Year End Farm Record Keeping Issues

By: Chris Bruynis, Assistant Professor & Extension Educator, OSU Extension.

With the size and scope of many farm businesses today keeping accurate farm records are more critical than ever. The first reason to prepare accurate farm records is to allow management to make critical management decisions. Farm records are needed to determine resource use efficiency, which in turn indicates whether or not the farm business is profitable. Farm records, including enterprise analysis, are also essential for planning and decision making for the business.

A second reason for keeping farm records is for income tax management. Good records are needed to accurately determine potential tax liability and allows for tax planning before the end of the fiscal or calendar year. Poor farm records will typically result in increased tax liability of the farm owner. Obtaining credit is the third reason for keeping farm records. Good financial information provides lenders the necessary information needed to make lending decisions. In addition to determine the amount of the loan, this information is helpful in determining the interest rate a farm business owner may pay.

Characteristics of a Good Record Keeping System

The characteristics of a good record keeping system include easy to use and records the necessary information detail. Depending on the complexity of the business, the amount of detail will vary. Some businesses will want to keep detailed records down to the enterprise or location level. Recommended documents for a good record keeping system include:

• Business accounts for checking, savings, investing and credit cards. It is recommended not to inter-mingle business funds with personal funds. 

• An income and expense ledger or appropriate software program to record all cash business transactions by date and category.

• An inventory that involves both the physical counting and valuation assignment completed at least annually at the end of the business fiscal or calendar year.

• A depreciation schedule for all business assets showing asset basis, cost valuation and market valuation.

• A cost and market valuation balance sheet summarizing assets and liabilities of the farm.

• An income statement listing receipts, expenses, accounts receivable and accounts payable.

• A statement of cash flows showing the source of cash inflows into the business and where business cash outflows went.

• Enterprise records showing receipts and expenses by enterprises with some level of profitability analysis.

Year End Record Adjustment Considerations

Farm businesses typically use the calendar year for their business year and for tax return purposes. Additionally, farmers normally use a cash accounting method for filing their income taxes making it important to make the accrual adjustments in the income statement and balance sheet. Cash accounting can also mask financial issues for several years of low profitability. Farmers can generate cash for family living expenses through a variety of activities such as selling down inventory, not replacing equipment or other capital assets, selling capital assets, increasing accounts payable, or refinancing operating losses. 

The accrual income statement measures the profitability of the business for the year. An accrual adjusted income statement combines the cash basis farm records with the inventories from the balance sheets (the beginning and end of the year) to give a true measure of profitability. The balance sheet measures the operator’s level of ownership or equity in the business. These statements should be prepared using the same time period or point in time from year to year. The income statement typically covers the January 1 through December 31 time period while the balance sheet should usually be prepared as of December 31.

Farm managers need to make several accrual adjustments to properly capture the true profitability of the business providing a more accurate measure of profitability then the income tax schedule F. Income tax returns are not a good measure of farm profitability because the goal in income tax management is to minimize taxes paid (or at least level them off so we can consistently stay in a lower tax bracket). The main accrual adjustments on financial statements include prepaid expenses (including inputs used in the current year that is used to produce product in a subsequent year such as fall fertilizer applications), accounts payable, accounts receivable, changes in grain and livestock inventories, and investment in growing crops.  A final item that should be included is the tax liability due next year. 

Some farmers are also calculating the total deferred tax liability if the farm business were liquidated. This allows for better decision making in tax planning. Using the tax management tools available to farmer businesses such as Section 179, can significantly increase future taxes. Farm managers may want consider paying some additional tax now instead of in future year when the tax rates are unknown. Talk to your accountant and/or tax professional for a more detailed discussion of this issue.

Farm Business Risk Management

Farming has its share of volatility and risk associated with production, marketing, and financing the business. Michael Boehlje and Brent Gloy from Purdue have written an excellent article on managing the risk and capturing the opportunity in crop farming. They offer nine risk management strategies that farmers should be considering in today’s volatile environment. To read the full article go to:

Farmers will notice changes to the Schedule F

by David Marrison & Chris Bruynis, OSU Extension Educators

Part I of Schedule F (Form 1040) has been revised for 2011, and the line numbers for reporting farm income are not the same as in prior years. The payments reported on lines 1a and 2a for specified sales of resale or raised products are those received through a merchant card or a third-party network. These generally will be reported to the farmer on Form 1099-K, Merchant Card and Third Party Network Payments. Merchant cards include, but are not limited to, Visa® and Master-Card®. Third-party networks include, but are not limited to, Paypal® and Google Check-out®. The IRS instructions for Schedule F (Form 1040) state that merchant card and third-party network transactions are to be reported on line 1a or 2a even if a Form 1099-K is not received. Other sales of commodities are reported on lines 1b and 2b.

Click here to access the Form 1040-Schedule F for 2011

Click here to access the 2011 Farmers Tax Guide

Year End Farm Tax Questions

by David Marrison, OSU Extension Educator

As winter approaches, it is a good time for Ohio farmers to grab a cup of coffee and start to gather their income and expenses records to determine their cost of production and profitability from 2011. It is also the time to take a peak at their potential income tax liability for the year. This article addresses some of the questions which our Ohio AG Manager team has received with regards to income taxes.

I just signed a lease with an oil company to give them the rights to drill into the Marcellus Shale formation. Will I owe any taxes on this money?
Chuckle, Chuckle-Yes! Lease payments received for the right to drill are subject to ordinary income taxes. A reminder the higher the lease payment, the higher the tax bracket a landowner will be subject. As a general rule, you will need to set aside 35-45% of the payment for federal and state taxes. When the well is drilled, the owner will begin receiving royalty payments which will once again be subject to ordinary income taxes after depletion is taken.

With potential for strong incomes from crop production this year, what are some strategies farmers can use to reduce their potential tax burden?
Now is time for farmers to take a look at their records to examine potential income tax liability. Remember, that paying taxes is not a bad thing! By paying self-employment tax, the farmer is paying into social security which is the primary source of retirement income for many farmers. That said, farmers can use a variety of methods to reduce their liability. This may include using I.R.C. § 179 expensing and/or bonus depreciation, purchasing 2012 inputs in advance, or utilizing Farm Income Averaging to borrow unused tax brackets from the 3 prior years. Farmers can also postpone sales of raised commodities or use deferred-payment contracts to delay receipts into 2012.

Farm input costs are projected to be higher next year, should farmers consider purchasing some of those inputs this year to save money and offset tax levels?
Every farm’s tax obligations are unique; however the pre-purchasing of inputs is one way to reduce your tax liability for the current year. Remember that your deduction may be limited to 50% of your other deductible farm expenses for the year. Any prepayment of livestock feed must also meet specific business purpose criteria and must not cause a material distortion of income.

What is bonus depreciation, how can farmers use it for tax purposes, and how is it scheduled to change next year?
Over the past decade, Congress has repeatedly allowed faster depreciation of capital assets to stimulate business investment by providing a “bonus” depreciation allowance in the year the asset is purchased. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 extended the depreciation bonus for 2011 and 2012 to encourage new equipment purchasing. The additional first-year depreciation rules allow farmers to deduct on their 2011 income tax returns 100% of the cost of qualifying assets purchased in 2011 and 50% of the cost of qualifying assets in 2012.

How can farmers use Section 179 deductions and how is that tax strategy scheduled to change in 2012?
I.R.C. § 179 expensing allows farmers to elect to deduct part or all of the cost of qualifying farm assets in the year they are placed in service. The deduction is limited to the taxpayer’s income from all businesses and is also limited to a set dollar amount that varies by tax year. Under current law, the dollar limit is $500,000 for 2011, $125,000 in 2012, and $25,000 in 2013 and beyond. New and used equipment is eligible for this deduction.

What other changes are known or projected for next year, and how might farmers prepare for or react to those?
Farmers purchasing depreciable items should take notice now of the reductions which may occur in 2012. The reduction of the I.R.C. § 179 expensing will drop from $500,000 in 2011 to $125,000 in 2012 and then $25,000 per year thereafter. In addition, the bonus depreciation is scheduled to drop to 50% of the purchase price of eligible assets in 2012. So if the purchase of capital assets is in your farm’s business plan, now is the time to consider such a purchase. A word of caution, don’t buy “new paint” or “new steel” without first doing a comprehensive cost analysis.

I am a new farmer, are there any special tax deductions that I can take?
For 2011, you can deduct up to $5,000 of your business start up costs paid or incurred after October 22, 2004. The increased limit of $10,000 for start-up costs was only allowed in 2010.

Are there any Ohio tax issues farmers should keep in mind in 2011 and 2012?
One of the major tax issues for farmers to be aware of is not an income tax change but rather the increases which are being seen across Ohio for the CAUV (Current Agricultural Use Valuation) property tax program. Every three years, each county in Ohio is required to complete a triennial update on property values. This also required the re-calculation of the CAUV values. CAUV values are calculated for each soil type in Ohio (approximately 3500 soils) by a formula that is based on five factors. The factors used in the calculation are based on three crops: wheat, corn and soybeans. Also considered is the cropping pattern, production costs and the capitalization rate. These CAUV rates have increased significantly since 2008. These increases could cause landowners to increase the rental rates to the tenant farmers. Farmers should pay particular attention to their tax statements over the next 3 years.

What are some good sources of tax advice and information for farmers with questions?
A great location to find agricultural tax advice is through the new agricultural tax web site at This website provides with a source for agriculturally related income and self-employment tax information that is current and easy to understand. Producers should also watch for tax articles on OSU Extension’s Ohio Ag Manager web site located at Producers who prepare their own taxes should plan on attending OSU Extension’s Agricultural Tax Issues Update which will be held in 9 locations across Ohio on Monday, December 12, 2011. More information about this update can be found at: And last but not least, the Farmer’s Tax Guide is an excellent resource and it can be found at:

2011 Agricultural Tax Issues Workshops

by: David Marrison, OSU Extension Educator

Tax practitioners with an interest in farm income taxes will have an opportunity to attend a one day farm tax workshop scheduled for Monday, December 12, 2011 from 8:30 a.m. to 3:00 p.m. in nine locations across Ohio. This workshop will be taught by Dr. Phil Harris, Professor of Agricultural Economics, University of Wisconsin via tele-conference.

This program has been designed for tax practitioners who have a significant number of farm clients and therefore need a substantial amount of information on agricultural tax issues. Participants will hear an audiotape of a live lecture given by Phil Harris, supplemented with a slide presentation Dr. Harris used during his lecture. Dr. Harris will be available for questions during two conference calls during the day, and OSU faculty will be in the meeting rooms to answer questions. Registrants will receive a valuable 236 page supplemental book.

Some of the topics at these workshops include: self-employment tax and social security benefits, like-kind exchanges, farm income averaging, fertilizer or nutrient acquired with land, prepaid farm expenses, farm related income reported on Form 4797, taxation of agricultural labor, specialty agriculture taxation issues, and form 1099 requirements for farmers.

The locations for the 2011 Agricultural Issues Workshops are:

Caldwell, Ohio at the OSU Extension South Central Region Office

Chillicothe, Ohio at the OSU Extension Ross County Office

Columbus, Ohio at the OSU Fawcett Center

Greenville, Ohio at the OSU Extension Darke County Office

Jefferson, Ohio at the OSU Extension Ashtabula County Office

Ottawa, Ohio at the OSU Extension Putnam County Office

Upper Sandusky, Ohio at First Citizens National Bank

Urbana, Ohio at the OSU Extension Champaign County Office

Wooster, Ohio at OARDC Fisher Auditorium

The Agricultural Tax Issues program has been accepted for continuing education credits by the Accountancy Board of Ohio, and the IRS Office of Professional Responsibility. The registration fee for this workshop is $125 per person and includes agricultural tax workbook, lunch and refreshments. Reservations are requested by December 2, 2011.

Complete workshop information and on-line registration are available at the OSU Income Tax Schools’ website located at:, or can be obtained by contacting Warren Lee at (614) 292-6308 or The Agricultural Tax Issues Workshop is sponsored by the Ohio State University Department of Agricultural, Environmental and Development Economics and Ohio State University Extension.

Ohio State creates new Center for Subsurface Energy

In response to the growing need for an educational and research source for issues related to Ohio’s developing shale energy industry, The Ohio State University announced today the creation of the Ohio State Subsurface Energy Resource Center (SERC). The center, with faculty experts in the areas of economics, law and policy; earth science; engineering; energy and environmental science; extension and community development; and public health, will conduct relevant research and serve as a resource to subsurface energy stakeholders.

The center was established in response to recent technical advances that are leading to the expansion of horizontal drilling for hydrocarbon-bearing shale and other resources across Ohio. As one of the nation’s largest research universities and the state’s land-grant institution, Ohio State has a wealth of expertise to contribute to subsurface energy development and its associated environmental issues, as well as a responsibility to serve as a resource to policy makers.

“The creation of the Subsurface Energy Resource Center leverages the considerable expertise of Ohio State to provide a solid foundation for energy research and partnerships throughout Ohio,” said President E. Gordon Gee. “It draws upon a strong base of both excellence in environmental and energy research and commitment to partnering for Ohio’s future. Together, we can develop as a comprehensive resource for policymakers, companies, and citizens.”

SERC will ensure that Ohio State is a key participant in forums and decision making groups on energy and environmental issues related to subsurface development. Under the leadership of Ron Sega, vice president and enterprise executive for energy and the environment, SERC will work across Ohio State to help facilitate opportunities for Ohio State researchers and organized groups to work on major proposal development opportunities.

 “Ohio has an important opportunity to examine and research the potential for shale energy within our state and region,” said Sega. “Ohio State University is eager to add to the body of knowledge surrounding shale energy through the Subsurface Energy Resource, and our experts in subsurface geology and engineering, public policy, community affairs and public health will provide a valuable resource to the state as this issue develops.”

SERC will be led by co-directors Jeffrey Daniels, professor in the School of Earth Sciences, and Douglas Southgate, professor in Agricultural, Environmental and Development Economics. Daniels is a geophysicist with extensive exploration experience utilizing seismic, petrophysical measurements and borehole geophysics, and currently works to characterize reservoir and cap rock (shale) in Ohio for CO2 sequestration potential, a project that has implications for gas shale as well as CO2 storage. Southgate is an economist who specializes in natural resource development. He has studied petroleum development in South America and is currently contributing to an assessment of the impacts on Ohio’s economy of extracting fossil fuels from shale formations in the state.

A multidisciplinary coordinating committee comprised of faculty and staff experts in engineering and public health will provide additional oversight and strategic direction for the center. In order to promote technological improvement and address environmental and other issues related to energy resource development, the primary functions of SERC will be to:

• facilitate communication and collaboration between faculty educators and researchers within Ohio State

• provide a communication link among industry, government agencies, NGOs and universities throughout the state

• provide a forum to facilitate discussion of energy and environmental issues related to subsurface resource development

Shale development will be the near-term primary focus of SERC, but other energy resources will also be addressed as opportunities and needs arise. The existing Shale Energy Education Work Group formed by Ohio State Extension will continue its current operation and serve as the primary entity to coordinate public outreach and education. Ohio State Extension educators have conducted 39 shale energy related education programs to date, reaching 4,318 participants throughout Ohio.

Community Supported Agriculture Workshops Focused on Increasing Producer Profits

 By: Beth Fausey Scheckelhoff, Educator and Director, Agricultural Business Enhancement Center, OSU Extension

Since their introduction to the U.S. in 1984, numbers of community supported agriculture enterprises (CSAs) have grown to well over 160 operations in Ohio in 2011. Such enterprises connect well with consumers’ increasing interest in where food comes from, how it is grown, and how it is handled.  While still a relatively new model for value-added agricultural marketing, a CSA is an attractive marketing channel that enhances producer profits by providing working capital prior to the growing season, enabling farm diversification, and building relationships between communities and producers. Originally, CSAs’ member shareholders helped grow and harvest “their farm´s” crops. Today, CSAs have evolved to operate on a subscription basis, providing a given amount of product during an established growing season for a set fee. Subscribers or shareholders invest in the product and the risk associated with growing product over the course of the established season. More recently, innovative producers are developing CSAs in partnership with other producers, industry groups and organizations. This approach is a great attraction to existing producers looking to decrease risk, and to new producers looking for ways to lessen the costs and risks of start-up enterprises.

As more producers evaluate nontraditional methods of consumer marketing such as through a CSA, access to information on developing and sustaining a CSA operation is crucial. OSU Extension is assisting producers in evaluating, developing and sustaining CSA enterprises in Ohio by offering hands-on educational workshops, structured planning exercises, and supporting materials.  These workshops specifically addresses differences in markets, CSA models and how they can be effectively adapted and utilized, as well as what communication skills, consumer and producer agreements, and marketing strategies are necessary for success. Producers will gain valuable information from recent consumer research surveys, workshop materials, one-on-one consultations, online resources, fact sheets, and documented experiences of existing CSAs.

These workshops will be offered this fall.  Please visit this link for registration details:

Wednesday, November 30, 2011                                      Thursday, December 1, 2011

6:00 to 9:00 pm                                                                            9:00 am to 12:00 pm

Miami County Extension Office                                                 Ohio State University 4-H Center

201 W. Main (in the Courthouse)                                              2201 Fred Taylor Drive, Gehres Room

Troy, OH  45373                                                                            Columbus, OH  43210


Wednesday, December 7, 2011                                        Thursday, December 8, 2011

6:00 to 9:00 pm                                                                            9:00 am to 12:00 pm

OSU Extension ABE Center                                                         Lorain County Extension Office

639 S. Dunbridge Rd., Suite 4                                                     42110 Russia Road

Bowling Green, OH 43402                                                          Elyria, OH 44035

Crop Input Outlook 2012

By: Barry Ward, Leader, Production Business Management, OSU Extension, Department of Agricultural, Environmental and Development Economics

 Crop profitability prospects for 2012 are positive for the three major row crops in Ohio. Input costs have increased from last year but high futures prices for 2012 crops allow producers to plan for positive margins for next year. OSU Extension Enterprise Budget projections show positive returns for corn, soybeans and wheat in 2012. These budgets are available online at:

OSU Extension Budgets show projected variable (cash) costs for corn, soybean, and wheat production to all be 10% higher in 2012 versus 2011.

Higher commodity prices and higher costs lead us to a riskier production year as the cash investment in an acre of corn will top $400 (excluding land, machinery and labor costs) and in some production scenarios be closer to $450 per acre. The cash investment in an acre of soybeans or wheat will be in the $200-$250 range.


The Energy Information Administration (EIA) estimates the average price for West Texas Intermediate Crude Oil at $88.00 per barrel for 2012 which is a 4.7% decrease from 2011. This is due to slightly lower oil consumption growth projections for 2012. The EIA projects natural gas prices to increase 4.3 percent in 2012. Expected tightness in the market is the reasoning, but this projection is harder to reconcile with the increased production capabilities in the U.S.


Fertilizer continues to be the most volatile of the crop input costs and cost management of this important input may be the difference in being a low cost or high cost producer in 2012. The different fertilizer products have seen significant price increases over last year and likely will continue to increase due to higher crop commodity prices and positive profitability prospects for 2012. Healthier farmer balance sheets and continued positive crop profit prospects have signaled the global marketplace to increase acreage (if possible) and maintain or increase fertilizer rates and led to strong global demand driven markets. On the flipside, the E.U. and U.S. sovereign debt issues and potential economic slowdowns are factors, if unresolved, may lead to a slowdown in fertilizer demand and flat to lower prices.

Nitrogen (N)

The retail price of N in October in Ohio was $900-950/ton for anhydrous ammonia (24% increase over year ago), $400-425/ton for UAN (28%) (32% increase over year ago), and $595-665/ton for urea (40% increase over year ago). Spring prepay NH3 is running $20-$25/ton more than spot delivered tons in many markets.

Nitrogen fertilizer manufacturers are presently operating at profitable levels due to higher N prices and relatively low natural gas prices, but this fact hasn’t led to supply outstripping demand as the entire supply chain has been more cautious in getting caught in a repeat of the 2008 upside-down fertilizer market.

With the high correlation of nitrogen price to corn price, future movements in nitrogen prices will more than likely take their cues from movements in price of corn.

Phosphorous (P2O5)

Di-ammonium Phosphate (DAP) in October in Ohio was $715-755/ton (18% increase over year ago) while mono-ammonium phosphate (MAP) was $715-775/ton (18% increase over year ago).

Phosphate rock, sulfur and anhydrous ammonia, all primary ingredients used in the manufacture of P fertilizers are presently high priced and have contributed to higher P fertilizer prices.

These higher ingredient prices along with strong world demand continue to pressure phosphorous fertilizer prices. These pressures signal continued higher prices for the 2012 crop production year.

Potassium (K20)

The retail price of potash in December in Ohio was $625-690/ton (38% increase from year ago).

The potash industry essentially operates as a duopoly (two firms, in this case, two consortiums, with dominant control of the market) with Canpotex (Canadian Potash Exporters) and Bellarussian Potash Co. controlling much of the global potash supply.

Potash prices will likely trend higher into 2012 as high crop prices will translate into continued strong demand while the two major potash consortiums will meter out supply to keep prices stable.

Seed and Crop Protection Chemicals

Company price data and industry sources indicate seed prices for 2012 to be 5-10% higher.

Crop protection chemical prices will see similar increases except glyphoste, which should continue to see relatively flat prices due to excess global production capacity.

Outlook information presented here was developed with data from AEDE research, the Energy Information Administration, USDA, other Land Grant research, futures markets and retail sector surveys. While gauged to the best of this author’s capabilities, forward looking statements contained in this document may prove to be incorrect due to changes in supply and demand and other political and economic related events.


Farmland Value and Rent Outlook 2012

By: Barry Ward, Leader, Production Business Management, OSU Extension, Department of Agricultural, Environmental and Development Economics

 No revelation! Cropland values in Ohio have increased in 2011. An OSU Extension survey conducted in December 2010 estimated that the increase in value of Ohio cropland in 2011 would be 5.3-6.0%. This was prior to sharp run ups in commodity prices. The Chicago Federal Reserve Bank and Purdue University both conducted surveys in July 2011 and found that cropland values in Indiana had appreciated 20-22% from one year ago. These increases in land value are due to a number of factors.

Crop profitability prospects were positive in 2011 as they have been for the most part since 2007. This period has seen some of the most profitable years in the last 50 years of crop production. These profit streams and healthier balance sheets have led many farmers to seek an investment option for these profits and many have turned to land. Investors outside of agriculture have also been looking to farmland as an investment alternative.

With many dollar’s and buyers chasing farmland, it isn’t a surprise to see land values increase substantially in 2011. Low interest rates and the relative scarcity of farmland being sold have also helped drive land values higher.

So all of this begs the question, “Where are land prices headed in 2012?” The case is strong for land values to see continued strength in 2012 as profitability prospects are good for this upcoming crop year.

Returns to Land (Gross Revenue minus all costs except land cost) are projected to be $190-$500/acre for Ohio Corn in 2012 depending on the land production capabilities. This is assuming current prices of inputs and December 2012 Futures prices less basis for corn. Using the same set of assumptions for Ohio soybeans, Returns to Land are projected to be $100-340/acre. Returns to Land for wheat in Ohio are projected to be $40-190/acre. These projections are based on OSU Extension Ohio Crop Enterprise Budgets available online at:

Producers and other investors outside of agriculture will continue to see farmland as a good investment alternative. With strong balance sheets many farmers will continue to be in the land buying mode.

The Income Method of Capitalization, an appraiser’s method of valuing assets, yields high land valuations based on 2012 projections for returns to land and interest rates. For example, using a $250/acre Return to Land and a 4% capitalization rate, farmland would be valued at $6250/acre. Higher Returns to Land and/or lower interest rates would yield higher “appraised” land values using this approach.

There should be a note of caution in deriving budgets and using the Income Method of Capitalization for valuing cropland for 2012 and beyond. Assumptions used to formulate these budgets and appraisals may change. Crop prices could fall and input costs may increase.

A few of the factors that could adversely affect crop profitability and land values in the next year include:

a)      E.U. and U.S. sovereign debt issues and potential economic slowdowns

b)      U.S. budget cuts leading to changes in farm policy and/or changes in energy policy (ethanol policy)

c)      Input price inflation

The December 2010 OSU Extension Survey of Cropland Values and Cash Rents found that cash rents were predicted to increase 8 to 9.5% in 2011. Cash rental rates will see continued upward pressure as higher commodity crop prices and good prospects for profit in 2012 drive competition in local markets. Producers that want to continue to operate on their existing rented land base will have to pay at or near the market rate for their area. See the “Western Ohio Cropland Values and Cash Rents 20120-11” Factsheet online at: to see data on yields and cash rents for various land classes for your part of western Ohio.

Producers and landowners should also understand and attempt to quantify in some way the non-cash benefits provided by the producer to the landowner and vice-versa.

To manage risk of volatile crop and input markets, producers and landowner should consider flexible cash leases.

Outlook information presented here was developed with data from AEDE research, the Energy Information Administration, USDA, other Land Grant research, futures markets and retail sector surveys. While gauged to the best of this author’s capabilities, forward looking statements contained in this document may prove to be incorrect due to changes in supply and demand and other political and economic related events.

CHANGES TO THE AGRICULTURAL CHILD LABOR REGULATIONS: What it could mean when hiring young people on the farm

By: Dee Jepsen, Assistant Professor, Agricultural Safety Specialist

Recently the Department of Labor issued a proposed ruling to change the kinds of agricultural equipment and agricultural chores young people (under age 16) would be permitted to perform. Farm employers and agricultural businesses are encouraged to read more about the proposed changes and how these changes will affect youth working in agricultural settings.

To access the complete document, visit the US DOL website:

These proposed changes will be the first update since 1970. They are designed to bring agricultural jobs in line with other guidelines required of employers in non-agricultural areas. NOTE: The proposed rules would continue to exempt children working on family farms.  A summary of the changes include:

1) Regulatory changes to the Child Labor Laws for Agriculture.

• Tractors operated by 14 and 15-year old youth be equipped with approved Roll-Over Protective Structures (ROPS) and seatbelts; and that seatbelt use be mandated.

• Prohibit the use of tractors of any horse power, including small garden-tractors; whereby the training exemption will either be removed or changed to 90 hours of study.

• Require that student learners operating tractors & farm machinery on public roads have a valid state driver’s license.

• Prohibit use of electronic devices, including communication devices, while operating tractors, power-driven equipment, and motor vehicles.

• Restrict use of all power-driven equipment (similar to that of non-agricultural industries).

• Prohibit minors from riding as passengers on all farm machines when on public roads, and all student learners riding as passengers must have an “approved seat and seatbelt” with a mandatory use seat belt policy.

• Prohibit employment in occupations involving operation of non-powered driven hoisting apparatus and conveyers; no student-learner exemption would be permitted.

• Prohibit certain occupations involving working with or around animals: includes handling animals with known dangerous behaviors; assisting in animal husbandry practices that inflict pain upon animal or result in unpredictable behavior (such as branding, breeding, dehorning, vaccinating, castrating, and treating sick/injured animals); poultry catching or cooping in preparation for market; working in a yard, pen, or stall of an intact (non-castrated) male animals or with female animals with suckling offspring or umbilical cords present; herding animals in confined spaces or on horseback, or using motorized vehicles such as trucks or all terrain vehicles.

• Prohibit the felling, bucking, skidding, loading, or unloading timber of any size; and prohibit the removal of stumps except by manual means

• Prevent the employment in construction, communications, wrecking, demolition, and excavation for youth 14-15 years of age.

• Prevent the employment while working on roofs, scaffolds, ladders, and elevations greater than 6 feet, including elevated farm structures like grain bins, silos, windmills, and towers, as well as elevated farm equipment and implements.

• Prohibit driving all motor vehicles and off-road vehicles by youth younger than 16.

• Prohibit work inside a fruit, forage, silo, grain bin, or manure pit.

• Consistent with EPA Worker Protection Standards for pesticides, ban all work that falls within the EPA classification of pesticide handler.

• Prohibit the employment of young workers in tobacco processes – includes planting, cultivating, topping, harvesting, baling, barning, and curing.

• A new non-agricultural regulation prohibiting the employment of youth in occupations containing farm-product raw materials and wholesale trade industries – includes work performed at country grain elevators, grain elevators, grain bins, silos, feed lots, feed yards, stockyards, livestock exchanges, and livestock auctions.

2) Changes to the training exemption – commonly known as the Tractor Certification Program – Eliminates training offered through Cooperative Extension programs. Recognizes programs taught through school-based agricultural education programs and their instructors. The proposal also seeks to increase training from 24 hours to 90 hours.

Like any new proposed changes, there is an opportunity for the public to comment. The time period to comment is open through the end of November. All comments, from multiple perspectives, are welcome – and especially from those who employ young workers, are educators of young workers, or are parents of young workers. The most beneficial remarks are those that are based on fact or true experiences. Emotional pleas or statements with broad generalizations are not as helpful as those that are written with clear objectives, provide explanatory observations, or give suggestions for consideration. 

 To comment on the ruling or read reviews of others, visit the Website:!docketDetail;dct=FR%2BPR%2BN%2BO%2BSR%2BPS;rpp=10;po=0;D=WHD-2011-0001

Labor industry professionals are working to improve the conditions of the work environment for young workers. In my role as the Extension Agricultural Safety Leader, I encourage readers to review the proposed changes and be familiar with these changes. When the implemented, they will change the employment flexibility that farmers and agricultural businesses have when hiring youth under age 16.