Curtis Mahnken & Mariah Beverly - Center for Farm Financial Management

Curtis Mahnken (: 00:03

Welcome to the Farm Answers Podcast. The Farm Answers Podcast takes a deeper look at projects funded by the USDA National Institute of Food and Agriculture's Beginning Farmer and Rancher Development Program and how they are reaching beginning farmers and ranchers.

Megan Engel (: 00:19

The Center for Farm Financial Management develops applications and educational programs that provide educators, lenders, other professionals, and farmers resources to successfully manage farms and the financial activities related to farms and small businesses. I'm your host, Megan Engel, and today on the Farm Answers Podcast, I talk with two of CFFM's economists, Curtis and Mariah.

to learn about their newest applications and how they can help beginning farmers.

Curtis Mahnken (: 00:52

So the Center for Farm Financial Management, we're based out of the University of Minnesota and the Department of Applied Economics. We've been around for, I think we actually just celebrated our 40th anniversary. what we do is we develop software, web applications, web tools, and educational programming around those topics. And everything that we do is primarily focused on Farm financial planning, financial analysis.

⁓ business analysis, business plans, basically anything around farm financial management. I mean, that's why it's in our name, Center for Farm Financial Management. And our tools are focused, really the end user is the small business lenders, farmers who are really going to use our tools to be able to improve their farm financial management abilities, marketing abilities, depending on what

whichever tool it is. But, you know, we're also working a lot with educators and other ag professionals who are going to take our tool. We like to say that we wholesale our educational effort so that we're, you know, giving the tools to people who are going to be doing direct one-on-one help with farmers, business owners around the country, around the world. A lot of our tools are very not

specific to a particular region, but we like to say that we have a tool for anyone within their farming journey from thinking about farming, like with a beginning farmer and rancher development program, all the way through transitioning out of the business with ag transitions. So we like to say that we cover the whole waterfront of a farm business's life.

Megan Engel (: 02:36

Now CFFM has developed a couple new applications recently that could be beneficial to beginning farmers, CropCost and My Market Profit Let's start with crop cost. Can you give an overview of the application and just a little bit of the thought process behind the development of this?

Mariah Beverly (: 02:55

Sure. So, you know, we developed CropCost to kind of help farmers identify what their cost of production is ⁓ for each crop that they grow. This can be really important for farmers who are trying to figure out, know, what should I charge? You know, if expenses or things, you know, get more expensive, what's that going to look like for me? What's my break even going to be? So that thought process is why we developed this. So

You can go in, you can enter in your estimated expenses, and then it can tell you, you know, for each crop that you grow, what's your break even, and then it also tells you, you know, if expenses were to go up, you know, what is that going to look like for your business and how does that change?

Megan Engel (: 03:37

In

CropCost, I know there's two plan types. What are the differences between these two plan types? What are they? How can they be used?

Mariah Beverly (: 03:46

The difference between the two different types of plans, you can either choose a commodity plan. So that is for traditional row crop farmers who tend to have bigger acreage and they record expenses on a per acre basis. For the other type of plan, which is a specialty crop plan, those are aimed at farmers who maybe are a little bit on the smaller side, necessarily not necessarily recording expenses on a per acre expense, but rather than.

They know, you know, for this whole crop, spent X amount of dollars on seed or fertilizer. And that's really where the difference in the plan is. And it kind of changes some of the calculations on the output that would make sense depending on how big you are.

Megan Engel (: 04:30

So as someone who's using CropCost, once I've chosen my report type, added in all my crops, entered my expenses, crop cost is going to calculate a report. What does this report look like? What is it gonna tell me?

Mariah Beverly (: 04:44

This report's going to tell you what your expenses were. It'll kind of give you back some of that information that you've input so you can see all together in a big picture view what that's going to look like for your business. But then it's going to tell you for each crop what is the total cost including your overhead expenses, if you count for unpaid labor and management, what does that look like for your business. And then it's going to give you a break even analysis. So it's going to say, you've expected your yield to look like this.

and you've said your expenses are going to be this, but okay, what if yields not what you expect it to be? Or what if expenses are you know more or less, they might be more expensive, they might be less expensive. What is that going to do for your breakeven price? And you can see this for each crop that you've input.

Curtis Mahnken (: 05:33

And then what you can actually do with that information is you can actually take that and then just even using the break even, you can say, okay, this is what I need to make to, or to sell my product at to be able to say that I at least broke even. I covered my expenses so that I can make sure that I can do it again in the future.

Megan Engel (: 05:53

So obviously this application is going to be helpful for a lot of different farmers in a lot of different stages, but how is it going to be beneficial specifically for beginning farmers to utilize this?

Mariah Beverly (: 06:06

I think specifically one, it's just helpful for any farmer, like you've mentioned, to know their cost of production. What do they have to sell their product for? What do they have to make to hit those break evens? And I think for beginning farmers especially, this is really important to make sure that your business gets off on the right foot, that you are viable and you can continue to grow and develop your business. But then also, it can be used as sort of like a planning tool. If a beginning farmer is looking at, I want to plant this new crop or I want to...

get into this new enterprise, you can enter in expected expenses and then kind of see, what does that mean if I get into this new crop? What's it gonna cost me? And can I get the break even price to cover those expenses to sell this crop?

Curtis Mahnken (: 06:52

And something that we sometimes talk about too is, you know, for beginning farmers, a lot of times they're just even going, okay, I don't even know what expenses I should be tracking. So creating an account at crop cost or even some of the other tools that we have, those are good places to start just to get an idea of what you should even be tracking to kind of get yourself off as Mariah said, off on the right foot, also,

get yourself off on the right foot when it comes to doing record keeping so that you can make sure that you can then come back and track it and do something with it in the future. So what's the saying? If you can't measure it, you can't track it. So this is a good place to start with that.

Megan Engel (: 07:35

So where can people go to access CropCost?

Mariah Beverly (: 07:38

So you can access CropCost by going to cropcost.umn.edu, and from there, you can create an account for free. There's no cost or charge at all. ⁓ Just register with an email address and a password, and then you can start creating your plans and measuring your cost of production from there.

Megan Engel (: 07:56

Now shifting gears to My Market Profit, can you share an overview of this application and give a little bit of the thought process behind the creation of this one too?

Curtis Mahnken (: 08:07

Whereas CropCost, you're trying to figure out what your breakeven cost is, what you can sell something for to figure out what you need so that you can be sure that you're doing it again. My Market Profit then is actually building on that where you're identifying some of those costs, but you're also then splitting out how you are going to be selling your stuff, your crops, your t-shirts, hats, whatever it is.

how you can, where you're going to sell it and how you can make some profit off of it. So, and really where this tool came from is we were actually working with some farmers who were diversified marketers in the Northeast. And they said, know, and we've done a lot of enterprise analysis with some of our other tools. And they said, you know, we,

don't necessarily track everything by, you know, corn versus watermelon versus whatever, you know, in some cases they have 30, 40 or more crops that they're growing, but where they, where they track things and how they track things is by which markets they're selling at. So, they might've been selling at, you know, multiple farmers markets, or they might've had a CSA or two, winter share versus summer share, or they might be selling wholesale or whatever it is.

So My Market Profit is helping to address that where people are going, okay, where am I making profit and how can I best determine what my marketing mix is? And so that, and really this is about informed decision-making so that they can figure out again where they should invest their time. And in some cases, you know, again with just informed decision-making, in some cases it might be that, you know, that market might

be losing money, but it gets customers to come to the other markets where you are making a lot more money. But, and being able to see that on paper, see that in My Market Profit on the screen helps people kind of identify some of those opportunities.

Megan Engel (: 10:10

I know in My Market Profit, similar to CropCost, there's different avenues you can go within there specifically relating to report types. Can you talk a little bit about the different report types in My Market Profit?

Mariah Beverly (: 10:23

So within My Market Profit, there's two different report types. You can build an analysis, which is really looking back at historical performance. You're at the end of a season, you want to see how you've done in the different market channels that you've been selling through. So you can build an analysis to help get at some of that information.

The other option you can do is to create a projection which is looking forward. So maybe there's a new market that you're looking at entering. You want to see, you know, what are the costs and different things associated with that just to see what it's going to be like in this new market. And within that, so you get a couple different reports with either one of those types of analysis that you create with a projection or an analysis. ⁓

You get a summary report, so it combines all of the markets that you sell out together and gives you your, know, overall with all the markets, your total revenue, total expenses, and your return for all of that, all of your markets together. The other type of report that you also get is we call them comparisons. So then it'll individually go into each market and you can see what were the costs, what were the revenues generated within each market, and you can see returns that way.

And then you can also optionally include a labor report. So if you're tracking labor with your employees, you can see reports based on the labor as well.

Curtis Mahnken (: 11:46

For the reports, also have an option where you can kind of see it on per $100 sold. So you can actually, you know, if you're selling a hundred dollars worth of crop at a farmer's market, you can quickly identify, well, okay, it cost me $80 to make that hundred. So you can, you know, get in and do some more analysis like that. And there's even some.

know, when you're doing the data entry side, there's some differences there where you can, you know, you can actually put in each individual crop or each individual item that you're selling in a particular market. And that's completely optional.

Megan Engel (: 12:28

Getting this back once again to beginning farmers, can you just reiterate why is this application going to be helpful to beginning farmers?

Mariah Beverly (: 12:37

So I think there's a multitude of reasons why this tool is going to be helpful for beginning farmers. think number one, kind of helps like Curtis had mentioned this in CropCost, kind of tracking expenses and keeping track of like, what do I need to be thinking about as I enter in a new market? But also it can kind of help narrow down how much of something do I have to sell at a market? How much should I sell it for at a market? It kind of gets at some of that information.

It can also tell you, you're selling at multiple markets, maybe one it's not performing well and it's a really big headache for you as a beginning farmer to be at. You can kind of think through that decision, okay, well, is this market really worth the time and effort that I'm spending or is my time and resources better spent on these other markets? And again, it's an art, not a science. I mean, ⁓

It's not necessarily that if a market's performing poorly that you should leave that market. It's just to kind of make you think as you carry forward your business and are planning or looking for the next year, what are some things you should be thinking about and where you should spend your time in different markets?

Megan Engel (: 13:45

Where can people go to access My Market Profit?

Mariah Beverly (: 13:49

So they can access My Market Profit at mymarketprofit.umn.edu.

Megan Engel (: 13:54

CFFM also has a long list of other applications, tools, educational programs that have been developed over the years. Can you just share a little bit about some other applications or tools that CFFM has that might be useful for beginning farmers?

Curtis Mahnken (: 14:11

Another place where you can actually go find both of these tools is actually at our website, which is cffm.umn.edu. You can find both My Market Profit and CropCost there. But yeah, we have lots of other projects and lots of other tools that we have. Some you might've heard of AgPlan, which is an online business planning software that we've developed. And maybe we'll get a chance to come back and we'll dive more into AgPlan.

in one of these podcasts in the future. But then we also have other tools, ⁓ FairRent. So you can figure out what a reasonable or fair rental arrangement or cost would be for land. We have websites on farm financial management data. We're the largest farm financial management data warehouse, I guess.

in the country with FINBIN So that's F-I-N-B-I-N. We also have our anchor FINPACK, which is why the center was started, helping producers kind of understand where they stand financially with balance sheets, doing some planning with some of the robust planning tools that we have within FINPACK, and then creating all the financial statements out of there.

And then there's also Farm Answers, which is the beginning farmer and rancher development program clearinghouse. that's a place that beginning farmers could go to actually read about in various topics. have toolboxes for particular topics. We have a budget library in the Farm Answers website. So you can go and if you have a, you know, what's it cost to grow strawberries in California, could go, I think we have a budget on that. We don't, we're going to go find one.

So we have lots of other resources and tools that are out there. And one, you know, we've kind of mentioned a couple of times with these tools and, you know, knowing what expense categories and income categories to look at. But we have one called interpreting financial statements and measures. And within that, it's an online course where again, a free online course. The only thing that costs money out of the tools that we've mentioned is FINPACK, but

⁓ interpreting financial statements and measures has a module in there that's called developing your financial statements and measures. So if you're not sure how to put together a balance sheet, you could actually go. And listen to us talk about, how to put those together. and then you can actually take it one step further and okay. So what does this mean? That's great that we have a balance sheet. That's great that we have a cashflow plan. What does any of this actually mean? And that I think is what.

the strength of the Center for Farm Financial Management is that we take these practical tools and we try to not only help you use them, but why you would want to use them and then how to actually put them into place, into your workflow.

Megan Engel (: 17:08

Now you've shared so many great resources and before we close out the episode, can you just remind our listeners one more time of CFFM's website and where they can go to really find all these resources?

Curtis Mahnken (: 17:21

You can go to cffm.umn.edu.

Megan Engel (: 17:23

Great, well thank you both for joining me on the podcast and sharing more about your tools with our listeners.

Curtis Mahnken (: 17:32

Thank for listening to the Farm Answers Podcast. This episode was hosted by Megan Engel. To learn more about this USDA National Institute of Food and Agriculture's Beginning Farmer and Rancher Development Program project or other BFRDP projects, visit farmanswers.org. The Farm Answers Podcast and farmanswers.org are funded by the United States Department of Agriculture National Institute of Food and Agriculture and are a product of the Center for Farm Financial Management at the University of Minnesota.