Rory Lewandowski Set to Retire from OSU Extension

Rory Lewandowski, Extension Educator, Agriculture and Natural Resources, Wayne County, is retiring from Ohio State University Extension on July 29, 2020.  Rory has served agricultural clientele in Guernsey, Noble,  Athens, and Wayne Counties during his twenty years with Ohio State University Extension.

As an Extension Educator and Certified Crop Advisor (CCA), Rory focused much of his teaching on forages, pesticide use, nutrient management, and farm financial management.  Rory worked tirelessly to serve the needs of his clientele.  Farmers locally and across Ohio benefitted from his knowledge and expertise.  His ability to make every lesson unique and meet the needs of his audience is commendable.

Rory was a member of the Ohio Joint Council of Extension Professionals, National Association of County Agricultural Agents, Epsilon Sigma Phi National Extension Fraternity, Ohio Sheep Industry Association, and Ohio Cattleman’s Association.  Rory was recognized with numerous awards for his exemplary teaching, research, and service, including the Steven D. Ruhl Award for Outstanding Teaching, Leadership, and Service from Ohio State University Extension; Distinguished Service Award from the National Association of County Agricultural Agents; Mid-Career Award from Epsilon Sigma Phi; and the Ohio Sheep Industry Distinguished Service Award.  In addition, Rory was recognized by his professional associations for his outstanding teaching, winning eleven awards.

Rory and his wife Marcia have accepted a three-year assignment in Cambodia with the Mennonite Central Committee.  They will focus on peace and justice as they help people learn to work out their differences as opposed to resorting to violence.  This is not their first experience with the Mennonite Central Committee, having served in Bolivia from 1989 – 1992 and 1996-2000.

Those of us who have had the pleasure of working with Rory are better because of his teaching, leadership, and friendship.  His efforts have made an impact on the communities he has served, and he will carry his style of servant leadership into retirement.

In keeping with Rory’s wishes, an in-person gathering will not be held.  However, anyone interested in sharing memories, pictures, stories or well wishes may do so by clicking on this link: https://www.kudoboard.com/boards/yIDiZU6S

We wish Rory the best in his retirement!

Specialty Crops Available for CFAP Funding

by:  Chris Zoller, Extension Educator, ANR Tuscarawas County

The United States Department of Agriculture (USDA) announced earlier this year the Coronavirus Food Assistance Program (CFAP).  Developed earlier this year, CFAP is intended to assist farmers who suffered economic losses as a result of the COVID-19 pandemic. Initial payments were made available to growers of certain non-specialty and specialty crops, dairy, livestock, and wool producers.  On July 9, 2020 USDA announced additional specialty crops eligible for economic assistance.  The list of specialty crops includes:

  • alfalfa sprouts, anise, arugula, basil, bean sprouts, beets, blackberries, Brussels sprouts, celeriac (celery root), chives, cilantro, coconuts, collard greens, dandelion greens, greens (others not listed separately), guava, kale greens, lettuce – including Boston, green leaf, Lolla Rossa, oak leaf green, oak leaf red and red leaf – marjoram, mint, mustard, okra, oregano, parsnips, passion fruit, peas (green), pineapple, pistachios, radicchio, rosemary, sage, savory, sorrel, fresh sugarcane, Swiss chard, thyme and turnip top greens.

The USDA also expanded CARES Act funding for sales losses for seven currently eligible commodities – apples, blueberries, garlic, potatoes, raspberries, tangerines and taro – because USDA found these commodities had a five percent or greater price decline between mid-January and mid-April as a result of the COVID-19 pandemic. Originally, these commodities were only eligible for marketing adjustments.

How to Apply for CFAP

Producers have several options available to apply for CFAP funding:

  • The online portal, accessible at farmers.gov/cfap, allows producers with secure USDA login credentials—known as eAuthentication—to certify eligible commodities online, digitally sign applications and submit directly to the local USDA Service Center.
  • Complete the application form using the Farm Service Agency CFAP Application Generator and Payment Calculator found at farmers.gov/cfap. This Excel workbook allows customers to input operation specific to populate the printable application form. The application form needs to be signed and submitted to a USDA Service Center.
  • Download the AD-3114 application form from farmers.gov/cfap and manually complete the form to submit to a USDA Service Center by mail, electronically or by hand delivery to an office drop box. In some limited cases, the office may be open for in-person business by appointment.

Where to Apply for CFAP Funding

Eligible growers need to contact their local Farm Service Agency (FSA) office.  Visit farmers.gov/coronavirus/service-center-status  to check the status of your local FSA office.   New customers seeking one-on-one support with the CFAP application process can call 877-508-8364 to speak directly with a USDA employee ready to offer general assistance. This is a recommended first step before a producer engages the team at the FSA county office at their local USDA Service Center.  If you have been enrolled in previous FSA programs, you may contact your local FSA office to discuss CFAP program eligibility and begin the enrollment process.

Additional Information

If you are interested in learning more about CFAP for specialty crops, please visit https://www.farmers.gov/cfap/specialty.

Tax Value of Farmland Expected to Drop

There’s a bit of good news for Ohio farmers to counter the bad news caused by COVID-19, as well as by last year’s historic rain. In counties scheduled for property value updates in 2020—about half of Ohio’s 88 counties—the average value of farmland enrolled in the Current Agricultural Use Value (CAUV) program should be about 40% lower than 2017–2019, or about $665 per acre.

That’s according to projections by researchers at The Ohio State University College of Food, Agricultural, and Environmental Sciences (CFAES).

The same projections say that in counties due for property value updates in 2021—another quarter of Ohio’s counties—average CAUV values should be about 25% less than 2018–2020, or about $760 per acre.

The declines should mean lower property taxes, on average, for most of the farmers in those counties.

The projections were published in a May report by postdoctoral researcher Robert Dinterman and Ani Katchova, associate professor and farm income enhancement chair, both of CFAES’ Department of Agricultural, Environmental, and Development Economics.

“Less money paid in property tax will help reduce farmers’ costs and allow them to keep a greater share of the revenues they bring in,” Dinterman said.

But he noted that CAUV values are “not exactly equal to the property tax someone will pay.” A farm’s total property tax bill, he said, also depends on how many taxing jurisdictions the land is subject to and the tax rate, or millage rate, within those jurisdictions.

There could “certainly be a few cases where an agricultural landowner sees a large reduction in their CAUV value but has a corresponding increase in their millage rate and ends up paying the same in property taxes,” Dinterman said.

Ohio counties update their property values, including their CAUV values, every three years on a rotating basis, with about a third of the counties seeing updates every year. The new values then apply for the next three years.

The state’s CAUV program allows farmland to be taxed based on its agricultural value instead of its full market value. Enrollment in the program, which is voluntary, “normally results in a substantially lower tax bill for working farmers,” an Ohio Department of Taxation website says.

A county’s CAUV values are based, roughly, on a formula using net farm income data from over the past five to seven years. More specifically, the data comes from a hypothetical farm producing soybeans, corn, and wheat during that period.

“In a nutshell, CAUV values are high when the previous five to seven years of farm income were high. CAUV values are low when the previous five to seven years of farm income were low,” Dinterman said.

Farmers had a boom in net income from about 2010-2014, which was partly a major cause of rising CAUV values in the past, he said.

“So now that we have been in a prolonged period of what people might consider low farm incomes, those values start to enter the CAUV formula and in turn lower their values,” Dinterman said.

“Clearly a farmer does not want to have low income, but a bit of good news that comes with that is that at least their tax bills will be a bit lower,” he said.

Dinterman and Katchova’s report also states that based on early projections, the quarter of Ohio counties scheduled for CAUV updates in 2022 will see only a small decrease in their values, about 1%, to $880 per acre.

That ties in with the researchers’ expectation that the CAUV declines won’t continue.

“We should give a bit of a warning to farmers that the recent trend we’ve seen in reduced CAUV values has plateaued,” Dinterman said.

The reason: a major legislative change to the CAUV formula—related to how capitalization rates are calculated—was started in 2017. The change was phased in, and 2020 marks the end of the phase-in.

“That phase-in over 2017–2020 helped ease into the lowest CAUV values we’ve seen since about 2012,” Dinterman said. “We’re likely to stay within a range of about $650–$900 for average CAUV values in the foreseeable future.”

Read the report at go.osu.edu/may2020cauv.

FOR MORE INFORMATION CONTACT:

Kurt Knebusch
knebusch.1@osu.edu
330-263-3776

SOURCE(S):
Robert Dinterman
dinterman.1@osu.edu

Ani Katchova
katchova.1@osu.edu

 

OSU Income Tax Schools Summer Update Federal Income Tax & Financial Update Webinar

by: Barry Ward, Director, OSU income Tax Schools

 Significant tax related changes as a result of the new legislation passed in response COVID-19 have created some questions and perhaps consternation over the past few months as taxpayers and tax professionals wrestle with how these many changes may affect tax returns this year and beyond. OSU Income Tax Schools is offering a Summer Update to address these issues and other important information for tax professionals and taxpayers.

The OSU Income Tax Schools Summer Update: Federal Income Tax & Financial Update Webinar is scheduled for August 13th and will be presented as a webinar using the Zoom platform.

John Lawrence, CPA, will teach the course that offers continuing education credits for tax professionals and attorneys. Mr. Lawrence has taught at OSU Extension tax schools for over 20 years and developed this curriculum. He retired from the IRS in 2006 and has since run his own firm in Lawrence, Indiana and Wooster, Ohio.

Webinar Content:

New tax provisions implemented by the CARES Act and Families First Coronavirus Response Act and how to account for them such as the new net operating loss rules, the payroll tax credit, etc. Paycheck Protection Program Loan Issues: loan applications, forgiveness issues and the IRS ruling on loan expenditures that are forgiven under PPP are not tax deductible and how to account for them in preparing a return, etc.

Dealing with the IRS in these difficult times.  Also, what it means to the practitioner as to “dos” and don’ts” regarding the announcement that beginning this summer the IRS will allow the electronic filing of amended returns.

The “Hot IRS Audit Issues – Pitfalls for S Corporations and Partnerships”.  Basis of entities as to the rules and related rulings, how to track basis in these entities, creation of basis where none had been computed in prior tax years, losses in excess of basis and when they are not allowed, definition of an excess distribution, taxation of excess distributions, distribution of appreciated property,  conversion of C corporations to S corporations – do and don’ts, computation of the Built-In Gains Tax, inference and imputation of a reasonable wage for purposes of the computation of the qualified business income deduction, etc.

Other rulings, developments, and cases.

Webinar personnel:

John Lawrence, CPA, John M. Lawrence & Associates: Instructor

Barry Ward, Director, OSU Income Tax Schools: Co-Host & Question Wrangler

Julie Strawser, Program Assistant, OSU Income Tax Schools: Co-Host and Webinar Manager

Details:

OSU Income Tax Schools Summer Update

Federal Income Tax & Financial Update Webinar

(Zoom Webinar)

August 13th, 2020: 10am – 3:30 (Lunch Break: Noon – 12:50pm)

Cost: $150

Registration information and link to the registration page can be found at:

https://farmoffice.osu.edu/osu-income-tax-schools

This workshop is designed to be interactive with questions from the audience encouraged.

Continuing education offered:

Accountancy Board of Ohio (5 hours)

IRS Office of Professional Responsibility (5 hours)

Continuing Legal Education, Ohio Supreme Court (4.5 hours)

 

Ohio Department of Agriculture: dicamba use in Ohio ends June 30, 2020

by: Peggy Hall, OSU Extennsion

Source: https://ohioaglaw.wordpress.com/2020/06/11/ohio-department-of-agriculture-dicamba-use-in-ohio-ends-june-30-2020/

The dicamba roller coaster ride continues today, with a statement issued by the Ohio Department of Agriculture clarifying that the use of XtendiMax, Engenia, and FeXapan dicamba-based products in Ohio will end as of June 30, 2020.  Even though the US EPA has issued an order allowing continued use of the products until July 31, 2020, use in Ohio must end on June 30 because the Ohio registrations for the three dicamba-based products expire on that day.

As we’ve explained in our previous blog posts here and here, the Ninth Circuit Court of Appeals vacated the registration of the dicamba products on June 3, 2020.  In doing so, the court stated that the EPA had failed to perform a proper analysis of the risks and resulting costs of the products.  According to the court, EPA had substantially understated the amount of acreage damaged by dicamba and the extent of such damage, as well as complaints made to state agriculture departments.  The court determined that EPA had also entirely failed to acknowledge other risks, such as the risk of noncompliance with complex label restrictions, economic risks from anti-competition impacts created by the products, and the social costs to farm communities caused by dicamba versus non-dicamba users.  Rather than allowing the EPA to reconsider the registrations, the court vacated the product registrations altogether.

The EPA issued a Cancellation Order for the three products on June 8, stating that distribution or sale by the registrants is prohibited as of June 3, 2020.  But the agency also decided to examine the issue on the minds of many farmers:  what to do with the products.  Applying its “existing stocks” policy, the EPA examined six factors to help it determine how to deal with stocks of the product that are in the hands of dealers, commercial applicators, and farmers.  The EPA concluded that those factors weighed heavily in favor of allowing the end users to use the products in their possession, but that use must occur no later than July 31, 2020 and that any use inconsistent with the previous label restrictions is prohibited.

Despite the EPA’s Cancellation Order, however, the Ohio Department of Agriculture is the final arbiter of the registration and use of pesticides and herbicides within Ohio.  ODA patiently waited for the EPA to act on the Ninth Circuit’s ruling before issuing its guidance for Ohio users of the dicamba products.  In its guidance released today, ODA stated that:

After careful evaluation of the court’s ruling, US EPA’s Final Cancellation Order, and the Ohio Revised Code and Administrative Code, as of July 1, 2020, these products will no longer be registered or available for use in Ohio unless otherwise ordered by the courts.

While use of already purchased product is permitted in Ohio until June 30, further distribution or sale of the products is illegal, except for ensuring proper disposal or return to the registrant.

Application of existing stocks inconsistent with the previously approved labeling accompanying the product is prohibited.

But the roller coaster ride doesn’t necessarily end there.  Several dangling issues for dicamba-based product use remain:

We’re still waiting to see whether the plaintiffs who challenged the registrations (the National Family Farm Coalition, Center for Food Safety, Center for Biological Diversity, and Pesticide Action Network North America) will also challenge the EPA’s Cancellation Order and its decision to allow continued use of the products, and will request immediate discontinuance of such uses.

Bayer Crop Science, as an intervenor in the Ninth Circuit case, could still appeal the Ninth Circuit’s decision, as could the EPA.

All of these orders add complexity to the issue of liability for dicamba damage.  That issue has already become quite controversial, often pitting farmer against farmer and requiring the applicator or damaged party to prove adherence to or violation of the complicated label restrictions.  But the Ninth Circuit’s attention to the risks of adverse impacts from the products raises additional questions about whether an applicator who chooses to use the products is knowingly assuming a higher risk, and whether a liability insurance provider will cover that risk.  For this reason, growers may want to have a frank discussion with their liability insurance providers about coverage for dicamba drift.

The dicamba roller coaster ride will surely continue, and we’ll keep you updated on the next development.

Read the ODA’s Official Statement Regarding the Use of Over-the-Top Dicamba Products here.

U.S. Farm Liquidity Measures Projected to Decline in 2020

by: Chris Zoller, Extension Educator, ANR

Click here for Article (access the figures)

Liquidity is a measure of the ability of a farm to use cash or ability to convert assets to cash quickly to meet short-term (less than 12 months) liabilities when due.  Data from the United States Department of Agriculture Economic Research Service (USDA-ERS) forecast a continued decline in 2020 of liquidity on U.S. farms.  This article discusses two metrics, the current ratio and working capital, to evaluate liquidity.

Working Capital

USDA-ERS projects farm working capital to decline from the 2012 level of more than $160 billion to $52 billion in 2020 (see Chart 1).  Working capital is the value of cash and short-term assets that can easily be converted to cash minus amounts due to creditors within 12 months.  These are considered “short-term” assets and liabilities.  Having adequate working capital is important for a farm to meet obligations as they come due, take advantage of pre-pay discounts, and manage through price declines or unexpected expenses.

Like many things in agriculture, knowing how much working capital a farm needs varies based on several factors.  These include farm size, farm type, and market volatility.  The working capital to gross revenue ratio is a measurement of the working capital divided by the gross sales of the business. This ratio measures the amount of working capital compared to the size of the business.  Lenders prefer a working capital to gross revenues ratio of 40 percent or better. This means that if the business has $1 million in gross sales, working capital would need to be $400,000 or 40 percent of $1M.  When the working capital ratio falls below .20, a farm may have difficulty meeting cash obligations .in a timely manner.

Chart 1. (Source: USDA-ERS, February 5, 2020) (see PDF version to access charts)

Current Ratio

The current ratio is calculated as total current assets divided by total current debt (or liabilities).  Current is defined as less than 12 months.  Current assets include: cash, accounts receivable, fertilizer and supplies, investment in growing crops, crops held for storage and feed, and market livestock.  Current liabilities include: accounts payable/accrued expenses, income and social security taxes payable, current portion of deferred taxes, current loans due within one year, current portion of term debt, and accrued interest.

USDA-ERS expects the value of current assets to decline 3.5% and current liabilities to increase 2.3% in 2020.  The current ratio of U.S. agriculture was 2.87 in 2012 and is projected by USDA-ERS to fall to 1.42 in 2020 (see Chart 2).  If a farm has $100,000 in current assets and $70,000 in current liabilities, the current ratio equals 1.42.  A current ratio of 2:1 or greater is desirable and indicates a farm has $2 in short-term assets for every $1 in short-term debt.

Chart 2.  (Source: USDA-ERS, February 5, 2020)  (see PDF version to access charts)

Management Tips

Farm financial management is critical in today’s volatile environment.  Consider the following management tips:

  • Complete an annual balance sheet. Using your numbers, calculate trends.
  • Compare your numbers with recommended benchmark values.
  • Discuss your numbers with your lender.
  • Contact your local Extension educator or enroll in the Ohio State University Extension Farm Business Analysis and Benchmarking Program (https://farmprofitability.osu.edu/).

References

Assets, Debt, and Wealth, United States Department of Agriculture Economic Research Service, https://www.ers.usda.gov/topics/farm-economy/farm-sector-income-finances/assets-debt-and-wealth/

Deterioration of Working Capital, University of Illinois Farmdoc, https://farmdocdaily.illinois.edu/2020/03/deterioration-of-working-capital.html

Improve Understanding of Your Farm’s Working Capital, Michigan State University Extension, https://www.canr.msu.edu/news/improving_understanding_of_your_farms_working_capital

Minding Your Balance Sheet and Working Your Working Capital, University of Illinois Farmdoc, https://farmdocdaily.illinois.edu/2019/01/minding-your-balance-sheet-working-your-working-capital.html

The Basics of a Farm Balance Sheet, Ohio State University Extension, https://ohioline.osu.edu/factsheet/anr-64#:~:text=The%20farm%20balance%20sheet%20is,information%20about%20a%20farm%20business.&text=The%20balance%20sheet%20is%20also,solvency%2C%20and%20risk%20bearing%20capacity.

 

 

Economic Assistance Available for Dairy Farms

by: Dianne Shoemaker, OSU Extension, shoemaker.3@osu.edu

Click here for PDF version of article

One hundred and fifty days.  In only 150 days we have gone from anticipating a solid year of recovery for the dairy industry to seeing an April Class III price of $13.07 per cwt, the lowest Class III milk price in 10 years, with May announced at $12.14 on June 8th.  In that same time period major market disruptions occurred for nearly every commodity with impacts all along the food chain.  The response to the anticipated economic impact at the farm level has been swift, with a variety of options available to assist dairy farms.   We will touch on a few of them here, including links for additional information.  Every farm should review these options and see if there are opportunities to assist with cash flow shortfalls.

PPP– Paycheck Protection Program

At the end of May, there were still funds available for the PPP.  This low-interest loan program, authorized by the CARES Act (Coronavirus Aid, Relief and Economic Assistance Act) is administered through the SBA (Small Business Administration) to assist small businesses, including farms.  The maximum loan amount is calculated as up to 2.5 months of qualifying payroll expenses as well as sole proprietor income.    While loan proceeds can be used for any business expense, if it is used for specific expenses including payroll, utilities, mortgage interest or some rental payments within a specified time period, some portion or all of the loan may be forgiven.  Farms must apply through an SBA approved lender.  Find approved lenders and more information at http://sba.gov.   Recipients must apply for loan forgiveness.  Applications for forgiveness are now available, but specific guidance on eligible items and time periods continues to be announced.

EIDL – Economic Injury Disaster Loan

This is another CARES-authorized SBA program which is currently open only for farm applications at the sba.gov website.  Farm businesses and agricultural cooperatives with no more than 500 employees may apply for EIDL, which gives loans up to $2 million for businesses that suffer economic injuries due to COVID-19.  An “emergency advance” component provides an advance of up to $10,000 even if the loan is not approved.  The advance may be forgiven if the farm does not also have a PPP loan that is forgiven.  Clarification is pending.  Approved loans will incur 3.75% interest for terms up to 30 years.  Collateral will be required for larger loans.  Applications taken on-line only.  Find more information at http://sba.gov.

CFAP – Coronavirus Food Assistance Program

The intent of this program is to directly assist farms impacted by the effects of the COVID-19 outbreak.  Sign-up began at your local FSA (Farm Service Agency) office on Tuesday, May 26th and continues through August 28th.  FSA offices currently work with clients via email, fax, and phone by appointment.

Two funding sources are being used for this program, CFAP ($9.5 billion), and CCC, the Commodity Credit Corporation, ($6.5 billion).  The sources and uses are being tracked separately by FSA, but the payments will be combined and distributed to farms as a single payment.  Payment limits have been raised for this program only, to $250,000 per farm or up to $750,000 for farms that are set up as corporations, limited liability companies, or limited partnerships (corporate entities).  If these entities have up to three shareholders who meet eligibility requirements, they may be eligible for up $750,000 of assistance.  Eligibility requirements include gross farm income levels, wetland, and conservation compliance, and for individuals involved in multiple-shareholder situations, time spent actively working or managing in the farm business.  Once a farm has been approved, they will receive a first payment of 80% of the total calculated payment up to $200,000 per entity (80% of the $250,000 payment limitation).  If there are still funds available, the remaining 20%, or a prorated amount based on remaining funds available, will be paid at a later time.

The CFAP program is based on the change in futures prices between the weeks of January 13 – 17, and April 6 – 9, 2020.  Commodities that experienced a decline of greater than 5% are included in this program.  For dairy, that decline was around 33%, or $5.88 per cwt., calculated by USDA as the weighted average of the Class III price (60%), and the Class IV price (40%) which was selected as a reasonable representation of the trend of the US all-milk price.

Dairy markets took a severe beating since January and only recently trended upward in June – and will only actually settle at decent price levels going forward if supply aligns with demand.  We cannot keep milking more and more cows.

The program’s dairy (milk) section will yield the greatest assistance to qualifying farmers.  Cull cows, bull calves and dairy steers are included in the cattle section.  Farms that sell qualifying grain crops which were subject to price risk in the first quarter of 2020 will also find assistance in that section.

CFAP Dairy Calculation

Milk produced in January, February, and March (first quarter 2020) that was not priced through a forward contract, is eligible for assistance.  The formula for dairy is:

1st quarter milk production (cwt.) x $4.71/cwt. (CARES act rate)

plus

(1st quarter milk production x 1.014) x $1.47/cwt. (CCC rate)

  • The CARES rate of $4.71/cwt represents the price loss in Jan, Feb, and March.
  • Part two of the equation applies a projected 1.4% production increase.
  • The CCC rate represents anticipated price losses in April, May, and June.

Example:

Background Information:

A herd with 100 milking cows ships an average of 80 pounds of milk per cow per day or a total

of 7,280 cwt. of milk for the period January – March 2020 (91 days):

Dairy formula

1st quarter milk production (cwt.) x $4.71/cwt. (CARES act rate)

7,280 cwt x $4.71 = $34,288.80

+

 (1st quarter milk production x 1.014) x $1.47/cwt. (CCC rate)

(7,280 cwt x 1.014) x $1.47 = $10,851.42

Equals

$34,288.80 + $10,851.42 = $45,140.22 Total

80% or $36,112.18 will be paid shortly after the application is approved

These program payments are not subject to sequestration deductions.

The increase in payment limitations for this program has increased the assistance available to larger farms.  Using the simple example above, a herd with 500 milking cows shipping 80 pounds per cow per day would have a calculated total payment of $227,050, leaving an opportunity to apply for some assistance based on cull cows and bull calves sold between January 15 and April 15, 2020 before reaching the $250,000 payment limit.

Cull Cows

Dairy cull cows qualify for assistance in the “Slaughter Cattle – Mature Cattle” category.  The definition for these animals is “culled cattle raised or maintained for breeding purposes, but which were removed from inventory and are intended for slaughter.”  For animals sold between January 15 and April 15, the payment rate is $92 per head.  The dairy breeding stock herd is not eligible for a per-head payment.

Bull Calves, Dairy Steers

These animals, because they are going into beef production channels, qualify as either “Feeder Cattle less than 600 pounds” or “Feeder Cattle more than 600 pounds”.  Cull heifers sold for beef production would also be included in these categories depending on weight.  Animals less than 600 pounds are eligible for $102 per head (CARES Act rate) if they were sold between January 15 and April 15.  Animals greater than 600 pounds sold in the same time period are eligible for assistance at $139 per head (CARES).  For farms that finish steers (or heifers for beef) that meet weight requirements of 1,400 pounds liveweight or more with an average carcass weight greater than 800 pounds intended for slaughter are eligible for $214 per head (CARES rate).  The CCC rate applied to these animals is based on the highest inventory between 4/16/2020 and 5/14/2020.  If the farm keeps an inventory of animals for beef production, the highest inventory of animals between 4/16/2020 and 5/14/2020 is eligible for a $33 per head payment.  For cull cows, it appears that the highest inventory will be the total number of cows culled between 4/16 and 5/14.  For bull calves, the highest inventory between 4/16 and 5/14 would be equal to the largest group of calves sold in that time period.

Feed and Grain

Clarifications issued by FSA indicate that corn silage converted to bushels of grain is eligible for the CFAP program as well.  Farms that also sell grain and other eligible commodities can make application for those commodities.

Applying for CFAP

Farm Service Agency offices are working with farms via phone, fax, US mail, and internet.  Most FSA offices will ask for supporting documentation for milk and livestock sales at the time of application.  Participating farms should also keep records of those sales for at least three years.

At the FSA office, information is collected via a user-friendly spreadsheet found along with additional program information at  https://www.farmers.gov/cfap.  Farmers who have not previously applied for FSA programs can find information for first-time applicants at this web site or call 877-508-8364 for additional assistance.  While documentation is not collected at time of application, it may be requested for verification or spot checking during the next three years.

Dairy prices have taken tremendous hits, which were painfully obvious in the April final milk checks.  The Class III milk price of $13.07 is the lowest since April 2010 and even with a positive producer price differential of $1.15, well below cost of production. May will be more of the same.

These programs will help with some of the resulting cash shortfall.  Find more information about all these programs and others that may assist with COVID-19 related employee-related leave and unemployment issues at http://dairy.osu.edu and http://farmoffice.osu.edu.

Dairy farms are facing huge challenges this spring and have to make many unanticipated decisions.  Our OSU Dairy Working Group is responding with DIBS (Dairy Issue Briefs) to help inform those decisions.  These “breaking news” DIBS are posted regularly at http://dairy.osu.edu

 

 

CFAP Program for Beef Producers

By David Marrison, OSU Extension, marrison.2@osu.edu

Click here to access a PDF version of the article

Since the beginning of January, market prices for major commodities have fallen sharply since COVID-19 reached the United States.  There have been many efforts through federal and state legislation to offset the impact of COVID-19.

Enrollment is currently being taken by the USDA Farm Service Agency (FSA) for one such program targeted to help agricultural producers.  This program called the Coronavirus Food Assistance Program (CFAP) is providing financial assistance for losses experienced as a result of lost demand, short-term oversupply and shipping pattern disruptions caused by COVID-19.

The general details about the CFAP program can be found in a previous article written by the OSU Farm Office team.  This article can be accessed at:  https://go.osu.edu/CFAP-2020

Purpose:

The purpose of this article is to describe how CFAP can provide assistance to beef producers and to answer questions posed on the classification of animals.  Complete details about the livestock portion of CFAP can be found on the Farm Service Agency’s website at farmers.gov/cfap/livestock

Eligibility:

To be eligible for CFAP, a producer must have shared in the risk of producing an agricultural commodity which suffered a five percent or greater price decline or who had losses due to market chain disruptions due to COVID-19.  The decline for the beef industry over this time period was over 25% thus making it an eligible commodity.

Producers do not have to have prior program participation in a federal farm program in order to participate in CFAP.  However, new applicants must complete a farm operating plan and complete additional eligibility paperwork such as citizen status, farm operating structure, adjusted gross income verification, and highly erodible land and wetland certification.  Producers who have previously participated in FSA programs will have most of these forms on record at their local FSA office.

CFAP payments are subject to payment limitations of $250,000 per person.  This limit is the sum of all eligible commodity payments paid to a person or entity. Special payment limitations (maximum of $750,000) will be applied to participants that are corporations, LLCs, and limited partnerships classified as corporate entities. As applications are approved, 80% of the payment will be released with the remaining 20% held and paid at a later date if adequate funds remain.

Livestock Program:

Funding for CFAP originates from both the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Commodity Credit Corporation (CCC).  Because of this, payment rates are split in two parts for the livestock (and non-specialty crops) program.  Eligible livestock include cattle, sheep (yearlings and lambs only), pigs, and hogs.

The CARES portion is intended to provide producers with financial assistance to “help offset sales losses and increased marketing expenses associated with the COVID-19 pandemic.”  Meanwhile, the CCC funding “is based on projected costs that are likely to be incurred by cattle producers for marketing their 2020 inventory due to unexpected surplus and disrupted markets”.  The support from CFAP is to assist producers with losses, but not intended to cover total losses.

Cattle producers can participate in either or both components of the program. All sales and inventory of livestock must have been subject to price risk as of January 15, 2020. A contract grower who does not own the livestock is eligible if the contract allows the grower to have price risk in the livestock. Any livestock subject to an agreed upon price in the future through a forward contract, agreement, or similar binding document as of January 15, 2020 is ineligible.

A single payment will be calculated using the sum of two parts:

Part 1: Livestock sales (number of head) between January 15, 2020 and April 15, 2020 multiplied by the corresponding animal species CFAP Act payment rate per head. See CARES Act payment rate in Table 1.

Part 2: The highest amount of livestock inventory (number of head) on any day between April 16, 2020 and May 14, 2020 multiplied by the corresponding species CCC payment rate per head. See CCC payment rate in Table 1.

Separate payment rates exist for cattle of different size and age classifications: slaughter cattle-mature cattle, slaughter cattle-fed cattle, feeder cattle less than 600 pounds, feeder cattle 600 pounds or more; and all other cattle.

Table 1: Payment rates for non-specialty crops, dairy, and livestock
Commodity Unit CARES Act Payment Rate ($/unit) CCC Payment Rate ($/unit)
Slaughter Cattle- Mature cattle head $92 $33
Slaughter Cattle-Fed cattle head $214 $33
Feeder cattle less than 600 pounds head $102 $33
Feeder cattle 600 pounds or more head $139 $33
All other cattle head $102 $33

Example:

An example of the payment which a beef producer may receive is as follows:

Background Information:

A cattle producer sold 50 head of feeder cattle on 3/20/2020 which weighed more than 600 pounds

The highest number of cattle on-hand was 100 head of “other cattle” on 5/1/20

Livestock formula

Animals (head) sold 1/15/20-4/15/20 * CARES Rate

(50 head * CFAP Payment Rate of $139) = $6,950

+

(Head of unpriced animals 4/16/20-5/14/20 * CCC Rate)  

(100 head  * CCC Payment Rate of $33) = $3,300

Equals

Total Payment of $10,250 (80% or $8,200 will be paid initially)

 

Classification of Cattle:

In the initial days of CFAP enrollment, questions have arisen regarding how to classify different beef animals and how to track sales and inventory.  This is especially important when classifying animals marketed between January 15 and April 15, 2020 as the CARES Act part 1 payment rate is different between cattle classifications (range of $92 to $215).  To help producers, the FSA has published a classification of cattle table (see Table 2).

Table 2: Classification of Cattle
Cattle Common Name Description CFAP Category
Newborn Calf Calves from birth to days old Feeder Cattle: < 600 lbs
Calf Calves still nursing the cow, animals that generally weigh less than 500 pounds Feeder Cattle: < 600 lbs
Bucket Calf Orphan or newborn calf normally purchased when they are 1 to 10 days old Feeder Cattle: < 600 lbs
Heiferette A female bovine animal that has not calved and weighs more than 500 pounds; OR a heifer placed on feed following the loss of a calf or an open heifer placed on feed following the breeding season Feeder Cattle: < or > 600 lbs, as applicable
Steer A castrated male bovine animal that generally weighs more than 500 pounds Feeder Cattle: < or > 600 lbs, as applicable
Weaner or Weaned Calf Animal between 105 and 355 days coming from cow-calf Feeder Cattle: < or > 600 lbs, as applicable
Backgrounded Cattle Steers and heifers that are fed a warm up or conditioning ration are normally fed to approximately 700 pounds, and then sold as feeders or shipped to another feedlot to be finished for the slaughter market Feeder Cattle: < or > 600 lbs, as applicable
Stockers/Feeders/Feeder Calves Young weaned steers or heifers, weighing approximately 400-800 pounds usually grazing on pasture and/or feed ration to prepare for shipment to feeders intended for slaughter or selected for replacement stock Feeder Cattle: < or > 600 lbs, as applicable
Yearlings Calves between 1 and 2 years of age Feeder Cattle > 600 lbs
Open Heifer Non-pregnant female bovine Feeder Cattle: < or > 600 lbs, as applicable
Replacement Heifers A heifer that has been selected to be bred and placed in the beef herd All Other Cattle
Bred Heifers A female bovine that is pregnant with her first calf All Other Cattle
First Calf Heifers A young female that has had only one calf All Other Cattle
Bred Cows A female bovine animal that has borne at least one calf All Other Cattle
Open Cows – Retained in Herd (Non-pregnant) cows at the end of the breeding season All Other Cattle
Open Cows – Slaughter (Non-pregnant) cows at the end of the breeding season Slaughter Cattle: Mature
Cows-Culled (Beef and Dairy) A cow that is removed from the main breeding herd or dairy production for one or more reasons (i.e., age, poor production, physical ailment, poor disposition, genetic selection, etc.) and is generally sold for slaughter and not destined to be a replacement Slaughter Cattle: Mature
Herd Bulls-Culled (Beef and Dairy) A mature (approximately 24 months of age or older) uncastrated, male bovine removed from the main breeding herd sold for slaughter and not destined to be replacement Slaughter Cattle: Mature
Herd Bulls (Breeding-Beef only) A mature (approximately 24 months of age or older) uncastrated, male bovine used for breeding purposes All Other Cattle
Finished Cattle (1200 lbs or more) Cattle that have reached the optimal weight and conditions ready for slaughter Slaughter Cattle: Fed
Fat Steer/Heifer (1200 lbs or more) Cattle that have reached the optimal weight and conditions ready for slaughter Slaughter Cattle: Fed

Source: https://www.farmers.gov/cfap/livestock

Proof of Sales & Inventory:

Producers self-certify when they apply for CFAP. To complete the CFAP application, producers will need sales receipts and inventory records. However, since CFAP is a self-certification program, this documentation will not need to be submitted with the application.  Producers may be asked for additional documentation to support their certification.  Supporting documentation should be kept for a minimum of three years.  It is recommended producers contact their local FSA office to determine what types of records are acceptable for proof of livestock marketed (CARES Act part 1 payment) and for on-hand inventory (between April 16, 2020 and May 14, 2020).

CFAP Payment Calculator:

The Farm Service Agency has developed a CFAP Excel payment spreadsheet which allows producers to input information specific to their farm to determine estimated payments.  It can also be used to populate the application form to submit to your local FSA office. Producers can download the spreadsheet and other eligibility forms from farmers.gov/cfap

Enrolling in CFAP:

Eligible producers can sign up for assistance at their local Farm Service Agency office. Producers can find the local FSA Service Center contact information by visiting this link: https://offices.sc.egov.usda.gov/locator/app  Currently, due to COVID-19 restrictions, FSA Service Centers are open for business by phone appointment only. The FSA has streamlined the sign-up process and will be working with producers via phone and using e-mail, fax, mail, and online tools to accept applications.  Sign up concludes at close of business on August 28, 2020.

References:

Coronavirus Food Assistance Program, https://www.farmers.gov/cfap

Livestock and the Coronavirus Food Assistance Program, https://www.farmers.gov/cfap/livestock

Sign up for USDA-CFAP Direct Support to Begin May 26, 2020, OSU Extension, https://go.osu.edu/CFAP-2020

 

 

Dicamba takes another blow: Court of Appeals vacates dicamba registration

by:Peggy Kirk Hall, Associate Professor, Agricultural & Resource Law

Published on Thursday, June 04, 2020

Dicamba has had its share of legal challenges, and a decision issued yesterday dealt yet another blow when the Ninth Circuit Court of Appeals  vacated the product’s registration with the U.S. EPA.  In doing so, the court held that the EPA’s approval of the registration violated the provisions of the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”), which regulates the use of herbicides and other chemicals in the U.S.  Here’s a summary of how the court reached its decision and a few thoughts on the uncertainty that follows the opinion.

The challenge:  EPA’s approval of three dicamba products

We first have to step back to 2016, when the EPA approved three dicamba-based products– Monsanto’s XTendiMax, DuPont’s FeXapan, and BASF’s Engenia–as conditional use pesticides for post-emergent applications in 34 states, including Ohio.  Although dicamba has been around for years, the approval came after the companies reformulated dicamba to make it less volatile and in anticipation of the development of dicamba tolerant soybean and cotton seeds.  The agency conducted a risk assessment and concluded that if used according to the label restrictions, the benefits of the dicamba products outweighed “any remaining minimal risks, if they exist at all.”  The EPA also provided that the registrations would automatically expire if there was a determination of an unacceptable level or frequency of off-site dicamba damage.

Before the conditional registrations were set to automatically expire in late 2018, the EPA approved requests by Bayer CropScience (previously Monsanto), Cortevo (previously DuPont) and BASF to conditionally amend the registrations for an additional two years.  The approval came despite widespread concerns about dicamba drift and damage during the 2017 growing season.  To address those concerns, EPA chose not to conduct a new risk assessment and instead adopted additional label restrictions that had been proposed by Monsanto/Bayer to minimize off-field movement of dicamba.  Many states added restrictions for dicamba use that exceeded the label restrictions, including banning any use of the product during certain periods.

Several organizations challenged the EPA’s dicamba registration approvals.  The National Family Farm Coalition, Center for Food Safety, Center for Biological Diversity, and Pesticide Action Network North America filed suit against the EPA, claiming that the agency violated both FIFRA and the Endangered Species Act in approving the product registrations.  Monsanto requested and was granted permission to intervene in the case.

The Ninth Circuit’s review

To approve the request to amend the dicamba registrations, FIFRA required the EPA to make two conclusions:  first, that the applicant had submitted satisfactory data related to the proposed additional use of the pesticide and second, that the approval would not significantly increase the risk of unreasonable adverse effects on the environment.  The task before the Ninth Circuit Court of Appeals was to review the EPA’s 2018 decision  and determine whether there was substantial evidence to support the EPA’s conclusions and amend the registrations.

The conclusion that drew the most attention from the court was the EPA’s determination that amending the dicamba registrations for two years would not cause unreasonable adverse effects on the environment.  The court determined that the EPA erred in making this conclusion when it substantially understated several risks of dicamba registration, such as:

Misjudging by as much as 25% the amount of acreage on which dicamba would be used in 2018.

Concluding that complaints to state departments of agriculture could have either under-reported or over-reported the actual amount of dicamba damage, when the record clearly showed that complaints understated the amount of damage.

Failing to quantify the amount of damage caused by dicamba, “or even to admit that there was any damage at all,” despite having information that would enable the EPA to do so.

But that’s not all.  The court pointed out that the agency had also “entirely failed to acknowledge other risks, including those it was statutorily required to consider,” such as:

The risk of substantial non-compliance with label restrictions, which the court noted became “increasingly restrictive and, correspondingly, more difficult to follow” and to which even conscientious applicators could not consistently adhere.

The risk of economic costs.  The court stated that the EPA did not take into account the “virtually certain” economic costs that would result from the anti-competitive effect of continued dicamba registration, citing evidence in the record that growers were compelled to adopt the dicamba products just to avoid the possibility of damage should they use non-dicamba tolerant seed.

The social costs of dicamba technology to farming communities.  The court pointed out that a farmer in Arkansas had been shot and killed over dicamba damage, that dicamba had “pitted neighbor against neighbor,” and that the EPA should have identified the severe strain on social relations in farming communities as a clear social cost of the continued registration of the products.

Given the EPA’s understatement of some risks and failure to recognize other risks, the Court of Appeals concluded that substantial evidence did not support the agency’s decision to grant the conditional registration of the dicamba products.  The EPA “failed to perform a proper analysis of the risks and resulting costs of the uses,” determined the court.  The court did not address the Endangered Species Act issue.

What remedy?

A critical point in the decision is the court’s determination of the appropriate remedy for the EPA’s unsupported approval of the dicamba products.  The EPA and Monsanto had asked the court to utilize its ability to “remand without vacatur,” or to send the matter back to the agency for reconsideration.  The remedy of “vacatur,” however, would vacate or void the product registrations.  The court explained that determining whether vacatur is appropriate required the court to weigh several criteria, including:

The seriousness of the agency’s errors against the disruptive consequences of an interim change that may itself be changed,

The extent to which vacating or leaving the decision in place would risk environmental harm, and

Whether the agency would likely be able to offer better reasoning on remand, or whether such fundamental flaws in the agency’s decision make it unlikely that the same rule would be adopted on remand.

The court’s weighing of these criteria led to its conclusion that vacating the registrations of the products was the appropriate remedy due to the “fundamental flaws in the EPA’s analysis.”  Vacating the registrations was not an action taken lightly by the court, however.  The judges acknowledged that the decision could have an adverse impact on growers who have already purchased dicamba products for the current growing season and that growers “have been placed in this situation through no fault of their own.”  Clearly, the court places the blame for such consequences upon the EPA, reiterating the “absence of substantial evidence” for the agency’s decision to register the dicamba products.

What now?

The court raised the issue we’re all wondering about now:  can growers still use the dicamba products they’ve purchased?  Unfortunately, we don’t have an immediate answer to the question, because it depends largely upon how the EPA responds to the ruling.  We do know that:

FIFRA § 136a prohibits a person from distributing or selling any pesticide that is not registered.

FIFRA § 136d allows the EPA to permit continued sale and use of existing stocks of a pesticide whose registration is suspended or canceled.  The EPA utilized this authority in 2015 after the Ninth Circuit Court of Appeals vacated  the EPA’s registration of sulfoxaflor after determining that the registration was not supported by substantial evidence.  In that case, the EPA allowed continued use of the existing stocks of sulfoxaflor held by end-users provided that the users followed label restrictions.  Whether the agency would find similarly in regards to existing stocks of dicamba is somewhat unlikely given the court’s opinion, but remains to be seen.  The EPA’s 2015 sulfoxaflor cancellation order at: https://www.epa.gov/sites/production/files/2015-11/documents/final_cancellation_order-sulfoxaflor.pdf

While the U.S. EPA registers pesticides for use and sale in the U.S., the product must also be registered within a state in order to be sold and used within the state.  The Ohio Department of Agriculture oversees pesticide registrations within Ohio, and also regulates the use of registered pesticides.

If the EPA appeals the Ninth Circuit’s decision to the U.S. Supreme Court, the agency would likely include a request for a “stay” that would delay enforcement of the court’s Order.

Bayer strongly disagrees with the decision but has paused its sale, distribution and use of XtendiMax while assessing its next step and awaiting EPA direction.  The company states that it will “work quickly to minimize any impact on our customers this season.”  Bayer also notes that it is already working to obtain a new registration for XtendiMax for the 2021 season and beyond, and hopes to obtain the registration by this fall.  See Bayer’s information T: https://www.roundupreadyxtend.com/Pages/xtendimax-updates.aspx

BASF and Corteva have also stated that they are awaiting the EPA’s reaction to the decision, and will “use all legal remedies available to challenge this Order.”

Syngenta has clarified that its Tavium Plus VaporGrip dicamba-based herbicide is not part of the ruling and .that the company will continue selling that product.

For now, all eyes are on the U.S. EPA’s reaction to the Ninth Circuit’s decision, and we also need to hear from the Ohio Department of Agriculture.  Given the current state of uncertainty, it would be wise for growers to wait and see before taking any actions with dicamba products.  We’ll keep you posted on any new legal developments.  Read the court’s decision in National Family Farm Coalition et al v. U.S. EPA AT: https://farmoffice.osu.edu/sites/aglaw/files/site-library/Ninth_Circuit_Dicamba_Registration_Petition.pdf

 

Ohio Soybean State of Soy Webinar

The Ohio Soybean Council will be sponsoring a Ohio Soybean State of Soy webinar on Tuesday, June 9 beginning at 10:00 a.m.  Ben Brown, Assistant Professor of Professional Practice in Agricultural Risk Management  in the Department of Agricultural, Environmental and Development Economics at The Ohio State University will be the featured speaker.

During this webinar, Ben Brown will speak on soybean market fundamentals, trade update and assistance programs. There is no cost to attend this program.  For more information, visit