Welcome to the Eastern Mountain Region ARMS III Workshop

Transcription

1 Welcome to the Eastern Mountain Region ARMS III Workshop 1

2 Cell Phone Reminder Please turn off OR place your cell phone on vibrate. 2

3 Welcome & Introductions Mike Meek 3

4 NASDA REMARKS Martha Van Dale NASDA Director, Finance 4

5 EMR Director REMARKS & ARMS III Importance Dave Knopf NASS EMR Director 5

6 ARMS III Cost & Returns Report (Blue Form) QUESTIONNAIRE REVIEW

7 Face Page & Section A Mike Meek

8 Screening The screening phase, ARMS Phase 1, was conducted from May to July

9 Phase I Data 8 items of pre-printed data will be on page 2 and the back pages of the questionnaire. 9

10 Phase I Pre-printed Data Who responded in phase I Mode of response (mail, phone, etc) Completion status Owned Land Land Rented In or Out Total Acres Operated Total Cropland 10

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12 Screening Supplement Form The Screening Supplement Form is necessary when: Changes are made to the target name on the label Uncertainty about whether the operation qualifies for the interview 12

13 AREA FRAME SAMPLES All of the area frame samples selected for the ARMS were identified as farm operators during the June Agricultural Survey conducted in In other words, if they were sampled, there was agriculture of some type listed in the June Area questionnaire. Collect data for the operation as it existed on June 1. 13

14 Area Record Issues May be very small. Most are hay, cattle, horses and/or CRP farms. They count. If they say they don t farm, inquire if they had hay, Conservation Reserve Program (CRP) acres and/or cattle or horses. If the total land varies +/- 10% from the preprinted total land, please make a note

15 AREA RECORD ID begins with a 1 Example:

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18 DCMS CODE IDs METHOD/DCMS CODES 260: Mail, EDR available, Field Follow-Up 420: Not mailed, Field first Contact 685: Coordinated, Field First Contact

19 Record Interview Time Using Beginning Time and Ending Time (see last page of questionnaire) OR Total Time.

20 Questions about the Face Page? 20

21 Section A Measure the total land operated Determine the tenure arrangements and whether farmers are renting on a share, cash, flexible, or rent-free basis Account for rent paid & value of land rented from others Account for rent received & value of land rented to others 21

22 Section A: Acres Operated

23 Section A: Cropland

24 Section A: Rented Land 24

25 Section A: Rented Land Items refer to ground rented TO OTHERS Keep an eye on the different market values

26 Section B Acreage, Production, & Cash Sales Mike Meek

27 Section B Harvested acres Production Used on farm Cash sales 27

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30 Nursery and Greenhouse Crops (items 3-5) Item 3: Human consumption? What s not human consumption? (Flowers, ferns, etc) Item 4: Percent of sales from previous page (code box 189) represented by sales for human consumption Why? We know of shifts to greenhouses for some vegetable production (large for some). How big? What kinds of farms? Item 5: Technology use of tunnels or high hoops 30

31 Seed Technology (item 6): Following Up on ARMS

32 NASS reports on genetically engineered (GE) corn, cotton, and soybeans in Acreage. But herbicide-tolerant GE varieties are also used in alfalfa, canola, and sugar beets. What s more, drought-tolerant GE varieties have been introduced for corn. We aim to track adoption with ARMS. 32

33 Seed Technology: Key points Planted acres, not harvested acres as in item 2. The sum of columns may not equal Planted Acres of a crop. Why? corn seed may be HT and Bt and droughtresistant, while cotton may be HT and Bt. For alfalfa, canola, and sugarbeets, columns 1 and 4 should add to all planted acres. IP seed varieties (col. 5) may be non-ge varieties kept separate and sold as such. That can also be GE versions of specialized varieties, such as high-oil corn, sold as IP. 33

34 Sally planted 500 acres of corn and 300 acres of soybeans last year. Seed Technology Example All of the soybeans were HT varieties, while 400 acres of the corn were HT, and half of those were also drought-tolerant. For the first time this year, Sally also planted 100 acres of non-ge corn, which would be marketed specifically as such, with identity preserved throughout the marketing chain

35 Crop Insurance (Item 7) There was a significant change in crop insurance programs with the 2014 Farm Bill These questions aim to track producer choices, and to tie choices to farm business attributes and other risk management choices. 35

36 Crop Insurance Details Note planted acres in column 1, not harvested. Basics: CAT provides low level of coverage on yield losses at low cost to producers. Exclude. Producers can pay more and buy up to yield or revenue policies. Producers choose a level of yield or revenue coverage. SCO allows for added coverage, for higher premium. 36

37 Crop Insurance Example Pamela farms 400 acres of corn. She purchases a Revenue Protection with Harvest Price Exclusion (RP-HPE) policy with 70% coverage on 300 acres. She also enrolls half of her acreage in SCO x 37

38 Crop Insurance Exercise 2 Andy plants 100 acres of soybeans and 100 acres of corn. He insures all 100 soybean acres with a CAT yield policy in 2016 and all 100 acres of corn with a 75% Revenue Protection policy. Further, due to his participation in another program, he could not enroll any of them in the SCO program x x 38

39 Risk Management: Items 8-10 Risk management strategies followed by farmers Hedging through exchange-traded derivatives--futures contracts and options (on futures). Use of cooperatives (who might in turn hedge through futures). Use of on-farm storage (to provide flexibility in sales). Use of marketing contracts (section E) 39

40 Risk Management: Items 8-10 Items 9 and 10 are straightforward If yes for any commodity, check box. #10) Note: if not used for any commodity, check none. 40

41 Futures and Options 41

42 There are two markets Cash Market (local elevator) Futures Market (on paper) Hedging takes place in the futures market Chicago Mercantile Exchange (CME)

43 Hedging This is basically taking the opposite position (sellers buy and buyers sell) in the cash and futures market. This practice gives some protection to sellers and buyers of grain against uncertainties of an unstable grain market.

44 Options Gives the holder the option of selling or buying a futures contract at a given price. 44

45 Two key points: Items 8-10 refer to production, not to input acquisition, such as a dairy farm or feedlot hedging on corn purchases. Most futures transactions are closed out without delivery. Focus on the quantity of production that s hedged 45

46 If respondent has used futures or options markets for commodities not included in this group Write in the commodity name in the blank space next to Other Enter the quantity hedged as usual 46

47 Cover crops are grown due to Federal & state incentive programs, improving seed availability, & growing interest in soil health. We aim to track where and why cover crops are expanding. Land Use Practices Items Cover crops, double cropping, and conservation tillage affect farm finances and USDA conservation goals. Double cropping (eg, soybeans and winter wheat) varies with weather and commodity prices. Tracking helps USDA understand links between acreage and cropland. 47

48 Land Use Practices Item 13 Conservation tillage helps build soil health and reduce nutrient losses. It s an important target of conservation policy, but adoption varies over time and across regions. No-till: seeds planted directly through residue. Strip-till: discs open a narrow planting strip; little soil disturbance. Others include ridge and mulch till. Conservation tillage leaves at least 30% of crop residue at planting. 48

49 Section C Livestock Mike Meek

50 Section C Inventory- On hand and owned Removals Cash Sales Gain or loss on breeding stock

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52 Section C Example

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54 Sections D-G: Contracts & Accounts Receivable Kimberly McDaniel

55 An agreement What s a Contract? could be oral, but usually written Reached prior to harvest or end of livestock production cycle Sets a commodity, an outlet, and a compensation agreement

56 Purpose of contracts Options other than cash market Ensure supply Reduce risk

57 Section D Other Operations Growing, Feeding, or Raising Livestock for This Operation Used to shift specialized functions Common for Replacement Heifers

58 Section D Example Dairy Heifers These values are zero because the heifers were returned to the dairy and not sold.

59 Section E Marketing Contracts

60 Section E: Marketing Contracts Operator(contractee) Bears majority risk Owns the commodity during production Makes the production decisions Receives majority share of production Contractor Establishes set production Receives commodity after production Processes & markets the commodity

61 Common Commodities for Marketing Milk Cotton Fruit & Nuts Vegetables Feed Grains Cereal Grains Rice Peanuts Potatoes Hay/Silage

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63 Section F Production Contracts

64 Section F: Production Contracts Operator(contractee) Bears less risk Provides the labor, facilities, & equipment Receives a fee per unit of production Contractor Provides inputs Receives commodity after production Processes & markets the commodity Owns the commodity during production

65 Common Commodities for Production Cattle on Feed Hogs Broilers Turkeys Layers Pullets/Poults Replacement Heifers Strawberries Seed Crops Production Vegetables

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67 Section E & F What type? 20,000 broilers, fee $0.40/hd 25,000 bu of corn at $3.00/bu 400 steers at $0.95/lbs. 2,500 hogs at $35/animal space 5000 cwt of milk at $17.75/cwt Production Marketing Marketing Production Marketing

68 Section G Accounts Receivable

69 Section G: Accounts Receivable & Deferred Payments Sometimes a deferment used as a strategy

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71 Section H: Government Payments & Other Farm Related Income

72 Questionnaire changes Government Program Payment questions No questions on 2008 farm bill (old) programs Single question on Agricultural Risk Coverage (ARC) program One question on Margin Protection Program for Dairy Other Farm Related Income questions Total insurance indemnities for the farm business, followed by a breakout of total for federal crop and livestock insurance.

73 Other Farm Related Income This is where these go Custom work Grazing fees Farm real estate sales All other income, including value added products Total insurance indemnity payments (SCO) Sub-question on federal crop and livestock insurance indemnities

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75 Welcome to the Eastern Mountain Region ARMS III Workshop 75

76 Cell Phone Reminder Please turn off OR place your cell phone on vibrate. 76

77 Section I -- Expenditures Mike Meek

78 Operating Expenses Expenses paid for by the operation during Calendar Year Expenditures for inputs that are normally used up during the year purchased. Major Expenses Feed Livestock purchases Farm Services Labor Rent Fertilizer Chemicals Seeds Fuels Taxes

79 Record only the farm share of all expenses as defined for the targeted operation using total acres operated in Section A. Exclude unrelated expenses. Non-farm business expenses. Household and living expenses. Collect operator dwelling expenses (and assets), if it is owned by the operation. House is recorded as an asset in record books. Deeded as part of the farm.

80 Expense data is collected in great detail. Ensures that no data will be omitted, particularly items not typically found in record books. Interviewer's Manual has a detailed list of what to include and exclude for each item.

81 Marketing and storage expenses, Section I, Item 33 Almost all operations that sell commodities have marketing expenses. Get total quantity and unit sold if operator doesn't know the total marketing charges. If missing, editor should add up the commodity specific charges from income sections. Rent received by operation Cash rent, Item 11, Section A Share rent, Item 12, Section A

82 New questions and re-phrasing for 2016 Item 5 Leasing of livestock (include bees, bulls and dairy cattle) Item 11 Purchased water for irrigation from off-farm suppliers.(including irrigation assessments and fees) Item 17(b) Include $100 participation fee for Margin Protection Program for Dairy,

83 Landlord & Contractor Questions Collect expenses paid by: Operator(s), Landlord(s), and Contractor(s). Most operating expenses have three cells. Landlord Expenses emphasized because ERS calculates Net rent to non-operator landlords. Net rent equals Landlord income less Landlord expenses Contractor Expenses Ask whether operator knows contractor expenses. May know if given a settlement sheet by contractor. If unknown, leave blank and write a note

84 Wages for Individuals and Partnerships Operators organized as individuals or as partnerships do not receive income in the form of wages Instead of wages, they receive the net income generated by the operation

85 Wage Treatment for Corporations and Other Operators organized as a corporation or as Other (Trust, Estate) Operator can receive wages since they are an employee of the corporation or trust

86 Capital Expenditures

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90 Capital Expenditures Purchases with multiple year life Placed on operator s depreciation schedule Listed on the operator s Assets page

91 Why do we collect Capital Expenses? Early indicator of financial stress in operation Weights for NASS Prices Paid Indexes ERS publishes capital expenditures in more detail than in the Farm Production Expenditures publication

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93 Data Relationships

94 When the interview is concluded, ask yourself: Does the whole questionnaire make sense? Does it tell a story? Compare the type of expenses collected with the type of commodities reported for the operation. Evaluate how expenses compare to items in other sections of questionnaire.

95 Seed Fuel Fertilizer Crops Labor Chemicals Rent

96 Feed Veterinarian Expenses Livestock purchases Livestock Repairs Bedding & litter Custom Services

97 Labor Seed Chemicals Fuel Seed Fertilizer Nursery & Greenhouse Fuels Labor Fertilizer Chemicals Utilities Repair

98 Interest expenses reported in Item 18. Debt is expected in Section K.and vice versa. It is possible for a farm to have no end-of-year debt and yet incur interest expenses, if all its loans are production (seasonal) loans, ---- HOWEVER, they would have an entry in question 1 in Section K for production loans taken out and repaid during the year.

99 Real estate taxes (Item 19a) Real estate taxes paid by the operator are expected if land owned was reported in Section A. Real estate taxes paid by the landlord are expected if land rented from others was reported in Section A. Contractor expenses When a production contract exists. Largest are usually feed and livestock purchases.

100 Dairy operations should have milk hauling expenses reported in item 28a (Hauling expenses). If these expenses were netted out of the operator's milk check, add them back to get the "net" figure. If vehicles are owned or leased, registration fees are expected in Item 21 (Vehicle registration and licensing).

101 Expenses and Assets Asset values usually expected in Section J, if Repairs (Items 15-16) or new construction and remodeling (Items 35-36) of buildings, structures, and dwellings (Section J: 1a-1c). Repairs (Item 14) or purchases (Items 37-41) of vehicles and machinery (Section J: 2a-2b).

102 Encourage use of farm records Most accurate data when records are used. Shorter interview time if the records are used. The IRS Schedule F Tax form contains some information but it will be in summary format and you will have to try to split it out for ARMS III. Operators best estimate are acceptable for responses if no farm records are available.

103 Section J & K Assets & Debt Mike Meek

104 Overview Background and data uses Section J: Farm Assets Overview of questionnaire No changes from 2015 Section K: Farm Debt Overview of questions 1-5 New column added to debt table: question 3, column 3. No research questions in 2016

105 Background Why so much detail on a sensitive subject? A complete and accurate financial picture of the agricultural sector requires wealth measurement via the balance sheet. Getting component detail ensures accuracy Provides more detailed picture of the sector balance sheet s strengths and weaknesses Many of the current financial concerns about agriculture involve asset (land values) and debt repayment.

106 Operator Dwelling count or not? Owned by the Farm: Listed as an asset for the farm records or deeded with the farm Asset Value: Record the value of operator dwelling assets only if they are owned by the farm operation House Debt: Only record debt owed on the operator s dwelling if it is owned by the operation (recorded as an asset in Section J, item 1a) Not Owned by the Farm: If farm operator dwelling is not owned by the operation record value and debt in the household section (N)

107 Section J - Question 1 Record market value of assets Item 1e (oil, gas, and mineral rights) is relatively new Important Note: Exclude value reported in 1e from 1f

108 Section J Question 2 Item 2a-2b - Make sure the value reflects pricing if goods were sold/traded in marketplace (e.g.: used-market) Item 2c - If there are loans from Farm Credit System (FCS) in section K, they should report a value here (required to purchase FCS stock to get loan)

109 Section J Question 3 It is unlikely Jan. 1 st and Dec. 31 st values will be the same Respondent should consider quantity of each type of item on hand and market prices on each date For 3b and 3c you can cross-check against section C inventory quantities

110 Section J Question 4 Item 4 - Exclude accounts receivable payments from section G

111 Section K Questions 1 and 2 Item 1 if no, then skip to section L because there are no research questions Item 2 - includes lines of credit.

112 Section K Question 3 (Debt Table) Gather as much information as possible Improves imputation Column 2 is new; measures debt at the beginning of year. Verify columns 6 and 7 are consistent and refer to refinance year and term as applicable Column 8 is used to exclude non-farm debt from sector balance sheet Sector accounts use lender codes to report debt owed to lender groupings Individual and others is debt owed to lender codes 3, 4, 8-16, 18, 19 Loan type allows current debt (one year or less) to be compared to current liabilities

113 Section K Questions 4 and 5 Item 4 - Allows value of debt outstanding beyond the 5 loans in the debt table to be captured. Item 5 - The portion of total debt (items 3 and 4) owed for operator s dwelling

114 L: Farm Labor and Management M: Operator and Household Characteristics N: Household Income, Assets, & Debt Kimberly McDaniel

115 Survey Changes for 2016 ARMS Changes Change in hired farm labor questions Change of order in farm organization questions Removed Heath insurance questions Some direct sales details

116 Where are these data published? ERS WEBSITE Farm Household Well-being Topic Page Income and wealth of farm households Farm Household Income Data Product Many tables of statistics on principal farm operator household characteristics by off-farm work status, income and wealth, and more ARMS Query Tool Household income and balance sheet information Print publications ERS reports and other research and policy papers 116

117 Who uses this data? The public; government; industry groups; academics and others. These data help determine rural communities needs. These data are used to evaluate the effects of current and proposed policies that affect farms and rural communities.

118 SECTION L: FARM LABOR AND MANAGEMENT

119 L-Q1: The Family Farm Question This question forms the foundation for whether a farm is counted as a family farm 1. In 2016, did your household and extended family own more than 50% of this operation? Select yes if more than 50% of the assets of this operation are owned by you (the principal operator), members of your household, and/or other persons related to you by blood, marriage, or adoption, including relatives not residing in your household. Consider only farm and ranch assets owned not rented or leased by the operation, and exclude the assets held by non-family landlords and contractors. Note: For 2016 ARMS, all respondents answer the household section (Section N), regardless of the family farm classification 119

120 Section L-Q2: Ownership Question 2: The number of owners Exclude Landlords Question 2a: percent of ownership held by principal operator household Used to develop an estimate of the farm s contribution to the net worth of the farm household as a whole Permits calculating household assets, debt, and net worth 120

121 L Q3-4: Operation Organization Legal Status for tax purposes Family or Individual operation no partners and no shareholders Could be an LLC Legal partnership two or more people Not landlord-tenant C-Corporation Limited liability (could be single-owner LLC) Pay income tax separately from owners S-Corporation (small business corp.) Taxed as a partnership or sole-proprietor Other (estate, trust, co-op, etc.) Q4: Any category may be organized as an LLC under state law 121

122 L5-6: Income to HH Q5: Number of households sharing in income Q6, a, b: If the farm files taxes as a C-Corporation, the household receives compensation as dividends. If not, profit is passed directly to household(s). 6b: What percent of net income (whether profit or loss) were you (the operator) and your household entitled to receive from this operation? Key for calculating household farm income when multiple households share in the farm business income. 122

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124 Key Question: How many operators are there? Q7: Number of operators. Who are operators? People involved in the day to day decisions excluding hired workers unless they are a hired manager or a family member A required question; key aspect of operation; used to edit other items. Q8 is there a spouse; Q9 are they making day-to-day decisions? If a spouse is an operator (Q9), data for that individual are reported in the second column in Q10 Operator Characteristics Year in which operator began to operate ANY farm 124

125 Why do we care about time use? Permits calculating wages for different groups What types of farms are seeing labor costs increase? Are we seeing the effect of running out of farm laborers? What do farmers earn per hour working on the farm? What about working off the farm? Provides insight into the productivity of farms For instance, does increased use of inputs decrease labor costs? Allows detailed calculation of the Cost of Production, which computes the value of farmer s labor on their operation. 125

126 L-Q11: Use of Time Hours working for the farm/ranch in the typical week in four, three-month periods Breakout hours by: a. Principal operator (total/unpaid) b. Spouse (total/unpaid) c. Other operators (total/unpaid) d. Other unpaid e. Other paid Should have hours in at least one quarter Book keeping, form filing, oversight all count! 126

127 Q12-Hired Workers Revised questions (asked first in 2015 ARMS) Q12 - Report the average number of full-time paid hired workers in paid/unpaid categories NOT operators Not making day-to-day decisions on the farm or ranch Exclude custom hire and contract labor Could be full-time or part-time workers IMPORTANT: Full-time means 30 hours/week

128 L-Q13: Part-time Workers Report the TOTAL NUMBER OF HOUR worked EACH WEEK by ALL PART-TIME workers during each three month period? Part time = less than 30 hours/week Still exclude custom hire, contract labor, and unpaid workers Reason? Part of who is required to provide health insurance under the Affordable Care

129 L: Direct Marketing (Local Foods) Direct marketing/local foods defined by the marketing channel Q15: For human consumption AND sold directly to (a) individuals, (b) retail outlets, or (c) institutions Exclude non-edible products or processed products Exclude sales to local businesses who resell across the country Q16: Sales of crops, livestock to 5 different outlets (exclude sales via production contracts) 129

130 SECTIONS M & N: FARM OPERATOR AND HOUSEHOLD CHARACTERISTICS FARM OPERATOR HOUSEHOLD INCOME ASSETS & DEBT

131 M: Operator and Household Characteristics For operator and spouse Spanish, Hispanic, or Latino Origin (separate from race) Race (separate from origin) Education Primary occupation Retired from farming The primary occupation and retirement from farming affect whether we consider the farm a farm business. 131

132 Section N: Household Income, Assets, and Debt Cannot understand the decisions and economic wellbeing of business owners without knowing what other assets, debt, or income they have It s important to get the complete picture 132

133 Examples of users asking questions related to this data recently: Office of Advocacy and Outreach on beginning farmers Dep Secretary on direct marketing Farm Bureau on family farms White house on farm women University researcher on labor use for congressional testimony 133

134 Section N: Household Income, Assets, and Debt ARMS is the only survey that measures poverty for the farm operator population. The vast majority of farms are run by households (98.7% in 2015) In 2016, this section is not skipped by any respondents 134

135 Why does USDA collect household information? To inform policy design and implement better laws regarding farmers and farm households Farm household information used to protect EQIP program from changes To meet Congressional and executive mandates: USDA Release No , May 1993 Secretary requires household income be reported concurrent with farm income. USC, Title 7, Chap 55, Sec 2266 Family Farm Report: The Secretary [of Agriculture]...shall submit to Congress each year a written report containing current information on trends in family farm operations To undergird a robust research agenda Are farm household well-off? How volatile is the household income of farmers? How much is a dollar of farm income worth?

136 Section N Refusal update Increased refusal rates in 2012, 2013 Improved in 2014 and 2015 Remains high across regions and commodity groups We need more responses for household analysis! Estimates of spending Estimates of farm income Low response rates increase uncertainty of our estimates, and make trends and research more difficult 136

137 Components of Household Income Household Income = Farm income + Non-farm Income Farm income On-farm income on-farm expenses Non-farm income Salary and wages Income from other businesses Pensions, transfers, interest, dividends (Household assets and debt are calculated

138 N-Q1: Nonfarm income and farm income from outside the operation (10 sources) a) Off-farm wages, salaries and tips (before withholding) b) Net cash income from operating another farm and ranch (net depreciation) c) Net cash income from operating any other business (net depreciation) d) Net cash income from renting farmland to others (exclude renting of this operation s land) 138

139 e) Interest income f) Dividend income N-Q1: Parts e-j g) Proceeds from the sale of farm and non-farm capital assets (operator s share only) Gain or loss on sale (again, only operator s share) h) Private pensions and private disability payments i) Income from public sources j) Other off-farm sources of income 139

140 N-Q2: Household Spending Categories a-j Food, rent, utilities, transportation, health, insurance, payments to others, mortgage, property taxes, other 140

141 N-Q2: Household Spending On rent (part b), operator dwelling rental payments are included only if the operator lives in a dwelling not owned by the household or the farm business. Similarly, mortgage payments (part h) or property taxes (part i) are only if the dwelling is not owned by the operation Note that health insurance premiums (part e-i) are separate from out of pocket health expenses (part e- ii) 141

142 N-Q3: Off-Farm Assets Value of assets owned by operator and members of the household as of December 31, 2014 Household share, excluding assets of this operation Seven categories: (a) nonretirement financial assets, (b) retirement accounts, (c) operator dwelling (if not owned by operation), (d) other real estate, (e) other businesses not part of this farm, (f) vehicles, (g) other assets 142

143 N-Q4: Off-Farm Debt Value of debt of operator and members of the household as of December 31, 2016 Excluding debt of this operation Five categories: (a) debt associated with dwelling (if not owned by operation), (b) other real estate, (c) businesses, (d) personal loans, (e) other debt Includes debt secured by farm assets but not reported elsewhere as farm debt. Purpose of the asset must not be for the farm business. 143

144 N-Q5-8 Q5: Value of off-farm debt secured by farm assets A portion of what was recorded in Q4 Q6-8: Previous year information Sales Net operating income (farm income) Total off-farm income, including wages, personal, and business income 144

145 X Respondent Name If different from label

146 Any Questions