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Many farmers and ranchers are facing

an unprecedented risk environment
•  Extreme price volatility has impacted both the cost
of inputs as well as the prices received for farm
commodities. As an example, the price fluctuations
of diammonium phosphate (DAP) fertilizer and corn
over the past three years have been dramatic.

1/1/07 1/1/08 6/1/08 7/1/09 1/5/10

DAP/ton $130 $400 $1,200 $400 $500
Cash Corn/bu $3.60 $4.50 $6.50 $3.10 $3.70
(USDA-AMS Livestock and Grain Market News – Springfield Illinois)

•  Many livestock producers, especially dairy, hog and

poultry producers, are facing liquidations due to sagging
profits from higher feed prices and reduced product
demand. The world economic situation and events such
as the outbreak of the H1N1 virus have had a major
impact on the global demand for livestock products.

•  In response to the economic volatility, agricultural

lenders have tightened their lending standards
and are requiring more documentation.

While some fortunate producers may have timed sales and

purchases at profitable levels, many have experienced losses that
threaten their existence. The need for new risk management tools
and the mastery of existing tools has never been more important.

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What is
Extension Risk Management Education?
In this environment of dramatically increasing risk, the
Extension Risk Management Education program provides
training to help producers learn new strategies to manage
complex and growing agricultural risks. The program’s goal is
simple – “Help America’s farmers and ranchers manage risk.”

Extension Risk Management Education accomplishes this

goal by encouraging and funding innovative programs across
the country, and helping programs focus on accomplishing
tangible results. More than 700 projects have been funded, and
projects have been delivered in all 50 states. The following pages
describe why risk management education is important and how
it is helping producers survive in a high risk environment.

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 Understanding and managing the
volatility in agricultural prices

Situation
Volatility has dominated agriculture the past couple of years.
With the large commodity price and input cost fluctuations that are
occurring, how do producers develop a cash flow plan or determine
if they can break even producing a product? How can they
determine how much operating credit to ask for from their lender
or how much rent they can afford to pay for land?

Risk Management Education helps producers

•  Minnesota’s Winning the Game marketing education
program has helped more than 20,000 producers in 19
states write a marketing plan during the past five years,
resulting in an average gain of $6,111 per producer.

•  An Oregon risk management education project helped

over 100 producers of locally grown products extend the
length of their growing and marketing seasons by adding
products and changing production methodologies.

•  In New York, successful entrepreneurs openly discussed

production practices and business experiences
in workshops with non-mainstream agricultural
entrepreneurs and provided emerging entrepreneurs
with up to an hour of individual mentoring.

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Dealing with the increasing cost of
agricultural inputs

Situation
Rapidly rising input costs have become a challenging risk
management issue for most producers. Livestock producers have
struggled with high feed costs for several years. Higher input
costs require more operating credit and are creating more risk for
producers.

Program results
•  A project in Montana helped producers use energy
evaluation tools to manage rising petroleum based
input costs. Two hundred and five producers tested an
Energy Estimator tool; 68 conducted on-farm energy
assessments; and 17 made energy use changes, utilized
alternative fuel production or made equipment changes.

•  Annie’s Project originated in Illinois and Iowa, and in the

past three years has helped more than 4,000 farm women
in 20 states improve their financial record keeping skills
and learn about marketing and business management.

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 Will producers be able to access the
credit they need?
Situation
Agriculture is not immune to the changing global credit
situation. Agricultural credit has become more difficult to
obtain. Lenders are scrutinizing borrowers more rigorously and
requiring stronger liquidity and increased financial documentation.
Many producers are projecting negative cash flows for 2010.

What Risk Management Education is doing to help

•  In Iowa, 89 producers completed balance sheets and
cash flow plans for their farm businesses as a result
of the training they received from the Agricultural
Management E-School: Going the Second Mile.

•  An Arkansas and Oklahoma project helped 25 Hmong

poultry producers schedule a meeting with their
lenders to honestly discuss their financial situation and
their options to avoid foreclosure or bankruptcy.

•  In Washington, a Transitioning to Value-Added Experts

team helped 36 producers analyze new value-added
product potential and develop business plans to help
them successfully develop value-added products.

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Educating small and immigrant farmers
on how to establish their businesses
and market their products
Situation
A growing number of small and immigrant producers are pursuing
farming as a family business, but these producers face greater
challenges than other farmers. Immigrant farmers often need to
learn how to market their products to consumers, overcoming a
lack of marketing knowledge, cultural and communication issues.

Program results
•  In California, the Regulatory Training for SE Asian
Immigrants Project helped over 240 Hmong,
Laotian and Hispanic farmers change their regulatory
compliance regarding farm safety and labor policies.

•  The Tierra De Oportunidades Project in Massachusetts

helped 25 Latino, Russian, Somalian, and Burmese
farmers develop a business plan. As a result, 18 farmers
reported at least a ten percent increase in profits.

•  A value-added project in rural southern Georgia

helped 30 African American women establish small
food-based enterprises. By learning to network with
other producers, they were able to expand the range
of produce offered at local vegetable stands.

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 Transition planning for retiring
producers and helping new producers
start successfully
Situation
More than 500,000 U.S. producers are over 65 years old
and will need a transition plan now or in the near future.
Entry into farming or ranching is difficult due to the capital
requirements and the expertise necessary to be successful.

How Risk Management Education is helping

•  Wisconsin’s Communication Skills Support Farm
Transfer Success project helped 60 farm families
analyze the financial capacity of their farms and helped
10 families develop a written plan to transfer farm
management and assets to the next generation.

•  Estate Planning in the Sandhills of Nebraska was

attended by 128 producers, with 18 of them completing
written farm transfer plans and 67 percent reporting
improved intergenerational communication.

•  In North Carolina, the Linking Youth with Farming

Enterprises project helped 18 retiring farmers develop
an estate plan and helped 11 beginning farmers
develop partnerships with a retiring farmer.

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Extension Risk Management Education
Centers

•  Extension Risk Management Education is delivered

to producers throughout the U.S. via four regional
centers. Each center requests results-focused grant
applications that address current risk management
issues. Proposals are reviewed by a panel of producers,
lenders, agribusiness representatives and educators.

•  Projects receiving funding must report the results that

producers achieve due to participating in the project. Projects
are held accountable to report how well they accomplished
the proposed results they committed to in the application.

•  Extension Risk Management Education is having a significant

impact as producers figure out how to manage their farm
and ranch businesses through turbulent, high risk times.

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Extension Risk Management Education
www.ExtensionRME.org

North Central Risk Management Education Center

University of Nebraska-Lincoln Extension
www.ncrme.org

The Northeast Center for Risk Management Education

University of Delaware Cooperative Extension
www.necrme.org

Southern Risk Management Education Center

University of Arkansas Division of Agriculture
srmec.uark.edu

Western Center for Risk Management Education

Washington State University Extension
westrme.wsu.edu

The Digital Center for Risk Management Education

University of Minnesota Extension
www.AgRisk.umn.edu