Economics 230 – Farm Business Management

Spring 2010

 

 

Econ 230 Section 1

Econ 230 Section 2

MWF  9:00am – 9:50am

MWF  10:00am – 10:50am

118 Horticulture

 2050 Agronomy

 

James Kliebenstein

174C Heady Hall

Phone: 294-7111

Office Hours:  MWF 11-1 or by appt

E-mail:  jklieben@iastate.edu

 

Keri Jacobs

166D Heady Hall

Phone: 294-6780

Office Hours:  MWF 1:30-4p or by appt

E-mail:  kljacobs@iastate.edu

 

 

Course Objectives

 

A.            To understand the economic principles which are relevant to making farm business decisions.

B.            To learn how to use farm records to evaluate the performance of the farm business.

C.            To understand and apply budgeting concepts to make practical farm management decisions.

D.            To identify the economic resources employed in farming and compare alternative means of acquiring control over them.

 

Econ 230 home page:  http://www.econ.iastate.edu/classes/econ230/spring2010  

 

Teaching Assistants –        Callie Erickson, calliee@iastate.edu

Scott Mennenga, scottmen@iastate.edu

 

Required Text

Ronald D. Kay, William M. Edwards, and Patricia A. Duffy.  Farm Management, 6th edition, McGraw-Hill, Inc., New York.

 

Grading                                                                                                                                Points Possible

Four examinations                                                                                                              400

Final                                                                                                                                       100

Quizzes                                                                                                                                  20-40

Lab assignments 1-14 @ 20 pts. each                                                                             280

Farm-sim exercise                                                                                                               50

Farm-sim rank (bonus)                                                                                                       (20)

TOTAL                                                                                                                                  850-870

 

Unannounced quizzes, covering both lectures and readings, may be given throughout the semester.  Factors such as class participation, attendance, and exam grades will determine whether or not these quizzes are needed.

 

Grading scale for the semester:                         90-100%               A- to A

                                                                                80-89                     B- to B+

                                                                                70-79                     C- to C+

                                                                                60-69                     D- to D+

                                                                                less than 60           F

 

TOPIC AND READING OUTLINE

 

Date       Reading                                Topic

1/11                                        Introduction, course explanation; management decisions.

1/13        Ch 2                       Decision-making; setting goals.

1/15        Ch 1                       The changing business of farming.

1/18                                        University Holiday

1/20        Ch 7                       Choosing production levels; factor/product analysis; stages of production.

1/22                                        Allocating limited inputs.

1/25        Ch 8                       Product/product analysis; complementary, supplementary and general competitive interactions.

1/27                                        Farm-sim

1/29        Ch 9                       Fixed and variable costs; cash and opportunity costs; average and marginal costs.

2/1          Ch 10                     Crop enterprise budgets.

2/3                                          Working with or as a professional farm manager (Jim Farrell).

2/5                                          Livestock enterprise budgets.

2/8                                          First Exam (Chapters 1, 2, 7, 8, 9, 10)

2/10        Ch 11                     Partial budgeting.

2/12                                        Observations from a banker

2/15        Ch 12                     Total farm budgeting.

2/17        Ch 22                     Budgeting machinery costs.

2/19                                        Farm machinery selection and investment.

2/22        Ch 3                       Farm accounting – designing and selecting a farm record system.

2/24        Ch 5/4                    The balance sheet.

2/26        Ch 6                       The farm income statement.

3/1          Ch 18                     Using farm records for analysis.

3/3                                          Enterprise analysis; Diagnosing farm business problems.

3/5                                          Second Exam (Chapters 3, 4, 5, 6, 11, 12, 18, 22)

3/8          Ch 17                     Investment analysis I.

3/10                                        Investment analysis II.

3/12        Ch. 19                    Capital and use of credit I.

3/15-19                                  SPRING BREAK

3/22                                        Brazil Iowa Farmer (David Kruse)

3/24                                        Capital and the use of credit II.

3/26        Ch 15                     Managing risk and uncertainty I.

3/29                                        Professional farm management (Loyd Brown).

3/31                                        Agricultural contracting and vertical coordination.

4/2                                          Third Exam (Chapters 15, 17, 19)

4/5          Ch 20                     Control and use of land.

4/7                                          Farm lease arrangements (Tim Fevold).

4/9                                          Understanding government farm programs.

4/12        Ch 16                     Income tax management.

4/14                                        Income tax management.

4/16        Ch 21                     Employing labor resources.

4/19                                        Wage and operating agreements.

4/21        Ch 13                     Cash flow budgeting.

4/23        Ch 14                     Farm business organization                              

4/26                                        Remaining competitive 2010 and beyond.

4/28                                        Fourth Exam  (Chapters 13, 14, 16, 20, 21)

4/30                                        Managing yourself; wrap up.

5/3-5/7                                   FINALS Week

LAB SCHEDULE

 

Week of

Lab #

Topic

Farm-sim Year

 

1/11

1

Goals, objectives, and decision-making

 

1/18

2

How much of a resource to use

 

1/25

3

Crop enterprise budgets

1

2/1

4

Livestock enterprise budgets, partial budgeting

2

2/8

5

Balancing land, labor and machinery

3

2/15

6

Hog expansion analysis

4

2/22

7

Farm Net Income Statement 

Open

3/1

8

Current Issues

5

3/8

9

Land purchase decision

6

3/15

 

SPRING BREAK

 

3/22

10

Current Issues

Auction

3/29

11

Financial analysis

7

4/5

12

Risk management

8

4/12

13

Farm income tax management

9

4/19

14

Farm-sim summarya

10

aThis weekly assignment (Lab 14) will be handed out Monday, April 19 and due Friday, April 23.

 

WEEKLY ASSIGNMENT SCHEDULE AND EXPLANATION

 

Assignments will be handed out in line with associated topics and will be due in one week.  Points will be deducted for assignments handed in late.  Late assignments will have 5 points deducted.  Labs handed in after the graded assignments have been returned will receive a 10 point reduction.  Labs will be graded on the basis of accuracy, correctness of methodology and clarity of expression, and neatness.

 

Farm-sim is a computerized model of a typical Iowa farming operation.  All participants in Farm-sim begin with identical resources and receive identical information.  Each year for ten years (weeks) you will be asked to make decisions regarding production, marketing and financing of your farming operation.  You will have several chances to acquire additional resources.  Farm-sim will automatically provide you with detailed records of your success (or non-success).

 

Fifty points will be provided based on running Farm-sim on time; 5 points each week (year).  No points will be assigned for Farm-sim weeks (years) run late.  In addition, up to 20 points will be provided as a bonus based on net worth or debt/asset ratio class rank.  The highest 5 percent will receive 20 points; the next 5 percent will receive 19 points, etc.

 

Current Issues Labs

The “Current Issues” labs are intended to be an analysis of a current topic, problem, or opportunity in agriculture using the publication FeedStuffs.  FeedStuffs is a weekly publication covering a diverse range of topics in livestock and crop production, agricultural markets, and the impacts of global markets.  The assignment is to identify a recent article in FeedStuffs that reflects a topic covered in the course and write a 1.5 to 2 page analysis.  Your analysis should include a summary of the article and its main point(s), identification of the topic covered in the course to which you are relating it, and an analysis of the article’s argument(s), main point(s), and conclusion(s) using the tools, terms, and/or strategies discussed in class and/or in the textbook.

 

FeedStuffs is available in print in the ISU library (periodical holdings) and also online.  The online holdings go back several years but you should select articles that reflect current issues; something within the last year is appropriate.  You can either search for a topic that interests you by using the search features online or browse the recent articles within a publication to give you ideas of appropriate topics.  FeedStuffs is accessible online by following these steps:

1.       Access the ISU e-Library homepage: http://www.lib.iastate.edu/

2.       Scroll over the “Collections” marker (yellow) and select the menu item labeled “e-Journals and e-Books.”

3.       Search by the title, FeedStuffs using the “starts with” or “exact” identifier or browse alphabetically using the tabs provided.

4.       Clink on the link “Get it @ ISU” to see the full text articles (in PDF) from the Business and Company Resource Center.

5.       If you wish to search the FeedStuffs holdings using keywords, click on the link to “FeedStuffs” under any of the individual articles and you will taken to a search portal that allows searches by company name, industry, article keywords, and so forth.

 

Note: FeedStuffs is available in print in the periodical holdings at Parks Library.  The online holdings are delayed in their availability by about 3-4 weeks and not all publication dates are available online.  Regardless, there are plenty of recent publications with recent topics from which to choose.

 

The Current Issues labs are graded the same as the other assignments.  Our expectation is that you will put a great deal of thought into your analysis of the topic you identify.  This is your opportunity to have some autonomy in how you spend time learning – take advantage of it.  We strongly encourage you to identify a recent issue or topic that interests you; doing so will benefit the quality of your final product!  Feel free to pull from other sources to support your analysis.  Academic integrity is required: no plagiarism.  Good composition is required: proof your work – you cannot blame grammatical and editorial errors on the word processing software!

 

Identify something that interests you, read and research in an analytical and discerning manner, develop an opinion, and defend your analysis using what you have learned!