Dairy Risk Management Series Offers a Range of Important Information to Producers

By Ben Brown, Dianne Shoemaker and Chris Zoller

Offered in three sessions during November, OSU Extension, in partnership with the Ohio Dairy Producers Association, delivered a dairy risk management webinar series covering three important topics: milk pricing and producer price differentials, outlooks for domestic and international milk product markets, and dairy risk management tools. Slides and recordings for all presentations can be found at https://farmoffice.osu.edu/events/archived-videos.

Session one was presented by Mark Stephenson from the University of Wisconsin discussing milk pricing and producer price differentials. Due to COVID-19 disrupting supply chains and a change in the 2018 Farm Bill using the average of Class III and Class IV milk prices instead of the higher of the two to set Class I milk prices, Ohio dairy producers experienced several months of historically large negative producer price differentials. According to Dr. Stevenson, these negative PPDs could continue for a couple more months and producers need to be aware of these when making business planning decisions. Dr. Stephenson’s presentation can be found at https://studio.youtube.com/video/fpGfd5c0pi4/edit.

Session two highlighted domestic and international markets. William Loux from the U.S. Dairy Export Council started off the session with a presentation on dairy supply and demand outside the United States. International demand for US dairy products is up in 2020 driven primarily by China and the Middle East/ North Africa Region. Southeast Asia also saw large year over year increases in dairy product imports. Loux pointed out there are a couple things to watch for in the next couple of months: COVID-19 resurgence, Brexit and the ability to trade with England, and the subsidization of dairy exports by India. He concluded by saying it is a good sign that the US continues to export dairy products in strong numbers even with US dairy prices above world dairy prices. His session can be found at https://www.youtube.com/watch?v=fJsHMSkcHVc

Also in session two, Mike McCully from the McCully Group provided price expectations for US dairy markets over the next 12 months. Key points from his presentation included product specific outlooks with cheese prices being strong on solid demand, butter prices being extremely weak on burdensome supplies and milk prices being relatively stable. He continued that the outlook is mixed, with dairy markets having a bearish tone heading into the first quarter of 2021 on growing milk supplies and concerns over demand, but the second half of 2021 being more bullish given an expected reduction in milk supply growth and possible demand improvements. Mike’s full presentation can be found at https://www.youtube.com/watch?v=NAy6Xy-Nb7s&t=119s

Session three focused on risk management tools for dairy producers. OSU Extension Educator Chris Zoller provided an overview of USDA’s Dairy Margin Coverage program, which is authorized through the Farm Bill every year. Producers wishing to sign up for DMC need to contact their FSA office prior to December 11 to enroll for 2021. Chris’ presentation can be found here: https://www.youtube.com/watch?v=ZR_4SukNX2I&t=24s

Dr. Kenny Burdine, Associate Extension Professor, University of Kentucky, also presented during session three.  Dr. Burdine discussed Livestock Gross Margin Insurance- Dairy and gave a brief overview of using futures and options in milk price protection. Dr. Burdine suggested USDA’s Dairy Margin Coverage Program as the first level of protection for smaller producers, with Livestock Gross Margin Insurance- Dairy being the second level of protection. Kenny’s presentation can be found here: https://www.youtube.com/watch?v=PdjEijnDCMw

Session three concluded with a presentation by OSU Extension Educator Jason Hartschuh on Dairy Revenue Protection Insurance offered through the Risk Management Agency. Jason reviewed six decisions for dairy producers to consider and provided examples of how to use the program. Additional information about this topic can be found at dairy@osu.edu under Dairy Revenue Protection. Jason’s presentation from the webinar series can be found at https://www.youtube.com/watch?v=B38TVJkrlQU

For any additional questions or thoughts for future risk management webinars please reach out to Ben Brown at brown.6888@osu.edu, Dianne Shoemaker at shoemaker.3@osu.edu, Chris Zoller at zoller.1@osu.edu or your local OSU Extension Office.

Agricultural Risk Coverage and Price Loss Coverage for the 2021 Crop Year

By Ben Brown, The Ohio State University

The 2018 Farm Bill reauthorized the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) safety net programs that were in the 2014 Farm Bill. Producers must enroll  in ARC/PLC for the 2021 crop year through their local Farm Service Agency office. Producers can amend the program elections they made for the 2019 and 2020 crop years for the 2021 crop year. The signup period for the 2021 crop year is open now, and the deadline to enroll and make amendments to program elections is March 15, 2021.

If changes are not made by March 15, 2021 deadline, the election defaults to the programs selected for the 2020 crop year with no penalty. Producers will have the opportunity to amend program elections again for the 2022 and 2023 crop years.

Producers again have the option to enroll covered commodities in either ARC-County, ARC-Individual, or PLC. Program elections are made on a crop-by-crop basis unless selecting ARC-Individual where all crops under that FSA Farm Number fall under that program. ARC program payments are made when crop revenue falls below a guaranteed level, while PLC payments are made when a crops specific effective price is lower than its reference price. These are the same program options that were available to producers during the 2019 and 2020 crop years. In some cases, producers may want to amend program election to better manage the potential risks facing their farms during the 2021 crop year.

On December 1, 2020 at 10:00 a.m. EST program directors from the Ohio Farm Service Agency and Ohio State University Extension will host a free informational webinar about ARC/PLC enrollment and election for the 2021 crop year. During this free 1-hour webinar, state leaders will cover program design, economic considerations and frequently asked questions. To make sure your question is addressed during the webinar, please send to Ben Brown at brown.6888@osu.edu or 660-492-7574 prior to December 1, 2020.

To register, visit: go.osu.edu/arc_plc

 

USDA Releases Projections of Farm Prices to 2030

by: Chris Zoller, Extension Educator, ANR in Tuscarawas County

The Unites States Department of Agriculture Economic Research Service (USDA-ERS) released their 10 year projection for farm commodity prices.  The projections offer a mixed outlook based on expected increases in demand, exports, and market conditions this year.  See Figure 1 for the USDA-ERS price projections for several U.S. farm commodities.  These projections are not inflation adjusted.

The projections are based on an assumed long-term global outlook that includes a recovery in income growth—beginning in 2021—from the declines that have occurred in most economies during 2020. The outlook for the U.S. economy, and for many important U.S. agricultural markets and competitors, however, remains uncertain.

Figure 1.  Projected changes in U.S. farm commodities, 2020-2030

Crops

Wheat and cotton are projected by USDA-ERS to show the strongest gains. Wheat prices are projected to rise as domestic and export demand begins to outpace domestic production.  In addition to the potential to capitalize on projected price gains, you may want to consider incorporating wheat into your rotation for soil health, disease management, and other reasons.   Modest changes in prices for U.S. corn and soybeans from current levels reflect the relatively steady demand for these products during 2020, together with the moderating influences of productivity gains and continued export competition.  If the corn and soybean price projections are true, should you continue to grow these crops?

Livestock

Farm prices of hogs, broilers, and eggs are projected higher by 2030, as economic recovery restores growth in domestic and export demand. U.S. beef cattle prices are expected to rise during the early years of the 10-year projection period, before declining somewhat as the multi-year cattle cycle and a longer-term trend of sluggish demand growth turn prices downward.  For those in the beef business, the overall projected negative price change should be of concern.  What can you do now to plan for a downward price trend?

Planning

This USDA-ERS release is a prediction of future prices based on two things: (1) information known today and (2) anticipated changes over time.  What will you do with this information?  How will this and other information impact how you chart the course of your business?  The weather is a topic all farmers want to discuss but cannot control.  Planning, however, is something all farmers can control.  Use the available information to help make educated decisions about the future of your farm.  Read and review information, meet with your lender, accountant, and Extension Educator.

Ohio State University Extension crop budgets are developed annually and are available at https://farmoffice.osu.edu/farm-mgt-tools/farm-budgets.  These Excel-based budgets include a column for users to input their own information to evaluate scenarios.

The FINPACK computerized program is used by Ohio State University Extension to help farmers evaluate business changes.  Depending upon the commodities you produce, now may be the time to re-evaluate your business model.  If this is you, the FINPACK program can be of great benefit.  Additional information is available here:  https://farmprofitability.osu.edu/.

Source

United States Department of Agriculture Economic Research Service, Economic recovery, competition shape projections of U.S. farm prices to 2030. November 6, 2020.  Available at: https://www.ers.usda.gov/data-products/chart-gallery/gallery/chart-detail/?chartId=99758

 

USDA Releases Farm Production Expense Forecast for 2020

by: Chris Zoller, Extension Educator, ANR in Tuscarawas County

The United States Department of Agriculture Economic Research Service (USDA-ERS) has announced their prediction for farm production expenses for 2020.  Production expenses (see Figure 1) are projected to be reduced by 1.3 percent to $344.2 billion in nominal (non-inflation-adjusted) dollars.  These expenses represent the costs of all inputs used to produce farm commodities and affect farm profitability.  While overall production expenses are forecast to decrease, specific expenses vary.

Figure 1. Nominal & Inflation-Adjusted Farm Production Expenses, 1970-2020

USDA-ERS estimates expenses to increase in 2020 account for 69 percent of total expenses.  The two largest expense categories, feed and labor, are expected to increase 1.4% and 3.1%, respectively.  Expenses expected to decrease in 2020 account for 31 percent of all production expenses.  Specific examples of expense items expected to decrease include interest expenses (27.1%), fuel and oil (13.9%), livestock and poultry purchases (7.5%), and pesticides (2.1%).

Inflation-adjusted total production expenses in 2020 are expected to be 19 percent below the record high of $427.1 billion in 2014.  This will mark the sixth year of declining expenses.

Looking to 2021

While some expense items are forecast to be reduced in 2020, it is important to ask questions as you plan.  Will government payments continue?  I don’t suggest relying on these payments.  What is the outlook for the commodities you produce?  What tools are available to help you minimize risk?

As you plan for 2021, I encourage you to talk to your accountant, lender, and other advisors.  Refer to the OSU Extension 2021 Budgets (https://farmoffice.osu.edu/farm-mgt-tools/farm-budgets#2021).  The Ohio State University Extension Farm Business Analysis and Benchmarking Program (https://farmprofitability.osu.edu/) can also provide assistance with planning, evaluation, and decision making.

Reference

USDA-ERS, Farm production expenses forecast to decrease in 2020, the sixth year in a row.  Available at: https://www.ers.usda.gov/data-products/chart-gallery/gallery/chart-detail/?chartId=99736

 

 

 

 

Three Part Webinar Series to Help Ohio Dairy Producers Mitigate Price and Income Risk

COLUMBUS, Ohio – Dairy producers in Ohio and across the country have faced a turbulent year for milk prices, input costs, and income.

Like other commodities, dairy product supply chains were stressed during the initial stages of the global Coronavirus pandemic. Milk prices have improved since the lows of April and May, but price and income risk remain major concerns of producers. Organizers from The Ohio State University’s College of Food, Agricultural, and Environmental Sciences in partnership with the Ohio Dairy Producer’s Association are hosting a free three-part webinar series November 5, 17, and 24 from noon to 1:00 p.m. EST. to prepare producers to mitigate these risks.

Ohio’s Federal Milk Marketing Order Class III milk price fell to a low of $12.14 per hundredweight in May before climbing to $24.54 per hundredweight in July. However, Class III prices do not always reflect the price received at the farm. Producer Price Differentials (PPDs) can increase or decrease the final price paid to producers based on factors such as how the milk is used – bottled for fluid consumption or manufactured into cheese and other dairy products- and how much milk is pooled in the Federal Order system. For Ohio dairy producers, the PPDs fell to a previously unseen level of negative $8.02 per hundredweight in July.

“For Ohio’s dairy farms, that meant that instead of seeing $24.54 as the base price in their July milk checks, we saw $16.52 per cwt.  This followed a similar scenario in June, where a $21.04 Class III price was reduced by a negative $7.05 PPD which led to a pay price starting at $13.99 per cwt.  Prices at these levels are below the cost of production for the vast majority of Ohio’s dairy farms”, said Dianne Shoemaker, Associate Professor and OSU Extension Field Specialist of Dairy Production Economics said.

Furthermore, feed costs- the largest costs at 40-60 percent of an operation’s total costs- can also be highly volatile and impact final returns substantially. Corn, soybean meal, and forage all had large price swings in 2020. As milk prices on the futures market have recovered so have the prices for feed. Soybean meal prices are currently the highest since May 2018.

Ben Brown, Assistant Professor of Agricultural Risk Management in the Department of Agricultural, Environmental, and Development Economics said “2020 is a year like one we have never seen for markets and policy”, adding “it was difficult giving farm management advice to producers because conditions and policy were changing at a pace that seemed like hourly”.

The good news is that there are risk management options available to dairy producers and the organizers say their main goals of the webinar series are to bring awareness of key issues facing the dairy sector, provide a current dairy market outlook, offer educational training on public and private risk management tools, and encourage producer action either through follow-up conversations or practice implementation.

One of those risk management tools is the Dairy Margin Coverage (DMC) Program offered through the Farm Service Agency (FSA). The program allows producers to buy protection against coverage levels of their milk margin- the difference between the milk price and feed costs. The program does cost producers a premium and enrollment is required during a set period- usually in November and December of the prior year. For 2021 coverage, that deadline is December 11, 2020 through the local FSA office.

In December 2019, some of the best forecasts were showing milk margins above the highest coverage levels given current futures prices for milk and feed. Futures prices are an estimation of prices later given what the market knows now. In December 2019, the market was not expecting a global pandemic. As a result, many producers did not participate in DMC during calendar year 2020 and exposed themselves to downside income risk. The DMC program for 2021 along with other price and income risk management tools will be covered during the webinar series.

The series will start on Thursday November 5, with a presentation by Mark Stephenson, Director of Dairy Markets and Policy at the University of Wisconsin, on how milk is priced in the United States and a discussion about factors that led to this years’ unprecedented negative PPDs and volatile milk prices.

Session two, covering domestic and international dairy supply and demand outlooks on November 17, 2020, will be presented by William Loux, Director of Global Trade Analysis at the U.S. Dairy Export Council and Mike McCully, Owner and CEO of The McCully Group.

Concluding the series is the overview of risk management tools including DMC, futures and options, Livestock Gross Margin Coverage, and Dairy Revenue Protection. OSU Extension Educators Chris Zoller- Tuscarawas County and Jason Hartshuh- Crawford County will be joined by Dr. Kenny Burdine, Livestock Extension Economist at the University of Kentucky, for the final session on November 24th.

“This has been a difficult year for dairy farmers, and it’s likely we will see price volatility in future years. Dairy farmers are encouraged to attend to learn about the tools available to minimize price risk as they plan for the future”, said Zoller.

The webinar series is free and open to the public for all three session from Noon to 1:00 PM EST. The virtual nature of the webinars allows flexibility in attendance, but the sessions will also be recorded and posted at farmoffice.osu.edu under past events.

For the complete program and to register, visit go.osu.edu/dairyriskmanagement. For questions, contact Dianne Shoemaker at shoemaker.3@osu.edu, Ben Brown at brown.6888@osu.edu or Chris Zoller at Zoller.1@osu.edu.

 

 

Beef Producers Should Consider Signing Up for CFAP-2

by: David Marrison, Extension Educator, ANR, Coshocton County

The COVID pandemic has created disruption in many areas of agriculture.  Instead of our usual market cycles, farmers saw prices move up and down in ways contrary to typical market cycles.  To help farmers mitigate the impact of the coronavirus, the Coronavirus Food Assistance program (CFAP) was released in April with program sign-up ending on September 11, 2020.

On September 17, the USDA announced additional assistance through a second version of this program titled Coronavirus Food Assistance Program 2 (CFAP 2).     Nearly all agricultural commodities are eligible for payments under this program.  These payments will be made for three different categories which include:

  • Price Trigger commodities– suffered a five percent-or-greater national price decline in a comparison of the average prices for the week of January 13-17, 2020, and July 27-31, 2020.
  • Flat Rate crops– These crops either do not meet the 5-percent price decline trigger noted above or do not have data available to calculate a price change.
  • Specialty (sales-based) commodities -This category includes specialty crops and livestock. Payments will be made on sales-based approach based on 2019 sales

This article is written specifically for beef producers. Additional information for other commodities covered in CFAP 2 can be found at: https://www.farmers.gov/

Beef Cattle:

Beef cattle (excluding breeding stock) are eligible for CFAP 2 payments as a price trigger commodity.  This is because the average mid-January to late-July live cattle December futures price declined by $12.10 per cwt., or 9.9 percent.  Additionally, feeder cattle November futures declined 8.2 percent ($12.77 per cwt) during the same time period. It is estimated that $2.82 billion in payments will be made to beef producers in CFAP-2.

For beef cattle, payments under CFAP 2 will be equal to:

  • The producer’s owned inventory of eligible beef cattle, excluding breeding stock, on a date selected by the producer from April 16, 2020, through August 31, 2020,
  • Multiplied by the payment rate of $55 per head, up to $250,000 or 4,546 head per producer.

Payment Example:

Joe Bull have a small herd of beef cattle in Eastern Ohio.  The largest number of beef animals he owned from April 16 to August 31 was 72 on July 23, 2020.  This included 30 brood cows, 10 fat cattle intended for slaughter, 20 feeder calves, 10 heifers, and 2 breeding bulls.  In this example, Mr. Bull would be eligible to receive a payment of $2,200 for his eligible animals (fat cattle, feeders, & heifers) which were in inventory on July 23, 2020 (See Table 1).

Table 1: Example Beef Payment under CFAP 2

Animal Inventory Number Eligible? Payment ($55 per eligible animal)
Brood Cows 30 No $0
Fat Cattle 10 Yes $550
Feeder Calves 20 Yes $1100
Heifers 10 Yes (have not calved) $550
Breeding Bulls 2 No $0

 

Eligibility

Any individual or legal entity who shares in the risk of producing a commodity may apply for CFAP 2. Producers must be in the business of farming and producing commercially produced commodities at the time of submitting their application to be eligible.

Commodities grown under a contract in which the grower has ownership and production risk are eligible for CFAP 2.

To be eligible for payments, a person or legal entity must have an average adjusted gross income of less than $900,000 for tax years 2016, 2017, and 2018. However, if 75 percent of their adjusted gross income (AGI) comes from farming, the AGI limit of $900,000 does not apply and the person or legal entity is eligible to receive CFAP 2 payments up to the applicable payment limitation.

Persons and legal entities also must also comply with the provisions of the “Highly Erodible Land and Wetland Conservation” regulations, often called the conservation compliance provisions; and not have a controlled substance violation.

Operations can qualify for up to three payment limitations if they provide at least 400 hours of active personal labor, active personal management, or combination thereof with respect to the production of 2020 commodities.

  • Two payment maximum limit = $500,000 or 9,091 head.
  • Three payment maximum limit = $750,000 or 13,636 head.

It should be noted the combined payment for the entity could be limited based on the percentage distribution of ownership shares of the entity.

Application:

To complete the CFAP 2 application, producers will need to reference their sales, inventory, and other records. CFAP 2 is a self-certification program, this documentation will not need to be submitted with the application. Because applications are subject to County Committee review and spot check, some producers will be required to provide documentation. Producers should retain the records and documentation they use to complete the application. More information can be found at:  farmers.gov/cfap/apply.

Applications can be completed online, manually, or through your local FSA office.   You can find contact information for your local USDA Service Center at farmers.gov/coronavirus/service-center-status.

Additional information about the application process, including a Excel calculator, is available here https://www.farmers.gov/cfap.

Sources:

Coronavirus Food Assistance Program 2, Cost Benefit Analysis

https://www.farmers.gov/sites/default/files/documents/CFAP2-CBA-09252020.pdf

Coronavirus Food Assistance Program 2.0

https://u.osu.edu/ohioagmanager/2020/10/21/coronavirus-food-assistance-program-2-0/

 

 

 

Coronavirus Food Assistance Program 2.0

by: Chris Zoller, Extension Educator, ANR, Tuscarawas County

Farmers are encouraged to contact their local Farm Service Agency (FSA) office to apply for the Coronavirus Food Assistance Program 2.0 (CFAP 2.0).  The application deadline is December 11, 2020. President Trump and USDA Secretary of Agriculture Sonny Perdue announced an expansion of the original CFAP intended to provide support to farmers who suffered losses because of the COVID-19 pandemic.  The following information is sourced from USDA and available at https://www.farmers.gov/cfap.

Eligibility

Any individual or legal entity who shares in the risk of producing a commodity may apply for CFAP 2. Producers must be in the business of farming and producing commercially produced commodities at the time of submitting their application to be eligible.  Commodities grown under a contract in which the grower has ownership and production risk are eligible for CFAP 2.

To be eligible for payments, a person or legal entity must have an average adjusted gross income of less than $900,000 for tax years 2016, 2017, and 2018. However, if 75 percent of their adjusted gross income (AGI) comes from farming, the AGI limit of $900,000 does not apply and the person or legal entity is eligible to receive CFAP 2 payments up to the applicable payment limitation.

Persons and legal entities also must:

  • comply with the provisions of the “Highly Erodible Land and Wetland Conservation” regulations, often called the conservation compliance provisions; and
  • not have a controlled substance violation.

Eligible Commodities

Commodities eligible for CFAP 2.0 include: row crops, wool, livestock, specialty livestock, dairy, specialty crops, floriculture and nursery, aquaculture, broilers and eggs, and tobacco.

Ineligible Commodities

Commodities not eligible for CFAP 2 include:

  • Hay, except alfalfa, and crops intended for grazing are ineligible for CFAP 2.
  • All equine, breeding stock, companion or comfort animals, pets, and animals raised for hunting or game purposes.
  • Birdsfoot and trefoil, clover, cover crop, fallow, forage soybeans, forage sorghum, gardens (commercial and home), grass, kochia (prostrata), lespedeza, milkweed, mixed forage, pelts (excluding mink), perennial peanuts, pollinators, sunn hemp, vetch, and seed of ineligible crops.

How to Apply

To complete the CFAP 2 application, producers will need to reference their sales, inventory, and other records. However, since CFAP 2 is a self-certification program, this documentation will not need to be submitted with the application. Because applications are subject to County Committee review and spot check, some producers will be required to provide documentation. Producers should retain the records and documentation they use to complete the application.

Applications can be completed online, manually, or through your local FSA office.  Additional information about the application, including a calculator, is available here https://www.farmers.gov/cfap.

Ohio Corn, Soybean and Wheat Enterprise Budgets – Projected Returns for 2021

by: Barry Ward, Leader, Production Business Management, College of Food, Agricultural and Environmental Sciences, Ohio State University Extension

Production costs for Ohio field crops are forecast to be slightly lower than last year with lower expenses for fertilizer, fuel and interest. Variable costs for corn in Ohio for 2021 are projected to range from $359 to $433 per acre depending on land productivity. Variable costs for 2021 Ohio soybeans are projected to range from $199 to $220 per acre. Wheat variable expenses for 2021 are projected to range from $162 to $191 per acre.

Grain prices currently used as assumptions in the 2021 crop enterprise budgets are $3.70/bushel for corn, $9.40/bushel for soybeans and $5.70/bushel for wheat. Projected returns above variable costs (contribution margin) range from $172 to $357 per acre for corn and $222 to $404 per acre for soybeans. Projected returns above variable costs for wheat range from $179 to $314 per acre.

Return to Land is a measure calculated to sometime assist in land rental and purchase decision making. The measure is calculated by starting with total receipts or revenue from the crop and subtracting all expenses except the land expense. Returns to Land for Ohio corn (Total receipts minus total costs except land cost) are projected to range from $11 to $184 per acre in 2021 depending on land production capabilities. Returns to land for Ohio soybeans are expected to range from $109 to $282 per acre depending on land production capabilities. Returns to land for wheat (not including straw or double-crop returns) are projected to range from $95 per acre to $222 per acre.

Total costs projected for trend line corn production in Ohio are estimated to be $761 per acre. This includes all variable costs as well as fixed costs (or overhead if you prefer) including machinery, labor, management and land costs. Fixed machinery costs of $75 per acre include depreciation, interest, insurance and housing. A land charge of $195 per acre is based on data from the Western Ohio Cropland Values and Cash Rents Survey Summary. Labor and management costs combined are calculated at $71 per acre. Details of budget assumptions and numbers can be found in footnotes included in each budget.

Total costs projected for trend line soybean production in Ohio are estimated to be $522 per acre. (Fixed machinery costs: $59 per acre, land charge: $195 per acre, labor and management costs combined: $45 per acre.)

Total costs projected for trend line wheat production in Ohio are estimated to be $459 per acre. (Fixed machinery costs: $34 per acre, land charge: $195 per acre, labor and management costs combined: $43 per acre.)

Budget projections for commodity crops for 2021 have been completed and posted to the Farm Office website: https://farmoffice.osu.edu/farm-mgt-tools/farm-budgets

 

 

 

 

 

Farm Office Live Scheduled for October 7, 2020

Join the OSU Extension Farm Office team for discussions on the latest agricultural law and farm management news.  The next session will be held on October 7, 2020 8:00 – 9:30 a.m.

Farm Office Live will be back for a review of the latest on round two of the Coronavirus Food Assistance Program (CFAP), 2020 crop enterprise budgets, new custom rates and Western Ohio Cropland Values and Cash Rents survey summary, Ohio’s COVID-19 immunity legislation, and other current issues in farm management.

Join our experts for quick presentations and Q & A.   Go to https://farmoffice.osu.edu/farmofficelive  to register or view past webinars and PowerPoint slides.

 

Governor Signs Ohio Coronavirus Immunity Bill

By: Peggy Kirk Hall, Wednesday, September 16th, 2020

It took five months of negotiation, but the Ohio General Assembly has enacted a controversial bill that grants immunity from civil liability for coronavirus injuries, deaths, or losses. Governor DeWine signed House Bill 606 on September 14, stating that it strikes a balance between reopening the economy and keeping Ohioans safe.  The bill will be effective in 90 days.

The bill’s statement of findings and declaration of intent illustrate why it faced disagreement within the General Assembly.  After stating its findings that business owners are unsure of the tort liability they may face when reopening after COVID-19, that businesses need certainty because recommendations on how to avoid COVID-19 change frequently, that individuals who decide to go out in public places should bear responsibility for taking steps to avoid exposure to COVID-19, that nothing in existing Ohio law established duties on business and premise owners to prevent exposure to airborne germs and viruses, and that the legislature has not delegated authority to Ohio’s Executive Branch to create new legal duties for business and premises owners, the General Assembly made a clear declaration of intent in the bill:  “Orders and recommendations from the Executive Branch, from counties and local municipalities, from boards of health and other agencies, and from any federal government agency do not create any new legal duties for purposes of tort liability” and “are presumed to be irrelevant to the issue of the existence of a duty or breach of a duty….and inadmissible at trial to establish proof of a duty or breach of a duty in tort actions.”

The bill’s sponsor, Rep. Diane Grendell (R-Chesterland), refers to it as the “Good Samaritan Expansion Bill.”  That name relates to one of the two types of immunity in the bill, a temporary qualified immunity for coronavirus-based claims against health care providers.  In its original version of H.B. 606, the House of Representatives included only the health care immunity provisions.  Of interest to farms and other businesses are the bill’s general immunity provisions, however, added to the final legislation by the Senate.

General immunity from coronavirus claims

The new law will prohibit a person from bringing a civil action that seeks damages for injury, death or loss to a person or property allegedly caused by exposure to or transmission of coronavirus, with one exception.  The civil immunity does not apply if the exposure to or transmission of coronavirus resulted from a defendant’s “reckless conduct,” “intentional misconduct,” or “willful or wanton misconduct.”  “Reckless conduct” means disregarding a substantial and unjustifiable risk that conduct or circumstances are likely to cause exposure to or transmission of coronavirus and having “heedless indifference” to the consequences.

Government guidelines don’t create legal duties

Consistent with the bill’s stated intent, the new law clarifies that a claimant cannot assert liability based on a failure to follow government guidelines for coronavirus.  The law states that any government order, recommendation or guideline for coronavirus does not create a duty of care that can be enforced through a civil cause of action.  A person may not admit such orders and guidelines as evidence of a legal right, duty of care or new legal cause of action.

No class actions

Another provision in the new law also prohibits a class action that alleges liability for coronavirus exposure or transmission if the law’s general immunity provisions do not apply.

Time period covered

The general immunity provisions apply only to a specified period of time:  from March 9, 2020, when the Governor declared a state of emergency due to COVID-19, until September 30, 2021.

Workers compensation not addressed

An earlier version of the bill passed by the House of Representatives would have classified coronavirus as an “occupational disease” and would have allowed food workers, first responders and corrections officers to receive workers’ compensation benefits for the disease.  However, the Senate removed the workers’ compensation provisions from the final bill based on its belief that the Bureau of Workers’ Compensation is already covering 85% of such claims.

What does H.B. 606 mean for agricultural businesses?

The new law provides certainty that agricultural businesses won’t be assailed by lawsuits seeking damages for COVID-19.  A person claiming harm from exposure to COVID-19 at an agricultural business will only be successful upon a showing that the business acted recklessly and with intentional disregard or indifference to the possibility of COVID-19.  That’s a high evidentiary standard and burden of proof for a claimant.

As is often the case when an immunity bill is enacted, however, there are several reasons why businesses should not let down their guards because of the new law.   Note that while the law rejects government guidelines and orders about COVID-19 as a basis for placing legal duties upon businesses, following such guidelines and recommendations can counter an allegation of reckless or indifferent behavior about COVID-19 exposure or transmission.  And there can be consequences from COVID-19 other than litigation, such as impacts on customer and employee health and safety, workers’ compensation claims, and negative publicity from an alleged COVID-19 outbreak.  Continuing to take reasonable actions to manage COVID-19 and documenting actions taken can enhance the certainty offered by Ohio’s new COVID-19 immunity law.

Read H.B. 606 here.