“How to Lose Less on the Farm” workshop series to be held in London, Ohio

By: Amanda Douridas, OSU Extension Educator – Madison County

Running a profitable farm can be a challenge even with the best of commodity prices. Lower prices and higher inputs facing farmers this year are putting a serious strain on the bottom line. OSU Extension in Madison County is offering a program designed to connect producers to farm management specialists with whom they can share resources, tools and initiate discussion on how farmers can get a better handle on budgets.

This series will dive into areas of the budget where adjustments can be made. We will look at results of the FINPACK benchmarking program to see where Ohio farmers are spending the most. This can provide guidance on how one’s budget compares to other farmers in Ohio. Record keeping is not always everyone’s favorite activity but, in this series, we will see how it can help keep that budget on track.

Weed and fertility management are often the two places farmers look when budgets get tights. This session dives into where costs can safely be cut to help profitability and maintain good agronomic practices.

Of course, taxes are a key factor in farm financial management. Discover new regulations and the sunsetting of the 2018 Tax Cuts and Jobs Act. Lastly, the series will end with a look into organic and alternative crops for those interested in making bigger shift in their operation.

The program is free but RSVPs are required. There is an option to attend virtually or in-person at Beck’s Hybrids. 720 US Hwy 40, London. Each offering of the workshop will be held from 9:00 to 11:00 a.m. Feel free to register for sessions individually and at anytime throughout the series.

RSVP: go.osu.edu/loseless.

DECEMBER 3- Budget Bootcamp

  • Enterprise budget overview and cost control- Barry Ward, Director, OSU Extension Income Tax School Program; Leader, Production Business Management
  • Calculating (and reducing) the ‘Tricky Two’ Fixed Costs in an Enterprise Budget- Eric Richer Associate Professor and Field Specialist, Farm Management

JANUARY 8- On The Record

  • Record keeping strategies to keep a budget on track- Bruce Clevenger, Associate Professor and Field Specialist, Farm Management
  • Ohio Farmers: What categories have the biggest impact on profits- Clint Schroeder, Program Manager, Farm Business Analysis

JANUARY 21- In the Field

  • Nutrient management: how to decide where to cut budget- Amanda Douridas, CCA, OSU Extension Madison County
  • Weed mgt: Reducing costs here and switching to non-GMO- Dr. Alyssa Essman, Assistant Professor, Weed Science
  • Vetting products before going all in- Amanda Douridas

FEBRUARY 4- Life, Death and Taxes

  • Farm Tax Update and Managing for the Sunset of 2018 Tax Cuts and Jobs Act- Barry Ward and David Marrison, Professor and Field Specialist in Farm Management; Interim Director for the Farm Financial Management & Policy Institute

FEBRUARY 18- Organic and Alternative Crops

  • Hurdles associated with Organic Grain Transition- Eric Richer
  • Alternatives to Corn and Soybeans- Dr. Osler Ortez Assistant Professor, Corn & Emerging Crops

Fall Back to the Basics of Grain Marketing

By: Wm. Bruce Clevenger, Field Specialist, Farm Management

Turning the clocks back in the Fall happens on November 2, 2024.  Grain producers and farm managers are also looking at adjustments on the farm to the tightening profit margins projected for 2025.  Knowledge and action plans related to grain marketing in the coming year will be important to manage risk.

Registration is now open for the Basics of Grain Marketing Workshop, January 16 & 17, 2025 at the OSU Extension Champaign County Office in Urbana, Ohio.  This in-person workshop offers education and farm ready strategies on topics such as: basis, market carry, cash markets, forward and futures contracts, hedge to arrive and basis contracts, differed price, hedging, storage, and overviews on options, spreads, and crop insurance.  It’s “more than a 2-day workshop”, featuring pre-workshop activities on calculating grain cost of production and measure of risk comfort. Workshop content will include workshop content and activities, plus a panel of industry professionals.  A post-workshop grain marketing peer group will be offered to strengthen learning into action with webinar updates.  The workshop has 50 limited seats.

Expert instructors: Seungki Lee, The Ohio State University, Grant Gardner, University of Kentucky, and Ben Brown, University of Missouri.  For more information and registration, visit https://go.osu.edu/grainmarketing

This workshop is possible by the support of grower checkoff dollars via the Ohio Soybean Council and Ohio Corn & Wheat.  This workshop is led by Ohio State University Extension and the Ohio State University Farm Financial Management & Policy Institute.

Register Now for the January 9-10 Ohio State Organic Grains Conference

Contact:Eric Richer, The Ohio State University, Associate Professor / Farm Management Field Specialist, richer.5@osu.edu

Registration is open for the 3rd annual Ohio State Organic Grains Conference, January 9-10, 2025, at the Kalahari Resorts & Conventions in Sandusky, Ohio. The conference offers programming for experienced organic growers, growers transitioning to or considering organic, and consultants or educators who support these growers.

Featured speakers for 2025 include Erin Silva, University of Wisconsin-Madison Extension Specialist in Organic and Sustainable Cropping Systems; Damon DeSutter of DeSutter Farms in Attica, Ind., Osler Ortez, Ohio State Corn and Emerging Crops Specialist; Sophie Rivest-Auger, organic field crop advisor for Centre for Expertise and Transfer in Organic and Local Agriculture, Quebec; and David Marrison, Ohio State Farm Management Field Specialist. Additional farmer, researchers, and educators from Ohio and beyond will round out the two full days of agronomic and farm management sessions. Topics for this year include interseeding cover crops in organic corn, flame cultivation, the use of biological products in organic production, setting up weed control equipment for success, nitrogen credits from cover crops and manure, farm succession planning and a market end-users panel.

Take advantage of Early Bird pricing and register now. The cost of $140 per person includes two days of programming, meals throughout the event, and opportunities to network with organic farmers in the region as well as speakers and trade show vendors.

This event is planned by Ohio State University Extension and Ohio State’s Organic Food & Farming Education and Research (OFFER) program. Continuing education credits will be available for Certified Crop Advisors (CCAs). For more information, visit go.osu.edu/OrganicGrains.

 

 Economic Relief Available from USDA for Producers Impacted by 2024 Drought

By: David Marrison, OSU Extension Field Specialist – Farm Management

Click here for PDF of article

Note: this is an updated version of an article published on October 10, 2024.

Drought conditions started in Ohio in mid-June and intensified throughout the summer until some relief was provided by rain showers at the end of September and first few days of October. Then drier conditions returned. The economic consequences of this summer’s drought will linger for quite some time.

Economic relief is available through various USDA assistance programs following a natural disaster declaration. The Secretary of the United States Department of Agriculture (USDA) has issued 7 natural disaster designations (August 30, September 3, 18 & 23, and October 2, 8 & 15) which designated 49 counties as primary disaster counties with an additional 17 counties classified as contiguous. According to the U.S. Drought Monitor, these counties suffered from a drought intensity value during the growing season of 1) D2 Drought-Severe for eight or more consecutive weeks or 2) D3 Drought-Extreme or D4 Drought-Exceptional. The following are the counties which have been designated as of October 15 (note that other counties in far northwest Ohio may be added later this month.

Primary Counties:  Adams, Athens, Belmont, Brown, Butler, Carroll, Champaign, Clark, Clermont, Clinton, Coshocton, Defiance, Delaware, Fairfield, Fayette, Franklin, Fulton, Gallia, Guernsey, Greene, Hamilton, Harrison, Henry, Highland, Hocking, Jackson, Jefferson, Lawrence, Licking, Logan, Lucas, Madison, Meigs, Miami, Monroe, Montgomery, Morgan, Muskingum, Noble, Perry, Pickaway, Pike, Ross, Tuscarawas, Union, Vinton, Warren, Washington and Williams counties

Contiguous Counties:  Auglaize, Columbiana, Darke, Hancock, Hardin, Holmes, Knox, Marion, Morrow, Ottawa, Paulding, Preble, Putnam, Scioto, Shelby, Stark and Wood counties.

These designations allow the USDA Farm Service Agency (FSA) to extend much-needed emergency credit to farm operators in primary counties and contiguous counties through FSA emergency loan assistance. The USDA FSA uses the U.S. Drought Monitor (USDM) map to determine a producer’s eligibility by county for certain drought assistance programs, like the Livestock Forage Program (LFP), Emergency Assistance for Livestock, Honeybees, and Farm Raised Fish Program (ELAP) and the Emergency Haying and Grazing on CRP acres. These programs are available to both new and existing users of FSA services. Please note that each program has eligibility requirements and payment limitations.

Below are short descriptions for each of the drought assistance programs:

Emergency Loan Program: This program provides emergency loan assistance to farm operators. These loans can be used to meet various recovery needs including the replacement of essential items such as equipment or livestock, reorganization of a farming operation, or to refinance certain debts. For production loss loans, the producer must have a disaster yield that is below the normal production yield of the crop, as determined by the Agency, that comprises a basic part of an applicant’s total farming operation.  Quality losses are determined by comparing the average market price for the commodity at the grade the applicant would have normally sold the product, with the average price of the grade at actual sale.  Producers can borrow up to 100 percent of actual production or physical losses to a maximum amount of $500,000.  The deadline for producers in designated primary and contiguous counties to apply for loans is between April 21 to June 16, 2025, depending on the county. Complete details about ELP can be found at: https://www.fsa.usda.gov/tools/informational/fact-sheets/emergency-loan-program-2024pdf

Disaster Set-Aside Program (DSA): This program allows FSA borrowers to set aside of one payment due to qualified disaster. Each payment set-aside must be repaid prior to the final maturity of the note. Any principal set-aside will continue to accrue interest until it is repaid. The borrower must be current or not more than 90 days past due on any FSA loan when the application is completed. Borrowers have 8 months from date of the disaster designation to apply. More details about the DSA program can be found at: https://www.fsa.usda.gov/tools/informational/fact-sheets/disaster-set-aside-program-2024pdf

Noninsured Disaster Assistance Program (NAP): This program provides financial assistance to producers of non-insurable crops that have lower yields or crop losses due to natural disasters such as drought. Eligible crops must be commercially produced agricultural commodities for which crop insurance is not available. Such crops include (but are not limited to): crops grown for food; crops planted and grown for livestock consumption, such as grain and forage crops; specialty crops, such as honey and maple sap; value loss crops, such as aquaculture, Christmas trees, and ornamental nursery and turf-grass sod. Eligible producers must have purchased NAP coverage for the current crop year. NAP payments are limited to $125,000 per crop year, per individual or entity for crops with basic coverage. Any NAP payments received with additional (buy-up) coverage is to $300,000. More information about NAP can be found at: https://www.fsa.usda.gov/tools/informational/fact-sheets/noninsured-crop-disaster-assistance-program-nap

Tree Assistance Program (TAP): This program provides financial assistance to qualifying orchardists and nursery tree growers to replant or rehabilitate eligible trees, bushes, and vines damaged by natural disasters such as drought. To be eligible, at least a 15 percent mortality loss, after normal mortality, must be determined due to a natural disaster. Payment is the lessor of either 65% of the actual cost of replanting or the maximum eligible amount established by FSA. Replacement of eligible trees, bushes and vines must be made within 12 months. More information about TAP can be found at: https://www.fsa.usda.gov/tools/informational/fact-sheets/tree-assistance-program-tap

Conservation Reserve Program (CRP) Haying and Grazing: The Deputy Administrator for Farm Programs (DAFP) is authorizing emergency haying and grazing authority in all counties throughout the state that are not otherwise eligible for emergency haying and grazing in accordance with 2-CRP paragraph 681. Through this authority CRP participants (except CREP) may donate emergency haying and grazing rights to livestock producers affected by severe drought (D2 or greater on the U.S. Drought Monitor) through March 15, 2025. This allows the affected livestock producer to have access to feed sources from areas less impacted by drought conditions that are limited because of an active CRP contract to emergency hay and graze acres.

To ensure emergency haying and grazing is only being utilized by those producers whose livestock operations were adversely impacted by severe drought (D2 or greater on the U.S. Drought Monitor), livestock producers must file a CCC-576 (Notice of Loss) or provide a written certification documenting the impact to their operation.

To summarize, emergency haying and grazing can be utilized in any Ohio county, regardless of the county’s Drought Monitor status. However, emergency haying and grazing can only be used by an eligible farmer affected by severe drought (D2 or greater on the U.S. Drought Monitor).

CREP- Both CREP agreements prohibit haying or grazing activities that would normally be available on CRP acreage in circumstances like the present. Unfortunately, as a result, emergency haying and grazing is not available on CREP acreage.

SAFE-With concurrence from Ohio SAFE partners, DAFP has agreed to waive emergency haying and grazing restrictions set forth in all Ohio SAFE projects for this specific drought event and authorizes CRP participants to donate emergency haying and grazing rights to livestock producers whose farming operation is affected by severe drought (D2 or greater on the U.S. Drought Monitor) on a one-time basis.

For more information about the emergency haying and grazing, producers should contact their FSA County office for additional requirements and details.

Livestock Forage Disaster Program (LFP): This program provides compensation to eligible livestock producers who have suffered grazing losses due to drought on land that is native or improved pastureland with permanent vegetative cover or that is reported on the FSA-578 with initial intended use of grazing. This program looks at acreage and intended use directly from the producer certified FSA-578 form. This program also provides compensation for eligible livestock. Eligible livestock must be animals that receive the majority of their net energy requirement of nutrition via grazing. Covered livestock include beef cattle, dairy cattle, deer, equine, goats, llamas, and sheep. The 2018 Farm Bill established a maximum annual per person and legal entity payment limitation for LFP of $125,000. More details about the LFP program can be found at: https://www.fsa.usda.gov/tools/informational/fact-sheets/livestock-forage-disaster-program-lfp

Livestock Indemnity Program (LIP):  This program benefits to livestock owners or contract growers for livestock deaths in excess of normal mortality caused by adverse weather. Note that drought is not an eligible adverse weather event except when death loss is associated with anthrax which occurs because of the drought. In addition, Mycoplasma Bovis is an eligible loss during drought for bison. Payment levels are based on national payment rates that are 75% of the market value of applicable livestock. Cattle, poultry, swine and other livestock are covered. More information about LIP can be obtained at: https://www.fsa.usda.gov/tools/informational/fact-sheets/livestock-indemnity-program-lip

Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish (ELAP): This program provides emergency assistance to eligible producers of livestock, honeybees, and farm-raised fish for losses due to disease, or adverse weather not covered by the Livestock Forage Disaster Program and the Livestock Indemnity Program. Assistance is provided for losses resulting from the cost of transporting water to livestock and hauling livestock to forage or other grazing acres due to a qualifying drought. For commercial bee producers, ELAP provides for additional feed purchased to sustain honeybees during drought conditions when natural feed is not available. ELAP also assists farm-raised fish operations for excess mortality and excessive feed requirements due to eligible weather conditions.  Learn more about each facet of the ELAP program at:  https://www.fsa.usda.gov/programs-and-services/disaster-assistance-program/emergency-assist-for-livestock-honey-bees-fish

Emergency Conservation Program (ECP): This program provides funding and technical assistance for farmers and ranchers to restore farmland damaged by natural disasters and for emergency water conservation measures in severe droughts. Specific assistance can be sought for providing emergency water during periods of severe drought to grazing and confined livestock or through existing irrigation systems for orchards and vineyards. Additional details about ECP program can be found at: https://www.fsa.usda.gov/tools/informational/fact-sheets/emergency-conservation-program-ecp

Disaster Assistance Discovery Tool: FSA has developed an on-line disaster assistance discover tool which allows producers to learn the USDA assistance programs which might fit their operation due to this year’s drought. This easy-to-use tool can be accessed at: https://www.farmers.gov/protection-recovery/disaster-tool

Take Action and Report: Producers are encouraged visit their local Farm Service Agency office to report crop and livestock losses. By providing this data, producers can learn their eligibility for the FSA disaster programs. Additionally, this data can serve as a catalyst for potential ad hoc disaster relief programs for crops and livestock which are not covered by an existing program.

More information on FSA Programs: Producers are encouraged to contact their local Farm Service Agency office to explore program which they may be eligible. Producers can locate their local office at: www.fsa.usda.gov/oh

 

 

 

 

Farm Office Live Scheduled for October 18

OSU Extension will be offering the October Farm Office Live webinar on Friday, October 18 from 10:00 to 11:30 a.m.  Farm Office Live is a monthly webinar of updates and outlooks on legal, economic, and farm management issues that affect Ohio agriculture. Some of the topics which will be addressed during this webinar include:

  • Fall Crop Insurance Update
  • USDA Drought Assistance Programs
  • Legal Update
  • Tribute to Paul Wright
  • Is H-2A a Viable Option for Your Farm
  • 4th Quarterly Fertilizer Price Summary
  • Winter Program Update

Featured speakers include guest Farm Office members Peggy Hall, Jeff Lewis, David Marrison, Robert Moore, Eric Richer, and Clint Schroeder. Register for this and future Farm Office Live webinars through this link on farmoffice.osu.edu.

Ohio State University Grain Marketing Update on October 18

OSU Extension invites Ohio grain producers to grab a cup of coffee and join a grain marketing conversation with Dr. Seungki Lee, Assistant Professor in the Department of Agricultural, Environmental and Development Economics (AEDE) from 7:30 to 8:00 a.m. on October 18, 2024.

During this webinar held via Zoom, Dr. Lee will provide his insight on the October 11  World Agricultural Supply and Demand Estimates (WASDE) crop report and the current state of the Ohio grain market. “This early morning webinar will be a great way for Ohio farmers to learn more about the factors impacting the corn, soybean, and wheat markets” said David Marrison, Interim Director for OSU Extension’s Farm Financial Management and Policy Institute.

There is no fee to attend this webinar. Pre-registration can be made at go.osu.edu/coffeeandgrain. These webinars are sponsored by: OSU Extension, Farm Financial Management & Policy Institute (FFMPI), and the Department of Agricultural, Environmental and Development Economics (AEDE) all located in The Ohio State University College of Food, Agricultural, and Environmental Sciences (CFAES). More information can be found at: http://farmoffice.osu.edu

 

The Longshoreman Strike:  How Might It Affect Agriculture?  

By: Ian Sheldon, Professor and Andersons Chair of Agricultural Marketing, Trade, and Policy, Agricultural, Environmental, and Development Economics, Ohio State University and

Chris Zoller, Interim Assistant Director Agriculture & Natural Resources (ANR), Professor and Extension Educator, ANR, Ohio State University Extension – Tuscarawas County

Click here for PDF version of this article

Background to the Strike

With growing pressure on farm margins (Jonathan Coppess, Squeezing the Farmer Part 1: Initiating Examination of a Persistent Challenge, Gardner Policy Series, September 26, 2024), and no relief currently in sight from a new Farm Bill being negotiated and signed by Congress (Farm Policy News, 2018 Farm Bill Extension Expires – What Does That Mean?, October 3, 2024), the first major dock strike since 1977 has some potential to exacerbate the current rather negative market outlook for US agriculture.  The strike also comes at a time when agricultural trade forecasts by USDA’s Economic Research Service (ERS) indicate the sector will continue to run a deficit for 2024 (USDA/ERS, Outlook for U.S. Agricultural Trade, August 2024).

At midnight September 30, the contract between the International Longshoremen’s Association (ILA) and the United States Marine Alliance (USMX) expired, negotiations between the parties having been stalled since June of this year, dockworkers going on strike on October 1 (Farm Policy News, Dockworkers Begin Strike at East and Gulf Coast Ports, October 1, 2024).  The ILA represents an estimated 25,000 affected port workers, while the USMX represents ports on the East and Gulf Coasts and container carriers operating out of those ports.  The ILA has been seeking wage increases exceeding the 32 percent won last year by the International Longshore and Warehouse Union which represents West Coast dockworkers.  In terms of U.S. agricultural trade, of the $174 and $196 billion exported and imported in 2023, 38 and 43 percent respectively went through the affected ports (USDA, Global Agricultural Trade System, 2024).

Impact on Grain and Oilseeds Exports

Key to understanding the potential impact of the strike is the distinction between containerized trade and bulk shipping.  Agricultural exports via East Coast ports such as Philadelphia and Savannah are by container, while bulk commodities such as soybeans, corn and feed grains, Ohio’s top-3 exports (USDA/ERS, Annual State Agricultural Exports, 2024), are handled by ports on the Gulf Coast.  For example, in 2023, of the $16.8 billion worth of agricultural exports, only $700 million was by containers (see figure) (Joe Glauber, The Likely U.S. Longshoreman Strike and Its Implications for Agricultural Trade, IFPRI, September 30, 2024).

Importantly, bulk grain facilities operate with different labor arrangements, either non-union or different labor unions that are not on strike, which means that bulk commodity exports will not be affected by the strike.  For example, in 2023, 1 billion bushels of soybeans went through the Gulf Coast, compared to 100 million bushels exported by container via ports such as Baltimore and Charleston (Jim Wiesmeyer, Chances of a Strike at East Coast and West Coast Ports are Growing: Here’s How it Could Impact Farmers, AGWEB, September 20, 2024).  The bottom line is that the strike is expected to have only a modest direct impact on bulk commodity exports.  However, there could be specific geographic effects for those producers operating near to ports such as Norfolk, Virginia which handles 60 percent of containerized soybean exports. Specifically, it could result in a sharp decline in basis, as local supply builds up, combined with limited demand due to disruptions at the port (American Farm Bureau, $1.4 billion in Weekly Ag Trade at Risk, September 25, 2024).

Impact on Other Agricultural Exports

In terms of other agricultural exports, the impact of the strike on grain and oilseed producers is largely tied up with what will happen to US animal product exports.  Products such as chilled or frozen meat, eggs, and other livestock products are mostly shipped in containers out of ports such New York/New Jersey, Wilmington, and Houston. For example, 78 and 36 percent of waterborne exports of poultry and meat respectively are delivered via the affected East Coast ports (American Farm Bureau, $1.4 billion in Weekly Ag Trade at Risk, September 25, 2024).  Essentially, if containerized exports of animal products are slowed down or stopped by the strike, not only will it depress animal product prices, but it will also have negative feedback effects on soybean and feed grain producers, and would very likely put further downward pressure on farmgate prices. (Jim Wiesmeyer, Chances of a Strike at East Coast and West Coast Ports are Growing: Here’s How it Could Impact Farmers, AGWEB, September 20, 2024).

Impact on Consumers

At a time when the rate of food price increases has started to slow down, the strike may have some quite specific effects in the grocery store, although it should be pointed out that the two largest suppliers to the United States, Canada and Mexico, ship over 94-97 percent of their agricultural and food products overland by truck and train (Joe Glauber, The Likely U.S. Longshoreman Strike and Its Implications for Agricultural Trade, IFPRI, September 30, 2024).  Outside of North America, 70-80 percent of European Union (EU) exports transit through the East and Gulf Coast ports, with other countries in South America, Africa and Asia also depending on these ports to access the United States (USDA, Global Agricultural Trade System, 2024).  In 2023, the top-15 imports accounted for $120 billion in value, with over 41 percent coming through ports affected by the strike.

Although processed fruits and vegetables are the leading U.S. agricultural import, most products enter via either West Coast ports, or from Mexico and Canada.  However, commentators have pointed out that imports and prices of perishable products such as bananas could be significantly affected, 75 percent of banana imports coming through ILA-handled ports from Guatemala, Ecuador, Costa Rica, Colombia, and Honduras (Joe Glauber, The Likely U.S. Longshoreman Strike and Its Implications for Agricultural Trade, IFPRI, September 30, 2024).  Other products that are likely to see higher store prices include imported cherries, canned foodstuffs, and chocolate, as well as imported beer, wine, whiskey, and rum (American Farm Bureau, $1.4 billion in Weekly Ag Trade at Risk, September 25, 2024).

Planning for 2025

While the impact of this strike on Ohio agriculture is uncertain, it does reiterate the importance of farm management, records analysis, and financial budgeting and planning.  Ohio State University Extension has recently released commodity budgets for 2025 available here: https://farmoffice.osu.edu/farm-management/enterprise-budgets.  These budgets provide an ability to use your own farm numbers to evaluate profitability based on expected returns and input costs.  Additional farm management information is available here: https://farmoffice.osu.edu/ and by contacting your local Extension Educator.

 

The Case for an Outside Board of Directors for Closely Held Farm and Agricultural Businesses

Published as part of the Farm Financial Management and Policy Institute’s Manager’s Library Series

Written by:

John Foltz, Professor Emeritus, The Ohio State University; and Dean Emeritus, College of Agricultural and Life Sciences, and Professor Emeritus, Agricultural Economics, University of Idaho

Lance Woodbury, Principal, Pinion (formerly KCoe Isom, LLP)

Jay Akridge, Trustee Chair, Teaching and Learning Excellence and Professor, Department of Agricultural Economics, Purdue University

Many closely held or family businesses make the decision to incorporate for the positive benefits provided by a corporate legal structure. These benefits include corporate personal liability limits and the potential for a corporation to survive the departure of a principal member of the business due to their decision to leave the business or their death. One of the requirements for incorporation in many states is the establishment of a board of directors.

Some owners of closely held companies view incorporating as unnecessary and overreaching. These companies may have a “compliance” board that fulfills legal requirements but has little input in strategic business decisions. While a compliance board may give the owner a greater sense of control, it also has downsides. As Harvard University professor Noam Wasserman describes in his book The Founder’s Dilemmas, “Most entrepreneurs want to make a lot of money and to run the show.” Wasserman’s research indicates, “It’s tough to do both. If you don’t figure out which matters most to you, you could end up being neither rich nor king.”

This publication delves into the composition of boards of directors—how the right board members can benefit closely held farm and agricultural corporations.

The Founder’s Dilemmas

In The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup, Wasserman states that entrepreneurs “face a choice between making money and controlling their business. And each choice comes with a trade-off” (Table 1).

Click here to access PDF of The Founder’s Dilemmas. Source: The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup, Noam Wasserman, 2013.

This publication focuses on the board of directors: the role it will play and who serves on the board. According to Wasserman, decisions about the board are heavily dependent on the ambitions and goals of the founder/owner of the farm or agricultural business.

Types of Boards

Edward Robson of Robson and Robson, a Pennsylvania law firm, writes about types of boards in his blog Prepare to Be Boarded! Robson’s key types of boards are outlined below.

COMPLIANCE BOARD

At one end of the continuum is the compliance board. A compliance board is a nonfunctional board meant to meet legal requirements. In fact, it may comprise only the owner(s) of the closely held business. Nonfunctional means the board has no material influence on the decisions of the organization and exists to satisfy legal requirements.

INSIDER BOARD

One step away from a compliance board, and as Robson states, “toward a functioning board,” is the insider board. This type of board may be established by the founder but is designed to involve the family and senior management in big-picture planning. However, the owner(s) retain ultimate decision-making authority.

INNER CIRCLE BOARD

Moving closer toward a more independent board, the inner circle board contains directors the founder(s)/owner(s) know well but who bring perspective and knowledge that is different from, and beyond that, of the owner. This type of board can provide important guidance on growth and profitability, as well as other strategic issues—and perhaps challenges the thinking of the owner(s)—but the owner retains the authority to make decisions.

INDEPENDENT BOARD

With this type of structure, outside/independent directors have no tie (employment, familial, or otherwise) to the company aside from their role as directors. The goal for these directors is to be more objective and less deferential to ownership than members of the previous types of boards. They expect their input to be considered and acted upon, and the owner(s) may not retain full decision-making authority as they would with the other board structures.

The Case for the Independent Board

Figure 1 (click graphic to view enlarged image). The “Ladder of Professionalism.” Source: Pinion, LLC.

Pinion, LLC, a food and agricultural consulting firm, has developed a “ladder of professionalism” of the closely held firm that outlines a range from “survival” to “institutional.” This ladder describes a firm’s growth towards more formal governance as it adds new skill sets as well as plans for generational transitions (Figure 1). From an initial start-up where the farm or agricultural business focuses on survival and securing financial stability, the firm progresses to stability and growth in net worth. Pinion describes the next stage beyond stability as a move to a more professional business, where nonfamily management, policies, and formalized roles are introduced. The ladder culminates in an institutional business with a potential mix of family and nonfamily shareholders, the addition of outside managers, a board of directors as a governing body, and the board’s duty to hire and evaluate a CEO (who may or may not be the founder of the business).

Where Is Your Farm Business on the “Family Business Continuum?”

An important point for consideration is where the family/closely held corporation sees itself in terms of emotion versus logic. Closely held family businesses can span two ends of a business continuum (Figure 2). At one end of this continuum is the choice of the family to focus more on the emotional or “family-oriented” nature of the business. This type of business might allow family members to join and/or remain in the business even if their performance would be characterized as “poor” or “needs improvement” by an impartial observer. Other traits might be “making room” for children, nieces, or nephews whose addition places strains on cash flow or profitability. The overarching point is that emotion and/or familial ties weigh heavily on the firm’s goals and decisions.

Figure 2 (click graphic to view enlarged image). The Family Business Continuum. Source: Pinion, LLC.

At the other end of the continuum are “business-oriented” firms whose primary approach is to make logic-based, rational decisions. This type of firm focuses on achieving key performance indicators (KPIs), maximizing profitability, and achieving strategic goals—family considerations have much less impact on decisions.

While most family businesses are not on one end or the other, the continuum helps a manager/owner reflect on the general weight that emotion and logic play in the firm’s decision-making processes. In reality, almost all firms operate somewhere between these two extremes. However, if your closely held business has grown in size (measured by sales, profitability, assets, and number of employees, among other measures) and complexity, it may be time to consider a more professional governance structure. Such a decision is heavily dependent on some degree of consensus among key family or business members as they explore a more professional approach to business governance. Some key points to consider and ways to start this process are outlined below.

The Benefits of an Independent Board of Directors

Robson states, “Good business decisions can’t be based on fleeting passions and grievances. They should be grounded in a rational and impersonal assessment of the situation. An (independent) board can help ensure that such an assessment is the norm.” This is good advice but it is typically easier said than done within the confines of the closely held farm or agricultural business. “One can’t flip a switch and instantly separate business from emotion,” says Robson. “But a Board of Directors is tremendously helpful in creating that separation. A healthy separation between closely held companies and their owners reminds owners they are not their companies, and vice versa.”

Another important reason to consider an outside board is that it broadens the firm’s access to expertise. It’s important to ask a number of questions to achieve this goal. What are the areas of the business/industry where family members excel? What are the expertise gaps that external directors could fill? Can someone with deep financial insights add value? Or is there someone with extensive technical knowledge, or policy/regulatory knowledge, or just someone who ‘knows business’ in an entirely different industry that can offer expertise?  Diverse perspectives provide a rich base of insights to draw from as the firm sets its strategy for the future.

Some farm and agricultural business owners may still have doubts and perceive the drawbacks of installing an independent board. With proper planning many concerns can be addressed, but a competent attorney or a consultant with expertise in this area should be engaged. According to Robson, owners who fear giving up control of their business can maintain control as long as they are the controlling shareholders. Owners who are afraid of sharing confidential information with an independent board can have directors sign nondisclosure agreements. Owners who fear they’re going to have to waste time on the formalities of having a board can bring in a co-worker to compile agendas and materials and take meeting notes. According to Robson, owners who fear they’d have to waste money on compensating directors can provide equity (rather than cash compensation) to their directors—and hopefully the directors create the kind of value that dwarfs their compensation.

If a fully independent board is a step too far for a closely held family business, the firm can add an independent director/advisor to their family board and obtain at least some of the benefits of an independent board. This individual can be selected based on the specific expertise they would bring to the firm. It is also important to develop a set of expectations for an independent director/advisor:

  • What role do you want them to play?
  • How much time are they expected to spend?
  • What authority, if any, do they have in decision processes?

These individuals can serve in the role of an outside advisor, providing insight into areas not well addressed by family board members. And, in some cases, it is possible this will be a reciprocal relationship—the individual can serve as the owner’s outside adviser if the owner serve as theirs. This external board member/adviser may provide a more palatable alternative to an independent board and could also serve as a first step toward such a board, allowing the family to evaluate the benefits and costs of an outside, independent board.

Food for Thought—and Possible Action

The adoption of an independent board is not a decision to be undertaken without thoughtful discussion and assent from most or all members of a closely held corporation. However, the benefits to the firm that have been reviewed provide “food for thought,” and possible action. Action to move in this direction includes discussion of the topic among the members and owners of a firm. Many closely held/family-based farm businesses find that a consultant can assist in these challenging discussions. If the decision is to move in this direction, then it is also important to work with an attorney well-versed in these types of dealings. A checklist is provided below that may prove helpful in this decision process.

In the end, ask yourself if your farm or agricultural business can benefit from “hybrid vigor,” the scientific principle that the offspring of genetically different parents (in this case, the owners and the independent board members) exhibit increased vigor, yield, and general health, which translates to improved business growth and profitability.

Checklist 1 – click here to download PDF of the checklist to use when considering the move to utilize an independent board for the closely held farm or agricultural business.

Some of the ideas and thoughts in this publication were generated at a Table Talk held at the Farm Foundation Roundtable meetings in Kona, Hawaii on January 19, 2024. The authors also appreciate the review provided by Duane Grant of Grant 4-D Farms in Rupert, Idaho. Portions of this publication were originally published by WATT Global Media in Feed & Grain Magazine at feedandgrain.com/15669768.

Valuable Habits for Effective Managers and Employees

Published as part of the Farm Financial Management and Policy Institute’s Manager’s Library Series

Written by:

John Foltz, Professor Emeritus, The Ohio State University; and Dean Emeritus, College of Agricultural and Life Sciences, and Professor Emeritus, Agricultural Economics, University of Idaho

Margaret Jodlowski, Assistant Professor; Department of Agricultural, Environmental, and Development Economics; The Ohio State University

Jay Akridge, Trustee Chair, Teaching and Learning Excellence and Professor, Department of Agricultural Economics, Purdue University

Have you ever thought about habits? When we hear the word, we often think first of “bad” habits, like cracking our knuckles or biting our nails, which are easily recognizable and relatively minor in terms of their impact on others. Habits, however, encompass many other behaviors, some more conscious than others. They often impact our ability to function in the workplace as either a manager or as an employee. An old adage says, “We are what we repeatedly do. Excellence, then, is not an act but a habit.” Making our habits reflect who we are and who we want to be means both breaking bad habits and starting good ones.

In this article, we discuss how to first recognize the bad habits that may be holding you back and then how to replace them with habits that have a documented impact on improving on-the-job effectiveness as either a manager or an employee. We will focus our discussion initially on habits—what they are and how we might rid ourselves of bad ones. We will also review how we can make positive habits part of our lives and our work. Then, we will look at the positive habits of successful and effective people, and how they might benefit you as the leader of your farm or agribusiness.

Habits, Good and Bad

Habits are the building blocks of behavior. They are patterns that we follow for situations in our personal and professional lives that dictate how we interact with ourselves and those around us. Habits form naturally to reduce our cognitive burden—when we do not have to think as hard about what to do in a given situation, we are typically better off, at least in the short term. Any habit, whether good or bad, has three components:

  1. the cue or trigger
  2. the routine
  3. the reward

The cue is the external stimulus that prompts a response. The actions performed after the cue, regardless of how conscious or unconscious, form the routine. The reward is the signal the brain receives that the habit cycle is complete. Later in this article, we will review how behavior change requires targeting one or more of these components of a habit.

Good Habits in the Workplace

Successful and effective managers have elements of their success that are not easily replicable. Nonetheless, surveys of habits that result in proven managerial effectiveness reveal many commonalities. These seemingly small behaviors add up to form one’s management style and on-the-job personality. They reduce workplace friction, save operation time, and provide the tools to more easily confront unexpected disruptions. A review of the research reveals the common and easily replicable habits of effective managers.

Effective Management: Leading by Example

One of the classic studies of effective management is almost certainly one you may have heard of, or perhaps even read. A longstanding bestseller and something of an “oldie but goodie,” The 7 Habits of Highly Effective People by the late Dr. Stephen R. Covey, laid the early groundwork for our understanding of effective managerial and personal traits. Covey asserts that our “character is a collection of habits,” and that these habits have a powerful role on our lives. An important feature of his seven habits is the way in which each emphasizes the need to move from dependence, which characterizes new workers, to independence, which is where many managers tend to get stuck, to the ultimate goal of interdependence, which acknowledges the need for effective management to identify and incorporate the work of others into the operation in order to increase achievement.

Covey’s identification of independence within his framework is an important one, especially as more attention can be attributed to its value. While independence is inherently valuable, an over-emphasis on this value can be extremely limiting from an operational perspective. Operators must acknowledge that in today’s world, their operation is interdependent on actors inside and outside of their business. A model of strict independence is limiting when the environment is interdependent, as it is today for most operations in the food and agricultural value chain. Effective operations in this sector need both leaders and team members to advance goals and make progress.

Dr. Stephen R. Covey’s list of seven habits:

  1. Be Proactive.
  2. Begin with the end in mind.
  3. Put first things first.
  4. Think win/win.
  5. Seek first to understand, then to be understood.
  6. Synergize.
  7. Sharpen the saw.

Taken together, these habits reveal important characteristics of managers. The first two habits reveal the need to overcome our natural human (and managerial) tendency to be reactive rather than proactive. Reactionary management does not anticipate change well and thus cannot respond effectively to it. Without end goals in sight, managerial decisions often are reduced to reactions to external forces. Of course, reactions are needed on occasion, but the bulk of the steps a business takes should be internally driven, proactive, and focused on furthering the operation’s stated mission or targeted goal.

Knowing the mission of one’s life and operation is central to the first three habits. This requires knowing what the “first thing” is, and putting it first in order to have a clear picture of what one wants out of life and what one wants their operation to achieve. Thinking critically about the specifics of an operation’s mission, including as many details as possible, is foundational to effective management.

The next three habits (4, 5, and 6) deal with interpersonal relationships—an area of heightened importance for promoting one’s operation in an interdependent framework. The concept of a “win/win” strategy may feel somewhat tired, but it is oft-repeated for a reason—effective managers seek agreements and relationships that are mutually beneficial. Solutions that both parties see as a win are far more likely to achieve long-term success than the alternative. Covey even states that in cases where a win/win situation cannot be achieved, walking away from the deal may be the best alternative. Effective interpersonal communication is best encapsulated by habit 5. Effective listening is not just echoing what the other person has said through the lens of your experience. Rather, it is putting yourself in the other person’s situation, and determining their intentions, motivations, and expectations. Such empathetic listening can be a challenge but pays dividends through smoother interactions. It also contributes to the synergy of one’s organization. Although synergy has taken on buzzword status, it defines the nature of an effective operation as one that leverages individual differences to create a well-functioning whole. We can summarize habits 4, 5, and 6 by saying effective people communicate effectively.

Habit 7 may be one of the most difficult for managers to take on, despite its demonstrated importance for long-term efficacy. Covey is emphatic that you should take time out from “production” to build “production capacity” through personal renewal of your physical, mental, social/emotional, and spiritual dimensions. The approach to doing so may vary. Readings, vacations, retreats, and personal time are all methods of “sharpening your saw.” One of the keys to building in the capacity to take time to recharge is effective delegation. Indeed, management is “the process of getting things done with and through other people.” In your role as manager/leader, perhaps nothing is more important than growing the skills of your people, and this happens in part by giving people increasing levels of responsibility. Managers should practice the habit of delegation, which will then allow them to take time away from the operation. Although the emphasis on relaxation may seem counter to many managers’ tendency to “burn the candle at both ends,” the benefits far outweigh any of the perceived costs.

How Can We Change Our Habits?

Figure 1: The stages of behavior change (click graphic to view enlarged image). Source: Prochaska, Norcross, and DiClemente; Changing for Good: A Revolutionary Six-Stage Program for Overcoming Bad Habits and Moving Your Life Positively Forward, 1994.

Any change in habit requires changing behaviors that have in many cases become ingrained in our personalities and our day-to-day lives. These behavior changes are much easier to think and talk about than they are to actually implement. Proven ways are available on how to break bad habits and there are steps we can follow for starting good habits. Figure 1 illustrates the steps needed to change a behavior, based on the work of Prochaska, Norcross, and DiClemente in Changing for Good: A Revolutionary Six-Stage Program for Overcoming Bad Habits and Moving Your Life Positively Forward. Although the steps seem simple, implementation is the challenge.

Habit-change happens by targeting the three components of habits:

  • the cue
  • the routine
  • the reward

Changing the cue involves creating a new indicator that a habit, particularly a good one, is needed. This can take many forms—an alarm on your phone or other device, a physical cue, or a mental shift. Thinking differently about a behavior you want to change, as simple as it sounds, has been shown to serve the same purpose as a physical cue.

To change the routine that makes up a habit, you must think about the underlying factors behind a bad habit or lack of a good habit. Think about why you do what you do and why it would be valuable to do things differently. Use physical reminders to make implementing the new routine as easy as possible. Finally, change the reward. Often, implementation of a good new habit yields dividends that are rewards unto themselves. For bad habits, behavior tracking often helps, especially as it allows for easily acknowledging the milestones achieved. Knowing yourself means knowing what kind of reward will be most motivating and what will encourage the continued maintenance of the new habit.

Old habits are difficult to break because they are ingrained (comforting, familiar, and easy). We have done them so many times, they come to us naturally. They are tried and true, and form a part of who we believe we are. Simply knowing a habit is bad is often not enough to break it. Mastering one’s habits and instituting behavior change, however, requires dedicated effort and well-supported techniques. Techniques for changing habits and behaviors include vision setting, which involves setting goals for changes that are achievable and within reason. People often fail at changes because they start with objectives that are too extreme. When people fall short of these changes, discouragement can set in. Small, achievable wins are more likely to sustain momentum. Apply daily consistent and purposeful effort to implement new habits and behaviors, regardless of their magnitude.

Believe in your ability to make changes in your life. Self-belief is also a habit, and it makes it easier to be patient with yourself, keep your head down, and keep pushing.

Fight to make the changes stick. Thinking of new habits as a fight for who you would like to be versus who you have been is a mindset that reinforces and reaffirms changing habits.

Behavior can be changed, and you can become a more effective manager or help your employees become more effective employees. Start by taking stock of one or two key habits you would like to begin or change. Then, prepare yourself and take action to implement them. Write them down, and then work every day to implement them. To really ensure success, have one or two of your key, trusted people assist you in changing your behavior or launching a new good habit. Explain to them what you are doing and why, and then ask for assistance in making these desirable traits part of the way you lead and manage.

Change is Hard Work, so We Must Work Hard to Change

The reality is that all of us can improve our habits, which can be good for your farm or agribusiness. Change does not come easily, but once a good behavior or best practice becomes a habit, it is part of your management routine and will make you (and/or your employees) a more effective manager.

Portions of this publication were originally published by WATT Global Media in Feed & Grain Magazine at:
feedandgrain.com/grain-handling-processing/grain-facility-management/article/15400876/valuable-habits-for-effective-managers-and-employees

Watch “Farm Office Live” Live from Farm Science Review on September 19

The fifth season of our Farm Office Live webinar will kick off at the Farm Science Review next Thursday, September 19, 2024.  Grab a cup of coffee and join us from 10:00 a.m. to Noon for updates from the legal and farm management experts on OSU’s Farm Office team.

Here are the topics we’ll address live from the Farm Science Review:

  • Extreme Weather Management
  • USDA Drought Assistance Programs
  • Legal Update
  • Crop Inputs and Budgets Outlook for 2025
  • Ohio Farm Custom Rates
  • Quarterly Fertilizer Price Summary
  • Retirement Planning
  • 1099 Employees
  • Quicken vs QuickBooks

Featured speakers include guest Aaron Wilson, OSU’s Ag Weather and Climate Field Specialist and our entire Farm Office Team consisting of Bruce Clevenger, Peggy Hall, Jeff Lewis, David Marrison, Robert Moore, Eric Richer, Clint Schroeder and Barry Ward.

Register for our Farm Office Live webinars, which will continue through next April, through this link on farmoffice.osu.edu.