in which agricultural researchmight be redirected from its current"output-enhancing" orientation to an"input-minimizing" emphasis. Such a redirectionwould slow the rate at which the "technologicaltreadmill" is turning. While it is important toaddress the immediate problems facing farmers inr' curent crisis, it is also important tounuerstand the structural roots of the problem.

Jess Gilbert (Department of Rural Sociology,UW-Madison) is presently investigating farmlandtenure changes in Wisconsin. This project is anupdate of two township-level studies of tenureprocesses done in the 1940s. The objectives areto describe the changes that have occurred sinceWorld War II, to examine the separation of landownership and control, and to discover thereasons that people own farmland. This researchis relevant to the farm crisis in that it willfocus as well on ownership changes in the 1980s,on managerial decision-making concerning thelaid, and on individuals' subjective meaningsattached to land ownership.

ZITENSION IMMO minium

SOS Handbook I (Agent Workshop I)

MacroeconomicsFarm Financial ManagementStress ManagementHelping Skills

70

Community Helping Resources/SupportOrganization

Case Studies

SOS Handbook II (Agent Workshop II)

Equity Financing for AgricultureLess* vs. PurchaseMachine, System and Crop Production

CostManaging the Farmr-L-'ty Feeding

Strategies--Feed CostFarm Enterprise BudgetsFINLRB

Managing the Financial Future of YourDairy Farm

Case Study MaterialsSelf AssessmentCost of FoodLife Insurance Learning SeriesFamily Living Expense PlanningBankruptcy, ForeclosuresCreative FinancingMoving out of AgricultureCurriculum- -Small Groups

SOS Survival KitDesigned to Help AgentsCounsel

Family RecordsCash Flow Planning GuideManaging Farm Financial Future

Building Emotionally Healthy FamiliesFamily Living Expenses

Capital Debt Repayment CapacityFinancial and Production Performance,Guide--Dairy Farm

Enterprise Booklet--Designed to Help FarmersIncrease Farm Profitability

Dairy

Forage CropsSheepBeefSwine

Grain Crops

Farm Profitability Videotapes

Pricing Standing Crops

Feed Inventory--Quality and QuantityConsiderations

Grain By-Products in Dairy RationsFeeding the Dairy Herd when Forages are

Limited

Marketing Hay as a Cash CropGrain Situation and OutlookDairy Situation and OutlookCattle Situation

Family Living Videotapes

Making Ends MeetTracking Ycur Spending

Microcomputer Software

FINLRB

FINTRAN

Loan CalculatorPartial BudgetBadger BalanceTotal Mixed RationCommunity Economic AnalysisFood SSDecision-MakerSteps into SpendingAdditional computer software available

via mainframe--WISPLAN ComputerService, 302 Hiram Smith Hall, 1545Observatory Drive, Madison, Wf 53706

Counseling and Support Group Materials

Neighbor-to-NeighborCounseling Issues and StrategiesCounseling Process Analysis

Farmers Resource Guide--A County/Community-Based Information and Assistance Guide

Agriculture Finance Survey--February 1986

Contacts for Resource Materials:

Robert E. RieckAssociate DeanCooperative Extension Service615 Extension Building432 N. Lake StreetMadison, WI 53706(608) 262-7965

Glenn S. Thompson

Asst. State Program LeaderAgriculture/Agribusiness, CES637 Extension Building432 N. Lake StreetMadison, WI 53706(608) 262-7321

RESEARCH usovacz masons

Richard L. BarrowsDept. of Agricultural EconomicsHenry Taylor Hall427 Lorch StreetUniversity of WisconsinMadison, WI 53706(608) 262-6871

Herman FeletehausenDept. of Landscape Architecture25 Agriculture HallUniversity of WisconsinMadison, WI 53706(608) 262-7922

Jess GilbertDept. of Rural Sociology350 Agriculture HallUniversity of WisconsinMadison, WI 53706(608) 262-9530

71Wisconsin 65

Ward V. JesseDept. of Agricultural EconomicsHenry Taylor Mall427 Lorch StreetUniversity of WisconsinMadison, WI 53706008) 263-4472

Jack EloppenburgDept. of Rural Sociology350 Agriculture RallUniversity of WisconsinMadison, WI 53706(608) 262-6867

Mary McCarthy

Dept. of Agricultural EconomicsHenry Taylor Hall427 Lorch StreetUniversity of WisconsinMadison, WI 53706(608) 262-9479

66 Viscoesin

Mike leadDept. of Continuing Education112 Teacher Education Bldg.University of WisconsinMadison, WI 53706(608) 263-1154

William E. SaupeDein. of Agricultural EconomicsHenry Taylor Mall427 Lorch StreetUniversity of WisconsinMaason, WI 53706(608) 262-9480

72

North Central Region Rural Development Center

Sponsoring Institutions

Cooperative Extension ServiceAgricultural & Home Economics Experiment StationIOWA STATE UNIVERSITYAmes, IA 50011

Cooperative Extension ServiceAgricultural Experiment StationKANSAS STATE UNIVERSITYManhattan, KS 66506

Cooperative Extension ServiceAgricultural Experiment StationMICHIGAN STATE UNIVERSITYEast Lansing, MI 4E823

Cooperative Extension ServiceAgricultural Experiment StationNORTH DAKOTA STATE UNIVERSITYFargo, ND 58105

Cooperative Extension ServiceOhio Agricultural Research and Development CenterOHIO STATE UNIVERSITYColumbus, OH 43210

Cooperative Extension ServiceAgricultural Experiment StationPURDUE UNIVERSITYWest Lafayette, IN 47907

Cooperative Extension ServiceAgricultural Experiment StationSOUTH DAKOTA STATE UNIVERSITYBrookings, SD 57006

Cooperative Extension ServiceAgricultural Experiment Stat onUNIVERSITY OF ILLINOIStirbana, IL 61801

Minnesota Extension ServiceAgricultural Experiment StationUNIVERSITY OF MINNESOTASt Paul, MN 55108

Cooperative Extension ServiceAgricultural Experiment StationUNIVERSITY OF MISSOURIColumbia, MO 65211

Cooperative Extension ServiceAgricultural Experiment StationUNIVERSITY OF NEBRASKALincoln, NE 68583

Cooperative Extension ServiceAgricultural Experiment StationUNIVERSITY OF WISCONSINMadison, WI 53706

The North Central Regional Center for Rural Development programs are available to all potential cliunleleb without regard torace, color, sex, or national origin

NORTH CENTRAL REGIONAL CENTER FOR RURAL DEVELOPMENT

73

IOWA SIM 12. PNIV FIN! INIlf Si 'flue atul II 1 Iteuellogy211, 1...1%t HallA1111, Iowa 50011