Brief Summary of Minutes of Annual Meeting

The 2012 NC-1177 meetings were held October 25th and 26th in Washington DC. A part of the meeting was held jointly with the National Agricultural Credit Committee (NACC). The NACC is comprised of agricultural lenders from throughout the U.S. The meeting allowed members of NC-1177 to interact with these representatives and better understand how the groups research intersects with the issues faced by agricultural and rural lenders. NC-1177 members Professor Allen Featherstone (Kansas State University) and Jennifer Ifft (USDA-ERS) presented some of their current research on the impacts of the 2012 drought during the joint NACC sessions. The joint component also included presentations on the agricultural lending environment, agricultural risk management, and agricultural policy. Speakers represented the Farm Credit Administration, the CME Group, CHS, Inc., and the National Council of Farmer Cooperatives. During the NC-1177 portion of the meeting, members discussed the groups research projects and progress and presented completed and ongoing research.

The NC-1177 business meeting included updates on the formation of the Agricultural Finance and Management (AFM) Section of the Agricultural and Applied Economics Association (AAEA), member publication activity in the Agricultural Finance Review, and a new international conference on finance and risk. Members also discussed honoring member Professor Cole Gustafson who passed away in 2012 in a tragic farm accident. The meeting concluded with discussion of the location and dates for the 2013 annual meetings. The group agreed to continue to hold the meetings jointly with the fall meeting of the National Ag Credit Committee. Todd Kuethe (USDA-ERS) was unanimously elected as the new Secretary on the executive committee for 2013. Continuing members are Ryan Larsen (President) and Mindy Mallory (Vice President).

The complete 2012 meeting minutes are attached.

Agricultural and Rural Finance Markets in Transition has had another productive year. Member activities continue to focus on the projects four objectives. The objectives and activities related to each are provided below.

1. Examine the impact of recent fluctuations in capital and commodity markets on the performance, management, and regulation of agricultural financial institutions. Members have been actively involved in helping to understand how market volatility is impacting the performance, management, and regulation of financial institutions. Work in progress has examined the technical and economic efficiency of financial institutions as well as developing models to identify banks that may experience financial stress. Work from these modeling efforts has been used by financial institutions in stress testing applications and in updating underwriting procedures. Members also developed a simulation program that allows one to educate students and bankers on sound bank management practices. Other work has focused on examining how new products such as weather derivatives and crop insurance might be used jointly with marketing strategies to better manage risk in agriculture. Because savings and off-farm income are strategies that can be used to mitigate risk in agriculture, other projects have sought to understand these behaviors and how these factors influence risk. Finally, work was conducted to better understand the factors influencing the dramatic increases in farmland values experienced over the past 5 years, and to determine how potential changes in market factors could impact farmland values (i.e. changes in interest rates or commodity prices/farm income levels).

2. Evaluate the management strategies, capital needs, and policy impacting the financial performance and long-term sustainability of firms in the food and agribusiness sector.

Work related to objective two has investigated the impact of changes in the seasonal farm labor market resulting from the stricter implementation of immigration policies, with a focus on labor-intensive organic farms versus larger, more mechanized conventional farms. Strategic responses of organic and conventional farms to radical changes in the seasonal farm labor market conditions were documented. Efficient mulching and fumigation methods for vegetable farms when the traditional reliable fumigant methyl bromide is completely phased out from the market were also identified and disseminated to stakeholder through publications and extension materials. Continued efforts have been made to analyze the impacts of increased land values and rental rates on producers and landlords. Other work evaluated the use of direct marketing, alternative business structures, alternative marketing strategies, and the adoption of genetically modified crops and their impacts on farm profitability. The impact of changes to government policies and subsidy programs proposed for the 2012 Farm Bill on US farm income was also addressed, with work from project members used by Senate and House Ag Committee staff in drafting program proposals, and the Congressional Budget Office in scoring proposed programs. Project participants have also created a number of extension and outreach materials for use in educating producers on new programs proposed for the 2012 Farm Bill.

3. Identify financial institutions and services that benefit agricultural producers and rural communities and expand agricultural markets, especially those producers that are beginning, young, from socially disadvantaged groups, and/or involved in producing specialty crops.

Work toward objective three examined issues related to business succession planning, how beginning farmers adopt technology, and beginning farmer financial performance. Outputs in these areas have included scholarly publications and extension program materials for beginning farmer audiences. Other work examined the impact of farm program payments for both established and beginning farmers. Efforts also addressed how communities recover from natural disasters.

4. Investigate capital structure, financial performance, and investment strategies of firms producing renewable energy in context of long term climate change. Implications of these findings for agriculture and rural communities will be delineated.

Work on objective four has focused on evaluation of the impact of the Renewable Fuel Standard (RFS) mandates and Renewable Identification Numbers on the energy and agricultural markets. This has provided timely policy analysis of the RFS. The impact of carbon policies on livestock producers has also been considered, along with related research to better understand the economic feasibility of alternative energy production systems. Research and extension outputs in these areas have helped to inform related policy decisions, educate producers, and successfully led to business startups.

The following provides a list of more general accomplishments for 2012. Also included with the annual report are impact statements from project members, and a list of selected publications from project members in 2012.

Members coordinated review of the USDAs Agricultural Resource Management Survey (ARMS), publishing 11 articles in a special issue of the Agricultural Finance Review (Volume 72 (2), 2012, link provided below).

http://www.emeraldinsight.com/journals.htm?issn=0002-1466&volume=72&issue=2&PHPSESSID=e86db58i565kmrajkscpccp4e1

Project members successfully created a new section within the Agricultural and Applied Economics Association (AAEA). The new section  Agricultural Finance and Management  provides a stronger linkage to the main professional association in agricultural economics. This will assist project and section members in disseminating results and information from their research and outreach programs to the full membership of the AAEA. Section activities include organized sessions at the annual AAEA meetings, with publication of the papers presented during these sessions as proceedings in the Agricultural Finance Review.

Project members continue to exhibit excellent grantsmanship in securing both internal and external funding for related research and extension efforts. A partial list of the grant activity of members in 2012 is included with the attached list of publications. Funding sources include external sources such as commodity groups, consulting contracts with private businesses, and regional and national government agencies. Funding was also secured from internal sources across the various academic and government institutions in which members hold appointments. Linkages among project members and the Economic Research Service of the USDA also continue to be strong as evidenced by the multiple cooperative agreements in place between ERS researchers and academic faculty and staff who are members of the NC-1177 project.

Project members earned national awards for their research efforts in 2012, including the most outstanding article in Choices and the Gold Quill Award from the Journal of the American Society of Farm Managers and Rural Appraisers.

Project members have also served in numerous leadership roles within the agricultural economics profession. In 2012, members coordinated abstract reviews for multiple national and regional conferences, served as peer reviewers for scholarly journals and experts for major grant reviews.

See attached list of selected publications.