Precision Guidance + Precision Sprayer Control: Can It Pay?

Precision guidance and precision sprayer control have substantial promise to reduce input application overlap, thus saving chemicals, fuel, and time during the application process. In this research, we made preliminary estimates of the magnitude of the private benefits for a precision guidance system combined with automatic control of individual sprayer nozzles for agricultural sprayers (precision spraying). Hypothetical farm fields were analyzed, allowing comparison of the performance of the precision system to a traditional, non-precision system for different field shapes. An analysis of the impact of size of farm on system profitability also was explored.

We estimated that overlapped spray area could exceed 10 percent of a field’s total area when using conventional manual steer + manual sprayer control for fields with irregular shape and with obstacles like grassed waterways. If precision control of the guidance and spray processes allows accuracy to within two inches, overlap could be reduced to well under one percent of the field area. This would translate to substantial spray material cost savings (and reduced pollution) — as much as $2.50 per acre for a spray regime that costs $22/acre/year and applied in a single pass. That would double to $5.00 per acre savings if the spray material cost was doubled ($44/acre) or if two applications were required. In addition to spray material savings, the precision system required less distance to be travel due to reduced overlap, saving fuel and operator time.

The benefits of the precision spraying system will increase proportional to the cost of the spray material being applied and with fuel and operator labor costs. However, the investment costs for this system are relatively the same regardless of farm size. As a result, fixed costs of machine ownership diminish per acre as farm size increases. This means that the precision spraying system will make most sense economically for operators of larger farms who make several applications annually of relatively expensive spray materials. These estimates clearly are in alignment with the relatively rapid adoption of precision guidance systems by large farmers in the past few years.

For a complete discussion of this topic, see the following report:

http://aede.osu.edu/programs/VanBuren/pdf/AEDE-RP-0056-05.pdf

Computerized Software & Mapping Technologies for Crop Management

The full fact sheet and links to software vendor resources can be found at http://geospatial.osu.edu/resources/cropsoftware.html

As energy and input costs rise in agriculture it is not to uncommon for managers to continue to find ways for business efficiency. In many cases this can be a daunting task as operations get large and diversified. It also becomes difficult to keep track of all inputs and activities that go on in a business over time when evaluating the effectiveness of changes in management plans. Combining the use of computerized mapping and geographic information systems (GIS) software, imagery, GPS collected data, and other geo-data sources allows any manager to gain confidence in their management strategies.

Crop record keeping and mapping technologies can consist of basic record keeping and display software, desktop GIS, web-based GIS, and simple viewers for imagery and maps. Depending on what your applications are, and ability to expand in the future, dictates the sophistication level of your software needs. On average, these programs cost anywhere from $600 to several thousand dollars. These programs range from simple crop record keeping to full farm and business enterprise systems that includes connections to livestock, farm financial record keeping, crop management, and managing commercial fertilizer and chemical application operations. Generally, programs that have crop management features work with job tasks, field records, economics, soils, yield data, and creating recommendation maps for variable rate applicator equipment.

There are also field-based data collection systems using handheld, TabletPC, and laptop computers to generate field data and then sync or integrate into desktop software for creating maps and reports. These programs are intended for crop scouting and field record keeping. Most of these have functionality of using attached GPS units to collect geo-referenced data.

When selecting stand-alone field record keeping and GIS mapping software for use in crop production it is important to consider the following criteria: features, ease of use, computing hardware requirements, support and training, price, and maintenance. This criteria varies by software supplier. Make sure to fully investigate the various functions of the software and that it meets your application needs.

There are also online or web-based mapping systems you can use on the web that go beyond your farm operation to obtain county to national-level data. The benefit from using these tools is that you don’t need to purchase stand-alone software. You can either download a viewer or use a web browser to access online web maps. You can overlay several data layers, make measurements (ie, acres, feet), obtain data, display, and print maps. However, many of these online GIS systems are designed for specific purposes and does not allow you to add your own data. The USDA-NRCS Web Soil Survey ( http://websoilsurvey.nrcs.usda.gov/ ) and the University of Illinois MarketMaker ( http://www.marketmaker.uiuc.edu ) are a few agriculture examples to visit . There are other Internet based mapping tools that are available to display and download topographic (elevation) and aerial, satellite imagery and other data. Some of these include Google Earth http://earth.google.com , Microsoft Terraserver http://terraserver-usa.com , and USAPhotoMaps http://www.jdmcox.com .

Ultimately, to determine what set of crop record keeping and mapping tools are appropriate for your business depends on your applications. Mapping technologies can be used in operations of any size, but every application requires a different approach. You must decide what information you need and assemble a set of tools to gather it. You must decide what you can do yourself and which to contract out, taking into consideration your time, cash flow, and technical aptitude. You must also learn how to use the data you gather for decision making. Overall, the value you obtain from your software depends on how you use it as a tool for decision making.

A listing of software vendors and additional considerations in crop record keeping and mapping technologies can be can be found at http://geospatial.osu.edu/resources/cropsoftware.html

Additional information on considerations for selecting mobile GPS data collection and field record keeping systems can also be found at http://geospatial.osu.edu/resources/handheldgps.html

Designing Effective Pay-For Performance Systems for Employees and Suppliers-Part 1

The success of any business or farm ultimately depends on how its employees perform. A basic problem that any owner/manager faces is that employees often have different goals than the owner/manager. For example, the owner/manager wants employees with strong work ethic to take productive actions that increase the profitability of the farm or business while keeping labor costs to a minimum. Employees, on the other hand, often want the highest pay possible, but at the same time, some employees do not always have the interests of the farm or business at hand and therefore may not be the most efficient workers. An intelligently designed pay-for-performance plan can achieve the twin objectives of aligning the interests of the firm and employees, and providing incentives to employees to take productive actions that contribute to the bottom line. A poorly designed compensation scheme, however, can lead to negative unintended consequences, increased labor costs, and ultimately, lower profits. As global competition increases, business risk is higher than ever so that there is more riding on even the simplest actions taken by employees. Thus, intelligently designed compensation plans that increase a worker’s vested interest in productivity while maintaining manageable labor costs can increase a firm’s competitiveness.

This article is the first of a multi-part series covering the basic economic principles of designing optimal pay-for-performance plans – plans that will generate the highest productivity at the lowest labor costs. The design of effective compensation plans has become a science and many business schools and other social scientists devote considerable resources toward the understanding of incentive systems. The purpose of the series is to discuss and illustrate key economic principles developed by business and social science researchers that can help managers design effective pay-for-performance plans and incentive systems. The first part of the series provides an overview of pay-for-performance plans and highlights their impact on productivity using some case studies. Moreover, major research findings by social scientists are summarized. This will lay the groundwork for subsequent parts of this series, which will cover more specific principles and guidelines for designing efficient incentive plans.

Pay-for-performance: Does it Work?

At the heart of any incentive scheme is the method by which monetary compensation is linked to performance. While common sense tells us that people are not motivated only by money (examples of non-monetary rewards include a feeling of pride and self esteem, praise from superiors and co-workers, etc), money is nonetheless a powerful motivator. Even casual observation will tell us that the majority of people in society work because they need to earn money and that they tend to gravitate toward higher paying jobs. It is no accident that demand for slots in our nation’s medical schools, business schools, and law schools far outstrips the supply, as these slots are gateways to the highest paying professions in our society. In addition, even when people value non-monetary rewards, many individuals are willing to substitute non-monetary for monetary rewards, which suggests that money can serve as a general measure of economic value (Baker, Jensen and Murphy).

Our common sense is also verified by numerous research studies that have been undertaken by economists, psychologists and human resource professionals. While a few scholars have argued against pay-for-performance (e.g. Deci; Slater; Kohn), the overwhelming majority of studies show that pay-for-performance plans do improve productivity in many organizations. A common argument against pay-for-performance plans is that explicit monetary rewards can destroy intrinsic motivation. But the large number of studies that show that pay-for-performance plans work, suggests that the eroding of intrinsic motivation argument against pay-for-performance may be specialized to certain types of jobs or certain special situation such as jobs that require a great deal of creativity and latitude.

Ed Lazear, an economist at Stanford University , studied a change in compensation method at Safelite Glass Corporation in Columbus , Ohio . In 1994-95, Safelite changed the compensation method from pure hourly wages to piece rate pay, where glass installers were guaranteed $11 dollars an hour and then can earn addition money depending on number of glass units installed (i.e. pay-for-performance). Lazear examined over 3,000 workers at all Safelite locations over a 19-month period and found the following:

  • A switch to a pay-for-performance piece rate system resulted in about a 44% increases in productivity per worker (based on number of units installed per worker per day).
  • The output gain can be split into two components: a selection component and an incentive component. The “selection effect” refers to the gain that came from worker turnover where workers either were attracted to the piece rate or left the company because they did not like the piece rate. This selection effect, which is strictly due to a change in composition of workers, had a positive impact on production. In other words, a switch to piece rates also increased the talent level of the installers, which resulted in a 22% increase in productivity. The remaining 22% gain came from increased output for a given worker. In other words, even in the absence of turnover, each worker was incentivized to produce more under the piece rate.
  • On average, each worker made 10% more under the piece rate system so some of the cost savings from increased productivity was shared with workers.

Other studies also show that pay-for-performance can be beneficial. For example, M.A. Huselid conducted a study examining the human resources practices of over 3000 companies and concludes that firms that tied pay to performance had annual sales that averaged $27,000 more per employee.

The bottom line is that there is overwhelming evidence in the social sciences literature that pay-for-performance works if it is designed properly. Just as there are success stories, there are horror stories of pay-for-performance plans that went awry because they were not carefully thought out. This series of articles will discuss important principles that can help managers design profit enhancing pay-for-performance plans and avoid implementing “perverse” plans that lead to negative unintended consequences.

Before proceeding, I provide some examples of popular pay-for-performance schemes to add concreteness to the discussion. Common pay-for-performance plans are:

  1. Merit pay – Raise salary at the end of each year if performance is strong. Some researchers believe merit pay has little impact on performance (Bassett).
  2. Lump-sum bonuses – A one time bonus (not part of base salary) for good performance. E.g. end of the year bonus. Much less expensive than merit pay because it is not permanently built into the base pay. Thus, it is more efficient than merit pay.
  3. Piece rate – Pay varies with the number of units produced. Advantage is that it is simple to understand.
  4. Tournaments – a worker or supplier is awarded a bonus or promotion only if he outperforms another worker or supplier. Only relative performance matters.

Promotions are another way to provide big, discrete rewards for outstanding performers. According to Baker, Jensen and Murphy, promotions serve to (1) match individuals to the jobs for which they are best suited over time, and (2) provide incentives for lower level employees. However, promotions have some problems in that disincentives are created for those who have been passed up because they may perceive their future prospects at the company as being dim. This is particularly problematic if the best performer (therefore one who is most deserving of a promotion) is better suited for her current job because she is the best at it. If she is promoted, she may not be well suited for the new job.

Designing Effective Incentive Systems: Basic Principles

In order to design an effective incentive system, the manager must address some key issues, including the following:

  1. What objectives does the manager want her employee to pursue?
  2. How will these objectives be measured and how much transparency is there in the way performance is measured?
  3. How much control does the employee have over outcome and how risk averse is the employee?
  4. Will employees work in teams or will they be assessed individually?
  5. What is the duration of the relationship?

Answers to these questions can help managers avoid major pitfalls when designing incentives. I will address each of these issues in turn in future issues of Ohio Ag Manager. The reader should also keep in mind that the focus of this article is on the economic principles of incentive design, and it does not discuss labor laws or legal issues. Keeping abreast of labor laws is crucial aspect of human resources management and the following OSUE Extension websites provide additional information:

http://www.midamservices.org/maahs/maahswebengine.nsf/homepage

http://ohioagmanager.osu.edu/resources/zoller.pdf

http://ohioline.osu.edu/lines/busi.html#BCDEV

http://west.osu.edu/farm_mgt/Mngfrmlbr.pdf

Ohio Farm Custom Rates-Part 1

Many Ohio farmers hire custom farm work in their farm business or perform custom farm work for others. Custom farming rates traditionally have been arrived at by a series of activities and negotiations. One of the most common ways custom farming providers and consumers arrive at an agreeable custom farming rate is to access University Extension summarized surveys. Ohio State University Extension and the Department of Agricultural, Environmental and Development Economics have historically published farm custom rates to assist farm businesses with this important task.

The Ohio Farm Custom Rates are being updated for the first time since 2002 and will be published in two-parts in this and next month’s Ohio Ag Manager. “Ohio Farm Custom Rates 2006” will also be available from your local OSU Extension Office and online at http://www-agecon.ag.ohio-state.edu/

The data reported in this article is based on survey results from 277 Ohio farmers,

custom farmers and farm managers. The custom rates presented may differ from rates in your region depending on availability of custom operators and demand for their services. See “Farm Machinery Economic Cost Estimates” for an alternative approach to estimating custom machinery rates at:

http://www.extension.umn.edu/distribution/businessmanagement/DF6696.pdf

The “Average” rate listed below is the average of all responses. The range is the average

+/- one standard deviation which includes about two-thirds of all responses.

Ohio Farm Custom Rates – 2006 – Part I

Average Range
Soil Preparation
Stalk Chopper/ acre $8.45 $4.44 $12.50
Moldboard Plow / acre $14.75 $9.06 $20.42
Disk Chisel / acre $13.05 $8.76 $17.35
Chisel Plow / acre $13.15 $8.47 $17.87
Disk / acre $10.30 $6.65 $13.93
Drag / acre $9.15 $4.00 $15.05
Secondary Tillage / acre $10.00 $5.50 $14.83
Harrow / acre $8.80 $4.00 $13.62
Field Cultivator / acre $10.25 $6.54 $13.94
Land Leveling / acre $13.65 $4.87 $22.42
Land Leveling / hour $40.85 $26.90 $54.77
Subsoiling / acre $16.35 $10.11 $22.59
V-Ripping / acre $15.85 $11.00 $20.73
Strip Till / acre $15.35 $12.85 $17.84
Fertilizer/Lime Application – Ground
Dry Bulk / acre $4.35 $3.01 $5.72
Dry Bulk / ton $4.70 $3.63 $5.79
Dry Bulk (applicator only) / acre $3.65 $2.38 $4.96
Dry Bulk (applicator only) / ton $4.50 $3.95 $6.30
Liquid Knife / acre $7.40 $5.28 $9.51
Liquid Spray / acre $6.05 $4.40 $7.72
Annhydrous / acre $9.85 $6.55 $13.12
Lime application / acre $5.25 $2.69 $7.83
Lime application / ton $4.75 $2.97 $6.53
Chemical Control of Weeds or Insects
Spraying (self propelled) / acre $5.70 $4.35 $7.03
Spraying (pull type) / acre $5.35 $3.13 $7.52
Highboy spraying / acre $6.20 $4.83 $7.59
Mechanical Weed Control
Rotary Hoeing / acre $6.20 $4.00 $8.56
Conventional Cultivation / acre $8.25 $5.00 $12.07
Aerial Application
Fertilizer / acre $7.25 $4.18 $10.32
Chemicals / acre $7.20 $5.73 $8.69
Planting Operations
Conventional Till
Plant Corn / 30″ rows / acre $14.30 $11.23 $17.33
Plant Corn w/ Fert. Attach. / 30″ rows / acre $15.85 $12.44 $19.25
Plant Soybeans / 15″ rows/ acre $14.05 $10.54 $17.52
Plant Soybeans / 30″ rows/ acre $14.15 $10.85 $17.45
Drill Soybeans / acre $14.20 $9.96 $18.41
Drill Small Grains / acre $13.75 $9.18 $18.34
No-Till
Plant Corn / 30″ rows / acre $14.40 $11.87 $16.95
Plant Corn w/ Fert. Attach. / 30″ rows / acre $16.90 $12.71 $21.13
Plant Soybeans / 15″ rows/ acre $14.90 $11.82 $18.01
Plant Soybeans / 30″ rows/ acre $14.80 $11.25 $18.32
Drill Soybeans / acre $14.20 $10.60 $17.85
Drill Small Grains / acre $14.10 $11.01 $17.14
Grass/Legume/Pasture Seeding
Grain drill / acre $12.30 $9.03 $15.57

In next months article “Ohio Farm Custom Rates – 2006 – Part II”, we will present data on harvest and other operations.

The National Animal Identification System

The National Animal Identification System (NAIS) has been designed to enhance the current animal disease surveillance and monitoring system. When fully operational the goal of the NAIS will be to trace an animal, exposed to or expressing a foreign animal disease (FAD), or a disease of concern, to the point of origin within 48 hours.

Development of the plan began in January, 2002 following the 2001 outbreak of Foot-and-Mouth Disease (FMD) in Great Britain and the terrorist events of 911. Over 60 livestock and farm organizations representing producers and industry stakeholders, have worked cooperatively with state and federal animal health officials in developing the plan. These individuals recognized the lack of traceability capabilities in the U.S. to effectively control the accidental or intentional spread of a contagious disease outbreak. Since January, 2004, ten species working groups, representing the major livestock species in production within the U.S. , have been working to adapt the framework of the NAIS plan to meet the needs of their specific species. Ohio has four individuals representing the beef and dairy industries on the Cattle Industry Working Group; and one individual serving on each of the Pork Industry Working Group, Goat Industry Working Group, and Equine Industry Working Group.

There are three components to the NAIS:

  • Premises Identification – A premises is the physical location where livestock are produced, held or managed. Premises identification is the critical first step of the NAIS by uniquely identifying the origin of an animal and other locations where the animal has resided and disease exposure could have occurred.
  • Animal Identification – National standards have been established to uniquely identify individual animals as they change ownership and move throughout the marketing chain. The current owner/seller is responsible for assuring the animal is properly identified. The eventual goal of the NAIS is to electronically identify all individually identified animals. Standards have also been established to accommodate group/lot identification for those animals / species that are managed as a group from birth to harvest, are never commingled with animals outside of the production system, or with other owner’s animals.
  • Animal Tracking – Per the NAIS, animal movements will be reported every time an animal changes ownership, moved interstate, or commingled with other owners animals. The receiving premises will be the one ultimately responsible for reporting the movements of the animals onto their premises.

NAIS: “Application for Ohio ‘s Livestock Industry”

The Ohio Department of Agriculture (ODA) continues to move forward with voluntary implementation of the NAIS by encouraging the registration of all premises that produce, manage or hold livestock. Approximately 1700 premises have been registered to date.

Ohio ‘s livestock organizations will help guide the future steps to implementing the NAIS. General consensus supports delaying the animal tracking component of the NAIS until such time that:

•  Specie groups agree on the development and administration of the data management system that will hold the animal tracking information.

•  Infrastructure exists throughout the marketing chain to collect electronic readings of animal identity.

•  Technology improvements in scanning and data management equipment can occur.

Two options for implementing the NAIS in Ohio are currently being discussed.

One option is to maintain focus on identifying all premises that produce, manage, or hold livestock in Ohio until that task is complete. This action represents the first basic step to implementing the NAIS but provides little improvement to the current animal disease surveillance and monitoring system.

The other option being discussed would begin with premises identification followed by animal identification at change of ownership only. This option is being referred to as the “Bookends” supporting animal disease traceability.

Historically animal disease tracebacks have been hampered by the fact that animal health officials have had only one point of reference (one bookend) to start when trying to identify the origin of disease diagnosis and exposure. Unfortunately, that reference point does not appear until an animal has already expressed a contagious disease. At that time the animal health official learns the physical location (farm, sale barn, concentration yard, feedlot, packing plant, etc.) and the name of the current owner. From there the traceability of the origin of the disease is a one-way track dependent upon a paper-trail and a question – “Where did you buy this animal?” The speed of the trace is dictated by previous owner’s records and their availability for questioning. Previous owner contacts may not be accomplished for days, or weeks, and many times the trail stops, leaving a lingering source of infection of the disease.

The initial NAIS components of Premises Registration and Animal Identification would provide animal health officials an additional “Bookend” that significantly enhances disease traceability. This bookend is referred to as the “Bookend of Origin”.

Key components of the “Bookend” system include:

•  All livestock producers would be assigned a premises identification number for their farms.

•  Producers would be required to present their premises number to complete the purchase of official animal identification tags or devices.

•  To help reduce the cost to producers, electronic or visual ID tags / devices are acceptable.   The ID device represents the only tangible direct cost to producers under the bookend system

•  The official animal ID numbers associated with the producer’s premises number provides animal health officials with a record of the “Bookend of Origin” if the animal ever expresses a contagious disease.

•  Animals of origin may be officially identified at any time in their life, but only required when a change in ownership occurs.

•  Animals of origin, refers to the location where the animal was born or hatched.

•  Animal movements are not required to be reported.

•  As long as the ID device remains with the animal, subsequent owners need not re-identify the animal.

How the “Bookend” system works:

A producer’s local veterinarian reports to the state veterinarian’s office that an animal with a highly contagious disease has been found on his client’s farm. A state animal health official comes to the farm to confirm the diagnosis and to begin the traceback investigation. Historically this would have been a one-way, time-consuming track back to the herd of origin. However, with the “Bookends” system in place and seeing that the animal has an official ID, the state vet checks his records and immediately knows where the animal originated. Now the state vet can put two investigators on the case, one starting at the farm / bookend of disease detection and the other at the farm/ bookend of origin. With two investigators conducting simultaneous interviews with other owner’s of the animal, it is logical that this time-tested approach has proven its ability to reduce the time requirement for tracebacks by 50%.

USDA’s initial TB and Brucellosis Eradication Program were based on the bookends approach.

Canada started their animal identification system in 2001 based on the bookends approach.

The current USDA Scrapie Eradication Program, for the sheep and goat industries, is based on the bookends approach.

The bookends approach will not always meet the 48hour traceback goal of the NAIS. However, for the cost of an ear tag, it’s a cost-effective, time-tested interim step that will significantly improve our current animal disease surveillance and monitoring system; while we wait for the animal tracking component of the NAIS to develop.

Ohio Cropland Values and Cash Rents 2005-06

Demand for land value and cash rent data is strong as farmers, landowners, ag lenders, agribusiness persons and investors seek baseline data to formulate their business and investment plans. Previously, data has been gathered by surveying farmers, landlords or a combination of the two groups. In this initial survey we survey two groups of professionals with strong ties and an intimate knowledge of agriculture land and rental markets.

A survey of agricultural lenders, farm managers and rural appraisers was conducted at three OSU Extension/AEDE meetings in the Fall of ‘05 and Winter of ’06. This survey was a sample of participants in attendance at these meetings. It was not a random sample of the population but rather a survey of all willing participants in attendance at these meetings designed to test the survey instrument. Surveying these agricultural experts is an attempt to capture unbiased data for evaluating farmland value and cash rents. Eighty-four surveys were completed, analyzed and summarized. Seventy-two percent of the surveys were collected from professionals in western Ohio while 22% of the respondents were from north-central Ohio . The results are summarized in Table 1.

This survey found that on a statewide basis, bare Ohio cropland averaged $3886 per acre for top land, $3280 for average land and $2693 for poor land. Top land averages 177 bushels of corn per acre and rents for $138 per acre. Average land yields 146 bushels of corn per acre and rents for $111 per acre. Poor cropland averages 113 bushels per acre and rents for $87 per acre. The survey found that cash rents are expected to increase 2.5% in 2006.

Top Farmland

Survey results indicate the average yield for “top” performing farmland equals 177 bushels per acre. Results also show that average value of “top” farmland is $3886 per acre. According to survey data this “top” producing farm land is expected to be valued at $4005 by July of 2006. This is an increase of 3%. “Top” farmland rents for an average of $138 per acre according to survey results which equals $0.78 per bushel of corn produced. Rents in the “average” farmland category equal 3.55% of land value.

Average Farmland

Yields for “average” performing farmland equal 146 bushels per acre. Results also show that the value of “average” farmland is $3280 per acre. According to survey data this “average” producing farm land is expected to be valued at $3379 by July of 2006. This is an increase of 3%. “Average” farmland rents for an average of $111 per acre according to survey results which equals $0.76 per bushel of corn produced. Rents in the “top” farmland category equal 3.4% of land value.

Poor Farmland

The survey summary shows the average yield for “poor” performing farmland equals 113 bushels per acre. Results also show that average value of “poor” farmland is $2693 per acre. According to survey data this “poor” producing farm land is expected to be valued at $2802 by July of 2006. This is an increase of 4%. “Poor” farmland rents for an average of $87 per acre according to survey results which equals $0.77 per bushel of corn produced. Rents in the “poor” farmland category equal 3.22% of land value.

Cash Rent

Measures such as “Rent as a % of Land Value” and “Cash Rent per Bushel of Corn are valuable in many rental negotiations as many use these measures as “rules of thumb” when negotiating cash rent rates. In this study, rent as a percent of land value ranges from 3.55% for top cropland to 3.22% for poor cropland. This is considerably lower than historical ratios which have tended to be in the 4.5-5% range. Other states in the North Central region have found lower then historical ratios in recent surveys, although Ohio ratios in this study are the lowest reported out of the comparable states. Lower ratios may be due partly to the sharp increase in land values and lower interest rates in recent years.

Rent per bushel of corn is $0.78 for top cropland, $0.77 for average farmland and $0.76 for poor cropland. Comparing rent per bushel to other North Central states such as Indiana and Iowa show Ohio values to be lower per bushel than these comparable states. For example, Indiana Farmland survey results show rent per bushel on “ Average Land ” to be $0.91 per bushel.

According to survey results cash rents are expected to increase 2.5% from 2005 to 2006. Surveyed professionals see farmland values increasing 6.9% over the next 5 years, although the range in responses was large. Responses for farmland value change over a 5 year time horizon ranged from +25% to -20%.

Pasture rents average $45 per acre according to the survey results. Pasture quality farmland has an average value of $2360 per acre.

Summary

This study will add to existing research on Ohio farmland values and cash rents that can assist producers and landowners with purchase and rental decisions. Existing research includes: Ohio Farm Real Estate Markets at:

http://aede.osu.edu/resources/docs/pdf/C2V16S20-H8CG-UEFY-JGL2H3JPU7Y1PO5J.pdf

Land Rental Rates: Survey Results and Summary at: http://vanwert.osu.edu/ag/landrentalrates.pdf and companion Cash Rent Calculator at:

http://vanwert.osu.edu/ag/calculator.htm

Also, check with your local OSU Extension Office for local land value/rental survey summaries. For additional information on farmland lease issues see the Department of Agricultural, Environmental and Development Economics (AEDE) Farm Management webpage at: http://aede.osu.edu/Programs/FarmManagement/MgtPublications.htm

Forage Management Economics

The University of Kentucky, Department of Agricultural Economics has developed a series of Fact Sheets and Computer Decision Aids for forage production.  In response to many questions concerning the economics of numerous recommended forage production practices, a Forage Economics Quick Response Team was named to investigate the general topic of forage economics. The Forage Economics QRT has developed nine publications and three computer based decision aids to help producers analyze the economic consequences of adopting new forage production, harvesting, and storage practices on their farm. The titles of the following publications and decision aids should provide a good idea of the specific topic addressed by each.


The nine publications developed were:
The Economics of Forage Management Decisions in Your Beef Operation – AEC 2005-01A.
The Economics of Grazing Alfalfa- AEC 2005-01B.
The Economics of Replacing Endophyte Infected Fescue- AEC 2005- 01C.
The Economics of Hay Storage – AEC 2005-01D.
The Economics of Rotational Grazing – AEC 2005-02.
The Economics of Renovating Pastures with Clover – AEC 2005-04.
The Economics of Using Improved Red Clover Varieties – AEC 2005-05.
Economics of Pasture Fertilization – AEC 2005-06.
Economics of Hay Production and Harvesting – AEC 2005-10.

The three decision aids developed:
Hay Storage Decision Aid
Pasture Improvement Investment Tool
Hay Production and Harvesting Enterprise Budgeting Decision Aid

All of these publications and decision aids are available for printing or downloading from the Departmental Web site. The decision aids require use of the Excel spreadsheet program to adapt them to specific farm situations. The Web site address is:
http://www.uky.edu/Ag/AgriculturalEconomics/welcome.html

Once at this web site, click on the Extension and Outreach tab on the left of the screen and then on Farm Management on the left of the next screen. This will get you the listing of publications available for printing or downloading. To get to the decision aids, click on the Decision Aid button at the left of the Farm Management screen. They can be down loaded to your computer. Once the decision aids are downloaded, they can be used to analyze any number of specific situations. They should help to better understand and appreciate the economic consequences of the forage production practices they implement.  A special thank you to Dick Trimble, University of Kentucky for his assistance with these resources.

FDA Requirement for Tracking Food & Feed Relative to Public Health Security and Bioterrorism Preparedness And Response Act of 2002

There has been some concern caused by recent press releases about the need to track hay and grain sold off the farm relative to the Public Health Security and Bioterrorism Preparedness and Response Act of 2002.  The requirements take effect for June 9 for operations with more than 10 employees and Dec 9, 2006 for all other operations.  The FDA requirements are stated in a fact sheet at http://www.cfsan.fda.gov/~dms/fsbtac23.html .

The National Hay Association and others have checked requirements carefully with the FDA and found that the recording requirements have been vastly overstated in the press.  Requirements are “one up and one down” – a person should keep tract of who/where commodities are bought from and who/where commodities are sold to.

Farms are specifically exempt.  FDA is proposing to define “farm” in Sec. 1.227(c)(3) in part as “a facility in one general physical location devoted to the growing of crops for food, the raising of animals for food (including seafood), or both.…Some examples of farms include: apple orchards, hog farms, dairy farms, feedlots, or aquaculture facilities”. The definition of “farm” includes: “(i) Facilities that pack or hold food, provided that all of the food used in such activities is grown or raised on that farm or is consumed on that farm; and (ii) facilities that manufacture/process food, if all of the food used in such activities is consumed on that farm or another farm under the same ownership….Facilities that engage in manufacturing/processing, packing, or holding of food that are not described in the definition of “farm” must register …A farm that manufactures/processes, packs, or holds food is not required to register with FDA, if all of the food used in such activities is consumed on that farm or another farm under the same ownership. For example, a farm that manufactures/processes animal feed from ingredients obtained off the farm for consumption by animals on the farm would be exempt because most farms that raise animals engage in this activity.”

Farmers who simply bale hay for sale do not have to register their facilities or maintain records.  The FDA does not consider baling hay as processing.  All the FDA needs is a receipt in a receipt book showing the person (or entity) that bought the hay and the quantity that was purchased.  There is no requirement that hay producers keep track of all the bales and where they go.  Records that are maintained for tax purposes which show that a sale was made and to whom the sale was made should be sufficient for compliance.  The new FDA rule will not require a farmer to change recordkeeping as long as details of the feed sale are recorded.

Drying hay or grain and chopping for silage are considered post-harvest activities, which would be considered manufacturing/processing. Therefore, the facility drying hay or grain or chopping forage must establish and maintain records of the food’s receipt and release as required in 21 CFR 1.337 and 1.345. Those selling silage or TMRs would fall under this requirement.

In particular, there is no need for being able to track lots of hay or grain back to individual fields as some have indicated.

Thus, the news releases have been much ado about nothing.  No additional records for hay or grain sales are required beyond what most keep for tax records.

Employing Minors on Your Farm: Understand the Rules

With the school year coming to a close in the next few weeks, many students will be looking for employment on farms to do a variety of tasks ranging from baling hay to milking cows to operating machinery. Are all students allowed to operate machinery, handle livestock, apply chemicals, or work unlimited hours? For the most part, the answer is no to all of these. As an employer, it is your responsibility to understand the laws and regulations pertaining to the employment of minors. The Ohio Revised Code, Fair Labor Standards Act, and the Secretary of Labor all have rules and regulations in place for the protection of minors. The next few paragraphs will provide you with an overview of the regulations and references for additional information.

Who is Covered?

The employment of minors under age 16 is subject to federal requirements set by the Fair Labor Standards Act and the agriculture requirements are less than for many other industries. In 1967, the U.S. Secretary of Labor determined that certain jobs in agriculture are hazardous to children less than 16 years of age. However, like many other federal regulations, there are exemptions. These include the employment of children less than 16 years of age when employed on farms owned or operated by their parents or guardians and those who have completed an approved tractor and machinery certification course.

In addition to federal hazardous occupation regulations, there are also state regulations. For most Ohio laws, a person under the age of 18 is considered a minor and the Ohio Revised Code prohibits minors from working in certain hazardous jobs related to agriculture. The Ohio list of hazardous occupations is the same as the federal list, but the Ohio code sections and related regulations say the Ohio hazardous occupation list applies to those under 16 years of age . There are many sections of the Ohio Revised Code concerned with the employment of minors that do not apply to minors employed on farms. These include obtaining an age and schooling certificate (unless you employ children of migrant workers); keeping a list of minor employees; and paying the minimum wage.

Hazards Occupations in Agriculture:

Although it would be easier to list the non-hazardous jobs in agriculture, below is a list of those jobs declared hazardous by the U.S. Secretary of Labor. Because of space limitations, the full details of each hazardous occupation can not be provided here. Please see a copy of the “Ohio Farm Labor Handbook” for complete details. Jobs designated as hazardous to youth under 16 years old include:

• Operating a tractor of more than 20 PTO horsepower, or connecting or disconnecting implements from such a tractor.

• Operating any of the following:

• Corn picker, combine, hay mower, forage harvester, hay baler or potato digger.

• Feed grinder, grain dryer, forage blower, auger conveyor or the unloading mechanism of a non-gravity type self-unloading wagon or trailer.

• Operating a trencher, earth moving equipment, fork lift, or power-driven circular, band or chain saw.

• Working in a yard, stall or pen occupied by a bull, boar or stud horse; or sow with suckling pigs or cow with newborn calf.

• Felling, bucking, skidding, loading or unloading timber with butt diameter of greater than six inches.

• Working on a ladder at a height of more than 20 feet.

• Driving a bus, truck or automobile or riding on a tractor as a passenger.

• Working in a forage, fruit or grain storage facility; an upright silo within two weeks after silage has been added or when a top unloading device is operating; a manure pit; or a horizontal silo when operating a tractor for packing purposes.

• Handling or applying pesticides with the words or symbols “Danger”, “Poison”, “Skull and Crossbones” or “Warning” on the label.

• Handling or using blasting agents.

• Transporting, transferring or applying anhydrous ammonia.

When Can Minors Work?

Under the federal regulations, minors under 16 years of age may not be employed during school hours unless employed by their parent or guardian. Unless provided a special exemption, minors are subject to the following restrictions:

• No person under 16 years of age is to be employed:

• During school hours

• Before 7:00am or after 9:00pm from June 1 to September 1 or during any school holiday of five school days or more duration, or after 7:00pm at any other time.

• For more than three hours a day in any school day.

• For more than 18 hours in any week while school is in session.

• For more than eight hours in any day which is not a school day.

• For more than 40 hours in any week that school is not is session.

• No person under 16 years of age is to be employed more than 40 hours in any one week nor during school hours unless the employment is incidental to a state approved program.

• No minor is to be employed more than five consecutive hours without allowing the minor a rest period of at least thirty minutes.

What Records Should I Keep?

The Federal Regulations require employers of minors under 16 years of age to maintain and preserve records with the following information about each minor employee:

• Name in full.

• Place where the minor lives while employed.

• Date of birth.

• Proof of needed parental or guardian signatures.

Keep in mind that minors employed by a parent or guardian are exempt from these record keeping requirements.

The Ohio Revised Code exempts agricultural employers from record keeping provisions related to minors. However, the Ohio Revised Code requires an agreement as to wages for work to be performed be made between the employer and a minor before employment begins. For the protection of the employer, this agreement should be in writing and signed by both parties.

The state agency responsible for enforcement of the Ohio Code as it relates to prohibited jobs for minors is the Division of Minimum Wage, Prevailing Wage and Minors, Department of Industrial Relations. You may contact them at 614-644-2239. The U.S. Department of Labor web site ( www.dol.gov ) also contains information of interest to employers.

It is your responsibility as the employer to make sure you follow the rules and keep your farm a safe place to work.

(This article was written from materials contained in Ohio State University Extension Bulletin 833, Ohio Farm Labor Handbook, written by Dr. Bernie Erven and Russell Coltman, The Ohio State University. Copies of the Ohio Farm Labor Handbook are available for purchase through your local county office of Ohio State University Extension).