Long Term Impact of the Farm Financial Analysis
Training Curriculum on FSA Borrowers in Pennsylvania
National farm business
Management Conference
Fargo, ND
June 13 – 17, 2010
Kenneth L. Balliet,
Sr. Educator
Multicounty Extension Director
Copyright © 2010 The Pennsylvania State University
Background
• Financial management training an explicit mandate of
the 1990 farm bill
• Past studies looked at:
– Need for training
– Described a typical FSA borrower and measured immediate
gains in knowledge
• Since 1993 extension educators in Pa have been using
FFAT curriculum in a variety of delivery modes
2
Farm Financial Analysis Training(FFAT)
Curriculum
– Provides relevant instruction in the
development and use of three core financial
statements, using benchmarks and ratios and
fixing broken finances
– Incorporates exercises that result in the
determination of “own-farm” liquidity,
profitability, solvency, and efficiency
– Features a pre/post test, and chapter tests for
effective program evaluation
3
The workbook
Chapters
1. Balance Sheet
2. Income Statement
3. Cash Flow Statement
4. Understanding ratios
5. Fixing broken finances
4
Other features
•
•
•
•
•
•
Pre and post workshop comprehensive test
5 Chapter Quizzes
Own-farm homework assignments
Class participation and discussion
Guest speakers
Workshop evaluation form
5
Delivery
• State-wide extension programs
– varies by FSA office
– more difficult due to loss of educators
– technology being used
• Correspondence by producer
– mail request to Dr. Hansen for curriculum
– mail completed workbook back for grading
– receive pass/fail grade from PSU
6
Goals of the FFAT study
• Identify and measure long term impacts of
FFAT as it relates to:
–
–
–
–
Perceived gains in knowledge
Changes in management behavior
Changes in assets and profitability
Changes in attitude regarding farm finance and
lending
7
The survey
• 233 pre-tested
surveys sent to
FFAT attendees
2001 – 2006
• Pa only
• Two follow-ups
• 69 respondents
8
About Respondents
• Over half are less than 40 years old
– 68% of dairy farmers
• 57% had a HS diploma
• 36% had an 8th grade education
• 49% had less than 10 years experience in
farming
• 77% male, 23% female
9
Increase in perceived knowledge
Table 4. Percent Respondents (%) Perceived Level of Knowledge by Tool
Poor
Before
1
25%
2
27%
Good to Excellent
3
4
5
34%
9% 4%
After
3%
3%
20%
62% 12%
Before
24%
26%
32%
18%
0%
After
Before
After
Before
After
Before
After
5%
16%
9%
22%
4%
48%
15%
6%
34%
8%
31%
13%
36%
12%
20%
34%
32%
29%
25%
12%
41%
59%
13%
43%
16%
49%
3%
26%
9%
3%
8%
1%
9%
0%
5%
Financial Tool
Using a Balance Sheet
Using Income Statements
Fixing Broken Finances
Using Cash Flow Budgets
Using Finance Ratios
Increase in perceived knowledge
Table 3. Number of Respondents by Number of Levels Increased on Likert
Scale by Financial Tool
Number of Changes in Likert Scale
Financial Tool (ranked)
0
1
2
3
4
5
Total
Changes
Balance Sheet
13
22
24
7
0
0
91
Income Statement
15
26
17
6
0
0
78
Cash Flow Budget
23
23
17
4
0
0
67
Financial Ratios
21
15
22
7
0
0
80
Fixing Broken Finances
27
22
12
3
0
0
52
11
80% Indicate a gain of at least one step in the
Likert Scale
12
84% Rated their level of knowledge as
“good to excellent” after FFAT
13
74% are
likely to
make
management
changes
14
54% Discuss their finances more capably
15
64% Report a gain in farm profit as a result
16
FFAT Chapter test results (Balliet)
FSA Farm Financial Analysis Training
2001 - 2007
Number of Students
20
18
Balance Sheets, n=72
16
Income Statements, n=72
14
Cash Flow, n=51
12
10
8
6
4
2
0
Score
FFAT Pre/Post test comparison (Balliet)
FSA Farm Financial Analysis Training
2001 - 2007
25
Number of Students
Post-test, n=76
20
Pre-test, n=77
15
10
5
0
0
10
20
30
40
50
Score
60
70
80
90
100
Summary
Farm financial training is demonstrated to provide
new and at-risk producers with effective
educational materials that will significantly
increase: their knowledge about financial
statements, their use of financial management
tools, farm profit and net worth, and improve their
comfort and attitudes when dealing with
agricultural lenders.
Long-Term Impact of the Farm Financial Analysis Training Curriculum on
FSA Borrowers in PA, Balliet, K.L., Douglass, M. B., Hanson, G. D. Journal of
Extension, February 2010, Vol 48, Number 1 Art 1FEA6
19
Contact
Dr. Greg Hanson, Professor of Agricultural Economics
Email address: gdh3@psu.edu Telephone: 1-814-865-6362
Fax: 1-814-865-3746
Office address: 201C Armsby Building
University Park, PA 16802
Kenneth Balliet. CED, Sr. Extension Educator
Email address: klb26@psu.edu Telephone: (570) 837-4252
Penn State Cooperative Extension
Middleburg, PA 17842
Mark Douglass, Extension Educator
Email address: mbd10@psu.edu Telephone: (814) 849-7361
Penn State Cooperative Extension
Brookville, PA 17842
20
Thank You!
This Publication is available in alternative media on request.
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21
Appendix A
Appendix B