4R NUTRIENT STEWARDSHIP IN THE WESTERN LAKE ERIE BASIN

A Descriptive Report of Beliefs, Attitudes and Best Management Practices in the Maumee Watershed of the Western Lake Erie Basin

Prokup, A., Wilson, R., Zubko, C., Heeren, A, and Roe, B. 2017

Harmful algal blooms and eutrophication are threatening Lake Erie, a vital ecological and economic resource in the Great Lakes region. Phosphorus lost through agricultural run-off from the Maumee River Watershed appears to be the greatest contributor to the current problem. To better understand farmers’ perspectives in this region, particularly current nutrient management practices and barriers to implementation of recommended practices, researchers from The Ohio State University’s College of Agriculture, Food and Environmental Sciences conducted a survey of farmers in the Western Lake Erie Basin during the winter of 2016.

The majority of farmers (~80%) had great concern for the ecological health of Lake Erie and how they can minimize their farm’s impact on the lake. Similarly, a majority of farmers show a willingness to adopt recommended practices, but there is a small percentage that is currently unwilling to adopt many recommended practices. Although this could reduce the likelihood of positive change in Lake Erie, there is no evidence that these operations are proportionally more responsible for the nutrient loss issues, or that changes in their behavior are key to improving water quality. In fact, around 60 to 90% are willing to consider adopting new practices, and in many cases this potential level of adoption may be enough to achieve the recommended phosphorus reductions for Lake Erie.

Although the current farming population is largely motivated to adopt new practices, there are several significant barriers associated with recently recommended practices. In regards to cover crops, approximately 25 to 40% of respondents were concerned about fall planting windows, interference with spring planting, and/or the short-term costs. Over half of respondents viewed the cost of specialized equipment for subsurface fertilizer placement as too great and that injecting nutrients ran counter to a no-till approach. One-third of respondents also viewed alternatives to broadcasting as taking too much time.

Those willing to adopt recommended practices tend to be more informed about nutrient stewardship from a variety of both private and public sector sources and more concerned about future regulation. Perhaps due to less exposure to nutrient stewardship information, farmers less willing to adopt tended to have lower awareness of 4R principles, concern for environmental issues and nutrient loss, and awareness of state regulatory requirements. For those practices that involve significant financial investments and new technologies there does seem to be a positive effect of farm size and/or income. Applicator training and working with a consultant is often positively associated with adoption. Generally speaking, a belief in the effectiveness of a recommended practice is one of the strongest correlates of adoption. As a result, the best target audience moving forward are individuals who indicate a willingness to change their practices, and tend to be less constrained by potential barriers while sharing some of the same motivations as those who have already adopted these practices. Engaging these individuals in outreach focused on how to implement practices effectively is likely to result in the necessary increases in adoption over time. However, it will be critical that this outreach comes from those sources that are trusted (e.g., crop consultants, Extension personnel), involves some degree of peer to peer learning, and that the opportunities to learn be as personalized and hands-on as possible.

Ohio Legislature is Set to Reconsider CAUV Bill

Written by:  Chris Hogan, Law Fellow, OSU Agricultural & Resource Law Program

The Ohio Legislature is once again considering a bill regarding Ohio’s current agricultural use valuation (CAUV) program. CAUV permits land to be valued at its agricultural value rather than the land’s market or “highest and best use” value. Senator Cliff Hite (R-Findlay) introduced SB 36 on February 7, 2017. The bill would alter the capitalization rate used to calculate agricultural land value and the valuation of land used for conservation practices or programs. The bill has yet to be assigned to a committee.

The content of SB 36 closely mirrors the language of a bill meant to address CAUV from the last legislative session: SB 246. Introduced during the 131st General Assembly, SB 246 failed to pass into law. SB 246 proposed alterations to the CAUV formula which are identical to those proposed by the current bill: SB 36. According to the Ohio Legislative Service Commission’s report on SB 246, the bill would have proposed changes that would have led to a “downward effect on the taxable value of CAUV farmland.” The likely effect for Ohio farmers enrolled in CAUV would have been a lower tax bill.

Due to the similarity between the two bills, the potential impacts of SB 36 on the CAUV program will likely be comparable to those of the previous bill. The proposed adjustment of the capitalization rate is likely to reduce the tax bill for farmers enrolled in CAUV. More specifically, the bill proposes several changes to the CAUV formula:

  • States additional factors to include in the rules that prescribe CAUV calculation methods. Currently, the rules must consider the productivity of the soil under normal management practices, the average price patterns of the crops and products produced to determine the income potential to be capitalized and the market value of the land for agricultural use. The proposed legislation adds two new factors: typical cropping and land use patterns and typical production costs.
  • Clarifies that when determining the capitalization rate used in the CAUV formula, the tax commissioner cannot use a method that includes the buildup of equity or appreciation.
  • Requires the tax commissioner to add a tax additur to the overall capitalization rate, and that the sum of the capitalization rate and tax additur “shall represent as nearly as possible the rate of return a prudent investor would expect from an average or typical farm in this state considering only agricultural factors.”
  • Requires the commissioner to annually determine the overall capitalization rate, tax additur, agricultural land capitalization rate and the individual components used in computing those amounts and to publish the amounts with the annual publication of the per-acre agricultural use values for each soil type.

To remove disincentives for landowners who engage in conservation practices yet pay CAUV taxes at the same rate as if the land was in production, the proposed legislation:

  • Requires that the land in conservation practices or devoted to a land retirement or conservation program as of the first day of a tax year be valued at the lowest valued of all soil types listed in the tax commissioner’s annual publication of per-acre agricultural use values for each soil type in the state.
  • Provides for recalculation of the CAUV rate if the land ceases to be used for conservation within three years of its original certification for the reduced rate, and requires the auditor to levy a charge for the difference on the landowner who ceased the conservation practice or participation in the conservation program.

To read SB 36, visit this page. For more information on previous CAUV bills, see our previous blog post.

 

Ag Committees are in Place for Ohio’s New Legislative Session

by Peggy Kirk Hall

Senate President Larry Obhof and Speaker of the House Cliff Rosenberger have made committee assignments for the new session of Ohio’s 132nd General Assembly.  While there are no major changes to committee structure or leadership, the committees contain many new members, including several legislators serving their first terms as legislators.

Sen. Cliff Hite (R-Findlay) will again chair the Senate’s Agriculture Committee, with newly elected Sen. Frank Hoagland (R-Mingo Junction) serving as vice chair and first Senate termer Sen. Sean O’Brien (D-Bazetta) appointed as the ranking minority member.  O’Brien previously served three terms in the House of Representatives, which included a term on its Agriculture and Rural Development Committee.

  • Returning from last session’s Agriculture Committee are Senators Bill Beagle (R-Tipp City), Bob Peterson (R-Washington Court House) and Michael Skindell (D-Lakewood).
  • New to the committee are Senators Bob Hackett (R-London), previous House member Stephanie Kunze (R-Hilliard), Frank Larose (R-Hudson), Charleta Tavares (D-Columbus) and Joe Uecker (R-Miami Township).

Rep. Brian Hill (R-Zanesville) will again lead the House Agriculture and Rural Development Committee with Rep. Kyle Koehler (R-Springfield) serving as vice  chair for the first time and Rep. John Patterson (D-Jefferson) returning as the ranking minority member.

  • Representatives Jack Cera (D-Bellaire), Christina Hagan (R-Marlboro Township), Michael O’Brien (D-Warren), Bill Patmon (D-Cleveland), Jeff Rezabek (R-Clayton), Michael Sheehy (D-Toledo) and Andy Thompson (R-Marietta) will return to the committee.
  • New to both the House of Representatives and the committee are Representatives Rick Carfagna (R-Genoa Township), Jay Edwards (R-Nelsonville), Darrell Kick (R-Loudonville), Scott Lipps (R-Franklin) and Dick Stein (R-Norwalk).
  • New to the committee are Representatives Candice Keller (R-Middletown), David Leland (R-Columbus) and Derek Merrin (R-Monclova Township), along with Former Senate President Keith Faber (R-Celina).

Neither committee has a meeting scheduled at this time.  Follow the committees’ work in the new legislative session at https://www.legislature.ohio.gov/.

 

 

 

USDA Makes it Easier to Transfer Land to the Next Generation of Farmers and Ranchers

DES MOINES, Iowa, Dec. 29, 2016 – Agriculture Deputy Under Secretary Lanon Baccam today announced that beginning Jan. 9, 2017, the U.S. Department of Agriculture (USDA) will offer an early termination opportunity for certain Conservation Reserve Program (CRP) contracts, making it easier to transfer property to the next generation of farmers and ranchers, including family members. The land that is eligible for the early termination is among the least environmentally sensitive land enrolled in CRP.

This change to the CRP program is just one of many that USDA has implemented based on recommendations from the Land Tenure Advisory Subcommittee formed by Agriculture Secretary Tom Vilsack in 2015. The subcommittee was asked to identify ways the department could use or modify its programs, regulations, and practices to address the challenges of beginning farmers and ranchers in their access to land, capital and technical assistance.

“The average age of principal farm operators is 58,” said Baccam.  “So, land tenure, succession and estate planning, and access to land is an increasingly important issue for the future of agriculture and a priority for USDA. Access to land remains the biggest barrier for beginning farmers and ranchers.  This announcement is part of our efforts to address some of the challenges with transitioning land to beginning farmers.”

Baccam made the announcement while touring the Joe Dunn farm in Warren County, located in central Iowa near Carlisle. Dunn is the father-in-law to Iowa native and former Marine Aaron White, who with his wife, are prospective candidates for the early termination program.  Baccam was joined by Farm Service Agency Iowa State Executive Director John Whitaker when meeting with Dunn and White.

“The chance to give young farmers a better opportunity to succeed when starting a farming career makes perfect sense,” said Baccam. “There are Conservation Reserve Program acres that are rested and ready to be productive, an original goal of CRP. The technical teams at USDA will tell us which ones can terminate from the program with little impact on the overall conservation efforts. When they do, we’ll be ready to help beginning farmers like military veteran Aaron White.”

Normally if a landowner terminates a CRP contract early, they are required to repay all previous payments plus interest.  The new policy waives this repayment if the land is transferred to a beginning farmer or rancher through a sale or lease with an option to buy.  With CRP enrollment close to the Congressionally-mandated cap of 24 million acres, the early termination will also allow USDA to enroll other land with higher conservation value elsewhere.

“Starting the next generation of farmers and ranchers out with conservation and stewardship in mind is another important part of this announcement,” Baccam said.  “The land coming out of CRP will have priority enrollment opportunities with USDA’s working lands conservation programs through cooperation between the Farm Service Agency and the Natural Resources Conservation Service.”

Acres terminated early from CRP under these land tenure provisions will be eligible for priority enrollment consideration into the CRP Grasslands, if eligible; or the Conservation Stewardship Program or Environmental Quality Incentives Program, as determined by the Natural Resources Conservation Service.

According to the Tenure, Ownership and Transition of Agricultural Land survey, conducted by USDA in 2014, U.S. farmland owners expect to transfer 93 million acres to new ownership during 2015-2019. This represents 10 percent of all farmland across the nation. Details on the early termination opportunity will be available starting on Jan. 9, 2017, at local USDA service centers. For more information about CRP and to find out if your acreage is eligible for early contract termination, contact your local Farm Service Agency (FSA) office or go online at www.fsa.usda.gov/crp. To locate your local FSA office, visit http://offices.usda.gov/.

Since 2009, USDA has invested more than $29 billion to help producers make conservation improvements, working with as many as 500,000 farmers, ranchers and landowners to protect over 400 million acres nationwide, boosting soil and air quality, cleaning and conserving water and enhancing wildlife habitat. For an interactive look at USDA’s work in conservation and forestry over the course of this Administration, visit http://medium.com/usda-results.

Western Ohio 2017 Agriculture Outlook Meeting

by Sam Custer, Extension Educator

What does 2017 look like for Western Ohio farmers and agricultural businesses?

Learn what to expect this year during an agricultural outlook meeting February 3 at noon presented by agriculture economists and swine specialist with the College of Food, Agricultural, and Environmental Sciences at The Ohio State University.

The presentation is part of the 2017 Agricultural Policy and Outlook series offered by The Ohio State University Extension, the outreach arm of the college. The meeting is being hosted by the Agriculture and Natural Resources Educators from Auglaize, Darke, Miami, Mecer and Shelby Counties.

The meeting is partially sponsored by Farm Credit Mid America Merchants Bank of Indiana, Minster Bank, Second National Bank, The Andersons and Ohio’s Country Journal and Ohio Ag Net.

The meeting will feature presentations on matters the agricultural community should expect in 2017, including policy changes, key issues and market behavior with respect to farm, food and energy resources, and the environment, said Sam Custer, OSU Extension, Darke County Educator.

“Participants can listen and learn from Ohio State faculty as they discuss the opportunities and challenges for the agricultural sector as well as interpret the impact of recent policy decisions,” Custer said.

Speakers for the outlook meeting are:

Dale Richer, State Swine Specialist, OSU Extension

Carl Zulauf, Professor Emeritus, Ohio State University

Barry Ward, Asst. Professor, OSU Extension, Production Business Management

David Marrison, Assoc. Professor, OSU Extension

What we’ll cover:

  • Ohio Swine Production Update
  • Speculation on President Trump’s Policy Agenda
  • Examining Land Values, Cash Rents, Input Costs & Potential Crop Profitability in 2017
  • What Are Grain Markets Telling Us?
  • Farm & Estate Tax Laws – Planning for an Uncertain Future

“These presentations will provide excellent information and insights that will benefit farmers and agricultural leaders as they make plans for 2017 and beyond,” Custer said.

The meeting will be held at the Romer’s Party Room, 118 East Main Street, Greenville, Ohio.

Registration for the meeting is $20 (includes lunch) by January 27.  A registration flyer can be downloaded at http://go.osu.edu/2017darkeagoutlook.

For more information about the meeting, contact Custer at custer.2@osu.edu or 937.548.5215.

 

For more detailed information, visit the Darke County OSU Extension web site at www.darke.osu.edu, the OSU Extension Darke County Facebook page.

Ag Outlook and Policy Meeting to be held on February 2 in Wooster, Ohio

So what’s ahead for farmers and Ag businesses in 2017?  OSU Extension invites producers to attend the Ag Outlook and Policy meeting on Thursday, February 2, 2017 from 9:30 a.m. to 3:15 p.m. at the Fisher Auditorium OARDC located at 1680 Madison Avenue in Wooster, Ohio. A wide variety of experts will be on hand to share their agricultural outlook for 2017.

The following presentations will be made during the program:

Speculation on President Trump’s Policy Agenda and What Are Grain Markets Telling Us?- By: Carl Zulauf, Ag Policy Specialist and Professor Emeritus from The Ohio State University will provide “

Dairy Economic Update- By: Dianne Shoemaker: OSU Extension Dairy Production Economics Field Specialist

Beef Cattle Outlook- By: John Grimes: Extension Beef Program Specialist

Ten Legal Trends That Could Change Agriculture- Peggy Hall: OSU Extension Ag Law and Resources Program

Crop Budget and Cropland Rental Update- Rory Lewandowski: Extension Educator Wayne County

Farm & Estate Tax Laws – Planning for an Uncertain Future- David Marrison: Extension Educator Ashtabula County

This program is being sponsored by OSU Extension, Farmers National Bank, and Farm Credit.  The registration cost is $15 per person with the deadline of January 26, 2017. Make checks payable to OSU Extension. Please send checks and registration to: OSU Extension- Wayne County, 428 W. Liberty Street – Suite 12, Wooster, Ohio 44691.  More information can be obtained by calling the Wayne County Extension office at 330-264-8722 or email Rory Lewandowski at Lewandowski.11@osu.edu

ARC County Looking Forward: Making County of Payment Choice for 2016-2018

By: Chris Bruynis, OSU Extension Educator, Ross County

Farmers with the administration of their farms consolidated at one FSA office may want to examine their ARC-CO projected payments for 2016 – 2018. If no decision to change is made, ARC-CO payments will be calculated on the average yields for the administrative FSA office county, regardless of where the land is physically located. Earlier in the year, FSA announced that farmers could elect to have the 2014 and/or the 2015 ARC-CO payments calculated on the county in which the land is physically located.  For some farms this was financially beneficial. However, do not expect 2016 to be like previous years since the high yields that reduced payments in a few locations (Defiance County 2014, and Ross County 2015) are now included in the formula to determine the payment. To read the full article go to Farm Program Payments Revisited July 2016

Farm Program Payments Revisited: Farmers May Choose Between County of Administration or Geographic County Location

By: Chris Bruynis, OSU Extension Educator, Ross County

Farmers with the administration of their farms consolidated at one FSA office may want to examine their 2014 and 2015 ARC-CO payment calculations. Original 2014 ARC-CO payments were calculated on the average yields for the administrative FSA office county, regardless of where the land was physically located. Recently FSA announced that farmers could elect to have the 2014 and/or the 2015 ARC-CO payments calculated on the county in which the land is physically located.  For some farms this would be financially beneficial and needs to be requested by April 15, 2016. FSA has calculated the results for the 2014 payments and for the farms where this election is beneficial, farmers simply need to sign the forms at their local FSA office. This will only affect farmers with land in more than one county. Click on Farm Program Payments Revisited to download the full article and maps.

Section 179 Expensing Increased and Bonus Depreciation Allowed Under "Protecting Americans from Tax Hikes" Act

By Larry R. Gearhardt, Assistant Professor and Field Specialist in Taxation, OSU Extension

On December 18, 2015, Congress passed and the President signed into law an agreement on tax extenders and numerous other tax provisions in the “Protecting Americans from Tax Hikes (PATH) of 2015” (the Act). Tax extenders are the 50+ tax provisions that are routinely extended by Congress on a one- or two-year basis. The Act makes permanent many of the individual and business extenders. Some of the more pertinent provisions are as follows:

Section 179 Expense Deduction

Under Sec. 179 of the Internal Revenue Code, a taxpayer may elect to deduct as an expense, rather than to depreciate over time, up to a specified amount, the cost of new or used tangible personal property placed in service during the tax year in the taxpayer’s trade or business. In this case, “taxpayer” does not include an estate, trust, or certain non-corporate lessors. The maximum annual expensing amount generally is reduced dollar-for-dollar by the amount of Code Sec. 179 property placed in service during the tax year in excess of a specified investment ceiling.

The old law provided that, for 2015, the maximum expensing limit was $25,000 and the investment ceiling was $200,000. Pursuant to the new law, the expensing limit was increased to $500,000 and the investment ceiling was increased to $2,000,000 before the phase-out begins. These amounts were made retroactive to the beginning of 2015 and they were made permanent for future use. In addition, for any tax year beginning after December 31, 2015, both the $500,000 and the $2,000,000 are indexed for inflation.

The amount eligible to be expensed in a tax year cannot exceed the taxable income derived from the taxpayer’s active conduct of a trade or business. The amount deducted under Code Sec. 179 can offset the taxpayer’s income, but it cannot be used to create a loss. However, any amount that is not allowed as a deduction because of the taxable income limitation may be carried forward to succeeding tax years.

“Eligible property” for Code Sec. 179 purposes is any tangible property that is Code Sec. 1245 property (generally machinery and equipment) depreciated under the MACRS rules of Code Sec. 168, regardless of its depreciation recovery period. In short, if you can depreciate it, the property would qualify for Sec. 179 treatment. “Eligible property” includes machinery and equipment; property contained in or attached to a building (other than structural components), such as milk tanks, automatic feeders, barn cleaners, and office equipment; livestock, including horses, cattle, hogs, sheep, goats, mink and other fur bearing animals; grain bins; single purpose livestock and horticultural structures; and agricultural fences and drainage tile. Both new and used property qualifies.

The Code Sec. 179 deduction applies to the tax year when the eligible property is “placed in service.” This may be different than the date of purchase. Property is “placed in service” when it is ready and available for a specific use, even if the item is not being currently used. Warning: writing a check on the last day of the year to purchase new machinery or equipment does not automatically qualify that item to be deducted in that tax year. In addition to writing the check, the machinery or equipment must be ready and available to use in that tax year. This may be extremely important when taking on a long-term project, such as constructing a building.

A Code Sec. 179 deduction is taken on tax form 4562. The taxpayer may elect to deduct the entire cost of the property (within limitations), none of the cost, or a portion of the cost of the item. Even though Code Sec. 179 provides for a “deduction,” taking the deduction reduces the basis in the property the same as if it was depreciated. A “recapture” of the deduction may be triggered if the item is later sold for more than its basis.

Bonus First-Year Depreciation Extended Through 2019

There was no Accelerated First-Year Depreciation (AFYD) for 2015 under the old law. Under the new law, Congress provided some future stability by providing for AFYD through 2019, albeit on a decreasing scale. Eligible taxpayers will be able to claim:

  • A 50% bonus depreciation allowance for qualified property placed in service in 2015, 2016, and 2017;
  • A 40% bonus depreciation allowance for qualified property placed in service in 2018; and
  • A 30% bonus depreciation allowance for property placed in service in 2019.

In general, property qualifies for the bonus depreciation allowance if it is property to which the modified accelerated cost recovery system (MACRS) rules apply with a recovery period of 20 years or less. This includes virtually all of the items used in agriculture. Unlike the Code Sec. 179 expense deduction, which applies to both new and used property, the bonus depreciation allowance applies to only new property. Its original use must commence with the taxpayer.

The bonus depreciation allowance is also taken on tax form 4562. The basis of the property and the depreciation allowances in the year of purchase and later years are appropriately adjusted to reflect the additional first-year depreciation deduction. A taxpayer may elect out of additional first-year depreciation for any class of property (as opposed to an individual item) for any tax year.

 

New Rule for Plants With Long Production Periods

The Act contains a special new rule for plants planted or grafted after December 31, 2015 and before January 1, 2020. Bonus depreciation is allowed for certain trees, vines, and plants bearing fruit or nuts when planted or grafted rather than when the plant reaches income-producing stage. Under the old law, for depreciation purposes, fruit-bearing or nut-bearing plants were deemed “placed in service” when they reached an income-producing stage. The “placed in service” rule was relaxed in the Act so that a fruit-bearing or nut-bearing plant is deemed “placed in service” when planted or grafted. Therefore, plants with a long pre-production period can qualify for the bonus depreciation allowance under the new law.

A “specified plant” that qualifies is a plant, planted or grafted in the United States, that is: (1) any tree, vine, or plant that bears fruit or nuts; or (2) any other plant that will have more than one yield of fruits or nuts and generally has a pre-productive period of more than two years from the time of planting or grafting to the time that the plant bears fruit or nuts.

Other Extended Provisions Worth Noting

In addition to the foregoing provisions, the PATH Act extended the following provisions, among others:

  • A permanent extension of the general state and local sales tax deduction.
  • A permanent extension of the $250 educator expense deduction.
  • A permanent extension of the Credit for Increasing Research Activities (research credit)
  • A permanent extension of the 15-year recovery period for qualified leasehold improvements, qualified restaurant property and qualified retail improvements.
  • An extension of the tuition and fees deduction through 2016.
  • An extension of the nonbusiness energy credit through 2016.
  • An extension of mortgage insurance premiums paid or accrued as an itemized deduction through 2016.
  • An extension of the qualified principal residence indebtedness exclusion for debt discharge income through 2016.

2016 Dairy Margin Protection Program Decision Time-clock Winding Down

by Dianne Shoemaker, OSU Extens ion

The clock is winding down for dairy farmers to sign up for the 2016 Dairy Margin Protection Program.  Instituted as part of the 2014 Farm Bill, the Dairy Margin Protection Program replaced the Milk Income Loss Contract (MILC) program and the $9.90 minimum Class III support price programs for US dairy farmers.

The sign-up period for 2016 participation opened July 1 and is scheduled to run through September 30, 2015. With this “regularly scheduled” sign-up period, farmers now have to make their decisions a full quarter before the coverage period of January 1 through December 31, 2016. The 2014/2015 sign-up was uniquely late (September 2nd through December 19th) due to the time needed to establish rules for the program following the 2014 Farm Bill’s passage, and deadline extensions.

The advantage of that later sign-up was that we had a better feel for what 2015 might look like than we will have for 2016 when the coverage decisions have to be locked in by September 30th. The bottom line is that none of us can predict what milk prices will be three to 15 months away. The futures and options markets predict what milk prices might be based on today’s known facts and somebody’s guesses about the future.

During the 2016 sign-up period, farms that enrolled in the program for 2015 have 3 questions to answer:

  • Do I want to purchase, or “buy up” coverage above the default $4.00 per cwt. catastrophic coverage level?
  • If the answer to #1 is “yes”, then what level of coverage between $4.50 and $8.00 (in 50-cent increments) do you want to purchase?
  • What percentage of your base production between 25% and 90% (in 5% increments) do you want to cover at that coverage level?

Farms that participated in 2015 committed themselves to the program through 2018. Participating farms that do not go to their local Farm Service Agency (FSA) office and select a coverage level for 2016 will default to the “catastrophic” coverage level of $4 per cwt. on 90% of their production history (no matter what they selected for 2015). They will be charged the $100 per farm administrative fee. If you want to buy-up coverage for 2016, make an appointment with your county FSA office before September 30, 2015.

An important change from the 2014/2015 sign up is that premiums for the first 4 million pounds of covered milk will be charged at the full rate. There was a 25% reduction in these premiums for $4.50 through $7.50 coverage levels in place for the first sign-up period.

If you enrolled in the program in 2015, your 2015 production history (PH) was calculated using your farm’s highest annual production from 2011, 2012, or 2013. The highest year’s production was then increased by 0.87% to establish the 2015 PH. Your 2015 production history will automatically be increased this year by a recently-announced 2.61% to calculate your 2016 PH.

Farmers that chose not to participate in 2015, but would like to participate in 2016 should work with their FSA office to establish their PH and make their coverage selections. Their PH will still also start with the highest annual production for 2011, 2012, or 2013, but will not include the 0.87% increase received by farms that enrolled in 2015. It will include the 2.61% bump for 2016.

Want to brush up on the MPP Program before you make these decisions? A couple options:

  • Contact your Extension and FSA office for resources or to talk through the program.
  • Basic and an advanced MPP decision tools are available at http://dairymarkets.org. Use these to plug in your farm’s production history to look at projected premium costs and possible coverage if the markets for feed and milk perform as projected. (They won’t, as they are impacted by national and international factors that will change constantly over the coverage period. Use the historic options to see how the MPP would have performed if in place and compare that to your farm’s ability to handle catastrophic price issues.)
  • Also visit http://dairymarkets.org for an extensive library of fact sheets and videos covering participation in MPP.

If you are considering buying up coverage, invest an hour or two using the Decision Tool at the http://dairymarkets.org site. Using this tool, you can quickly see what your total premium costs would be for different levels of coverage on varying percentages of your production history.