Wages and Benefits for Farm Employees – Part II

Benefits for farm employees vary tremendously from farm to farm and frequently take the place of some wages that might normally be paid to employees in a non-farm position. With very little data available addressing the value of benefits provided, this survey was conducted to collect and share baseline data for farm employers and employees.

A survey was conducted in early 2007 to gather data on farm employee wages and benefits in Ohio. The “Wages and Benefits For Farm Employees” study was conducted by distribution of surveys by Extension Educators, Agricultural, Environmental and Development Economics Faculty and Staff and allied organizations. Surveys were returned and summarized for 122 farm employees in early 2007. Data was collected for each employee on benefits including health insurance, life insurance, disability insurance, housing, utilities, meals, personal use of vehicle, farm produce to consume, clothing, continuing education, recreation/vacation, farm commodities, retirement plan, and use of machinery and equipment.

In this study we collected data for full-time and part-time farm employees. The benefits summary shown below reflects benefits paid to full-time employees only.

Thirty-seven percent of full-time employees from this study received some form of insurance. Twenty-two percent of full-time farm employees received single person health insurance while 16% received family health insurance. The average value of the insurance benefit for those receiving the benefit was $4,425 per employee per year. The average value for all full-time employees in this study was significantly less at $1,344 per person per year due to a large number of employees receiving no insurance. (Sixty-three percent of this sample received no health insurance.)

Sixteen percent of full-time employees received housing as a part of their compensation package. The value of housing for those receiving the benefit averaged $6,277 per year. The average for all employees was $1,033 per year. Along with housing, some employees were compensated with paid utilities. For those receiving this benefit, the average value of the benefit was $1,978 per year. The average for all full-time employees was $275 per year. This much lower average value for all full-time employees is due to a large percentage not receiving this benefit.

Other significant forms of benefits for full-time farm employees include meals (34% received the benefit), paid recreation/vacation (44% received the benefit) and use of machinery and equipment (41% received the benefit). A breakdown of benefits received by full-time farm employees is shown in Table 3 below. Table 3 shows the percentages of farm employees receiving certain benefits along with average amounts paid to full-time farm employees.

Summary data presented in this paper is the second in a series of papers examining the findings of this research study. Further articles and papers will be available through the Ohio Ag Manager Newsletter http://ohioagmanager.osu.edu/, Ohioline http://ohioline.osu.edu/, and the OSU Department of Agricultural, Environmental, and Development Economics Farm Management http://www-agecon.ag.ohio-state.edu/.

Developing a Useful Mission Statement for Your Agricultural Business

Farms or agricultural businesses that are able to clearly communicate who they are and what they stand for are often more successful than those that don’t have a true understanding of their focus. One way to develop strong communication lines and a clear understanding of what the business does is through the process of writing a mission statement. It does not matter whether the farm business consists of two people or fifty, all involved must have a clear understanding of what the business does and why they do it in order to move the business in the desired direction.

A mission statement is a short statement describing the fundamental underlying reason for the business to exist—its critical purpose. This statement aligns what the business says it does, what it actually does and what others believe it does. It clarifies what the business is not trying to do and not trying to be. This statement is a reflection of the underlying values, goals and purposes of the farm and of the management team. The mission statement should be communicated and remembered. To learn more about the nuts and bolts of writing a mission statement and to download a worksheet to assist in the development process click here: http://vanwert.osu.edu/farm_market_factsheet.pdf

Land Rent Resources

Determining land rental rates on farmland is not as easy as determining the price of a bushel of corn or soybeans because there is no open market for rental rates. There are however several strategies that can be employed to determine land rental rates. There is a good outline of several strategies put together by Don Hofstrand and William Edwards fro Iowa that can be found at http://www.extension.iastate.edu/AgDM/wholefarm/html/c2-20.html. Another resource is the Fair Rent software program that was created by Center for Farm Financial Management at the University of Minnesota. Contact you local Extension office for more information on this software program.

Social Security and No-Match Letters

On Friday, August 10, the Department of Homeland Security (DHS) issued a final regulation requiring employers to take certain actions with respect to employment eligibility upon receipt of a Social Security No-Match Letter. Employers who fail to comply with the new rule could be deemed as knowingly hiring an illegal worker and could face fines of up to $10,000 per worker and incident.

The final rule was announced in a press conference in which Homeland Security Secretary Michael Chertoff also announced other major initiatives to strengthen border security, including the expansion of exit requirements to prevent overstays as well as a rulemaking to require federal contractors to use the Basic Pilot electronic verification system, now know as E-Verify.

What Is a No-Match Letter?

A No-Match Letter is a letter issued by the Social Security Administration (SSA) that notifies an employer that an employee’s name and/or social security number submitted to the SSA do not match agency records. The purpose of the letter is to gather information to enable SSA to reconcile inconsistencies between its records and the information provided by the employer on the W-2. Letters are sent to employers who have more than 10 employees with mismatched information, as well as to employers who have mismatches for more than 0.5 of 1% (or 1 out of 200) of their W-2 reported workforce.

Social Security mismatches may have a number of root causes, including failure to inform the SSA that a name change has occurred, typographical errors, an error within the SSA database, and individuals who present false social security numbers or use another person’s social security number when completing hiring paperwork.

What Does the New Rule Require?

The new rule requires certain actions by an employer when the employer receives a No-Match Letter from SSA or a letter from DHS regarding the validity of immigration documents. Upon receipt of one of these written notices indicating that a document presented by an employee does not match a record within the system of one of these agencies, the employer must take reasonable steps in a timely fashion to resolve the discrepancy.

The employer must check its records within 30 days of the receipt of the letter to determine whether the discrepancy is the result of the employer’s typographical, transcription, or similar clerical error. If it is, the employer should correct the records; inform the relevant agencies; verify that the corrected information matches agency records; and make a record of the manner, date, and time of the verification to be kept with the employee’s I-9 form.

If the discrepancy is not the result of the employer’s error, the employer must ask the employee to confirm that the employer’s records are correct. If the employee is able to correct the records, the employer should make the correction; inform the relevant agencies; verify that the corrected information matches agency records; and make a record of the manner, date, and time of the verification to be kept with the employee’s I-9.

If the discrepancy cannot be resolved, the employer must ask the employee to correct the situation by bringing the necessary documents to the appropriate agency in order to resolve the discrepancy. The discrepancy will only be resolved upon the employer’s verification with the SSA that the employee’s name matches the social security number in SSA’s records or that DHS verifies that their records indicate that the immigration status or employment authorization document was assigned to that employee. The employer should make a record of the manner, date, and time of the verification to be kept with the employee’s I-9. The discrepancy must be resolved within 90 days.

If the discrepancy cannot be resolved within 90 days, the employer must complete a new I-9 form for the employee by the 93rd day. In completing this new I-9, the employer may not accept any document containing the social security number that could not be reconciled, nor may the employer accept any DHS-issued document that was in question. The employer may not accept any identity document unless it has a photograph.

If the discrepancy cannot be resolved, and the employer is unable to verify the identity and employment authorization of the employee on a new I-9 using different documents, the employer must terminate the employee. Failure to terminate at this point may well lead to a finding by DHS that the employer had constructive knowledge of the employees lack of employment authorization.

For more information, contact the Social Security Number Verification Service (SSNVS) administered by SSA. SSNVS can be accessed by telephone at 1-800-772-6270 or through:

http://www.socialsecurity.gov/employer/ssnv.htm.

Largest Biodiesel Plant in the World

On August 21, I attended the Grand Opening celebration for what is being touted as the largest biodiesel plant in the world. The plant is located in Claypool, Indiana and will be owned and operated by Louis-Dreyfus Commodities. Claypool, Indiana is located in northeast Indiana and approximately 80 miles from the Ohio-Indiana state line.  Why would an Ohio boy travel over 100 miles to Indiana for such an event? Basically, I wanted to see what the ‘future’ of biodiesel looks like. I believe I saw it with my trip to Claypool.

Here are the vitals for the Louis-Dreyfus Commodities biodiesel facility in Claypool:

  • the facility is the largest integrated soybean-based biodiesel plant in the world. Soybeans will be crushed into meal, and the extracted oil will be converted to biodiesel — all onsite.
  • the plant can crush 50 million bushels of soybeans annually, more than 17 percent of all the soybeans grown in Indiana
  • over 88 million gallons of soy-based biodiesel will be produced
  • it will produce over one million tons of soybean meal, and over 80 million pounds of glycerin
  • the plant itself will cost in the neighborhood of $150 million dollars to build when completed
  • 70+ full time jobs will be created to run the plant 24 hours a day, seven days a week; however, the real economic impact isn’t in the jobs created but in the multiplier effect on the regional economy.

Three years ago, the largest biodiesel plant in the United States was making 10 or 11 million gallons a year, that was the big one. The small ones were making 500-thousand gallons a year. This one in Claypool will generate 88-million gallons a year.

With construction of this facility, Louis-Dreyfus Commodities has made a big statement about the future of agriculture and have clearly committed themselves to biodiesel. This facility is designed to do three things: take in soybeans, turn soybeans into soymeal, and turn extracted soyoil into biodiesel. This is not a long-term storage facility nor does it appear that whole soybeans be loaded from this facility for processing elsewhere.

There is much discussion in farm magazines and on-line agriculture chat-rooms about the possibility of using other feedstock oils for biodiesel (for example, jatropha, canola, camelina, etc.). Seeing this Louis-Dreyfus biodiesel facility gives me pause wonder about these alternative crops and their ability to supplant soyoil as the lead feedstock in biodiesel. At least in the Midwest the infrastructure is so clearly geared towards soybeans and soyoil I wonder how quickly (if at all) another crop would have any impact. Case in point, this Louis-Dreyfus facility is built for soybeans; crushing/processing of other crops is likely not going to happen at such a facility.

Stand-alone biodiesel manufacturers could be in for some challenges. By a stand-alone manufacturer, I am referring to facilities that only take in a feedstock oil and make it into biodiesel — no crushing, no meal, etc. This Louis-Dreyfus facility is completely integrated. Stand-alone, non-integrated biodiesel facilities will have their work cut out to compete with a totally integrated facility. I think this likely sets the tone for what we will see with regards to biodiesel in the future.

Oh, and by the way, I was only one of about 6,000+ people that attended this Grand Opening.  I was told by event planners that they were expecting no more than 1500 people – you better believe there is huge interest in biofuels. For more information on the Louis-Dreyfus biodiesel plant, please visit their website at http://ldclaypool.com/

China and the US Trade Deficit: Why Does Appreciation of the Renminbu Matter More for China?

Since 2004, China ‘s overall trade surplus has exhibited significant growth both in absolute terms and relative to the size of its economy.  By 2006, the surplus had reached an estimated $ 250 billion, accounting for 9 percent of China ‘s GDP, and all the signs are that it is continuing to expand in 2007.  At the same time, the U.S. bilateral trade deficit with China increased to $233 billion in 2006, accounting for nearly a third of the overall U.S. trade deficit.  The argument coming from the U.S. Congress is that the Chinese currency, known both as the yuan and the renminbi (RMB), is being held artificially low by the Chinese authorities, causing a loss of manufacturing jobs in the U.S. and contributing significantly to the U.S. trade deficit.  This has resulted in various calls for “China-bashing” legislation to be enacted by Congress, including the 2005 bipartisan bill of Senators Charles Schumer (D-NY) and Lindsey Graham (R-SC) which proposed a 27.5 percent tariff on all imported Chinese goods to offset undervaluation of the Chinese currency (The Economist) .

Recently the Wall Street Journal published a petition signed by 1,028 economists expressing concerns about the possibility that Congress will enact protectionist trade policies against China .  The economists present the textbook argument that levying tariffs against China will increase “…the possibility of a futile and harmful trade war.  American consumers and businesses would pay the price for this senseless war through higher prices, worse jobs, and reduced economic growth…” (Club for Growth) While it is hard for any economist to disagree with these sentiments, it is also the case that the issue of China’s external trade balance and the connection with its continuing phenomenal rate of economic growth is more than just an argument about the pros and cons of free trade.  The argument put forward in this bulletin is that a revaluation of the RMB is actually in China ‘s own best economic interests, and although such a revaluation might undercut anti-Chinese sentiments in the U.S. , it will likely not do very much actually to reduce the U.S. trade deficit.

The complete article can be viewed at the Andersons Policy Bulletin Page at:

http://aede.osu.edu/programs/Anderson/trade/ChinaExchangeBulletin.htm

House Version of the 2007 Farm Bill-An Update

In late July, the U.S. House of Representatives passed the “Farm, Nutrition, and Bioenergy Act of 2007” (H.R. 2419), its version of the 2007 farm bill. The vote was 231 to 199. Two one-page papers summarize selected provisions of the House farm bill. One paper focuses on provisions that pertain to the price and income support programs for the major farm program field crops. The other paper focuses on provisions that do not directly pertain to the price and income support programs of the major farm program field crops.
Click here to access the two papers.