Month: September 2008

Farm Management, Marketing & Economics Events at the 2008 Farm Science Review

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 activities, exhibits, presentations and opportunities to interact with Agricultural Economists, Farm Management Specialists and Extension Educators at this year’s Farm Science Review, September 16th through the 18th at the Molly Caren Agricultural Center .

Knowing your input costs and how to manage them are a big part of farm profitability. Examining 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 along with detailed breakdowns for fuel, fertilizer and land costs. Newly updated “Ohio Farm Custom Rates – 2008” will be on display along with a comparison of the 2006 and 2008 rates. “Ohio Cropland Values and Cash Rental Rates 2007-08” will also be a part of the exhibit and be available as a handout. A new decision making tool – Flexible Cash Lease Agreement Calculator will be on display and available for Review goers.

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 budgeting, cash rents, flexible cash rent arrangements, land purchase issues, input buying, farm transition planning, estate planning, retirement planning, farm record keeping and analysis, tax management, human resources management, risk management issues and more.

This year’s edition of the annual Farm Science Review discussion of policy and economics looks at food prices…where they’ve been, where they’re going and why. With much discussion in both domestic and international markets on food costs, distribution systems and hunger, four Ohio State agricultural economists will debate the impacts of rising demand, oil prices, and a number of other issues charged with changing the world’s food situation. Expect some analysis, some predictions, and probably an argument or two. And take an opportunity to stump the panel with your perspective.

The Energy Education display returns to Alumni Park this year. It features informational displays and demonstrations from Ohio State , Purdue , Michigan State, and organizations/agencies with similar educational missions. Look for the wind turbine outside of the tent. On Wednesday there will be demonstrations of biofuel possibilities from scientists with Wright Patterson Air Force Base. A number of sessions at the nearby Question the Authorities program will be addressing the economics of energy markets, conservation, and new technologies.

“Question the Authorities” is a series of live conversations 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. Marketing specialist 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 energy economics, trade policy and new legal questions for rural America . This year’s lineup includes some special emphasis on energy-related topics with guests from OSU, Michigan State , the Air Force, and Green Energy Ohio . Join the host in trying to stump the authorities with your toughest questions. A few surprise topics are likely to be added at the last minute, so check the signboard along Friday Ave. for daily lineups.

Tuesday, September 16

8:00 Early Bird Outlook: Grain Markets & Biofuels – Matt Roberts & Stan Ernst

8:30 Farm Bill Update – Carl Zulauf & Stan Ernst

11:15 $100,000 Per Acre With High-Value Crops – Joe Kovach (OSU Entomology)

11:30 Farm Bill Update – Carl Zulauf (OSU AED Economics)

11:45 Economics of Wind Energy – Lynn Hamilton (MSU Ag Economics)

12:05 Cropland Values & Rents – Barry Ward (OSU AED Economics)

12:20 Grain Market Outlook – Matt Roberts (OSU AED Economics)

12:45 World Food Prices – Ian Sheldon (OSU AED Economics)

1:00 Aquaculture Opportunities – Geoff Wallat (OSU South Centers)

1:15 Farm Bill Update – Carl Zulauf (OSU AED Economics)

1:30 Grain Market Outlook – Matt Roberts (OSU AED Economics)

1:45 Managing Farm Labor – Maria Marshall (Purdue Ag Economics)

2:10 Animal Ag & Ohio Law – Peggy Hall (OSU AED Economics)

2:30 Wind Turbine Sites and Contracts – (Lynn Hamilton, MSU Ag Economics)

2:50 Biofuels Outlook – Matt Roberts (OSU AED Economics)

3:10 Budgeting for Farm Enterprises – Barry Ward (OSU AED Economics)

Wednesday, September 17

8:00 Early Bird Outlook: Grain Markets & Biofuels – Matt Roberts & Stan Ernst

9:45 Cropland Values & Rents – Barry Ward (OSU AED Economics)

10:00 Farm Bill Update – Carl Zulauf (OSU AED Economics)

10:15 New Ideas: Protect Your Local Farmland – Jill Clark (AED Economics)

10:40 From CRP to Corn? – Fred Hitzhusen (OSU AED Economics)

11:00 Wind Energy – Kemp Jaycox (Green Energy Ohio )

11:15 Economies of Biomass – Fred Hitzhusen (OSU AED Economics)

11:30 Experiments in Farmland Preservation – Jill Clark (OSU AED Economics)

11:45 Biofuels Outlook – Matt Roberts (OSU AED Economics)

12:00 Cropland Values & Rents – Barry Ward (OSU AED Economics)

12:15 Grain Market Outlook – Matt Roberts (OSU AED Economics)

12:30 Farm Bill Update – Carl Zuluaf (OSE AED Economics)

12:45 Will Techonology Save Rural Retailing – Leslie Stoel (OSU Consumer Science)

1:00 New Ideas: Protect Your Local Farmland – Jill Clark (AED Economics)

1:20 Wind Energy – Kemp Jaycox (Green Energy Ohio )

1:40 Energy Costs and Ohio Households – Jeff Sharp (OSU Rural Sociology)

2:00 Animal Ag & Ohio Law – Peggy Hall (OSU AED Economics)

2:15 Rising Food Costs…More Gardeners? – Jeff Sharp (OSU Rural Sociology)

2:30 Transferring the Farm to the Next Generation – Don Breece (OSU Extension)

2:45 Budgeting for Farm Enterprises – Barry Ward (OSU AED Economics)

3:00 Branding Ohio Foods – Stan Ernst

Thursday, September 18

8:00 Early Bird Outlook: Grain Markets – Matt Roberts & Stan Ernst

9:45 Biofuels Outlook – Matt Roberts (OSU AED Economics)

10:00 Cropland Values & Rents – Barry Ward (OSU AED Economics)

10:15 Branding Ohio Foods – Stan Ernst (OSU AED Economics)

10:40 Animal Ag & Ohio Law – Peggy Hall (OSU AED Economics)

11:00 Grain Market Outlook – Matt Roberts (OSU AED Economics)

11:15 Budgeting for Farm Enterprises – Barry Ward (OSU AED Economics)

11:30 Biofuels Outlook – Matt Roberts (OSU AED Economics)

11:45 Transferring the Farm to the Next Generation – Don Breece (OSU Extension)

12:00 Grain Market Outlook – Matt Roberts (OSU AED Economics)

12:30 Cropland Values & Rents – Barry Ward (OSU AED Economics)

12:50 Biofuels Outlook– Matt Roberts (OSU AED Economics)

1:15 Economics of biodigester – Dan Sanders & Matt Roberts

1:40 Branding Ohio Foods – Stan Ernst

Drought Affecting Silage Harvest

Depending upon where in Ohio you are, you may be experiencing excessive moisture or, as is the case in many areas, you would welcome some rain. The dry weather may mean an early harvest of both corn for silage and grain and is creating many questions among growers about how to handle this year’s harvest. Ohio State University Extension specialists have developed information to help answer questions about proper timing for silage harvest and evaluating corn stands to estimate yields. Information on both can be found at
http://corn.osu.edu and http://dairy.osu.edu or by contacting your local Extension office.

What's Your Marketing Style and Does it Really Matter?

When it comes to selling your grain, do you do the same old thing, year after year, or do you actively incorporate all the most recent information and change your plans to fit the emerging realities of the market place? Turns out, your marketing style might not matter as much for profits as you would think, according to a recent article appearing in the American Journal of Agricultural Economics by Lewis Cunningham and colleagues from Oklahoma State University.

The authors looked at more than 25,000 individual sales of wheat by Oklahoma producers from a 9-year span from 1992 to 2001 and classified individual producers as having either a mechanical style of marketing – selling at the same time every year – or as have an active style where they change things up over time, e.g., sell early some years and store and sell later in other years. They then look at two things: 1) Did the style of selling correlate to average price received? and 2) Did the same sellers do well year after year?

Producers with a mechanical style of selling wheat did no better or worse than those producers who altered their sales timing on a year-by-year basis. Furthermore, there seemed to be very few producers that earned consistently high or low prices (top or bottom 25% of all producers).

What lessons can we learn from this analysis? Well, for Oklahoma wheat farmers, their style of marketing showed no connection to the prices they received and when producers sold for high prices one year, they most likely followed up next year by getting prices that were average or worse. Does it hold for corn and bean farmers and for wheat farmers in other areas of the country as well? Can’t say for sure, but most economists believe in the Efficient Market Hypothesis, or that outguessing the market is difficult to do on a regular basis. However, active market planning and timing may be important to make the most out of government payments, which wasn’t considered by the authors of this one. So, maybe it would be hasty to pitch out that marketing plan just yet.

Cunningham, Lewis T., B. Wade Brorsen and Kim B. Anderson. “Cash Marketing Styles and Performance Persistence,” American Journal of Agricultural Economics , August 2007, pages 624-636.

Seminars Scheduled for Agricultural Lenders

The Ohio State University Extension has scheduled two seminars in western Ohio for Agricultural Lenders. The dates are Tuesday, October 14th at the Putnam County Extension office in Ottawa and Wednesday, October 15th at the Champaign County Extension office in Urbana.

These seminars are excellent opportunities for Lenders, Farm Service Agency personnel, county Extension Educators and others to learn about OSU Extension research, outreach programs and current agricultural topics of interest across the state. Annual attendance at these seminars is typically around 125 participants.

Ohio State University Professor Carl Zulauf will present important aspects of the Average Crop Revenue Election (ACRE) portion of the new Farm Bill. The ACRE program has received considerable attention as a prime element in the new Farm Bill. Dr Zulauf will also be discussing another program in the farm Bill entitled SURE. SURE is an acronym for SUpplemental REvenue program and producers who may have suffered a disaster for the 2008 crop need to pay attention to its details, and will have to sign up for the program by September 16.

SURE is the permanent disaster program which Congress had only authorized from year to year in previous legislation. But being part of the permanent legislation, it requires action on the part of farmers and farm owners.

University of Illinois Professor and Extension Specialist Gary Schnitkey will be discussing the use of crop insurance as a tool to reduce risk in farming. With crop input costs escalating rapidly in recent years risk protection strategies are very important to agricultural lenders. Dr Schnitkey will also be discussing flexible crop rent arrangements being used by Illinois farmers to help mitigate their farm rent risk exposure.

Don Breece, OSU Extension Assistant Director for Agriculture will be discussing the future focus of Agricultural and Natural Resource Extension programs in Ohio. The OSU Extension Agricultural Signature Programs will be highlighted. The increasing number of Ohio counties without an agricultural Extension Educator to conduct local programming will also be addressed.

Barry Ward, Ohio State University Extension Leader, Production Business Management will be on hand to discuss Ohio Land Rents and the updated Crop Enterprise Budgets for 2009. Looking at the expected income and expenses for the 2009 crops can assist farmers in determining what money might be available for farmland rental payments.

The registration cost to attend on of the Ag Lender Seminars is $50.00 and the registration deadline is October 10th. Your local county extension office can provide a registration form or you can access it on the web at http://putnam.osu.edu/natural_resources_environment

Despite Relief at the Diesel Pump, Fertilizer Costs Continue to Rise

We have been following the diesel market in detail for a couple of months now, using data from the Energy Information Administration, Official Energy Statistics from the U.S. Government’s website. The EIA takes weekly retail on-highway diesel prices, including all taxes, from various locations around the United States from the East coast to the West Coast. We use this data to draw our own conclusions on the issue, showing changes from various points in time. They also have downloadable statistics for the past 53 weeks. This data is available to the public at:
http://tonto.eia.doe.gov/oog/info/wohdp/diesel.asp

As of 8/18/2008, EIA reports a U.S. National average diesel price of $4.207 per gallon at the pump. This is a 46.69% increase from $2.868 per gallon a year ago. Diesel was at its highest on 7/14/2008 with a U.S. National average of $4.764 per gallon. Since then it has decreased 12% to $4.207 per gallon as of 8/18/2008. The trend for the past few weeks is showing that the price is dropping nearly $0.10 per gallon every week.

While there is a slight relief at the pump for the time being, fertilizer costs continue to rise. According to our survey data, the average price for NH 3 has increased from $952.5 per ton a month ago to $1074 on 8/13/2008, an increase of 16.77%. Prices for UAN and Urea have increased nearly the same rate. UAN increased from $440 to $465.5 or 8%, and Urea has increased from $735.75 to $853 or 21.34% in the same time period.

MAP and DAP have increased 10.10% and 3.38% from 7/16/2008 to 8/13/2008 respectively. MAP has increased from $1105.25 to $1185 per ton while DAP has increased from $1180 to $1184 per ton. Potash has increased from $736 to $802 per ton in the same time period. This is an increase 19.12% in just three months.

Input costs as of 8/18/2008 :

Diesel Fuel (On-Highway, Taxes included): $4.207 per gallon

Anhydrous Ammonia: $1074 per ton or $0.655 N per lb

UAN: $465.5 per ton or $0.831 per lb of N

Urea: $853 per ton or $0.927 per lb of N

MAP: $1185 per ton or $1.139 per lb of P 2 0 5

DAP: $1184 per ton or $1.287 per lb of P 2 0 5

Potash: $802 per ton or $0.668 per lb of K 2 0

OSU 2008 Summer Law Notes Available

The OSU Extension 2008 Law Notes has been published by the OSU Extension’s Agricultural & Resource Law Program.  Topics in this newsletter include: Ohio Line Fence Law will Change on September 30, 2008, OSU to Host Ohio Agricultural Law Symposium, Controversial Livestock Zoning Case Decided, Ohio Water Issues:  the Great Lakes Compact and a Proposed Constitutional Amendment, What Should Agricultural Employers Know about Employment Laws? and Legal Q&A on open burning, trees on the property line, dying without a will, watershed conservancy districts.  This newsletter can be found at:  http://aede.osu.edu/programs/aglaw/

Factors and Influences in Recruiting Hispanic Farm Labor

The recruitment of labor for planting, tending and harvesting crops is crucial. In cases where sufficient good labor is not obtained or where it is lost during the season, shortages can be truly damaging to your financial success. Whether it’s vegetables being disked in the field, fruit rotting on the tree or unmilked dairy herds, a lack of labor can ruin a potentially good year. So how do you find the labor you need? Here are some things to consider when you attempt your positive recruitment.

Wages & Work Conditions

One thing remains true for both employers and Hispanic workers —whether in dairy, agricultural, horticultural, nursery or landscaping operations — production and profits are the bottom line. Decent wages and work conditions increase the chances for positive recruitment results. “Decent” being subjective, the ODJFS Farm Program encourages employers and workers to utilize Interstate Clearance Orders to clarify and set the terms & conditions of the work being offered, before labor is contracted. The middle of the season is no time for bargaining. Try to maintain worker contact in the off-season, too.

Crop Calendar/Season

If you are recruiting for dairy, nursery or landscaping, you can offer labor an extended work year. If you are in field crops, berries or tree fruit, you should know that employees will be concerned about your crop calendar…the length of season and work available. To help recruit your labor, you should offer several harvests, either by yourself or by letting workers go to other producers in your operation’s off-times. This type of coordination can help keep labor within Ohio by offering these various employment opportunities.

Economic Downturn

A peculiar recruitment factor has arisen amidst the recent troubles with our national economy, increasing our unemployment rolls and leaving folks financially adrift. In some cases, this local labor has looked to agriculture for employment. Despite the fear (and reality) of losing labor under the unsettled immigration situation, some employers have seen unemployed newcomers trying ag work and some former farmworkers returning to a familiar place. Recruiting this new, legal labor force may prove both beneficial and a management challenge. (An aside: The economic downturn in housing and construction has also released a lot of Hispanic labor into the unemployment count.)

Raids and Fear

The negative influence of enforcement-first immigration policy is definitely a factor in your labor recruitment. And the high numbers of undocumented workers in agriculture is no secret either. The combination of labor too fearful to move and their ever-increasing deportations deplete the labor pool available for recruitment. And politicians have not yet devised a way to truly and effectively document & verify. Nor does a positive and workable immigration solution appear on the horizon.

Other Factors

Gas/Travel Especially under today’s economy and high fuel prices, money for travel to Ohio from Florida , Texas and other states along the migrant stream can become a factor for recruitment of labor. Workers may consider adjusting their travels to work in states closer to home. To counter this, employers may consider offering cash grants or temporary loans.

Programs & Services

Farmworkers factor a state’s help with their non-job-related needs in their decision of where to travel. This recruitment consideration was addressed in the June 2008 Ag Manager article, Migrant Labor Resources. Your knowledge in this area can factor into your positive contact with potential labor.

Labor’s Reasons for Picking A Particular State

Some factors and influences cited by farmworker comments and observations:

1. Historical contact with particular employer, region or state

2. Positive relations with employer and/or farm labor contractor

3. Positive work environment and conditions

4. The state provides familiar crops/work

5. Length of season…amount of work available/potential for profits

6. Good housing and supportive services

7. Economic necessity…wherever work can be found

Producing Carbon Credits on Your Farm

We have heard so much in the news media about global warming lately, and it seems that everybody has an idea of how to fix it. This is what I understand about the changing climate. The gases in the atmosphere act like a blanket around the earth, trapping heat from the sun, much like a greenhouse. While I am not sure if this is part of a normal cycle, or if something we have done is causing it, many people believe the increasing amount of carbon dioxide (CO 2 ) emitted from human activities plays a role. Other gases, like methane and nitrous oxide are even more of a problem. Methane is said to have 21 times greater impact than CO 2 , and nitrous oxide is 300 times worse than CO 2 . Armed with this knowledge, it appears that reducing emission of these “greenhouse” gases could reduce the problem.

Scientists believe that trapping or sequestering CO 2 in crops or in the soil may be part of the answer. Land management practices such as no-till, strip-till, grassland, and forestry are known to contain these greenhouse gases, a concept known as “carbon sequestration”. Here is where it gets interesting. There are people and businesses that are willing to pay farmers who sequester carbon, referred to as “carbon credits” (one carbon credit is equal to one metric ton of CO 2 ).

Carbon credits are traded on the Chicago Climate Exchange (CCX) in the same way grains are traded on the Chicago Board of Trade. Factories and electric generating companies who are trying to reduce their greenhouse gas emissions, but are not able to do it fast enough or as cost effectively, are willing to purchase carbon credits like those from conservation farming practices. Farmers may not be able to sequester enough carbon individually to make them a player in this game, so an “aggregator” acts on the behalf of many producers. The aggregator purchases the carbon credits from of these smaller operations and sells them on the CCX to parties who want them.

Currently carbon credits are trading for about $3.90, and this translates into about $3.00 per acre, according to Mark Wilson of Land Stewards. Carbon credits, when added to the other income sources available on an acre, could be the icing on the cake. Europe has a similar program and carbon credits are much more valuable than we have seen here. This could be a possible sign of things to come in the U.S.

There are other ways to get into the carbon credit business. Livestock farms with certain types of manure handling systems can cover a portion of their manure storage and collect the methane that is produced by anaerobic digestion of the manure. Carbon credits can be earned by preventing the release of greenhouse gases, such as methane.   Jim Jensen, who is with Environmental Credit Corporation (ECC), said his company is in the business of buying and selling carbon credits. His company is willing to pay to install a lagoon cover to prevent the release of the greenhouse gasses (the term lagoon is used here for both true manure processing lagoons and earthen manure storage basins). This is a passive type of methane digester. ECC is willing to pay the cooperating livestock producer 15% of the annual carbon credit value, and when the investment is paid for, payments can increase to 25%. The methane collected can either be flared off or used by the farm at 25% of the market value of the gas.

If I have aroused your curiosity, you need to know that only certain types of farms are offered this deal. Each operation has to be an economically feasible endeavor for ECC. At this time it looks like a farm with at least 1,500 cows or 6,000 hogs will meet this need. The gas is likely to contain some hydrogen sulfide, which is corrosive, so it can only be burned in certain types of appliances, or may be “cleaned” for use in more conventional equipment.

One other issue may help you decide if this is something for your farm. The covers work best on lagoons which have a static level, and deeper is better. First the sand or other solids need to be removed from the manure stream. The liquid material then must move through the covered pond or tank, being retained for about 60 days. Farms that have a two or more manure storage basins in series are more likely to fit the bill. The carbon credits are earned based on the amount of methane prevented from entering the atmosphere.

Jon Rausch, OSU’s Environmental Management Program director, pointed out several other benefits of lagoon covers. The synthetic impermeable covers can exclude precipitation, increasing storage capacity and reducing the manure hauling costs. The cover can also reduce offensive odors, and improve the fertilizer value of the manure, as less ammonia nitrogen will be lost to the environment during storage.

We really are entering a new age of agriculture. For more information about carbon credits and carbon sequestration contact your Extension office or Jim Jensen at the Environmental Credit Corporation (206-297-0698).

NASS releases Agricultural Land Values Report

The USDA National Agricultural Statistics Service (NASS) released its annual report on land values and cash rents for farm real estate, cropland and pastureland in August. The report is available as a pdf file at:

http://usda.mannlib.cornell.edu/usda/current/AgriLandVa/AgriLandVa-08-04-2008.pdf

Farm real estate values, a measurement of the value of all land and buildings on farms, averaged $2,350 per acre on January 1, 2008, up 8.8 percent from 2007. The $2,350 per acre is a record high and $190 more than a year earlier. Both cropland and pasture values for 2008 are record highs. Cropland values rose by 10 percent to $2,970 per acre, up from the previous high of $2,690 in 2007. Pasture value rose by 6 percent to $1,230 per acre. While commercial and residential development has slowed in many regions, farm real estate values continue to increase. Strong commodity prices and farm programs, outside investments, favorable interest rates, and tax incentives continue to be the factors that drive farm real estate values to record levels. Livestock prices,recreational use, and urban development remain the predominant influences that increase pasture land values. Regional increases in the average value of farm real estate ranged from 1.6 percent in the Northeast region to 15.5 percent in the Northern Plains region. The highest farm real estate values remained in the Northeast region, where development pressure continued to push the average value to $5,080 per acre. The Northern Plains region had the lowest farm real estate value, at $1110 per acre, up 15.5 percent from the previous year. In the Corn Belt region cropland values rose 14.8 percent, to $4,260 per acre. The Southern Plains region increased 12 percent from the previous year, to $1,490 per acre. The Northern Plains region also had the highest average percentage increase in pasture value, 19.7 percent above 2007. In the Southern Plains and Mountain regions, which account for more than half of the pasture in the U.S., pasture values per acre increased 17.1 percent and 6.4 percent, respectively.