Financial Indicators of Sustainability on Michigan Farms

Financial Indicators of Sustainability on Michigan Farms

Summary

This Project has brought farmers and Extension agents together to evaluate the usefulness of ratios developed to assess sustainability and progress toward sustainability of Michigan farms. Our objectives are:

1) Evaluate usefulness of financial indicators of sustainability and assess their suitability for incorporation into existing farm business analysis programming.

2) Assess farm system sustainability and quantify progress toward farm system sustainability over time through calculation of financial indicators.

3) Educate farmers and Extension agents on calculation, utilization, and interpretation of financial indicators of sustainability.

4) Demonstrate to a broader audience of Michigan agriculturalists, including other farmers and farm service providers, appropriate use of financial indicators of sustainability.

5) Disseminate project results to a wider audience of Michigan farmers and Extension agents.

Farmers, members of the Michigan Agricultural Stewardship Association (MASA), Michigan State University Extension agents, and others were introduced to the indicators through two workshops. Participants calculated their own ratios and compared them with historic and contemporary data. A case study involved a conventional-turned-grazing dairy that provided 20 years of ratios and hosted a tour for workshop participants. University of Minnesota Professor and Extension Specialist Dick Levins, developer of the ratios, facilitated the workshops.

The exercise of wrestling with the ratios, especially in the context of a conventional-turned-grazing dairy, was very instructive. While there was broad consensus on the desirability of some set of readily calculable ratios for distributing farm payments, and possibly for assessing individual farm progress toward sustainability, consensus was not reached on the formulation of the specific ratios. Team efforts to develop this formulation include ongoing interviews with program participants and discussions with sustainability ratio experimenters in several states.

This project’s impact was primarily in the discussion it generated and the questions it raised about assessing farm sustainability and the collateral issue of using ratios as a basis for farm payment distribution. The conventional-turned-grazing case farm and its 20-year ratio history also evoked important discussion. Discussions from this project were important because of the topic—assessing sustainability—and because of who was involved in the discussion—key farmer-leaders and Extension agricultural and farm management agents from throughout Michigan. Project experience with the indicators has been the subject of several stories in Michigan’s Farm and Country Journal and will soon be available on the web at sustainable-ag.org

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