Certifying Financial Literacy for Iowa USDA/FSA Borrowers
Agricultural Economics & Community Development
Patrick Hatting
Farm Management Specialist
Iowa State University Extension and Outreach
Altoona
Abstract
Farmers[SMM[1] and ranchers often have irregular income and obtaining enough financing at the right time is critical to the success of their businesses. Nationally[SMM[2] , farm real estate debt is expected to reach $312.0 billion, and farm non-real estate debt is expected to reach $155.4 billion in 2022 (USDA ERS, 2022.) The debt-to-asset ratio is forecast to increase while working capital is forecast to decrease from 2021. Extension has an important role in supporting smaller and newer farmers and ranchers as they navigate debt in challenging times. One[SMM[3] way to improve outcomes is to work with the USDA Farm Service Agency to educate borrowers. The Iowa State University Extension and Outreach Financial Decision Making course is designed to increase the financial literacy of farm and ranch borrowers. The course helps borrowers develop and improve skills that are necessary to successfully operate a business and build equity in the operation. Completion of the course satisfies Iowa Farm Service Agency mandatory borrower education requirements. Borrower certification is provided directly to FSA loan officers in Iowa. The 10-12 hour course is designed to be completed online. A correspondence version is also available. There are eight financial exercises and eight online quizzes covering net worth statement, income statement, analyzing financial statements, production record analysis, financial trouble shooting, 12 steps to cash flow budgeting, cash management, and financing alternatives. As the instructor and administrator of this course, I personally work with students of diverse backgrounds and education levels to ensure the learning objectives are met. Currently[SMM[4] there are over 200 active students in the course. In the past three years 192 students graduated from the course. After completing the course, most graduates create a detailed cash flow budget[SMM[5] for their own farm and ranch operation. After completing the cash flow budget analysis, it can easily be modified on an annual basis. When[SMM[6] extension supports smaller and newer farmers through financial education, they can make good decisions that lead to prosperous farm and ranch businesses and a stronger rural economy.
[SMM[1]Intro statement
[SMM[2]Need
[SMM[3]Response/program
[SMM[4]Results/impact
[SMM[5]Can you add at least one more statement of outcomes or results? That would be valuable. Even a brief anecdotal story.
[SMM[6]Concluding statement
Authors: Patrick Hatting
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Patrick Hatting Farm Management Specialist, Iowa State University Extension and Outreach, Iowa, 50009