Department of Agricultural Leadership, Education, and Communication


Date of this Version

April 1989


Published in The Journal of Agricultural Education, volume 30 (1989), pages 54-58. Used by permission.
The Journal of Agricultural Education (JAE) is a publication of the American Association for Agricultural Education (AAAE). Its back issues are available online at


Agriculture has changed a great deal, particularly during the past five years. Lower prices for commodities and higher production costs, including higher interest rates, have made it necessary for farmers to become better financial managers. "The farm of the future will be treated financially like any other business--it will have to demonstrate profitability before a bank will finance its operations" (Congress of the United States, 1986).

The Iowa Department of Agriculture (1985) and others concluded that rapid economic and social change is not a new phenomenon in agriculture. Agriculture has in fact been adjusting to conditions of greater efficiency since the beginning of recorded history. What is occurring in agriculture at the present time (farms failing because equity is exhausted or operating credit is denied), has little to do with efficiency but rather the amount of debt that is held is excessive as measured by the economic environment of the 1980's.

Harl (1985) expanded upon the present crisis by addressing the massive adjustment taking place in agriculture and the increased demand for educational services for adults remaining in farming. He feels strongly about the heavy emphasis needed in the areas of management skills, cost structure, financial management, financing arrangements, utilization of non-farm sourced equity capital and marketing skills.

The investigator found no current studies that had researched the financial management competencies needed to succeed in agriculture. Additionally, the review of literature revealed no current studies that dealt with the specific competencies required for the successful use of farm credit. This lack of research, in combination with the current ongoing farm credit crisis, magnifies the need for a study in this area.