Ag Lenders Learn to Manage Technology and Risk in their Portfolios

Agriculture and Natural Resources Extension
Iowa State University

Extension Lead(s)
(name, position, counties served, contact information)

Lead: Larry Tranel, Dairy Field Specialist, NE/SE Iowa
ISU Extension Presenters: Chad Hart, Jim Jensen and Larry Tranel

Your Position

­­­­­__x___Field
_____Campus
_____Both

POW # and Team

 ­­­­­__x___100 Corn and Soybean Production and Protection
­­­­­__x___ 110 Dairy
­­­­­___x__ 120 Farm and Business Management
­­­­­_____ 130 Horticulture: Commercial and Consumer
­­­­­_____ 140 Iowa Beef Center
­­­­­_____ 150 Iowa Pork Industry Center
­­­­­_____ 160 Natural Resources and Stewardship
_____170 Pesticide Applicator Training
_____180 Other ANR Programs

ANR Priority (select all that apply)

­­­­­__x___Global Food Security and Hunger
­­­­­_____Regional Food Systems
­­­­­_____Natural Resources & Environmental Stewardship
­­­­­_____Food Safety
­­­­­__x___Sustainable Energy – Biofuels & Biobased Products
­­­­­_____Climate Change
­­­­­_____Other

Title of Success Story

Ag Lenders Learn to Manage Technology and Risk in their Portfolios

Continuing Story

_____ No                ___x__  Yes (If continuing, what story?) 
This annual event continues to improve lender learning to better serve farm and agri-business clients.

Knowledge Areas: (USDA categories)

 

Desired Changes
Learning
Actions
Conditions

Learning: Increased knowledge of Crop, Dairy and Livestock Risk Management; Increased knowledge of Federal Ag and Dairy Policy; and increased knowledge of Robotic Milking Technology.
Actions: Increased levels of knowledge relating to price, production and technology to allow lenders to more accurately assess loan risks to producers and agri-business who work with producers.
Conditions: Dairy, livestock and crop production is of great economic value to the Tri-State area (IA, IL and WI).  Increasing knowledge of agricultural lenders to better assess risk to more confidently loan monies to producers and the agri-businesses that work with them has large economic ramifications to local economies.

RELEVANCE
(Why is it important to address this issue with education?  What are the desired changes?)

For example, increasing lender knowledge has made lenders feel more comfortable lending money to a producer wanting to implement robotic milking.  This change assists this producer staying in business.  Each dairy cow generates an estimated $17,000 to the local economy meaning an average 100 cow dairy herd generates $1,700,000 each year to the local economy. Also, increased learning in production and price risk management assist lenders critiquing balance sheets and financial statements of borrowers for projected incomes and expenses into the next year, along with possible expansion or reduction plans.  This knowledge helps reduce the failure rate of loans which is expensive for both the borrower and lender.

RESPONSE
(Outputs: activities, numbers reached, publications, products)

The Tri-State Agricultural Lenders Seminar is the main focus of activity. Powerpoint presentations were prepared for each of the five topics presented.  An “Economics of Robotic Milking” spreadsheet was prepared by Larry Tranel and Kristen Schulte, ISU Extension farm management specialist in NE Iowa.

RESULTS (Outcomes:  specific changes that occurred in Learning, Actions, Conditions; how outcomes were measured)

85 agricultural lenders attended the session. 74 lenders responded to a post-pre survey regarding their level of knowledge increase on a scale of 1-10 with one being little increase and ten being a large increase.  For each of the session their increase in knowledge level was:

n=74                                                            Level of Knowledge Increase  

1. Livestock Risk Management Update                                                           +6.55
Jim Jensen, Farm Management Specialist, ISU Extension
                                                                                                                                 
2.  Can Robotic Milking Be a Good Investment?                                            +7.75
                Larry Tranel, Dairy Field Specialist, ISU Extension

3.  Ethanol, Grain Marketing and Risk Management                   +7.65
                Chad Hart, Grain Marketing Specialist, ISU Extension

4.  Federal Dairy and Ag Policy—Farm Bill Update                                       +7.01
              Scott Brown,  University of Missouri

5.  Dairy Marketing and Risk Management Update                                     +7.18
                Robert Cropp, Dairy Marketing Specialist, UW Professor Emeritus

On this 10 point scale, the level of knowledge increase for each of the topics increased dramatically for each of the topic areas.

When surveyed lenders were asked:
 “Has this seminar been of high value for you?”        99% responded YES.

When surveyed lenders were asked:
“What did you like best about the conference?”  They responded:

Chad Hart/Ethanol/Grain Marketing (15x)*; Larry Tranel/Robotic milking (13x);  Excellent and knowledgeable speakers (12x);   Good location/facility/meal (10x); Varity of topics (5x); Scott Brown, Federal Ag Policy (3x); Robert Cropp/Dairy Marketing (2x); Risk management; Jim Jensen/Livestock information; Knowledgeable presenters and good information; Speakers had good slides and presentations; Chad Hart/Larry Tranel did excellent presentations; On-going references to what we need to monitor in the coming year to support our farmers and manage risk in our portfolios; Best ever; Dairy emphasis with some crop info; Expertise regarding worldwide markets and domestic ones.

Public Value (now or future)
(Impact:  Who benefits beyond participants and how?  What conditions changed?)

The economy is the biggest recipient of this seminar event due to the increased ability of lenders to make informed choices on lending portfolios.  As stated in the survey, one benefit is: “the on-going references to what we need to monitor in the coming year to support our farmers and manage risk in our portfolios. Thus, the producer clients are benefited through more informed support from their lenders.  This changed condition helps keep them in business.  Their staying in business has a $17,000/cow benefit to the local economy.

Major Partners or Collaborators

University of Wisconsin-Extension, University of Illinois Extension, University of Wisconsin-Platteville.

Where story took place
(Region, campus, multi-regional)

Seminar hosted in Dubuque, IA but multi-regional in NE/SE Iowa, SW Wisconsin and NW Illinois. 

Fiscal Year

2011-2012

Multi-state or Integrated (Ext + Research)

Seminar hosted in Dubuque, IA but multi-regional in NE/SE Iowa, SW Wisconsin and NW Illinois. 

Funding Source

Self-funded by participating lenders

Keywords

Agricultural lenders, dairy, risk management, robotic milking

 

Page last updated: December 1, 2011
Page maintained by Julie Honeick, jhoneick@iastate.edu