Budgeting helps guide you through your decision making process as you attempt to commit resources to the most profitable enterprises on the farm. Crops or Livestock? Corn, Soybeans, Wheat, Hay? We can begin to answer these questions with well thought out budgets that include all revenue and costs. Without some form of budgeting and some method to track your enterprises’ progress you’ll have difficulty determining your most profitable enterprise(s) and if you’ve met your goals for the farm.

Budgeting is often described as “penciling it out” before committing resources to a plan. Ohio State University Extension has had a long history of developing “Enterprise Budgets” that can be used as a starting point for producers in their budgeting process.

Newly updated Enterprise Budgets for 2013 have been completed and posted to the Farm Management Website of the Department of Agricultural, Environmental and Development Economics. Updated Enterprise Budgets can be viewed and downloaded from the following website:
http://aede.osu.edu/research/osu-farm-management/enterprise-budgets

Enterprise Budget projections updated for 2013 include: Corn-Conservation Tillage; Soybeans-No-Till (Roundup Ready); Wheat-Conservation Tillage, (Grain & Straw); Alfalfa Hay; Alfalfa Haylage; Grass Hay; Swine – Farrow to Wean; Swine –Wean to Finish; Cow- Calf Spring Calving; Market Steer; Yearling Market Steer; Market Heifer; Ewe and Lamb.

Our enterprise budgets are compiled on downloadable Excel Spreadsheets that contain macros for ease of use. Users can input their own production and price levels to calculate their own numbers. These Enterprise Budgets have color coded cells that allow users to plug in numbers to easily calculate bottoms lines for different scenarios. Detailed footnotes are included to help explain methodologies used to obtain the budget numbers. Budgets include a date in the upper right hand corner of the front page indicating when the last update occurred.

Ohio cropland varies significantly in its production capabilities and cropland values and cash rents vary widely throughout the state. Generally speaking, western Ohio cropland values and cash rents differ substantially from eastern Ohio cropland values and cash rents. This is due to a number of factors including land productivity and potential crop return, the variability of those crop returns, field size, field shape, drainage, population, ease of access, market access, local market price, potential for wildlife damage, and competition for rented cropland in a region. This article highlights the summary of data collected for western Ohio cropland values and cash rents.

Ohio cropland values and cash rental rates are projected to increase in 2013. According to the Ohio Cropland Values and Cash Rents Survey bare cropland values in western Ohio are expected to increase from 6.8% to 15.4% in 2013 depending on the region and land class. Cash rents are expected to increase from 7.8% to 10.7% depending on the region and land class.

The “Western Ohio Cropland Values and Cash Rents” study was conducted surveying professionals knowledgeable about Ohio’s cropland markets. Surveyed groups include farm managers, rural appraisers, agricultural lenders, OSU Extension educators, farmers, landowners, and Farm Service Agency personnel.

Average Cropland

Survey results for “average” producing cropland show an average yield to be 160.7 bushels of corn per acre. Results show that the value of “average” cropland in western Ohio was $6,516 per acre in 2012. According to survey data this “average” producing cropland is expected to be valued at $7,069 per acre in 2013. This is a projected increase of 8.5%.

“Average” cropland rented for an average of $197 per acre in 2012 according to survey results. “Average” cropland is expected to rent for $215 per acre in 2013. This equates to a cash rent of $1.34 per bushel of corn produced. Rents in the “average” cropland category are expected to equal 3.0% of land value in 2013.

Top Cropland

Survey results indicate that “top” performing cropland in western Ohio averages 192.3 bushels of corn per acre. Results also show that average value of “top” cropland in 2012 was $7,865 per acre. According to this survey “top” cropland in western Ohio is expected to be valued at $8,515 in 2013. This is a projected increase of 8.3%.

“Top” cropland in western Ohio rented for an average of $256 per acre in 2012 according to survey results. “Top” cropland is expected to rent for $283 in 2013. This equates to a cash rent of $1.47 per bushel of corn produced. Rents in the “top” cropland category are expected to equal 3.3% of land value in 2013.

Poor Cropland

The survey summary shows the average yield for “poor” performing cropland equals 127.2 bushels of corn per acre. Results also show that the average value of “poor” cropland was $5,053 per acre in 2012. According to survey data this “poor” producing cropland is expected to be valued at $5,645 in 2013. This is an increase of 11.7%.

“Poor” cropland rented for an average of $144 per acre in 2012 according to survey results. Cash Rent for “Poor” cropland is expected to average $156 per acre in 2013. This equates to a cash rent of $1.23 per bushel of corn produced in 2013. Rents in the “poor” cropland category are expected to equal 2.8% of land value in 2013.

The entire survey summary is available online at:

http://aede.osu.edu/about-us/publications/western-ohio-cropland-values-and-cash-rents-2012-13

Peggy Kirk Hall, Asst. Professor, OSU Extension Agricultural & Resource Law Program

The U.S. Supreme Court today ruled that a farmer’s replanting of harvested Roundup Ready© soybeans violates Monsanto Company’s patent rights.  The ruling leaves in place a former court award of $84,456 against farmer Vernon Bowman for planting and harvesting the soybeans, which he had purchased as commodity beans from a local grain elevator or saved from his prior harvests.

Relying on the theory of “patent exhaustion,” Bowman argued that Monsanto’s patent rights exhausted after the first sale of the seed and did not apply to later uses or sales.  This exception to patent protection allows a purchaser of a patented good to resell the “used” good without violating patent rights.   The Court unanimously disagreed that patent exhaustion was applicable in Bowman’s case, explaining that the patent exhaustion theory applies to later uses of a good but not to the creation of new and additional goods from a patented good.  While Bowman could sell harvested Roundup Ready beans or use them as feed, he could not plant those beans, produce new beans and sell the new beans without violating Monsanto’s patent rights.  “That is how “to ‘make’ a new product,” said the Court, or to ”reproduce Monsanto’s patented invention” without compensation to Monsanto.   “A patentee retains an undiminished right to prohibit others from making the thing his patent protects,” said the Court.

Bowman tried to distinguish the application of patent exhaustion to his case based on the “self-replicating” nature of seed, arguing that the seed, rather than Bowman, controlled the seed’s actual reproduction.  Monsanto should not be allowed to interfere with natural reproduction, claimed Bowman.  The Court again disagreed, rejecting what it referred to as Bowman’s “blame the bean” and “seeds are special” arguments and pointing out that Bowman played an active role in the seed reproduction process.  But the Court carefully noted that its ruling does not automatically apply to every  self-replicating product, as there could be situations where a self-replication might occur outside a purchaser’s control or be a necessary but incidental step in using the item for another purpose.

Many expected the Court to rule in favor of Monsanto based solely on the argument that ruling otherwise would negate the incentive for innovation that Congress intended upon passing the federal Patent Act.  The Court was mindful of this argument when clarifying the parameters of the patent exhaustion doctrine, referring several times to the importance of not depriving Monsanto of its monopoly and the rewards of innovation.

What does the case mean for farmers?  The Monsanto ruling is not a big surprise but it does send a strong message to farmers, some of whom have likely grumbled over seed patents and limitations on the age-old practice of saving seed.  With the Supreme Court’s decision, it’s clear that the current legal system simply won’t tolerate replantings of patented seeds.  Instead, the law will support continued efforts by patent holders to monitor what farmers do with patented seed.  Replanting of patented seed, whether intentional or accidental, is more than ever a high risk activity.

Read the Supreme Court’s decision in Bowman v. Monsanto Co. here.

As the temperatures start to climb, many producers are gearing up for planting season. If you are a farmer who grows, harvests, packs, or holds fruits and vegetables intended for human consumption, you should be aware of the proposed produce safety standards that were released by FDA on January 16, 2013, as part of the Food Safety Modernization Act. The proposed rule could impact your business later this year. The comment period has been extended: originally all comments were due by May 16, 2013, but now with the extension, you have until September 16, 2013 to submit comments. So, if you have not had a chance to review and comment on the proposed rule, there is still time.

What does the proposed produce safety rule do? The focus of the proposed rule is foodborne illness prevention. The goal is to now focus on preventing a foodborne illness outbreak rather than reacting to one. Foodborne illness outbreaks are a major concern and produce is often associated with such outbreaks. As a producer, you are responsible for ensuring your product is safe. If you fail to do so, you could face liability.

The proposed rule establishes “science-based standards for growing, harvesting, packing and holding produce on domestic and foreign farms.” To address foodborne illness prevention, the proposed rule identifies seven routes of microbial contamination where prevention is key and sets standards for each:

• Agricultural Water – The rule proposes requiring all agricultural water to be safe and of adequate sanitary quality for its intended use and to be inspected at the beginning of the growing season to identify conditions that are reasonably likely to introduce pathogens. An alternative to the water requirements may be permitted if the alternative is scientifically established to provide the same amount of protection as the proposed requirement.
• Biological Soil Amendments of Animal Origin – Types of treatment, methods of application, and time intervals between the application of a biological soil amendment of animal origin and crop harvest are three proposed measures to reduce risk. An alternative to these requirements is also permitted as long as the alternative is scientifically established to provide the same amount of protection as the proposed requirement.
• Health and Hygiene – The rule proposes farm personnel be required to use hygienic practices, including hand washing and maintaining adequate personal cleanliness.
• Domesticated and Wild Animals – For domesticated animals, the rule proposes waiting an adequate period between grazing of the animals and harvesting produce from that growing area. If working animals are being used where produce has been planted, the rule requires farms to take measures to prevent pathogens from being introduced onto the produce. For wild animals, the rule requires farms to monitor for significant wild animal intrusion immediately before harvest and as needed during the growing season.
• Equipment, Tools, and Buildings – Some of the key requirements proposed for equipment and tools includes: using equipment and tools that are of adequate design, construction, and workmanship, inspecting, maintaining, and cleaning all food-contact surfaces of equipment and tools, and storing and maintaining equipment and tools to prevent contamination. Some of the key requirements proposed for buildings includes: requiring buildings to be a suitable size, construction, and design to facilitate maintenance and sanitary operations, buildings must provide sufficient space for placement of equipment and storage of materials, and requiring the plumbing system be properly designed, installed, and maintained.
• Sprouts – Requirements include: treating seeds before sprouting, testing spent sprout irrigation water for pathogens, and monitoring the growing environment for Listeria species or Listeria monocytogenes.
• Training – Training would be required for farm personnel would handle produce or food-contact surfaces, and for supervisors.

Who is exempt from the proposed rule? The standards and requirements of the proposed rule will apply to farms that grow, harvest, pack, or hold fruits and vegetables intended for human consumption in its raw or natural state. The rule however, does exempt certain farms. Total exemptions include:

• Produce that is rarely consumed raw, such as potatoes.
• Produce that is destined for further processing, such as green beans destined for a canning operation.
• Produce intended for personal or on-farm consumption
• Farms that sell $25,000 or less of food per year

A farm could also be partially exempt from the rule if they meet two requirements:

1. Food sales average less than $500,000 per year during the last 3 years
2. Sales to qualified end-users exceed sales to others during the same period

For purposes of the second requirement, a qualified end-user is a consumer, restaurant, or retail food establishment. The consumer may be located anywhere, but the restaurant or retail food establishment must be located in the same state as the farm or not more than 275 miles away from the farm.

If your farm does qualify for a partial exemption, then you must comply with certain labeling requirements. If a label is already required on the produce, then the name and business address of the farm where the produce was grown must be included on that label. If a label is not already required, then the name and business address must be displayed at the point of purchase.

Could I lose my exemption status? Yes. FDA may withdraw an exemption if:

• There is an investigation of a foodborne illness outbreak directly linked to your farm, or
• FDA determines it is necessary to protect the public health and prevent or mitigate a foodborne illness outbreak based on conduct or conditions associated with your farm

How soon do I have to start complying with the rule? After the final rule is published, it will become effective within 60 days. Farms would have between two and four years to comply with the rule depending on the value of food their operation sells during the previous three-year period:

• Businesses selling less than $250,000 per year would have 4 years after the effective date to comply and 6 years to comply with some of the water requirements
• Businesses selling between $250,000 and $500,000 per year would have 3 years after the effective date to comply and 5 years for some of the water requirements
• Businesses selling more than $500,00 per year would have 2 years after the effective date to comply and 4 years to comply with some of the water requirements.

The proposed rule is currently open for comments. Comments must be submitted by September 16, 2013 to be considered. For more information on the proposed rule and to submit a comment, visit: http://www.fda.gov/Food/FoodSafety/FSMA/ucm334114.htm.

With the end of the school year, many students will be heading home for the summer. The additional help on the farm will be welcomed. Most times the help is free. After all, you provide free room and board, right? But there may be tax advantages, at least from a family perspective, if you “hire” your children to work in the family business.

INCOME SHIFTING: Regardless of how a business is organized, its owners may be able to shift some of their high-taxed income into tax-free or low-taxed income by employing their children. For the children’s wages to be deductible, the work done by the children must be legitimate and the wage must be reasonable for the work. The standard deduction for an individual is $6,100 in 2013. This means that your child can earn up to $6,100 before he/she incurs any tax liability. The amount that you pay your child reduces the parent’s income which is taxed at a higher rate.

ILLUSTRATION: Let’s say that Fred Farmer, who happens to be in a 33% tax bracket, hires Fred Jr. to work on the farm for the summer, and pays him $6,100. If that $6,100 had remained with Fred Farmer, he would have paid $2,013 in taxes. Instead, Fred Jr. receives the money tax-free because of his standard deduction. The family unit saves money. Even if Fred Jr. earns more than $6100, family taxes are reduced because Fred Jr.’s beginning tax rate is 10% instead of the 33% paid by his father.

CAUTION: The tax code contains a provision known as the “kiddie tax.” This provision applies to unearned income on investments. It is meant to guard against parents transferring high earning investments to their children so that the unearned income will be taxed at a lower rate. The kiddie tax applies to the child if he/she does not file a joint tax return and (1) hasn’t reached age 18 before the end of the tax year, or (2) his/her income doesn’t exceed one-half of his/her support and the child is 18, or is a full time student age 19-23. The kiddie tax says that the tax rate on the child’s unearned income over $2,000 will be taxed at the parents’ highest tax rate. This provision applies only in the event that the child’s unearned income exceeds $2,000. The kiddie tax only applies to unearned income and has no effect on the child’s wages and other earned income.

RETIREMENT SAVINGS: If the child is paid more than his/her $6,100 standard deduction, additional savings are possible if the child deposits the extra earnings into a traditional IRA. For 2013, a child can make a tax-deductible contribution of up to $5,500 to his/her own IRA. The result of the combination of the standard deduction and the IRA contribution is that the child can earn up to $11,600 in 2013 without paying income taxes. Fred Farmer’s tax savings is now $3,863.

EFFECTS ON THE BUSINESS

INCOME TAX WITHHOLDING: Regardless of how the business is organized, it should withhold federal income taxes on the child’s wages. This means that the child should complete a W-4 form for 2013. There are some exemptions from withholding federal income tax for a business, however, they are minor exemptions that more than likely will not apply here. Instead, it is recommended that the business play it safe and withhold federal income tax, keeping in mind that the child probably will get a refund of all or part of the taxes paid if he/she files a return for the tax year.

FICA (Medicare): Employment for FICA tax purposes does not include services performed by a child under the age of 18 while employed by a parent. This can generate some additional savings for a parent who runs an unincorporated business, including a partnership that consists of both parents and no other partners. A parent can save 2.9% on the amount of wages paid to a child under 18. This savings does not apply if the child is age 18 or over, if the business is incorporated, or if a partnership includes partners other than the parents. In these instances, the child should be treated the same as any other employee.

FUTA (federal unemployment tax): A similar but more liberal exemption applies for FUTA, which exempts earnings paid to a child under age 21 while employed by his or her parent. The FUTA tax is 6% on the first $7,000 of wages. A credit for state unemployment tax paid is allowed up to 5.4%. Once again, this exemption does not apply to incorporated businesses or partnerships that have partners other than the parents.

More detailed information can be found at irs.gov, Publication 15 (Circular E) Employer’s Tax Guide.

Ohio State University Extension and the Ohio State Bar Association will again partner to host the fifth annual Ohio Agricultural Law Symposium on June 23 and 24, 2013.

The focus of this year’s program is representing Ohio’s farm and agri-business clients.  Two nationally respected  practitioners will teach for the Symposium.   Allen Olson from Albany, Georgia, who has farm clients throughout the southern states, will provide guidance on representing farmers in crop insurance disputes and will also share his outlook on federal farm bill policies.   Cari Rincker of Rincker Law Office in New York, NY,  whose client base is spread around the country, will speak on protecting the farm client’s business by managing contracts, intellectual property and employment concerns.

The program will also include Ohio legal experts on labor, trucking, food safety and estate and business planning.   Leah Curtis from Ohio Farm Bureau and Roxi Liming with Adams, Liming & Hockenberry, LLC in Columbus will use a case study approach to discuss advising farm clients on trucking and labor regulations.   Russell Cunningham and Jeff Easterday of Barrett, Easterday, Cunningham & Eselgroth, LLP will present on estate and business planning for farm clients, and advising clients on recent food safety regulations will be presented by our own OSU Extension Agricultural & Resource Law Program.  An update from the Ohio Department of Agriculture will feature Deputy Director John Schlichter.

New this year are changes to the location and timing of the Symposium.  The  conference will be held at Cherry Valley Lodge near Newark, Ohio, and will begin on Sunday evening with a bonus 2.5 hour CLE session on Ethics, Professional Responsibility, and Substance Abuse.   Ethics and substance abuse topics will be delivered via video replay and speakers Allen Olson and Cari Rincker will cover the professionalism component with strategies for developing and retaining farm and agri-business clients.  The Sunday session will conclude with a social reception. Also new this year, the Ohio State Bar Association Agricultural Law Committee will meet on Monday morning.

Law students interested in attending the Symposium may apply for student scholarships provided by the Paul L. Wright Chair in Agricultural Law Endowment Fund at Ohio State.  Contact Peggy Hall at aglaw@osu.edu for scholarship information.

To register for the Symposium, visit the Ohio State Bar Association Continuing Legal Education website at www.ohiobar.org. View the complete Symposium brochure on the OSU Extension Agricultural & Resource Law website.

Peggy Kirk Hall, Asst. Professor, OSU Extension Agricultural & Resource Law Program

Many farms are scrambling to meet the upcoming May 10, 2013, deadline for having an oil spill containment plan (SPCC plan) as required by EPA regulations,  but Congress has quietly delayed the U.S. EPA’s ability to enforce the regulation.   Amendment 29 to the recently enacted funding bill, H.R. 933, states that the U.S. EPA may not use any of its funds to enforce the SPCC rule against farms for a period of 180 days, until after September 26, 2013.

The purpose of the U.S. EPA’s Spill Prevention Control and Countermeasures (SPCC) program is to help facilities and farms prevent a discharge of oil into navigable waterways.  Program regulations affect farms that store more than 1,320 gallons of oil or oil products in aboveground containers or more than 42,000 gallons in completely buried containers–those farms are required to develop, maintain and implement an oil spill prevention plan by May 10, 2013.

The recent action by Congress, however, prevents the EPA from enforcing the plan until late September.  In the meantime, congressional efforts will focus on revising the SPCC rule as it applies to farm SPCC plans.  Senator Inhofe (OK), who sponsored the amendment to delay enforcement, has already co-sponsored a bill (S. 496)  with Senators Pryor (AK) and Boozman (AK) to provide more exemptions for small farms and help farms reduce compliance costs.

What should farmers do now about SPCC plans?  The future of the SPCC rule is uncertain, but we do know that the current deadline of May 10 can’t be enforced by the EPA.  Farmers who are currently subject to the regulation must decide whether to proceed with compliance and be prepared for a possible September deadline, or wait and see if Congress changes SPCC requirements before the end of September.  If a farmer is subject to an attempted enforcement action after the May 10 deadline, contact legal counsel right away.  For those who have already developed SPCC plans, be assured that the plan may still be required in the future and could also be a useful tool for  reacting to an oil spill that could contaminate a waterway and reducing your environmental liability risk.   For more information about the SPCC rule, visit here.

It’s the time of year when farmers clear fields and fence rows of corn stalks, branches and other debris and use a common management practice–piling the debris and burning it in the field.  Because outdoor fires such as this create air emissions and wildfire concerns, Ohio has laws that regulate open burning activities.   Burning certain materials at certain times in certain places may violate the open burning laws and cause a health or safety issue.  It’s important to know when open burning of crop debris and field residue is permissible, and to take precautions to minimize risk and liability.

There are several areas of law in Ohio that address open burning.  The Ohio Environmental Protection Agency (OEPA) oversees regulations on the open burning of materials that may produce harmful air emissions that affect human and environmental health.  Ohio also has laws that regulate open burning to minimize the danger of wildfires; these laws may be enforced by the Ohio Department of Natural Resources (ODNR) Division of Forestry or local law officials.   Additionally, a local government might have local ordinances that regulate open burning.

In regards to crop debris in farm fields, it is typically permissible for a farmer to burn the debris.  However, the law creates duties to conduct the burn responsibly and imposes some conditions on what, where and when to burn.  Violating the laws can lead to criminal charges, fines and civil liability to harmed parties.

What can you burn?

Ohio law allows the burning of “agricultural wastes” under certain conditions.  The definition of agricultural waste includes materials such as crop debris, as well as other materials.   According to Ohio law, agricultural waste includes:

• Waste material generated by crop, horticultural, or livestock production practices, landscape wastes that are generated in agricultural activities and woody debris and plant matter from stream flooding.
• Bags, cartons, structural materials and containers for pesticides, insecticides, fungicides, rodenticides, miticides, nematocides, fumigants, herbicides, seed disinfectants and defoliants, if the manufacturer has identified open burning as a safe disposal procedure.  Farmers may add seed bags and cartons to the burn pile as long as the label states that open burning of the materials is safe.

Agricultural waste does not include:

• Standing or fallen buildings, building materials, food waste, dead animals, materials made from petroleum or containing plastic, rubber, grease or asphalt.   A farmer may not add these materials to the burn pile.
• Debris resulting from the clearing of land for new agricultural, residential, commercial or industrial development—this type of waste is defined as “land clearing waste.”  Open burning of land clearing waste requires prior written notification to Ohio EPA.

Where can you burn?

Several regulations determine acceptable locations for burning crop debris and other agricultural waste:

• Agricultural waste may only be burned on the property where the waste is generated; the waste may not be taken to a different property for burning and a farmer cannot receive and burn waste from another property.
• If the burning is inside a “restricted area,” then prior written notice to Ohio EPA must be provided at least ten days in advance of the burning.  A “restricted area” is an area where there is higher population density.  The law defines a restricted area as:
  • Any area inside city or village limits.
  • Any area within the 1,000-foot zone outside of a city or village with a population of 1,000 to 10,000.
  • Any area within a one-mile zone outside of a city or village with a population of more than 10,000.
  • The fire must occur in a location where it will not obscure visibility for roadways, railroad tracks or air fields.
  • The fire must be more than 1,000 feet from any neighboring building inhabited by people, such as homes, stores, restaurants, schools, etc.

When can you burn?

There are definite times when burning of crop debris and other agricultural waste is not permitted unless certain conditions are met.

• Ohio’s wildfire laws limit open burning in rural areas during the months of March, April, May, October and November, when wildfire risk is highest due to dry vegetative conditions and dry winds.  During these months, open burning in rural areas is completely prohibited between the hours of 6 a.m. and 6 p.m., when volunteer fire departments are not well-staffed.  One exception to this prohibition applies to farmers:
  • Open burning may occur in a plowed field or garden, if the burn pile is at least 200 feet from any woodland, brush land or field containing dry grass or other flammable material.  If a farmer can’t meet this 200 foot buffer zone requirement, the farmer should wait until after 6 p.m. to conduct the burn.
  • Open burning should only occur when atmospheric conditions will readily dissipate any smoke and potential contaminants.  If weather conditions are foggy, rainy or causing air inversions, smoke and contaminants will not readily disperse and the farmer should not burn the materials.
  • Even if all other legal requirements for open burning are met, open burning is not allowed when air pollution warnings, alerts or emergencies are in effect.

What about prescribed burning?

Both the ODNR and Ohio EPA have authority over prescribed burning—intentional burns for horticultural, silvicultural, range or wildlife management practices.  Prescribed burning requires prior written permission from Ohio EPA and–if taking place during March, April, May, October or November–the burn must be conducted by a Certified Prescribed Fire Manager with permission by the Chief of ODNR’s Division of Forestry.  See the Division of Forestry’s website for more information on becoming a Certified Prescribed Fire Manager and requesting permission for prescribed burns.

Prior notice to Ohio EPA

For burns that require advance notice to the Ohio EPA, farmers may use the notification form on the Ohio EPA website at http://www.epa.ohio.gov/dapc/general/openburning.  The form seeks information about what will be burned and when and where the burn will take place; this allows the EPA to ensure that the burn is permissible.

Legal duties for conducting open burning

Ohio law also imposes duties for managing open burns.   Ohio Revised Code 1503.18 establishes a duty to prevent fire escape.   The law requires any person who starts a fire near trees, woodland or brush land to take steps to prevent the fire from escaping.  All leaves, grass, wood and inflammable material surrounding the place must be removed to a safe distance and all other reasonable precautions must be taken to keep the fire under control.   The law also states that a person should extinguish or safely cover an open fire before leaving the area.

Ohio EPA’s regulations impose several other duties for managing burns.  As mentioned above, burning of agricultural waste should take place at least 1,000 feet from any neighbor’s inhabited buildings. The wastes should be stacked and dried to provide the best practicable condition for efficient burning and weather conditions should not prevent dispersion of the smoke and emissions.  If the size of an agricultural waste pile exceeds 20 feet in diameter by 10 feet in height (or 4,000 cubic feet),  the farmer must provide written notification of the burn to the Ohio EPA at least ten days before burning.

Local laws

The above analysis explains Ohio’s laws on open burning; remember that the local government might have a local law that also regulates burning activities.  Check with your local fire department to know whether any local regulations apply to the situation.

What if a farmer violates open burning laws?

Violation of the open burning laws creates several risks for farmers.  Ohio EPA has the authority to issue fines of up to $1,000 per day per offense.  The EPA states that it takes enforcement action against repeat offenders or violations that cause significant harmful emissions.  Otherwise, EPA enforcement officers prefer to issue warnings to first-time offenders and educate on how to conduct open burns that minimize pollution impacts.  EPA enforcement officers regularly patrol their districts, investigate fires they see and investigate complaints from neighbors or others who report burning activities.  According to the EPA, the most common violations by farmers include burning substances that are not “agricultural wastes” such as tires and plastics, failing to meet the 1,000 foot setback requirement and burning waste from another property.

Conducting open burns that violate Ohio’s wildfire prevention laws can result in third degree misdemeanor charges, which carry penalties of up to $500 and 60 days of jail time per violation.   Any person may report a potential illegal burn that creates wildfire risks to the local law enforcement or Division of Forestry.

Equally and perhaps more important is the risk of civil liability from an open burning incident.  We all know that the “burn police” can’t observe everyone all the time, but civil liability doesn’t require intensive monitoring—it requires harm.  Where an open burn causes harm to people or property, civil liability may arise.  An open burn that reduces roadway visibility and results in an auto accident, escapes the property and harms neighbors or neighboring property or significantly interferes with other owners’ property use could result in a negligence or nuisance lawsuit.  The farmer who violated open burning laws or failed to properly manage the fire could be liable for all harm resulting from the fire.

For more information on Ohio’s open burning laws, visit the websites of the Ohio EPA Division of Air Pollution Control and ODNR Division of Forestry.

On May 10, 2013 farms must have prepared and implemented their Spill Prevention, Control and Countermeasure (SPCC) Plans if they fall under regulation by the EPA. Farms with 1,320 gallons above ground storage or 42,000 gallons below ground storage of oil or oil products meet the requirements to have a SPCC. This includes all containers 55 gallons or greater. The implementation date was delayed from its original date in the fall of 2011.

Two basic requirements need to be met to comply. The first is having sufficient secondary containment for storage and transfer areas to contain any spillage. The containment area is designed to prevent discharge until cleanup can occur and is usually designed to hold 110 percent of the largest container or tank in the area. The second requirement is to prepare and implement a written SPCC plan that covers all of the steps the farm has taken to prevent discharges into the environment. The plan must be updated every 5 years or in the event of a major re-design of the area. Any employees handling oil and petroleum products must be trained on what the plan involves.

Some farms may need to have their plan approved by a Professional Engineer. If on farm storage is between 1,320 and 10,000 gallons, you are allowed to prepare and self-certify if you have not had any spills of 1,000 gallons or more at once or less than two discharges of more than 42 gallons in the last year. Also, if secondary containment is not practical or alternative methods of diking or secondary containment are to be used, a Professional Engineer will need to certify.

On completion the plan must be kept on site. It does not need to be sent to EPA but may be requested if a major discharge event occurs. More in-depth information on creating a plan for farms can be found at the SPCC for Agriculture page on the EPA site: http://www.epa.gov/emergencies/content/spcc/spcc_ag.htm#spcc. This fact sheet also provides a good overview: http://www.epa.ohio.gov/portals/41/sb/publications/spcc.pdf.  Additionally more information can be found in a previous OAM article located at  http://ohioagmanager.osu.edu/uncategorized/fuel-storage-containment-required

 With the drilling of gas wells comes the need to establish pipelines to move the gas from the point of drilling to the end users.  Landowners across Ohio are being asked to sign agreements allowing companies to purchase acreage for pipeline construction.  A new fact sheet provides landowners with an overview of items to consider regarding standards and construction specifications related to pipelines. This fact sheet is intended for educational purposes only.  We strongly encourage landowners who may be considering negotiating a pipeline easement to consult with an attorney familiar with such negotiations. Download the factsheet by clicking A Landowners Guide to Understanding Recommended Standards and Construction of Pipeline Standards 2012 2012.

Ownership of a piece of property may best be described as a “bundle of rights.” These rights include the right to occupy, use, lease, sell, and develop the land. An easement involves the exchange of one or more of these rights from the landowner to someone who does not own the land. Easements have been used for years to provide governments, utilities, and extractive industries with certain property rights. An easement permits the holder certain rights regarding the land for specified purposes while the ownership of the land remains with the private property owner.  The property owner retains ownership of the land and is responsible for any and all taxes due.  The easement agreement should be filed with the county recorder where the property exists. To read more download the pdf of the new factsheet titled Considerations When Evaluating a Pipeline Easement Agreement.

With the arrival of spring, many agricultural businesses may be looking to hire additional employees. Before putting those new employees to work, employers should take time to ensure a “legal” workforce.  One important step is following the Form I-9 Employment Eligibility Verification process.  And with the recent release of a new Form I-9, close attention to Form I-9 compliance is extremely important.

What is the purpose of Form I-9?  The form aims to verify the identity and employment of every person hired to perform labor or services in return for wages or for anything of value that is given in exchange for labor or services, including food and lodging.

Why worry about Form I-9?  Because correct completion of Form I-9 is both a legal mandate and a legal defense.  Federal law requires every employer to complete an I-9 form upon hiring an employee.    Filling out the form is not optional.  Even if the employer knows the new employee, knows of the employee or knows the employee’s family–the employer must do a Form I-9 for the employee.    Once properly completed, a Form I-9 is the employer’s defense against a potential claim of knowingly employing an unauthorized worker.

How does an employer complete Form I-9?  Form I-9 compliance requires completion of three sections, as follows:

• Employers must have every newly hired employee complete Section 1 of the form no later than the first day of work for pay.  Section 1 requests personal employee information such as name, address, e-mail, phone number, date of birth and social security number and requires the employee to attest to his or her citizenship status.
• No later than the third day of employment, the employer must complete and sign Section 2 of the form. Section 2 requires the employer to physically examine documentation presented by the employee showing identity and employment authorization.    There are three lists of acceptable documents; employees may present one document from List A or a combination of one document from List B and one document from List C.  Examples of documents include U.S. passports, driver’s licenses, social security cards and employment authorization from the Department of Homeland Security.
• Section 3 applies to re-verification and rehires.  An employer must complete Section 3 only if the employee is not a U.S. citizen or lawful permanent resident and his or her employment authorization documentation has expired.  An employer may complete Section 3 for employees rehired within three years of the date that a Form I-9 was originally completed, or the employer  may choose to complete a new Form I-9 for the rehired employee.

What does an employer do with completed I-9 forms?  An employer must keep all completed  I-9 forms for all current employees and make the forms available to federal officials in the event of an inspection.  An employer must keep I-9 records for a certain period of time after employees stop working.  This period of time varies; the government provides a chart to help employers identify the appropriate period of time.

Are there penalties for non-compliance?  Yes.  An employee may be subject to civil penalties for failing to properly complete, retain or make the I-9 forms available for inspection.

When is the new Form I-9 effective?  On March 8, 2013, a new Form I-9 was released with revisions. The revised Form I-9 is now two pages long, includes expanded instructions, and has new fields for e-mail addresses, phone number, and foreign passport. Employers should be using this revised form now, but may continue to use the previous Form I-9 until May 7, 2013.

The importance of document inspection.   To avoid liability, the employer should properly inspect the employee’s documents.   The documents must reasonably appear to be genuine and relate to the person presenting them.  The employer’s duty is to verify the documentation; the job of fully “investigating” whether the employee is authorized to work rests with U.S. Immigration Customs Enforcement.  If an employee provides a document that does not appear to be genuine or relate to the employee and the employee cannot present other documentation, then the employer may terminate employment.

Avoiding discrimination liability.  Employers should make sure they do not engage in any discriminatory practices when it comes to the Form I-9.  At the pre-hire stage, an employer may not ask an applicant their citizenship, nationality, immigration status, type of work authorization, or green card status. After hiring the employee, an employer may not request a particular document for the employee to provide to complete the Form I-9; it is the employee’s decision as to what documents they will provide. An employer also may not request more documents than what are required by Form I-9.   Such actions by the employer might result in a discrimination claim.

For complete information about I-9 compliance, check out the “Handbook for Employers – Guidance for Completing Form I-9″ on the  U.S Citizenship and Immigration Services I-9 Central website.

Budgeting helps guide you through your decision making process as you attempt to commit resources to the most profitable enterprises on the farm. Crops or Livestock? Corn, Soybeans, Wheat, Hay? We can begin to answer these questions with well thought out budgets that include all revenue and costs. Without some form of budgeting and some method to track your enterprises’ progress you’ll have difficulty determining your most profitable enterprise(s) and if you’ve met your goals for the farm.

Budgeting is often described as “penciling it out” before committing resources to a plan. Ohio State University Extension has had a long history of developing “Enterprise Budgets” that can be used as a starting point for producers in their budgeting process.

Newly updated Enterprise Budgets for 2013 have been completed and posted to the Farm Management Website of the Department of Agricultural, Environmental and Development Economics. Updated Enterprise Budgets can be viewed and downloaded from the following website: http://aede.osu.edu/programs/farmmanagement/budgets

Enterprise Budget projections updated for 2013 include: Corn-Conservation Tillage; Soybeans-No-Till (Roundup Ready); Wheat-Conservation Tillage, (Grain & Straw); Alfalfa Hay; Alfalfa Haylage; Grass Hay, Swine-Farrow to Wean; Swine- Wean to Finish.

Our enterprise budgets are economic budgets. This means that, in addition to cash expenses and depreciation, opportunity costs of land, labor, management and capital are included. By including these costs we are able to estimate an economic profit which is different from an accounting profit. By including opportunity costs of labor and management in an economic enterprise budget, the user can determine whether the enterprise is economically viable in the time-frame being considered.

Using current input costs for Ohio row crops we find that the break-even price for corn to be between $4.98 and $5.31 per bushel (assuming 158 or 190 bushel production potential).

Using current input costs for Ohio soybean we find that the break-even price to be between $11.73 and $12.47 per bushel (assuming  or 46 or 55 bushel production potential).

Our enterprise budgets are compiled on downloadable Excel Spreadsheets that contain macros for ease of use. Users can input their own production and price levels to calculate their own numbers. These Enterprise Budgets have color coded cells that allow users to plug in numbers to easily calculate bottoms lines for different scenarios. Detailed footnotes are included to help explain methodologies used to obtain the budget numbers. Budgets include a date in the upper right hand corner of the front page indicating when the last update occurred.

There are a variety of tools available to assist you as a farm manager or landowner in the task of developing a flexible cash lease or crop share lease. These tools have been developed through Ohio State University Extension and the Department of Agricultural Environmental and Development Economics at the Ohio State University. These tools are downloadable Excel spreadsheets that can be used to evaluate changes to lease amounts depending on changing lease parameters. These tools are available online at: http://aede.osu.edu/programs-and-research/osu-farm-management/decision-tools

The following are descriptions of the each tools.

Flexible Cash Lease Calculator – Cash Lease with a Bonus Approach

This flexible cash lease tool is intended to help landowners and tenants agree on terms of their flexible cash lease. This Flexible Cash Lease Calculator can assist users in developing a flexible cash rent model.

The flexible cash rent approach used in this calculator allows users to compare actual prices, yields and gross income to base prices, yields and gross revenue. The difference between the base and actual gross revenues can be shared in some proportion between landowner and operator and added to the base cash rent.

The Microsoft Excel spreadsheet is designed to enable the user to input base and year end prices, yields and proportional split to formulate a flex rental amount at the end of the lease year.

Flexible Cash Lease Calculator – Net Return Approach

This flexible cash lease tool is intended to help landowners and tenants agree on terms of their flexible cash lease. This Flexible Cash Lease Calculator can assist users in developing a flexible cash rent model. Unlike other flexible cash lease calculators, this tool allows the user to incorporate flexible parameters for input costs as well as for price and yield.

The flexible cash rent approach used in this calculator allows users to calculate actual net income for rented land and compare it against a base net income. The difference between the base and actual net revenues can be shared in some proportion between landowner and operator and added to the base cash rent.

The Microsoft Excel spreadsheet is designed to enable the user to input base and year end prices, yields and costs to formulate a flex rental amount at the end of the lease year.

Flexible Cash Lease Calculator – Ratio Approach

This flexible cash lease tool is intended to help landowners and tenants agree on terms of their flexible cash lease. This Flexible Cash Lease Calculator can assist users in developing a flexible cash rent model. Unlike other flexible cash lease calculators, this tool allows the user to incorporate flexible parameters for input costs as well as for price and yield.

The flexible cash rent approach used in this calculator is to multiply the base rent by: 1) the ratio of the Year End Price to Base Price, 2) the ratio of the Year End Yield to Base Yield and, 3) the ratio of the Base Input Costs to Year End Input Costs.

The Microsoft Excel spreadsheet is designed to enable the user to input base and year end prices, yields and costs to formulate a flex rent at the end of the lease year. There are two tabs for this calculator. Page 1 contains the Flexible Cash Lease Inputs and page 2 contains the Flexible Cash Lease Output.

Crop Share Calculator

The Crop-Share Lease Calculator is a tool designed to allow the user to input costs and shares of each to fairly allocate revenue in a crop share lease arrangement. This tool shows the tenant and landowner returns above total costs given share percentages and costs. This decision aid contains three sections:

Shares

This section separates various receipt and cost sections out so that the user can input the share percentage of that particular item.  Simply input the percentage that the landowner is responsible for and the tenant percentage is automatically generated.

Costs

This section allows the user to input the costs and receipts for the particular crops.

Output

This section separates the sections into 4 broad categories (Receipts, Inputs, Machinery, and Direct Costs) and breaks them down to show the amount (based on the percentages inputted in section 1) that the landowner and the tenant are responsible for.  At the bottom of the sheet, it will show the return to total costs based on the numbers provided.