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Farm Employee Management: New Employee Orientation

September 11th, 2013

Contributed by Melissa O’Rourke, B.S., M.A., J.D. Farm & Agribusiness Management Specialist, Iowa State University Extension & Outreach, morourke@iastate.edu

MelissaORourke2-Nov2011You only get one chance to make a good first impression. Employee orientation is the employer’s opportunity to make good first impressions on the new employee that set the tone for the employment relationship. Unfortunately, some farm employers neglect this vital step.

All employees need orientation and training as they begin new employment. While training is an ongoing process that continues throughout employment, the orientation phase begins with the first day on the job and is generally completed within the first week or so of employment. Another article in my Farm Employee Management series provided tips and guidelines for getting the new farm employee off to a good start on the first day of employment. (See “Getting the New Employee Off to a Good Start on Day One”). That first day on the job will fly by quickly. The smart farm employer will have a plan in place for employee orientation and training. This article outlines the purposes and key components of an employee orientation program.

Purposes of Farm Employee Orientation

Employee orientation helps employees become socialized to your farm business. This process of socialization helps to reduce a new employee’s natural anxiety that comes with starting any new job. A new employee who becomes comfortable in the workplace is more likely to develop and maintain a positive attitude toward the job and the employer. That positive attitude translates into earlier and higher productivity. When the new worker is assisted in becoming quickly familiar with the work environment, the stress level decreases and the individual is better able to learn new job duties, skills and expectations. This socialization aspect of employee orientation prepares a new worker for job training. If a new employee is relieved of general stress and worry, that individual is able to concentrate and absorb substantive information about new job assignments and tasks.

Planning and Content of Orientation Program

If your farm has not previously conducted an employee orientation program, planning may seem like an overwhelming task. One way to think about orientation is to sit down with current employees and ask for input. Ask current employees what they wish they had been told when they first started working at your farm. Find out what they view as important information for newcomers. Every farm business is different, but some possible content areas to consider including the following:

Background and Overview of Your Farm: Provide new employees with your farm’s story – the history and development of the farm business. This should include information about key people in the farm’s history as well as present-day leadership. Share your farm’s mission statement, goals and objectives. While a farm tour may have been part of the pre-employment process, this should be repeated, perhaps over a series of days as the new employee is introduced to the layout of facilities, fields and operations. Throughout the process, emphasize the role and importance of employees in the farm’s success.

Employee Policies: Even the smallest farm should consider development of an employee handbook or policy document. (See “Do We Need an Employee Handbook?” in the Farm Employee Management series). As part of the employee orientation process, all key policies, compensation and benefits information should be reviewed. Do not just present the new employee stacks of documents and instructions to read. Orientation is the employer’s opportunity to review the policies, explain rationale and provide opportunities for questions or clarification.

Introductions: While the new employee may have been introduced to some individuals during the pre-employment process, introductions should be repeated. Name badges (or embroidered shirts/apparel) can be very helpful in the farm workplace. Provide the new employee with an organizational chart or list of names. Include names of people who visit the farm on a regular basis such as drivers, veterinarians, suppliers, service personnel, neighbors or relatives.

Job Duty Information: While a position description was most likely discussed during the employment process, this is a key part of the new employee orientation phase. Provide the written position description, and use it as a guide to discuss specific tasks including training that will be provided to the new employee. Emphasize basic safety and indicate the importance of ongoing safety training and awareness. Help a new employee to understand the relationship and importance of the position to other jobs and functions on the farm.

Who Should Conduct New Employee Orientation?

To assure a consistent message to new employees, it is useful to have the same person conduct orientation. However, identifying other supervisors or more experienced co-workers to participate in the process will also assist in the socialization aspect of orientation. All members of the orientation team should be those who will share a positive attitude with the new employee. Especially during the early days of employment, the new worker needs to hear constructive, upbeat messages geared toward making those good, early impressions.

A well-planned orientation program takes an investment of time and effort on the part of the farm employer. Providing a positive orientation experience during the early days of employment sets the stage for a satisfying, long-term employment relationship on your farm.

As always, feel free to contact me with any of your farm employee management questions.

Ag Decision Maker (AgDM) 

An agricultural economics and business website.

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Iowa Farmland Ownership

July 29th, 2013

Contributed by Mike Duffy, Extension Farm Management Specialist, mduffy@iastate.edu.

duffyFarmland is the major resource for Iowa.  Who owns the land and how it is farmed determines what kind of agriculture we have across the state. Every five years Iowa State University does a survey to examine the ownership of Iowa farmland.

The Iowa farmland ownership survey examined land ownership as of July 1, 2012. The final report (Farmland Ownership and Tenure in Iowa, 2012 – publication PM 1983 revised) will be available in the coming months.

One of the interesting aspects of the 2012 survey is that it shows the changes in land ownership patterns over a boom period. The last ownership survey was done in 2007 and during the intervening five years Iowa farmland values more than doubled going from $3909 per acre to $8296. This increases rivals any similar time period.

The latest Iowa farmland ownership survey is compared to previous surveys dating back to 1982, during the time when farmland values first started collapsing after the boom of the 1970s. Looking at the various surveys over the past 30 years shows some of the changes in farming technology, demographics and other patterns. The 2012 survey also shows the impact of the current land boom on these trends.

Iowa farmland is increasingly in the hands of the elderly.  In 2012 30 percent of Iowa’s farmland was owned by someone over the age of 75 years old. The percent of land owned by people in this age category had been steadily increasing since 1982, when 12 percent of the land was owned by someone over 75 years old. The trend towards increasing age does appear to have been slowed by the boom. There are younger owners although they represent a small percentage of the acres. Over half, 56 percent, of the farmland in Iowa is owned by someone over the age of 65.

Another trend that seems to have slowed is the percent of land owned by people who don’t live in Iowa full time.  In 2012, 21 percent of the farmland in Iowa was owned by someone who didn’t live in the state or only lived in Iowa part time.  This was the same percentage as found in the 2007 survey. However, in 1982, only 6 percent of the land was owned by someone who didn’t live in Iowa or only lived here part of the time. It appears that the higher land values had an impact on the ownership by non-Iowans.

Ownership of Iowa’s farmland and access to the use of the land is critical for the future of the State. The impact of the ownership on both beginning farmers and the retiring farmers will be crucial. The current situation with respect to farmland ownership in Iowa is a good topic for discussion among landlords, family or heirs, and agribusiness professionals.

Ag Decision Maker (AgDM)

An agricultural economics and business website.

Land, Whole Farm ,

“Ag Cycles” and Iowa Agriculture

July 22nd, 2013

John Lawrence , ISU Extension Director for Ag and Natural Resources, provides an update of analysis completed and information available.

ISU Extension and the ISU Economics Department have put together a series of papers titled “Ag Cycles.” This collection of papers is an analysis of the current state of Iowa agriculture from the crop, livestock, and land market perspective. It examines the question of price levels and price risk going forward. It also includes a recent analysis and papers from the Federal Reserve Bank of Kansas City, which examines previous agricultural cycles and how they played out through borrower’s behavior. Combined, this analysis provides lessons from the past and milestones as potential guides to the future.

Agricultural production and prices have always been cyclical. The influence of weather on production is one factor. The tendency of individuals to react rather than anticipate market signals also contributes to boom and bust periods. The length of the cycle differs with the commodity, and the weather and cyclical prices in one commodity will influence cyclical behavior in another market.

 This analysis is not intended to be a forecast of annual prices in the coming months or years. Nor is it predicting gloom and doom for agriculture. Rather, it is intended to help put current economic conditions into a historic context, better understand the factors that will influence prices and margins in the future, and help you prepare for whatever direction the market turns.

This series of papers can be found in Ag Decision Maker at http://www.extension.iastate.edu/agdm/info/agcycles.html.

Ag Decision Maker (AgDM)

An agricultural economics and business website.

Crops, Financial, Livestock, Whole Farm

High Grain Prices means “The Russians are Coming”

July 17th, 2013

Contributed by Kelvin Leibold, Extension Farm Management Field Specialist, kleibold@iastate.edu. Leibold_K03-L

With several years of extremely high grain prices the world of agriculture is changing.

1). We are seeing profits increasing to all-time highs. This is creating a strong incentive to expand land use which could result in a substantial decline in crop prices worldwide.

2). Cost of production has increased but not as much as revenues have increased resulting in motivation for producers to boost output.

3). Boosts in production may outpace increase in demand in the short run. Boosts in production of wheat, for example, will drag down the price of all crops.

I recently returned from Voronezh, Russia which is located in the “black earth zone” where the soils are as black as Iowa and they have enough organic matter you can scrape it loose with your foot. These are ideal soils for raising sugar beets or potatoes. They can also raise corn and soybeans. In the short run they are seeing a lot of demand for feed from the domestic livestock industry. Dairy is growing extremely fast with assistance from the government in the form of interest rate subsidies.

Land values for top land range from $250 to $750 per acre, depending on the quality of the “land title” and no property taxes. If they get adequate rain corn yields can reach 175 bushels per acre. One feels quite at home talking about seed corn companies, machinery suppliers and GPS technology. Labor is a lot different as are certain overhead costs.

Walking the fields of EKONIVA, http://ekoniva-apk.ru/en, gives one a good sense of their vastness at almost 460,000 acres. They have almost 3,000 employees. Not bad for a company that started off with $200,000 in capital less than twenty years ago. This is just one example. Black Earth Farms, http://blackearthfarming.com/about.html, is another operation with over 750,000 acres, mostly owned, which has been operating since 2005. High prices have encouraged the expansion of these and the development of many more farms. Producers from the UK, Germany, Sweden and other western European countries all faced with limited land availability and high taxes have looked to the east for opportunities.

It remains to be seen how competitive these farms will be in the long run. Competition is a function of production costs, land rents, and infrastructure (ex. Transportation costs). Russia also joined the World Trade Organization in 2012 and this will impact their domestic livestock in the coming years as we should export more meats and dairy products into their country.

On a closing note and a little closer to home: in 2012 which was more profitable on the average – an acre of corn in Iowa or in North Dakota? It’s not only the Russians to think about!

Ag Decision Maker (AgDM)

An agricultural economics and business website.

Crop Outlook, Crops, Whole Farm ,

Livestock Producers May Face Limited Feed Supplies

July 10th, 2013

schultek_final Contributed by Kristen Schulte, Extension Farm Management Field Specialist, kschulte@iastate.edu and Lee Schulz, Extension Livestock Economist, lschulz@iatste.edu.  

The changing weather and crop conditions over the past year have raised questions again regarding quality and quantity of feed availability for livestock producers across parts of Iowa. Some producers stretched forage supplies over the winter due to the widespread drought that affected last year’s crops. Some of these same areas are facing a potential limited supply of forage or corn for the coming year due to a wet spring that caused prevented planting or inability to harvest early forages. As of the first week of July, over 70 percent of corn, hay, and pasture acres are in fair to good condition; however, crop progress in much of northeast and north central Iowa is behind the other regions of the state. Although it is unknown what the rest of the growing season will bring, livestock producers can start to plan if they anticipate limited feed inventories. Livestock producers should evaluate feed inventory, feed required and financial position.

Calculating Feed Inventory

Feed inventory can account for what is currently on hand and what is expected to be harvested this growing season as feed for the coming year. Inventory should be recalculated at the end of harvest. All forages and grain allocated for feed need to be accounted for. Forages in upright silos or bunkers can be calculated with estimated capacity tables based on dry matter (DM) and size of the silo or bunker. Feed grain stored on farm will need to be accounted for based on estimated capacity measurements or starting amount less shrink and amount fed. Also, pasture conditions should be monitored to account for supplemental forage if needed.

Feed Inventory Required

Livestock inventory needs to account for all animals that consume raised forage or grain. For each species type, total tons of raised feed fed per year is needed. Also, one needs to account for expected livestock inventory, accounting for expansion or fluctuation in inventory. Daily rations or weekly feed amounts can be used to reach a yearly feed intake value for all raised feed. Differences in DM or nutrient quality may influence amount of feed required over a years’ time. Total feed required will need to last until the following year’s harvest or feed availability date (e.g., alfalfa/grass – June 1; corn silage – September 15; corn – October 1); also, this time can be extended as some forages need to ferment before feeding.

The difference between raised feed available after 2013 harvests and annual feed inventory required will determine if additional feed is needed.

Low Feed Inventory

If feed needs surpass feed availability the producer has a shortage of raised feed. If there is a surplus of feed inventory, one should evaluate if there is an adequate amount of needed carryover. If there is a shortage, one should plan for purchase of additional feed and/or evaluate alternative feedstuffs with their nutritionist or livestock specialist. Although producers may want to save money when purchasing additional feed, it is important to keep in mind quality, feed efficiency, and adequate nutrition for long term viability.

Financial Impact Considerations

Some feed decisions may have an effect on the bottom line. Is purchasing feed a financially feasible solution based on projected breakeven and profitability? What funds are available to purchase additional feed? How do crop insurance proceeds from prevented planting acres correlate with purchased feed at market prices? What ration alternatives can be made to accommodate feed costs or limited feed availability and what are the associated costs? How do these changes affect feed cost per head and how does that compare to your desired feed cost benchmark? All of these answers are ones that each livestock producer will need to evaluate for their operation.

ISU Extension Resources

Estimated feed rations for beef, swine, ewes, and dairy can be found in the livestock budgets on Ag Decision Maker, http://www.extension.iastate.edu/agdm/livestock/html/b1-21.html. A sample feed inventory worksheet can be found on the ISU Extension Dairy Team website, http://www.extension.iastate.edu/dairyteam/sites/www.extension.iastate.edu/files/dairyteam/ISURecovery44FeedInventoryAidMgmt.pdf.

 

Ag Decision Maker (AgDM)

An agricultural economics and business website.

Livestock, Other, Whole Farm ,

Communicating with Landlords, Lenders, and Grain Dealers

June 25th, 2013

Leibold_K03-LContributed by Kelvin Leibold, Extension Farm Management Field Specialist, kleibold@iastate.edu.

If you haven’t already started to talk to your landlords, lenders and grain dealers you may want to take some time to bring them up to date with what is going on with your farming practices. Plans that were put in place months ago are being revised due to events beyond anyone’s control.

Keeping them up to date with what is going on with your farm operation is critical. Some farmers are going to take “Prevented Planting” option for corn and possible for soybeans. Many of the landowners will not understand why tenants took that option. The idea of not planting may seem unreasonable. Producers are trying to maximize returns considering unpredictable outcomes such as yields, prices, and input costs such as drying costs or cover crops. You need to communicate this to your landlords. Negotiation of rental rates for 2014 will soon be underway so providing information such as satellite pictures of the farm can help “tell the story”.

Lenders, for the most part, understand the challenges you face. Most of the producers have some level of crop insurance. However, if the timing of the payments for claims or the total income available to service debt is going to be an issue you need to visit with your lender about restructuring or adjusting the timing of payments. You may also have some issue regarding your income tax liabilities and may need to spend some time with your tax advisors on how to deal with the change of timing of your income. There may be options if you need to defer income if you may end up with two years of income in one tax year.

Many producers have forward contracted grain to end users. These end users need the commodity to operate their plants, make feed, or meet their export contracts. The sooner these people are aware of challenges you may have in meeting these contracts the sooner that both of you can start to work on ways to mitigate the impact. Defaulting on these contracts is not a viable option.

Communicating early and often will go a long ways to deal with these issues. The Ag Decision Maker has several articles on improving your communication skills.  File C5-116 Improving Business Communication Skills https://www.extension.iastate.edu/agdm/wholefarm/pdf/c5-116.pdf gives some suggestions. In addition to landlords and lenders you may face challenges with your own family or co-workers in these stressful times. File C6-56 Good Communication Can Help Solve Problems http://www.extension.iastate.edu/agdm/wholefarm/pdf/c6-56.pdf can help with communication with family.

If you feel overwhelmed or are looking for some answers check out the Iowa Concern website    http://www.extension.iastate.edu/iowaconcern/ or call the HOTLINE at 1-800-447-1985.

Ag Decision Maker (AgDM)

An agricultural economics and business website.

Farmland Leasing, Other, Whole Farm

Updated survey on farm employee compensation

March 20th, 2012

Contributed by William Edwards, extension economist

Over 20,000 people make their living each year as full-time employees on Iowa farms. Iowa State University and the North Central Risk Management Education Center recently conducted a survey to study the wages and benefits they receive. The average compensation paid to these employees in 2011 was $38,929 per year, before deductions for taxes. Cash wages accounted for $33,320, or 85 percent of this total. In addition, the average employee received fringe benefits valued at $4,185 and cash bonuses of $1,424.

In a similar survey conducted in 2006 the average farm employee received $34,640 in total compensation. The change represents an average annual increase of about 2.1 percent. Employees worked an average of 2,602 hours in 2011, so on an hourly basis cash wages averaged $12.96 and total compensation averaged $15.05. The average employee had 12 years of experience working on a farm, seven of which were with the present employer. Six percent of the employees included in the survey were female, and 16 percent were born outside the United States.

The most significant benefit provided was some type of insurance plan, usually medical. Other common benefits included housing, meals, farm produce, work clothing and recreational opportunities.

Factors such as farm size, employee duties, number of other employees supervised, education and years of farm experience had a major influence on how much each employee was paid. For more details about the farm employee compensation survey see the information file link.

Ag Decision Maker (AgDM)

An agricultural economics and business web site.

Whole Farm

Mowing Restrictions Remain in Place until July 15

June 24th, 2011

Melissa O’Rourke, ISU Extension Farm & Agribusiness Management Specialist

Farmland owners and operators should be aware of recent changes to Iowa law regarding mowing along Iowa roads.  The mowing restrictions apply to private landowners as well as local government units.  Changes to mowing regulations were enacted during the 2010 legislature – so 2011 is the first full year of effectiveness. 

Mowing regulations now apply to secondary roads throughout Iowa as well as to interstates and primary roads.  This is a significant change to the roadway mowing regulations contained in Iowa Code 314.17

Secondary roads are those roads under county jurisdiction.  Primary roads are any roads or streets under the jurisdiction of the Iowa Department of Transportation (DOT). 

Mowing is prohibited prior to July 15th along any secondary road, primary road, or interstate highway in Iowa.  

However, the law contains a list of exceptions to the July 15 date.  Mowing along roadways is allowed prior to July 15th within 200 yards of an inhabited dwelling, for visibility and safety reasons, or along a right-of-way within one mile of corporate city limits.  

Mowing prior to July 15th is also allowed for purposes of access to a mailbox or other accessibility purposes – such as field access.  Additionally, mowing is permitted within 50 feet of a drainage tile or tile intake. 

Mowing is also allowed to promote native species of vegetation or other long-lived and adaptable vegetation, or to establish control of damaging insect populations, noxious weeds and invasive plant species. 

Mowing is permitted on rights-of-way adjacent to agricultural demonstration or research plots. 

Finally, the law also points out that mowing is allowed in rest areas, weigh stations and wayside parks at any time. 

Prior to enactment of these changes, the Iowa Department of Transportation (DOT) issued mowing permits as early as July 1.  The significance of changing the prohibited mowing date to July 15 is to allow a second nesting season for pheasants and other Iowa native bird populations. 

According to the Iowa Department of Natural Resources (DNR), pheasant hens that were unsuccessful in nesting during May or June will attempt a second nest. For those birds, the first two weeks of July is  critical because that is the time chicks begin to hatch from second nesting efforts.  The DNR points out that pheasants – as well as many songbird specieis – use roadside ditches for nesting and brood rearing habitat. 

Recent years have seen weather patterns making for challenging nesting seasons.  2011 is no exception throughout much of Iowa.  

With struggling pheasant populations, the DNR encourages everyone to follow the mowing regulations to provide additional opportunities for nesting success.  Summer weather patterns of dry, warm weather increase nesting success and chick survival.

Ag Decision Maker (AgDM)

An agricultural economics and business web site.

Legal & Taxes, Whole Farm

Thoughts on rents…

March 23rd, 2010

Contributed by Craig Chase, ISU Extension Farm Management Field Specialist

craig_chaseThe highest rent doesn’t always get the landlord the best return depending upon how the tenant treats the land, etc. The general economic condition for agriculture, land values, input prices, and farm profitability and land values and land rent have to over the long-run reflect the profitability of farming.

Another way to look at land rent is on a per bushel corn basis, at $3.50 per bushel for corn, how much could a tenant afford to pay for rent? Maybe about $1.15, and with 190 bushel average for good farm ground in this case should be somewhere around $220, give or take.

Also consider 1 yr versus 3 yr lease terms and the reasons for a long term agreement such as a stability of income as long as the tenant can afford to pay the rent. More on leasing is available on Ag Decision Maker.

Other, Whole Farm

Risk Management in Agriculture

February 11th, 2010

Contributed by Craig Chase, ISU Extension Farm Management Field Specialist

Craig Chase
Agricultural risk falls into five basic categories: production, price, financial, legal, and human.  In each of these categories there are methods to lower risk or transfer it. There is a lot of information on risk management at the Agricultural Risk Education Library (www.agrisk.umn.edu).  

For production risk, enterprise diversification (longer term rotations) is commonly used to lower risk.  Longer-term rotational crops tend to have different planting and harvest periods.  Crop insurance is normally used to transfer risk. 

Price risk is typically reduced through sales contracts. 

Financial risk can be lowered through keeping good production and financial records, as well as understanding asset management.  The key to agriculture, as well with other businesses, is the control of assets and not necessarily the ownership of assets.  In many cases, risk can be transferred through rental or leasing agreements

Legal risk for organic transitioning farms would focus on certification rules and making sure rules are met.  If involved in producing food, then compliance with food safety regulations would also be necessary.  Mitigation can come through various organizational structures and cooperative or collaborative agreements. 

Human risks come into play primarily through the hiring of laborers.

 I recommend reviewing the information on the agricultural risk education library (www.agrisk.umn.edu) and if you have specific questions, please let me know what those are.

Whole Farm