A Comparison Analysis Of Farm Financial Positions Between Farmers Who Use The Guidelines And Those Who Do Not

Farm Financial Standards Council (FFSC) developed accounting procedures that are specific to agricultural producers; commonly referred to as the “Guidelines". This paper determines the extent to which agriculture producers in Kentucky are using the Guidelines and analyzes the effect the use has on farm profitability. Data were collected through a mailed survey sent to 650 small and medium farms during early summer 2016. Results indicate that the majority of producers have either not heard of the Guidelines, or that they may have heard of them but are unsure of how to use them. We also found that those who keep records of financial activities following the Guidelines have higher profits and are confident in making financial decisions to expend their farm. The fact that following the Guidelines is associated with greater profitability is a motivating factor to those who did not adopt them yet. Results suggest that extension specialists need to improve their efforts towards providing technical assistance to the producers. Likewise, offering agricultural accounting classes that teach the use of the Guidelines among current and future agriculture producers improve farm profitability and economic sustainability in future. This study is useful for future studies regarding the use of the Guidelines.