Month: January 2011

Cover Crops Part of 2011 Conservation Tillage Conference

With dozens of cover crop varieties available with a whole host of benefits ideal in a number of cropping systems, choosing the right variety for the farm can be a daunting task. Farmers interested in cover crops will have a daylong educational session on cover crop management available at the Conservation Tillage and Technology Conference (CTTC) in Ada.

The CTTC will be held Feb. 24-25 at the McIntosh Center of Ohio Northern University in Ada. The cover crops sessions will be held Feb. 24 from 8:00 a.m. until 5:30 p.m. Farmers attending this session are invited to stay for a cover crop meeting and networking, starting at 6:00 pm.

Randall Reeder, an Ohio State University Extension agricultural engineer and organizer of the conference, said that the cover crops session is an opportunity for growers to learn about the benefits of cover crops, how they can incorporate the right cover crop into their cropping system, and how to manage cover crops efficiently and profitably. “Our goal is to increase cover crop acreage in Ohio by 5,000 acres,” said Reeder. “Cover crops offer much in terms of potential economic benefits as well as improvements in soil and water quality.”

Cover crops offer a myriad of benefits for field crops, especially in no-till production systems. They are excellent sources of nitrogen, have almost a 15:1 carbon-to-nitrogen ratio essential for maintaining soil quality, and they produce chemicals (allelochemicals) that are antagonistic to soil-borne diseases and pests. Cover crops also fit in well with field crops because of their short rotation and winter cover. Many cover crops are killed off by winter weather, eliminating the need to use herbicides for burn-down.

Ohio State University Extension research has found that legume cover crops incorporated into a continuous no-till field crop rotation can produce enough nitrogen to complement, or in some cases, replace corn nitrogen fertilizer applications. In addition, cover crops improve the soil structure, support microbial diversity, facilitate drainage, reduce soil erosion, reduce nutrient leaching, store carbon, suppress weeds, enhance wildlife and can serve as a forage for livestock.

Speakers from across the Midwest and Canada will cover fourteen topics including research on oilseed radish varieties; tools to choose the best cover crops for the farm; practical cover crops for corn-soybean rotation; earthworms and their ability to build organic matter; survey results of why farmers don’t plant cover crops; and using cover crops to improve water quality. A panel of farmers will show how they incorporate cover crops into their operations.

Speakers include Dave Robison of Cisco Seeds; Dale Mutch and Dean Bass from Michigan State University; Ann Verhalen from Ontario, Canada; Odette Menard from Quebec, Canada; Barry Fisher from NRCS in Indiana; and Glen Arnold, Rafiq Islam, and Jim Hoorman from Ohio State University Extension. Sponsors include Ohio State University Extension, the Ohio Agricultural Research and Development Center, Northwest Ohio Soil and Water Conservation Districts, USDA Natural Resources Conservation Service, USDA Farm Service Agency, and the Ohio No-Till Council.

The Conservation Tillage and Technology Conference is the largest, most comprehensive program of conservation tillage techniques in the Midwest. About 60 presenters (farmers, industry professionals, and university specialists) from around the country focus on cost-saving, production management topics. The conference is broken down into tracks covering soil and water; nutrient and manure management; advanced scouting techniques; cover crops; crop management; and planters and precision agriculture.

Elwynn Taylor, Iowa State University agricultural climatologist, will be the speaker for the opening general session at 9:30 a.m. on Feb. 24. Note that the cover crop session starts at 8:00 a.m., and is concurrent with the general session. The “Corn College” and “Soybean University” will be two other intensive programs to select from at this year’s CTTC.

Early registration is $50 for one day or $70 for both days. At the door, registration is $60 for one day and $85 for both days. Complete registration and program information is available at http://ctc.osu.edu.

The Conservation Tillage and Technology Conference broke an attendance record in 2010 with 966 farmers, crop consultants and industry representatives attending the event.

Ohio Governor Issues Emergency Rule on Ownership of Wild Animals

In an attempt to satisfy the animal welfare agreement negotiated last year with the Humane Society of the United States and various agricultural interests, Governor Strickland yesterday authorized an emergency rule that restricts the possession, sale and transfer of certain wild animals in Ohio.  The controversial animal welfare agreement, designed to prevent another Ohio ballot initiative on farm animal welfare,  provided that “[t]he Ohio Department of Agriculture and the Ohio Department of Natural Resources will coordinate and take action on wild and dangerous animals including the prohibition of the sale and/or possession of big cates, bears, primates, large constricting and venomous snakes and alligators and crocodiles.  Existing owners will be grandfathered in, but they could not breed or obtain new animals.”  The Governor’s action, however, is a week shy of the December 31, 2010 deadline included in the agreement, which stated that failure to implement the wild and dangerous animals provision by such date could void  the agreement. 

 ”This action fulfills my responsibilities within the agreement that will keep Ohio’s vital agriculture industry profitable while appropriately updating animal care standards,” said Governor Strickland.  The Governor also cited public safety reasons for the new regulation, stating that ”[t]his rule will help protect Ohioans from deaths and serious injuries caused by attacks from dangerous wild animals held in private ownership.”

The Governor’s Executive Order suspended the regular rulemaking process and allowed the immediate adoption of Rule 1501:31-19-05 by the Department of Natural Resources Divison of Wildlife.  The new rule, which became effective January 6, 2011, does the following:

  • Prohibits the possession, sale and transport of “restricted species,”  which includes coyotes, timber and gray wolves, lions, tigers, jaguars, panthers, leopards, cheetahs, bobcats, lunx, cougars, pumas, mountain lions, bears, all primates except humans, alligators, crocodiles, caimans, gharials and numerous snake species, including pythons, cobras and rattlesnakes.
  • Creates an exception from the regulation for persons who possessed a restricted species prior to January 6, 2011, if the person meets all of the following criteria:
    • Does not acquire any new restricted species through purchase, gift, trade, barter, donation or breeding;
    • Has not been convicted of animal abuse or neglect;
    • Has not had any type of animal license or permit revoked or suspended;
    • Registers the animal by May 1, 2011 with the Ohio Department of Natural Resources and maintains the registration annually;
    • Does not allow the public to come into physical contact with the animal;
    • Does not sell or transfer the animal to anyone other than an accredited zoo or institution, a wildlife sanctuary, a family member approved by the division chief, or an out-of-state facility (until January 1, 2016) and notifies the division chief of the new recipient of the animal at least 72 hours prior to transfer.
    • Maintains a permanent transponder implant on the animal.
  • Creates an exception from the rule for certain facilities and organizations:
    • Institutions accredited by the association of zoos and aquariums and facilities under active contract for a species survival plan under the Endangered Species Act;
    • Circuses licensed by the U.S. Department of Agriculture that are in the state less than 45 days per year and do not allow the public to come into physical contact with the restricted species;
    • Institutions operating a mascot program licensed by the U.S. Department of Agriculture;
    • Non-profit wildlife sanctuaries that do not use restricted species for commercial or entertainment purposes, do not allow the public to come into contacted with the species, and do not breed the species.
    • Wildlife rehabilitation facilities engaged in the rehabilitation and reintroduction of native species and permitted by the division chief;
    • Education, research and scientific institutions or projects permitted by the division chief;
    • A person transporting a legally owned restricted animal through the state for less than 48 hours who does not exhibit the animal, keeps the animal enclosed and does not allow public contact with the animal.
  • Requires a person who possesses a restricted species to notify the division of wildlife if the animal escapes, in addition to complying with other reporting requirements in ORC 2927.21.

Emergency rules remain in effect in Ohio for 90 days, which should provide the agency sufficient time to extend the life of the rule through the regular rulemaking process.  Given the upcoming change of leadership in Ohio,  it will be interesting to see if the new administration follows Governor Strickland’s lead and makes the new regulation permanent.

View the Governor’s Executive Order and the new rule.

Crop Input and Land Outlook 2011

Crop profitability prospects for 2011 are positive for the three major row crops in Ohio. Input costs have increased from last year but increases in commodity futures crop prices for the 2011 crop year have increased substantially as well. Enterprise budget projections show positive returns for corn, soybeans and wheat in 2011. These budgets are available online at:
http://aede.osu.edu/Programs/FarmManagement/Budgets/index.htm

OSU Extension Budgets show projected variable (cash) costs for corn production to be 16% higher in 2011 than 2010. Soybean variable costs are projected to be 10% higher in ’11 than ’10. Wheat variable costs are projected to be 13% higher in 2011. Higher commodity prices and profitability in 2010 and projected net profits in 2011 will lead to cash rental rate increases for 2011.

Higher commodity prices and higher costs lead us to a riskier production year as the cash investment in an acre of corn will top $350 and in some production scenarios be closer to $400 per acre. The cash investment in an acre of soybeans will be in the $200 range.

Outlook information presented here was developed with data from AEDE research, Energy Information Administration, USDA, other Land Grant research, futures markets and retail sector surveys.

Fuel
As of December 7th, the Energy Information Administration (EIA) pegged the average price for West Texas Intermediate Crude Oil at $86.10 per barrel for 2011. This is a 9% increase over the 2010 Crude price.

The EIA projects the Henry Hub Natural Gas price to average $4.33 per MMBtu in 2011. This is approximately a 1% increase over the 2010 natural gas price.

Fertilizer
Fertilizer continues to be the most volatile of the crop input costs and cost management of this important input may be the difference in being a low cost or high cost producer in 2011. Fertilizer prices were relatively flat through July of 2010. Since August fertilizer prices have increased substantially. A number of factors have led to the rapid increase in these fertilizer prices. First, due to relatively low crop prices through mid-summer, fertilizer manufacturers were not producing at full capacity anticipating a flat global demand for fertilizer through the fall of 2010 and into the spring of 2011. This relatively empty pipeline together with an early harvest in the U.S. Corn belt and much higher prices for major row crops has led to the higher fertilizer prices that we are now experiencing. Higher prices for corn, soybeans and wheat have signaled the global marketplace to increase acreage (bringing marginal acres back into production) and increase fertilizer rates on all acres. Higher energy prices have also put upward pressure on all fertilizer prices due to the higher mining, manufacturing and transportation costs.

Nitrogen (N)
U.S. demand is projected to be 12.9 million tons in 2011 compared to 11.8 million tons in 2010.

The U.S. imported approximately 15% of our nitrogen needs for crop production in 1980. Today, the U.S. imports approximately 48% of our nitrogen. This highlights the importance of the world supply and demand as we try to evaluate price direction of nitrogen fertilizers.
The retail price of N in December in Ohio was $750-800/ton for anhydrous ammonia (75-87% increase over year ago), $320-385/ton for UAN (28%) (50-82% increase over year ago), and $480-500/ton for urea (25-32% increase over year ago).

Nitrogen fertilizer manufacturers are presently operating at profitable levels due to higher N prices and relatively low natural gas prices, but this fact hasn’t led to supply outstripping demand as the entire supply chain has been more cautious in getting caught in a repeat of the 2008 upside-down fertilizer market.

With the high correlation of nitrogen price to corn price, future movements in nitrogen prices will more than likely take their cues from movements in price of corn.

Phosphorous (P2O5)
The retail price of phosphorous fertilizers are much higher over year ago prices. DAP in December in Ohio was $660-690/ton (80-88% increase over year ago) while MAP was $670-700/ton (68-75% increase over year ago).

Phosphate rock, sulfur and anhydrous ammonia, all primary ingredients used in the manufacture of P fertilizers are presently high priced and have contributed to higher P fertilizer prices.

These higher ingredient prices along with strong world demand continue to pressure phosphorous fertilizer prices. These pressures signal continued higher prices for the 2011 crop production year.

Potassium (K20)
The retail price of potash in December in Ohio was $500-550/ton (10-15% decrease from year ago).

The potash industry essentially operates as a duopoly (two firms, in this case, two consortiums, with dominant control of the market) with Canpotex (Canadian Potash Exporters) and Bellarussian Potash Co. controlling much of the global potash supply.

Potash prices will likely remain steady to higher into 2011 as high crop prices will translate into continued strong demand while the two major potash consortiums will meter out supply to keep prices stable.

Fertilizer Buying Strategies
Storage Approach
To take advantage of “lows” in the market during seasonal lows or unforeseen dips in the market, building storage for your N, P and K needs may be an option to consider as these fertilizer prices remain volatile.

Price Averaging Approach
As fertilizer price remain high and volatile it may be wise for producers to spend more time on pricing these critical inputs. Spreading out your purchases and buying N, P, and K at several different times should result in a better price average over the long run as you average your high priced purchases with your low priced purchases. The only drawback to this option is the inability to take advantage of volume discounts if you are spreading your purchases over several different buying opportunities instead of buying product in one large volume.

Farmland Values and RentsCropland values in Ohio have increased in 2010 due to profitability in crop production. These profits have led many farmers to seek an investment option for these $’s and many have turned to land. Investors outside of agriculture have also been looking at farmland as a stable investment to add to their portfolios. With many $’s and buyers chasing farmland it isn’t a surprise to see land values increase substantially in 2010 (Iowa State reported in November that Iowa farmland increased in value 16% from last November. Ohio increases are likely similar.) Low interest rates and the relative scarcity of farmland up for sale have also helped drive land values higher.

So all of this begs the question, “Where are land prices headed this year?”

The case is strong for land values to see continued strength in 2011 as profitability prospects are very good for this upcoming crop year. Producers and other investors outside of agriculture will continue to see farmland as a good investment alternative. With strong balance sheets many farmers will continue to be in the land buying mode.

Cash rental rates will seem similar upward pressure as higher commodity crop prices and good prospects for profit in 2011 drive competition in local markets.

Seed and Crop Protection Chemicals
Seed company data indicates price for 2011 to be mostly flat among similarly traited seed. Farmers should carefully consider the need for these seed traits by evaluating University and company plot research.
Crop protection chemicals prices have remained fairly flat over the last 2 years. Glyphoste, the leading crop protection chemical in terms of use in the world still continues to flat prices.

Glyphosate production is energy and capital intensive, but not labor intensive. Thus, China has no competitive advantage in glyphosate production. There’s no sizeable domestic demand for glyphosate in China as the Chinese market is relatively small. Chinese producers have been encouraged by China’s government to expand their capacity to capture export markets around the globe, says Vance.

Their government does this by granting export incentives such as tax rebates to glyphosate producers. Also, lack of wage and environmental standards in China and an undervalued Chinese currency all effectively subsidize unfair trade and pricing practices.

Continued high prices of petroleum products (main ingredients in many crop protection chemicals) will pressure prices to move somewhat higher.