Do you have off-farm income? If you do, you are part of the 71% majority of farmers who do; but more so, your off-farm income may be a primary determinant of how you run your farming operation. As amazing as it may seem, such typical farming activities as manure spreading and record keeping are impacted by off-farm income. If that has whetted your whistle, read on…

The difference between manure spreading and record keeping is the first is a capital intensive project and the second is a labor intensive project, and the common denominator is off-farm income. That is the finding of agricultural economists Haluk Gedikoglu and Laura McCann, both of the University of Missouri. They studied the adoption of how livestock operators injected manure into the soil as part of their environmental requirements of feeding operations. In identifying whether particular operations adopted certain technologies, the researchers determined, “While the early adoption theories focused on profitability, subsequent studies have found that farm size, risk and uncertainty, information, human capital and labor supply also affect adoption.” And they have added off-farm income to that list. “There can be two effects; 1) farmers with off-farm income have more financial capability to adopt new technologies, 2) farmers with off-farm income do not have enough time to adopt new technologies. Hence, depending on capital and time requirements of the technology, the off-farm income can be a factor that intensifies adoption or a factor that defers adoption.”

The economists surveyed over 3 thousand Missouri and Iowa farmers with a wide range of farming operations, and looked for those with and without off-farm income, and compared their tendencies to four common farming operations:
1) Injecting manure into the soil is categorized as a capital intensive technology since it requires specific equipment,
2) Using grass filter systems as a buffer around water sources is intermediate,
3) Record keeping is labor intensive,
4) Soil testing is categorized as neither capital nor labor intensive.

The survey results found:
• If the farm operator has seasonal off-farm work, then the farmer is more likely to adopt injecting manure and grass filters than a farmer who has no off-farm work.
• If the farm operator has year round off-farm work, the farmer is less likely to adopt record keeping than a farmer who has no off-farm work.
• For soil testing, however, it is found that, if the farm operator has seasonal off-farm work, then the farmer is more likely to adopt soil testing than a farmer with no off-farm work. The same result is found for the impact of the spouse’s seasonal work.

As a double check against the findings, the researchers compared the variables to larger farms, where the operator would have had less time available for off-farm labor. “In the current study, farmers with an off-farm income level of $10,000-$24,999 are found to be more likely to inject manure and adopt grass filters than farmers with an off-farm income level of $25,000-$49,999. For soil testing, there is no statistically significant difference between the base category and the other off-farm income levels.”

Finally, the Missouri researchers conclude: “The current study predicted that adoption of capital intensive practices is positively impacted by off-farm work, due to creation of extra income, and adoption of labor intensive technologies is negatively impacted by off-farm work, due to a lack of time. Since the importance of off-farm income is expected to increase in the future, programs and policies to increase the adoption of environmental practices need to take this into account. Time to acquire information and perform practices is increasingly scarce. For farmers with full-time jobs, meeting with NRCS agents during the day is problematic. EQIP and other incentive programs can help capital-constrained farmers but the application process is time-consuming and requires interaction with NRCS agents. The design of new technologies should take into account the opportunity cost of farmers’ time as well as the out of pocket costs.

Summary:
With the majority of US farmers reporting off-farm income, whether that is their own second job or in combination with a spouse, their farming practices will be dictated by the time available and the extent of its capital requirements. If a job is labor intensive such as bookkeeping, then there will be little time for it once the demands of farming and a second job are met. If a job is capital intensive, such as implementation of livestock management plans with expensive equipment, then it may fit into an operation with off-farm income.