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Priming minds for decision making

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It takes 10 to 12 years before a walnut tree can produce a commercial crop for the next 60 to 70 years. Yet growers still plant them--in the face of considerable uncertainty.

That continues to intrigue Kent Olson since his days working as an Extension economist at the University of California-Davis. Today he explores the same principle, though on a shorter time scale and with different crops, while here at the University of Minnesota as an Extension specialist and professor of applied economics.

Kent Olson in his office

"Even planting a crop or buying cattle or feeder pigs: the uncertainty is out there for six months. How do you decide? How do you protect your potential profit?" asks Kent.

It comes down to making decisions, and how we make decisions is of peak interest to Kent. Once you decide to make the investment, how do you decide what to grow? How to grow? What machinery to buy? What about insurance? And what is the market going to do?

One decision begets another.

Kent explained that many of the big decisions we make--big in that that they affect us down the line--are made spur of the moment, which is not necessarily a bad thing.

"It goes back to students taking tests. Your first guess is probably right, but how many times have we gone back and changed it? Then it is graded and you realize the first guess was right."

Extension helps farm managers and producers make better decisions by delivering research-based education. It's the information and stories that stick with farm managers.

"So when it comes time to make that decision--on the spur of the moment even--they have the background and are ready to roll," said Kent.

Farm bill analysis is currently occupying Kent's time. Kent takes example farms and applies different scenarios: such as insurance products, percent coverage, yield and acres. He looks at forecasts and budgets. He looks at the impacts of different choices along the way.

"I'm trying to help farm managers see if, in a very complicated situation, there are some easy signals."

His initial assessment: "Your choice of insurance coverage doesn't have the biggest effect on which option within the farm bill. But what you think the prices are going to be in the future really does. So pay attention to the price forecasts."

What makes a successful farm manager? There's no concrete answer. Yes, education and psychology are likely, but it's hard to evaluate. It also comes down to management characteristics: a bit of aggressiveness, flexibility, and curiosity. It's about looking for opportunity and threats and willingness to change. Extension helps farm managers recognize those opportunities and threats.

Of course, sometimes success comes down to a bit of luck.

"Some of it is the grandparents or great-grandparents stopped the wagon at the right place. On the right soil. Someone made a decision at some point in time that turned out to be gloriously right."

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