quences, and characteristics of the decision maker (experience, financial .... application software owned, as did ownership of a farm-related business and the ... Many producers have not adopted data intensive farm informa- ..... free time, funds for family ..... Information from their FIS played a key role in both decisions.
Farm Information Systems Their Development and Use in Decision Making Prepared by Damona Doye, Oklahoma State University; Robert ]oOy, Iowa State University; Robert Hornbaker, University of!Oinois; Tim Cross, University ofTennessee; Robert P. King and WiOiam E Lazarus, University ofMinnesota; Anthony Yeboah, North Carolina A&T State University; and Ed Rister, Texas A&M University.
Agricultural experiment stations of Illinois, Indiana,
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Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin with r--- ~:.r•·--....,r ,_
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the U.S. Department of Agriculture cooperating.
Research Bulletin 601 North Central Regional Research Publication No. 345
A publication of the NC-191 regional committee on Farm Information Systems
August2000
Project NC-191, Farm Information Systems Sponsoring Experiment Stations Illinois Indiana Iowa Michigan
Minnesota North Carolina A & T North Dakota Ohio
Tennessee Oklahoma State Texas Wisconsin
Administrative Advisor Marc Johnson, Kansas State University
North Central Regional Technical Committee NC-191 Stephen Harsh
Marvin Batte
Robert Hornbaker
Department of Agricultural
Department of Agricultural,
Agricultural and Consumer
Economics
Environmental, and
307 Agricultural Hall
Development Economics
Michigan State University
The Ohio State University
East Lansing, MI 48824
2120 Fyffe Road Columbus, OH 43210
Tim Cross Agricultural Economics and Resource Developement
Economics University of Illinois Urbana, IL 61801 David Watt Department of Agricultural
Robert Jolly
Economics
Department of Economics
Morrill Hall
University ofTennessee
560 Heady Hall
North Dakota State University
P.O. Box 1071
Iowa State University
Fargo, ND 58105
Knoxville, TN 37901-1071
Ames, IA 50011 Robert King
DamonaDoye
Ed Rister
Department of Applied Economics
Department of Agricultural
Department of Agricultural
Classroom Office Building
Economics
Economics
Oklahoma State University
Texas A&M University
529 Agricultural Hall
College Station, TX 77843-2124
Stillwater, OK 74078-1066
Center for Dairy Profitability 279 Animal Science 1675 Observatory Drive
St. Paul, MN 55108 Craig Dobbins
Anthony Yeboah Gary Frank
University of Minnesota
Department of Agricultural Economics and Rural Sociology CH Moore Agricultural Research Facility
University ofWisconsin
North Carolina A&T State University
Madison, WI 53706
Greensboro, NC 27411
Department of Agricultural Economics 1145 Krannert Bldg. Room 640 Purdue University W. Lafayette, IN 47907-1145
Contents Farm Information Systems: Their Development and Use in Decision Making ..................................... 1 Technology Adoption and Benefits ...................................................................................................... 3 Computer Adoption ............................................................................................................................ 4 Conceptual Framework ........................................................................................................................ 6 Methods and Procedures .................................................................................................................... 10 The Peregrine Farm ............................................................................................................................ 16 Four-Lane Farms, Inc......................................................................................................................... 22 Oak Hollow Dairy ............................................................................................................................. 29 Big Stone Farm .................................................................................................................................. 36 The Signal Ranch ............................................................................................................................... 42 Cross-Case Analysis ........................................................................................................................... 49 The Case Study as a Research Technique for Agricultural Economists ................................................ 53 Conclusions ....................................................................................................................................... 54 Further Research ................................................................................................................................ 56 References .......................................................................................................................................... 57 Appendix A: Interview Protocol ......................................................................................................... 59 Suggested Case Study Report Content ....................................................................................... 61 Prepare Final Case Study Report ................................................................................................ 62 Appendix B: NC-191 Interview Packet ............................................................................................. 63
Farm Information Systems: Their Development and Use in Decision Making Agricultural producers continue to be challenged to become better managers of their resources. In an information age and a globally competitive environment, most academicians agree that farmers and ranchers need improved farm information systems. For decades educators have attempted to encourage record keeping by developing hand record systems and software, as well as facilitating the formation of farm business management associations. Yet, farm record keeping generally remains a neglected, often distasteful chore, and many farm information systems lack the sophistication found in small businesses with comparable levels of investment and equity. Advances in computer hardware, software, and telecommunications technology have greatly increased the potential for effective computer-based support of farm management decisions. New information technology available to farmers is recommended as a way of increasing farming efficiency and environmental safety. Electronic information data bases greatly increase the amount of information available to farmers while allowing them to select information they deem most useful to them. This technology is generally expensive, however, and requires a careful investment analysis before farmers adopt it. These advances continue the trend of expecting farmers to use even more information when making decisions. Increased market variability, more complex production technologies, and greater need for financial planning and control have increased the demand for information by farmers and the advisors that help them make management decisions. Fewer government programs at the farm level have resulted in an increasing need to evaluate and manage risk, with corresponding increases in information needed for risk management decision making. Private sector firms and public sector institutions have responded by developing a wide range of software, training, and information service products for farmers. Despite these significant changes in both the supply of and demand for information products and services, the adoption of computer-based farm information systems has been slow. A problem remains in determining the value of better information. Farmers differ in the ways they use management information, from being information "hogs" requiring great amounts of detailed information, to being "seat of the
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pants" decision makers where experience and intuition are all that is used in decisions. Academic institutions, including the cooperative extension system, have routinely addressed and promoted the information intensive style of decision making while rejecting those decision makers who appear to use little, if any, information. In actuality, these latter decision makers may simply be using information differing from what land grant universities are accustomed to providing or analyzing. The NC-191 "Farm Information Systems" is a regional research project initiated in 1993, with twelve participating states. It has focused on various types of information systems, the degree to which farmers use different types of information, farmers' learning styles, farm decision processes, and data base system design. In 1995 NC-91 completed a twelve-state survey documenting components of farm information systems and farmers' use of information (Batte). Results generally
2.
supported the notion that farmers use only a limited number of information sources and that records were used primarily for tax planning and generating financial reports for obtaining credit. The most important uses of crop records included determining the amount of fertilizer and the crop variety to plant. The most important uses of livestock records included determining which animals to cull and monitoring health/disease prevention programs. The majority of farmers did not place much emphasis on many of the analysis tools that farm management specialists consider important for farm/ranch decision makers. The survey helped document farmers' adoption of technology and differences in information systems by geographic region, size of operation, and enterprise. It indicated that information from the record system is important, but it did not provide insights into how this information is used to identify problems or the motivation for and perceived benefit of information management. Another NC-191 initiative focused on farmers' identification of critical success factors. The NC-191 workshop activities and decision process effort led to the realization that the decision methods used by farmers include a much broader set of methods than full involvement, full analysis decision processes (e.g., following the textbook problem solving steps) used in undergraduate education (King, Cross, Dobbins, and Fuller). The extent to which decision makers use the six decision steps of analysis that farm management specialists tend to teach depends on problem characteristics (how much time is available to make the decision and how often the decision is made or has been made in the past), the importance of the consequences, and characteristics of the decision maker (experience, financial position, the decision maker's individual learning style, and relationships among individuals involved in the decision, etc.). A few producers have developed systems that capture essential information in a timely, efficient manner. What can be learned from these producers? What makes
them different from other producers? Is it interest, skills, time, or cultural indoctrination? How is information used in decision making? How does it influence decisions-routine and strategic? Do farm records matter? Do they help producers become more profitable or better prepare them to achieve other goals? NC-191 participants sought answers to these questions through interviews with farmers perceived as having innovative or successful farm information systems. Theoretical models and surveys assume we understand the problem we are studying. What if we do not? Agricultural economists have a poor understanding of the complexity of and objectives driving small family-owned businesses; for example, issues such as family and adult development, communication skills, or business succession influence management and, presumably, farm information systems. It is likely that information management strategies and professional or human capital development are linked in complex ways. We need to understand information management in a systematic way. This requires careful and skilled observation of actual businesses. For many economists, observation seems to be a lost skill. Case study research can help us regain or at least strengthen those skills. Exploratory case studies provide a descriptive base from which a better understanding of the issues in developing a farm information system (FIS) can be developed. The objectives for this study are to: • Document how farm information systems have developed on farms perceived as having innovative or successful farm information systems; and • Describe how farm information systems are used in strategic decisions on these farms.
• Technology Adoption and Benefits Empirical studies have found a positive relationship between the education level of farmers and the likelihood of adoption of a new technology (Feder, Just, and Zilberman; Lin). In addition, farm size has been shown to have a positive effect on the adoption of new technology (Lin). Zepeda's study of factors affecting technology adoption by California dairy farmers found that education had a significant positive effect on use of Dairy Herd Improvement Association (DHIA) record keeping. Bhattacharyya et al. found that use of computers, veterinary checkup of herd, and herd size influence the probability of adoption of trichomoniasis vaccine by Nevada range cattle producers and that cooperative extension programs enhanced the rate of adoption. Marra and Carlson investigated the relationship between farm size and technology adoption and concluded that management ability and conservation tillage practices
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were associated with the allocation ofland to a new technology (double-cropping). Empirical evidence supported the Just and Zilberman model of technology adoption under risk and the relationship to farm size. The combined effects of risk attitudes and the covariance of returns were hypothesized to be limiting factors in the size-adoption relationship, assuming a continuous quadratic function was appropriate. The rapid diffusion of a new technology may be constrained by lack of credit, inadequate farm size, unstable supply of complementary inputs, etc. (Feder, Just, and Zilberman). Knudson's study of the diffusion of semi-dwarf wheat varieties in the United States points out that the diffusion path of an innovation can be significantly affected by technological change in other related areas (e.g., fertilizer in her study). Leathers and Smale use a Bayesian approach to model observed behavior of sequential adoption of a package of new technology, explaining that a farmer may be uncertain about whether new production techniques will be successful on his/her
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farm. Experimentation with techniques may not resolve this uncertainty so a farmer may choose to adopt only part of the recommended package and gradually learn more about the innovation as a whole. Leathers and Smale conclude that "sequential adoption may be a rational choice for imperfectly informed farmers and need not be viewed as evidence of institutional shortcomings or farmer irrationality'' (p. 741). Shapiro, Brorsen, and Doster found that risk perception was an important factor in the decision to adopt double-cropping of soybeans and wheat in Indiana and, unlike some other adoption studies, human capital factors were not. Farmers who double-cropped were more highly leveraged and apparently adopted this technology to both increase income and diversify risks.
• Computer Adoption In the past decade, computer adoption by farmers has increased from 3 percent (Willimack) to 20 percent in 1997. National Agricultural Statistics Service (NASS) data indicate that computer use in the farm business increases as farm size (measured by farm sales) increases and that crop farms are more likely to use computers for farm business than livestock farms. In a study of computer use by farmers in Tulare County, California, Putler and Zilberman found that the size of the farm, education and age of the operator, and the ownership of a farm-related non-farming business significantly influenced the probability of computer ownership while the type of farm production did not. However, the type of farm products produced did significantly impact the type of application software owned, as did ownership of a farm-related business and the education of the operator. They conclude that "basic introductory educational
programs about computers may need to be targeted toward small farmers and lesseducated farmers, while more advanced computer-oriented programs should be targeted toward large farms and well-educated farm operators." Another important finding of this study is that "the use of transaction processing applications ... is much higher than for decisions support applications." Batte, Jones, and Schnitkey's research identified factors influencing commercial Ohio farmers' adoption of computers and the number and type of applications used. Education positively influenced the rate of computer adoption. Older farmers were less likely to adopt computers, were less likely to find them useful, and made fewer applications of the computer in their business. Specialized grain producers were less likely to use a computer in farm management than either dairy or mixed livestock producers. Producers who used their records in management decisions were more likely to use a computer for business management. Farmers who spent above-average amounts for farm information (subscriptions, consulting fees, and computer software) were more likely to own computers. Batte, Jones, and Schnitkey argue that adoption of a computer and its complement of software may require new skills leading to high learning costs, unlike other new technologies such as hybrid seed which requires little adaptation in the management process. Factors predicting computer adoption-age, education level, farm size-did not influence producers' satisfaction with computer technology. Batte, Jones, and Schnitkey found that the most frequently used applications were business accounting, business planning (budgeting, cash·flow projections, etc.), and production record keeping. Education and increased tenancy was positively related to the number of applications, as was the use of a formalized financial records system. Jarvis concluded that the probability of computer adoption for Texas rice producers increased as farm size and business complexity increased. Some evidence that adoption of computer technology differed from production technology was revealed through the negative sign on an index of innovative production practices and use of production consultants. A positive relationship between computer adoption and the actions of producers' peers and children's computer experience was found. Encouraging computer user groups and computer training courses for producers could foster the adoption of computer technology. Baker explores characteristics that influence computer adoption and successful use in non-farm agribusinesses in New Mexico and finds computer adoption is related to firm characteristics such as size and type of business but unrelated to manager characteristics such as age and education. He hypothesizes that decentralized decision making in non-farm agribusinesses relative to farms means manager characteristics have less impact on decisions about computer utilization. In Baker's study, manager involvement in the computer purchase decision was the most
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important characteristic affecting computer effectiveness as measured by user satisfaction and number of applications. Managers who participate in decisions to computerize operations are thought to believe that computerization will increase profits by supporting managerial decision making. In a study of on-farm computer use by New York dairy producers, Lazarus, Streeter, and Jofre-Giraudo found evidence that a computerized farm information system was a good investment for farms with 100 or more cows. Verstegen et al. quantify economic benefits of farm information systems (daily production information on individual animal levels) in sow farming by combining data from two survey studies. They estimate a return on investment of between 220 percent and 348 percent for sow farms in the Netherlands.
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• Conceptual Framework Farm managers are assumed to be utility maximizers, where utility is a function of profits and risk (Anderson et al.). Farm profits, off-farm income, farm characteristics, personal attributes, and preferences help determine utility; constraints on the utility function can include time, human capital, and money. Farm information systems (FIS) are promoted as tools to assist businesses in forward planning, risk management and the control function of management. Thus an efficient and effective FIS is expected to contribute to increased profits (for instance, by facilitating cost control or identifying opportunities to lock in profitable prices for products), increased productivity, and lower financial risk. Development of an FIS requires an investment of human capital, time, and financial resources. While some output from the FIS may be tangible (e.g., a monthly cash flow budget), many potential benefits are less visible and a direct connection to the "bottom line" is difficult to trace. Many producers have not adopted data intensive farm information systems promoted by educators, presumably because their perception is that the costs of the idealized FIS outweigh its benefits. From the literature review, factors that have been found significant in studies of technology and computer adoption include age, education, goals, farm size, business complexity, increased tenancy, perceptions of risk, type of production, ownership of a non-farm business, cost of the system, inn0V3:tiveness in production, average expenditure on information, and use of the technology by peers and other family members. These variables are also thought to he relevant to the analysis of FIS development and use. Conceptualized relationships with respect to these factors include: • Age. Younger managers would likely have had more exposure to computers in their education and would be more likely to use them in their operations. And,
younger operators are often more highly leveraged and thus more vulnerable to risk, suggesting a greater need for a well-developed information system. Older operators, particularly those near retirement, might be less likely to invest in new technology if they are emphasizing business goals relative to personal goals. Older operators also have less expected time to recoup the costs of investment in new technology or new skills. • Education. More highly educated producers are expected to place a higher value on information and information systems, leading to increased demand for information. • Goals. Managers with an emphasis on profitability would be expected to have substantial financial records, together with production records, while managers with less emphasis on profitability might stress, for instance, "fat, happy cows" and rely on visual feedback rather than a record-keeping system so long as financial resources allow.
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•Farm size. & farm size increases, the financial investment required increases, as do management responsibilities. More large operations have managers with a business, rather than lifestyle, orientation. Farms large enough to have employees have increased record-keeping requirements for
tax
and legal purposes, and few
of their managers are interested in having labor that does not pay for itsel£ Larger farms are, therefore, expected to have more complex information systems. • Type of production. Intensive or integrated operations require a coordinated flow of production through all stages in the system. A more comprehensive tracking and projection system is expected in the FIS. • Business complexity. More complex businesses are expected to have more detailed information systems as business relationships become more complicated, responsibilities of managers become more diverse and more coordination is needed to ensure smooth ongoing operations. In some cases, tracking a few significant success factors-for instance, plant population and variety-in a pocket notebook may be sufficient. •Innovativeness in production. Managers with a propensity to be on the "cutting edge" with respect to production might also be expected to have innovative information systems, provided that time or financial constraints don't preclude them from developing both production and record-keeping expertise and purchasing capital. • Increased tenancy. With increased tenancy, farm managers must communicate with and maintain relationships with more people and partners. Information and records are an important resource for communications between parties.
• Perceptions of risk. Farm managers are assumed to be risk averse to some degree. Records assist in risk management and prepare operators to take advantage of opportunities. Thus, in operations with more risk or for managers with greater relative risk aversion, higher rates of adoption and use of FIS are expected. • Non-farm business ownership, experience. Experiences with FIS off-farm would likely increase adoption on-farm. • Cost of the system. Historically, investment and maintenance costs might have been barriers to some in adopting computers, for instance, as part of an FIS. While the cash outlay has become less expensive over time relative to other farm machinery and equipment, significant human capital barriers with respect to adding computer and management skills remain. Unless training and support are readily available and schedules permit ample time to learn these skills, ongoing
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operations may find it difficult to add information management expertise. The greater the cost of FIS components, the less likely they are to be adopted. • Average expenditure on information. Producers evidencing a "need to know" would be expected to adopt technology that would allow them to more efficiently process and summarize information. Logically, then producers are expected to have higher rates of computer adoption. • Culture (use of the technology by peers and other family members plus emphasis placed on personal growth and business improvement). Managers whose upbringing included an emphasis on or encouragement of records to document resource use are expected to have retained those skills and built on them as adults. Likewise, if peers or other family members use computers, for instance, managers are more likely to use computers for farm records and farm management. • Learning style and personal preferences. Managers with analytical bents are more likely to have well developed FIS, and people who are disciplined are more likely to keep records up to date. Managers with math phobia or a fear of knowing ("ignorance is bliss") may avoid financial record keeping. Just as some people do not exercise even if they know it would be good for them, some people do not keep records. Some managers with sufficient resources claim that they don't want to know, for instance, what it costs them to raise cattle, as they don't want to change what they are doing. • Time constraints. Managers whose operations are labor intensive but not large enough to require hired labor may be precluded from developing the desired farm information system. Their time is devoted to producing agricultural products.
Considering these conceptualized relationships, several hypotheses about farmers' use of information were formulated by NC-191 participants before interviews with producers: • A farm manager chooses to adopt a specific information system because of its perceived value, i.e., its contribution to the farm's goals. For example, it may help ensure employee accountability, identify costs to be controlled, maximize the ability to manage details of farm management, minimize time spent doing routine jobs, provide information needed by outside stakeholders (e.g., lenders), increase profits by linking carcass information with herd genetics, support critical success factors of getting cows bred in a timely manner by listing calving dates, pregnancy check status, breeding dates, etc. • Farms that specialize in on-going or continuous production-for example, farrow-to-finish or dairy enterprises-develop an FIS that is inwardly focused and largely coordinates the production process. Farms that specialize in enterprises that are more dependent on successful marketing-cash grain, feeder pig finishing, or stocker/feeders-develop FIS that are externally focused and support the sale of products or the purchase of inputs. •The value of a computer-based FIS increases with its ease of use, flexibility, number of reporting features, timeliness of obtaining reports, etc. • Production records are important and increase the likelihood of financial success in intensive, integrated operations; financial records are more important in extensive operations lacking the ability to monitor and control production inputs (e.g., forage production in a grazing livestock system). •Strategic decisions require information from much more diverse sources than do tactical or operational decisions. Therefore, a farm's internal records are of less direct value in making strategic decisions than in making tactical decisions. For example, adding a new crop enterprise requires substantial external information and minimal information from internal records. • Families with off-farm business experience are more likely to keep and analyze financial records. •Records kept are indicative of business priorities and goals. For example, a lack of farm financial records indicates that lifestyle is more important than profit.
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• Methods and Procedures To better understand how the farm information system is used in identifying problems and evaluating alternatives, case studies of farmers' use of farms were conducted by researchers from six states. Exploratory case study research was initiated to delve more deeply into the evolution of record-keeping systems and their use in operational and strategic decisions, including resource allocation. Yin describes the case study as the "preferred method of social science research when 'how' or 'why' questions are being posed, when the investigator has little control over events, and when the focus is on a contemporary phenomenon within some real-life context (1994, p. 6)." Another definition for the case study provided by Yin (1993) is "an empirical inquiry in which the number of variables exceeds the number of data points." The essence of a case study is that it tries to illuminate decisions: "Why were they made? How were they implemented? "What were the consequences of the
10.
decision? The case study is an empirical study of a phenomenon in its real-world context when the boundaries between the phenomenon and context are unclear. Research case studies are required to rigorously and fairly present empirical data. The case is the unit of analysis. However, the case is not a sampling unit. Multiple cases are likened to multiple experiments. They are selected to predict similar results (literal replication) or contrary results for predictable reasons (a theoretical replica-
Figure 1. Case study research process ...i.(1-------D_e_s_ig_n_ _ _ _ _ _-;>~
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Select cases
Single-case data collection and analysis
Conduct 1st case study
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.. Write individual case report
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Conduct 2nd
~ case study
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• pattern match • policy implications
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Write individual case report
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Modify theory
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• interviews Design data collection protocol
Draw cross-case conclusions
• interviews
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•documents Develop theory
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• observations
• pattern match
•documents
• policy implications
',.. Develop policy implications
• replication
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Conduct remaining case studies
• define "process" operationally • define "process outcomes" • use formal data collection techniques
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tion). In this research the unit of analysis was the farm management team on farms perceived to have innovative or successful farms. Figure 1 highlights the case study research process used in this project. Through periodic meetings, theory was discussed, hypotheses were formed, and case selection was deliberated.
An interview protocol was drafted and, after discussion and revision, was adopted by all participants (Appendix A). Case studies were developed independently in each state. Individual case reports of initial interviews were shared in both written and oral forms at a regional meeting. Lessons learned and cross-case observations were discussed, as was missing data in certain cases. A second interview or additional contact completed the data collection. Data were collected on the variables described in the preceding section as potentially important. Personal interviews were the primary source of data. Generally, two interviews were used. In the first interview managers were asked to describe the elements in their farm information system and its development over time. In some cases the interviewee received an interview packet in advance of the initial meeting and had the opportunity to complete it before the first meeting. Results of the interview were summarized and returned to the manager for review and corrections. In the second interview managers described a strategic decision and their use of information in the process. In all cases the interviewer either took a colleague along as an observer or used a -tape recorder to capture the discussion. In some cases interviewers had multiple sources of evidence of managers' practices as they were shown physical evidence of records kept and used, had past observations of producers' practices through other programs, etc. Particular attention was given to how information technologies are used to support tactical, operational, and strategic decision making, the differences in costs (both equipment and human capital or training costs) associated with the alternative types of information systems, and differences in the types of analyses conducted by users of different information technologies. The case study summary for each case includes: •A brief discussion of the evolution of the farm information system, components of the FIS, division of record-keeping responsibilities, standardized office routines, stumbling blocks and disappointments, strengths and sources of pride, the impacts of the FIS on the organization and management, a review of a strategic decision and how the farm's FIS supported it, and future plans for the FIS on the farm. • The researcher's insights gained which were anticipated to benefit other farm management advisors and educators. A summary of the management and farm characteristics for the five case studies that were conducted is shown in Table 1. Characteristics of the farm information systems used in these farms are summarized in Table 2. Detailed descriptions of each case study are presented next.
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Table 1. Summary of Manager and Farm Characteristics by Case Peregrine Farm
Four Lane Farms, Inc.
Oak Hollow Dairy
Big Stone Farm
Signal Ranch
Age
Alex, 41 Betsy, 40
2families, 2 generations
John Angie
Carl, 54
James, 61 Grace, 53
Education
B.S. Soil Science
B.S. Forestry Recreation B.S. Farm Operation
B.S. Ag Business B.S. B.S. Biology & Chemistry D.V.M.
Goals
•Stay small • Minimize outside labor •Sell direct to consumers •Make living off farm • Debt free in 7 years
• Income for 2 generations •Teamwork • Self improvement • Farm succession
• Maintain farm for children • Pay off debt by 2006 • Increase milk production • Improve quality of life (more free time, funds for family living)
Non-farm business experience • He paid way through college • Real estate broker • Agricultural sales in construction • She worked in greenhouses, restaurants
Ph.D. Animal Science B.S. Home Economics
• Profitable, sustainable ag •Profit operation • Eventually transfer manage• Eliminate use of purchased men! and operations to fertilizer and herbicides daughter and son-in-law • Help keep other farms viable
• Public and vocational school • Taught high school, sold real • University faculty teacher estate • Veterinary practice • Wife works off farm
Type of production; business complexity
•Flowers •Berries • Vegetables
• Farrow-finish, corn, specialty • Dairy, grass hay, pasture, food and seed soybeans corn silage, haylage, under contract tobacco, wheat/vetch, fed dairy steers • 5 full-time employees • 2 part-time employees
• Small grain/alfalfa/corn/ soybean rotation • Hog finishing operation that is part of a network with brother and nephew
• Cow/calf, stockers, feeders, pasture • 6 full-time employees (including 2 owners) • 6 part-time employees (including 2 owners)
Farm size
26acres
900 acres, 1000 sows
• 500 acres (1/2 forest) • 250 dairy cows
• 300 acres •600 head • Hog finishing facility
• 44,540 acres • 1,300 cows • 1,200 stockers
Tenancy
All land owned
60 percent owned
All land owned
All land owned
•Adopt new technology techniques • Cross train managers
Uses BST (bovine growth hormone), TMR (total mixed rations), no-till
• Recognized as an innovator in sustainable crop production practices • Exploring new ways to develop markets for organic products
• 44, 140 rented •400 owned • Use of genetics • Early users of retained ownership • Shift number of cows, calves, stockers with pasture, market conditions
Innovativeness in production
Table 1. Continued-Summary of Manager and Farm Characteristics by Case
Culture
Peregrine Farm
Four Lane Farms, Inc.
Oak Hollow Dairy
Big Stone Farm
Signal Ranch
• Value contact with other producers •Continual learning
• High value on continued education
• Participant in numerous research projects
•Value continuing education • Participant in university research projects
• Active learners •Value continuing education • Involved in university research projects
• Very analytical
• Careful, involved observer • Thrives on information
• Careful, involved observer • Participant in university research projects
• Analytical
Learning styles and preferences • Membership in several farmer organizations • Attends conferences Time constraints
Use part-time employees at critical times and have sufficient full-time employees
Timeliness of operations Ease constraints through use crucial to vegetable production of part-time employees and contract producers
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Table 2. Summary of FIS Characteristics by Case Peregrine Farm
Four Lane Farms, Inc.
Oak Hollow Dairy
Big Stone Farm
Critical success factors
• Develop markets • Good lettuce crop
•Death loss •Average daily gain • Feed efficiency • Farrowing rate • Non-productive days • No. of pigs born alive • Weaning rate
• Produce 3.5 million lbs. milk/year • Get cows bred in timely manner • Maintain supplemental income
• Weed control and soil fertility • Good genetics management • Efficient production price to • Steady flow of animals reward genetic program through swine network
Manual records
• Notes on calendar • Pocket notebook
Journal of notes related to pork sales
Typed crop narrative with activities, conditions, problems
Computer
1st adopted in 1993, now have Windows, modem
1st adopted in 1983. In-house • 1 at home system with hired computer • 1 at office operator • 1 at milk parlor
1st adopted in 1992
1st adopted in 1985, now386 DOS
Financial records and analysis • Quicken° tools • PFS: Windows Works0
double entry
• Quicken° with QuickPay • FinPack®
• Hand records • Pioneer, now Quicken°
• Hand records • Quicken° (QuickBooks0 next?) • Lotus0
Time spent keeping business records
6 hrs/month
20 hours/week
4 hours/week
30-40 hours/month, including Internet use
40 hrs/month accounting, 2 hours/month on payroll, 20 hrs/month on spreadsheet for other records
Time spent analyzing records
• 1 hr/month on financial • 4 hrs/month on production
•Weekly (30 minute) and monthly (2 hr) meetings of managers, employees
• 1-2 hrs daily on production
Principal off-farm sources of info
• Other producers most important •Accountant •Magazines • Trade association
• Accountant • Veterinarian •Ag engineer • Breeding consultant • Personnel consultant • Seed stock company consultant • Crop scouts • Agronomists • Had market service but dropped • Plan to add Internet access
• Farm and dairy publications • Nutrition consultant •Extension
Signal Ranch
"Not enough"
• Other producers • Internet • University and Agricultral Research Service researchers • Tax preparer • Local computer vendor • National Resource Conservation Service • Farm Service Agency
• University professors and extension specialists • Accountant • Tax preparer • Veterinarian • County agent • Other producers
Table 2. Continued-Summary of FIS Characteristics by Case Peregrine Farm
Four Lane Farms, Inc.
Oak Hollow Dairy
Big Stone Farm
Signal Ranch
Expenditure on FIS, informalion (excluding time)
8-1 Opercent of gross income, $17,000 initial cost 6-8 conferences annually
$1,060/month + $5,000 annual for repairs, maintenance
Written goals
No
Yes
Yes
Yes
No
Cash flow budgets
No
Annual and monthly reconciliation
Annually
Annually
Annually
Compare actual to budget
No
Annually
Semi-annually
Annually
Annually
Current balance sheet
Annually
Annually
Semi-annually
Annually
Annually
Profit Analysis
Annually
Annually
Annually
Annually
Annually
Enterprise analysis
Labor use
Swine cost of production, monthly, crop costs and production, feed mill
Annually, using FINPACK"'
Certified organic barley, oats, Annually corn and soybeans plus alfalfa Cow/calf, stockers, in 4-yr. rotation yearlings
Specialized records for problem or specific areas
Organic certification
Feed mill Income trends
"What if' analysis
No
Enterprise analysis
Annually, also long run budgets
FIN PACK"'
• IFFS0 • marketing strategies
Production records
• Fertilizer use • Pesticides • Machinery operations •Crop yield • Irrigation scheduling and amounts
• Quarterly inventory for lender • Monitor internal trends • Benchmark against industry norms •Adding GPS/GIS for crops
• Computerized milk production • Conductivity and cow activity
• PigCHAMP •USDA/AAS crop system
• Whole farm basis • Quarterly inventory for lender.
Windmill, vehicle repairs Markets all hogs for partnership, prices hogs to be sold to partners
-•
V\
• The Peregrine Farm1 The Peregrine Farm is located in Alamance County in North Carolina. It has been owned and operated by Alex and Betsy Hitt since 1980. Alex is 41 and has a college degree in soil science, and Betsy, who is 40 years old, has a B.S. in forestry recreation and much experience in greenhouse and restaurant operations. The couple owns 26 acres, two of which are in cut flower production (over 100 varieties), 3/4 acre is in blackberry and blueberry production, and 2.25 acres are used for vegetable production. The rest of the land is hilly and mainly in pine timber. Over 75 different vegetables are grown each year and double-cropping is practiced within the limits of the crop rotation system. The principal crop in terms of largest sale is lettuce, followed by tomatoes, peppers, and asparagus. 16 •
They do not have a conservation plan but conduct a soil survey each year. The property receives about 40 inches of rainfall annually. They practice irrigation and each works about 50 weeks per year with a workweek of between 20 and 70 hours. They employ two part-time workers (Kim and Carlos), especially for harvesting and planting. Kim works about 75 days per year at an annual wage of $6,000 and participates to a limited extent in decision making. Carlos works about 50 days per year for about $2,000 and does not participate in decision making.
Farm History and Evolution The couple started farming right after graduating from college in 1980. Before that Betsy had some experience working in greenhouses and restaurants. Alex paid his way through college by working in the construction business. Berries were the only crop grown and were marketed through the pick-your-own system. However, they soon realized that this system would not generate enough income to make a living. So around 1984, they started diversifying into vegetables and selling at the farmers' market. In addition to being another marketing outlet, they also found the farmers' market to be a great research tool. They were able to determine consumers' preferences and the different types of produce being sold. They were even able to determine the seasonal effects on consumer behavior. The Hitts completely stopped doing the pick-your-own operation in 1988/89. They continue to grow berries but market them differently. The most rapid expansion 1 All information is believed to be factual. Prepared by Anthony Yeboah, Professor, North Carolina A&T University.
came with the cut flower business: from 0 to 2 acres in three years. Last year 53 percent of their sales were from farmers' markets. They also supply to four grocery stores and two restaurants. There are no written contracts. They hope to increase the farmers' market share to 60 percent this year. Despite serious natural disasters (hurricanes, flood, early freeze, etc.) over the last four years, they have consistently done better financially each year, mainly as a result of diversification.
Management Environment The farm was initially set up as a corporation. The Hitts sold shares to raise the seed money. These shareholders do not participate in the day-to-day decision making on the farm. However, over the years all the shareholders but one have been bought out. Alex is responsible for the vegetables and berries operations while Betsy is charge of the cut flower business. In addition, Alex does all the soil work: testing, bed preparation, etc. The Hitts have a list of simple goals and values which include a) the need to stay small, b) use very little outside labor, c) sell directly to consumers, and d) for parallel construction make their entire living from the farm. In the long run, they expect to buy out the remaining shareholder, be completely debt free in about six to seven years, scale down operation to about 3 or 4 acres, and sell all produce at farmers' markets. These goals, values, and expectations are communicated between the couple through daily breakfast discussions. Total areas planted to the various crops vary very little across years. The cost of production hovers around $30,000 each year, hence financial performance is dictated by weather situations and the ability to sell produce. This cost translates into about $6,000 per acre and includes not only input costs, but other costs such as utilities and health insurance which are not directly related to production. The gross return per acre is about $15,000 yielding a per acre net return of $9,000 and an expected annual net total return of $45,000. Good performance by lettuce is critical to the success of the farm in any given year. Sale of at least 20,000 heads oflettuce is necessary for success. This is followed closely by tomatoes. The number of heads per lettuce plant during the growing period is an indication of overall performance of the crop. Similarly, fruit setting and plant vigor are used to monitor potential tomato yield. The couple was the first in the area to enter the organic vegetable production business; hence they were able to capture a good marketing niche. With the relatively low cost of production, the return per dollar spent is high. However, these two crops will not necessarily make or break the couple since they are highly diversified. They are simply the two most important crops in terms of sales per acre.
• 17
The couple has a good understanding of their marketing outlets and strives to reduce the use of off-farm inputs. In addition, the proximity to several area farmers' markets is an advantage to the marketing of their produce. The markets work as a system and not as disjointed parts. The Hitts are keen on balancing the proper amount of hired labor with the cost of payroll. The structure of the farm has not changed in the past three years; however, there have been, and will continue to be, changes in the crop mix. Crops are marketed as cash sales at harvest without any storage.
Farm Information System Information management is very important to the couple together with societal concerns about natural resource issues and environmental regulations. The Hitts do not use any outside service to keep their farm business records. Initially, their record-keeping system consisted of a double entry ledger with information entered 18 •
chronologically. Their present farm information system (FIS) has both manual and computer based components. They purchased a computer in 1993 and in less than a month found it to be very useful. It has 200MB hard disk space and 4MB RAM. The computer also has a modem and uses the Windows® operating system. Alex is completely responsible for record keeping and is the primary operator of the computer. Alex is a self-taught computer literate and uses the computer between 10 and 15 hours a month. He uses the cash method of record keeping and keeps field records on fertilizer usage, herbicide applications, machinery operations performed, and crop yields. Crop records are kept for fertilizer used, insecticide and/ or fungicide applied, machinery operations performed, crop yield, cost of production, and revenue and irrigation scheduling and amounts. No records are kept on manure application, and labor use per crop is not monitored because of the large number of crops involved. The general business accounting software used is Quicken®. This software is utilized in doing balance sheets. PFS: Windows Works® is used for spreadsheet records and analysis. Receipts are entered into farm records about four times a month. However, expense data are entered only once or twice a year due to time constraints. Alex feels there is very little benefit to be derived from the additional time required for entry. About six hours a month are spent keeping business accounting records and an hour a month is spent analyzing them. An hour a month each is spent on keeping records for payroll, tax computation, crop records, soil maps, chemical use, and electronic spreadsheet for crops. Besides payroll and tax computation, where no analysis is done, the other activities take about an hour each for analysis. Word processing takes about eight hours a month.
In addition to the computer, notes on calendars and a pocket notebook are used to record crop data. Some of the tasks for which the computer has proven to be highly useful include business financial records, business planning, business correspondence, crop production record keeping, and marketing and price analysis. Alex feels that the computer has helped very much in saving time and getting better information than he was able to achieve with manually kept records. It has helped to keep up with the diversification program, helped with labor management, and the overall day-to-day management of the farm. Their FIS provides good enough data to make informed decisions, hence there is very little waste. They produce and market just what is needed. The Hitts do not have any major stumbling blocks or problems with their FIS. The only complaint they have is the amount of data required to be certified as organic producers. In fact, they plan to stop participating in the certification process. Alex also indicated that he would like to organize a notebook that would facilitate information retrieval more easily rather than to keep flipping pages. A computer software application that would allow crop coding will be useful. Currently, enterprise coding is done. Codes are given to the four enterprises: berries, vegetables, cut flowers, and prepared foods (canned vegetables). Individual crops are not coded. However, Alex is not sure the time and effort to do this will pay off. Over the past two years, the Hitts have utilized (2 to 5 times) a number of professional services for gathering farm financial information. These include an accountant or financial advisor, a tax preparer, cooperative extension specialist, a cooperative extension agent, a university professor, and other producers. Contacts with other producers was ranked the most useful, while the rest were viewed as only moderately useful. The principal off-farm sources of information are an accountant who provides updates on tax laws; magazines, such as "Growing for the Market;" and membership in various trade associations, such as the North Carolina Vegetable Growers Association. They attend six to eight conferences a year and spend between 8 and 10 percent of their annual gross income on continuing education. On-farm information is used to fine-tune the information obtained from these external sources. Because of the vast number of crops they deal with, they need to seek information from anywhere possible. Most of these conferences are held during the winter months and hence do not compete with farm production activities. They do not anticipate any major changes in this system. However, they are considering hooking up to the Internet even though they are wary of the time it might take to surf the net for information.
•
19
Decision Case Alex and Betsy have recently made two key decisions on their farm. The first concerns the need for additional hired labor. The couple presently uses about 50 hours a week of hired labor. Over the past few years, their records have shown that certain activities are not performed in a timely manner. These include planting, harvesting, and post-harvest handling. In addition, they feel they need to work a little less in order to improve their quality of life. They estimate that an additional 20 hours per week of hired labor will be needed. This additional labor will be used to improve efficiency so as to increase production from the same acreage rather than expanding the operation. More labor will make it possible to better prepare produce (e.g., washing) for the market. Betsy needs some help with the cut flower business (e.g., handling of cut flowers before sales) and 20 •
some of the other aforementioned activities will be done on time. Another motivating factor is the addition of another farmers' market to their marketing outlets. This requires increased production to meet the added demand. Mechanization will not be cost effective, and the couple does not have additional land to bring into production. An option is to rent additional land which will raise their fixed cost of production. Instead, the couple has decided to farm the present acreage more efficiently and more intensely. Both Alex and Betsy made this decision, and they are the primary beneficiaries. Quality oflabor is important to the farm operation. Potential laborers should be people who are interested in this business and hence are motivated to work and are also knowledgeable about the various operations. Farm workers groups will be utilized as sources for recruitment. The second decision concerns the need to even-out income flow during the year to avoid the wide fluctuations in income. This will require adding new crops during the off-season, e.g., planting specific crops during August and September. Information from their FIS played a key role in both decisions. The information kept on labor use by enterprise (berries, vegetables, cut flowers, and prepared foods) signaled the need for additional labor. Labor usage in previous years served as an indication of the need for added labor. However, the addition of another marketing outlet and the couple's desire to work less also contributed immensely to this decision. The ease of recording and retrieving information from the FIS (ease of operation) is perceived to be the major strength of the system. However, the couple feels that an improvement is needed to enable them to keep individual crop data even though
they are not sure it will be worth the time needed for the large number of crops they deal with. Also, they feel that some information that may be needed for long-term decision making is not well recorded. Overall, they do not expect this decision to have a significant impact on their farm information system. Concerning the issue of income fluctuation during the year, the FIS played a role since the couple keep records of income generated on timely basis. What type of crop enterprise will be determined by the availability of potential markets? Such information most likely will be obtained from outside their FIS.
Lessons Learned The couple has a very good FIS in place, and they find it useful. Even though expense data are entered once or twice a year, they are able to monitor their financial situation throughout the year due to fixed low crop production expenses (about $30,000). It is hoped that the FIS will assist them in the implementation of these decisions and help measure impact on the farm organization and management. The Hitts have already implemented the labor decision. However, instead of three parttime laborers as initially planned, they hired one full-time worker and one part-time worker. The decision to add additional crops in August and September to even out income flow will be implemented this year.
It appears that the couple relies heavily on their FIS for
taX
purposes. Additionally,
they keep good track of field activities in terms of input use and income generated. However, enterprise records are only kept with respect to income generated and not for input use. The latter are tracked mainly on a field basis. Most of the propositions were confirmed. For example, the couple indicated that the use of an FIS has helped in minimizing time spent doing routine jobs and has provided better information for their diversification program. Because vegetable production is a specialized farming enterprise which is very dependent on successful marketing, the couple's FIS is most important in supporting product sales and the acquisition of inputs, including labor. They rely very heavily on external factors. As mentioned earlier, contacts with other producers are the most important source of information. Total production and successful marketing are the keys to success in an intensive operation such as vegetable production. Good records of these are kept. When it comes to deciding how to accomplish certain tasks (operational or tactical), the couple relies more on internal information sources (FIS) whereas when deciding whether or not to do something new, both inside and outside information sources are utilized with greater reliance on the latter. For example, in deciding to hire more labor, the lack of timeliness in the operations as indicated by their records was a key factor in addition to the need to provide themselves more leisure time. However, the decision
• 21
to add a new enterprise during August and September required external information on potential markets for the proposed crops. Alex keeps a lot of information on the markets in the area, including weather and attendance records. This is necessary due to the importance of marketing to vegetable enterprises. The expected addition of new enterprises will increase the need for more internally focused FIS. Another proposition confirmed was the link between off-farm business experience and the likelihood of keeping and analyzing financial records. Even though Alex does not have any off-farm business experience, Betsy has some working experience in greenhouses and restaurants. However, the proposition that records kept are indicative of business priorities and goals was not confirmed. Alex and Betsy are very much interested in quality lifestyles, but they still keep financial records. It may appear that there is a need to ensure sound financial footing through good record keeping permitting pursuit of comfortable living. The farm is their only source of income. 22.
Finally, it might be proposed that the type and amount of detailed record keeping would depend on the time it takes to perform this activity and the perceived benefit. For example, the Hitts do not want to keep records of each individual crop variety because they do not think it will be worth the effort considering the number of varieties they deal with each year.
• Four-Lane Farms, Inc.
2
Four-Lane Farms, Inc. is located in east central Iowa in the heart of one oflowa's most productive regions. The farm is a two-family, two-generation operation owned and operated by the Boyd family. The core business is a three-site 1000-sow farrowfinish enterprise. They currently finish 75 percent of their own pigs. The remaining 25 percent are fed under contracts with nearby farmers. Market hogs are sold grade and yield on the cash market. In addition, the Boyds farm approximately 900 acres, 60 percent of which is on owned land. All corn produced is fed. The soybean enterprise produces specialty food and seed beans under contract. They also operate a feed mill as a cost center for the swine enterprise. The management team for the farm consists of two brothers, Don and Dan Boyd, and Don's two adult sons, Phil and Paul. There are 7-8 other employees involved in the business not including the contract finishers. An organizational chart is presented in Figure 2. The names of individuals and the farm locations have been altered to preserve anonymity. All other information is believed to be factual. Prepared by Robert W. Jolly, Professor, Iowa State University, and Robert H. Hornbaker, Associate Professor, University of Illinois. 2
Dan Boyd is a graduate oflowa State University with a major in farm operations. Although he has been involved with the farm his entire working life, he did work part time as a real estate broker shortly after graduation. Don attended Iowa State for a year. Following military service he returned to the farm full time. Phil also attended Iowa State but returned to the farm before completing his degree. Paul completed college in a neighboring state with a major in agricultural business. Following graduation he worked for five years in the swine seedstock industry and in agricultural advertising. He then returned to the family business. Four-Lane Farms is a very well managed business. The management team demonstrates a strong commitment to the pork industry as well as to the management of their business. Information is clearly and consistently identified as a critical element in their operation influencing both process management and business strategy. The culture of Four-Lane Farms emphasizes teamwork with clearly defined specialization and responsibilities. Communication is open across the management team. Self-
• 23
improvement is encouraged for management and employees. Their egalitarian approach to management has allowed the Boyds to deal with a number of critical issues such as risk management and succession planning for the business.
Farm History and Evolution For nearly 50 years the major enterprise of Four-Lane Farms was turkey production. However, two independent events caused all of this to change in the early 1990s.
Figure 2. Organization Chart of Four-Lane Farms, Inc.
IStockholders I Consultant pool
I I
I Management team Dan
I Don I Phil I Paul
I Finance, production contracts, MIS, business strategy 1 employee
Breeding/Gestation
Nursery
1000 Sows All-In-All-Out
1 employee
3.5 employees
I Finishing On-site
Contract
75%of farrowing
25% of farrowing
1 6 employee contractors
Feed mill Produces all rations Buys 50% of corn fed 1 employee
I Crop production Corn for feed
ISoybeans contract
The turkey industry was rapidly changing. Processors became fully integrated, controlling genetics, nutrition, production, processing, and retailing. For the Boyds, integration meant a shift entirely to contract production. With the contracts came intense supervision by the processor and narrow profit margins for the grower. The second major event was the incorporation of a second generation into the family business. To accommodate the increased labor force, the Boyds had to expand. However, the narrow margins in contract turkey production meant that output would have to double to maintain acceptable profitability and liquidity. In addition, contract turkey production did not play to the Boyds' strengths. They were well educated with excellent managerial skills. There was simply no way that contract production could adequately reward their human capital. Further, neither the younger nor the older generation really liked turkeys.
24 •
In 1992, the Boyds decided to shift to pork production. Their skills and knowledge in animal nutrition, cost control, animal health, employee management, and information management acquired in turkey production were easily transferable to swine. The Boyds remodeled some existing turkey buildings for hogs. They added new swine production and manure management systems. And because profit margins were wider in swine and the industry was still paying a reasonable return to management, the expansion required to accommodate the second generation was considerably smaller than would have been necessary had the Boyds remained in turkey production.
Farm Information System The farm information system currently in place at Four-Lane Farms has evolved over the past 20 years. The FIS consists of several interrelated components. The major ones are: •An in-house computerized accounting system. • An externally provided swine management record system.
• An extensive consultant pool. • Regular weekly and monthly meetings involving managers and employees. •External computerized information services. •In-house spreadsheets and data bases to support specific management decisions; externally provided yield monitoring with GPS/GIS capabilities. • An organizational structure and culture that encourages information acquisition and sharing. Each component is briefly described along with some information on its evaluation and future development.
The Boyds purchased their first computer in 1983. Initially, they hired a consultant to review their accounting needs and help select an appropriate system. The most important feature they were looking for was payroll accounting. They selected a double-entry accounting system developed in California for use in larger, high-labor operations. The initial purchase cost was approximately $17 ,000. Because on-farm computing was at an early stage of development in 1983, the Boyds decided to collaborate with a neighboring farming operation that was also interested in obtaining an accounting system. The two farms individually purchased the same accounting and hardware system. They felt this was essential for successful adoption-a users' group of two. The Boyds initially trained a farrowing house employee to serve as a computer operator and data entry clerk. Since then, they continue to use a hired person as a computer operator. The current operator has college-level training in computers and accounting. The hardware and software has been upgraded continuously since 1983. However, they have remained with the original vendor. The Boyds use financial information generated by their accounting system in several ways. First, their lender requires quarterly reports related to inventory management, production levels, and costs. The Boyds also monitor borrowing limits and spending against budgeted amounts. The financial statements prepared by their CPA from their accounting system are used to examine profitability, solvency, and liquidity performance. Net farm income, its level and trend, is considered to be the primary financial factor that they monitor. Their accounting software does permit cost and profit center analysis. Cost of crop production and profitability is currently monitored at the enterprise level. The feed mill is a cost center. Market prices are used as transfer prices for the feed mill. They also benchmark costs and feed performance against toll mills that are providing feed to the Boyds' contract finishers. On average the Boyds estimate 20 hours per week are required to input and review information from in-house computer systems. Record keeping for the swine enterprise is provided by a major seed stock company. The Boyds use both breeding herd and finishing components of the system. They switched to the vendor after starting with a small local firm because it did a better job with the breeding records. Their experience in turkey production enabled them to adopt modern swine production methods as well as the associated information systems. Turkey flocks use all-in-all-out finishing. Cost control and nutrition are key success factors.
• 25
The Boyds believe the swine enterprise information system is the critical element in the daily management of the business. Key critical success factors include: • Death loss. • Average daily gain. • Feed efficiency. • Farrowing rate. • Non-productive days. • Number of pigs born alive. • Weaning rate. The key aggregate performance indicator that they monitor is average cost of production. Any factor that potentially contributes to an increase in unit production costs is examined and, if possible, corrected. The swine enterprise is benchmarked against industry norms prepared by the seed stock company. In addition,
26 •
the Boyds monitor their own trends. They feel this internal assessment is important because of unique aspects of their business, production methods, and facilities. Consultants play a major role in the Boyds' information system. The primary consultants used by Four-Lane Farms include: • Accountant for routine accounting services and reports to lenders. • CPA for year-end financial statement preparation. •Herd veterinarian for routine health matters. • Consulting veterinarian for health management strategy. • Consulting agricultural engineer for waste management plans and ventilation. • Breeding consultant for artificial insemination (AI) management. • Personnel consultant for employee job descriptions, evaluation, compensation management, and personal counseling. • Seed stock company fieldman for routine record keeping questions and interpretation. • Seed stock company consultant for genetics, sow herd performance, and analysis of kill sheets. • Crop scouts provided by the local co-op. • Agronomists provided by seed companies, the local co-op or extension. Many of the consultants are used on an as-needed basis. Regularly scheduled meetings are used to augment formal information systems, encourage exchange of information, prepare data for input into the system, and interpret results. A 30-minute weekly meeting is held every Monday at I p.m. Ostensibly, the purpose of this meeting is to review swine enterprise data from the preceding week that
will be entered into the swine breeding data base. This meeting is attended by the management team and all facility managers. In addition, the meeting is used to identify
production problems apparent in the swine record data and take the corrective action. The meetings are also used to coordinate planned activities for the coming week. The second regular meeting is held on a monthly basis. It normally lasts two hours and includes supper. The meeting is attended by the management team and unit managers. This meeting has a prepared agenda. An employee or manager is selected to make a presentation to the group on a specific topic. Presentations might include a management issue, a topic from the employee's manual, or a self-improvement topic. The underlying goal of the monthly meeting appears to be team building, coordination, and professional development. Four-Lane Farms also organizes occasional retreats to deal with strategic issues or longer term plans. These are often held in a recreational setting. Occasionally the Boyds will
hire a professional fu.cilitator to help guide their discussion of a particular topic. The Boyds did subscribe to a satellite delivered market information service at one time. They do not currently. They feel the daily information was not particularly valuable. Weather information can be obtained elsewhere. Existing information from external sources is not adequate to assist the Boyds with hog marketing. They are not currently using the Internet, but expect to subscribe fairly soon. They plan to use the Internet for e-mail and to search for specific information. They see this as an improvement over print media-particularly for speed and convenience. The Boyds have developed a number of specialized record systems. Dan records by hand 25 variables on each load of pigs marketed. Some of this information is transferred to the computer. However, some is kept as a desk reference that Dan uses to monitor backfat or check postings. Several Excel spreadsheets have been developed by the Boyds. One monitors costs and utilization of the feed mill. Another extracts information from the farm accounting system into a trend sheet that compares cash, accrual, and taxable income. Four-Lane Farms is currently adopting Global Position System/Geographic Information System (GPS/GIS) technologies. They started this past year with a yield monitor on the combine. In the coming year they expect to capture information &om the planter and sprayer. This will add information on weed pressure, herbicide application, and variety performance to the yield and fertility information currently being obtained. Their experience with GPS/GIS has "generated a lot of questions." Originally they had seen this technology as helping improve fertility management. Their current expectation is that it will help identify drainage problems and weed pressure. They feel at least three years of data will be needed before any inferences are possible.
• 27
The Boyds are clearly in a learning mode with GPS/GIS. Data management and timeliness don't seem like major issues since the service provider is located nearby. Furthermore, they see the data and output as something they can ponder during the winter. They expect the cost of the technology and service to decline over time. The Boyds expect to expand their FIS over the next several years. Certainly adoption of GPS/GIS is one element. However, they are also interested in local data capture through hand-held computers and process monitoring with remote sensors. Their AgStar system will soon be upgraded to operate from a Windows platform. They also expect that many of the data-capture technologies will be provided as enhancement to the AgStar system. They are also quite interested in enhancing external information access and profes-
28 •
sional development through the Internet or CD-ROMs. Data base and archival information is considered to be important. However, they also look forward to opportunities to make direct inquiries to experts or other farmers on specific management topics.
Lessons Learned The Boyds are very management-oriented producers and have placed a high value on management information for a long time. They clearly are not typical or representative farmers. But their case illustrates several important points: 1. A farm information system is extensive, complex, and interrelated. Specifically, it
transcends the on-farm computer and accounting system that usually comes to mind when the term farm information system is used. In the Boyds' case, their FIS includes formal computer-based products, along with consultants, data capture technologies, meetings, and other routine management procedures. 2. The firm's culture and routine procedures are part of the FIS. The Boyds' use of formalized or scheduled meetings, retreats, and professional development activities facilitate information exchange. But they also foster organizational learning-a corporate culture that creates and uses information to develop the competencies of the management team and other employees. 3. The Boyds' computer system is not very well integrated. The swine enterprise software operates independently of the accounting system. The same holds true with their GIS/GPS software. Integration has plagued computerized farm information systems since their inception. The Boyds are internally optimistic that one day they will have a seamless system that supports data capture, entry, archival, and analysis. However, it will likely be a few years before this comes to pass. That said, however, it appears that the Boyds have developed a number of
coping mechanisms to minimize the problems caused by a lack of integration. The key ones are: • Hiring part-time data entry clerks to reduce the cost of redundant data entry. • Applications are separable as are the data requirements-accounting, swine scheduling, weed scouting, and documentation. •Organizational and management responses such as data entry review meetings. Lack of software and hardware integration has a cost associated with it, but the Boyds have taken steps to minimize the impact of partially integrated systems on their business. 4. The most frequent use of the information system is process or production management. They examine swine enterprise data, inputs as well as outputs, on a daily basis. Accounting and financial information is used much less frequently. In fact, the Boyds felt that managing the enterprises or production system would generally cause the financials to be acceptable. 5. The Boyds' FIS only indirectly supported strategic issues. For example, their decision to shifr from
turkeys to pigs was fitcilitated by the FIS because the Boyds had a good
understanding of their costs, returns, critical success fuctors, and level of performance. The Boyds' skills in strategic management were also supported by the learning culture that was both supportive of and supported by their farm accounting system. Recent work in organizational economics demonstrates the importance of economies of fit in complex organizations. If interrelationships are understood by managers and employees, then coordination of the firm's productive activities can be managed and improved. The extensive farm information system that the Boyds have created serves to capture these coordination economies.
• Oak Hollow Dairy3 Oak Hollow Dairy is owned and operated by John and Angie Ripley. The farm has been in the family for three generations. John and Angie established the dairy and started farming full time in 1987. Both John and Angie have college degrees: John has a B.S. degree in biology and chemistry; Angie is a licensed veterinarian. They have one son (Bill, age eight) and one daughter (Bethany, age five).
names of individuals and the farm location have been altered to preserve anonymity. All other information is believed to be factual. Prepared by Tim Cross, Associate Professor, and Rob Holland, Area Specialist-Farm Management, The University of Tennessee Agricultural Extension Service. 3 The
• 29
The farm includes 500 acres of owned land, of which about half is devoted to hardwood forest. Around 150 acres ofland are in grass hay and permanent pasture, and the remaining 100 acres are used for crop production. Some additional cropland is leased on a year-to-year basis as needed. The dairy herd includes 254 cows, with about 210 in milk at one time. The herd averages about 19,000-20,000 lbs. milk per cow annually. Replacement heifers are raised on the farm, and additional replacement animals are purchased as needed. Steers are kept and fed to about 500 pounds, then sold as truckload lots. Corn silage is the major forage crop produced on the farm, amounting to about 3,200 tons per year stored in upright and trench silos. All corn is planted no-till and is followed with a no-till winter cover crop of wheat and vetch. About half of the wheat and vetch is harvested as haylage. Soils on the farm are mostly deep day loams, ranging from poorly drained to well drained. Approximately 100 acres are
30 •
classified as highly erodible. Animal waste from their two free-stall barns is handled using a flush system. Solids are removed using a separator, and liquids are stored in a two-stage lagoon system. Liquid from the second stage is recycled and used as flush water. Liquid waste also is applied to cropland and pastures by pumping to a big-gun reel system, reducing purchased fertilizer costs by approximately $5,000 per year. The Ripleys recognize the value of financial planning and analysis and construct longrun budgets for base and alternative farm plans annually. They also evaluate the prior year's financial performance for the farm every year. This monitoring and planning enables them to identify problems and opportunities and also provides them feedback concerning progress towards their goals. The farm has participated in the Agri-21 program, a University of Tennessee Agricultural Extension Service whole-farm demonstration project for sustainable agriculture production systems, since 1994. John and Angie dearly have articulated goals which they strive to accomplish. Their primary objective is to maintain the family farm in a positive financial position in order to pass it on to their children. Specific goals include paying off all farm debt by 2006, when the children are near high school graduation; increasing the level of milk production using cost-effective management practices; and improving their quality of life, measured through time available for family relationships and funds available for family uses. Their critical success factors are: (1) producing at least 3.5 million pounds of milk annually; (2) getting cows bred in a timely manner; and (3) maintaining their supplemental income. The Oak Hollow operation has been through many changes. Originally, it was operated as a dairy and a swine farrowing farm. Then, the farm switched to beef cattle and poultry production. The dairy was re-established in 1987 when John and Angie
started farming full time. The dairy enterprise was selected because of the resources available on the farm and John's previous interest and experience in dairying. A longrun farm financial analysis also identified dairy production as an enterprise which would generate the capital needed for the Ripleys to meet their goals. Both John and Angie place a high value on education and continued learning, and they have both been involved in off-farm employment. John taught in the public school system and in a vocational school before farming full time. Angie's doctorate in Veterinary Medicine allows her to provide veterinary services on the farm and maintain a veterinary practice based at the farm. About half of her off-farm practice is devoted to serving approximately twelve large animal clients, and the remainder of her practice is devoted to small animals. Income from her veterinary practice is used to supplement their dairy income.
Farm Information System The major components of the farm's FIS include a computerized milk production and cow monitoring system, an individual cow and whole-herd analysis program, and a single-entry accounting system. Angie is the primary data entry person, and both John and Angie interpret reports and construct management plans. External information sources used in the farm operation include popular farm and dairy publications and a nutrition consultant. In addition, the Ripleys have obtained information from their county extension agent and several other extension specialists regularly since 1987. The Ripleys have installed an electronic milk production monitoring system called Afimilk©. Every cow in the milking herd wears an ankle transponder to identify her as she enters the parlor, and milk production is automatically recorded and stored in a computer located in the parlor. Milk conductivity also is recorded. The ankle transponders serve as pedometers, reporting the number of steps taken daily as a reflection of the cow's level of activity. Milk production, conductivity, and activity records are automatically entered for every cow at every milking. The Ripleys access the Afimilk© data base using a computer and modem in their home to connect to the parlor computer and modem (located about one-half mile away).
Milk, conductivity, and activity data for each cow are downloaded and stored permanently in the office computer. These data are analyzed using Dairy Comp 305©, producing cow summary reports, graphs, and herd summary reports. The Ripleys make extensive use of management by exception, using Dairy Comp 305© to identify cows with exceptional changes in milk production, conductivity, and activity. The exceptions reports are based on user-defined criteria which John and Angie have developed over time. These exceptions criteria are established for each stage of lactation.
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John spends one to two hours daily reviewing reports and directing management of the herd and treatments for individual cows. Instructions for treatment of individual cows are uploaded from the home to the Afimilk© computer system in the parlor, alerting milkers to required tasks for cows the next time the cows enter the parlor. An LED display at each of the twelve milk stations displays codes that indicate actions to take for each cow. For example, an exceptions report may indicate low milk production and high conductivity for a cow, suggesting that the cow may be suffering from mastitis. John identifies the cow and has the Afimilk© system flash a
"7" code the next time the cow comes in to milk. The flashing "7"
code instructs the milker to perform a mastitis test. The system is used extensively to manage the milking herd. Decisions and management actions based on the system include bovine growth hormone (BST) treatment, antibiotic treatment, group changes, use of oxytocin, mastitis tests, heat detection
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and breeding, and identification of displaced abomasums. The Afimilk© system was obtained using a five-year lease purchase agreement at a monthly lease rate of $1,060. Repairs and maintenance on the system cost about $5,000 annually, and these expenses are considered to be primarily the result of employee neglect and mistreatment. The ankle transponders cost $80 each and have an expected life of three to five years. They have been very reliable thus far. According to John, human elements are the weakest part of the system. One unexpected management use of the system is in monitoring labor. Hired labor management is a continuing challenge. The farm currently has five full-time and two part-time employees. Based on data recorded by Afimilk©, John can track when each milking begins and ends. He can monitor whether the milking system was flushed properly, and he also can detect problems with feeding. (If cows aren't fed, milk production drops for all cows the second milking following the missed feeding.) Cows that weren't milked are easily identified. Since the Afimilk© system was installed, the dairy has not participated in DHIA testing. John and Angie believe that their own milk information is more accurate and timely than the information on their DHIA reports. Also, their information is based on three milkings every day, while DHIA is based on sampling one milking per month. The cost of DHIA exceeded the benefits of the information received, according to John and Angie. Costs and returns are tracked using the Quicken® software program. Angie enters transactions two to three times per week, keeping their financial records as current as possible. Payroll is handled using QuickPay©, which is integrated with Quicken®. Angie says, "Entering data is not a constraint to the system. It takes less time than doing it by hand." The income and expense records are summarized regularly and analyzed periodically during the year and at year-end, and they are used to construct
projected budgets for the coming year. A mid-year review of budget to actual revenues and expenses is typically performed to identify problems or opportunities relative to the projected financial position and to formulate potential tax management strategies. Financial information and production data are integrated manually to evaluate the benefits and costs of changes in management practices. For example, in an effort to reduce costs, milking was changed from three times daily to two times daily in July, 1996. From July to November, their milk production records reported a five pound per cow daily decrease in milk production. Their financial records, however, showed that costs had not been reduced. Milking was switched back to three times daily in December, and production increased to previous levels almost immediately.
Decision Case: Grazing To illustrate the Ripleys' use of their farm information system, a strategic decision they made in 1995 was examined. The problem was that the herd had grown in numbers and was exceeding the capacity of the barns. John also recognized that he had pasture that was not used fully and with additional management could be grazed more intensively. The plan was to create a third group of cows that would be housed outdoors and grazed on cool-season perennial pastures. Cows placed in this group would be those approaching the end of their lactation, with lower nutritional requirements. By grazing them, the cows could be milked longer before turning them dry. Milk production levels for this group were projected to be low {about 30 pounds/cow daily), but costs were also expected to be low. And, a larger herd could be milked, producing more total pounds of milk per year. This was also expected to reduce the rolling herd average for the cows due to increasing days in milk and lowering average daily milk production per cow. The third group of cows was established in 1995 and maintained for one year. On the production side, the group performed as projected. Their milk levels were low, but their feed costs were minimal. After being dried off, calving, and entering another lactation cycle, production for the cows returned to previous high levels, with most cows going from the low group back to the high group. Overall culling rates were down, and total milk production was increased. The two groups of cows in the free-stall barns had access to more stalls, and their production levels increased slightly. Feed costs for the cows in the barns remained constant. Unfortunately, the benefits of the third group were offset by one major limiting factor: labor. Employees were spending far too much time moving cows from the grazing paddocks to the milk parlor. They also disliked dealing with this third group, leading to large inefficiencies in labor use and escalating labor costs. Another significant factor was that cows in the third group lost too much body condition during winter months, requiring costly feed supplements and resulting in extended calving intervals. Based
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on these factors, the third group of cows was eliminated in 1996. Herd size was not reduced (in order to maintain total milk production volume), so now John and Angie must contend with overcrowding in their housing facilities. Information from the farm information system used in this decision case included milk production levels for cows in all three groups, especially the third group (and their subsequent production levels in their next lactation), close monitoring of activity levels for the third group, time to milk cows, and labor expenses. Current, accurate information indicated that implementation of the third group did not increase total profits. The experiment with the third group of cows revealed several strengths of the Ripleys' farm records. The Afimilk© system provided actual production levels for cows in all three groups, enabling the Ripleys to track the impacts of their decision to establish a grazing decision on milk production levels individually and by group. 34 •
The system also showed that time spent bringing in cows and milking cows had increased substantially, and this was reinforced by examining the labor records from their payroll system. A weakness identified through this experiment was a lack of knowledge about how a change in grazing systems will affect milk production levels. The loss of body condition in cows was not expected based on research reports and information from nutrition consultants. The poor response might have been due to management or perhaps to site-specific factors. The farm's FIS identified the symptom of the problem but did not provide enough information to accurately identify the problem. Were forage yields below average in yield and/or quality? Were stocking rates too high? How often should cows on pasture be rotated? John and Angie did not have access to answers to these questions from their information system.
Future Plans and Outlook Escalating dairy production costs during 1995 motivated John and Angie to diversify their farm and add a high-value cash crop enterprise. In 1996 they produced 17 acres of tobacco and achieved above-average yields of 2, 100 lbs./ acre. For 1997 they plan to produce 25 acres of tobacco, with the potential of increasing to 50 acres in the future. As tobacco crop acres increase, more detailed enterprise financial records are needed to track income and expenses. Also, tobacco is produced and harvested using seasonal migrant labor. This has resulted in a need for more external information, such as labor availability, contractors, prevailing terms and wages, legal requirements, etc. In terms of limitations with their financial records, Quicken® does not record and track physical quantities, so it cannot maintain inventory levels and production
levels. Angie would like to have a convenient way of recording physical quantities as she enters financial transactions. Cash flow margins on the farm have been, and will likdy continue to be, very tight. However, John and Angie's equity in the farm has grown steadily, and they are making excdlent progress in reducing their farm debt. Current projections indicate that they will
be debt-free by their target date. Continued increases in milk production levels and high levds of demand for tobacco may help to improve cash availability in the future.
Lessons Learned This case study illustrates several lessons important to information system designers, educators, and researchers. First and foremost, it provides evidence that humans are the most influential part of a farm information system. John and Angie are avid record keepers and analysts, so their milk records system is very useful to them. The system would be ill-suited to managers who are not highly analytical and detail oriented. Another illustration of the importance of humans in the decision process is that management of a third group of cows was changed due to human (employee) response and expense. And finally, this case demonstrated that humans were directly responsible for about 90 percent of the annual repairs and maintenance of the computerized milk monitoring system. A general conclusion is that the value from, and cost of, a farm's farm information system is determined largely by human factors. The Oak Hollow case study supports the proposition that a farm manager chooses to adopt a specific information system because of its perceived value through its contributions to the farm's goals. The Ripleys' information system provides direct feedback on progress in achieving their goals of maintaining profitability, reducing debt, and increasing milk production levels. Furthermore, their system can provide daily information related to their achievement of their three critical success factors. Their computerized milking system is costly, but contributes much in the way of value to the farm and to its managers. A second proposition supported by this case study is that production records are important and increase the likelihood of financial success in intensive integrated operations, while financial records are more important in extensive operations lacking the ability to monitor and control production inputs. A sophisticated milk production record system stores data for every milking to render detailed production information on the Ripleys' farm, while a fairly simple accounting system is sufficient for monitoring financial results. The computerized milk records were of less value when a lower-intensity group of cows was established, but the payroll system increased in importance under the grazing situation.
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Finally, this case supports the proposition that strategic decisions require information from much more diverse sources than do tactical or operational decisions. The decision to create a third group of cows was strategic. Information from the farm's internal information sources indicated that the decision would be beneficial, but the outcome suggests that more information was needed. Perhaps external information sources might have revealed a potential negative reaction by employees or a loss of body condition among cows. In any event, this knowledge was not available from the farm's internal records. (This is not to suggest that the managers overlooked or ignored important information. It simply reaffirms that hindsight is perfect.) Collecting the information to conduct this case study was simple and straightforward because of the farm's involvement in the Agri-21 whole-farm demonstration program and their regular contact with university extension agents and specialists. Their desire to learn and improve as managers, along with their cooperative spirit, 36 •
resulted in an insightful interview in a fairly short amount of time.
• Big Stone Farm4 Carl Frank farms 300 acres in Laq Qui Parle County, only a few miles away from Minnesota's border with South Dakota. Big Stone Farm is certified organic. Carl raises small grain (usually barley and oats), alfalfa, corn, and soybeans in a four-year rotation. He sells the small grain, corn, and soybeans at a price premium in organic markets. Big Stone Farm also has a hog finishing building with a 500-600 head capacity. Carl finishes about 1,200 hogs per year, feeding purchased feed and marketing hogs in the conventional market. All the feeder pigs for this enterprise are purchased through a networking arrangement with Carl's brother and nephew, who have specialized farrowing and nursery facilities on their respective farms. Carl is 54. He is sole proprietor for the farm and does nearly all the on-farm work. His wife, Susan, has a full-time job in the nearby town. Her income has been important in maintaining the family's financial stability in bad years. While Carl discusses major farm decisions and investments with her, he is the primary decisionmaker for the operation. Carl and Susan have four children-a grown son and two grown daughters who no longer live at home and a son who is just finishing high school. Carl is active in Minnesota's sustainable agriculture community, and his son often helps with chores when Carl is away from the farm to attend meetings. The names of individuals and the farm location have been altered to preserve anonymity. All other information is believed to be factual. Prepared by Robert P. King, E. Fred Koller, Professor of Agricultural Management Information Systems, and William F. Lazarus, Associate Professor, Department of Applied Economics, University of Minnesota.
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Carl is deeply committed to making sustainable practices work for his own operation and for the broader agricultural community. He has written goals for the farm. These include the financial goal of making the farm operation profitable and the production goal of completely eliminating the use of purchased fertilizer and herbicides. After years of working toward it, Carl finally achieved this production goal in 1997. He also has a dear vision for the future of agriculture in his community: to keep as many viable farming operations in the area as possible, perhaps three or four farms per section. He works toward this goal by using his own farm as an example of what can be done, by participating in on-farm research projects, by making efforts to strengthen markets for organic products, and by sharing his ideas with others in programs on sustainable agriculture.
Farm History and Evolution Carl grew up on a farm that adjoins Big Stone Farm. After graduating from college, he taught high school in a nearby community for six years. In early 1972 he was selling real estate and was ready to enroll in a graduate program in counseling at South Dakota State University. He was also thinking of returning to farming, however, and the 80-acre home place that is now part of Big Stone Farm was for sale. On the day he was to start classes at South Dakota State, he instead found himself at the local bank finalizing an agreement to purchase the farm. During his second crop year on the farm, Carl started finishing hogs. He built the current finishing barn in 1976 and converted to a 70-sow farrow-to-finish operation in 1979. He continued with this livestock setup until 1995, when he switched back to hog finishing under the networking arrangement with his brother and nephew. Carl markets all the hogs for the network operation, selling in the spot market and under forward contract to a major packing firm. He prices hogs when feeder pigs are transferred from the nursery to his farm, then makes payments to his brother and nephew using a pricing formula based on the contract price. This means Carl bears more of the price risks than the others, but he is comfortable with this. The decision to move into this new business arrangement is discussed in greater detail later in this case summary. The cropping system is Carl's greatest interest on the farm. He is constantly looking for new ways to produce more using fewer purchased inputs and less tillage. He is widely recognized for his knowledge of production practices and for his skills in non-chemical weed control. The small grain-alfalfa-corn-soybean rotation has been a key to successful weed control and soil fertility management on the farm. Manure from the hog operation is also an important soil nutrient source. Over the years, Carl has worked hard to develop relationships with brokers who handle his organic small grains, corn, and soybeans. With large premiums for organic crops-organic soybeans sold for as high as $24 per bushel in 1997-both buyers and sellers are concerned
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about the potential for misrepresentation and theft. Carl currently requires brokers to deposit funds for purchase of his crops into an escrow account that is cleared when the crops are accepted by their buyer and payment is made to the broker. Carl has not been able to develop a special market for organic alfalfa. He currently sells the crop standing in the field to a dairy farmer who harvests it and hauls it away. Carl's ability to innovate is a major strength. He is able to put new ideas and practices together into a system that works, and he is able to look ahead to potential problems and how he might react. This has allowed him to generate considerable added value within the parameters of his farm. For example, his corn and soybean yields-100 to 110 bushels per acre for corn and 35 to 40 bushels per acre for soybeans-compare favorably with county averages, yet the price received per bushel is considerably higher and cash costs per acre are much lower than on conventional farms. Carl feels that bringing changes to the marketing system for
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organic products remains a major challenge. Accessible markets with assurances that payment will be received are essential for the economic viability of smaller farms that produce organic products, but one individual simply does not have the clout to initiate system-wide changes.
Farm Information System Carl uses computerized record systems to support management activities in all aspects of his operation. He uses Quicken® for financial records, PigCHAMP for swine production records, and a crop· record system developed by researchers at the USDA/ Agricultural Resarch Service (ARS) laboratory in Morris, Minnesota. Carl does all the record keeping for the operation. He spends mornings in the office during the winter months and maintains records whenever he can-usually late at night or on rainy days--during the cropping season. Carl has access to the Internet through a local service provider, and he is constantly
finding new sources of information through this new medium. Other external information sources and services include: university and ARS researchers, with whom he cooperates on research projects; a tax preparer; the local computer vendor; and local offices of the Natural Resource Conservation Agency and the Farm Service Agency. Finally, Carl notes that other producers are a key source of information and ideas. Carl purchased his first computer in 1992. He now owns his fourth-a fully loaded Pentium® running under Windows 95®. In addition to using the computer to support management of his farm business, he also spends a considerable amount of time using word processing, e-mail, and Internet browser applications to support his sustainable agriculture activities. He estimates that he uses the computer 30 to 40 hours per month. His computer skills are largely self taught. The computer manuals that fill the shelves in his office have obviously been used.
Carl established good record-keeping practices long before he bought his first computer. He has belonged to a vo-ag farm record association since he began farming, and he began maintaining financial records manually in the Minnesota Farm Account Book. He purchased a farm accounting package from Pioneer Hibred International in 1992 when he bought his first computer. He was happy with that system and continued using it until Pioneer stopped supporting it. At that time he switched to Quicken, and he is still developing his skills with this new package. In addition, he recently purchased the on-farm version ofFINPACK™ and is learning how to use it. He expects the ability to transfer data from Quicken to FINPACK™ will be important to him, though he has not yet taken advantage of this feature. In the future, he hopes all the record systems on his farm will be integrated so that data need only be entered once. Since he started farming, Carl has maintained a typed cropping season narrative that is a detailed account of daily activities, conditions, and problems on the farm. He keeps the narratives in a loose-leaf binder that makes it easy to refer back to records for previous years. For example, review of narratives for recent years convinced him that delayed planting for corn and beans would be an effective practice for weed control. For the past five years, he has been part of a group of farmers working with ARS researchers in Morris on the development of a crop production record system. Based on Carl's experience, memo fields were included as a key feature of the data base for this system, and they now are the mechanism he uses to record his crop production narrative. Carl purchased PigCHAMP in 1993. He used it extensively for record keeping when he had his farrow-to-finish operation. Now he uses it less, but he does find the kill sheet summaries to be useful in monitoring the quality of the hogs he finishes. In summary, Carl is a manager who thrives on having access to information and who is willing to spend time maintaining the records that are the foundation of an effective information system. He is quick to adopt new applications and seems to be adept at using them to work more effectively. His commitment to extending his knowledge of sustainable agriculture to the broader community may also be a factor that motivates his dedication to record keeping because he recognizes that others will adopt more sustainable practices only if their feasibility is carefully documented. Finally, Carl's cropping season narratives epitomize his approach to information management. They place carefully kept records into a narrative context, capturing observations he makes as a careful, involved observer in all of his farming operation and making experiences more readily available for understanding new problems as they arise.
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Decision Case The transition from farrow to finish to specialized finishing in the network arrangement was an important strategic decision for Carl. It allows him more time for his crop operation and for involvement in community activities. At the same time, it strengthens the operations of Carl's brother and nephew, thereby serving as a concrete example of how smaller farming operations can be viable in this part of western Minnesota. Carl's information system played an important supporting, but not central, role in this decision. He learned about networking arrangements of this sort from magazine articles, university publications, and discussions with other farmers. He then thought through how a network could be set up in his own situation and shared ideas with his brother and nephew. As they moved toward a decision, he did some
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"back-of-envelope" budgeting with a spreadsheet, but this was mostly to confirm his perception that the arrangement would work. Transfer pricing rules play a critical part in the arrangement, and Carl uses his information system to implement those rules. On the day a group of feeder pigs is delivered from the nursery, Carl projects their value as finished hogs, using a three-month ahead forward price quote. The farrowing operation receives 27 percent of the projected value, and the nursery operation receives 15 percent. This leaves 58 percent of the projected value for Carl, who bears all the marketing risk, since he may or may not commit to a forward contract on that day. All the transfer payments are calculated and recorded in a spreadsheet worksheet that Carl designed and maintains.
Looking Ahead Carl plans to farm for at least ten more years. He does not expect any of his four children to return to the operation, though his own experience has taught him that this is always a possibility. It is also possible that his nephew will take over the operation when he retires. In years to come, Carl may make a minor expansion in his hog finishing operation, especially if his network partners want to expand. He has no plans for expanding his cropping operation, though he may consider adding some alternative crops, such as peas or buckwheat. During the next ten years, Carl also expects to devote time to developing markets for organic farm products. This is an important issue for him in his own farm operation, and it is also a key for realizing his vision of having more small farmers on the land in his area. Concerted, collective action will be needed to make this happen. Carl also believes
that the Internet may be one tool that will help support expansion of organic markets.
Finally, Carl plans to increase his involvement with crop and livestock research over the next ten years. For example, he has been working with a university weed scientist on mapping weed pressure and soil nutrient levels in his fields in hopes that he can learn more about non-chemical strategies for managing problems with patches of Canadian thistle. As noted earlier, Carl is open to innovation in his own operation. He is willing to consider and try new technologies as long as they are consistent with his own values. He also views carefully designed, well documented trials of new technologies in an organic operation as the best way to work toward his goal of strengthening and expanding sustainable agriculture.
Lessons Learned This case clearly supports the propositions that farm managers adopt a specific information system because of its perceived value in contributing to the farm's goals and that records kept are indicative of business priorities and goals. Carl's FIS supports his efforts to achieve profitability. Equally important, it also makes it possible for his farm to be used as an example of what can be achieved in a farm that uses sustainable practices. Finally, Carl's FIS is providing increasingly important support for his participation in a wide range of activities in the sustainable agriculture community. This case also supports the proposition that production records are important for the financial success of an intensive, integrated operation. While cash cropping is usually viewed as an extensive type of farming, organic production requires careful cost control as well as focused attention and intensive management on a smaller land base. Carl's crop production record system supports this well. Also, Carl's livestock production record system, though less detailed than the crop record system, provides efficiency and revenue data that are useful for tracking profitability and for communicating with his network partners. This case also supports the proposition that a farm's internal records are ofless direct value in making strategic decisions than in making tactical decisions. While Carl makes extensive use of his records for analysis and planning crop and livestock operations, those records were not a key element in his analysis of the networking arrangement for his hog operation. Carl's wife works off-farm in an administrative position. Both she and Carl are generally familiar with accounting concepts, and with the role of financial records in the management of a non-farm business. While Carl keeps good financial records, they are not the centerpiece of his farm information system. The fact that Susan is involved in an off-farm business seems to have little influence on the type of financial records Carl keeps or on the way he uses those records. Therefore, this case provides little support for the proposition that families with off-farm business experience are more likely to keep and analyze financial records.
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Finally, the evolution of Carl's FIS suggests a proposition that should be explored in other case studies: that motivation and skills in maintaining and using farm records are largely independent of computer skills. Carl developed his own record-keeping practices long before he purchased his first computer. Despite the fact that he uses information technology far more than most farmers, he uses it because it helps him manage information and communicate with others in ways that were not possible before. Though he is quick to adopt new technologies and new software applications, he bases the adoption decision on a sound understanding of what he may be able to accomplish, rather than on a simple desire to be among the first using the latest information management tool.
As technological progress continues at an increasing rate, effective farm managers need to recognize that information technology is a tool rather than an end in itself
• The Signal Ranch5 42 • The Signal ranch is a partnership with five owners: James Light, age 61; his wife, Grace, age 53; Grace's mother, Helen; a daughter, Amanda, age 24, and a son-in-law, Rob. James and Grace have been working on a ranch for 45 years and have operated this ranch for 25 years. The structure of the operation changed in May 1997 with the addition of Amanda and Rob as partners. James has a Ph.D. in Animal Science; Grace, their daughter and son-in-law have college degrees. James and Grace anticipate that in five years, Rob and Amanda will be able to take on more management and operations responsibilities and that in ten years, they can retire. The ranch consists of three enterprises: cow/calf, yearling, and feedlot. (These enterprises are not truly separate because they retain ownership of calves to capture the benefits of their health program and genetics.) Ranch land includes 44,540 acres of warm season native grass, of which 400 acres are owned and 44, 140 are rented. Breeding livestock includes 1,300 head of Hereford/Angus crossbred females, 170 head of Hereford/Angus crossbred replacement heifers, and 65 head of Hereford, Angus, and Charolais bulls. They also own 1,200 weaned calves.
Management Environment Because the ranch helps support several families, it is very important that this operation make a profit. The strengths of the ranch include the availability ofland, loyal and good employees, and highly productive cattle. However, the land is poor quality and receives only 21 inches of rain annually, limiting their ability to diversify crops and pasture further. Hired labor is expensive. James and Grace think that 5 The
names of individuals and the farm location have been altered to preserve anonymity. All other information is believed to be factual. Prepared by Damona Doye, Professor, Oklahoma State University.
pasture management could be improved and labor costs reduced. They enjoy raising good cattle and growing good pasture. They would like to spend less time doing basic maintenance, i.e., repairing fences, equipment, and windmills. Factors that they feel are critical to success include knowing where the money is going and where income is coming from. It is important to James and Grace to look at profit and loss by enterprise. However, the rate of return on investment in agricultural enterprises generally has been discouraging. Issues that are very important to the operation include adoption of new technology, societal concerns about natural resource issues, environmental regulations, increased international trade, growth to generate additional income, and use of computers. James works 60 hours per week and Grace works about 10 hours per week on the ranch. Rob works for the ranch full time; Amanda works part time on the ranch. James and Rob are salaried, Grace and Amanda receive part-time salaries. The ranch employs four full-time hands and has five day laborers who worked from 6 to 40 days in 1997.
Farm Information System Grace keeps farm records both manually and on the computer. Her father was a good role model in that he had good records and was conscious of needing his own information. Grace inherited full responsibility for record keeping in 1985 when her father died. Her father had begun talking about buying a computer and had relayed that the banker indicated that he would like to have a cash flow statement. Grace and James went to a nearby vocational-technical school and took several computer courses and bought their first computer in 1985. She attended an Oklahoma State extension program and learned to use the Integrated Farm Financial Statement (IFFS©) software to develop her first cash flow statement. Grace said the banker put it in his drawer without looking at it. A subsequent lender was more interested in her work and studied the cash flow in detail. Grace and James use a modified accrual cash record-keeping system, entering receipt and expense data five times per month on average. Grace has been using Quicken® (version 6 for DOS®) and would like to learn more about its features. However, she is being encouraged by a tax consultant to adopt QuickBooks® for its payroll features. She would like to develop tax schedule reports and expects these reports could save time and money when working with their accountant. Grace's ranch work is typically 40 hours per month keeping records, with two hours on payroll, 16-20 hours in Lotus®, and five hours on word processing. She enjoys keeping records and working with the numbers but expects to train Amanda to take over these responsibilities. Amanda has Quicken® for Windows® and would like to have internet access paid for by the ranch. James says that it would be worthwhile if she could pick up one good idea per month.
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Cash flow projections are developed annually in March for their banker to identify borrowing needs, both when and how much. Projections are based on past history, projected costs, and cattle numbers. Actual monthly cash flow figures are provided to the banker at year's end. In general, the plan is fairly uniform from year to year. They count cows 2-3 times per year, inventory assets and liabilities quarterly for the bank, and complete a full inventory annually. Grace has developed Lotus spreadsheets to do enterprise analysis and track other important items, such as total tons of feed fed, employee costs, gasoline (mpg/ pickup}, maintenance per pickup, plus well and windmill repairs. They keep an information sheet on each of 35 windmill locations (detailing repairs, when the head was rebuilt, depth, and water level}. Because they do repair work themselves, this information is useful in anticipating why a windmill isn't pumping so that unnecessary trips for repairs (30 minutes away} can be avoided. With James' input,
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she assigns a percentage of pickup and labor costs to each enterprise. They have learned that while the yearling program on the ranch is not profitable it does allow them to recapture higher performance gains in the feedlot. They have used Cow/ Calf Standardized Performance Analysis (SPA) software but found it provided little new information for them beyond previously developed spreadsheets. They do not keep production records on individual animals but do maintain individual IDs on cows as long as ear tags last. To gain information on the cow herd, they study summary statistics such as weaning weight and calving percentage annually and the calf crop weaning percent on a pasture basis (5 units}. They haven't seen a need to keep financial records by aggregate unit. Periodically, they use individual pastures to maintain herds separately and gather more information. They keep records of feed fed on a group level with a self-designed spreadsheet in Lotus®. They also use a feedlot closeout program designed by James in BASIC® but want to update it. Amanda had BASIC® in high school and is working on modifying it. The program uses raw data from the feedlot and tracks death losses. But, they would like to add health information and use it to help bring health costs down. Other components of their farm information system include: • Written agreement for hunters regarding liability since hunter liability insurance is very expensive. • Contingency plans in place in the event of death of one of the partners. Adding another generation has reduced succession problems, but because of potential tax liability, they can't afford to disperse overnight.
James and Grace question whether their FIS provides sufficient information to analyze: • When and how to trade vehicles? They currently buy used vehicles for feeding and wear them out. They save on the purchase price, but wonder if the maintenance and operation costs offset the price difference. They currently need five new pickups at a cost of about $125,000 at 9 percent interest. Should they continue their practice of buying used vehicles and wearing them out, buy new and trade periodically, or buy new and wear them out? • Risk associated with eliminating a vaccine from their health program. They consulted with the veterinarian to determine whether the disease was endemic and don't bring in outside cattle other than bulls. Still, they wonder whether they might be at substantial risk should environmental conditions change. •Whether feeding more calves within 60-90 days of weaning would increase profits? By reducing the number of yearlings, they could increase the number of cows and feed more calves. Components in their farm plan that they feel are missing include: • Written employment agreements. They provide live-in employee housing plus some non-monetary benefits, including bee£ One condition of employment is that the person is on call 24 hours a day. •Environmental plan. They attended a workshop at the National Cattleman's Beef Association (NCBA) Convention on ranch liability discussing landfills on ranches, discarding oil, tires, batteries, etc. External sources of information used most frequently include extension specialists, veterinarian, and other producers. The accountant/financial advisor and tax preparer, though used less frequently, were rated highest in terms of usefulness with extension specialists and university professors also rated highly. James continued to subscribe to an animal science journal until recently when storing all the back issues raised concerns about the attic caving in. He was offered an electronic version of the journal but doesn't currently have a means of accessing it. James and Grace have no formal office routines. When working cattle, they have some time to communicate with employees. They verbally set short-to-intermediate-term goals for the cattle operation but do not keep written goals. They feel that they probably don't spend enough time analyzing their records and, consequently, that their information system hasn't had enough impact on management.
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Decision Case For James and Grace, changes in marketing strategies over time provide the best example of how the farm records have influenced decisions. While profitability is the driving force behind decisions, human resource considerations are always a factor. If something is a real aggravation, James won't do it to make another dollar or two. Decisions to try new marketing methods are made by talking to feedlot people, state extension livestock specialists, and producers with experience, then sitting down and penciling it out. In the beginning of the operation when Grace's dad was still the primary decision maker, calves were sold off the cow on a cash basis, which was typical for the region. A yearling program was added as a drought hedge, as yearlings (and cows) could be sold to feedlots to reduce the need for grass. By the time James and Grace moved to
46.
the ranch, all calves were being sold as yearlings and they had begun feeding a few cattle. Analysis indicated that each of these changes was profitable, and so they gradually increased the proportion fed. Recently, they have retained ownership and fed nearly all cattle. This marketing strategy allows them to capture profits generated by their high performance cattle, which would otherwise be lost in a market environment where prices are based on industry averages. When the cash market for yearlings is high enough that their records indicate that feeding can't be justified, they sell some yearlings off the ranch. In 1995, for instance, rather than feeding 95 percent of the cattle raised, they fed 75 percent and marketed others off the ranch. Study of the yearling program has driven home the fact that carrying calves over winter on the ranch is very expensive so they have started feeding some of these calves in the fall after worming. James expects this program to expand. Sending more calves directly to the feedlots in late November or early December has freed up grass to expand the cow number slightly. The decision on feeding is analyzed through projections, for instance, by projecting the amount of gain, estimating the cost of gain (e.g., 50 cents a pound), and the expected returns per head. James and Grace have obtained carcass data in the past from furnishing cattle to Oklahoma State University (OSU) research programs and are currently analyzing the desirability of selling fed cattle on a grid basis which is determined by a combination of grade and yield. They placed 100 calves on feed which will undergo an ultrasound evaluation and be sorted into two groups for marketing purposes. For instance, fifty may be sold on a grid price basis and the remainder will not. Grid prices are not set at the time the cattle are placed on feed; rather they will be known at the time the cattle are to be sold. Marketing costs associated with selling cattle on the grid range from very little up to $10 per head at some feedlots. Although the feedlot will provide two separate "close-out" statements, James and Grace will use the raw data from the "close-outs" to do their own calculations of costs and benefits
of grid pricing. James expects that his current spreadsheet will need to be redesigned so that standardized, meaningful comparisons to historical sales can be made. The decision on which feedlot to use is based first on how well cattle perform (e.g., gain, cost of gain, death losses, veterinarian costs, etc.) and secondly, on the value of the information received from the feedlot. Information about how well a feedlot performs is gathered by visiting with feedlot people and other industry experts and feeding a few cattle with them. James and Grace's farm records plus feedlot closeouts provide the necessary documentation to determine how well their cattle do in a specific feedlot. However, if grid pricing appears advantageous, some feedlots that sell only on a live bid basis may be precluded as potential market outlets in the future. The choice on which feedlot(s) to use is not limited to only nearby feedlots. The current batch of calves is being fed in a feedlot 120 miles north of Dodge City and it will provide data on individual calf gains. This feedlot puts electronic ear tags on the cattle when they arrive and are started on a health program and implanted. When the calves are reimplanted after 85-90 days, the feedlot will do an ultrasound on the calves and mark the cattle using colored ear tags as to which way they think they will market. For instance, the cattle may be sorted into two groups: red eartagged cattle are expected to be sold at 140 days, blue ones at 160 days. Once cattle are tagged, they are returned to a common pen. James and Grace will only be involved at the end of the feeding period when they must authorize the sale of calves using grid prices. Calves that are expected to grade choice might be grid priced; any overweight or underweight cattle and those expected to grade standard would be sold live. At that time, market prices, the spread between select and choice, and perceived financial risk will be fuctored into the decision as to how many calves are sold using the grid. At the end of the feeding period, the feedlot has several options for marketing calves: a Farmland program, a co-op program where the cattle also go through the Farmland packing plant, or a Certified Angus Beef program. James and Grace will get grade and yield data on calves sold "on the grid" {and perhaps some individual carcass information), which will show the variability in gains and quality of the calf crop and perhaps performance by breed. James estimates that this information is worth $2 to $3 per head above the extra transportation cost relative to feedlots located closer. This information could lead to changes in breeding program. Currently the cow herd is a Hereford/Angus rotation with some Charolais bulls used in the terminal cross. While the Charolais cross calves may be fuster growing, if the grade is penalized, they may go back to a straight Hereford/Angus rotation. James expects that several years of data will be needed to identify any change needed. James anticipates that he will put groups of cattle fed together but marketed differently through his own feedlot program to determine the "bottom line." Use of
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the spreadsheet will allow them to look at alternatives; for instance, what might have happened if a group that was sold for cash had been sold using grid prices? James indicated that in many respects they have been gathering information for 25 years to prepare them for this marketing strategy. (Many decisions, in fact, are made over several years.) They have been selling some cattle on grade and yield over time and have gotten carcass data by contributing cattle to OSU research projects. From 1964-73, they participated in the Oklahoma Certified Feeder Calf Program and thought that it would be a great marketing program. This experience put them ahead of the average producer in learning to get and use carcass and feedlot data. They also have participated in a continuation of that program, OK Feedout. However, it has only been in the last two to three years that it has become practical to sell on a grid basis, and probably only in the last year have grid programs been prepared to handle much volume. 48 •
James thinks that many producers are like him in that decisions may be formulated over several years and consequently it is difficult to go back to records and determine a specific event that may have saved or made them money. However, the fact that he uses his records means that this information helps inform and guide his decision making and management.
Lessons Learned One of the Lights' primary goals is profitability. Their farm information system has value to them in helping them achieve this goal. Other goals, such as minimizing personal stress associated with repairing windmills or pickups, prompted them to track major expenses and overhauls associated with specific equipment and vehicles so as to alert them to needs for replacement. While they do not consult their farm records daily in making ongoing decisions, it clearly plays an important role in their ranch management. Even though they are well above average in their recordkeeping practices and uses, the Lights felt that they probably did not spend enough time analyzing their records and that their information system would have a greater impact on management if they did. This case also supported the hypothesis that extensive operations such as their multi-unit cow/calf operation rely more heavily on financial records than production records. While they have the usual need for tax records and cash flow statements, they also regularly use their farm information system in determining enterprise returns and analyzing "what ifs." Historical records are important to the Lights as they feel that several years of data are often needed to realize the impact of a change. The Lights were intrigued by the possibility of having someone come in to provide an objective evaluation of their entire operation with the possibility that it might be turned upside down.
Producers with a "need to know" do not require the latest in computer technology to be able to sort and summarize the information they need. However, having a family member who enjoys "fooling around" with numbers and is willing to spend time doing it is a valuable asset, which not every farm organization has. Some efficiency could be gained if more one-on-one support were available to assist producers in learning to better utilize the software adopted. Tax consultants can influence record-keeping software choices because of the fees that they charge, even if it potentially reduces the managerial records and analysis capabilities. This case supports the hypothesis that farms that specialize in continuous production rely primarily on inwardly focused records. Their system has evolved over time to document the costs and returns associated with different enterprises as they changed and to analyze different decisions. The questions for which they were unsure their information system provided adequate support were very specific in nature, e.g., to their geographic location and herd health system. The strategic decision, feeding cattle to be sold on a grid price basis, relied on more information from outside sources than some other decisions, thus supporting the hypothesis that strategic decisions require information from more diverse sources than do tactical or operational decisions. However, the farm's internal records did have value in this decision in that they know their breakeven cost. In addition, the information they expect to gain from the feeder is sought for its potential use in changing their genetic program.
• Cross-Case Analysis The farm managers interviewed for these case studies were selected because they were perceived to have superior farm information systems. Thus they differ from the typical agricultural producer in this respect. Table 1 facilitates cross-case comparison of manager and farm characteristics. The managers were well educated and had articulated, if not written, goals which included profitability. Several planned to build and maintain a farm operation that could be transferred to a younger generation. Farm size in the case studies ranged from 26 acres for a horticultural operation to more than 44,000 acres for a beef-producing unit. Primary enterprises on participating farms were horticulture, farrow-to-finish with crops, dairy with crops, crops with hog finishing, and beef (cow/calf, stockers and feeders). Although we did not solicit expert opinion to rank the manager's innovativeness with respect to production practices, we would hypothesize a positive correlation between production management and information management. The businesses were complex relative to many farms but were generally no more complicated than farms of compa-
• 49
rable size and type. Only one furn relied primarily on rented land. Most producers
had non-furn work experience though not all had owned or participated in ownership of a non-furn business. The furn managers were thought to be analytical by nature and committed to lifelong learning. Most were active leaders in producer organizations and had participated in several university applied research projects. Time constraints were eased by hiring part-time employees for specific tasks. Table 2 allows cross-case comparison of the adoption and use of furn information system components often advocated by educators. Production variables weigh heavily in the list of critical success factors. While all the managers had used a computer for more than five years, most supplemented their computer records with manual records. Quicken® was commonly used for financial records. Time spent keeping business records varied from 6 to 80 hours per month, with more hours per month spent in larger operations with more employees. Time spent analyzing
50 •
records was more generally a few hours per month. The furn information systems, while containing many similar features and practices, also include unique features rarely found in the general furn population, e.g., a commitment to spend 8-10 percent of gross income annually networking with other producers; weekly and monthly meetings of managers and employees; computers in the home, office, and milk parlor linked; typed crop narrative with activities, conditions, and problems; and speciali7.ed records for problem areas. Thus the FIS, tailored to the operation, tracks important factors in a timely fashion. Producers generally value the experiences and insights of other producers. The role of outside consultants appeared to be more important in intensive integrated operations. Annual financial statements and enterprise analysis was the norm for the managers interviewed. Extensive production records were kept on intensive production enterprises. Most producers also regularly engaged in "what if' analysis for their operation. Several of the hypotheses posed about farmers' use of information were supported by the cases studied (Table 3): • A farm manager chooses to adopt a specific information system because of its perceived value, i.e., its contribution to farm goals. • Farms that speciali7.e in on-going or continuous production develop FIS that are inwardly focused. • Production records are important and increase the likelihood of financial success in intensive, integrated operations; financial records are more important in extensive operations lacking the ability to monitor and control production inputs. • Strategic decisions require information from much more diverse sources than do tactical or operational decisions. • Records kept are indicative of business priorities and goals.
Evidence for "Farms that specialize in enterprises that are more dependent on successful marketing develop FIS that are externally focused" was less clear. Onfarm records and analysis seemed to be of equal or greater value to external sources of information, perhaps because of their value in cost control and monitoring production performance. Upon further consideration, two hypotheses seem to be poorly specified or difficult to test: • The value of a computer-based FIS increases with its ease of use, flexibility, number of reporting features, timeliness of obtaining reports, etc. • Families with off-farm business experience are more likely to keep and analyze financial records. Does the spouse's off-farm work count if he/she is not involved in farm decision-making? Does the experience have to include record keeping or management responsibilities? Several additional common themes and practices emerge when the case studies are compared. Human factors influence the value from and cost of a FIS. The managers in these cases were often described as analytical by nature. They anticipated problems and kept records to minimize potential adverse impacts of problems. Some managers indicated a desire to spend more time on analysis. The producers in our case studies did not rely solely on outside services to provide them with the information they needed and wanted. In some cases, information sharing may substitute for some communication about goals. Few research studies correlate record keeping and information management with increased income. Thus the value of an information system derives mainly from its support to managers in achieving goals. Producers expect the information system to result in time saved (for instance in processing transactions), increased profits, and better monitoring of financial performance and position as well as production performance and processes. When describing their use of records, the producers who participated in the study did not emphasize the need for records for tax purposes, which differs from responses to surveys of the larger farm population. Motivation and skills in record keeping are likely independent of computer skills. Managers in the case studies are largely self-taught with respect to computer skills. Additional computer training could benefit even these innovative producers, and software support is important. Record-keeping systems continually evolve over time, rather than being adopted or disposed of wholesale. Producers changed the kinds and amounts of records kept over time and demonstrated a willingness to change software if they found it did not meet their needs or support was insufficient. More than one producer stressed the need to have multiple years of their own data to make inferences about the profitability of practices or changes in a farm plan. Other changes in the FIS also resulted from studied decisions.
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VI
N
• Table 3. Support for Hypotheses by Case Peregrine Farm
Four Lane Farms, Inc.
Oak Hollow Dairy
Big Stone Farm
Signal Ranch
A farm manager adopts an FIS Yes because of its contribution to farm goals.
Yes
Yes
Yes
Yes
Farms with ongoing or NIA continuous production develop an FIS that is inwardly focused, coordinates production.
Yes
Yes
Yes
N/A
Farms that specialize in Yes enterprises that are more dependent on marketing develop an externally focused FIS.
Yes
NIA
N/A
No
The value of computer-based Yes FIS increases with its ease of use, flexibility, etc.
?
Yes
?
?
Production records are very important in intensive, integrated operations.
Yes
Yes
Yes
Yes
NIA
Financial records are most important in extensive operations.
NIA
NIA
NIA
NIA
Yes
Strategic decisions require information from diverse sources.
Yes
Yes
Yes
Yes
Yes
Off-farm business experience increases likelihood of keeping, analyzing financial records.
Yes
Yes
Yes
?
N/A
Records are indicative of business priorities and goals.
Yes
Yes
Yes
Yes
Yes
• The Case Study as a Research Technique for Agricultural Economists Agricultural economists are not experienced with the use of case studies as a research tool compared to survey methods and quantitative research. We were uncomfortable with the technique, and we are somewhat ambivalent about the results. For economists, a detailed look at a single, probably non-representative (illustrative) firm is disquieting. We are trained to generate hypotheses from an axiom-based theory, then test the hypotheses generally using large population-based data sets or time-series aggregates and statistical methods. These statistical tools are not appropriate for case study research. We never resolved our discomfon, and our inclination is still to generalize or make inferences. Case study methods don't permit this heroic leap very easily. The contextual information and insights derived from the case study are extremely valuable. Survey summaries on the adoption of farm computers tend to be thin on contextual information. Surveys help us understand the state of the world: "20 percent of farmers with sales in excess of $100,000 own a computer." But, the surveys don't tell us much about how and why certain practices are used or how adoption of computers alters the management of the business. Case studies can play a very important role in answering the how and why kinds of questions. Cenainly case studies can help us develop better surveys, but they also have intrinsic value by letting us see the "real story" behind a panicular topic. Case studies are time-consuming, invasive research. Researchers were uncomfortable in the role of interviewer for several reasons:
1. Most had no formal training in interview techniques and so felt inadequately prepared to use interviewing as a primary means of data collection.
2. & educators, our inclination is to want to respond to questions rather than ask them. 3. The interviews required several hours of the manager's valuable time so the researcher felt as if he/she was imposing and, consequently, may have hurried the interview or failed to ask appropriate follow-up questions because of the perceived imposition. 4. Because the interviewees were known and respected producers, the researchers wanted the interview to be a pleasant (or, at least not unpleasant) experience, which precluded exploration of areas of potential interest if perceived as sensitive, for example, interpersonal problems created by the adoption of a computer or current financial conditions. At the same time, we felt a need to learn how to approach sensitive issues to portray the business accurately.
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Many aspects of the interview protocol worked well. One lesson learned in conducting interviews was that the tape recorder was very useful, and some would argue essential. Having a colleague along to also listen and take notes was helpful, but probably still an imperfect substitute for a recording of the session. The tape worked well with the initial case report by clarifying what was said. Some points of protocol were difficult to pursue in an interview mode. For example, assessing the direct impact of the FIS on business and identifying critical success factors was vexing to some producers. In general, we believe case study research has a place in economists' tool kits. The ability to observe economic behavior with accuracy and insight should lead to better theory, questions, and hopefully answers. We doubt that "qualitative research" will ever be a respectable activity for an economist. But for those willing to take a risk, the view can be fantastic. Each of us felt that the interview and case study experience was very valuable. We gained insights about management processes which we
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do not get from analyzing data; however, we found it difficult to summarize what we felt we had learned. Interesting, but, now what?
• Conclusions Case studies such as these point out the difficulty in suggesting improvements to a farm operation without several hours of orientation to document and analyze existing practices. The educator who routinely is asked to participate in broadbrush educational programs realizes that he/she may rarely provide the right advice at the right time for anyone in a given audience. Many producers seek quick answers from extension staff who want to accommodate them, but how helpful can we be in responding to questions with a background void? At the same time, learning about questions that innovative producers do not know how to address may be instructive with respect to research and educational program needs. Another possible side benefit of this project is the identification of alternative methods of teaching academic programs. Much concern has been voiced in recent years about the quality of education received by our students. Have the students failed to learn or have the teachers failed to teach? In all likelihood, both have occurred. One possible solution is individualized learning plans, where learning styles and different teaching methods are better linked. Because producers value highly insights gained from other producers, perhaps educational programs should regularly include innovative or exemplary producers as speakers. New programs to facilitate information exchange among producers on an ongoing basis should be developed. Efforts to develop and maintain programs comparable to marketing dubs and Integrated Resource Management (IRM) groups
should probably be expanded. Perhaps a Master Manager program or support networks for computerized decision aids are in order. Another alternative might be to re-emphasize the role of county extension agents, and encourage them to conduct one-on-one educational programs. By working with farmers individually, they will gain and maintain an understanding of farm production and management systems for producers in their county or area. This should, in turn, enable them to help producers adapt broad based extension recommendations on their individual operations. (This is contrary to what most state and federal administrators are likely to recommend.) Veterinarians are one of the more frequently used as well as highly regarded consultants on operations with livestock. Educators should not overlook veterinarians as a potential audience for training programs with the idea that they may have a multiplier effect. Likewise, dialogue with and programs for tax preparers and accountants may be useful in minimizing the number of mixed signals producers receive and reducing the stress associated with trying to maintain records for different purposes. Even producers with fairly sophisticated record-keeping systems may lack skills or time to efficiently and effectively summarize and analyze information. Recordkeeping must be made as simple, inexpensive, and painless as possible. Programs in time management might be beneficial to many producers. Another alternative would be to assist in further development of consultants and encourage producers to use them to supplement their personal efforts and skills. Not all segments of agriculture or geographic regions have benchmark data readily available with which producers can make comparisons. Can agricultural economists help identify key statistics that are important and provide benchmarks without farm management associations? Because the audience for programs on analyzing financial and production records is small, programs to assist managers in learning these skills or improving them are probably not as well developed as programs to provide basic skills. Analysis is hard work-how can researchers and educators make it easier? Perhaps additional research to demonstrate the benefits and costs of specific FIS components for farms of different types would be beneficial. Jose and Crumly note that the "premise that income maximization is the major goal may lead to low rates of adoption of extension information" and that their study provides a psychological basis for Kliebenstein's findings that profit maximization is not the highest priority goal for many producers. Perhaps some farm management resources directed towards teaching financial management have a higher and better use. However, all of these case studies identified minimum levels of income or improved profitability as one of their goals.
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• Further Research This case study research provides additional insights into the development and use of information on farms perceived to have innovative information systems. The human dimensions of the process were only lightly touched. Personal observation and experience would suggest that love of learning, fear of knowing, time constraints, discipline with respect to record keeping and major irritants/sources of stress also affect the development and use of the farm information system. More probing questions with respect to the motivations, learning styles and preferences, producer perceptions of risk, and the role of personal preferences in determining the value of information are needed. Because the cases were selected to include managers perceived as being innovative with respect to their use of information, we do not have cases of more typical producers for contrast and comparison.
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References Anderson, J.R, J.L. Dillon and B. Hardaker. Agricultural Decision Analysis. Iowa State University Press. Ames, Iowa. 1977. Baker, Gregory A. "Computer Adoption and Use by New Mexico Nonfarm Agribusinesses." American journal ofAgricultural Economics. 74, 3 (August, 1992). Batte, Marvin T., editor. Adoption and Use ofFarm Information Systems. Ohio Agricultural Research and Development Center Special Circular 149; North Central Regional Research Publication 339. December 1995. Batte, Marvin T., Eugene Jones, and Gary D. Schnitkey. "Computer Use by Ohio Commercial Farmers." American Journal ofAgricultural Economics. 72, 4 {November, 1990): 935-45. Batte, Marvin T., Eugene Jones, and Gary D. Schnitkey. "Farm Information Use: An Analysis of Production and Weather Information for Midwestern Cash Grain Farmers." journal ofProduction Agriculture. 3, 1 Qanuary-March, 1990): 187-96. Bhattacharyya, Thomas R Harris, William G. Kvasnicka, and Gary M. Veserat. "Factors Influencing Rates of Adoption ofTrichomoniasis Vaccine by Nevada Range Cattle Producers." JournalofAgriculturalandResourceEconomics. 22, 1Quly1997): 174-90. Feder, G., RE. Just, and D. Zilberman. ''.Adoption of Agricultural Innovation in Developing Countries: A Survey." Economic Development and Cultural Change. 31 (1985): 255-298. Jarvis, Anne Marie. "Computer Adoption Decisions-Implications for Research and Extension: The Case ofTexas Rice Producers." American journal ofAgricultural Economics. 72, 5 (December 1990): 1388-94. Jose, H. Douglas, and James A. Crumly. "Psychological Type of Farm/Ranch Operators: Relationship to Financial Measures." Review ofAgricultural Economics. 15, 1 Qanuary 1993): 121-32. Just, Richard E., and David Zilberman. "Stochastic Structure, Farm Size and Technology Adoption in Developing Countries." Oxford Economic Paper. 34(1983): 307-28. Just, Richard E., and David Zilberman. "The Role of Micro-Risk Behavior in Aggregate Relationships." Risk Analysis far Agricultural Production Firms: Concepts, Information Requirements and Policy Issues. p. 40-73, Dept. of Ag. Econ., University of Illinois, July 1984. King, Robert P., Tim Cross, Craig Dobbins, and Earl Fuller. "Lessons Learned from Workshops on Farm Information Systems." Farm Level Information Systems Conference at Woudschoten Conference Center, Zeist, Netherlands, May 1993. Kliebenstein, J.B., W.D. Heffernan, D.A. Barrett, and C.L. Kutley. "Economics and Sociologic Motivational Factors in Farming." Journal ofAmerican Society ofFarm Managers and Rural Appraisers. 45 (1981): 10-14.
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Knudson, Mary. "Incorporating Technological Change in Diffusion Models."
American journal ofAgricultural Economics. Vol. 73, No. 3, August, 1991: 724-33. Leathers, Howard D., and Melinda Smale. ''A Bayesian Approach to Explain Sequential Adoption of Components of a Technological Package." American journal ofAgricultural Economics. 73:3 (August, 1991): 734-42. Lazarus, William F., Deborah Streeter, and Eduardo Jofre-Giraudo. "Management Information Systems: Impact on Dairy Farm Profitability." North Central journal of Agricultural Economics. 12 Quly 1990): 267-78. Lin, Justin Yifu. "Education and Innovation Adoption in Agriculture: Evidence from Hybrid Rice in China." American journal ofAgricultural Economics. 73, 3 (August, 1991): 713-23. Marra, Michele C., and Gerald A. Carlson. "The Role of Farm Size and Resource Constraints in the Choice Between Risky Technologies." Wt-stern journal ofAgricultural Economics. 12, 2 (1987): 109-18.
58 • National Agricultural Statistics Service. "Farm Computer Usage and Ownership." News release. Agricultural Statistics Board, USDA. July 30, 1997. Putler, Daniel S., and David Zilberman. "Computer Use in Agriculture: Evidence from Tulare County, California." American Journal ofAgricultural Economics. 70, 4 (November 1988): 790-802. Shapiro, B.I., B. Wade Brorsen, and D. Howard Doster. ''Adoption of DoubleCropping Soybeans and Wheat." Southern journal ofAgricultural Economics. 24, 2 (December 1992): 33-40. Verstegen, Jos A.AM., Ruud B.M. Huime, Aslt A. Dijkhuizen, and Robert P. King. "Quantifying Economic Benefits of Sow-Herd Management Information Systems Using Panel Data." American journal ofAgricultural Economics. 77, 5 (May 1995): 387-96. Willimack, Diane K "The Financial Record Keeping Practices of U.S. Farm Operators and Their Relationship to Selected Operator Characteristics." Selected paper presented at AAEA Annual Meeting. Louisiana State University, Baton Rouge. July 30-Aug. 2, 1989. Yin, Robert K Applications of Case Study Research. Applied Social Research Methods Series, Volume 34. Sage Publications. Newbury Park. 1993. Yin, Robert K Case Study Research: Design and Methods. 2nd ed. Sage Publications. Newbury Park. 1994. Zepeda, Lydia. "Simultaneity ofTechnology Adoption and Productivity." Journal of Agricultural and Resource Economics. 19, 1 Uuly 1994): 46-57.
Appendix A Interview Protocol A two-visit protocol is proposed that would permit a consistently conducted reconnaissance followed by more in-depth study of a specific decision. Of course additional visits could be arranged if needed. The protocol would include the following general steps: 1. Call prospective case to discuss their willingness to participate. 2. (optional) Develop baseline information using pre-interview mailing.
3. Conduct interview 1. 4. Develop a preliminary report and provide a copy to the family for verification of accuracy. 5. Circulate the case report to selected NC-191 members for comments, questions. 6. Conduct interview 2 primarily focused on a strategic decision and the role of information in making and implementing the decision (also, seek answers to questions raised by NC-191 reviewers). 7. Draft a final report and have the farm family review. 8. Circulate case to selected NC-191 members for comments, questions. 9. Develop final report. Additional detail on the major steps of the protocol is outlined below.
Pre-Interview Activities 1. Complete IRB applications, other paperwork required when human subjects are part of research project 2. Initial phone contact •describe the project objectives • discuss farm characteristics to reaffirm eligibility or appropriateness for case study. (Have they done something unique or innovative in their farm information system?) • encourage them to include as many stakeholders as possible in the interview 3. Follow-up letter (with returns) • outline of project, protocol • expectations • obligations, honoraria, expenses •human subject releases, etc. •(optional) NC-191 Interview Packet Advance Mailing • (optional) goals worksheets or critical success factor worksheets 4. If used, review returned NC-191 Interview Packet 5. Prepare for Interview 1 based on returned materials and follow-up phone calls.
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Suggestions for Interview 1 6. Consider taking a tape recorder so that you can review the interview when needed in writing up the case study. 7. Take someone with you (student or colleague) to also take notes and listen. This is important! 8. Let subjects tell their story: • Tell us about your farm organization. - activities, enterprises - decision makers - stakeholders (including spouse, children, in-laws as appropriate) - educational background (years of school, degrees) of stakeholders - off-farm job experience of stakeholders - job descriptions, family members' roles (sketch out an organizational chart)
60 •
- evolution of farm business (brief history, key changes, external events) - goals and values - long-term expectations, hopes for business, succession plan • Tell us about your farm information system. - survey material - evolution of current system - standardized office routines? - stumbling blocks? disappointments? - what are they proudest of in their MIS? - what kind of MIS did their parents have? - impacts on organization, responsibilities - perceived impact on management - future plans • How do you use information from your system on the farm? - Production information + output, input measures (what they look at) + if appropriate, ask to see sample reports - Financial performance + current and past measures (what they look at) + if appropriate, ask to see sample reports
+DIA ratio and total value of assets - OR, Critical success factors +identify CSFs by area (production, finance/marketing, human resources) + how well does producer think they are doing with respect to CSFs? + how does the information support achieving CSFs? +facilitator's guide format (p. 19) or materials from MSU's strategic planning
9. Listen carefully for what is said as well as what may not be said 10. Listen for and ask questions about things that may be unique to them 11. Ask to see the office. 12. Identify a strategic decision for subsequent interview
Preliminary Report 1. Draft this as soon as possible after the interview. Schedule time to do it! The
longer you wait, the more difficult it becomes as you try to recall the interview. - use notes from Interview 1 - ask the other interviewer/observer to contribute - use written materials provided (if any) - note areas needing clarification, additional details 2. Develop plans for Interview 2 3. Draft letter to case study asking them to review the preliminary report, notify you of changes needed or respond to questions for clarification. At the same time, let them know what to expect in Interview 2. 4. Once the preliminary report has been reviewed by family, circulate it to NC191 reviewers
Suggested Case Study Report Content The following outline is suggested for use in writing our case study reports. Every case farm is unique, so some portions of this outline may not apply to your farms, and other topics may need to be addressed that don't appear here. However, the greater consistency we have among case study write-ups, the easier it will be to draw inferences and conclusions from among them as we construct our summary pieces.
Introduction and Overview Summarize the farm's resources, enterprises, and stakeholders. Review the farm family's goals and their roles on the farm. An organizational chart or diagram illustrating management responsibilities may be helpful. A brief summary of the farm's financial structure and performance should also be included.
Farm History and Evolution Discuss changes that have occurred in the farm's ownership, management, and production, emphasizing changes that have influenced the farm's management information system.
Management Information System Describe the primary components of the farm's MIS, including internal and external
•
61
information. Identify the primary types of information maintained and how this information is used in managing the farm. Also discuss who records, maintains, and reports information on the farm and relate the MIS to the farm's production management and critical success factors. It may be important to describe how the MIS has evolved over time and relate these changes to the farm's evolution.
Decision Case Describe the decision case analyzed, emphasizing the role that information and the FIS played in making the decision. Discuss the outcome of the decision, if known. Analyze the strengths and weaknesses of the MIS in the decision-making process.
Looking Ahead Present your views on the future of the farm and its MIS, and identify changes discussed or planned by the farm stakeholders.
62 •
Suggested Activities for Interview 2 1. Schedule second interview after you have received comments from NC-191 reviewers in case they raise additional questions about the preliminary interview. 2. Again let them tell their story. • Describe the strategic decision that resulted in changes in your farm information system. - objectives, motivation - decision makers, stakeholders - problem identification - alternatives considered, rationale - selection considerations - implementation • Role of information used in the decision - sources, uses - quantities, methods, measures - uncertainty - strengthens and weaknesses of current MIS • Impact of decision on MIS and impact of MIS on decision
Prepare Final Case Study Report Same process as for preliminary report.
AppendixB NC-191 Interview Packet (Advance Mailing) At any time if you have any questions or feel additional comments are warranted, please note them on these forms. Farm/Ranch N a m e : - - - - - - - - - - - - - - Date: _ _ _ __
Family Information Name:
Age: _ _ _ __
Spouse:
Age: _ _ _ __
Children: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ living at home 0
Ages: _ _ _ __
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ living at home 0 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ living at home 0 A d d r e s s : - - - - - - - - - - - Telephone:(work) - - - - - - - - - - - - - - - - - - - - - - - - ( h o m e ) _ _ _ _ _ _ __ Goals and Management Which of the following describes your farming/ranching business? Number of owners
0 0 0 0
Sole proprietorship Partnership Corporation Other (Please describe)
How many years have you worked on a farm/ranch? How many years have you operated this farm/ranch? Do you have written goals for your farm/ranch? Family?
yes
0
no
yes
0
no
0
0
If yes, please attach a copy. If not, what are they? (Please complete the worksheets in the enclosed publication.) How important is it for this operation to make a profit?
0
Very important
0
Somewhat important
0
Not important
Describe how goals are communicated among family members and others involved in the operation.
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What do you perceive to be the strengths of your farm/ranch operation? Weaknesses?
What management practices, if any, do you think you should change?
Has the size or structure of the operation changed in the past three years? yesO
noD
If yes, please explain:
64. What kinds of changes, if any, do you anticipate in the operation {e.g., bringing children into the operation, retirement) in one year? Five years? Ten years?
Are there any extenuating circumstances {death or disability of key partner, debilitating health problem, divorce) affecting your farm or family recently of which we should be aware?
What do you enjoy doing most on the farm/ranch?
What would you like to spend less time doing?
Please indicate the importance of the following agribusiness environmental factors relative to your operation in the next 1-2 years: Extremely important
Very important
Moderately important
Somewhat important
Not important
Information management Value-added production (furtherprocessing of farm products) Adoption of new technology Societal concerns about natural resource issues, environmental regulations Change in government programs Increased international trade
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Growth to generate additional income Use of computers Changes in structure of rural communities Diversification of enterprises to spread production and income risk Changes in property rights Other (please specify)
Management and Labor Resource Inventory On-farm employment Weeks/year Avg. hrs/wk You Spouse
Custom work Weeks/year Avg. hrs/wk
Off-farm employment Weeks/year Avg. hrs/wk
Title/ Name
Responsibilities
Age
Person
Annual
Years
(Years)
Employed days/year 1 Wages2 Making (YIN)
Management
$ __ $ __ $ __ $ __ $ __ $_ Permanent Labor
$ __ $_ $ __ $ __ $ __ Administrative Staff
$ __
$_
66 • Part Time or Hourly
$ __ $ __ $ __ $ __ $ __ For day labor, one person day= 10 hours labor
1
This should include the full cost (salary or wages, payroll, benefits, etc.)
2
Land Inventory Do you have a conservation plan?
Oyes Ono
Do you have a soil survey?
Oyes
0
no
How much precipitation does the property receive annually? --.-inches
Crop and Feed Acreage Crop
Acres
Involved in Decision
Educ.
Average Yield
Irrigated/ Dryland
Rented/ Owned
Pasture and Range Acres
1
Primary
Secondary
Rented/
Forage
Forage
Owned
1
1
Bermuda grass, tall fcsruc. bromc: grass, clovers, old world blucstcm, rye, ryc:grass, oats, wheat, rangeland, brwh, forbs/wcc:ds, other (please specify).
Breeding Livestock Inventory Breeding Females Replacement Females Number
Primary Breed Number
Bulls/Sires
Type of Date of Approximate Primary Primary Breed Number Breed Production 1 Inventory Value per Head
Sccdstock, commercial, both.
1
Livestock Held for Sale or Purchased for Resale Number
1 Stocker
Type1
Date of Inventory
steers, stocker heifers, feeder pigs, broilers, feeder lambs, etc.
Approximate Value per Head
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Farm Financial Record Systems 1. Do you use or subscribe to a service to keep some (or all) of your farm business records? (include farm business associations, accountants, consultants or other paid services if they enter transactions data, provide summaries, etc. separate from completing tax forms)
D No
Go to question 3
DYes 2. Which of the following best describes this service? (Check ONE)
D Accountant DAttorney
D Record- keeping business, bureau or association D Other (please specify) 3. Aside from this service, do you keep a farm records workbook, general ledger, or use some other method to record the farm's financial activities?
68 •
D No
Go to question 10
DYes
4. Who is primarily responsible for keeping these records? (Check ONE) Diam Name: ~~~~~~~~~~~~~~
D
Partner in the farming business
D Spouse or other family member D Hired employee D Other (Please specify) 5. Which of the following best describes your financial record system? (Check ONE)
D D D
Both manual and computer based components
D
Mail-in records system
Manual record system Computer-based record system
6. What method of record keeping are you using now?
D
Cash
D Accrual 7. Are your financial records based on single or double-entry accounting methods? (Check ONE)
D Single-entry accounting D
Double-entry accounting
D Don't know 8. Do you keep enterprise records?
D
No
D
Yes
9. If your financial records are computer based, which of the following best describes your system?
0
General business accounting software (e.g., Quicken, Peachtree, Money, Dae-easy}
0 0
Accounting package designed for farm firms (e.g., Redwing, FBS) Accounts are maintained on an electronic spreadsheet (e.g., Lotus 1-2-3, QuattroPro, Excel}
0
Accounts are maintained using data base management software (e.g., dBASE)
0 0
Mail-in records system Other (please specify)
10. How frequently are receipt and expense data entered into your farm records? _____ times per month time per year 11. Please indicate how many hours per month are spent analyzing and keeping farm records and computer software used, if any.
Business Accounting Payroll Tax Computation Market Price Analysis Crop Records Livestock Production Records Livestock Feeding/Ration Evaluation Soil Maps, Chemical Use Electronic Spreadsheet Word Processing Data Base Management Other
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Hours/month
Hours/month
Keeping
Analyzing
Software Used,
Records
Records
If Any
Crop/Forage Record System
1. Select all crop information that you record every year either on a field-level (e.g. , Smith place, Jones farm etc.) or on a total enterprise (crop} basis. Field Records?
Crop Records?
a. Fertilizer used
Dyes
Ono
Dyes Ono
b. Manure applied
Dyes
Ono
Dyes Ono
c. Herbicides applied
Dyes
Ono
Dyes Ono
Dyes
Ono
Dyes Ono
performed
Dyes
Ono
Dyes Ono
£Crop yield
Dyes
Ono
Dyes Ono
g. Forage yield
Dyes
Ono
Dyes Ono
Dyes
Ono
Dyes Ono
Dyes
Ono
Dyes Ono
d. Insecticides or fungicide applied e. Machinery operations
h. Costs of production
70 •
and revenue
I. Irrigation scheduling/ amounts
2. What methods do you use to record crop data.(Check ALL that apply.)
0 0
Notes on calendars
0
Field record book
0 0 0
Computerized crop records program (e.g., Field Manager, CropAudit)
Pocket notebook
Computer data base of my design Other (please specify:_ _ _ _ _ _ _ _ _ _ _ _ _ _ _~
3. How often do you test the soils in tillable fields?
0 0 0
Annually Every 2 years Every 3-4 years
4. What is your main market crop (e.g., largest sales}? How do you market this crop? (Check ALL that apply.) Currently
In past
0 0 0 0 0 CJ 0 0 0
0 0 0 0 0 CJ 0 0 0
Cash sales at harvest without storage Cash sales after storing the crop Forward cash contract Hedging using futures market Hedging using options market Contract with processor Feed to livestock Process and sell as processed product Other {please specify:
Livestock Record System 1. For breeding animals, do you keep individual cow records?
0
yes
Ono
2. For breeding animals, how do you record and keep information in question 1? (Check ALL that apply.) a. A manual system on paper b. A computer program I designed c. A computer program I purchased
0 0 0 0 0
d. A service bureau e. Other (please specify)
3. Do you keep records of feed fed to animals? (Check ONE)
0 0
No Yes
If yes, at what level:
0 0 0 0
on a total farm basis only on a species basis only on a group level within species on an individual animal basis
If yes, how are these records kept?
0
Paper system
0 0 0
Self designed computer program Purchased computer program Other:
On-Fann Computer Use
1. Do you use a computer in any aspect of your farm business?
0 0
No Go to "Use of Computerized Information Service" section. Yes Answer the following questions:
2. Which best describes your primary computer system. (Check ONE)
0
Windows operating system
0 0
MS-DOS operating system Other. Please specify:
4. In what year did you purchase the computer? 19 a. Do you have a MODEM for your computer?
0
yes
0
no
0
don't know
b. What is the size of your hard disk drive? c. How much RAM does your computer have?
k
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5. Who is the PRIMARY operator of the computer for business uses? (Check ONE) Name:
0 0 0 0 0
Owner Partner in the farm business Spouse Other family member Employee
6. How did the primary operator learn to use the computer? (Check ONE)
0 0 0 0 0 0
72.
High school classes College classes Classes offered by the cooperative extension service Vo-ag or technical school classes service Self-taught, no formal training Other (please specify):
7. About how many hours per month is the computer used for farm/ranch use?
0 0 0 0 0
Less than 5 hours/month 5-10 hours/month 10-20 hours/month 20-30 hours/month More than 30 hours/month
8. For which tasks do you use the computer and how helpful is it? Is computer used for this task?
Helpfulness in management Low High
yes
no
1 2 3 4 5
yes
no
c. Tax computation
yes
no
1 2 3 4 5 1 2 3 4 5
d. Business correspondence
yes
no
1 2 3 4 5
yes
no
1 2 3 4 5
yes
no
yes
no
1 2 3 4 5 1 2 3 4 5
yes
no
yes
no
a. Business financial accounting b. Business planning (budgets, projected cash flow statements, etc.)
e. Herd production record keeping (e.g., herd health & breeding records)
£ Crop production record keeping (e.g., yield & fertilization records) g. Livestock feeding/ration evaluation h. Marketing and price analysis (e.g., charting, forecasting, etc.) i. Access to an electronic information service
1 2 3 4 5 1 2 3 4 5
9. To what extent do you feel the computer has either saved time or provided better information than "hand" records? (Circle ONE) Very much
Not at all
1
2
3
4
5
10. How much time passed from when you purchased the computer system until you felt it became useful?
0 0 0 0 0
Less than 1 month 1-3 months 4-6 months 7-9 months More than 9 months
Use of Agricultural Professionals and Information Services During the past two years, which of the following professional services have you used as a source of information and how useful have these been? Times the source was used per year (Circle ONE) Accountant or financial advisor Farm record association agent Tax preparer Livestock management advisor Crop/pest management consultant Computer software vendor/advisor Computer hardware vendor/advisor Farm management consultant Coop. extension - county agent Coop. extension - specialist University professor Vocational agriculture teacher Veterinarian Natural Resource Conservation Service Farm Service Agency (FSA) State Dept. of Forestry State Dept. of Fish & Game Other producers Industrialization of Agriculture Computer Information Services (e.g.,DTN, Farm Bureau ACRES) (please specify) Internet (e.g., COMPUSERVE, AOL) (please specify) Other:
Usefulness Low High
0 0 0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1 1 1
2-5 2-5 2-5 2-5 2-5 2-5 2-5 2-5 2-5 2-5 2-5 2-5 2-5
6-10 6-10 6-10 6-10 6-10 6-10 6-10 6-10 6-10 6-10 6-10 6-10 6-10
>10 >10 >10 >10 >10 >10 >10 >10 >10 >10 >10 >10 >10
1 1 1 1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5 5 5 5
0 0 0 0 0 0
1 1 1 1 1 1
2-5 2-5 2-5 2-5 2-5 2-5
6-10 6-10 6-10 6-10 6-10 6-10
>10 >10 >10 >10 >10 >10
1 1 1 1 1 1
2 2 2 2 2 2
3 3 3 3 3 3
4 4 4 4 4 4
5 5 5 5 5 5
0
1
2-5 6-10 >10
1
2 3 4 5
0
1
2-5 6-10 >10
1
2 3 4 5
0
1
2-5 6-10 >10
1
2 3 4 5
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