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Suggested administrative changes; [A] Look to states where there are fewer problems for ideas on the differences of local administration. Our company prepares applications in six different states, and the program does NOT work the same in all six states. I think there are three factors to examine; (1) Loan Losses, (2) Average decision time, and (3) Appeal decisions. Excessive loan losses suggest a number of problems, some of which can be administrative, IE; a communication breakdown with the lenders, poorly structured loans, loans not properly serviced, loans that were not correctly packaged, and/or inadequate review during the approval process. Extended decision times point to overworked staff, poor training, inadequate credit skills, and most important to AG Credit managers who are wasting time trying to tum down a good loan, because they do not like the bank, the packager, or the applicant drives a better pickup than they do (that is a quotation!) We know that good AG Credit managers are frustrated with the current regulations, which force them to make loans that they know are not sound credits. This however, does not excuse those who impede the process without reason.

Direct the State, District, and local administrators to follow the regulations. Far too many people are making their own rules, with little to NO regard for the rules Congress has established. I know of cases where decision making people have said "I don't care what the law is, I'm not going to do ..." If the rules are not right, then change the rules. But until the rules change we must all live by them, regardless if we agree. [C] Stop the retaliation by some FSA officials against those lenders and packagers who take them to appeal. If FSA offices are losing appeals, then it is obvious they are not following the rules, if the lenders are losing the appeals, then they are not. Appeals, the number of them, and the outcome should tell you a tremendous amount about how the system is working. As it is now, lenders and packagers who take decisions to appeal are given the treatment, IE; we will stop everything you submit as punishment for having our decision overturned. This frustrates the good lenders into quitting the program.


Suggested Lender participation changes; [A] Give good lenders more power, up to and including approval. Reserve this privilege for those lenders who have a proven record, but allow other lenders the opportunity to work up to this status. [B] For those lenders who are continually placing bad loans into the program, reduce the guarantee percentage until they have proven themselves, this can be determined by examination of that lender's loss claim ratio.

Thank you for your time. Please refer to the attached material for related information
(1) Brief background on myself and on Loan Pro, Inc.
(2) Copy of a letter sent from my office to New Mexico Congressional members this last year.

Please give these ideas serious consideration. If significant changes are not made soon in this program, it may self destruct from losses that Congress will not allow to continue. I think the program is in MUCH worse shape than what the agency is willing to see. It can be fixed, but surgery is needed soon! I know there are lots of agency staff who are working very hard to make this program better. My criticism of the agency is not directed at these individuals, but at those who are working equally hard at impeding the program.


Joe Kirkpatrick

/Enc. As stated.


Texas A&M University-Commerce

Commerce, Texas

Dr. Larry J. Klingbeil


"1) The Food, Agriculture, Conservation and Trade Act of 1990 made provisions for farm financial management training for Farm Service Agency (FSA) borrowers. The report of the Committee on Agriculture, Nutrition and Forestry, United States Senate (July 6, 1990) provided the first general definition of the training mandated in Subtitle D (7USC 1981 et seq) section 359, Borrower Training, of the legislative act. In their report, they specified only that the curriculum for such training should assist the borrower to forecast trends in income and expenses, complete lender-required forms, analyze the farm operation and become aware of resources which provide information on new farming techniques, crops and products. A further provision was that "non FSA eligible farmers may attend and pay for such classes, including applicants determined to be ineligible for FSA assistance due to lack of sufficient experience or farm management ability."

The specific tentative goals of the training program were further delineated in communication from the Farmer Programs Loan Making Division of FSA. These seven broad goals were:

Goals - Upon Completion

1. 2.


To use an acceptable record keeping system, including tracking family living expenses.
To complete an annual summary of income and expenses and reconcile with balance
To properly complete a financial statement, including separation of farm and non-farm
items, calculation of current liabilities, and calculation of net worth.
To complete a projected cash flow, including estimation of production and expenses.
To prepare an enterprise analysis and be able to use it to determine the profitability
of decisions.
To establish, monitor, modify and achieve goals for the operation.
To properly manage the farm operation in a businesslike manner.

4. 5.

6. 7.

This preliminary set of guidelines was further defined in the Federal Register 57:228, November 25, 1992 when the proposed rules were published that defined the selection and approval of organizations and courses that would meet the specifications for FSA mandated training of new borrowers.

This final set of goals detailed in the Federal Register Vol. 58, No 249, December 30, 1993 is a subset of the broader goals and objectives of the Texas Farm & Ranch Financial/Production Management Program of Texas A&M University - Commerce.



The primary purpose of any farm business management program has been to increase a farmer's knowledge of record keeping and record analysis so that farmers may increase the efficiency and output of their enterprises based on their family and business goals.

There have been numerous studies conducted on Farm Business Management (FBM) education programs. A study of Minnesota farmers') found that the average income of the general farm population from 1981 to 1985 was $18,340 with a range of $15,397 to $22,498. During this same period the average income of those enrolled in a FBM program was $27,168 with a range of $24,359 to $33,935, thus showing economic benefits for being enrolled in an organized FBM education program following the format like that of the Texas Farm & Ranch Financial/Production Management Program (TxFRFPMP).

Not only does the farmer benefit from enrollment in a FBM program, so does the community. A Minnesota study(2) of 3500 business records of enrolled farmers showed that farmers could expect to realize about $4.00 of labor earnings for each dollar of investment in a FBM education program. When stimulated business activity was the benefit measure, the benefit rose to 9:1, resulting in a multiplying effect with a return of 36:1 to the community. That is, for every dollar invested in a FBM education program conducted like the TxFRFPMP, stimulated $36.00 of new business in the community.

There are other benefits from a FBM program besides increased profits. Wilson(3) stated the benefits of enrollment in a Farm Business Management Program were:

1. 2. 3. 4.

Tax reporting was simplified because the records are already compiled.
The records gave the farmer a clearer picture of their enterprise efficie

Financial information was at hand.
The family became more knowledgeable of the operation through increased
The farmer could see where increased improvements were needed. They could
see the whole picture.
There was no guess work for budgeting. The farmer knew where each
enterprise stood concerning expenses and expansion possibilities.



(4) A review of literature showed that FBM programs have several benefits and the basics of a good program includes the following vital components:



Record keeping is of primary importance with a farming operation and in a
successful FBM program.
The topics of instruction must cater to the needs of the enrolled.
The types of instruction must vary (i.e., group, individual, etc.) in order to
maintain farmer participation.
The high school agriculture instructor can be of primary importance in
facilitating an adult educational program.



(4)In a 1994 study of 553 Texas farmers and ranchers, conducted by Department of Agricultural Sciences at Texas A&M University - Commerce, it was found that 61.2% of the respondents indicated that they would be willing to enroll in a FBM program if one was offered in their community. Additionally, 78.3% of the respondents indicated that they believed other farmers and ranchers would be willing to enroll in a FBM program. The top five subjects as chosen by the farmers and ranchers to be included in a FBM program were: (1) Developing a record system, (2) Keeping income tax records, (3) Maintaining income records, (4) Maintaining expense records, and (5) Maintaining livestock and production records. Texas and Minnesota farmers and ranchers have similar ideas on what should be included in a FBM educational program. Both Texas and Minnesota farmers ranked nine of the top 15 topics the same.

(5)With a state average of $375,000 invested in land and buildings and $30,000 for machinery and equipment at stake, the farmer needs to know how to properly manage their finances. Farmers need someone who is trained in farm business management and who can properly teach them how to manage their resources to the maximum potential.

This study also found that the local high school or community center was the choice for 62.6% of the farmer respondents. "Other" was the second most popular choice (13.9%). It included feed stores, civic centers, and private businesses. A Junior College was the choice of 11.3% of the respondents, followed by "any of the above would be convenient" (9.3%). Only 3.0% of the respondents indicated that a "four year college or university" would be a convenient place for them to enroll in a FBM program.

The farmers also indicated Monday (20.1%), Tuesday (32.2%) and Wednesday (18.6%) would be the most convenient days of the week for them to attend a FBM program with 63% indicating evenings as the most convenient time.

In summary, Texas farmers and ranchers are willing to enroll in an organized FBM education program. High School Agriculture Science instructors would be willing to teach the FBM program in their area. The most convenient place for farmers and ranchers to enroll in a FBM program would be the local high school. The local high school has the necessary facilities for instruction and they are familiar with the Agriculture Science instructor. More farmers would be able to attend if the FBM program was held in the evenings during the first part of the week.


The following training units, adopted and modified for the Texas educational environment from the Minnesota Farm Business Management program, is presented to the FSA borrowers (enrollees) through selected Agricultural Science & Technology Instructors in the Texas Public School system. These units of instruction are each taught in a 2 - 2 1/2 hour group classroom session.



First Year:

FBM-12 & 13

Systems Approach to Farm Business Management
System Goal Setting & Directed Study
Introduction to Data Management Systems
Elements of Farm Business Planning
Accounting for Systems & Enterprise Planning
Cash Flows

During the year the enrollee will be able to have two office visits and one on-farm visit that will last between 1 1/2 to 2 hours to discuss cash flows, net worth statements, accounting procedures and/or financial or production concerns.

Second Year:
November FBM-21
December FBM-22
January FBM-23
February FBM-24
March FBM-25

Tax Management Principles
Preparation for Farm Business Analysis
Income Statement & Net Worth
Farm Business Analysis Interpretation
Financial Planning Analysis

During the year the enrollee will be able to have two office visits and one on-farm visit that will last between 1 1/2 to 2 hours to discuss cash flows, net worth statements, accounting procedures and/or financial or production concerns.


Additional classes for the Production would include:
FBM - 1P

Elements of Commodity Market Planning
FBM - 2P

Futures Strategies in Commodity Marketing
FBM - 3P

Elements of Risk Management in World Agriculture The borrower will have one additional on-farm visit each year to work on analysis interpretation and production concerns.

Course Materials and Training Objectives:

Appended to this proposal are basic outlines (titles, description and goals) of the courses included in the training plan. They illustrate the way in which the curriculum materials have been organized with a title, course description, texts and 10-12 goal statements for each course. These outlines were used in turn as the basis for a curriculum project to turn each course outline sheet into a self contained teaching unit.

Instructors and Qualifications:

The instructors for the TxFRFPMP are Texas Agricultural Science & Technology Instructors currently teaching in local school districts. The instructors all have at least a Bachelor's degree and are recognized as certified teachers in the state of Texas. The instructors have a minimum of three years teaching experience in the field of farm management and agribusiness. The additional training required by the instructors to teach the TxFRFPMP

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