Buckeye Dairy News: Volume 18, Issue 1

  1. Timing Your FY-2004 Milk Income Loss Contract Payments: What you need to know!

    Additional milk marketing information by Dr. Thraen

    We are now fully four months into the fiscal year 2004 Milk Income Loss Contract (MILC) program payments. For the first three of these months, milk prices were high enough to send the MILC payment rate into the negative zone and set payments at zero. The first MILC non-zero payment for FY-2004 is this current month of January and the rate is $0.828/cwt. Front and center on every dairy producer's financial planning radar screen for the remainder of the fiscal year is the need to plan for the most likely pattern of milk prices and the associated MILC payments. There are a few simple rules that you need to keep in mind.

    Rule One: If your rate of milk production is such that it takes all 12 months of the fiscal year to reach the marketing cap of 2.4 million pounds, then you should already have started your payments. There is no benefit to timing your start month to catch the highest MILC payment rates.

    Rule Two: If your rate of production is such that it takes less than the 12 months of the fiscal year to reach your marketing cap of 2.4 million pounds, then you need to sit down and evaluate the most likely pattern of milk prices and MILC payments to determine when you should commit to your start month. There are a number of key factors that you need to consider when making this decision. First, how many months does it take you to reach the full marketing cap? If you meet this with a single months shipping, then you have a market timing challenge. If your objective is set the start date so as to receive the maximum payment, then you have to accurately forecast the lowest point for the Class I price mover and that, in turn, requires accurately forecasting the lowest combination of Grade AA butter, cheddar cheese, and whey prices for the first two weeks of the month preceding the month that you expect to receive the MILC payment.

    Rule Three: If your production rate is such that it takes two to six months to reach the cap, then you must think about the average payment received over the months you are eligible for the MILC payment. You do not want to focus exclusively on the month that you think will be the lowest Class I mover and therefore the highest MILC payment. If you do, you may well miss setting your starting date so that you receive the highest average payment, taking into account both the payment rate and the number of days of shipment in each eligible month.

    Now consider a concrete example. For this exercise I will use the current 2004 price forecast, as published by Bill Brooks, eDairy/Down's-O'Neill Economist, for butter, cheese, nonfat dry milk, and whey prices. I will use these as the basis for calculating the forecast Class I mover and MILC payment rates. Let's look at four possible cases that you may identify with, and for each, I will calculate the total MILC payment, the month to start receiving the MILC payment, and the average payment.

    Case I: Remaining nine months to meet the MILC cap. The MILC payment start month is January 2004. The total MILC FY-2004 payment is $25,475, and the average payment is $1.063/cwt. If you identify with this case, then you need to be eligible to receive your MILC payments for all of the remaining FY-2004 months.

    Case II: One month to meet MILC cap. The MILC payment start month is April 2004. The total MILC FY-2004 payment is $32,292, and the average payment is $1.346/cwt. Forecast prices used to calculate the April Class I mover reach their lowest FY-2004 point during the first two weeks of March. You need to be signed-up and eligible to start receiving payment for April milk shipments.

    Case III: Three months to meet the MILC cap. The MILC payment start month is April 2004. The total MILC FY-2004 payment is $31,217, and the average payment is $1.301/cwt. This is the same as Case II. With milk prices hitting bottom in early March, the MILC payment rates will peak and then begin to decline over the next nine months.

    Case IV: Five months to meet the MILC cap. The MILC payment start month is March 2004. The total MILC FY-2004 payment is $29,941, and the average payment is $1.248/cwt. Here you need to consider the impact of averaging the MILC payment. Waiting until the peak payment rate forecast for April will cost you on the months further out. If you identify with this situation, then you need to be eligible to receive MILC payments beginning with March 2004.

    If you would like to work out scenarios that more closely match your production rate you can do so by downloading the MILC_CALC Microsoft Excel Workbook from my Ohio Dairy Web 2004 website. Look on the front page for the link to MILC_CALC. Download this to your computer, and using Microsoft Excel and this workbook, you can do your own tracking of the likely MILC payment rates as market price forecasts change. The workbook contains all instructions for its use and even allows you to use the CME Class III and Class IV futures prices as forecasts. And, of course, it is provided free of charge for educational purposes only.

  2. Milk Prices, Costs of Nutrients, Margins and Comparison of Feedstuffs Prices

    Mr. Alex Tebbe, Graduate Research Associate, Department of Animal Sciences, The Ohio State University

    As you read this issue of The Buckeye Dairy News, you may have noticed a different author for this column. My name is Alex Tebbe and I am currently a graduate student studying dairy nutrition under Dr. Bill Weiss. I will be writing this section from this point on in light of Dr. St-Pierre’s retirement. His years of dedication to The Ohio State University and global dairy industry are irreplaceable, and we thank him for his countless contributions.

    Although my insight on the dairy and ingredient markets may differ from that of Dr. St-Pierre, rest assured, the SESAME analysis of these 27 feed commodities and their respective economic prediction found in the tables below will stay the same. In effect, I leave it up to the readers to decide which category I fit under: good or ugly.

    The Ugly Side: Milk Prices

    In the last issue, the price of Class III closed at $15.33/cwt for November and was expected to fall even farther to $14.68/cwt in December and January. Unfortunately, the December and January futures closed even lower than expected to $14.44/cwt, and $14.47/cwt respectively, and really go down in February to $13.64/cwt. The Class IV futures prices are above the Class III for the next couple of months, then they drop into the $14.00 to 14.50/cwt range. Although the price for corn is still relative low at $3.75/bu, the price is on the rise since the first of the year, further confounding low milk prices. In effect, corn and its byproducts may have contributed to the doubled appraisal for NEL; (8.4¢/Mcal) in comparison to November (4.9¢/Mcal).
     
    The Good Side: Nutrient Prices

    Feed prices have continued to stay low through the tail end of 2015 as we enter into the New Year. On an even better note, 48% CP soybean meal has fallen over $20/ton since the last issue and is expected to decline even more before spring. This decrease, however, does not outweigh the slight bump in corn prices nor lower milk price.

    As in previous issues, these feed ingredients were appraised using the software program SESAME™ developed by Dr. St-Pierre at Ohio State to price the important nutrients in dairy rations, to estimate break-even prices of all commodities traded in Ohio, and to identify feedstuffs that currently are significantly underpriced as of January 26, 2015. Price estimates of net energy lactation (NEL, $/Mcal), metabolizable protein (MP, $/lb – MP is the sum of the digestible microbial protein and digestible rumen-undegradable protein of a feed), non-effective NDF (ne-NDF, $/lb), and effective NDF (e-NDF, $/lb) are reported in Table 1.  For MP, its current price ($0.437/lb) has nearly split the difference from the last issue ($0.556/lb) and the 6-year average ($0.28/lb).  This is good in counteracting the jump of NEL from last month mentioned previously. However, the jump is still lower compared to its historical 6-year average of about 10¢/Mcal, NEL.   The cost of ne-NDF has also went down substantially from -1.7¢/lb to -7¢/lb, making it an even larger market discount (i.e., feeds with a significant content of non-effective NDF are priced at a discount). Meanwhile, unit costs of e-NDF are also at over 4 times their 6-year average, being priced at 13.3¢/lb compared to the 6-year average (3.3¢/lb).  Fortunately, a dairy cow requires only 10 to 11 lb of effective NDF, so the daily cost of providing this nutrient is only about $1.40/cow/day (i.e., 10.5 lb × $0.133 per lb).

    To estimate the cost of production at these nutrient levels, I used a target cow milking 70 lb/day at 3.7% fat and 3.1% protein eating 50.4 lb/day. In this model, the average costs should be around $4.94/cow/day or $7.06/cwt.  A cow producing 85 lb/day will increase average feed costs to $6.42/cow/day or $7.56/cwt. These costs do not include the costs of feeding the dry cows nor the replacement herd. In short, this is about a $1/cow/day less than it was in November.

    Table 1. Prices of dairy nutrients for Ohio dairy farms, January 27, 2016.
    Table 1

    Economic Value of Feeds

    Results of the Sesame analysis for central Ohio on January 27, 2016 are presented in Table 2. Detailed results for all 27 feed commodities are reported. The lower and upper limits mark the 75% confidence range for the predicted (break-even) prices. Feeds in the “Appraisal Set” were those for which we didn’t have a price. One must remember that Sesame compares all commodities at one point in time, mid January in this case. Thus, the results do not imply that the bargain feeds are cheap on a historical basis.

    Table 2. Actual, breakeven (predicted) and 75% confidence limits of 27 feed commodities used on Ohio dairy farms, January 27, 2016.
    Table 2

    Appraisal

    For convenience, Table 3 summarizes the economic classification of feeds according to their outcome in the Sesame analysis.

    Table 3. Partitioning of feedstuffs, Ohio, January 27, 2016.

    Bargains

    At Breakeven

    Overpriced

    Bakery byproducts

    Alfalfa hay – 40% NDF

    Beet pulp

    Corn, ground, shelled

    Brewers grains, wet

    Blood meal

    Corn silage

    Canola meal

    Citrus pulp

    Distillers dried grains

    41% Cottonseed meal

    Fish meal

    Feather meal

    Whole cottonseed

    Hominy

    Gluten feed

    Gluten meal

    Molasses

    Meat meal

    Roasted soybeans

    Soybean hulls

    Soybean meal - expeller

    Tallow

    44% soybean meal

    48% soybean meal

    Wheat bran

    		  

    Wheat middlings

    		    

    As coined by Dr. St-Pierre, I must remind the readers that these results do not mean that you can formulate a balanced diet using only feeds in the “bargains” column. Feeds in the “bargains” column offer savings opportunity and their usage should be maximized within the limits of a properly balanced diet. In addition, prices within a commodity type can vary considerably because of quality differences as well as non-nutritional value added by some suppliers in the form of nutritional services, blending, terms of credit, etc. Also, there are reasons that a feed might be a very good fit in your feeding program while not appearing in the “bargains” column. For example, your nutritionist might be using some molasses in your rations for reasons other than its NEL and MP content.

    Appendix

    For those of you who use the 5-nutrient group values (i.e., replace metabolizable protein by rumen degradable protein and digestible rumen undegradable protein), see the table below.

    Table 4. Prices of dairy nutrients using the 5-nutrient solution for Ohio dairy farms, January 27, 2016.
    Table 4


     

  3. Nutrient Losses from Dairy Operations and Their Environmental Issues

    Dr. Chanhee Lee, Assistant Professor, Department of Animal Sciences, The Ohio State University

    One goal of dairy producers is to obtain high milk yields and good profitability. Most producers also want to be good environmental stewards and having a good nutrient management plan is necessary to mitigate nutrient losses and environmental (air, soil, and water) impacts. Among the livestock sector in Ohio, dairy operations produce the greatest amount of manure (51 million lb/day, Figure 1). Inappropriate management of feed and manure causes significant nutrient losses, which possibly can influence local, regional, and global environments.

    Figure 1

    Figure 1. Proportions (%) of daily manure production by
    livestock in Ohio (calculated based on Ohio livestock
    populations on January 2014 with typical livestock manure
    production; USDA, 2015; OSU Extension, 2006).

    Nitrogen (N) is a nutrient excreted from dairy cows in great amounts and is a pollutant that can contaminate air, soil, and water when manure is not properly managed. For example, a dairy cow producing 90 lb/day of milk excretes 1 lb of N in manure while capturing only about 0.4 lb of N as milk protein. In Ohio, total N excreted from dairy cows is about 300,000 lb/ day. Once urine and feces are excreted and mixed, i.e., fresh manure, ammonia begins volatilizing immediately. During manure handling and storage before field application, considerable N is lost through ammonia emissions. Depending on environmental conditions, storage time, and type of manure storage, the loss can be 20 to 80% of the total N in fresh manure. Farm animals may contribute up to 50% of total anthropogenic ammonia emitted in the US (NRC, 2003). Although ammonia in fresh manure (mostly originating from urine) is a readily available N source for crops, when manure is applied to the field, most of the N is not available in manure at time of application due to rapid ammonia volatilization during storage. Nitrogen excreted in manure contributes to surface and ground water pollution through N runoff and nitrate leaching during field application of manure. In addition, ammonia volatilized during manure handling, storage, and land application can be re-deposited on surface water (and land), which increases N loading in lakes. After field application,  N is also lost through nitrous oxide (N2O) emissions during the process of soil microbial nitrification and denitrification. Nitrous oxide emissions are another loss of valuable manure N for crops. Furthermore, nitrous oxide is one of the powerful greenhouse gases and is 298 times stronger in global warming potential compared with CO2. Dairy manure may contribute 33% of total N2O emitted from animal manure in the US (US EPA, 2015). Lastly, ammonia emitted from manure reacts with nitric and sulfuric acids in the atmosphere to form fine particulate matter with a diameter ≤ 2.5 μm (PM2.5; ammonium nitrate and ammonium sulfate). Atmospheric PM2.5 is one of the greatest environmental risks that directly affect human health (respiratory diseases; WHO, 2005). Farm animals in the North Central region might contribute up to 20% of the total PM2.5 in cool weather (Hristov, 2011).

    Phosphorus (P) is an essential nutrient for lactating dairy cows. If dietary P supply does not meet the P requirement, production (e.g., milk yield) can decrease and health problems can increase. The P requirement for lactating dairy cows has been estimated to be 0.32 to 0.42% in dietary DM. When a dairy cow producing 90 lb of milk is fed a 0.35% P diet, about 0.07 lb of P is secreted in milk and 0.11 lb of P is excreted in manrue. If P concentration in diets increases, fecal P excretion increases linearly (Figure 2). P losses are negligible during manure handling and storage. Therefore, manure can be a good P source for crops. Nonetheless, high P concentrations in manure from feeding excessive dietary P can result in an oversupply of manure P to the field due to an imbalance between N and P concentrations in manure (low N and high P in manure relative to crop needs). When oversupplied to the field, P is lost from the field through runoff, which increases the risk of manure P causing water quality problems, such as eutrophication and harmful algae blooms. For example,  Ohio EPA (2010) estimated that 89% of total P loads into the western basin of Lake Erie is from non-point sources (mostly agriculture), among which animal manure contributed 27% and commercial fertilizers contributed 66% (biosolids contribute 7%). For Grand Lake St. Mary’s (OH), farm animal operations are responsible for most P loads causing eutrophication and harmful algae blooms (Tetra Tech, 2010).

    Figure 2

    Figure 2. Relationship between fecal P output and
    P intake (Alvarez-Fuentes et al., 2016).

    Methane (CH4) is produced from dairy operations as an end-product of feed (in the rumen; enteric) or manure fermentation by microbes. Once CH4 is released from the rumen by belching or from manure, the greenhouse effect potential of CH4 is 25 times greater than that of CO2 in the atmosphere. The formation and release of CH4 from the rumen are considered a feed energy loss that accounts for 2 to 12% of total feed energy consumed. Theoretically, a decrease in enteric CH4 emission can increase the feed energy supply to cows. A cow producing 90 lb of milk and fed a typical North American diet (about 50 to 60% forage diet) releases 400 to 500 g/day of CH4. In 2013, dairy cows produced an estimated 1,660 kilotones of enteric CH4, which accounted for 7% of total anthropogenic CH4 emitted in the US (estimated by US EPA, 2015). The most important factor influencing enteric CH4 emissions in dairy cows is feed intake (Figure 3). A cow eating more feed produces more methane. However, milk production is also closely associated with feed intake (i.e., the more cows eat, the more milk is produced). When methane emission is expressed as a unit of product (milk, energy-corrected milk, or fat-corrected milk; intensity), cows eating more feed usually produce less methane than cows eating less. Forage and concentrate ratios in the diets are another factor, with high forage diets resulting in more methane being produced in the rumen.  Considerable amounts of CH4 are also released from animal manure. Although the CH4 emissions are variable depending on manure handling and storage, dairy manure is the largest contributor to total CH4 emission from animal manure. The US EPA (2015) estimated that dairy manure contributed 52% (1,271 kilotones) of total CH4 emitted from animal manure (2,456 kilotones) in 2013. The contribution of CH4 emissions from dairy operations to total CH4 emissions in the US was 12%, and the contribution of dairy operations (enteric and manure) to total greenhouse gas emissions (CO2, CH4, and N2O) in the US (2013) was only 1.2% (CH4 and N2O emissions from manure). Therefore, dairy operations have relatively less impact on global warming potential compared with other environmental impacts from N and P.

    Figure 3

    Figure 3. Relationship between dietary dry matter intake and enteric methane production (FAO, 2013).

    In summary, major nutrients lost from dairy operations are N and P. Nitrogen and P are lost during manure handling and storage in barns and during field application. Methane is emitted from the rumen as feed energy loss and manure. Because manure production from dairy operations is highest of the livestock operations in Ohio, efforts to minimize nutrient losses from dairy manure needs to be made.  Since the contribution of animal operations to total greenhouse gas emissions in the US is relatively quite small, mitigating surface water (nutrient runoff) and air (ammonia emissions) pollution  should be a primary focus in dairy operations.

    References

    Alvarez-Fuentes, G., J. A. D. R. N. Appuhamy, and E. Kebreab. 2016. Prediction of phosphorus output in manure and milk by lactating dairy cows. J. Dairy Sci. 99:1-12.

    FAO. 2013. Mitigation of Greenhouse Gas Emissions in Livestock Production: A Review of Technical Options for Non-CO2 Emissions. Food Agriculture Organization of the United Nations. Accessed Jan. 13, 2016. https://www.google.com/?gws_rd=ssl#q=FAO

    Hristov, A. N. 2011. Technical note: Contribution of ammonia emitted from livestock to atmospheric fine particulate matter (PM2.5) in the United States. J. Dairy Sci. 94:3130-3136.

    NRC. 2003. Air emissions from animal feeding operations: Current knowledge, future needs. The National Academy Press, Washington, DC.
    Ohio EPA. 2010. Ohio Lake Erie Phosphorus Task Force Final Report. Ohio Environmental Protection Agency, Division of Surface water, Columbus, Ohio.

    OSU Extension. 2006. Ohio Livestock Manure Management Guide. Bulletin 604, Ohio State University Extension, Columbus.
    Tetra Tech, Inc. 2010. Recommended Actions for Grand Lake St. Marys, Ohio. Prepared for Ohio Environmental Protection Agency and U.S.
    Environmental Protection Agency.

    USDA. 2015. Ohio Agricultural Statistics 2015 Annual Bulletin. Accessed Dec. 21, 2015. http://www.nass.usda.gov/Statistics_by_State/Ohio/Publications/Annual_St...

    US EPA. 2015. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2013. US Environmental Protection Agency, Washington, DC.
    WHO (World Health Organization). 2005. Ambient (outdoor) air quality and health. Accessed Dec. 18, 2015.  http://www.who.int/mediacentre/factsheets/fs313/en/

  4. Dairy Calf Management Workshop

    Mr. Rory Lewandowski, Extension Educator, Wayne County, The Ohio State University

    OSU Extension Wayne County is hosting a Dairy Calf Management Workshop on Tuesday, March 8 from 9:00 am until 3:00 pm.  The workshop consists of morning classroom sessions and an afternoon on-farm session.  Raising dairy heifer calves to freshen at 22 to 24 months of age requires good management that maintains calf health.  Each dairy heifer represents a two-year investment before any economic returns are realized.  In these times of low milk prices, volatile market conditions, and high feed prices, dairy producers and managers need to evaluate their calf rearing program and make sure that it is effective and efficient.

    The purpose of the dairy calf management workshop is to help participants:

    • Improve the growth efficiency of dairy heifer calves,
    • Foster sound health of calves through management of their feeding and housing programs along with a prescribed vaccination program,
    • Improve the financial understanding and implications of raising dairy heifer calves,
    • Review the pros and cons of various rearing systems, and
    •  See an example of a local dairy calf rearing system.

    The workshop will begin with registration and refreshments at 9:00 am at the Wayne Presbyterian Church located at 7152 Burbank Rd (SR 83), Wooster at the intersection of SR 83 and Jentes Roads.  The program will begin at 9:30 am.  Morning topics include: Feeding, Housing Options/Systems, Costs of Raising Heifers, and Developing a Vaccination Program for Heifer Calves.  A hot lunch will be provided at noon.  The afternoon session will take place at the Virgil Gasser dairy farm located at 3093 E Pleasant Home Rd, Creston, OH  44217.  At the Gasser farm, participants will see an automated calf feeding system and hear about the farm’s calf raising program.

    The cost of the program is $25/person or $40 /farm (2 persons).  Checks can be made payable to “OSU Extension”.  The cost includes refreshments, lunch, and program handout materials.  Pre-registration is required, and the workshop limit is 32 persons.  Registration deadline is Tuesday, March 1.  Registrations can be sent to: Rory Lewandowski, OSU Extension Wayne County, 428 West Liberty Street, Wooster, OH  44691.   A brochure that includes more details about the topics and a registration form is available on the Wayne County Extension web site at: http://go.osu.edu/agwayne. For more information, contact Rory Lewandowski at the Wayne County Extension office at 330-264-8722 or via email at: lewandowski.11@osu.edu.

  5. Labor Management Series: Farm Transition to Non-Family

    Mr. Chris Zoller, Extension Educator, OSU Extension Tuscarawas County

    I was asked recently to assist an area farmer sort through the complexities of his farm transition plan.  This farmer worked hard all of his life, built a successful diversified farm, and as he approached retirement, began investing considerable time and energy into how best to transition his farm business.  Discussions with his children revealed that they had no interest in managing the farm.  However, there was consensus that, if possible, the farm should continue in operation, be profitable, and maintain its reputation in the community.

    What to do?

    In this case, some key employees had expressed interest in assuming the ownership and management role.  Interviews were held with each interested employee and their family to discuss their goals and level of interest.  The interview process resulted in a husband and wife both employed by the farm as the most likely candidates.  For many, it’s ‘out of the box’ thinking to consider having someone outside the family assume the ownership and management of a farm, but this may be a viable option to consider.

    Interviewing potential successors takes time and energy.  It’s helpful to take notes about each interested person.  These notes will be helpful as you reflect on the discussions.  Some may find it helpful to rank each potential successor against a variety of items.  Below is a table from the Ohio State University Extension Fact Sheet, Developing the Next Generation of Managers, which is titled Attributes of Potential Successors.  I encourage you to use this as a starting point to evaluate candidates interested in operating your business.  Feel free to add additional attributes that are important to you.

    Name

     

     

     

     

     

    Relevant Education

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    Relevant Experience

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    Commitment to Family

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    Management Style

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    Communication Ability

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    Financial Stewardship

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    Leadership Abilities

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    Risk Orientation

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    Creativity

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    Guts and Ambition

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    Values Alignment

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    1 2 3 4 5

    Total

     

     

     

     

     

    Suggested scale: 1 = Poor, 3 = Fair, 5 = Excellent

    In order for a potential successor to be successful, they must assume management responsibilities.  An excellent way of providing initial guidance to your successor is to involve this person in current decisions.  Provide this person with a current problem and all the facts you have.  Allow them to work through the problem.  Ask questions as to why they do/did something a certain way.  Ask them situational or ‘what if’ questions.  This should not be confrontational, but rather an opportunity for you to understand how your successor makes decisions.

    Allow your successor to develop and use management skills early in the process.  Managing a parcel of land or an existing enterprise are good examples.  All decisions, including purchasing, finance, marketing, and personnel management, should be transferred.  The current farm manager should be available for consultation but should not dictate management decisions.

    For some, one of the most difficult parts of the transition is letting go.  Anyone who has worked hard to build and manage a successful business worries about its future.  Peter Drucker, a well-respected management author, once said that it’s the job of the manager to pick his or her successor and get out of the way to let the successor run the company.  For some, easier said than done, but it is a true statement.  Be confident in the abilities of your successor and know they are committed to the long term profitability and success of the business.

    Ohio State University Extension has an extensive list of Fact Sheet references related to farm management and transition planning, including:

    A Comparison of Business Entities Available to Ohio Farmers
    Conducting a SWOT Analysis of Your Agricultural Business
    Conducting Successful Family Business Transition Meetings
    Develop a Useful Mission Statement for Your Agricultural Business
    Developing Goals for the Agricultural Business
    Developing the Next Generation of Managers
    Planning for the Successful Transition of Your Agricultural Business
    Starting, Organizing, and Managing an LLC for a Farm Business
    Tax Characteristics of Business Entities Available to Ohio Farmers
    Using Liability Limiting Entities to Manage Liability Exposure to Ohio Farms
    Is a Prenuptial Agreement Right for Your Farm Business?
    Whole Farm Planning Model

    Copies of these publications are available at http://ohioline.osu.edu or from your local County Extension office.

    This article originally appeared in the Farm and Dairy, September 2015.


  6. Employing Minors on Your Farm

    Mr. Chris Zoller, Extension Educator, OSU Extension Tuscarawas County

    It may be hard to believe, but the snow and cold winter weather will eventually be behind us and it will be time to get busy in the fields.  In a few short months, students will be getting out of school and some will be looking for a job. You may have some students inquire about working on your farm.  This can be a great opportunity for everyone involved, but you should be aware of some rules and regulations before agreeing to hire a minor to work on your farm.

    The following is not legal advice, nor should it be considered as such.  Should you have specific questions, please contact the Department of Labor, your attorney, or see Know the Rules When Employing Minors on Your Farm, OSU Extension Fact Sheet ANR-26-10, for additional information.  This fact sheet is available at http://ohioline.osu.edu.

    The employment of minors under age 16 is subject to federal requirements set by the Fair Labor Standards Act, and the agriculture requirements are less stringent than those for other industries. In 1967, the U.S. Secretary of Labor determined that certain jobs in agriculture are hazardous to children less than 16 years of age. However, there are some exemptions. These exemptions include the employment of children less than 16 years of age when employed on farms owned or operated by their parents or guardians and those who have completed an approved tractor and machinery certification course. Completion of a Tractor and Machinery Certification course will legally allow a youth who is 14 or 15 years old to operate tractors over 20 horsepower for hire to someone other than their parents.

    In addition to federal hazardous occupation regulations, there can be state regulations which may be more restrictive. For most Ohio laws, a person under the age of 18 is considered a minor and the Ohio Revised Code prohibits minors from working in certain hazardous jobs related to agriculture. The Ohio list of hazardous occupations is the same as the federal list, but the Ohio code sections and regulations say the Ohio hazardous occupation list applies to those under 16 years of age. There are many sections of the Ohio Revised Code pertaining to the employment of minors that do not apply to minors
    employed on farms. These include obtaining an age and schooling certificate (unless you employ children of migrant workers); keeping a list of minor employees; and paying the minimum wage.

    Hazardous Occupations in Agriculture:

    Anyone involved in agriculture knows it can be a dangerous occupation. The US Department of Labor’s Fair Labor Standards Act has declared certain agricultural tasks to be hazardous to youth working for hire under the age of 16. These tasks are listed in the Hazardous Occupations Order in Agriculture (AgHO). After a youth turns 16 years of age, then the AgHO laws no longer apply. These tasks include the following:

    • Operating a tractor of more than 20 PTO horsepower, or connecting or disconnecting implements from such a tractor.
    • Operating a corn picker, combine, hay mower, forage harvester, hay baler or potato digger.
    • Operating a feed grinder, grain dryer, forage blower, auger conveyor, or the unloading mechanism of a
    non-gravity type self-unloading wagon or trailer. Operating a trencher, earth moving equipment, forklift, or power-driven circular, band, or chain saw.
    • Working in a yard, stall, or pen occupied by a bull, boar, or stud horse; or sow with suckling pigs or cow with newborn calf.
    • Felling, bucking, skidding, loading, or unloading timber with butt diameter of greater than six inches.
    • Working on a ladder at a height of more than 20 feet.
    • Driving a bus, truck, or automobile or riding on a tractor as a passenger.
    • Working in a forage, fruit, or grain storage facility; an upright silo within two weeks after silage has been added or when a top unloading device is operating; a manure pit; or a horizontal silo when operating a tractor for packing purposes.
    • Handling or applying pesticides with the words or symbols “Danger”, “Poison”, “Skull and Crossbones”
    or “Warning” on the label.
    • Handling or using blasting agents.
    • Transporting, transferring, or applying anhydrous ammonia.

    A complete listing of these tasks can be viewed at: http://www.dol.gov/whd/regs/compliance/childlabor102.pdf

    When Can Minors Work?

    The answer depends upon the age of the employee and whether school is in session. When school is in session, minors who are 14 or 15 cannot be employed before 7:00 am or after 7:00 pm; work more than three hours in a school day; work more than 18 hours in any school week; or work during school hours, unless employed in a bona fide vocational training program. When school is not in session, 14 and 15 year old minors cannot be employed before 7:00 am or after 9:00 pm; work more than eight hours per day; or work more than 40 hours per week.

    Those who are 16 and 17 years of age, when school is in session, cannot be employed before 7:00 am or 6:00 am if not employed after 8:00 pm the previous night; or after 11:00 pm Sunday through Thursday. There is no limitation in hours per day or week. When school is not in session, minors 16 and 17 years of age have no limitation on the starting and ending time and no limitation in hours per day or week.

    All minors are required to have a 30-minute uninterrupted break when working more than five consecutive hours. Please see the table below for a summary of the hours minors may work based on their age and whether school is in or out of session.

    What Records Should I Keep?

    Federal regulations require employers of minors less than 16 years of age to maintain and preserve records about each minor employee. This information includes the persons full name, address of the minor while employed, and date of birth. Minors employed by a parent or guardian are exempt from these record keeping requirements.

    The Ohio Revised Code exempts agricultural employers from record keeping provisions related to minors. However, the Ohio Revised Code requires an agreement as to wages for work to be performed be made between the employer and a minor before employment begins. For the protection of  the employer, this agreement should be in writing and signed by both parties. The state agency responsible for enforcement of the Ohio Code as it relates to prohibited jobs for minors is the Division of Minimum Wage, Prevailing Wage and Minors, Department of Industrial Relations. You may contact them at www.com.state.oh.us or by telephone at 614-644-2239.

    Summary of hours minors may work based on age and time of year.

     

    14 to 15 year old

    16 to 17 year old

    School in session

    Cannot work before 7 am or after 7 pm
    Cannot work more than 3 hr in a school day
    Cannot work more than 18 hr/ school week
    Cannot work during school hours, unless employed in a
    certified vocational training program

    Cannot work before 7 am or 6 am if not employed after 8 pm the previous night
    Cannot work after 11 pm Sunday through Thursday
    No limitations in hours per day or per week

    School NOT in session

    Cannot be employed before 7  am or after 9 pm
    Cannot work more than 8 hr/ day
    Cannot work more than 40 hr/week

    No limitation on starting and ending time
    No limitation in hours per day or per week

    Employing minors can be a win-win situation for everyone, but make certain you are following the rules.  Providing a young person a job allows them to earn money, learn responsibility, and gain an appreciation for agriculture.

  7. Farm Labor for 2014 Versus 2015: Field Versus Livestock Workers

    Dr. Maurice Eastridge, Extension Dairy Specialist, Department of Animal Sciences, The Ohio State University

    The USDA National Agricultural Statistics (NASS) publishes the Farm Labor report twice annually (May and November). Some of the data from the November 2015 report is provided in Table 1. The wages reported in the table do not include any benefits. The national average for hours worked per week was about 42 in October 2015. The average hourly wages was higher for field versus livestock labor. Over the period of one year from October 2014 to October 2015, the average hourly wage for a field worker increased 6.9% in the cornbelt and 5.1% nationally. For the same time period, the hourly wage for a livestock worker increased 4.4% in the cornbelt and 6.5% nationally.  For about every $100,000 increase in gross sales on a farm in the US for 2015, the hourly wage increased by about $0.12/hr. For about every $100,000 increase in gross sales on a farm in the Cornbelt for the same time period, the hourly wage increased by about $0.22/hr. So for both populations, hourly wage increased with gross sales on a farm, reflective of both farm productivity and farm size. We need to be aware of competitive opportunities for employees on dairy farms, even within agriculture. In addition, the total wages and benefits provided for livestock employees need to be compared to other agricultural and non-agricultural employment opportunities. Although milk and beef prices are not very favorable at this time, we need to make sure competitive wages are paid to be able to hire and retain dependable skilled labor on dairy farms. Feed and labor are the two largest costs of producing milk, thus labor management is key to a farm’s success.

    Table 1. Farm labor in the cornbelt and US during 2014 and 2015.1

    Item

    Cornbelt I (IN, IL, OH)

    US

     

     

     

    October 2015

     

     

       Hours worked/wk

    39.4

    41.7

       Field labor, $/hr

    12.63

    12.11

       Livestock labor, $/hr

    11.68

    12.02

    October 2014

     

     

       Hours worked/wk

    37.8

    41.3

       Field labor, $/hr

    11.82

    11.52

       Livestock labor, $/hr

    11.19

    11.29

    Hourly wages (4/hr) by gross sales in 2015 ($1,000)

    Corn belt I & II (IA, MO)

     

       < 50

    11.92

    11.60

       50 to 99

    11.37

    11.54

       100 to 249

    12.31

    11.90

       250 to 499

    12.62

    12.28

       500 to 999

    13.22

    12.42

       1000+

    13.46

    13.24

     

     

     

    1Data taken from USDA, National Agricultural Statistics Service
    (http://www.nass.usda.gov/Surveys/Guide_to_NASS_Surveys/Farm_Labor/index.php)

     

  8. Update on Collegiate Dairy Judging and Dairy Palooza

    Team judging in Texas: Laura Bond, Meghan Sanders, Ella Jackson, and Colton Harstine.

    Ms. Bonnie Ayars, Dairy Program Specialist, Department of Animal Sciences, The Ohio State University

    The OSU Dairy Judging Team of Laura Bond, Colton Harstine, Ella Jackson, and Meghan Sanders participated in the contest located at the Fort Worth Stock Show in Texas on Sunday, January 17.  The team finished 2nd in the Jersey breed and Ella Jackson was 5th high individual overall.  She also placed in the top 5 in two breeds, as well as 3rd high individual in reasons.  With 15 participating teams, this winter destination continues to grow in popularity! The trip also included many locations of cultural interest and visits to dairy farms who offered classes for us to evaluate.  Both also had active niche market businesses and shared their expertise on this topic.

    The Animal Science Recognition banquet will be held on April 2 at the Ohio 4-H Center on campus (click here for reservation form).  This year, we will be recognizing the 50, 25, and 10 year anniversary teams.  There will also be a silent auction to benefit the judging teams and dairy challenge.  If you are interested in these activities, please contact Ayars.5@osu.edu.

    At the Ohio 4-H Volunteer Conference to be held on March 10, the Dairy Palooza Committee will receive the prestigious 4-H Innovator Award.  Many of you reading this newsletter have been directly involved with your time and your financial support.  We thank you again for playing an integral role in this accomplishment and the success of this event.  If you have not yet viewed our informative video, the link can be located at www.ohiodairypalooza.com.