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By Becky Beyers
By almost any measure, 2009 was a horrible year for Minnesota livestock farmers.
Over the last three years, high feed prices and low sales prices in the dairy and pork industries have left producers struggling to make ends meet. But in 2009, U.S. livestock producers’ income fell off a cliff, with estimated losses in the billions of dollars nationwide.
When times get tough on the farm, the Center for Farm Financial Management (CFFM) gets busy. The center, which is operated jointly by CFANS and University of Minnesota Extension, serves as a national resource for agricultural lenders, educators and farm producers. 
Recent economic troubles are “a tale of two farmers,” says Bob Craven (’78–B.S., animal science; ’81–M.S., agricultural economics), director of CFFM. “For crop producers, the last two or three years have been pretty good, with a few exceptions. But for dairy and hog producers there’s been a lot of red ink the last couple of years.”
Most Minnesota producers produce some of their own feed, says associate director Dale Nordquist (’75–B.S., agricultural business administration; ’82–M.S., agricultural economics), “the ones who don’t have been the hardest hit. They’ve had major losses and it’s hard to imagine how some of them have made it through.”
CFFM got its start in the early 1980s, at another time when agriculture was struggling. In the 1970s, the Extension farm management staff at the University of Minnesota created FINPACK, software that would help lenders and farmers manage their financial affairs and plan for the future. In 1982, ag lenders and farm educators began using the software and encouraging producers to try it. By 1984, at the height of the farm crisis, demand for the software was rising; at the same time, the introduction of affordable personal computers meant farmers could use the new tool in their home offices.
Since then, CFFM’s array of software tools has expanded to products that help farmers develop crop marketing plans, write a business plan, compare their output to that of other farmers and calculate how much rent they should charge for farmland.
In addition to software, the center conducts training sessions nationwide on a variety of agri-business topics, gathers and reports data on farm income and, thanks to a new $17 million grant from the U.S. Department of Agriculture, will oversee a nationwide network of educators that will provide technical assistance training as part of the Trade Adjustment Assistance program.
Because the center is relatively small, with a staff of about a dozen, CFFM works primarily with lenders and agricultural educators, who in turn train individual producers how to use the center’s tools.
“By working with different groups this way, we can leverage the products much more than if we worked directly with individual producers,” Craven says. He estimates that each year, more than 30,000 producers use FINPACK, which remains the center’s flagship product. Another 25,000 have played “Winning the Game,” a series of workshops that teaches producers about the intricacies of grain marketing.
So how bad was 2009 for livestock producers?
For pork producers, the crisis was “the longest and deepest in 20 years,” Brian Buhr, head of the Department of Applied Economics and a nationally known expert on commodity markets, told a U.S. House agriculture committee when he was asked to speak last fall about the situation.
While most analysts agree that the worst of the crisis may now be past, a recent report from CFFM and the Minnesota State Colleges and Universities estimated that farmers’ median net income fell 63 percent in 2009, with even worse numbers for non-diversified dairy and pork producers. The annual report analyzed data from about 3,000 Minnesota farms; Nordquist said the return-on-assets data were the worst in the 17 years the report has been compiled. 
Adding to hog producers’ woes: the “swine flu” scare of late 2009—which had absolutely nothing to do with swine. Consumers, however, bought less pork because of the unfortunate nickname for H1N1 flu, driving down producers’ revenues even further.
For dairy producers, the situation was “by far the worst in years,” says Noah Litherland, assistant professor in the Department of Animal Science. Almost all producers had to take out loans or dip into their capital just to stay afloat.
A milk surplus created by years of a “make more milk” mindset was made worse by consumers eating fewer restaurant meals—restaurants use enormous amounts of cheese—plus a decline in exports and fast-rising forage and energy prices, Litherland says. In recent months, milk prices have begun to improve, he says, “but it’s going to take some time to heal the wounds.” 
Long-range, dairy producers need to find ways to eliminate some of their industry’s volatility, whether that’s through expanding consumer markets, changing how producers get paid or eliminating debt when times are good, Litherland says. “I don’t know exactly what the answer is, but something needs to change.”
In both cases, Minnesota farmers now must deal with a complicated risk-management situation, Buhr says. For pork producers in particular, risk management—planning for and mitigating the foreseeable factors that affect their income—is what separates the profitable from unprofitable operations, he says. “The people who are doing well are managing well.”
Buhr told the congressional committee that along with financial incentives, teaching producers how to more effectively manage and market will be one of the keys to preventing another crisis in the livestock industry.
CFFM’s newest project will help do just that. The “Trade Adjustment Assistance for Farmers Program,” announced in October, will help farmers, ranchers and commercial fishermen who are negatively affected by competition from imports. The program, funded by the U.S. Department of Agriculture’s Foreign Agricultural Service, involves CFFM coordinating efforts at four Extension centers around the country. The centers will help adult agricultural educators create training programs designed to help producers make the transition to alternative crops or products.
“For example, our trainers might work with avocado producers in California, or shrimpers in the Gulf of Mexico, anybody whose business is being affected by imports,” Craven said. The trainers will use CFFM’s software and training tools as well as intensive workshops and face-to-face meetings; producers will write business plans and meet with economists and educators to design plans that have the greatest chance of success.
All of the work ties into the University of Minnesota’s role as a land-grant institution, Craven says. “Our mission statement says ‘to improve farm management’ and that’s what we do.”
