Will the Drought Trigger an ACRE Payment in 2012?

By: Chris Bruynis, PhD, Assistant Professor & Extension Educator, OSU Extension.

Those farmers that signed up for the Average Crop Revenue Election created in the previous Farm Bill, are wondering if there might be a payment in 2012. The program was set up with both state and farm level revenue triggers that were based on the five year Olympic average and the previous two year average price for each commodity.  Since the state trigger needs to be met before the farm trigger, an examination on the revenue levels and the possibility of falling below these will be discussed first. 

The Ohio five year Olympic average yield for corn and soybeans are 157 bushels and 48 bushels respectively. The two year average market price currently is projected at $5.69 for corn and $11.85 for soybeans.  Both crops probably will increase slightly in price, but because of the 10% cap rules in the legislation the state revenue trigger will be capped for both crops well below the calculated revenue levels.  Under the current price projections, the corn revenue level calculates as $893 per acre and the soybean revenue level at $569 per acre.  The 10% cap from the 2011 revenue levels has the revenue guarantee at $627 for corn and $493 for soybeans.

ACRE payments will be triggered at the state level if the 2012 crop yields times the 2012 average crop price (September 1, 2012 – August 31, 2013) falls below the revenue guarantee level.  If December corn ($7.90) and November soybean ($16.80) futures price from July 20, 2012 holds true for the 2012 crop, what corresponding yield would trigger the state revenue guarantee?  The average Ohio corn yield would need to be below 80 bushels and the soybean yield below 30 bushels for this to happen.  Are these possible? In 1988 we had 85 bushel corn and 27 bushel soybeans and in 2002 88 bushels and 30 bushels respectively.

If and when the state trigger is met, then farmers will need to do the same calculations for their farm.  There are some farms that will easily meet their farm trigger and the actual ACRE payment is calculated on the farm level in terms of revenue loss.  However, if we fail to fall below the state revenue trigger, there will be no acre payments made, even if the farm revenue level is below its trigger.  At this time, farmers probably should not count on ACRE payments to cover losses from this year’s short crop. Even if there are payments, farmers would not receive them until after August 31, 2013 at the earliest.

Crop Insurance Management during a Drought

By: Chris Bruynis, PhD, Assistant Professor & Extension Educator, OSU Extension.

There is no doubt that crop insurance can be complicated to understand all the nuances surrounding making a claim. There are some common mistakes that producers make that can cost them money. Two of them that we are now seeing happening include:

  • Harvesting the crop in a manner other than insured – If you are harvesting the insured crop in a manner other than intended without informing the crop insurance carrier and have a claim, you will have a problem. For example: the producer has insured his corn as grain, but harvest the corn as silage. If there is no actual harvested grain for the adjuster to measure, the crop must be field appraised for grain content before harvested. The adjuster cannot appraise the grain content of harvested corn silage and the production to count will be assessed at the full guarantee. No indemnity will be paid.
  • Destroying the insured crop without the company’s approval – Production for a crop that is destroyed before the claim adjustment is made will be assessed at the full production guarantee and no indemnity will be paid

The rules also state that producers need to contact their crop insurance agent within 72 hours after they think they have a crop loss.  With a hail storm or flood that call is pretty easy to make, however with the slow decline created by the summer drought, this is a bit more difficult.  Even corn and beans that have had some drought and heat stress that still look decent will probably have a yield loss.  Contacting the insurance agent now, if you have not already done so, is advised if you suspect any yield loss this year. Attached is a fact sheet, recently released by the USDA Risk Management Agency, that provides some good information for producers.  Click here for USDA Risk Management Agency drought fact sheet.

2012 Ohio Backgrounding and Stocker Cattle Enterprise Budgets

By: Barry Ward, Leader, Production Business Management, Ohio State University Extension, Department of Agricultural, Environmental, and Development Economics

Newly updated OSU Extension Backgrounding and Stocker Cattle Enterprise Budgets for 2012 have been completed and posted to the Farm Management Website of the Department of Agricultural, Environmental and Development Economics. Updated Enterprise Budgets can be viewed and downloaded from the following website:


Our enterprise budgets are compiled on downloadable Excel Spreadsheets that contain macros for ease of use. Users can input their own production and price levels to calculate their own numbers. Detailed footnotes are included to help explain methodologies used to obtain the budget numbers.

Authors of these swine budgets include: Steve Boyles, Extension Beef Specialist, OSU Extension; John Grimes, Extension Beef Coordinator, Piketon South Centers, Barry Ward, Leader, Production Business Management, OSU Extension and OSU Department of Agricultural, Environmental and Development Economics ; and Seth Wilkerson, Undergraduate Student, Agribusiness and Applied Economics, OSU Department of Agricultural, Environmental and Development Economics.

OSU Extension to Host RTRP Exam Preparatory Classes

by David Marrison, OSU Extension Educator

Beginning January 1, 2011, all paid preparers must have a Preparer Tax Identification Number. Existing PTIN holders must pass a competency exam by the end of 2013. Attorneys, Certified Public Accounts and Enrolled Agents are exempt from the testing requirement. In addition to a competency exam, IRS Registered Tax Return Preparers will be required to take continuing education in the future.

OSU Extension and the OSU Income Tax School Program are pleased to announce that we will be offering assistance for individuals who are preparing to take the new Registered Tax Return Preparer (RTRP) competency test in 2012. We will be offering two educational options to help tax practitioners prepare for these tests.

The first available option is a study at home option. Through a partnership with Fast Forward Academy, participants can study at home and access an on-line test bank of questions. The cost of the at home materials is $99 for the study guide and access to a 200 question test bank or $179 for the study guide and access to a 700 question test bank and unlimited practice exams.

The second option is to attend one of four one-day preparatory workshops across Ohio in August & September. These workshops will be held on:

OSU Extension Office (Bowling Green, OH)- August 28, 2012
Bridgewater Banquet & Conference Center (Powell, OH)- August 29, 2012
Kings Island Conference Center (Mason, OH)- September 5, 2012
Geauga County Extension Office (Burton, OH)- September 6, 2012

Learn from our great OSU and IRS Instructors at these workshops and get the study materials and on-line test bank as a bonus. There are three registrations options for the workshop. The first is $100 for the day long preparatory workshop only. The second option is $199 which includes the workshop, study guide and access to the 200 question test bank. The third option is $279 which includes the day long preparatory workshop, study guide, access to a 700 question test bank and unlimited practice exams.

The workshops are approved by the IRS Return Preparer Office for 8 hours of CE credit in the category of “RTRP Test Preparation.” Lunch, program handouts, FastForward Study Guide, on-line test bank, and refreshments are included.

Registration must be completed (postmarked or via web) by midnight, August 15. There is an additional $20 late registration fee. Registration is available on-line at: http://go.osu.edu/RTRP . More information can be obtained by contacting David Marrison at marrison.2@osu.edu or 440-576-9008.

Estate Planning Fact Sheet Series Revised

Estate planning is a process not a onetime event because of continual changes in the farm business, family situation and state and federal laws.  Farmers need to schedule an annual check-up with their attorneys to make sure that the estate plans they have will still fulfill their stated objectives. OSU Extension has revised the Basic Estate Planning Fact Sheet series so the information is current for 2012. These revised factsheets have been published and are available at http://ohioline.osu.edu/ep-fact/index.html or you can click on the following links to read them.


Pricing Drought-Stressed Corn for Corn Silage

Dr. Bill Weiss, Professor and Extension Specialist & Dianne Shoemaker, Extension Field Specialist, Dairy Production Economics

With a “normal” corn crop, pricing a standing crop for silage can be “interesting”.  Pricing a drought-stressed corn crop is even more interesting.  What is the actual nutrient content of the  crop?  How well will the crop ferment?   Will nitrate levels put the potential silage crop at risk?  There are many unknowns, with the biggest challenge being how to determine the dollar value to assign to that risk. 

The value of drought-stressed corn silage can be estimated using expected nutrient composition and the cost of the nutrients.  The average composition of drought-stressed corn silage in Table 1 is reasonable, but the composition of silage for a specific situation (e.g., hybrid, growing conditions, etc.) could be substantially different. The nutrient values were calculated based on numerous feed prices in central Ohio.   To read more  click here to download the pdf of 2012 Pricing Drought Stressed Corn Silage

Key Features of the Dairy Title of the Agricultural Reform, Food, and Jobs Act of 2012

By:  John Newton, Ph.D. graduate student and Cameron Thraen, OSU Extension State Specialist, Dairy Markets and Policy, Department of Agricultural, Environmental and Development Economics, The Ohio State University

The following key information has been generated by simulating the milk marketings of 5,000 representative farms over the time period 2006-2012. Representative farms were structured to include herd demographics, seasonal production patterns, and farm growth rates common to farms found in Mideast portions of the U.S. Portions of the 2012 margins were estimated using Chicago Mercantile Exchange futures prices. All of the provisions contained in the U.S. Senate version of the DMPP and DMSP have been implemented over this period. To read the entire article click to download the DairyPolicyWatch_2012