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Showing posts from 2010

Economics of Farm Management in a Global Setting

Kent Olson, Extension Economist

A new book on farm management is available. I just published Economics of Farm Management in a Global Setting. As it says on the back cover of the book:

Advances in technology, communication, transportation, and policy are bringing farmers closer to the global market than they ever have been. To prepare for the future in the midst of these changes, farmers need an orderly process for developing strategic and operational plans and the ability to describe them in a structured business plan. Economics of Farm Management in a Global Setting provides the right blend of tools and knowledge for undergraduate Farm Management and Agricultural Economics students. It covers new and innovative topics needed for today's and tomorrow's farm managers while keeping the fundamental concepts at the forefront. New management tools and methods include:

• Strategic and operations management
• Quality management and control
• Production contract evaluation
• Farm Tra…

Managing in Turbulent Times

Kent Olson, Extension Economist

Given all the uncertainty of the future in the macroeconomic, politics, and the world in general, I decided to re-read "Managing in Turbulent Times," Peter Drucker's classic book from 1980. Even though Drucker was writing for a time period different in many ways from ours today, he still writes a core set of ideas that are pertinent to today's manager.

1. First task is survival. Do what needs to be done to survive today in order to be in business tomorrow.

2. Manage the fundamentals. Pay attention to the traditional measures and do what needs to be done to maintain liquidity and financial strength. Drucker adds, "Liquidity by itself is not an objective. But in turbulent times, it becomes a restraint. It becomes a survival need."

3. Manage productivity. Make the right choices to maintain and increase productivity of all resources: capital, physical assets, time, and knowledge. The productivity of each of these is managed separ…

ACRE Payments more likely for 2010

Kent Olson, Extension Economist
If they did not sign up in 2009, farmers have until June 1, 2010, to sign their farms up for the Average Crop Revenue Election (ACRE) program, the optional safety net for farmers provided in the 2008 Farm Bill. And farmers should pay close attention to this decision for 2010.

Current research results from University of Minnesota Extension tilt towards the decision to sign up for the Average Crop Revenue Election (ACRE) program in 2010. The decision in 2009 was a toss up as to whether ACRE or counter-cyclical payments (CCP) was a better bet.

My example calculations point toward ACRE payments for corn, soybean and wheat in Minnesota, but this is not certain. There are many interrelated moving parts in this decision. To predict the probability of ACRE payments in the midst of uncertainty, I estimated the potential values and distributions of yields and prices for 2010 and combined them with the ACRE program's rules in a statistical model. The results e…