Month: September 2006

August OSU Grain Marketing Newsletter Available

Since closing at 2.84 on 12 July, all CBOT corn contract months have slid 30 to 50c as fears of a hot, dry summer faded, and the realization made that the corn yield would be solid come harvest.  The weakness in corn prices and the large carry-overs have conspired to drag soybean prices lower in the last month. While the August reports did cut projected yields, the cuts were too small to overshadow the size of the ending inventories.

The complete outlook is available at:

http://aede.osu.edu/people/roberts.628/extension/GrainsNewsletters.htm

Increases in Ohio Farm Custom Rates – 2002 to 2006

Finding a fair custom farming rate can often be challenging. One way custom farming providers and clients arrive at an agreeable rate is to consult the Ohio Farm Custom Rates. This publication of OSU Extension and The Department of Agricultural, Environmental and Development Economics is a research summary of surveys completed by Ohio custom farming providers and clients. “Ohio Farm Custom Rates – 2006”, the first update since 2002 reveals that most practices have experienced cost increases.

The average amount of increase of custom farming practices was 17.0% over the four year period. This works out to 4.25% per year. Increases in fuel costs, machinery costs, labor rates and interest rates have helped to drive this increase in custom farming rates. Grouping custom farming practices into their survey categories reveals differences in rates of increase for the four year period. “Soil Preparation” practices increased the most with an average of 22.8% while “Grain Drying” actually decreased 16.7% (from $0.036 to $0.03 per point per bushel) over the four year period. A complete list of the percentage changes of the different categories of custom farming practices over the four year period reveals a mixed bag. In general the categories reveal double digit percentage increases over the four year period.

Custom Farming Category and % Change 2002-2006

• Soil Preparation +22.8%
• Fertilizer/Lime Application +17.9%
• Chemical Control of Weeds +10.5%
• Mechanical Control of Weeds – 4.15%
• Aerial Application +20.8%
• Planting/Seeding Operations +13.1%
• Grain Harvest +12.0%
• Grain Storage +10.7%
• Grain Drying -16.7%
• Grain Hauling +10.4%
• Custom Farming +17.3%
• Silage Harvest +16.5%
• Hay Harvest +18.1%

The complete list of all custom farming rates for 2006 is available as an OSU Extension FactSheet (in pdf form) titled “Ohio Farm Custom Rates – 2006” at:
http://ohioline.osu.edu/ae-fact/pdf/0011.pdf

New Medicaid Rules and Long Term Health Care

In February 2006 President Bush signed into law the Deficit Reduction Act of 2005. The Act contained several changes to Medicaid eligibility rules and long-term care coverage. It will affect the major estate planning objective of preserving family business assets for the next generation. First, it extends Medicaid’s look-back period for all asset transfers from 3 to 5 years, and changes the start of the penalty period for transferred assets from the date of transfer to the date when the individual transferring he assets enters the nursing home and would otherwise be eligible for Medicaid coverage. The penalty period is determined by dividing the amount of transfer by the average monthly cost of nursing home care. The resulting figure is the number of months the person’s penalty period will last. Second, any individual with home equity above $500,000 is ineligible for Medicaid (unless the applicant’s spouse resides in the home or the home is occupied by a child under 21, blind or disabled).

The new asset transfer rules complicate traditional asset preservation strategies. What should be done with transferred assets, gifts transferred to children or funds the children should set aside in event that the parents need assistance? Perhaps, the use of contractual family agreements concerning he use of these funds may be appropriate. Or, the assets could be held in trust for the entire family’s benefit. Clearly, there is incentive, for those that can afford it, to purchase long-term care insurance. Those who cannot afford the premiums for a lifetime (although preferred) may be able to pay the premiums for a long enough period of time to cover any penalty period triggered by transfer of assets. Maybe, the children, rather than the parents, should consider paying the premiums as a means to assure inheritance of the assets.

Specific rules and information concerning Medicaid coverage in Ohio may be found at: http://jfs.ohio.gov/Ohp/.

Recent Trends in the Level and Geography of Ohio Hog Production

Ohio has experienced a recovery in hog numbers over the past five years. This has stimulated discussion of how Ohio will fare in upcoming decades with regard to its hog industry and how the state’s livestock landscape will continue to evolve. In this issue I’d like to take a look at this recent increase in hog inventories, document where in Ohio the growth has been taking place over the past few years, analyze how Ohio’s production has shifted over the past few decades, and analyze if recent trends in geographical concentration are sustainable over the next decade.  Full text availalbe here:

http://ohioagmanager.osu.edu/resources/Hog_patterns_2006.pdf

Worker's Compensation 1K Program Expands to 5K

Worker’s Compensation Insurance Coverage is designed to protect employees. It is not optional, and represents a significant expense for Ohio’s farm businesses. Premium costs can reach 25% of gross payroll without careful management. Each farm business must make employee safety a priority. Proper training and maintenance are critical investments towards achieving a safe workplace.

Other tools to minimize Worker’s Compensation premiums are available to all farm businesses and have been discussed in previous issues of the OAM. Recent passage of Senate Bill 7 increased the payment limit in the $1,000 Medical-Only or 1K Program. Claims with a date of injury occurring on or after June 30, 2006, will now fall under the $5,000 Medical-Only or 5K Program.

An employer must be enrolled in the program before a claim occurs. Once enrolled, if an accident occurs, an employer can pay all medical expenses up to $5,000 if no more than 7 days of work are lost. An employer has the option of telling the Bureau of Worker’s Comp that it does not wish to pay the medical bills for a particular claim and allow it to follow the regular claim process through their designated MCO (managed care organization).

If the employer chooses to pay the medical bills for a qualifying accident, the accident will not be part of the employer’s WC claim history. This claim history is used to determine eligibility for and discount level of group rating program participation. Claims involving more than $5,000 of medical expenses or 7 days of lost work time must go through the regular Worker’s Compensation claim process.

Follow this link to find more detailed information on this program:
http://www.ohiobwc.com/basics/guidedtour/generalinfo/empgeneralinfo26.asp

Farm Management, Marketing and Economics Events at the 2006 Farm Science Review

Even though new equipment and machinery dominate the Farm Science Review each year, economics and the bottom line should 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 19th through the 21st at the Molly Caren Agricultural Center.

Input Cost Increases Focus of Display
Knowing your input costs and how to manage them are a big part of farm profitability. Examining fuel and fertilizer costs and their impact on the bottom line is the focus of an exhibit in the Francine Firebaugh Building at this year’s Review. OSU Extension Enterprise Budgets will be highlighted and 5 year cost increases will be illustrated along with detailed breakdowns for fuel, fertilizer and land costs. Newly updated “Ohio Farm Custom Rates – 2006” will be on display along with a comparison of the 2002 and 2006 rates. “Ohio Cropland Values and Cash Rental Rates 2005-06” will also be a part of the exhibit and be available as a handout. “Building for the Successful Transition of Your Agricultural Business” will be another focus of this exhibit which centers on economic issues affecting the farm business. This part of the exhibit contains information on upcoming new educational materials and workshops to be held in January and February of 2007 on Farm Transition Planning!

The exhibit will also feature the Ohio Ag Manager Newsletter that is published to provide Ohio’s farmers and agribusiness managers the latest and best management and marketing information. The Ohio Ag Manager is a free monthly electronic newsletter, published by OSU Extension, available to everyone via listserv or web. 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 and risk management as well as 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/

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 Extension Farm Management Specialists, OSU Agricultural Economists, and OSU Extension Educators.
Review goers can seek advice on various farm business and management topics including farm transition planning, estate planning, retirement planning, farm record keeping and analysis, tax management, human resources management, budgeting, farmland rental and purchase issues, risk management issues and more.

Data Shed at Farm Science Review
How much more will you pay to buy farm inputs locally? Why are you at the Review? How much does your hired help make? Do you care where your food comes from? You might get asked these kinds of questions at the 2006 Farm Science Review. Researchers from the Department of Agricultural, Environmental, and Development Economics will be popping up in various locations on the grounds to ask you a couple quick questions. Your answers will help plan research and extension projects and the next Farm Science Review. You might even be invited into the “Data Shed” at the Ohio Farmer Building, corner of Friday and Kottman, to do a quick experiment to find out what your decisions are worth to the ag economy.

Energy & Bio-Fuels: Economic & Policy Issues Defining Agriculture
10-11 a.m. Tuesday, September 19, 2006
Tobin Building, Molly Caren Center
Hosted by OSU Agricultural, Environmental & Development Economics

This annual Farm Science Review discussion gives policymakers, farmers, and industry leaders tools for understanding and analyzing the future of agriculture in Ohio. This year’s discussion is about Energy and Biofuels – what needs there are and the true economics behind ongoing policy discussion. Brent Sohngen will moderate this year’s panel of economists from Ohio State and Purdue University.

“Question the Authorities”
Live interviews of Ohio State’s authorities on current economic, business and policy issues. OSU’s Department of Agricultural, Environmental, and Development Economics sponsors this series of short interviews on the stage beside the Leaper Antique Building in Alumni Park on Friday Avenue. Stan Ernst leads the discussion, then opens things up for audience questions – your chance to question the authorities.

Each day of the Review, you’ll hear about timely topics – everything from current market behavior, marketing and economic performance, to welfare reform, trade policy and the impact of new technology on farms. Join the host in trying to stump the authorities with your toughest questions. This projected schedule is subject to change. Check the signboard along Friday Ave for daily lineups.

Tuesday, September 19
8:00 Early Bird Outlook: Grain Markets & Energy – Matt Roberts & Stan Ernst
11:15 Farm Bill Update – Carl Zulauf (OSU AED Economics)
11:30 Methamphetamines: Fighting a Rural Scourge – Karen Zotz (Purdue Extension)
11:45 How to Get Paid for Water Quality – Brent Sohngen (OSU AED Economics)
12:00 QUESTION THE AUTHORITIES: THE GAME (audience competes for prizes)
12:15 Increases in Direct Market Opportunities – Julie Fox (OSU South Centers)
12:30 Cropland Values & Rents – Barry Ward (OSU AED Economics)
12:45 The Cost of Safety – Dee Jepsen (OSU Ag Health & Safety Program)
1:00 Transferring the Farm to the Next Generation – Don Breece (OSU Extension)
1:15 Renewable Energy Ideas – Fred Hitzhusen (OSU AED Economics)
1:40 Grain Market Outlook – Matt Roberts (OSU AED Economics)
2:00 Wanna Be A Buckeye? (student opportunities) – Kelly Koren (OSU)
2:15 Healthy People, Healthy Communities – Karen Zotz (Purdue Extension)
2:40 Energy Outlook – Matt Roberts
3:00 Fertilizer, Fuel & Custom Rates – Barry Ward (OSU AED Economics)
3:15 Kid Labor/Cheap Labor – Dee Jepsen (OSU Ag Health & Safety Program)


Wednesday, September 20
8:00 Early Bird Outlook: Grain Markets & Energy – Matt Roberts & Stan Ernst
9:45 Wanna Be A Buckeye? (student opportunities) – Kelly Koren (OSU)
10:00 “Zoning” is not a 4-letter word – Peggy Kirk Hall (OSU AED Economics)
10:15 Livestock Outlook – Brian Roe (OSU AED Economics)
10:40 Who Will Work for Me? – Dave Boulay (OSU South Centers)
11:00 What Ohioans Think of Agriculture – Jeff Sharp (OSU Rural Sociology)
11:15 Livestock Outlook – Brian Roe (OSU AED Economics)
11:30 Cropland Values & Rents – Barry Ward (OSU AED Economics)
11:45 Energy Outlook – Matt Roberts (OSU AED Economics)
12:00 QUESTION THE AUTHORITIES: THE GAME (audience competes for prizes)
12:15 Grain Market Outlook – Matt Roberts (OSU AED Economics)
12:40 Finding & Motivating Good Workers – Dave Boulay (OSU South Centers)
1:00 Is Rural Retail Dead? – Leslie Stoel (OSU Consumer Science)
1:20 Transferring the Farm to the Next Generation – Don Breece (OSU Extension)
1:40 Fertilizer, Fuels & Custom Rates – Barry Ward (OSU AED Economics)
2:00 The Cost of Safety – Dee Jepsen (OSU Ag Health & Safety Program)
2:15 Why is Free Trade So Misunderstood? – Stan Thompson (OSU AED Economics)
2:40 Neighbor Issues — fences & drainage – Peggy Kirk Hall (OSU AED Economics)
3:00 Aquaculture Opportunities – Laura Tiu (OSU South Centers)
3:15 Green Industry Economics – Jim Chatfield (OSU Extension/Horticulture)


Thursday, September 21
9:45 Wanna Be A Buckeye? (student opportunities) – Kelly Koren (OSU)
10:00 Budgeting for New Enterprises – Barry Ward (OSU AED Economics)
10:15 Transferring the Farm to the Next Generation – Don Breece (OSU Extension)
10:40 Farmland Protection Priorities – Jill Clark (AED Economics)
11:00 Grain Market Outlook – Matt Roberts (OSU AED Economics)
11:15 Green Industry Economics – Jim Chatfield (OSU Extension/Horticulture)
11:30 Fertilizer & Fuels Outlook – Barry Ward (OSU AED Economics)
11:45 Energy Outlook – Matt Roberts (OSU AED Economics)
12:00 QUESTION THE AUTHORITIES: THE GAME (audience competes for prizes)
12:15 Grain Market Outlook – Matt Roberts (OSU AED Economics)
12:45 Cropland Values & Rents – Barry Ward (OSU AED Economics)
1:00 The Cost of Safety – Dee Jepsen (OSU Ag Health & Safety Program)
1:15 Transferring the Farm to the Next Generation – Don Breece (OSU Extension)
1:40 Farm Custom Rates – Barry Ward (OSU AED Economics)
2:00 Kid Labor/Cheap Labor – Dee Jepsen (OSU Ag Health & Safety Program)
2:15 TBA

Designing Effective Pay-For Performance Systems for Employees & Suppliers-Part 4

This is the fourth part of the series on designing effective pay-for-performance plans. This month, we will address the question of whether it is fair or economically reasonable to condition an employee’s pay on his performance even if performance is not determined solely by actions that he can control. In other words, what happens if performance outcomes are not purely a function of an employee’s effort, but are also affected by factors beyond the control of the employee? Would it still be fair to make the employee’s pay depend on her performance? And if so, how should the manager design such an incentive plan without alienating employees or causing them to quit?  Read the full article at the link below:

http://ohioagmanager.osu.edu/resources/wu_part4.pdf

Using Computers to Manage the Modern Farm Business – Online QuickBooks and Quicken Manuals

Computerizing farm financial records can help producers gain efficiencies and enhance their financial analysis. With a computerized farm record keeping system, the record keeper can use software to store information, summarize data, and generate reports.

Producers can now access online manuals instructing them on how to setup QuickBooks or Quicken for their farm business. These online manuals walk the user through the setup and operation of each of these popular financial software packages for the farm and small business.

“Using Computer to Manage the Modern Business – QuickBooks Pro 2005” is an online publication developed by The University of Tennessee Extension that provides detailed information on the setup and operation of QuickBooks. To locate this publication go to:

http://economics.ag.utk.edu/pubs/business/bw2005.pdf

“Computerized Farm Record Keeping with Quicken 2006” is an online manual developed for producers interested in a low cost, easy-to-use computerized financial record keeping package. The objective of the authors is for Quicken users to begin keeping farm records on their home computer by following the step by step procedures outlined in each chapter of this manual. To access this publication go to:

http://ohioline.osu.edu/b925/