SEED Plan for Agriculture, Foresty, Fishing and Hunting

Agriculture and its similar industries are one of the largest sources of employment in the US. In 2019 alone, this sector generated 10.9% of the total employment in the country. Owing to this accelerating trend of massive human engagement, this sector which was traditionally organized in cooperatives, is now gradually opening up to more equitable employment opportunities. The traditional model of owner-employee is now shifting to an all-owners framework. Offering equity compensation is one such step in this direction.

Agriculture, Forestry, Fishing and Hunting Companies

The agriculture industry plays a pivotal role in every society. Their impact on the economy and lives of people is undeniable. Though small families own almost 91% of all farms, it is the corporate-owned commercial farms and large families that contribute to over 50% of the total agriculture production. Let’s take a closer look.

What Agriculture, Forestry, Fishing and Hunting companies do? Why are they important?

The establishments engaged in agriculture, forestry, fishing, and hunting essentially grow crops, harvest timber, fish, and raise animals either from a designated farm or from other natural habitats. Over half of this industry’s workforce is made up of self-employed farmers and fishers, most of who work on their family-owned farms.

But the largest economic contribution comes from large farms that generate more than $250,000 a year in annual sales. Though they are less than 10% of the total number of farms in the US their contribution amounts to more than half of this industry. In 2019, the agriculture, food and related industries contributed $1.109 trillion to the US GDP (5.2% of the total GDP). The contribution of this sector is crucial because:

• It is the basic source of food supply and employment
• This industry is a major contributor to international trade
• Plays an important role in the nation’s revenue
• Agriculture provides the raw materials for several industries such as food and beverage, food services and eateries, textiles, leather products, forestry, and fishing

Forecast for the Agriculture, Forestry, Fishing and Hunting industry

The forecast for the Agriculture industry looks to increase in 2021, with USDA predicting a 5.5% growth for both crops and livestock. These figures are supported by other industry research by Interindustry Economic Research Fund, which predicted around 7.5% growth in 2021 within the industry. With the forecasted increase in this industry both in livestock and crop production, companies are expected to see growth in the next coming years.

Types of Agriculture, Forestry, Fishing and Hunting

This sector is not linear. There is a reason why agriculture and its related sectors are the largest contributors to the livelihoods and economy of a country. Here we list the various branches of this industry and the activities involved in them.

Agriculture: The agriculture industry is broadly categorized into three sections:

• Agriculture production: This is dedicated to crop production and is managed by farm owners and tenants.
• Agriculture support: This involves all activities that support crop production such as soil preparation, planting, harvesting, and is run by operators and sharecroppers.
• Animal production: Dairy animals play a crucial role in crop production. Apart from tending to the soil and the crop it produces, typical farmland also involves raising livestock such as cattle, sheep, poultry, etc.

However, agriculture research and conservation of land, minerals, wildlife, and forests are excluded from this industry.

• Forestry: This sector operates on a long-term basis. Timber is grown and harvested for long production cycles of at least ten years. The entire process is divided into phases through which timber is converted into lumber to be used for construction, wood, paper, and other materials.
• Fishing: Similar to forestry, the fishing industry also depends largely on the natural habitat. Freshwater sources and the ocean are the primary sources of this industry. However commercial production in aquaculture farms is also popular. This industry’s produce caters both to consumers and recreational purposes.

Agriculture, Forestry, Fishing and Hunting Industry Statistics

By Number of firms:

For the total number of firms in the Agriculture, Forestry, Fishing and Hunting industries, on average 85.7% of these fell within the 0-9 employee range. The next largest group was 10-19 employees at 7.70%. The average of these small firms remained relatively consistent over the five years, ranging from 85.42% to 86.24%.

This data shows that nearly 85% of all firms within these industries are small firms hiring up to 9 employees.

By Number of employees:

On the other hand, when reviewing the data for the number of employees per firms over the same period, an average of 28.29% of the total workforce worked in these small companies of up to 9 employees. The next largest group of employees was in the 20-49 employee size group, followed by large companies with over 500+ employees at 15.26%.

The overall data shows that on average the workforce in these industries is balanced throughout the varying size of companies, with the most employees working at small companies. With a larger number of smaller companies, this is a perfect situation for utilizing ESOPs for the Agriculture, Foresting, Fishing and Hunting industry for employees.

By Top Jobs/ Average wages per job:

The classifications for these occupations often overlap one another, so total employment size % may result in a larger number than 100% for all jobs.

For the top jobs in these industries, a sample size of 430,720 people was taken in 2019 to give a sample of the most common jobs and their salaries. On average overall occupations, the average salary increased from $30,960 in 2017 to $33,510 in 2019, a 8.24% increase over the four years.

Of these jobs, the most common included:

• Farming, Fishing, and Forestry Occupations
• Agricultural Workers
• Miscellaneous Agricultural Workers
• Farmworkers and Laborers, Crop, Nursery, and Greenhouse
• Transportation and Material Moving Occupations

The Farming, Fishing, and Forestry Occupations making up around 73.93% of the workforce in 2019 experienced a salary increase of 9.23% from $27,630 in 2017 to $30,180 in 2019, showing a gradual trend of increasing salaries for these jobs.

Agricultural Workers consisted of 64.64% of the total occupations in 2019, with the average salary increasing $2,640 (10.48%) over the four years from $25,200 in 2017 to $27,840 in 2019.

Miscellaneous Agricultural Workers made up around 61.26% of the total occupations in 2019, and also experienced an overall salary increase to $27,710 in 2019 from an average of $25,210 in 2017, a 9.92% increase.

Farmworkers and Laborers, Crop, Nursery, and Greenhouse occupations had a little over half of the total occupations at 54.06% in 2019, with a similar salary increase of 10.45% to $27,380 in 2019 from a salary of $24,700 in 2017.

Transportation and Material Moving Occupations had around 10.01% of the total workforce in 2019, and experienced a salary increase to $35,160 in 2019 to $33,150 in 2017, an increase of 6.06%.

ESOP in Agriculture, Forestry, Fishing and Hunting

Traditionally, farming industries operate through cooperative structures. One member is allowed one vote. As old members exit, they sell their shares to the new ones. However, this principle does not work for corporate structures. As per the co-op scheme, members with high stakes are limited to only one vote while the ones not contributing so much hold the same stakes as well. Thus the ESOP plan in the agriculture industry may have a more equitable solution.

Why is offering ESOP a better option for Agriculture, Forestry, Fishing and Hunting companies?

An employee stock ownership plan (ESOP) allows the owner to grant company shares to employees based on their contribution to the business. It truly adds value to the hard work of a stakeholder and inculcates a sense of ownership towards the business instead of an employee/member status. As the company grows and makes a profit, the farm owner profits from the shares as well. Overall, ESOP drives a sense of commitment and accountability towards the entire business as a unit as opposed to just the farmer’s land.

SEED by Eqvista – Plan for Agriculture, Forestry, Fishing and Hunting

Eqvista’s Simple employee equity development or SEED plan is a unique equity awards system. It has been designed after careful considerations of various industry needs. SEED has provisions for companies as small as 0-9 employees to large companies beyond 500 employees. As the agriculture industry is quite labor-intensive the employee count would range between 50 to 500+ and SEED has provisions for all employees at the entry-level, medium, as well as senior executives.

Checkout our complete guide on using SEED plans by Eqvista

Entry-level employees are generally granted 100% time based while senior employees are extended a good mix of time based and milestone based on the business size and the employee’s contributions to the business. However, time based vesting schedules always make up a higher percentage of the shares. Vesting schedules usually span 3 years with a cliff and stock credits varying between monthly, quarterly, and annual plans based on the position of the employee in the company hierarchy.

Before deciding to grant ESOP for employees, a company must agree on its options pool. This is a legal requirement and must be sorted out before distributing equity to employees. SEED suggests an options pool anywhere between 10 – 20% based on recruitment needs. If at all milestones are used, SEED suggests, to begin with, 3- 6 years and further extend it to 4 – 8 year terms.

Start a SEED plan for your Company

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