Month: May 2011

Training & Employment Services Offered through PathStone Corporation

By David Marrison, OSU Extension Educator

Are you an Employer who would like to upgrade the current skill level of your employee(s)? Would you like assistance in developing and upgrading the current skill level of your agricultural workers? If your employees meet certain eligibility requirements, you may wish to explore working with the Farm worker Training & Employment Services through PathStone Corporation.

PathStone Corporation is a private not for profit regional community development and human service organization which provides training services in New York, Ohio, Pennsylvania, New Jersey, Vermont, and Puerto Rico.

Some of the services provided by PathStone include: #1) English as a Second Language; #2) Occupational Skills/and or Agriculture Upgrade Trainings and Certifications; #3) Skill Upgrading and Retraining; and #4) On- the- job training (OJT) where PathStone will subsidize up to 50% of the employee’s wages while training in a new position.

PathStone’s goal is to provide your farm/and or business with services that will save you money, while providing you with trained and skilled employees. And PathStone is able to provide these services to you the employer for free!!!

PathStone Corporation has 5 offices across Ohio in Liberty Center, Fremont, Tipp City, Painesville and Alliance.

To be eligible for the training program you must be a farm worker or the dependent/spouse of a farm worker who has worked 25 days or earned at least $800 in farm work.

For more information on training/and or upgrading the skills of your employee’s please contact:

Cindy Martin Placement & Career Manager – Ohio Division at cmartin@pathstone.org or 419-310-1174.

Cover Crop Rule Change for 2011 Only

Farmers who are growing a cover crop in Ohio have until June 1st to terminate the cover crop if they are planning to grow corn and until June 10th for soybeans. These rules also specify that only crops planted after the termination of cover crop growth will be made insurable. An inspection will be required for any acreage that has been planted to the insurable crop. These crop termination dates differentiate a crop following another crop (FAC acreage) from a crop following a cover crop (FCC acreage). For corn following termination of a grass cover crop (FCC acreage), this includes a two week waiting period to limit the allelopathic effect of the grass to dissipate before planting corn. This two week waiting period all but eliminates corn on FCC acres except possible some late corn silage for dairy producers. See http://www.rma.usda.gov/fields/il_rso/2011/526uwgmemo.pdf for the USDA informational memorandum.

Late Planting Decision Aid Updated

Chris Bruynis, PhD, Assistant Professor & Extension Educator and Barry Ward, Assistant Professor & Program Leader.

As each storm roles through Ohio delaying planting even further, the decision to plant corn, switch to soybeans, or take prevented plant becomes more challenging. A decision aid was created to assist farmers in making this decision. Since last Friday, there has been some additional information incorporated into the program.

Since yield will vary from field to field or farm to farm, the ability to enter an expected harvest yield was added to the program. This will allow farmers to fine tune their decision by allowing them to examine the potential profitability ranging from the highly productive fields/farms to the poorer producing farms and make decisions based on profit potential.

Also there are costs associated with selecting prevented plant insurance payments that should be considered when making the decision. Reports are coming in that there could be a “restocking fee” for returning seed or other inputs that have been ordered. Also there will probably be storage charges for fertilizer and other prepaid but not yet delivered inputs or a buyback discount of some kind. On inputs that will be kept until next year, farmers should charge the increased interest expense associated with their operating loan. The crop insurance premium will still be paid, and there is a place to insert any other miscellaneous costs not already mentioned.

This program is a tool for farmers to be able to input their cost of production under different yield and price scenarios to determine possible returns to each decision. The program also allows for farmers to insert their coverage level and farm APH (actual production history) to compare prevented plant insurance payments to continuing to plant corn or switch to soybeans. There is even a place to enter anticipated planting date so the insurance discount (1% per day after June 5th) is reflected in the decision outcome. Note: this program is provided “as is” without warranties as to performance or merchantability. OSU Extension will not be liable for any damages suffered by the customer as the result of the use of this spreadsheet.

Click here to download Decision Aid

Enterprise Budgets Provide Another Tool to Evaluate Your Planting Decisions

Barry Ward
Leader, Production Business Management
Ohio State University Extension and Department of Agricultural, Environmental and Development Economics

Wet weather and atrocious planting conditions in Ohio in 2011 have led to a lot of hand wringing this year. Tough decisions lay ahead for many Ohio farmers as we approach June 5th, the “final planting date” for corn for crop insurance purposes. After this date, producers may take prevented planting payments on the farm or see their crop insurance coverage decrease each day of delay. Comparing your prevented planting payment to potential returns to corn or soybean planting may be a daily activity as we enter June.

Enterprise budgets comparing corn and soybean returns have been compiled and posted to our Enterprise Budget webpage to show an example of what late planting economics might look like for corn and soybeans.
http://aede.osu.edu/Programs/FarmManagement/Budgets/crops-2011/index2011.htm

For the “Late Planting Budget” (Planting date May 28 through June 5) we assume corn suffers a 21% yield loss while soybeans suffer a 10% yield loss. Corn drying costs are also increased in this late planting scenario.

“Returns to Labor and Management” is a measure that is calculated by subtracting all expenses except unpaid operator labor and management from gross revenue. “Returns to Labor and Management” for corn planted during this window (assuming 155bpa yield in a normal year and 122bpa due to late planting) are estimated to be $184/acre. “Returns to Labor and Management” for soybeans planted during this late window (assuming 48bpa yield in a normal year and 43.2bpa due to late planting) are estimated to be $183/acre. These returns can be compared to your Prevented Planting Payment less any expenses to assist in your decision making. Although many costs will be saved by taking the prevented planting route, some costs remain and should be counted against your prevented planting proceeds. Age and obsolescence related fixed machinery costs and fixed land costs are incurred regardless of whether you produce a crop or not. There may also by chemical, fertilizer, crop insurance and interest expenses that were incurred regardless of your prevented planting decision.

The big unknown in this analysis is the relative prices for corn and soybeans at harvest. Our assumptions for this set of budgets are a fall cash price of $6.40 per bushel for corn and $13.05 per bushel for soybeans. Fewer acres due to prevented plantings may change these price expectations.

Your numbers will, of course, differ from these. Download the spreadsheets to calculate returns for you farms. There is also a new Decision Aid tool titled “Estimated Yield and Profit by Planting Date – Corn, Soybeans or Preventative Planting Crop Insurance” that may be valuable as you contemplate this important decision. It is available online at:
http://ohioagmanager.osu.edu/farm-policy/new-decision-aid-to-determine-late-planting-options/

OSU to host Law Symposium on Oil and Gas

With shale development hitting Ohio at a rapid pace, OSU’s Agricultural & Resource Law Program will host our first Ohio Oil and Gas Law Symposium on Thursday, June 16, 2011.  “The New Ohio Oil and Gas Boom:  Drilling into Legal Issues,” will take place at the Longaberger Golf Club near Newark, Ohio.  The day-long educational program for attorneys will address many of the initial legal issues related to development of Ohio’s Marcellus and Utica shale resources, including these topics and speakers:

  • “An Overview of the Shale Resource” with Tom Murphy of Penn State’s Marcellus Center for Outreach and Research.
  • “Mandatory Pooling and Current Regulatory Issues,” by Sandra Ramos, Legal Counself for Ohio Department of Natural Resources Division of Mineral Resources Management
  • “Dealing with Dormant Minerals and Old Leases,” by Eric Johnson of Johnson and Johnson Law Firm, Canfield
  • “Ohio Oil and Gas Leases:  A Primer,” with Gregory Russell of Vorys, Sater, Seymour and Pease, LLP, Columbus
  • Landowner Leasing Issues Panel Discussion
  • “Representing Landowner Groups in Oil and Gas Leasing,” with Chris Finney of Logee, Hostetler, Stutzman and Lehman, LLC, Wooster

For more information on our Ohio Oil and Gas Law Symposium, visit https://www.regonline.com/OilandGasLaw.

New Decision Aid to Determine Late Planting Options

By: Chris Bruynis, Extension Educator and Barry Ward, Leader Production Business Management

With continued wet soil conditions throughout Ohio, farmers are evaluating whether to plant corn, switch to soybeans, or opt for preventative planting crop insurance payments.  OSU Extension has developed the decision aid, “Estimated Yield and Profit by Planting Date – Corn, Soybeans or Preventative Planting Crop Insurance” which is a downloadable Excel spreadsheet.   It allows farmers to enter their own production information to determine which choice might be best for their operation.  Many factors enter into this critical decision. Actual planting date and potential yield loss associated with later planting, relative yield potential of corn and soybeans of the farm, relative prices of corn and soybeans, market basis differences due to a later harvested crop, potential savings of crop inputs due to a later planting date, potentially higher costs of grain drying, and crop insurance APH yield and coverage level are some of the major factors impacting a producers decision. This decision aid allows users to enter their own assumptions about maximum yield potential, harvest market prices, input costs, and crop insurance coverage levels. Click here to download Decision Aid.

The “Estimated Yield and Profit by Planting Date – Corn, Soybeans or Preventative Planting Crop Insurance” decision aid was created using historical yield data for Ohio to determine potential corn and soybean yields for late planted crops. Since the data in this decision aid is historical and yield losses with current technology and productions methods may not be as limiting, the profit estimates are conservative. Unforeseen weather conditions during the remainder of the growing season may cause a different outcome from these initial estimates. Examples include the 2009 growing season when favorable weather conditions allowed for better than predicted crop yields after a late planting season while the 2002 growing season with adverse growing conditions after a late planting season caused poor yield over much of Ohio.  The model also provides a chart on typical grain moistures at later planting dates allowing the user to adjust the drying charges.

The “Estimated Yield and Profit by Planting Date – Corn, Soybeans or Preventative Planting Crop Insurance” OSU Extension Decision Aid can be downloaded from the Ohio Ag Manager (OAM) homepage at http://ohioagmanager.osu.edu.  This model was patterned after the decision aid created by Ryan Batts, Emerson Nafziger, and Gary Schnitkey at the University of Illinois located at: http://www.farmdoc.illinois.edu/fasttools/index.asp.

Motivating Employees When Work is Not Fun

By: Julia Nolan Woodruff, Extension Educator

It’s a great time to think about employee motivation. Dark, rainy, muddy days make for long work days around the farm. As we all wait for the skies to clear and the sun to come back, it is natural to begin feeling frustrated, stressed out, and just down right negative. I would challenge farm managers to spend some time thinking about and implementing some new or revised management practices that will help improve employee motivation and encourage a more positive feeling throughout the farm and the family.

How do you know what motivates your employees to come to work every day? How do you continue to motivate employees for the long term? These are the two big questions you must find answers to, as the farm manager. In order to begin uncovering these answers, sit down with your employees and ask them what is important to them. This can be done by having a conversation or by providing a simple list and asking employees to rank the following items from most important to least important to them. The list might include:

  • Fair pay and benefits
  • Job security
  • Opportunity for advancement
  • Being a part of the team
  • Safe working conditions
  • Ability to make decisions
  • Appreciation of work done and effort given
  • Work that is interesting – challenging
  • Recognition for new ideas and successful implementation

Employee ranking of these items may surprise you. Use your employee rankings as a way to start a conversation about what employees would like to see in the future. Are there ways to improve working conditions or maybe improving communication could help all employees feel more a part of the team.

Money is a motivating factor to work for everyone, but once that need is met with fair wages employees typically prioritize other items on this list as more important than money. So the question remains, what is it that motivates an employee to do his/her best to make sure your animals are well cared for and the farm is efficient and profitable? Three points to think about according to a 2005 study by Massachusetts Institute of Technology researches are: Autonomy, mastery and purpose.

Employees value the ability to make decisions on their own and this is also a valuable tool for the employer. Employees that can make decisions without checking in with their supervisors all time are more efficient. This concept ties together with mastery of specific skills very well. As employees are given opportunities to develop their skills the next natural step is for the manager is to empower them to use their skills to make decisions on their own that will benefit the farm operation.

Purpose can be a strong motivator for employees at any job. We all want to know why we have to do specific tasks and does it really matter? It is important for employees to know the farm’s mission and buy into that concept. Once employees understand working toward the mission, help them see how each chore or decision they make affects the overall ability of the farm to reach its mission.

For example, if proper milking protocols are not being followed share the affect that it has on milk production and/or udder health. Help employees, especially new employees understand how the little things fit together to impact the bottom line. Also remember the bigger picture as well, the production of a safe and healthy product for our family, friends and other consumers. These explanations will help employees be more connected to their work and feel like even the little jobs have a grander purpose.

It is also important to remember not everyone is motivated by exactly the same thing. Knowing what makes your employees tick is an important part of motivation. As you communicate with your employees you may learn that you are already providing positive motivation and only small changes will need to be made here or there. These changes, although many times very simple or inexpensive can provide a big return for the farm. Whether the result is keeping employees longer or improved performance, both will mean a more efficient and profitable farm.

Involving employees in the team and asking for their ideas will also help provide motivation. Feelings of involvement and appreciation are strong motivation for employees to make sure they do their best and show up for work, even on rainy, muddy days.

Ethics…do they really matter to me?

By: Julia Nolan Woodruff, Extension Educator, Erie County

Recently I attended the National Conference for Extension Risk Management Education in St. Louis and one of the keynote speakers was Professor Marianne Jennings from Arizona State University. Dr. Jennings discussed the topic of ethics and how it related to risk management. My first thought was ethics, really does that relate to risk management and farmers? We are all ethical people, right? It’s those guys running large corporations embezzling millions of dollars, using company credit cards for personal charges, manipulating reports and data, committing financial fraud and the list goes on. Do farmers really have to deal with these issues?

As you think about these statements a little more, you begin to realize that first thought about ‘those guys managing large corporations worth millions of dollars’ could actually describe a farmer. Today’s farmer may be managing a family farm, but it could be a business as large as some of the corporations we’ve read about lately with ethical issues. Just because it is a family business, it does not exempt it from ethical issues.

Another thought, ethics affect both large and small businesses. The big ethical blunders are well publicized because most times they involve millions of dollars or a major cover up of information affecting a lot of people, but that doesn’t mean that smaller businesses don’t have problems caused by unethical decisions.

Dr. Jennings gave several reasons why ethics matter throughout her talk, but the one that really stuck was a quote by a Madison Avenue PR executive, “the single greatest competitive advantage a company has is its reputation.” As a farmer, when you think about your relationships within the community and the consumer, I think this quote rings very true. If your farm’s reputation was damaged due to an ethical lapse, how would that affect your relationship with landlords and your ability to rent land in the future? How would it affect your ability to obtain capital or operating loans from the local lenders? What about relationships with current employees and your ability to recruit and hire new, dependable employees? And the big question, how would consumers view your operation and agriculture as an industry as a result?

As you think about just these few questions, what cost could they have to your farm? What if you lost land you currently were renting because of an ethical issue or you lost out on rental land, not because your bid wasn’t high enough, but because the landlord had heard about questionable ethics of the farm management team? This has a real effect on the farm’s bottom line. Questionable ethics costs real dollars.

Ethics also matter because as a nation we are not doing so well, as Dr. Jennings pointed out to the conference audience. A few statistics she shared about our future work force from a Josephson Institute 2008 study are as follows:

  • 64% of high school students cheated on an exam in the last year at least once.
  • 82% have copied another’s homework.
  • 82% have lied to their parents and 62% have lied to a teacher in the past year.
  • 30% have stolen from a store in the past year.
  • 26% admitted lying on their answers to this survey.

Other statistics she shared showed that 11% of college students reported cheating in 1963. That number grew to 75% in 2006. Finally the KPMG 2008 survey revealed that 74% of employees observed a high level of illegal or unethical conduct at work in the past 12 months.

Even though the statistics and the reports show that as a whole we are not doing very well on the ethical scorecard, we still have a tendency to believe as individuals we are very ethical. It‘s those other people who are acting in an unethical manner, not me! We tend to justify why something we did was ok. So I ask you, have you seen any signals around the farm in the past year that might give the impression there are unethical practices happening? What have you done in the past year that might be considered unethical?

A couple of examples to think about:

  • You paid for your items at the store and when you got home you realized that you had not paid for the pack of gum you got. What do you do?
  • You sold a bike (car, wagon, tractor) to a neighbor and it was later stolen. He asks you to inflate the sales price (on the claim form) so he could get a larger sum from the insurance company. What do you do?

As you think about these very common and real life questions, it helps us to realize ethical decisions aren’t just a challenge for CEOs of multimillion dollar companies. They really do apply to our farm businesses and our everyday lives. We have to think about how we conduct business and how we are perceived not only within our communities but worldwide. Lately, farmers are being judged more than ever by consumers. We need to continue to put our best ethical foot forward.

Dr. Jennings did a very good job of helping us to see the ethics of everyday life and it made me think of a story that related to my young daughters. My kindergartener had to read a story to someone each night and then that person was to sign her paper. She had chosen to read to an older friend one day, but the friend did not understand she needed to sign the paper. I told my daughter I would just sign her friend’s name on the paper for her so she could turn it in the next day. My third grader was quick to point out that was not the right thing to do because “Mom you don’t know that she really read the story and you can’t sign someone else’s name.” Maybe we could all learn a few things about ethics from our young children. There is no ‘gray area’ or justification for them – only right and wrong!

Crop Insurance: What are the Preventative Plant Rules?

By: Chris Bruynis, Assistant Professor & Extension Educator; Greg Schiefer, Scheifer Farm and Family Insurance; and Marlene McCreary, Farmers Mutual Insurance

With the weather forecasters calling for more wet weather for the next ten days, farmers are starting to think about the preventative planting provisions in their crop insurance policies.  Although most crop insurance policies have some preventative plant provision, neither GRP nor GRIP policies have preventative plant coverage, so check with your agent. One good thing is that farmers have choices and do not have to rush into any decisions but need to be aware of their options before getting to busy in the field. The target date for corn to be planted is June 5th and farmers can either take preventative planting, switch to another crop, or still plant corn with a reduction in coverage.

Claiming preventative planting probably will not be the first choice in 2011 because many farmers have already locked in favorable contract prices for their corn and will need to plant some corn to fulfill those obligations. But if farmers choose to take preventative plant they will need either 20% or 20 acres of a unit (whichever is smaller) to have not been planted this year.  Example: a farmer has 400 acres of corn insured, 20% of 400 would be 80 acres and since 20 acres is smaller, there would need to be at least 20 acres of preventative plant in order to file a claim.   The maximum numbers of acres that a farmer can claim is equal to or less than the highest number of acres of that crop planted in the past 4 growing seasons less the acres planted this year.  Example: a farmer had 380 acres in 2007, 120 acres in 2008, 400 in 2009, and 340 acres in 2010 of corn. This year he is able to plant 200 acres of corn.  He can claim 200 acres of preventative plant (400 acres is the greatest number of acres planted in the past 4 years less 200 acres he planted this year). 

If preventative plant is chosen the farmer’s historical average will not be harmed.  You will be eligible for 60% of your guarantee per acre. However if preventative plant is chosen and you plan to follow with another crop in 2011, you will have to wait until the end of the late plant period for corn (July 1) and your prevented plant claim would be reduced to 35% of your coverage and only 35% of your premium would be due.  A production of 60% of your corn’s historical average will be recorded reducing your historical averages. If the farm plants soybeans after the preventative plant date expires, he will also need  insured the soybeans, however it will result in a reduced coverage as July 1 is eleven days into the late plant period for beans. A preventative plant claim must be filed within 72 hours of the final plant date which is June 5th for corn and June 20th for soybeans or within the late plant period for the crop.  Basically, the claim should be filed as soon as the decision is made not to plant a crop on the affected acres after the final plant date has passed for the crop.

The second option and probable the most common is simply switching to another crop. Here in Ohio, most farmers will switch those preventative plant acres to soybeans. This will be influenced by many factors including contracted corn bushels, herbicides already applied, availability of soybean seed, market price of soybeans and planting date.

The third option is to simply wait it out and plant corn after the June 5th preventative planting date. The late planting window that opens after June 5 allows for corn to be planted but with a reduction in coverage level. Each day after June 5 will result in the affected acres being reduced by 1% of your chosen coverage levels. Example: if a 50 acre field did not get planted until June 10 then the coverage will be reduced on those acres by 5%. If a farmer purchases coverage that would result in a $600 payment per acre, the premium will remain unchanged and the coverage would become $570 per acre in this scenario. If a farmer chooses this option and then cannot plant corn he can still file a preventative plant claim as long as it is still within the late plant period (until July 1).

This is just a summary and it is not meant to substitute for the actual Multi-Peril Crop Insurance provisions. Farmers wanting to explore their options should contact their insurance agent for specific rules associated with their insurance coverage.

How to Be Your Own Boss

by Chris Bruynis, PhD, Assistant Professor & Extension Educator

Sometimes I have the opportunity to dialogue with people wanting to enter into the business of farming. This could be returning home to the farm and entering into some business arrangement with the existing business, starting a second career after having worked away from the farm for some time, or starting a retirement business. Regardless of when or why people are motivated to return to the business of farming there are some things they need to do to be successful in being their own boss.

Consider these tips from successful business owners who learned how to position a new business for success from the start.

Get educated– Get prepared by learning about your future business, whether it’s through formal education such as college or technical training, or by reading and “being a sponge” for information related to your field. Learning is a constant that needs to occur for you to stay current on business strategies and tactics necessary for success.

Get experience– Thinking and acting like business owner while working for someone else can be another strategy and stepping stone to business ownership. The secret is to constantly think and evaluate what is happening in the business environment and the business reaction to those pressures… “Would you make the same decision as your employer?”

Get advice– Consider creating an advisory board that can review your strategies and financial information in order to provide advice. You probably will not have the time to read and track everything that will affect your business, so relying on an advisory board can not only provide good advice, it can be an excellent source of information. Another approach is to hire a coach that can help you learn how to actually run a successful business (and the coach does not need to be from a farm or agricultural background).

Get comfortable with failure– Although you probably want to avoid those fatal failures if possible, get use to the idea that you will make mistakes and that these mistakes will provide valuable learning opportunities for you to grow personally as well as to grow your business.

Get away– There are multiple returns to you in getting away from the agricultural business from time to time to recharge yourself. This does not always need to be a vacation unrelated to the farm business, but a good conference, tour or other agricultural related event can often do the same thing (and it would be tax deductable).

Although there are no secret answers to being a successful new agricultural business, getting education, experience, advice, comfortable with failure, and away from the heat are thing successful agricultural business owners have embraced. Add to this some common sense, some luck, and some calculated risk taking, and the probably of business success is greatly enhanced.