Texas Crop Farms Current
Financial Situation
Steven L. Klose
Texas Agricultural Extension Service
Southern Region
Agricultural Outlook Conference
September 2000
Texas Risk Management
Education Program
Risk Management Education
Master Marketer
 Curriculum Guide

FARM Assistance
Decision Support System
 Financial analysis of alternative operating
strategies
 Database of Base Farm Analyses

What is
FARM Assistance?
A strategic planning tool designed to provide
farmers and ranchers the flexibility to
pro forma analyze their operation under risk
for the purpose of choosing among risk
management tools and/or business
strategies.
What is
FARM Assistance?
Information


All Enterprises
Non-farm Activities
Projection




Ten year pro-forma
Incorporating risk in production and prices
Reports distribution of key financial performance
measures
Comparative Analysis
Alternative Strategies Analyzed
Capital investment



Equipment
Harvest vs. custom
Irrigation systems
Size of the operation


Buy/Sell land
Rent/Lease land
Management



Crop insurance
Retirement investment
Debt Management
FARM Assistance
Data Base
Data Base of Farms


181 Completed Report
Covering over 450,000 acres
Categorization of farms


NCFI performance (3 groups)
Specific Commodities ( more than 50% of planted
acres)



Cotton (48)
Wheat (15)
Corn & Sorghum (35)
Farm and Ranch
Characteristics
Farm Group
(# of farms)
Acres
2000
Receipts
($1,000)
2000
NCFI
($1,000)
Off-Farm
Salary
Top (61)
3,544
777
178
6,570
Middle (60)
1,776
285
45
11,363
Bottom (60)
1,920
201
-2
13,845
Cotton (48)
1,933
393
92
7,760
Wheat (15)
2,280
279
62
11,227
FeedGrains (35)
1,959
440
58
19,159
Debt Level and
Interest Expense
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
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Debt/Asset
Interest/Receipts
Asset Structure ($1,000)
$2,000
$1,500
$1,000
$500
$0
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Real Estate
Equipment
Other
Debt Structure ($1,000)
$500
$400
$300
$200
$100
$0
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Long Term Debt
Short Term Debt
Intermediate Term Debt
Deffered C.G. Tax
Projected 2001 Profitability
($1,000)
$200
$150
$100
$50
$0
-$50
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Net Cash Farm Income
Fe
ed
Gr
ain
s
Projected Risk in 2001
60
50
40
30
20
10
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Prob( NCFI < 0 )
Prob( Cash < 0 )
Equity Growth and Risk for
2001
40%
30%
20%
10%
10.4%
10.4%
5.5%
0%
1.4%
6.0%
5.0%
-10%
-20%
-30%
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Questions or
More Information
Joe Outlaw
Steven Klose
Dean McCorkle
George Knapek
1-877-TAMRISK
http://trmep.tamu.edu/