Farm Safety: Investing in Farm Sustainability

Sustaining the Farm

With recent events effecting farmers' bottom lines and farm sustainability, such as commodity trade disputes or milk prices, it is critical not to neglect farm safety. You may see bumper stickers that state "No Farms, No Food" but think about the marketing tagline "No Farmer, No Farm." Farmers and farm workers face many challenges like commodity pricing, input costs, land prices, weather, or even financial stress. However, they face an even greater burden with the high risk of a serious or fatal injury. Estimates from the National Tractor Roll-Over Protection Rebate Program and National Tractor Safety Coalition indicate that 70% of farms will go out of business within five years of a tractor overturn fatality.

Although many great strides have been made, production agriculture remains one of the most hazardous industries in the United States. When compared to other industries using fatal work injury rates per 100,000 workers, agriculture has the highest rate at 23 per 100,000 workers (BLS, 2017). Hazards by nature include any existing or potential source that may cause damage, harm, or adverse health effects on someone or something. The risk of an injury involves the probability and severity of harm that a hazard presents. Safety can be defined as a state of being where a person or object is free from the occurrence or risk of being injured, harmed, or damaged. Applying this to work on the farm, farm safety involves not only workplace safety but also safety for your family and visitors. Unlike most industries, farming is unique due to the overlap of the personal residence and worksite. Of the 2.1 million farms in the U.S., 88% are small family farms (USDA, 2012). Farm injuries place considerable hardship in terms of physical, financial as well as emotional for both workers and their families. This article will review the financial impact of a farm injury and discuss the research around financial investment in farm safety.

Cost of Injury

According to the 2018 Liberty Mutual Workplace Safety Index, serious, nonfatal workplace injuries amounted to $60 billion in direct U.S. workers compensation costs. This translates into more than one billion dollars a week spent by businesses on these injuries. Agriculture ranks among the most hazardous industries because farmers are at very high risk for fatal and nonfatal injuries, and farming is one of the few industries in which family members (who often share the work and live on the premises) are also at risk for fatal and nonfatal injuries. In 2014, an estimated 12,000 youth were injured on farms; 4,000 of these injuries were due to farm work.  According to the National Institute for Occupational Safety & Health (NIOSH) every day, about 243 agricultural workers suffer a serious lost-work-time injury. Five percent of these injuries result in permanent impairment. The cost that results from these injuries can be confusing, but understanding the cost that injury has on your farm will put you and your employees in a better position to make confident, informed decisions. Examining these issues in an economic context will benefit the bottom line, and even more importantly, it will ensure that all of your workers return home safe and healthy every day, reducing the likelihood that their families and friends will suffer from the effects of an injury.

The nature and sources of agricultural injuries have been well studied however limited information exists about the cost associated with injuries. Understanding the exact cost of an injury can be confusing, which stems from underreporting of injuries, limited coverage in reporting of injuries, variations in compensation calculations, as well as limited uniformity among injury surveillance strategies. Previous research has shown that the estimated costs for agricultural injuries are a considerable economic burden (Leigh et. al, 2001). Landsteiner et al, (2016) showed that while only 2% of Minnesota's employment population worked in agriculture between the years 2004–2010, farm injuries produced an annual cost between $18.0 and $32.0 million and accounted for 31% of total work-related deaths in Minnesota. Dr. Tim Kelsey's survey of New York farm families in 1991 found an average of 17 families quit operation and 11 families move off their farms annually because of fatal farm accidents in New York.

Why Invest in Safety?

Investing in farm safety in your production operation can pay dividends. In a study conducted by Donham et al, (2007), 316 farms in northwestern Iowa were recruited for randomized agricultural safety and health experimental trials. Costs for farm‐related injuries and illnesses were $138 lower for farms that received occupational health screenings, health and wellness screening, education, on‐farm safety reviews, and performance incentives.

When considering if you should invest in safety, it is important to discuss the return on investment (ROI) and the cost. The first thing that usually comes to mind is how much you are going to spend to develop a safety plan or to implement safety practices on your farm. However, just like any business, you should consider what the return on investment (ROI) would be. For the money invested into a practice or safety feature, you should determine what you will be getting out. Farmers put a lot of capital every year to bring a crop or livestock to market. This is done with the expectation of seeing a profit or at least breaking even. Yet when it comes to safety, the return on investment might not be as straightforward. By looking at the direct and indirect cost of injuries, you will be able to get a clearer picture on the economic impact safety will have on your operation and bottom line. So, when we say invest in safety, we are really saying invest in the well-being of your business, your employees, and your family.

In this next section, we will look at the difference in indirect and direct costs associated with farm injuries.

Indirect vs. Direct Cost

Injury costs are broken up into two categories: direct and indirect. When differentiating the two, Ohrt (2015) says to think of an iceberg. Direct costs represent the part of the iceberg visible to the eye. Those are the obvious ones–medical costs, lost wages, and higher insurance premiums. Icebergs, however, are deceiving as most of their weight and size are below the surface. In a similar way, indirect costs of a job site injury are not visible on the surface, but are still present and have the potential to cost just as much, or even more as the direct costs if they are not properly identified and managed ahead of time (Ohrt, 2015). The National Safety Council (NSC) says that for every dollar in direct costs, indirect costs could be as much as $2.12. Rice (1985) documented that indirect cost is between four and ten times higher than the amount of direct cost. While most of the direct cost is usually covered by insurance, the indirect costs are most often paid by the farmer. For example, in the instance of a tractor rollover injury, the medical cost of the injury is the direct cost while the reduction of your tractor's life span before having to buy a new tractor or replacement of a damaged part would be the indirect cost, along with loss of productivity from the time spent in the hospital. Dr. Tim Kelsey's research documented that in 1987 the average total annual present value of expected income foregone because of fatal farm accidents in New York was over $8.6 million. This would be equivalent to a little over $19 million given inflation.

OSHA's $afety Pays Tool

OSHA wanted to show employers, especially small and medium-sized employers, that workplace injuries and illnesses can have an enormous impact on a company's bottom line. So, it created the OSHA Safety Pays Program, an online calculator that uses data on workplace injury costs compiled by the National Council on Compensation Insurance, Inc., to calculate the direct and indirect costs to your business. The tool allows users to pick an injury type from a drop-down list or to enter their workers' compensation costs. Then the user inputs their profit margin and the number of injuries, which allows it to generate a report of the costs and the sales needed to cover these costs. The tool is intended to raise awareness of how occupational injuries and illnesses can impact a company's profitability. At the same time it shows that employers who implement an effective safety and health program can help prevent workplace injuries, illnesses, and deaths, thereby reducing costs such as workers' compensation premiums. OSHA hopes this information will encourage employers to take steps to make their workplaces safer.

Example Case Study

In January of 2018, a Pennsylvanian farm employee was cleaning out a trimming machine, when the hood of the trimming machine fell and landed on the employee's hand. The force of the impact resulted in severe fractures to the hand that required surgery, and the injuries resulted in an overnight hospitalization. To assess the impact of this occupational injury on the farm's profitability, we used the OSHA safety pays tools. You can see in Figure 1 that one instance of a fracture will have a direct cost of $53,458 and an indirect cost of $58,803, which adds up to a total cost of $112,261 on the farm. The employer would need to produce $1,960,126 in extra sales that year to cover the direct cost, and $1,781,907 to cover the indirect cost. This would add up to $3,742,033 in new sales to fully cover the monetary effect of that injury on the business. The direct cost is covered by the farmer's insurance and workers' compensation plan. The indirect cost, like loss of productivity on the farm because the employee is now in the hospital, and the cost of temporary labor to make sure that his farm stays on track, will be seen in the bottom line.

Figure 1: OSHA Safety Pays Calculation for a Fracture Injury

Summary

In Pennsylvania, tractor rollovers continue to be the highest cause of farm fatalities. Young children on Pennsylvania farms are at a high risk of being backed over or run over by farm equipment. As we look at farm safety this can have a big impact on the bottom line of your farm enterprise. Understanding the costs of an injury and how prevention efforts can reduce these costs can put your farm in a better position to succeed. Myers et al. (2018) documented that an increase in retrofitting tractors with rollover protective structures (ROPS) averted a total injury cost at just over $6 million compared to a program cost of $1.7 million. This one-time retrofit cost can continue to prevent injuries for the effective serviceable life of a tractor. Myers et al. projected that future savings by installing a ROPS retrofit would double after 15 years of operating the tractor. If you or a farmer, you know could benefit from a ROPS retrofit or other safety programs consider investing in the Agricultural Safety and Health Endowment. Penn State's Farm Safety Team participates with the National ROPS Rebate Program and we encourage you to consider supporting this effort to keep farmers safe. Penn State's Farm Safety Program can help farmers and their families identify and consider various safety programs. Tools like the OSHA Safety Pays program can help you show management that investment in safety training, education, and written safety programs are not only the right thing to do for the workers but also a wise business decision. Farming communities may consider creating campaigns or programs to promote the use of safety products to address the issue of farm safety as well as further development methods to protect our farming population.

References

Donham, K. J., Rautiainen, R. H., Lange, J. L., & Schneiders, S. (2007). Injury and Illness Costs in the Certified Safe Farm Study. The Journal of Rural Health, 23(4), 348-355.

Douphrate, D. I., Rosecrance, J. C., Stallones, L., Reynolds, S. J., & Gilkey, D. P. (2009). Livestock-handling injuries in agriculture: An analysis of Colorado workers compensation data. American Journal of Industrial Medicine,52(5), 391-407. 

Kelsey, T. W. (1991). Fatal farm accidents in New York: Estimates of their costs. Northeastern Journal of Agricultural and Applied  Economics, 20(2): 203-207.

Landsteiner, Adrienne M. K., Patricia M. McGovern, John A. Nyman, Bruce H. Alexander, Paula G. Lindgren, and Allan N. Williams. 2016. "The Economic Impact for Farm Injury in Minnesota, 2004–2010." Journal of Agromedicine, 21(2):171–77.

Leigh, J.P., McCurdy, S.A., Schenker, M.B., Costs of Occupational Injuries in Agriculture. Public Health Reports Volume 116, May-June 2001.

Myers, M., Kelsey, T., Tinc, P., Sorensen, J., & Jenkins, P. (2018). Rollover protective structures, worker safety, and cost-effectiveness: New York, 2011-2017. American Journal of Public Health, 101(11): 1517-1522.

Ohrt, S. (2015). How Icebergs and Indirect Costs Relate. Retrieved October 10, 2018.

Rice, D. P., Hodgson, T. A., & Kopstein, A. N. (1985). The economic costs of illness: A replication and update. Health Care Financing Review, 7(1), 61–80.