Future of Animal Agriculture

Animal agriculture in Ohio and across North America faces a future of opportunities and challenges. Choices, the outreach magazine of American Agricultural Economic Association, recently published a set of papers that provide an overview of the current state of the industry, examine the forces that may impact the industry in the future, identify policy alternatives and potential business strategies, identify the potential consequences of such policies or strategies, and identify knowledge gaps and research needs. The papers draw from a broader report commissioned through the Farm Foundation for the purposes of providing a better understanding of the position and future of this dynamic sector of the agricultural economy.


Policy & Outlook Meetings Set

The annual series of Policy and Outlook meetings have been scheduled for Fall 2006/Winter 2007. Meetings will focus on agricultural issues, horticultural industry topics or a blend of both. Dates, locations, topics and speakers are listed below. For details and program updates, contact county offices of OSU Extension or visit the Policy & Outlook website at
http://aede.osu.edu/programs/outlook .

Nov. 13, 2006 – Canfield. Combined hort/ag meeting. Topics: Energy Outlook (Matt Roberts); Green Industry Outlook (Stan Ernst); Food Trends & Market Opportunities (Stan Ernst); Farm Inputs Outlook (Barry Ward); Labor Issues & Outlook (Dave Boulay). Host: Dave Goerig, OSU Extension- Mahoning County , (330) 718-2156.

Nov. 14, 2006 – Upper Sandusky . Ag Outlook meeting. Topics: Energy Outlook (Matt Roberts); Farm Bill (Carl Zulauf); Farm Inputs (Barry Ward); Grains Outlook (Matt Roberts); Highlights of other topics not covered at this meeting (Stan Ernst). Host: Chris Bruynis, OSU Extension-Wyandot County , (419) 310-1726.

Nov. 28, 2006 – Sidney (lunch). Ag Outlook meeting. Topics: Energy Outlook (Matt Roberts); Farm Bill (Carl Zulauf); Farm Inputs (Barry Ward); Grains Outlook (Matt Roberts); Highlights of other topics not covered at this meeting (Stan Ernst). Host: Roger Bender , OSU Extension-Shelby County , (937) 498-7239.

Nov. 28, 2006 – Urbana (dinner). Ag Outlook meeting. Topics: Energy Outlook (Matt Roberts); Farm Bill (Carl Zulauf); Farm Inputs (Barry Ward); Grains Outlook (Matt Roberts); Highlights of other topics not covered at this meeting (Stan Ernst). Host: Harold Watters , OSU Extension-Champaign County , (937) 484-1526.

Dec. 6, 2006 – Ashland (lunch). Ag Outlook meeting. Topics: Energy Outlook (Matt Roberts); Farm Bill (Carl Zulauf); Dairy Outlook (Cam Thraen); Grains Outlook (Matt Roberts); Highlights of other topics not covered at this meeting (Stan Ernst). Host: Julia Nolan Woodruff , OSU Extension-Ashland County , (419) 281-8242 and Sutton Bank.

Dec. 6, 2006 – Attica (dinner). Ag Outlook meeting. Topics: Energy Outlook (Matt Roberts); Farm Bill (Carl Zulauf); Food Trends & Market Opportunities (Stan Ernst); Grains Outlook (Matt Roberts); Highlights of other topics not covered at this meeting (Stan Ernst). Host: Ed Lentz, OSU Extension-Seneca County , (419) 447-9722 and Sutton Bank.

Dec. 12, 2006 – Lima (dinner). Ag Outlook meeting. Topics: Energy Outlook (Matt Roberts); Farm Bill (Carl Zulauf); Livestock Outlook (Brian Roe); Grains Outlook (Matt Roberts); Highlights of other topics not covered at this meeting (Stan Ernst). Host: Curtis Young, OSU Extension-Allen County , (419) 222-9946.

Jan. 2007 (TBA) – Butler/Montgomery County Region . Agricultural Outlook Update. Topics: Grains & Biofuels (Matt Roberts); Land, Custom Rates & Inputs (Barry Ward). Host: Southwest Ohio OSU Extension ANR educators; contact Tammy Dobbles, (937) 224-9654.

Feb. 21, 2007 – Dayton/Huber Hts. area. Horticulture Outlook. Topics: Energy Outlook (Matt Roberts); Green Industry Outlook (Stan Ernst); Consumer Trends & Market Opportunities (Stan Ernst); Labor Issues & Outlook (Dave Boulay). Hosts: Tammy Dobbles & Pam Bennett, OSU Extension- Montgomery & Clark counties, (937) 224-9654.

Schedules for several additional winter remain to be finalized. The Policy & Outlook website will have those details.

Designing Effective Pay-for-performance Systems for Employees and Suppliers: Part VI – Synopsis

In this sixth part of the series on designing effective pay-for-performance plans, the focus is informal agreements and implicit incentives. Most employers and employees interact with each other not just once but repeatedly over time. For example, an employee typically works for the same employer for multiple months or years so that an employer and employee may form what economists call a
relational contract where both parties have an informal understanding about each other’s obligations. If both parties are satisfied with the working relationship and believe that it is both productive and profitable, then the need for explicit pay-for-performance plans is greatly reduced. If the employee consistently underperforms, then the relationship may unravel and the employer may terminate the relationship and/or withhold other implicit obligations. This can motive employees to perform even in the absence of an explicit pay-for-performance plan.

http://ohioagmanager.osu.edu/resources/wu part6.pdf

An Overview of U.S. Farm Real Estate Markets

Abstract:  This paper offers an overview of U.S. farm real estate markets.  Major uses of land, location of farm real estate, and ownership patterns are summarized.  Characteristics of participants in farm real markets are reviewed.  Farm real estate values and rents examined, and factors affecting farm real estate values are reviewed, including the effects of conversion of farm real estate to other uses.  Finally, historic returns to farmland owners are summarized.

Website for the full article:


Returns to Iowa Farmland Since 1970

This is an interesting article about returns to Iowa farmland over time.  It estimates the average returns from owning Iowa farmland since 1970.   Annual returns are in two forms: cash income and change in market value.  Total return is the sum of these two.  It appeared in the Iowa State University Farm Management Newsletter, Ag Decision Maker.  The site is:  http://www.extension.iastate.edu/agdm/newsletters/nl2006/nloct06.pdf

New Household Septic Rules Affect Rural Housing and Lenders

Beginning in 2007, many Ohio home builders and buyers likely will sniff out more information about on-site wastewater treatment than they ever dreamed of.

On May 4, the Ohio Department of Health’s Public Health Council adopted new sewage treatment system rules, based on a state law passed in 2005. The new rules take effect Jan. 1, 2007.

About a million homes in Ohio use a septic tank or other on-site system rather than be hooked up to a sewer system. In addition, an estimated one in four to one in five new homes built in Ohio have on-site systems, said Karen Mancl, water quality specialist with Ohio State University Extension, “and that percentage is growing as people move out of the city to build homes.”

The rules will mean the traditional septic tank/leach field system will be a thing of the past for most new homes, Mancl said.

“The new systems will be designed to match the soils present on the lot, and only 6.4 percent of Ohio’s land has soil appropriate for leach fields,” said Mancl, who is also a researcher with the Ohio Agricultural Research and Development Center and professor of food, agricultural and biological engineering. “The system for one home will probably be different than their neighbor’s. In many areas of Ohio, just move 50 feet and you’ll find soil with completely different characteristics.”

Mancl has anticipated these new rules for years, and has held workshops on the design and installation of different types of systems for contractors, engineers, soil scientists, sanitarians and regulators. And they have responded. For example, a one-day workshop in June, “Mound System for Onsite Wastewater Treatment,” was full almost since registration began, Mancl said. She originally offered two sessions, and added a third when the waiting list grew long enough. Mancl plans to offer the workshop again later this year. So far, she has taught hundreds of installers and other professionals in learning about new types of on-site wastewater treatment systems.

Implicit in the new rules is a new way of thinking about household waste, Mancl said.

“The old rules were ‘disposal’ rules; the new ones are ‘treatment’ rules. Now when homeowners spend money on a system, they know it will be one that protects the environment and public health by actually removing pathogens, not just moving them away.”

In the past, leach fields were often installed in areas that did not have the proper soil characteristics to treat the waste, Mancl said.

“Pollutants make it to streams, ditches, wells, and you can see the consequences especially in the winter when those families experience what they think is stomach flu. Often their illness isn’t the flu, but water-borne illness from pathogens in the environment around their homes, or in their well water — all because they don’t have a septic system that treats water properly.”

Mancl suggests that anyone planning to build a home in Ohio beginning in 2007 should start learning more about on-site wastewater treatment systems.

“Before you even buy a piece of property (that will require an on-site system) you should make sure that the soil is appropriate for waste treatment,” Mancl said. “And when construction starts, make sure the soil is protected. Digging up and disturbing the soil could easily make it unusable for a wastewater treatment system.”

District offices of the Soil and Water Conservation Service have soil surveys available for the public, and staff members can help people find the property they are interested in. With that information, Mancl suggests reviewing a bulletin she wrote with OSU Extension soil scientist Brian Slater, “Suitability of Ohio Soils for Treating Wastewater,” Bulletin 896-02, available on the Soil Environment Technology Learning Lab Web site, http://setll.osu.edu.

“You will still need an on-site evaluation by a consultant or soil scientist, but I think you should do as much homework as you can on your own so you can ask the right questions and make sure you get the information you need.” Mancl has several other bulletins and fact sheets on her Web site that may be helpful for new homeowners. All are available free for download, or available free or at low cost from county offices of OSU Extension.

The Minimum Payment Trap

Monthly credit card statements offer the opportunity to make minimum monthly payments.  It sounds good, but this is a costly trap.  It would take many years to pay off the current debt and adds significant interest charges.  In the past, minimum payments were typically 2% of the balance.

Today, many credit cards have raised these minimum payments up to 4%.  The new guidelines suggest the payments should cover interest and fees plus 1% of the principle.  The change is result of pressure from the Office of the Comptroller of Currency which advocates for consumer protection from abusive and deceptive credit card practices.  This call to credit card companies to raise the minimum payment is a step towards helping consumers get out of burdensome debt.

The increase of the minimum monthly payment certainly lowers the overall interest cost and allows the debt to be paid much sooner.  Using the on-line payment calculator at www.bankrate.com , consider the difference between paying 2% vs 4% minimum monthly payments on $6,000 at 18% interest.  The 2% monthly minimum payment is $120.  It will take 589 months (49 years) to be rid of the debt. In that time, $16,931.58 is paid in interest alone.  If $240.00 were to be devoted to the debt every month, it would be paid off in 32 months, and would cost only $1,576.76 in interest.

According to the Federal Reserve, the carrying of credit card balances is widespread, but notably lower among the highest and lowest income groups, the highest wealth group, and families headed by persons aged 65 or older or are retired.  From 2001 to 2004, the proportion of families carrying a balance rose 1.8 percentage points, to 46.2 percent.  Overall, the median balance being carried (middle of the survey group) rose 10 percent to $2,200.  The mean average, however, rose 15.9 percent to $5,100.  Many families with credit cards do not carry balances.  Of the 74.9 percent of families with credit cards in 2004, only 58 percent had a balance at the time of the survey interview.

According to financial advisors, there are several steps that may be taken to get out of credit card debt. Paying off several thousand dollars or more in credit card debt takes time, so discipline is a must:

1) If you have several cards, your first goal is to pay off the card with the highest interest rate.

2) Pay more money toward that credit card and slightly less toward the other cards, and eventually you can rip it up. Then you move onto the next card, and so on.

One proven way to pay more toward the most expensive card – and to get rid of it faster – is to make a separate payment every 14 days to the credit card company. Mark your calendar every 14 days and write that check or send your on-line payment that day. Making a payment every 14 days equals one extra month’s payment you’ve made at the end of the year. Work these payments around your statement cycle to avoid paying late fees.

The Federal Reserve has an on-line brochure on selecting a credit card at:  http://www.federalreserve.gov/pubs/shop/default.htm .

2006 Federal Income Tax Business Update

Increased section 179 limits. The maximum section 179 deduction you can elect for property you placed in service in 2006 is increased to $108,000 for qualified section 179 property. This limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $430,000.

More information. Publication 946, How to Depreciate Property , has more information on these rules.

The self-employment tax rate on net earnings remains the same for 2006. This rate, 15.3%, is a total of 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).

The maximum amount subject to the social security part for tax years beginning in 2006 has increased to $94,200. All net earnings of at least $400 are subject to the Medicare part.

Social Security and Medicare Taxes for 2006. The employer and employee will continue to pay:
6.2% each for social security tax (old-age, survivors, and disability insurance), and
1.45% each for Medicare tax (hospital insurance).
Wage limits. For social security tax, the maximum amount of 2006 wages subject to the tax has increased to $94,200. For Medicare tax, all covered 2006 wages are subject to the tax. Circular E (Publication 15), Employer’s Tax Guide, has more information about these taxes.

Mileage Rates. For 2006, the standard mileage rate for the cost of operating your car, van, pickup, or panel truck for your business is 44.5 cents a mile for all business miles driven.