Farm Asset Analysis

A key part of farm succession planning is the evaluation of existing or available assets. Assets include physical items such as feed, tools and machinery, land and facilities, and cattle. This category also includes available commodity markets and the environmental conditions of the farm an community. Human assets including labor availability, business management skills and established relationships are also part of this category. For the most part, these assets combine to form the “equity” from which to build or expand the business.

Environmental Issues

An environmental assessment is more important today than ever before when considering farm business changes.  For some farms, this may be a very simple checklist of existing conditions.  However, for farms considering expansions and business growth, it can become a much more complicated process.  Farm nutrient and pest management plans come into play with these larger farms.  Local land use planning and zoning may provide challenges.  In general, local, state and federal standards and regulations must be evaluated in every case.

Environmental Risk Survey Form FSA-851 This environmental risk survey form is the official document utilized by the USDA Farm Service Agency (FSA) to evaluate the environmental condition of farm properties they consider for farm business loans. It is used nationwide for property loans for beginning and/or existing farmer.  The form has eight sections that evaluate general site information, ownership history, building and facility conditions, and water and waste information.  More specifically, the document records the conditions of fuel storage systems; any abandoned containers, batteries, machinery, tires, etc.; status of wells; and manure storage structures and ponds.  The form is intended for the use by FSA staff but prospective farmers should be aware of the environmental issues that must be evaluated during an FSA real estate loan application procedure.

Environmental Questionnaire – Fannie Mae Form 4340  .doc This environmental risk survey form is a standard format that is utilized by many independent lenders throughout the Midwest as well as nationwide.  It is comprised of a straightforward checklist with columns for responses by the lender, the owner, as well as any occupants of the property.  The form included a list of questions relating to the current environmental condition of a specific property with several references to adjoining properties. It also evaluates known history of any past questionable practices.

(Fannie Mae is a shareholder-owned company with the public mission of supporting the secondary mortgage market to ensure that mortgage bankers and other lenders have enough funds to lend to home buyers at low rates.)

Farm management and Human Relations

Human resources are vital to evaluate in planning a farm succession.  The new generation must have the basic skills and experiences from which to build.  They need to exhibit the willingness to learn management techniques that best fit their situation.  Development of solid personal relationships, especially between family members, is also extremely valuable during the planning and operation phases of farm succession.

Market Availability

The commodity type will determine the need for the amount of market research and planning that is required for your farm succession planning.  For example, a commodity like milk in Wisconsin is the easy one as many options are available for your product.  Even in that case, you will need to select the buyer that best fits your marketing goals.  The smaller scale, niche-type commodities will demand much more marketing research to better ensure a reliable income source to make the business profitable in the long-term.

Direct Marketing Meat: A Resource for Direct Market Meat Producers in Wisconsin  The 133 page book is a summary of information presented at the 2001-2002 UW-Extension Emerging Markets Team and Wisconsin Department of Agriculture, Trade and Consumer Protection Meat Marketing Workshops. There is discussion on market research, promotion, pricing, working with your processor and other issues related to the direct marketing of meat products. The material is pertinent for all meat species. Excellent resource for Wisconsin producers desiring to develop a direct meat marketing business.

Additional Resources

Coming soon!