Source: KANSAS STATE UNIV submitted to
MAXIMIZING AND BENCHMARKING PROFITABILITY OF SMALL TO MEDIUM-SIZED B2C (BUSINESS TO CONSUMER) BEEF PRODUCERS IN KANSAS
Sponsoring Institution
National Institute of Food and Agriculture
Project Status
ACTIVE
Funding Source
OTHER GRANTS
Reporting Frequency
Annual
Accession No.
1026883
Grant No.
2021-38504-35301
Cumulative Award Amt.
$500,000.00
Proposal No.
2021-05867
Multistate No.
(N/A)
Project Start Date
Sep 1, 2021
Project End Date
Aug 31, 2025
Grant Year
2021
Program Code
[FBMB]- Farm Business Management and Benchmarking Program
Project Director
Ibendahl, G. A.
Recipient Organization
KANSAS STATE UNIV
(N/A)
MANHATTAN,KS 66506
Performing Department
Hospitality Management
Non Technical Summary
Demands for local beef have continually increased overtime but exploded during the COVID-19 pandemic. As more direct transactions occur among producers, processors, and customers of local beef, challenges surfaced due to uncertainties and lack of communication among stakeholders regarding transactions. Additionally, our preliminary survey showed these B2C beef producers do not fully utilize standardized farm financial management techniques for maximizing profitability potential. To address these challenges, this multi-disciplinary project aims to maximize profitability potential of small- and medium-sized B2C beef producers by developing resources related to financial management/cost controls, benchmarking, and local beef purchasing. Developed resources will be implemented at 18-24 ranches in Kansas, and their financial information will be added to the National Farm Financial Database (FINBIN).Deliverables include (1) benchmarking data of 18-24 beef producers in Kansas and (2) resources for producers, processors, and customers of local beef: financial management/cost control and local beef purchasing. An agricultural economist will visit beef producers 2-3 times, yearly, to collect operational/financial data to expand FINBIN and to provide consultations using the developed resources. Changes in financial performance and satisfaction with B2C transactions will be used to assess the effectiveness of the deliverables. The project will culminate in a free online resource repository.
Animal Health Component
50%
Research Effort Categories
Basic
(N/A)
Applied
50%
Developmental
50%
Classification

Knowledge Area (KA)Subject of Investigation (SOI)Field of Science (FOS)Percent
6013320301025%
6023320310030%
6046299310025%
9036010302020%
Knowledge Area
601 - Economics of Agricultural Production and Farm Management; 602 - Business Management, Finance, and Taxation; 604 - Marketing and Distribution Practices; 903 - Communication, Education, and Information Delivery;

Subject Of Investigation
3320 - Meat, beef cattle; 6010 - Individuals; 6299 - Marketing, general/other;

Field Of Science
3020 - Education; 3010 - Economics; 3100 - Management;
Goals / Objectives
The goal of this multi-disciplinary project is to maximize profitability potential of small and medium-sized B2C beef producers by developing resources related to financial management and cost controls, local beef purchasing, and benchmarking. Specific project objectives are:Analyze financial performance of 18 to 24 small- to medium-sized beef producers in Kansas and provide producers with benchmarking data to further support their financial performances.Submit benchmarking data from the small- and medium-sized beef producers in Kansas to the already established national, publicly available farm financial management database (FINBIN).Develop, pilot-test, and assess effectiveness of educational resources in regards to financial management, cost controls, and benchmarking for beef producers.Provide financial consultation for beef producers by an agricultural economist throughout the grant period (2-3 times per year) to improve producers' record-keeping, tax reporting, benchmarking, and, eventually, financial performance.Develop, pilot-test, and assess effectiveness of educational resources for local beef purchasing that can be used by beef producers, processors, and consumers to better understand and communicate factors affecting quality/quantity of local beef purchases.In short, we will utilize an agricultural economist who will collect financial data and provide consultation for Kansas beef producers (2-3 consultations each year) during the project period (Obj. 4). The financial data from 18 to 24 small- and medium-sized beef producers will be used to (a) generate and submit bench-marking reports to beef producers and FINBIN each year (Obj. 1 and 2) and (b) evaluate their profitability before and after using educational resources regarding financial management, cost controls, benchmarking, and beef purchasing, which will be developed (Obj. 3 and 5).
Project Methods
1. Analyze financial performance of 18 to 24 small- to medium-sized beef producers in Kansas and provide producers with benchmarking data to further support their financial performances.PD, Co-PDs, and the agricultural economist extension specialist will work together to gather financial data from 18 to 24 small- and medium-sized beef producers; and generate benchmarking reports with their peer group (participants) to compare their performances. Through interviews and agricultural economist visits, we will collect necessary financial and operational data from producers for KFMA to generate benchmarking reports. Benchmarking reports will be generated with following data: revenue data based on the target market (e.g., individual customers, large processors, supermarkets, etc.), standard expenses according to uniform system of accounts, profit and loss, standardized financial ratios, and other industry standards (e.g., ADG, COG). Each beef producer will receive summarized data of all other participating producers without revealing proprietary specifics of their competitors and be informed of how to interpret and use the benchmarking data.2. Submit benchmarking data from the small- and medium-sized beef producers in Kansas to the already established national, publicly available farm financial management database.Three benchmarking reports generated by KFMA with 18 to 24 small- and medium-sized beef producers during and shortly after the project period will be submitted to FINBIN to add Kansas beef producers' data, which currently are not available. Even after the project ends, participating beef producers will be trained to use FINBIN through Center for Farm Financial Management to benchmark their performance against similar operators.The benchmarking report generated by KFMA with our project participants will be submitted to FINBIN. According to the preliminary survey results, these small and medium-sized beef producers are unlikely to be members of KFMA because (a) its membership may be too expensive for these small operators and (b) they may not be aware of benefits of benchmarking. KFMA is collaborating with our project team and agreed to provide benchmarking reports with a nominal fee of $200 per producer. Financial records from these B2C beef producers will be submitted to KFMA, who will provide detailed benchmarking data for peer comparison and submission to FINBIN.3. Develop, pilot-test, and assess effectiveness of educational resources in regards to financial management, cost controls, and benchmarking for beef producers.Financial management and cost control education resources (details below) will be produced for beef producers. The developed resources will be shared and pilottested with beef producers participating in this project during the agricultural economist visits. Effectiveness and usability of resources will be evaluated, and resources will be revised. Co-PD Ibendahl, Vaughan, and the extension specialist will develop financial management and cost control education resources based on needs identified from the preliminary survey and producer interviews. These three team members will work closely together to identify challenges that small- and medium-sized beef producers face. Anticipated deliverables include, but are not limited to: (a) the uniform system of accounting practices for beef producers, (b) introduction to financial statements and 21 standardized ratio analyses for beef producers, and (c) advertising and promotion related resources to maximize sales and profitability.Pre- and post-tests will be used to evaluate the effectiveness of developed resources. Increased knowledge, improved attitudes toward using financial analyses tools developed from this project, use of financial analysis tools (e.g., number of analyses used), and perceived usefulness of financial analyses tools of beef producers will be evaluated using online surveys. Data will be summarized using descriptive statistics, and inferential statistics, such as t-tests and ANOVA will be utilized to analyze differences in data between or among groups. To evaluate the differences before and after the using educational resources, paired t-tests and MANOVA will be conducted (p<0.05).4. Provide financial consultation for beef producers by an agricultural economist throughout the grant period (2-3 times per year) to improve producers' record-keeping, profit and loss (P&L) analysis, benchmarking, and ultimately financial performance.With PD and Co-PDs, the extension specialist will plan two to three visits (4-6 hour each) per year to provide consultations for 18-24 beef producers. The extension specialist will (a) collect financial information to generate financial reports (e.g., balance sheet, income statement, statement of cash flows) and analyze operational ratios, (b) submit the data to KFMA to generate benchmarking reports with 18-24 producers, and (c) provide mentoring and consultation services to beef producers.Financial management training materials developed above will be used for consultation with beef producers. Deliverables will include but are not limited to training and consultation for financial recordkeeping, enterprise analyses, profitability and ratio analyses, direct marketing and other marketing analyses, and strategies to increase profitability.5. Develop, pilot-test, and assess effectiveness of educational resources for local beef purchasing that can be used by beef producers, processors, and consumers to better understand and communicate factors affecting quality/quantity of local beef purchases.Qualitative research analysis methods will be used to analyze the individual interview data. Interviews will be transcribed verbatim and themes/subthemes will be identified. Based on analyses, a series of educational resources including topic areas such as factors affecting beef yield (e.g., breed, size at harvest, age, customer choices - "cut order sheet"), factors affecting beef quality, interactive decision making tool to determine beef cut orders, other consideration when purchasing local beef (e.g., reputation of producers), and frequently asked questions and answers will be developed. Our preliminary data showed that local beef customers prefer testimonials from previous customers, beef producers, and small processors. The format of these education materials will include printable fact sheets, an interactive decision making tool, and 3-5 testimonials from previous local beef customers, producers, and processors.First, written responses in the state-wide survey (Kwon et al., n.d.) will be analyzed to identify education resources to be developed in priority. Once developed, the resources will be reviewed and evaluated by the project team members, beef producers, processors, and customers who expressed their support for this project via Shop Kansas Farms website. In addition, the resources will be pilot-tested with 18-24 beef producers and their customers. Pre- and post-tests will be used to evaluate effectiveness of developed resources (n=200). Prior to sharing resources, customers and the beef producers will complete a pre-test survey measuring their knowledge, attitudes, and practices of local beef purchases. When resources are finalized, the project team will share the information with 18-24 beef producers and their customers by providing printed copies. After 2 weeks, we will verify participants have reviewed resources and follow up with the post-test survey to evaluate the effectiveness of local beef purchasing resources. Data will be summarized using descriptive statistics, and inferential statistics, such as t-tests and ANOVA will be utilized to analyze differences in data between or among groups. To evaluate the differences before and after reviewing resources, paired t-tests and MANOVA will be conducted (p<0.05).

Progress 09/01/22 to 08/31/23

Outputs
Target Audience:We continue to talk to producers about their interest in the project. We have contacted between 10 and 15 new producers that we hadn't talked to before as well as about 20 producers from the year before. We have also discussed the project as part of other Extension programming efforts including ag lenders and those attending our Risk and Profit annual conference as well as producers at county meetings. We also work with ourKansas Farm Management Association which includes 12 farm management specialists and over 1,000 producers to explain our aspects of direct marketing and the value of keeping good records. We also talk about record keeping and marketing considerations through our K-State Ag Today radio audience. Changes/Problems: The biggest issue by far continues to be the reluctance of producers wanting to share their financial information. Many producers have expressed an interest in the project but when we explain that they will need to work with us to develop a set of financial statement that we can then share on an anonymous basis, everything comes to a standstill. We are not sure if this is because producers are reluctant to share their information of if it is becasue producers don't want to take the time to develop detailed financial informaiton. There is an overlap of producers in the Kansas Farm Management Association program that also do direct marketing, While KFMA doesn't do specific analysis of direct marketing, they do analysis of beef enterprises. KFMA is also very protective of the farmers data. So we have the issue of trying to get these producers to share data when they never have before and these producers may also feel the KFMA beef enterprise analysis is enough. Part of this difficulty to develop financial information for the producers may be because of the very profitable conditions for beef producers. When conditions are good, producers feel less need to worry about individual parts of their business. Getting producers interested in a detailed financial analysis is much easier when the beef farm economy is not profitable or barely profitable. There was also some health issues with the new major PI and his family in 2023. The PI had his gall bladder removed in the spring and his daughter has been having seizures issues that have gotten worse over the past year. The seizure issues have resulted in several weeks in the hospital for testing and this continues althoug we may be making some progress toward finding a possible solution. Finally, the PI's mom died in the spring of 2023 and this has taken time to settle the estate and resolve problems there. What opportunities for training and professional development has the project provided? We are developing web and written material to support our individual work with farmers. Much of this work is still in the planning phase but we anticipate publications on Agmanager.info and possibly a dedicated web blog as well. The overall financial performance of farms is a normal part of K-State Extension programming and this project allows us to expand that programming to include aspects of direct marketing that we might not cover in a normal Extension meeting. How have the results been disseminated to communities of interest? We have been using AgManager.info and also the K-State radio network to support our project. What do you plan to do during the next reporting period to accomplish the goals?We will keep contacting individual producers and also continue to develop materials relating to marketing, record keeping, and financial analysis.

Impacts
What was accomplished under these goals? We continue to meet and contact producers in Kansas who market some of their beef directly to consumers. There are a number of producers in Kansas doing this. Our offer to these producers is that we will have a dedicated farm management specialist work directly with them to input all of their financial information and give them a detailed analysis of their farm financial picture including an analysis of their direct to consumer beef business. The farm management specialist is an expert in FinPak and will do the analysis for them for free. They just have to spend the time to gather their financial records and then be will to have us upload the information to the Minnesota database where it will be combined with other financial information. So far, we haven't had anyone follow through despite there being some interest in the program. These difficulties will be discussed in the problem section. We also continue to talk about general farm profitability and how to keep good records in our typical Extension program. We are working on a set of publications to help with interpreting financial ratios for beef producers doing direct marketing.

Publications

  • Type: Journal Articles Status: Accepted Year Published: 2023 Citation: OQuinn, T. G., K. R. Lybarger, G. A. Ibendahl, Y. T. Vaughan, and J. Kwon. 2023. A survey of Kansas beef producers and consumers who participate in business-to-consumer marketing of beef. Transl. Anim. Sci. 7. doi:10.1093/tas/txad125


Progress 09/01/21 to 08/31/22

Outputs
Target Audience: So far we have contacted 20 t0 30 producers about their interest in participating in the projecct. We have also used the K-State Extension outlets to publicize the grant and to explain the importance of good record keeping. These Extension outlets include K-State radio network and articles in AgManager.info. We have also worked with the Kansas Farm Management Association which includes 12 farm management specialists and over 1,000 producers to explain our project and to see if there is any overlap between producers in the KFMA program and the direct to consumer beef producers we are trying to target with this project. Changes/Problems:The biggest issue by far has been the reluctance of producers wanting to share their financial information. Many producers have expressed an interest in the project but when we explain that they will need to work with us to develop a set of financial statement that we can then share on an anonymous basis, everything comes to a standstill. We are not sure if this is because producers are reluctant to share their information of if it is becasue producers don't want to take the time to develop detailed financial informaiton. Part of this difficulty to develop financial information for the producers may be because of the very profitable conditions for beef producers. When conditions are good, producers feel less need to worry about individual parts of their business. There has also been a change in the main PI role as the former main PI changed universities. What opportunities for training and professional development has the project provided?We are developing web and written material to support our individual work with farmers. Much of this work is still in the planning phase but we anticipate publications on Agmanager.info and possibly a dedicated web blog as well. How have the results been disseminated to communities of interest?We have been using AgManager.info and also the K-State radio network to support our project. What do you plan to do during the next reporting period to accomplish the goals?We will keep developing materials and making individual beef producer contacts.

Impacts
What was accomplished under these goals? We have contact 30 plus producers about their interest in participating int he project. We have offered these producers the chance to get a detailed financial analysis of their beef operation and also to analyze the direct marketing component of their business. We have worked with the Kansas Farm Management Association economists to see if some of their beef producers might be interested in our project as well. There are several KFMA producers who do some direct marketing of animals. We offer these producers the chance to have a detailed analyis of their beef operation conducted using FinPak. In additon to contacting producers and trying to publicize the grant project as much as possible, we have also been discussing the pitfalls that could occur during direct marketing. We have been adding this discussion to other Extension talks the PI have conducted during the year.

Publications

  • Type: Websites Status: Published Year Published: 2022 Citation: Ibendahl, G., J. Kwon, T. O'Quinn, and Y. Vaughan. 2022. "Opportunities to Improve Beef Producers Profitability ?rough Direct Marketing." AgManager Publication - GI-2022.11, March 25, 2022.
  • Type: Other Status: Published Year Published: 2022 Citation: Ibendahl, G., and T. O'Quinn 2022. "Opportunities for Beef Producers to Practice More Direct Marketing." Radio interview for Agriculture Today. 3/29/22.