It’s time for farmers to lose the fear and dread associated with farm financial literacy

Sandy Stuttgen

The online dictionary,, defines farming as “the practice of cultivating the land or raising stock”. The site goes on to state, “People often have a romantic idea of what farming is like — roosters crowing, farmers driving tractors and milking goats — although farming can be very hard work, dependent on food prices and weather. The noun farm originally meant "a lease on farm land," and it comes from the Medieval Latin firma, ‘fixed payment’."

It’s time for farmers to lose the fear and dread associated with farm financial literacy so they are able to make sound financial management decisions.

I find it interesting that the Latin root for ‘farm’ harkens to the concept of payment, or business. Despite the culture, romantic notions and hard work surrounding farming, managing a farm boils down to managing a business. For example, farmers cultivate corn to create income, they raise dairy cows to create milk income, or they raise beef to market seed-stock or meat. Farmers must also cultivate their farm’s financial records in order to make sound financial management decisions.

Agricultural lenders, Wisconsin Technical College agriculture instructors, and specialists and educators from the University of Wisconsin and Extension all indicate that farmers need more help with financial literacy and business management. Simply filing a schedule F does not constitute financial literacy nor business management. Financial understanding of a farmer’s business happens when he or she understands financial reports, including the Balance Sheet and Income Statement, and the farm’s Financial Ratios.

I like to use the following analogy to build a farmer’s confidence as they approach their farm’s finances. Farmers have a basic notion of what it means to be a crop farmer. Even if they don’t grow alfalfa, they have an appreciation for planting seeds, cultivating the plants and harvesting the crop into manageable forms for future decision-making regarding storage, feeding or selling the alfalfa.

When it comes to farming an agricultural business, we can think of the seeds being the associated inputs used to raise the product and the product sales. We cultivate the collected records and receipts as the product is made and sold, harvesting those records into manageable reports. It’s from these reports that sound financial decisions are made. What I have just described is known as the Financial Model where financial records are compiled into financial management reports that are then used to make decisions.

It’s time for farmers to lose the fear and dread associated with farm financial literacy! Farming Your Finances is a term coined for helping farmers to think about managing their farm business using the Financial Model. Farming Your Finances is taught in bite-sized chunks over two or three sessions within UW-Extension’s Heart of the Farm programming. Following the UW-Extension teaching model, these sessions bring accessible, relevant education to your area, where you work in small groups, and learn with your peers.

A Farming Your Finances – Beef Edition will be held beginning January 31 in Medford, WI. Contact Taylor County UW-Extension at 715-748-3327 ext. 1 for more information.

If you would like more information on farm financial management and/or UW-Extension classes on the topic, contact the Center for Dairy Profitability at 608-263-7795 or the UW-Extension Farm Management Program at (715) 896-1609.

Many organizations offer other farm financial classes. Enroll in one today! The future of your agricultural businesses depends on your financial literacy.

Associate Professor Sandy Stuttgen is the Agriculture Educator for UW-Extension in Taylor County