Final Report for EW03-011

Education, Training and Outreach on Risk Education

Project Type: Professional Development Program
Funds awarded in 2003: $99,600.00
Projected End Date: 12/31/2006
Matching Non-Federal Funds: $17,000.00
Region: Western
State: Colorado
Principal Investigator:
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Project Information

Abstract:

Project Summary: Risk management is difficult to teach because the breadth of problems and solutions are great. This project developed an educational program based on a simulation called RightRisk (rightrisk.org). RightRisk provides farmers and ranchers a chance to manage risk in hands-on, realistic scenarios that won’t leave them broke if they make mistakes. We developed six new scenarios, with complementary educational materials, trained Extension specialists in six states, and presented over 135 workshops for over 2,000 farmers and ranchers. Our website experienced 6,000 hits/month from 13 countries and 35 US states, with 65 of users logging on for over 5 minutes.

Project Objectives:

The goal of this project, or overarching objective, is:
To build a unique, innovative, and effective risk education program for farmers and ranchers and to train extension personnel in Colorado, Wyoming, Utah, Nevada, Idaho and Arizona how to use it.

Objective 1: Build an active, hands-on, applied, and realistic learning tool / program to teach risk management. This program will include (1.1) a field version of RightRisk, (1.2) an internet site with many scenarios to play in RightRisk (e.g. crops, livestock, prices, yields, pests, different locations), (1.3) a written, scripted educational program to accompany the field education program, and (1.4) written educational materials to accompany the program.

Objective 2: Train agricultural educators how to use the educational program built in objective 1. A central base will be in Wyoming, and integrated with the Western Risk Management Library, the Western Livestock Risk and Education Coalition (the current team of cooperators in the six states) and the newly formed Western Center for Risk Management Education. The central base will house the website and educational materials. Programs in the six states will be delivered to Cooperative Extension educators, lenders, Farm Service Agency, and crop and livestock insurance professionals that can in turn offer training to farmers, ranchers, absentee landowners, and other clients.

Introduction:

One of the keys to long-term sustainability is managing the risks involved in agricultural production, not just of the individual components, but also of the whole, interacting system. The mid 1990s changed dramatically the business environment that agricultural producers face. International trade agreements such as GATT (General Agreement on Tariffs and Trade) and NAFTA (North American Free Trade Agreement) opened up global markets for agricultural products. These agricultural policy changes translated into more opportunities for U.S. agricultural products and a market environment that is more volatile. The economy we face now is a higher-risk economic environment than agricultural families had seen since the 1930s (Fetsch, Bastian, Kaan, and Koontz, 2000). In response to these changes, the 1996 FAIR Act mandated that risk management education be provided to agriculturalists. For those who provide education and Extension workshops to agricultural producers and their families, this is often a daunting task, given limited resources and the paucity of empirical studies on farmers’ and ranchers’ needs for risk management information and education.

There is a need for more effective education than we have had in the past. Risk is complex and difficult to understand. Simply explaining how to use a decision tool is not usually enough. RightRisk lets people try to use their decision-making talents in a realistic setting, without cost. Our educational program lets producers test first hand whether they are better off with their newly learned educational tools. For example, a manager can compare their strategy with a risk management tool such as safety first or maximizing expected value. In our workshops we have producers testing whether to forward price some or all of their calves from one quarter of the year to the next, whether they should buy or sell their hay before winter sets in, and looking at the implications of whether they should hold calves over to feeders. We even throw in a “wildcard” that gives the producer a human risk, such as a heart attack. Their losses depend on how good of a delegater they are. A poor delegater stands to lose a lot while in the hospital. RightRisk uses real probabilities and lets the user know how they did. They can even run the model 100 times with the same decisions to differentiate their luck from a single run from the average worth of their strategy. Simply put, there is no other product that lets producers practice managing risk.

The need for risk management education has been confirmed in our surveys of producers. Colorado, Wyoming and Montana have assessed farmers’ and ranchers’ need for risk management information and education (Kaan et al., 2000). The study is a six-dimensional empirical assessment of ranchers’ and farmers’ needs for risk management information and education. While the study verified the need for risk management education in traditional areas, such as production, marketing and finance, it also found that farmers and ranchers reported highest interest levels in and a need for legal, estate planning, and human relationship risk management information. RightRisk is flexible enough to allow for creating lessons in these risk areas.

In summary, our program is relevant because it provides training using realistic agricultural scenarios that can be customized to different producer and regional settings. It can be used as part of a training program by Extension in any state, in the classroom, or by individuals on their own through the internet. It can also be used for research by recording and analyzing how individuals play the game.

References
Fetsch, R. J., C. T. Bastian, D. A. Kaan, and S. R. Koontz. “A Two-State Comparison of Farmers’ and Ranchers’ Risk Management Education Needs.” American Journal of the Society of Farm Managers and Rural Appraisers. (Currently in Review).

Kaan, D. A., R. J. Fetsch, C. T. Bastian, and S. R. Koontz. “A Two-state Comparison of Farmers’ and Ranchers’ Risk Management Education Needs.” Paper presented at The 2000 National Risk Management Education Workshop. St. Louis, MO. Jun. 6- 7. (Presented by Kaan). Abstract to be published in Conference Proceedings.

Cooperators

Click linked name(s) to expand
  • John Hewlett

Education & Outreach Initiatives

Objective:
Description:

Methods

Objective 1
A program coordinator, Dr. Jay Parsons, in cooperation with principle investigators Dr. Dana Hoag and John Hewlett, was hired to improve the RightRisk program and to write code for five new scenarios. Dr. Parsons was also responsible for coordinating the development of educational materials, keeping a calendar of programs delivered and for evaluation. With the aid of other grants, we formed the RightRisk Education Team to help develop our scenarios.

The project proceeded with four basic steps:

1) Modify and update RightRisk.
2) Develop six new scenarios appropriate for the six states (Colorado, Wyoming, Idaho, Arizona, Utah and Nevada.).
3) Develop written risk management educational materials to accompany each scenario.
4) Centralize the training materials at the University of Wyoming (RightRisk.org).

Objective 2
Develop a train-the-trainer program in the six cooperating states. Once we developed the field education version and several scenarios at the web site, we trained educators in all six states. This involved materials, use of the mobile computer lab that we purchased under another grant, personalized assistance to develop scenarios that match the needs of the state, and assistance with presenting the program the first few times.

Outreach and Publications

CD Table of Contents

Photos

PowerPoints
Bar-B-Q Ranch
EWS Farms
Public Lands
The King Family Ranch
The Lazy U Ranch
The Wheatfields

Publications
CSU-Extension Production and Farm Management publications

Production Risk Management for a Typical Beef and Hay Ranch in Colorado (PFM-Jan-01)

Strategic Planning for Risk Management (PFM-Jan-02)

How does your attitude about risk stack up to other farmers and ranchers? (PFM-Jan-03)

Risk Management Resources on the Internet

Safety First

RightRisk 6.2

Risk Game

Scenario Folder

Scenario Guides
Bar-B-Q Ranch
EWS Farms
Public Lands
The King Family Ranch
The Lazy U Ranch
The Wheatfields

Outcomes and impacts:

Objective 1
1) Modify and update RightRisk.
Dr. Jay Parsons, with the help of the RightRisk Education Team, improved usability and functionability of RightRisk and the simulation was renamed “Ag Survivor.” The name RightRisk was retained for the overall educational effort. Improvements include debugging, developing a software program to generate new scenarios, editing screens, new screen designs and accommodating new functions for new scenarios (such as insurance products and marketing).

2) Develop six new scenarios appropriate for the six states (Colorado, Wyoming, Idaho, Arizona, Utah and Nevada.).
We built a library of examples for different commodities, regions, farm types, etc. that a user can pick from. Six scenarios are in the current version of RightRisk:

The Wheatfields Scenario
King Family Ranch Scenario
Public Lands Scenario
Lazy U Ranch Scenario
Bar B Q Ranch Scenario
EWS Scenario

A complete description of each scenario is included in the scenario guides in the Appendix.

3) Develop written risk management educational materials to accompany each scenario.
The RightRisk simulation grew into an overall education program that is illustrated by our website (discussed in 4 below). The software simulation was recently renamed “Ag Survivor.” Each scenario in RightRisk is accompanied by a published scenario guide, which guides participants through the program. We also developed “Lesson Guides” that help people use one of the scenarios to learn a lesson. For example, one of the Lesson Guides explains the concept of “safety first” by using the King Family Ranch Scenario. We also published several side publications and presented RightRisk at professional meetings.

We also agreed to develop written educational programs. The educational team needed to customize the program for each program and consequently several PowerPoint presentations were prepared (found on CD). Ag Survivor was used in a variety of training meetings such as crop insurance, marketing, and financial management.

4) Centralize the training materials at the University of Wyoming (RightRisk.org).
We were successful at creating a website to centralize our educational program. The site contains 4 products: Ag Survivor, the Strategic Risk Management Process, Enterprise Feasibility (based off of the RDFinancial), and Taxes for Ag Enterprises. Three of the scenarios have been reprogrammed for the website. The website version has a very different feel from the field version and will replace the field version sometime in 2007. The site also contains a section on resources, such as on-line courses, risk management lesson guides, and links to the risk education library. It also contains a schedule of workshops being offered and a list of people on the RightRisk Education Team and our sponsors.
Objective 2
Develop a train-the-trainer program in the six cooperating states. Once we developed the field education version and several scenarios at the web site, we trained educators in all six states. This involved materials, use of the mobile computer lab that we purchased under another grant, personalized assistance to develop scenarios that match the needs of the state, and assistance with presenting the program the first few times.

Thanks to this grant and grants from the Western Center for Risk Management Education, we were able to meet twice annually with the RightRisk Education Team. Team members include: Russ Tronstad and Trent Teegerstrom from Arizona, Dana Hoag, Jay Parsons, Rod Sharp, Dennis Kaan, John Deering, Jeff Tranel, and Aaron Sprague, from Colorado, Wilson Gray from Idaho, Duane Griffith from Montana, Willy Riggs from Nevada, Bruce Godfrey from Utah, Jay Jenkins, formerly from Washington State, now Nebraska, and John Hewlett from Wyoming.

Project Outcomes

Project outcomes:

We parlayed the WSARE grant into several other grants with the Western Center for Risk Management Education, the Cooperative State Research Extension Education Service, the USDA National Research Initiative and the Risk Management Agency. Through these grants we made many interesting partnerships. Our primary accomplishment was to form the RightRisk Education Team. The team allowed us to develop a single product that could be delivered autonomously in any state. The Education Team:
Coordinated traditional Extension efforts
Built on existing extension relationships (such as the western extension management team)
Leveraged costs and good will
Meet twice per year
Developed joint products
Combined grants together for a larger whole than the sum of the parts

Another accomplishment was to align ourselves with several different agricultural groups, such as wheat growers and the Farm Bureau. Examples of workshop settings include:
Agriculture lender meetings
Crop insurance trainings
Risk management workshops
Drought workshops
Futures/Options trainings
Commodity group annual meetings
Extension agent in-service trainings
Professional development for extension specialists
Regional production symposia
Classrooms
High School vo-ag classes
University classes
Community college classes

Recommendations:

Potential Contributions

The RightRisk program is designed to help producers learn about what risks are, how to measure them, and how to manage them. The program does not contribute to new knowledge about how to manage risk, or techniques, but RightRisk puts what is known into a framework that makes learning how to manage risk more accessible to producers. Over 2,000 producers and other agricultural professionals such as crop insurance agents and bankers have attended over 135 meetings in the 12 states, including the six states represented in this project and 5,000 documented user sessions, 105,700 hits, in 13 countries and 35 US states.

Evaluations: 93 percent of surveyed producers indicated that RightRisk was helpful, 90 percent said it can help them learn about their personal risk preference, and 92 percent indicated that RightRisk can help them learn about managing risks. (see Appendix for more information).

An example of participants includes:
Extension agents
Farm management specialists
Marketing specialists
Ag lenders
Livestock producers
Crop producers
High School students
College students

The basic skills offered to participants include an overview of risk and risk management, measuring risk tolerance, strategic planning/making decisions, risk mapping and probabilities. Specifically, participants in different venues learned:

Ag Production Meetings
Focus on production risks
Weather/Drought
Disease
Insects
Weeds
And production tools
Insurance
Diversity
Fertilization
Disease Prevention (Vaccination)
Marketing meetings
Focus on market risks
Price variations
Cyclical patterns
Price trends
And marketing tools
Forward pricing
Retained ownership
Futures and options
Marketing plans
Financial Management Meetings
Focus on financial risks
Insufficient cash flow
Declining asset values
Foreclosure / Bankruptcy
Interest rates
And Financial management tools
Enterprise budgets
Financial statements
Financial analysis

Future Recommendations

Improvements to Ag Survivor seem less important in the next two years than does securing a regular flow of funds for the routine offerings of the program. Grants enable improving the program but it is difficult to fund the continued education for what we have developed. Our current plans include expanding our offerings to other states, adding financial analysis to the program, developing more new scenarios to address contemporary issues (drought, new insurance products),and developing innovative outreach programs for new audiences (youth, women/limited resource producers, water roundtables, dairy/community).

Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.