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Extension > Agricultural Business Management News > March 2017

Wednesday, March 22, 2017

Finding and Keeping Good Employees- It Can Be Done!

by Betty Berning
Extension Educator

One of the top issues I hear about from farmers is labor management.  Most people aren’t farmers because they wanted to manage employees.  Most farmers want to FARM.  As farms grow, though, more help (and management!) is required.  Enter employees.  For an operation to be successful as it grows, owners must accept that they will need to spend more time on management activities, like human resources. 

I hear about human resource struggles- even from farmers that have embraced their role as “farm manager”.  It is hard to find good employees and it is hard to retain them.  The agricultural industry pays less than other comparable industries.  Minnesota mean hourly wage data from May 2015 indicates farmworkers on farms with animals were paid $12.58/hour.  Compare that to a construction laborers’ mean hourly wage of $17.57/hour during that same time.  That’s a difference of almost $5/hour.  In addition, farm work is physically demanding and can be dirty.  Not everyone is cut out to work on a farm!  These factors can make it difficult to find good employees.

It sounds like a lot of doom and gloom, right?  It doesn’t have to be.  With the right tools and approach to employee management, it is possible to both find and keep good employees.  I will offer the disclaimer that there is no silver bullet to solve all problems.  There are some things, though, that a farm can implement that will help improve its chances of recruiting and retaining the right people for the job. 

Let’s start with your image.  What is your public image as a farm?  What do people think about when your farm’s name comes up in conversation?  For example, maybe you lease animals to the local 4-H Club.  People might think of you as service-oriented or good advocates for agriculture.  What do your employees say about working for you?  Your employees can be great advocates for your farm’s image, if they are satisfied and feel valued!  (I’ll provide some tips later in this article on how to value employees, so they feel valued.)  The important thing is that when people hear about or think of your farm, they have a positive image.

If your farm doesn’t have an image or it’s negative, think about what you can do.  Start by being a good neighbor!  This could mean communicating with your neighbors about manure spreading or avoiding fieldwork near neighbors’ homes late in the evening.  I’d also encourage you to think about your farm’s positive attributes- every farm has a few!  Your next step is to determine how to share this positive image.  Social media can be a good way to do this. Traditional activities, like volunteering at church, making school visits, or serving on a community board, are also great ways to build your farm’s image.  Your image lets potential employees know what it might be like to work for you.  Building a positive image will attract people to your farm.

The next thing to think about is recruitment.  How do you recruit?   Do you simply place an ad that says, “Looking for a tractor driver,” in the local paper, or do you write a compelling ad that provides a little bit of information about the job and your farm?  How do you share this message- only in the paper?  Consider new places and ways to recruit, like job fairs, internships through local colleges or FFA programs, referrals from other employees, or handing out your ad to agribusiness professionals.  Be sure to communicate responsibilities and competencies needed for the job, along with a little bit about your farm’s values.

Finally, you have to value your employees.  Treat them like you would want to be treated.  How often do you show them that they are valued?  Simple things often tell people how much we value them.  A “thank you” or “good job” goes a long way!  Some farms have a birthday board or bring in treats to celebrate employees’ birthdays.  Offering a hot meal once a day during busy times like planting or harvest can also be a great way to let your employees know they are appreciated.  Hold regular meetings with your employees to talk about the farm and listen to their feedback.  Listen well.  Try to understand any concerns your employees may have and determine ways to address them.

Tuesday, March 7, 2017

Long Term Health Care Planning Crucial Part of Business Transition & Estate Planning

by Gary Hachfeld, Extension Educator

Not planning for long term health care, when doing farm business transition and estate planning, can financially cripple the farm business.

There are three reasons why many farm families overlook planning for long term health care when doing business transition and estate planning. They do not realize the probability of needing long term care, they do not realize long term care costs have skyrocketed in the last 5 years and there are lots of misconceptions about what people think they can do with their assets to shelter them from long term care costs, said Gary A. Hachfeld, University of Minnesota Extension educator in agricultural business management.

"Long term health care costs are potentially more financially devastating to a farm business than any tax issue,” Hachfeld said. "Long term care costs can undo any amount of transition and estate planning if not addressed."

Currently, one in every two Americans over the age of 65 will have some type of stay in a nursing home. One in ten Americans over the age of 65 will have a nursing home stay greater than five years. Of those individuals currently receiving nursing home level care, 40 percent are under the age of 65. Long term care costs, based upon a recent survey by Genworth Financial, shows median costs for home care of $65,000 and a private nursing home room at $97,000.

Medicare will pay for a maximum of a 100 day stay in a nursing home if certain criteria are met. Medicaid has asset limit rules which state a Medicaid applicant cannot own more than $3,000 worth of assets and a prepaid burial to qualify. In addition, life estate and most trusts will not shelter assets from long term care costs. If assets are gifted away, 60 months has to pass before the donor can qualify for Medicaid. In Minnesota, the only way to protect farm business assets from long term health care costs is to purchase long term care insurance. Seek the help of an elder law attorney when doing any long term health care planning to avoid making any mistakes.

Minnesota Farms Continue to Get Larger and Fewer

by David Bau, Extension Educator

Last month the USDA came out with estimated number of farms in Minnesota declining by 300 from 73,600 in 2015 to 73,300 in 2016. The total amount of land in farms was constant, but the average farm size increased by one acre per farm from 352 acres in 2015 to 353 in 2016. Looking back 20 years there were an estimated 87,000 farms in Minnesota with an average size of 343 acres in 1997. Total land in farms declined from 29,800,000 acres in 1997 to 25,900,000 acres in 2016.

What is surprising is how the numbers varied by size group.  Small farms less than $10,000 in gross sales declined from 33,000 in 1997 to 26,500 in 2016. Farms from $10,000 to $99,999 gross sales declined from 31,000 in 1997 to 21,600, but farms with over $100,000 increased from 23,000 in 1997 to 25,200.

Comparing land in farms by size indicates small farms under $10,000 in sales in 1997 was 3,200,000 acres and 2,100,000 in 2016, while farms with gross income from $10,000 to $99,999 were 8,900,000 acres in 1997 and 3,600,000 acres in 2016. Land in farms with over $100,000 in sales had 17,700,000 acres in 1997 and 20,200,000 aces in 2016.

Much of these changes in numbers can be associated with the cost of living increases and the need to generate larger sales to cover increased farm expenses and living costs. In 1997 the average living cost for farm families in adult farm management was $34,284 for a farm family of 3.7 and in 2015 this had increased $67,092 for 3.1 family size, almost double. Total farm cash expenses were $303,241 per farm in 1997 and increased to $798,226 in 2015, more than double.

If you divide the average family living costs by total crop acres of 648 in 1997 and 940 in 2015. That translates into $53 per acre in 1997 and $72 in 2015 in family living costs. This can be explained by increased cost due to inflation. What did a loaf of bread, a gallon of milk or health insurance, cost in 1997 compared to 2015? Corn price was $2.30 at end of 1997 and soybean price was $6.40, while at end of 2015 corn price was $3.19 and soybean price was 8.04.

If a farmer can generate $50 of net income per acre they would need to farm 686 acres to cover living costs in 1997 and in 2015 the same farmer would need 1342 acres. This is the simple answer as to why farm size continues to increase. The smaller hobby farms by far outnumber larger farms with 48,100 farms with gross income less than $100,000. Today a farm would need to have over $500,000 in expenses to generate a majority of their income from farming. There were 10,400 farms of this size in 2016 compared with 62,900 in the other size groups which accounts for the smaller farm size and slower growth in acres.

Monday, March 6, 2017

Becoming a Preferred Employer- Join Us April 4

Finding and keeping good employees for your farm operation can be a real challenge.  Join the Women in Ag Network on April 4, 2017 for "Becoming a Preferred Employed".   

We'll learn why these challenges exist in agriculture and how you can build your farm’s “brand” to help recruit employees.  Get ideas on how to avoid mis-hires and what you can do to make your employees feel valued every day.   We’ll close out the day by discussing the importance of an employee handbook to help your employees understand your farm and be safe in their work!  

 The event will take place April 4, 2017 at the Heintz Center in Rochester, Minnesota (1926 Collegeview Rd E, Rochester, MN 55904). Registration begins at 9:30 a.m. and the program runs from 10 a.m. to 3:00 p.m. The fee is $20, which covers the cost of lunch. Payment can be made the day of the event. 

The Women in Ag Network offers more information about the program. Registration for this event has closed.
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