Even though new equipment and machinery dominate the Farm Science Review each year, economics and the bottom line always play the major role in your decision making. The Department of Agricultural, Environmental and Development Economics together with Ohio State University Extension will offer several new activities, exhibits, presentations and opportunities to interact with Agricultural Economists, Farm Management Specialists and Extension Educators at this year’s Farm Science Review, September 20 th through the 22 nd at the Molly Caren Agricultural Center .

“Cost Saving Ideas and Innovations in Crop Production – Save $$$$$’s per Corn and Soybean Acre !” Exhibit

“Cost Saving Ideas and Innovations in Crop Production – Save $$$$$’s per Corn and Soybean Acre!” focuses on the latest research and innovations in crop production and lays out ways to cut input costs. This exhibit which will located in the Francine Firebaugh Building will give producers ideas on how they can save $$$$$’s per acre in their production systems. This manned exhibit will also give producers the opprotunity to interact with Farm Management Specialists, Agricultural Economists and Extension educators to discuss further options to improve the bottom line.

One example of a “cost saving idea” included in the exhibit is to “Consider Anhydrous Ammonia as Nitrogen Source versus UAN (28%), Nitrogen Savings of $16 per acre.” Many more ideas and innovations will be featured as a part of this brand new exhibit.

The exhibit will also feature the new Ohio Ag Manager Newsletter that is a free monthly electronic newsletter available to everyone. The goal of the Ohio Ag Manager Team is to provide agricultural businesses with timely management information dedicated to improving efficiency and profitability. Focal issue areas discussed in the monthly electronic newsletter include financial, labor, legal, marketing and human resource development. Current and past newsletters along with subscription information can be found at the Ohio Ag Manager website at: http://ohioagmanager.osu.edu/

One last part of the exhibit is the interactive computer quiz “How Well Do You Know Ohio Agriculture?” This fun and informative game will allow you to test your knowledge of the various aspects of Ohio Agriculture. (And possibly win a prize!) Complimentary copies of the Ohio Ag Manger Newsletter, updated 2005 Crop Enterprise Budgets and a list of the “Cost Saving Ideas and Innovations in Crop Production” will be available.

Farm Business Office in the Firebaugh Building

The Farm Business Office at the Farm Science Review is located in the Francine Firebaugh Building and will give Review goers the opportunity to interact one-on-one with Ohio State University Farm Management Specialists, Agricultural Economists, and Extension Educators. Review goers can seek advice on various farm business and management topics including farm record keeping and analysis, tax management, risk management, human resources management, budgeting, estate planning, farm transferal planning, retirement planning, farmland rental and/or purchase issues and more.

Special Events and Programs

Ohio State ‘s Department of Agricultural, Environmental and Development Economics coordinates a number of special programs at Farm Science Review. Economic & Policy Issues Defining Agriculture: “Politics, Policy & Money” is an annual panel discussion and open forum to give farmers, policymakers, and industry leaders tools for understanding and analyzing the future of agriculture in Ohio. This year’s discussion is on what federal budgets have in store for food, agriculture and rural economies. The program takes place in the Tobin Building at the west end of the central exhibit area on Tuesday, Sept. 20 at 10 a.m. The moderator for this year’s session is Professor Matt Roberts and the panel includes Professors Carl Zulauf, Ian Sheldon and David Kraybill from the Department of Agricultural, Environmental and Development Economics.

“Question the Authorities” is a series of short presentations and discussions that run throughout the Review on the small stage across Friday Ave. from the Utzinger Garden . Topics relate to business, policy and economics and include experts from OSU, Purdue and various government agencies. Stan Ernst from OSU’s Ag Economics department hosts the sessions. Topics are posted daily on Friday Avenue by the presentation area. Speakers are also available for individual consultations after their sessions. This year’s planned schedule is:

Tuesday, September 20
11:15 E-commerce in Agriculture – Marv Batte, Stan Ernst
11:40 Farming together as a family – Bernie Erven
12:00 QUESTION THE AUTHORITIES: THE GAME (audience competes for prizes)
12:15 Crop Conditions & Current Farm Economy – Jim Ramey
12:40 Grain Markets – Matt Roberts
1:00 Livestock Markets – Brian Roe
1:15 Energy Market Impacts on Ohio/agriculture – Matt Roberts
1:30 Landlord – tenant relationships – Bernie Erven
1:45 Market Opportunities from Seafood Demand – Laura Tiu
2:15 Berry Markets – Marv Batte, Sandy Kuhn, Stan Ernst
2:45 Ohio Farm Business Financial Summary – Don Breece
3:00 Farm Input Costs – Barry Ward

Wednesday, September 21
10:00 BioFuels: Economic Power from “waste” – Fred Hitzhusen
10:20 Energy Market Impacts on Ohio/agriculture – Matt Roberts
10:45 When WalMart Comes to Town – Elena Irwin
11:15 Finding & Keeping Good Employees – Bernie Erven
11:45 Grain Markets – Matt Roberts
12:00 QUESTION THE AUTHORITIES: THE GAME (audience competes for prizes)
12:10 Crop Conditions & Current Farm Economy – Jim Ramey
12:20 Farming together as a family – Bernie Erven
12:45 Timber Tax – Bill Hoover
1:00 Weighing the Costs of Obesity – Eugene Jones
1:15 Eat for Health.Functional Food Economics – Neal Hooker
1:30 “Eat Local” .Ohioans’ views on food source – Jeff Sharp
2:00 Direct Market Opportunities – Ag & Natural Resources – Julie Fox
2:30 Water Rights – Peggy Hall
2:45 Farm Input Costs – Barry Ward
3:00 Cash Flow Planning – Don Breece

Thursday, September 22
10:00 TBA
10:15 Figuring Farm Rents – Barry Ward
10:45 Ohio Farm Business Financial Summary – Don Breece
11:00 Farm Input Costs – Barry Ward
11:30 Grain Markets – Matt Roberts
12:00 QUESTION THE AUTHORITIES: THE GAME (audience competes for prizes)
12:15 Crop Conditions & Current Farm Economy – Jim Ramey
12:45 Energy Market Impacts on Ohio/agriculture – Matt Roberts
1:00 Grain Markets – Matt Roberts
1:30 Cash Flow Planning – Don Breece
1:45 Calculating “ripples”? – Greg Davis
2:00 TBA
2:20 TBA

Calf prices decrease as fall progresses and as more calves become ready for market.  In addition, heavier cattle bring lower prices then light cattle due to the prevailing price-weight slide.  However, calves gain weight as fall progress, which means more pounds per sale.  How does one balance these competing trends and find the best time to market your calves?  This column will revisit this important question using some weight-specific and month-specific feeder cattle price predictions.  These predictions are based upon a statistical model of Kentucky feeder steer auction prices that takes into account feed prices, current feeder cattle prices, cattle futures prices, seasonality and animal weight.

Suppose you were considering when to market a group of steer calves that could be marketed as early as mid-September around 350 pounds or held on farm under a feeding program that would allow them to gain about 2 pounds per day over the fall and early winter.  Using my price projections I chart out the value of the calf at different points throughout the fall and early winter in the table below.  I also chart out the costs of holding these animals in the feeding program, where the feeding program uses a ration involving mostly corn ($2.00/bu) and some soybean based feed ($0.11/lb.).  I assume animals begin with a feed to gain ratio of 8.00 and that this ratio increases a little bit throughout the fall as temperatures decrease and as the animals get larger.  I also incorporate an annual death loss of 2.5%, interest charges of 5% and miscellaneous costs of facility repair and maintenance.

Date        Lbs.     Pred. Price    Gross Rev.   Costs   Net Rev.   $ Gain

15-Sep   350      135.09           472.83         0.00     472.83         0.00

15-Oct    410      115.57           473.82        26.61    447.21      -25.62

15-Nov    470      102.83           483.29        53.51    429.78      -43.04

15-Dec    530      104.24           552.45        81.06    471.39       -1.43

15-Jan    590       105.62           623.18       109.16   514.02       41.19

The above projections suggest that holding these calves to heavier weights can be attractive for those willing to hold cattle into 2006.  However, holding animals that long may be difficult.  Many may not have the facilities to hold animals to these heavier weights and in potentially inclement weather.  Furthermore, rates of gain may be more variable as winter weather arrives.  Also, recall that the returns to holding cattle are critically dependent upon future price projections; like any predictive model, we should have less confidence in price projections further into the future.  Hence, there is greater price risk from holding animals for a longer period of time.  Finally, delaying sales to 2006 may mean altering your tax situation if your tax year matches the calendar year, which is the case for many farmers.

Losses are projected for holding animals into October, November or December.  Note that the return to holding animals is also dependent upon the price of corn used in the feeding program.  Many of you may have corn available to you at prices different from the $2.00/bu price built into these projections.  While everyone’s situation will be a little different, this example will hopefully provide a template for making you marketing decisions this fall.

Another key assumption driving these results is that of feed efficiency.  While some calves in your pen may require 8 pounds of feed per pound of gain, the average calf may be more efficient.  The table below considers the case with a feed/gain ratio of 6.00.

Date      Lbs.   Pred. Price    Gross Rev.     Costs    Net Rev.    $ Gain

15-Sep   350      135.09           472.83        0.00      472.83          0.00

15-Oct    410      115.57           473.82       20.98    452.85       -19.98

15-Nov    470      102.83           483.29       42.22    441.08       -31.75

15-Dec    530      104.24           552.45       64.09    488.37        15.54

15-Jan     590      105.62           623.18       86.49    536.70        63.87

As the table shows, if feed efficiency is better, holding animals on a back grounding program in more attractive.  Hence, knowing your calves’ ability to convert feed efficiently into pounds of gain is crucial for helping understanding the relative profitability of various marketing strategies.  To help in your decision making, several versions of the above tables, for various corn prices, feed efficiencies and initial weights are available on my website along with price projections for several feeder steer weight classes.  Just click on the fall calf outlook slides link at: http://aede.osu.edu/people/roe.30/livehome.htm.

The low carbohydrate diet – the great diet revolution that helped resurrect red meat demand – was been pronounced dead by most media outlets in early August after Atkins Nutrionals, a company dedicated to the marketing of low-carbohydrate foods and affiliated with the founder of the Atkins diet, filed for bankruptcy.  Proof, in both quantitative and anecdotal form, was abundant.  Anecdotes abound, including stories of low-carb specialty products being shipped to food banks in Appalachia , apparently because they had no value following the bust of the low-carb boom.  The quantitative proof was also negative, with data from the NPD group – a marketing firm specializing in consumer research – tracking adherence to low-carb diets from a high of about 10% of the population in early 2004 to around 2% this summer.

However, another data source suggests that low-carb dieting is not ready to join the pet rock and the grapefruit diet in the junk heap of American fads.  Starting in December of 2003, another market research firm called Opinion Dynamics contacted 1,000 different people by phone each month and asked them a simple question: “Are you currently on some form of low-carbohydrate diet?”  Similar to the NPD group, during early 2004, about 10% answered yes.  Like the NPD group they identified a downward trend during the second half of 2004, but at least 6% of the Opinion Dynamics’ respondents answered yes during December 2004 versus 3% for the NPD group.  Then, during 2005, the Opinion Dynamics’ data show something remarkable – resurgence in the number of self-identified low-carb dieters to levels exceeding those of  2004.

So, what’s the deal?  How can low-carb dieting be both going up and going down at the same time?  It turns out that the NPD group tracks those that actually stick to the diet while the Opinion Dynamics group tracks those who, in a sense, try to stick to the diet.  One member of a low-carb dieters’ group provides some canny insight into this: “These two bits of info [NPD vs. Opinion Dynamics] do not contradict, they fit together to give us a complete picture.  The logical conclusion to be drawn from this information, is that there are just as many carb-conscious people as there were in 2004 …  and just as many people who DO consider themselves carb-conscious.  But, there are far less who are strictly limiting … carbs… People probably switched from strict plans like Atkins … or decided to be less strict in limiting all carbs, likely due to the rising popularity …. of ‘good carb/good fat’ diets.”

What are the implications of this?  When someone falls off the ‘low-carb wagon,’ they are likely to eat more carbs and, maybe, cut back on meat consumption.  The first protein a ‘fallen’ low-carb dieter is likely to shun is at breakfast, as quick and easy items like cereal, toast and bagels replace more time- and attention-intensive items like eggs, bacon and sausage.  This would explain why the domestic demand for eggs and pork has suffered more than that for beef over the past year.

Another source of information regarding dieting trends is simply to scan the best seller list for popular diet books.  While Atkins’ diet books have dropped way down the list on Amazon.com’s sales rank (around 18,000), the South Beach Diet book remains in the top 50.  The South Beach Diet is considered a ‘low-carb’ diet, though this diet puts more emphasis on eating the ‘right’ carbs.  The South Beach Diet serves as a transition from the low-carb era in dieting to emerging ‘smart carb’ and ‘low glycemic’ era, which focuses on avoiding foods that make blood sugar levels surge.  Lean meats still enjoy an important place in these diets, but adherents are not likely to mistaken for Atkins-era carnivores.

Several other dieting fads wait in the wings.  Something called the ‘Three-Hour Diet’ is currently ranked around 150 th in sales at Amazon.com.  This diet emphasizes the timing of food consumption rather than the content.  The implication for the red meat sector if this were to become the next fad is neutral – meat is not a forbidden food.  Also, around 150 in the Amazon.com sales rank is a book called “Why French Women Don’t Get Fat.”  The theme here is to enjoy the food you eat and take sensible measures to offset occasional indulgences – again, probably not going to threaten meat demand either.  Several diet books that rank at 1000 or below, including “The pH Miracle” and “Volumetrics ”could have a negative impact on meat demand if either becomes the hot new thing – both diets are heavy on the veggies and allow little meat.

Will low-carb dieters continue to pile on meat and eggs?  Will the next diet fad be favorable or unforgiving to meats and protein?  Given the importance of dieting and diet trends to the red meat sectors, I would suggest that detailed research that tracks the dietary transition of former and current low-carb dieters and that monitors emerging dietary trends would provide some much needed guidance to forecasting meat and poultry demand in the United States .  Researchers at various industry- and producer-sponsored organizations and land grant universities should be able to work with one or more of the marketing research firms identified above to produce a regular report detailing these trends.