Texas farmer Dan Krienke doesn't have to wonder what his farm operation will look like in the next 10 years. A new computer program from Texas A&M has already given him a fairly accurate vision of what he can expect.
Called FARM Assistance, the computer program allows producers to plug their operations into the future as viewed by the Agricultural and Food Policy Center (AFPC), headquartered on the Texas A&M campus. AFPC is internationally recognized for its computer simulations that forecast farm profitability.
The Texas program does more than just spit out numbers. It evaluates the relative risk farmers face if their operations change or stay the same. Changes might be as basic as: Should you rent or lease land? Buy or lease equipment? Expand a livestock operation? The program can also evaluate how new farm policies will affect your individual operation and, if necessary, can help struggling farmers decide if they should quit.
“The program takes your base production and financial information and then runs 100 different price scenarios for the next 10 years. It doesn't project a single price, but rather a range of possibilities and the percent probability that they will occur,” explains Steven Klose, Texas A&M ag economist.
FARM Assistance uses the same process to evaluate other changes farmers might consider for their operations. Besides the written report, farmers are also given graphs and bar charts as visual pictures of the possibilities.
“You can use it to project crop rotations and machinery replacement,” Krienke says. “But what you do isn't set in stone. I intend to use it on an annual basis to see how things have changed. We know what the future looks like based on the assumption, but we need to look at it again when those assumptions change.”
It's a political tool as well as a financial one, according to Krienke. “Once they have your records, they can run different farm bill alternatives through the program and show how they would affect your specific farm,” he says. “When I see the results, I know how I need to respond to my legislators. I have an average size operation and figure if legislation is going to affect me a certain way, it will have the same effect on my neighbors.”
Krienke also has used the program to evaluate whether he should buy or lease land. “I have ideas on what I want to do, but I won't do anything until we have a new farm bill,” says the Perryton, TX, farmer.
The program works for folks who aren't yet in business, as well as those who are. “Some people are pretty imaginative in developing ideas that won't work,” says Joe Outlaw, Texas A&M ag economist. “We've saved people millions of dollars in Texas by running their projections through this program.
“We present the written report to the farmer, just as we would a board of directors,” Outlaw adds. “In some cases, we've actually gone with a farmer to his banker and presented the report there.”
The state of Texas funded the development and implementation of FARM Assistance, which allows Texas Cooperative Extension to charge just $250 for its services. Right now it's available only in Texas, but Outlaw is testing the interest of farmers in other states as well.
“It's really a no-brainer. I can't imagine not using it,” says Krienke. So far, more than 400 other Texas producers have agreed with the 3,000-acre soybean, wheat and grain sorghum farmer.
The program isn't state-specific, according to Outlaw. “We're hoping we can make the program available to farmers in other areas to help them quantify the risk of their production management strategies.”
For more information, check out the FARM Assistance Web site at http://trmep.tamu.edu/farm.htm or call toll free 1-877-TAMRISK.