When the Smith-Hughes Act was passed in 1917 it was expected that the agriculture teacher would conduct classes for both young people and adult farmers. Over the years the focus on adult farmers has drastically declined in most states. However, Minnesota is an exception. We welcome T. J. Brown, an Agribusiness Instructor at South Central College in North Mankato, Minnesota as the guest columnist for this Footnote. He will educate us about the Farm Business Management program in Minnesota. Take it away T. J.
The National Farm Business Management Database is a critical resource to provide benchmark financial information to farmers, educators, ag lenders, and other professionals. Agricultural universities, state extension services, high school ag teachers, rural banking organizations and farm accounting professionals from across the nation access the database’s annual farm financial reports frequently. But did you know that 67% of all data submitted to the National Farm Business Management Database comes from Minnesota farms? How can this be?
One of Minnesota’s best-kept secrets is its statewide Farm Business Management (FBM) program that is second to none in the nation. This adult Ag Ed section of MN instructors consists of 68 teachers at seven different two-year colleges across the state who serve over 2800 farm families, largely in a one-on-one setting.
Class meetings typically take place on the farm, usually at a kitchen table, and work around the farmers’ schedule; the instruction provided is highly individualized. Each farming student enrolls in 10 college credits (~$2100) on an annual basis to be in the program, and while there are certificates and a diploma that can be earned within the program, most students never “complete” the curriculum sequence until they retire out of farming. Most families have been enrolled in the program consistently for decades, some farms are on the second or third generation of principal operators enrolled in the same annual FBM classes. Some farmers have been consistently enrolled for 40+ years and/or have farmer students into their 80’s still taking the FBM courses.
Figure 1. Minnesota institutions involved in the Farm Business Management Program
It’s not uncommon in today’s age of high tech and high stakes farming for producers to use a variety of “advisors” to help them make the farm as efficient and as effective as possible. The days of farmers not regularly needing an agronomist, feed nutritionist, veterinarian, equipment mechanic, etc., are gone. Farming is complex and highly technical/scientific. While most farmers will not hesitate to call their agronomist with a pest management decision or take their tractor to a diesel service technician when it is not working right, many do not consider having a regular and consistent person to help them with the finance side of their business. This is hard to believe with tightening margins and poor commodity markets.
Minnesota’s FBM program has been trying to change that mindset for 70+ years. MN FBM is designed to provide education to farm owners and operators with the purpose of assisting “students in meeting their business and personal goals. This is best accomplished through the use of quality records and sound business decisions. Effective financial management in the business is the best way for the business to maintain that competitive edge” (https://www.agcentric.org/farm-business-management/). “Each instructor works with their student on their farm needs such as succession planning, business expansion, tax preparation or loan applications” (https://centerofagriculture.org/about-fbm/). Estimated financial gains for farmers enrolled in the FBM program range from $10,000 to $20,000 per year.
Few things in life are more personal than one’s finances. Those are not details we share with just anybody. But these FBM instructors know the ins and outs of each of their students’ finances better than anyone else on earth. And when they work with a farmer student for 20+ years in a row and possibly help them through some of the most trying times of their operation, maybe even helping save the family farm from foreclosure, these student-teacher relationships become incredibly close. It is those relationships that have made FBM thrive in Minnesota for over 70 years. Let’s look at some of the historical landmarks of this program. (Note, while there was some minor editing, by and large the following chronological list was taken verbatim from https://www.agcentric.org/wp-content/uploads/2023/06/FBM-History-Highlights-single.pdf.)
1901: The University of Minnesota developed an accounting system which today’s farm analysis system is based on. These records were concerned with farm inventories, hours of labor, and income and expenses. The information was used to establish average values on a typical farm operation. At that time the project was primarily for research.
1913: Farmers mailed in information monthly, which included data on livestock enterprises and the feed consumed. An earning statement and cost for each type of livestock was completed for each farmer.
1953: The Beginning of the FBM Program: A new cooperative approach to adult education in agriculture was presented by Dr. Milo Peterson, head of the Department of Agriculture, University of Minnesota in 1952. “Each participating farmer will keep a set of farm records and make available certain data for research and teaching purposes for comparison.” Much of the concept for the program had its origin in the veteran’s agriculture offerings, which started after WWII. The philosophical contribution of veteran’s agriculture was that education is “learner centered” rather than “teacher centered.” This was the philosophy of Dr. A.M. Field, who believed that “the pupil learns through his own activities.” Dr. Peterson received key funding from the Hill Family Foundation; with other funding from the Farmers Union Grain Terminal Association and the Minnesota Iron Range Resources Commission.
1956: 1st Annual Report: Minnesota was well in the forefront of farm record analysis nationally, with early analyses focused more towards research. The Minnesota analysis approach was a hand calculated self-analysis, one of the most comprehensive in the country. In 1955, Ralph Smith developed a formalized procedure for a complete analysis of his veteran trainees’ records. He compiled averages and prepared a report with detailed directions for the entire process. In 1956, Area vocational schools at Thief River Falls, Mankato and Austin were selected as analysis centers for the 1955 farm records. These three centers adopted this process and analyzed a total of 153 farm records for the 1955 record year. Reports were published in the spring of 1956.
1965: Electronic Farm Analysis: In 1964, four Ag Coordinators agreed to incorporate an electronic analysis for averaging records that were published in 1965. That system was through Agricultural Records Cooperative (ARC) in Madison, Wis. Moving from in-house hand calculations to sending farmer data to a brand new company with a brand new analysis program was difficult but ultimately successful. The following year, all analysis centers went electronic. ARC would become Specialized Data Systems (SDS) in the early 1980s.
1970: First State Curriculum: To maintain the instructional integrity of the Farm Business Management (FBM) program throughout the state, a comprehensive and sequential curriculum was adopted in 1970. The curriculum incorporated instructional materials to teach farmers for the first four years of enrollment. It included suggestions for both group and individual instruction, with these four segments: Farm Management I – Farm Records and Accounts; Farm Management II – Farm Business Analysis; Farm Management III – Farm Business Organization; and Farm Management IV – Advanced Farm Management.
1973: Veterans Farm Management: Farm business management expanded at a steady trend between 1966 and 1973. With the advent of the Veterans Co-op program on July 1, 1973, program expansion accelerated rapidly. At the conclusion of these programs in 1983, 90 veterans programs transitioned into the regular adult FBM programs. FBM expanded from 20-plus full-time programs in 1967 to 100 programs by July 1, 1983.
1977: Taking a Stand: In November of 1976, Dr. Edgar Persons completed a cost study on MN Adult Farm Management programs. This study noted that, on average, the local HS or Area Vocational Technical Institute (AVTI) was funded to about 60% of total costs. In 1977, legislative action reaffirmed support for adult education in farm management, but not without great controversy. The State Department of Education interpreted the legislative intent differently, and established rules that severely restricted the use of public funds for long-term enrollment. A special legislative commission was convened to provide oversight in rulemaking to insure that rules matched legislative intent.
1983: New State Board: In 1983 the State Board of Vocational Technical Education was established. The new authority had responsibility for all educational programs in the AVTI system. As a result, all FBM programs located in AVTI’s came under supervision and management of that system. All local school district FBM instructors, however, remained under the supervision of their respective districts.
1985: Omnibus Agriculture Act of 1985: The farm crisis brought profound changes to the Minnesota FBM program in the mid-1980s. Student numbers had declined because of the exodus of farmers from production agriculture due to low prices, high costs, and re-evaluation of assets. The Minnesota Legislature responded to the cries of rural Minnesota with this Act, which provided funds for: 19 new FBM programs; portable personal computers, FINPACK financial management software, and FINPACK training for each instructor; and tuition assistance for enrolled families. (Selected HS instructors and County Agents also received this computer package) The result was significant growth in enrollment, but more importantly, a reinforced focus of developing the financial management skills of farmers across MN. Figure x shows the suitcase-sized portable computer each instructor received to take with them on farm visits.
Figure 2. The FINPACK package.
1992: Credit-based Curriculum: In 1990 a new six-year quarter-credit curriculum was developed and went into effect in 1992, replacing the traditional hour-based program. Enrolled farmers could now receive a two-year diploma or certificate in farm management after successful completion of the first six-years of the program.
1995: The Merger: On July 1, 1995 all FBM instructors, regardless of where they were located, were transferred to the MN State College and University system (MnSCU) and came under the direct supervision of the Regional Ag Program Manager. This was the first time since 1982 that all programs and instructors were under a single system.
1996: FINPACK : In 1991, John Murray approved a 3-year pilot project for the Northeast and East Central MN analysis region to compare SDS and FINPACK. As of the 1994 analysis year, three regions had switched to FINPACK. In 1996 the FBM program, as a whole discontinued its relationship with SDS and adopted the FINPACK analysis at the University of Minnesota Center for Farm Financial Management.
1998: Rural Mental Health: Coming out of the Farm Crisis and feeling the stress of the increased volatility in the Ag economy, FBM saw the need for emotional as well as financial support for farmers. Rural Mental Health funding would enable a professional to work one-on-one with producers to address this very private matter. This unique program has provided support to producers and faculty ever since, serving needs that would otherwise have gone unmet.
2012: Time of Change: By 2012, management programs and Regional Deans were under extreme pressure to change and had experienced significant stress as system leadership worked to manage funding scenarios. College presidents deemed that the current Regional Dean structure was no longer viable and steps needed to be considered for future leadership. Centers of Excellence existed in MnSCU for other industry sectors, which made an Agriculture Center a real possibility. In 2012 the Southern Center was established in Mankato and in 2014, the Northern Center (AgCentric) was established in Staples. The Directors of these Centers would lead future efforts in the Farm Business Management program.
2015: Sustain and Grow: With ongoing changes in college leadership and the resulting loss of institutional memory, critical steps were needed to support FBM. After several years of funding challenges in the system, legislative support came through the Minnesota Department of Agriculture in the form of challenge grants managed by the Minnesota Agricultural Education Leadership Council (MAELC). MAELC became the critical partner in support of FBM as a one-on-one, student-focused program with unique funding needs. To date more than 16 million has been provided to colleges in matching grants to sustain FBM.
2023: A New Era: Farm Business Management has weathered the storm that is governance in a higher education system. This specialized program, which provides an added value to the state of Minnesota that no other program can, is set for another 70 years. That added value is the State FBM Database which results from students of the program recording their data and sharing with the state so they can use the benchmarking data to improve their business. A program that meets the needs of its students, while serving the greater good, will certainly have a place in the future. The key to holding that place is a unified effort by all internal and external stakeholders.
The following news article from 2004 sums up the impact of the FBM program.
Figure 3. From Agri News, Rochester, Minnesota. October 21,2004
Concluding Remarks from T. J. Brown
Great effort was put into celebrating Minnesota FBM’s 70th anniversary just a couple of years ago. The team involved was able to find and scan hundreds of historical documents and publications about FBM’s early years. If this interests you, they are grouped by decade and can be viewed at the bottom of https://www.agcentric.org/fbm-70th-anniversary/ I’ll close with a wonderful and succinct paragraph explaining Minnesota’s FBM program from the executive summary of that 70th anniversary publication:
Minnesota FBM is known for delivering a consistent education on farm financial management. This stems from a distinctive statewide curriculum focusing on accounting, business analysis and interpretation, financial literacy, and goal achievement. The program uses annual FBM reports as a textbook, enabling the student to access current data for informed decision making. The primary delivery method is one-on-one, individualized instruction providing a unique educational plan for each student. Tailoring education to the individual results in learning that is applied at a faster rate. Instructors work in a real time setting where a dynamic business requires education that can be applied in the near term to generate the greatest impact for the student. (https://www.agcentric.org/wp-content/uploads/2023/06/FBM-History-Highlights-single.pdf)
A big thank you goes to T. J. Brown for educating us about the Minnesota FBM program.