Newsletter | Past Issues

December, 2005

In This Issue:

Building on Your Success as a Family Business

Dairy Enterprise Economics from Ohio Producers
A New Income Tax Deduction

Agricultural, Food and Public Policy Survey Important for 2007 Farm Bill

Precision Fertility – Does it Pay?

Conservation and the Next Farm Bill

Human Resource Managers' Forum Will Feature New Supervisor Training

2004 Ohio Farm Income Data Released

National Extension Women in Agriculture Education Conference  

Building On Your Success As a Family Business

Chris Zoller, Extension Educator-Tuscarawas County

“Building On Your Success As A Family Business” is a full day workshop designed for farm and non-farm family business who are interested in transferring the management responsibilities to the next generation. On March 24, 2006, Ohio State University Extension Educators will be hosting a workshop in Ashland County .

The total program is designed to provide an opportunity for multiple generations of a family business to hear the same message and encourage discussion about the important managerial issues that are required for continued business success.

The discussion topics include: What Do Managers Do?; How Do You Get the Next Generation Ready for Their Responsibilities?; How Do We Create Opportunity?; How Do We Share Responsibility?; How Important Is Communication?; How Can We Be Honest About Ourselves and Our Business?

This workshop has been conducted in Licking and Tuscarawas Counties in the past and has been highly rated by all participants. More details will be available in the coming months, but in the meantime, put the date on the calendar and make plans to attend. For further information, contact Julia Woodruff, Extension Educator, ANR, Ashland County at woodruff.94@osu.edu .

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Dairy Enterprise Economics from Ohio Producers
Donald J. Breece, Farm Management Specialist-OSU Extension Center at Lima

For twelve years dairy farm financial information and enterprise data have been collected from Ohio farms participating in Extension and FBPA programs.  These farms use the FINPACK computer program for analysis.  This data is also included on a national data base located at the Center of Farm Financial Management , University of Minnesota .  The data base is called FINBIN and is found at:  www.cffm.umn.edu.  Here is a summary of Ohio data (from 10 to 16 farms per year), for the past five years.  More complete details may be found in the Ohio Farm Business Summary 2004 , a copy is located at local Extension offices.

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A New Income Tax Deduction

Donald J. Breece, Farm Management Specialist-OSU Extension Center at Lima

The American Jobs Creation Act of 2004 created a new deduction based on income attributable to domestic production. Qualifying property includes receipts derived from what is grown or produced. This new deduction begins for the 2005 income tax year and is limited to the lesser of :

•  3% of qualified production activities (QPAI)

•  3% of taxable income of an entity or adjusted gross income for an individual taxpayer.

•  50% of W-2 wages paid during the year by the taxpayer.

Qualified production property for cash-basis farmers include receipts for sales of livestock, produce, milk, grains and other products raised by the farmer. Proceeds from the sale of raised breeding stock, reported on Farm 4797 also qualify. However, sales of purchased breeding or dairy animals will not qualify unless these were purchased as young stock and a substantial part of the animals value resulted from the farmers expense in raising the animal to maturity. Sales of land, machinery and equipment are also excluded from domestic production gross receipts. Furthermore, custom hire is also excluded.

The 50% of W-2 wages limitation may become the most limiting factor for many farmers wishing to qualify for this deduction, or wanting to take the maximum advantage of it. One way to increase W-2 wages is to pay wages for unpaid family labor, however the increase of FICA taxes and decrease of self-employment wages for the operator would need to be factored in, as a result of this change. Also, note that the following wages are not included for the calculation of qualified wages:

•  Wages paid to a child (under age 18) of the farmer.

•  Compensation paid in non-taxable fringe benefits.

Although the domestic production activities deduction is limited to 3% of QPAI for tax years 2005 and 2006, it will be 6% for 2007-2009 and 9% for years after 2009. The tax form for this new deduction is Form 8903. See your income tax practitioner or the IRS web site at www.irs.gov for further information.

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Agricultural, Food and Public Policy Survey Important for 2007 Farm Bill

Barry Ward, OSU Extension, Leader, Production Business Management

While 2007 is two years away, discussion has already started over the 2007 Farm Bill and the future for agricultural, food, and public policy.  There is much talk about the potential for major changes because of the current legislative focus on budget priorities and the on-going international trade negotiations.  Given this potential, it is important that farmers make their views known.  To help legislators, public policy makers and farm leaders make more informed decisions about allocating resources and designing future farm legislation, The Ohio State University's College of Food, Agricultural, and Environmental Sciences and the Ohio Agricultural Statistics Service are conducting a survey of Ohio farmers to learn about their views and attitudes toward issues likely to determine the 2007 Farm Bill.

Surveys will be mailed to producers in mid-November with a target completion and return date of December 15. Initial findings will be prepared and distributed in the Spring of 2006.

The information gathered in this survey is absolutely confidential.  Information from individual operations is combined with other responses to provide the needed data. All results will be reported in aggregate form to Ohio farmers, farm policy makers, and the general public through OSU Extension and academic outlets.  In short, farms will not be individually identified in any research result.

Questions on this survey and forthcoming research findings can be directed to Carl Zulauf ( Zulauf.1@osu.edu ) at 614-292-6285 or Barry Ward ( Ward.8@osu.edu )  at 614-688-3959.

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Precision Fertility – Does it Pay?

John Barker, Ag & NR Extension Educator, Knox County

Farmers often question the economic value GPS based technology. Does precision agriculture pay? In most precision agriculture circles, this is the most often asked question, and at times a most difficult question to answer.

Today's technology allows farmers to vary the application rates of crop inputs throughout a field. These practices are creating vast and sweeping changes on many farms. This technology allows such inputs as herbicide, insecticide, fertilizer, manure, etc. to be altered at any particular point within a field. GIS software allows various field data such as soil test results, crop scouting data and yield data to be analyzed and incorporated into the decision making process.

Theoretically, combing field based data with the ability to vary input usage at specific points within a field should increase input efficiency. Increased efficiency should improve profit margin and result in the adoption of more environmentally sound practices. - But does it pay?

To answer this question data was analyzed from a 45 acre Central Ohio farm. Seven years of accurate and calibrated yield data was available for this field utilizing a GPS based yield monitor. This field was in a strict corn-bean rotation. Fertilizer recommendations were developed utilizing the four following scenarios.

Scenario 1: Fertilizer recommendations were made according to the farmers normal production practices. Variable rate technology was not utilized in this scenario.

Scenario 2 : The field was divided into 2.5 acre grids. Soil samples were collected and sent to a lab for analysis. The fertilizer application data was developed for this field utilizing variable rate technology based upon the results from the soil test data.

Scenario 3 : The field was divided into management zones based upon soil type. Soil samples were then collected from each soil type. Each sample size was approximately 2.5 acres or less. The fertilizer application data was developed for this field utilizing variable rate technology based upon the results from the soil test data.

Scenario 4: GIS software was used to divide the field into management zones. These zones were based upon actual, historic crop removal data from this field. Fertilizer recommendations were based upon the actual crop removal in each of these management zones. Fertilizer applications were made utilizing variable rate technology.

Table 1 contains the data from this analysis. Fertilizer recommendations were made for each of the four scenarios using the Tri-State Fertilizer Recommendations as a guide. Overall fertilizer use was the highest using the farmers normal production practices (scenario 1). Utilizing grid soil sampling and variable rate applications (scenario 2) fertilizer use was reduced by 3,420 pounds. Soil sampling using management zones based upon soil type and utilizing variable rate fertilizer applications (scenario 3) reduced overall fertilizer use by more than 3.5 tons. Scenario 4 which utilized G.I.S. software to divide the field into management zones based upon crop removal and utilizing variable rate fertilizer applications produced the most efficient fertilizer use. This scenario, which is based on the actual field production, shows phosphorus recommendations were reduced by almost 1.5 tons and the potash recommendations were cut in half - But does it pay?

Fertilizer prices of $250/ton for Potash and $315/ton for D.A.P. were used for this analysis. Soil testing charges and variable rate fertilizer application charges were included where appropriate. Scenario 4, fertilizer recommendatins based upon crop removal produced the greatest savings. This scenario which had the lowest fertilizer use and no soil testing charges resulted in a savings of $17.67 per acre when compared to the farmers normal production plans. Soil sampling by soil type (scenario 3) and 2.5 acre grid sampling (scenario 2) resulted in savings of $16.26 per acre and $4.85 per acre respectively, when compared to the normal production practices for this farm.

But does it pay? In this analysis Yes! Each scenario involving variable rate fertilizer applications resulted in lower fertilizer use and a greater net return. With today's soaring fertilizer prices, savings of almost $5 to more than $17 per acre can have a significant impact on most Central Ohio farms.

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Conservation and the Next Farm Bill
Andy Kleinschmidt, Extension Educator, Van Wert County

This article argues that the next farm bill will bring even larger federal conservation programs with expanded funding - potentially up to $5 billion per year nationally by 2012.  By controlling most of the funding, USDA will be the major player in water quality policy as it relates to land-use, thus continuing to erode the influence of traditional environmental agencies on key water quality issues.  As always, federal funding for agricultural conservation brings questions about performance, and the article urges a movement towards value based conservation. 

Available at http://aede.osu.edu/people/sohngen.1/OER/index.htm

Human Resource Managers' Forum Will Feature New Supervisor Training Programs and Background Checking Essentials
John Wargowsky, Mid American Ag & Hort Services

Do you have ag or hort human resource (HR) responsibilities? Would you like to interact with ag and hort HR people from across the state? Would you benefit from knowing how other HR people tackle some of the same problems you face? Do you face some tough HR problems that occur over and over?

Mid American Ag and Hort Services (MAAHS) is pleased to announce the fourth Ohio Ag and Hort Human Resource Managers' Forum for people who answered yes to one or more of these questions. This forum is presented in partnership with the United State 's Department of Agriculture's Risk Management Agency.

T he Forum will be held Tuesday, February 7 at the Franklin County Farm Bureau office in Hilliard , Ohio from 10:00 a.m. to 3:00 p.m. This opportunity will provide a forum for fostering professional development and advancing effective human resource practices for human resource managers in agricultural and horticultural businesses.

The featured topic at the Forum will be "Implementing New Supervisor Training," presented by Bernie Erven of Erven HR Services LLC. Erven has 35 years of experience in teaching, extension and research focusing on employee management and family business relations.

In the afternoon, Cheryl Basinger with Competitive Edge HR will address "Background Checking and Reference Checking Essentials." Basinger has a 25-year track record of success in diverse assignments in human resources, sales and marketing.

John Wargowsky will address building future human resource management capacity in ag and hort businesses through future MAAHS program. Wargowsky serves as executive director of MAAHS, a membership organization dedicated to creating widespread human resource management strengths in Mid American agricultural and horticultural businesses.

The program will include opportunities for open discussion and networking opportunities for those with human resource responsibilities in ag and hort businesses.

The registration fee of $50 for MAAHS members and $70 for non-MAAHS members includes lunch and materials. Participation in the Forum is limited to the first 40 registrants and reservations are requested by January 31. Contact MAAHS at 614-246-8286, maahs@ofbf.org or www.midamservices.org (click on "Events") for more information.

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2004 Ohio Farm Income Data Released

David Marrison, Extension Educator-Ashtabula County

The National Agricultural Statistics Service and The Ohio State University's Department of Agricultural, Environmental, and Development Economics are pleased to announce the 2004 Ohio Farm Income publication has been released. This 32 page publication highlights cash receipts for the major agricultural commodities for the state of Ohio and each of its counties.

Cash receipts for Ohio livestock, livestock products and crops totaled a record high of $5.46 billion in 2004. This was up 12.5% from 2003's $4.85 billion. The top five Ohio agricultural commodities for cash receipts earned were: soybeans at $1.22 billion, corn at $1.02 billion, wholesale milk at $752 million, greenhouse and nursery at $589.1 million and poultry/eggs at $527.5 million. The top ten counties based on total cash receipts were: Mercer, Darke, Wayne, Putnam, Licking, Holmes, Wood, Hardin, Madison and Auglaize.

The 2004 Ohio Farm Income report can be viewed in its entirety at:

http://aede.osu.edu/resources/docs/pdf/C4IUUBQX-4WCT-RLNZ-ULIFXN9J6ZRD5ACC.pdf

National Extension Women in Agriculture Education Conference

David Marrison, Extension Educator, Ashtabula County

It has been announced the National Extension Women in Agriculture Education Conference will be held on April 6 & 7, 2006, in St. Louis , Missour. The goal of the conference is to broaden educational programming to women in agriculture, to encourage new programming efforts, and to strengthen existing programs.

For more information about the conference, producers can obtain details at www.agrisk.umn.edu/wia .

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Readers can subscribe electronically to this newsletter by sending an e-mail message to: ohioagmanager-on@ag.osu.edu. A successful subscription message will receive by an automatic reply from the listserv. Contact your local Ohio State University Extension Office or e-mail dmarrison@ag.osu.edu if you have problems subscribing.

Ohio Ag Manager Team Leaders: Chris Bruynis & David Marrison

Web Page Managers: David Marrison & Andy Kleinschmidt

Information presented above and where trade names are used, they are supplied with the understanding that no discrimination is intended and no endorsement by Ohio State University Extension is implied.

All educational programs conducted by Ohio State University Extension are available to clientele on a nondiscriminatory basis without regard to race, color, creed, religion, sexual orientation, national origin, gender, age, disability or Vietnam-era veteran status.

Issued in furtherance of Cooperative Extension work, Acts of May 8 and June 30, 1914, in cooperation with the U.S. Department of Agriculture, Keith L. Smith, Director, Ohio State University Extension.

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TDD # 1 (800) 589-8292 (Ohio only) or (614) 292-1868