2016 Ohio Farm Custom Rates

by: Barry Ward, Leader, Production Business Management Department of Agricultural, Environmental and Development Economics & John Barker, Extension Educator Agriculture/Amos Program, County Director- Ohio State University Extension Knox County

A large number of Ohio farmers hire machinery operations and other farm related work to be completed by others. This is often due to lack of proper equipment, lack of time or lack of expertise for a particular operation.  Many farm business owners do not own equipment for every possible job that they may encounter in the course of operating a farm and may, instead of purchasing the equipment needed, seek out someone with the proper tools necessary to complete the job. This farm work completed by others is often referred to as “custom farm work” or more simply “custom work”. A “custom rate” is the amount agreed upon by both parties to be paid by the custom work customer to the custom work provider.

The custom rates reported in this article are based on a statewide survey of 365 farmers, custom operators, farm managers and landowners conducted in 2016. These rates, except where noted, include the implement and tractor if required, all variable machinery costs such as fuel, oil, lube, twine etc., and the labor for the operation.

Some custom rates published from this study have a wide range. Possible explanations are the type or size of equipment used, size/shape of fields, condition of the crop (for harvesting operations), the value of labor, the mix of labor and equipment used and the different income goals of full-time custom operators versus farmers supplementing their income. Also some custom operations are provided at bargain rates due to family relationships between the parties or due to the fact that custom providers may see an increased probability of eventually securing the custom farmed land in a cash rental or other rental agreement. Some providers are simply attempting to spread their fixed costs over more acreage to decrease fixed costs per acre and are willing to forgo complete cost recovery of their variable costs.

Average custom rates reported in this publication are a simple average of all the survey responses. The Range rates represent -/+ one standard deviation around the average1. The Median represents the middle value in the survey responses. The Minimum and Maximum reported reference the minimum and maximum responses from the survey data for a given operation.

Charges may be added if the custom provider considers a job abnormal such as distance from the operator’s base location, difficulty of terrain, amount of product or labor involved with the operation, or other special requirements of the custom work customer.

There is no assurance that the average rates reported in this publication will cover your total costs for performing the custom service or that you will be able to hire a custom operator for the average rate published in this factsheet. Calculate your own costs carefully before determining the rate to charge or pay. It may be helpful to compare these custom rates with machinery costs calculated using an economic engineering approach. The data are intended to show a representative farming industry cost for specified machines and operations. The following resources are available to help you calculate and consider the total costs of performing a given machinery operation. Users may also consider using the data contained in these publications as a base for future custom rates.

Farm Machinery Cost Estimates available at:

https://drive.google.com/file/d/0B3psjoooP5QxWWd3a2cwblJCTjQ/viewMachinery

Economics at farmdoc:

http://www.farmdoc.illinois.edu/manage/index.asp

Estimating Farm Machinery Costs

http://www.extension.iastate.edu/agdm/crops/html/a3-29.html

Before entering into an agreement, discuss all of the details of the specific job with the other party.

Fuel prices have an impact on custom rates and rates may fluctuate based on large movements in fuel prices. The approximate price of diesel fuel at the time of this survey was $1.75-$2.50 per gallon for off-road (farm) usage.

1 Standard deviation is a measure of the variability of the survey responses. One “standard deviation” both above and below the average (mean) includes approximately two-thirds of all survey responses.

Click here to Access the Ohio Farm Custom Rates 2016 Data Tables

Prevalence and Cost of On-Farm Produce Safety Measures in the Mid-Atlantic

By Erik Lichtenberg and Elina Tselepidakis

We use data from a survey of leafy greens and tomato growers in the Mid-Atlantic region to investigate the prevalence and cost of produce safety practices required under the proposed Produce Rule implementing the Food Safety Modernization Act (FSMA).  Majorities of our respondents currently employ most of the food safety practices that would be required under the proposed Produce Rule.  But the Produce Rule will nevertheless require changes on the part of a large number of growers.  We find no evidence that the use of any of these practices is correlated with farm size. We do find some evidence that the shares of product sold to grocery/retail and to restaurants are positively correlated with the probability of testing water, soil amendments or product, consistent with theoretical literature suggesting that traceability increases incentives to take precautionary measures.  We find that all of these practices exhibit substantial increasing returns to scale, implying that the burden of complying with the provisions of the Produce Rule is much lower for large operations than small ones.  Our estimates suggest in addition that compliance costs are likely to be burdensome only for a handful of practices, notably testing of soil amendments, employee training, facility sanitation, and sanitizing harvest containers; further, that burden is likely to be much greater for small and very small operations than for large ones.  See more at: http://ageconsearch.umn.edu/bitstream/168210/2/Prevalence%20and%20Cost%20of%20On-Farm%20Produce%20Safety%20Measures%20in%20the%20Mid-Atlantic%20AAEA.pdf

The Food Safety Modernization Act and Production of Specialty Crops

By Luis A. Ribera, Fumiko Yamazaki, Mechel Paggi and James L. Seale, Jr

In Choices, Quarter 1, 2016, a publication of the Agricultural & Applied Economics Association

One way economists evaluate the impacts of policies on farms is through the development and analysis of so-called “representative farms.”  Representative farms are virtual farms developed by a panel of producers for a specific crop or crop mix at a specific location.  We calculate the average cost of production per acre for the representative produce farms, excluding any food safety compliance costs.  We then show the results of an analysis of the impacts on the profitability of selected representative farms by comparing results without and with the costs of complying with the Food Safety Modernization Act (FSMA).

The profitability of representative small farms is more negatively affected than the profitability of representative large farms under FMSA.  Also, the level of the impact of FSMA compliance costs varies significantly across states.  For example, the source of irrigation water, either surface or underground, has to be treated differently, as surface water has higher chances of having a higher microbial count; therefore surface water needs to be tested more often, which increases FSMA compliance costs.

See more at: http://www.choicesmagazine.org/choices-magazine/theme-articles/producer-impacts-of-the-food-safety-modernization-act/the-food-safety-modernization-act-and-production-of-specialty-crops#sthash.wFgNXNh1.dpuf

 

CAUV Bills Awaiting Committee Action

Legislation proposing changes to Ohio’s current agricultural use valuation (CAUV) program has remained on hold in the General Assembly since last fall. Senator Cliff Hite (R-Findlay) and Representative Brian Hill (R-Zanesville) introduced the companion bills on November 18, 2015. The Senate referred its bill, SB 246, to the Senate Ways and Means Committee on December 9, 2015 and House Bill 398 was referred to the House Government Accountability and Oversight Committee on January 20, 2016. Neither committee has acted on its bill.

Sixth Circuit Court of Appeals will hear challenge to WOTUS Rule

In a case successfully argued by Ohio’s Solicitor Eric Murphy, the Sixth Circuit Court of Appeals based in Cincinnati has determined that it has jurisdiction to hear challenges to the Clean Water Rule (WOTUS Rule) proposed by the U.S. EPA and Army Corps of Engineers.  The Rule expands the geographic extent of the “waters of the United States” (WOTUS) that are subject to the Clean Water Act. 

A brief background

Changes Made to Ohio's Cottage Food Regulations

The Ohio Department of Agriculture (ODA) has revised regulations that implement Ohio’s Cottage Food Law, which addresses the production and sale of certain “non-potentially hazardous” foods. An operation producing a “cottage food” may do so without licensing and inspection by ODA, but must follow labeling requirements and is subject to potential food sampling by ODA.

Changes to Ohio’s cottage food regulations include the following:

New cottage food products

The Legal and Practical Aspects of the Agricultural Sales Tax Exemption

By Larry R. Gearhardt, Assistant Professor and Field Specialist in Taxation, OSU Extension

Farmers have enjoyed an exemption from the Ohio and county sales tax for many years. Historically, obtaining the exemption from the sales tax was relatively simple. The farmer merely filled out a post card sized exemption form at his local agricultural retailer, checked the box that he was involved in “agriculture,” and most of his subsequent purchases from that agricultural retailer were exempt.

Section 179 Changes Under "Protecting Americans from Tax Hikes" Act

By Larry Gearhardt, OSU Extension Tax School Director

On December 18, 2015, Congress passed and the President signed into law an agreement on tax extenders and numerous other tax provisions in the “Protecting Americans from Tax Hikes (PATH) of 2015” (the Act). Tax extenders are the 50+ tax provisions that are routinely extended by Congress on a one- or two-year basis. The Act makes permanent many of the individual and business extenders. Some of the more pertinent provisions are as follows:

Section 179 Expense Deduction

Ohio Nutrient Management Record Keeper (OnMRK) Available

by John Barker, OSU Extension – Knox County

Ohio Nutrient Management Record Keeper (OnMRK) is a computerized recordkeeping system
that sync’s with your smartphone or tablet to create a simple, easy and quick way to record all
of your fertilizer and manure applications from the field. The free app which works on tablets,
iPads and smartphones can be downloaded from the Google Play store for Android devices and
iTunes for the Apple products.

To get started, simply go to the app’s website www.onmrk.com.  After setting up your account, enter your farm and field information. Download and open the app on you smartphone or
tablet and enter your applicator key. All of the data that has been entered on your computer
will now synchronize with your smartphone or tablet. The app features drop‐down menus and
quick entry fields which make it fast and easy to enter the required information.

Click here for Ohio Nutrient Management Record Keeper Instructions

The application information you enter from the field is combined with the GPS Location data
from your smartphone or tablet. Both the current weather data and the weather forecast for
this location is recorded. Once the application is saved the data is synced with the website.
From the website you can print your application records or export them to a spreadsheet.
The app was developed with input from OSU Extension Knox County, Ohio Farm Bureau and
Knox County Soil and Water Conservation District to meet the new state record keeping
requirements for both Senate Bill 1 (SB 1) and Senate Bill 150 (SB 150).

A detailed set of instructions can be downloaded from the OSU Extension – Knox County
website at www.knox.osu.edu.

EPA Proposes Changes to the Certification and Training of Pesticide Applicators

by: Sarah Noggle, OSU Extension Paulding County

The Environmental Protection Agency (EPA) has proposed a minimum age (18) and stricter standards for certifying applicators of restricted use pesticides (RUPs). For commercial applicators in Ohio, there is no distinction between RUP and non-RUP users, hence these new proposals potentially affect the certification and recertification of all licensed commercial pesticide applicators in Ohio whether or not they actually use restricted use pesticides. Private applicators are only required to be licensed in Ohio if they use RUPs. Much of what is proposed for the stricter federal standard is already required by Ohio Law; for example, Ohio pesticide applicators already take closed book exams, must recertify on a three-year schedule, and keep pesticide records.

The proposed changes would however significantly increase the recertification requirements for Ohio pesticide applicators. The EPA has proposed that all applicators will be required to take six units (50 minutes) of core plus three (private) or six (commercial) units per category every three years. An Ohio commercial applicator licensed in one category who is now required to take five hours of recertification would have to attend twelve 50-minute sessions every three years.

An Ohio private applicator licensed in one category who now needs 3 hours of training to recertify would have to attend nine 50-minute sessions every three years. Applicators would be required to present identification at exams and recertification programs. For private applicators, the fumigation category would be split into soil and non-soil fumigation categories. There also would be an annual training requirement and minimum age of 18 for trained service persons, who under current Ohio law only require a single, verified training prior to occupational exposure to pesticides.

The public may comment on the EPA’s proposal through December 23, 2015; there have been formal requests for an extension to the deadline. Comments may be submitted to the EPA at http://www.regulations.gov in docket number EPA-HQ-OPP-2011-0183. Learn more about the proposal and certification for pesticide applicators: http://www2.epa.gov/pesticide-worker-safety/epa-proposes-stronger-standards-people-applying-riskiest-pesticides .