Farm Bill Meetings to be held across Ohio

Click here for complete article with locations of meetings

Ohio State University Extension and the USDA Farm Service Agency in Ohio are partnering to provide a series of educational Farm Bill meetings this winter to help producers make informed decisions related to enrollment in commodity programs.

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. While the ARC and PLC programs under the new farm bill remain very similar to the previous farm bill, there are some changes that producers should be aware of.

Farm Bill meetings will review changes to the ARC/PLC programs as well as important dates and deadlines. Additionally, attendees will learn about decision tools and calculators available to help, which program best fits the needs of their farms under current market conditions and outlook.

Enrollment for 2019 is currently open with the deadline set as March 15, 2020. Enrollment for the 2020 crop year closes June 30, 2020. Producers can enroll for both 2019 and 2020 during the same visit to an FSA county office. Producers have the opportunity to elect to either ARC or PLC for the 2019 to 2023 crop years, with the option to change their program election in 2021, 2022, and 2023.

To find out about upcoming meetings, and get information about the Farm Bill, visit go.osu.edu/farmbill2019

Corn, Soybean, and Wheat Yield Trends by Ohio County, 1972-2018

by: Carl Zulauf, Robert Dinterman, and Ben Brown, Ohio State University, November 2019

Click here to access full report complete with figures

Yield growth is the primary source of increased production of crops in Ohio and most of the US.  Most land that can be cropped is being cropped.  Understanding historic yield trends is thus important to an informed understanding of Ohio agriculture.  This article examines trends in corn, soybean, and wheat yields since 1972 at the Ohio state level and across Ohio counties.  These three crops composed 87% of Ohio harvested crop acres in the 2017 Census of US Agriculture.  Trend yield is higher for corn than soybean and wheat, both in terms of bushel / acre and percent of yield.  Trend yields vary across Ohio counties, particularly for corn.  Implications are drawn for Ohio crop agriculture, with a particular point of interest being the implication for the CAUV (Current Agricultural Use Value) program that taxes farm land at its agricultural use value rather than its appraised value.

Analysis:  Yield per harvested acre is analyzed.  Source for the data is USDA, NASS (US Department of Agriculture, National Agricultural Statistics Service).  The analysis starts with the 1972 crop and ends with the 2018 crop.  It spans 47 years that include periods of prosperity, financial stress, and tight profit margins.  Not all counties have 47 years of observations for each crop.  It was decided a county should have at least half or 24 years of observations to be included in the analysis.  This decision reflects (1) consideration of the power of statistical tests, (2) that 24 years is a “natural break” in the distribution of number of county yield observations, and (3) a feeling that it seems reasonable to require yields for at least half of all years in order to have confidence in a county’s estimated trend yield.  Counties with 24 years of harvested yields total 86, 78, and 69 for corn, soybeans, and wheat, respectively.  The county yield trends were tested for statistical difference from the yield trend for Ohio.  For additional discussion of the analytical procedures, see the Data Note.

Corn Yield Trend:  Ohio linear corn yield trend is +1.76 bushel / year over 1972- 2018 (see Figure 1).  In comparison, average of the 86 county yield trends estimated for corn is +1.62 bushel / year.  Since the state yield is the average of county yield weighted by the amount of production in the county, the higher state trend yield suggests counties with more corn production had a higher yield trend.

County corn yield trend ranged from +0.66 (Carroll County) to +2.14 (Clinton County) (see Figures 1 and 2).  When examining the range of values, it is useful to assess if the extreme values are outliers.  Examination of the county corn yield trends suggests that both Carroll and the county with the next lowest trend (Belmont – +0.71) are outliers as the next lowest yield trend is +1.09 for Monroe County.

Individual county yield trends were tested for statistically significant deviation from Ohio’s yield trend (see Date Note).  Thirty-five (41%) of county corn yield trends deviated from the state yield trend with the commonly-used 95% level of statistical confidence (see Figure 2).  Corn yield trend was above (below) the state corn yield trend in 9 (26) counties.  It was thus almost three times more likely for statistically significant county yield trends to be below than above the Ohio trend yield. Counties with a statistically significant lower trend have a tendency to be in eastern Ohio (see Figure 2).  Statistically significant higher corn yield trends have a tendency to be in southwestern and central Ohio.

Soybean Yield Trend:  Ohio linear soybean trend yield is +0.48 bushel per year over 1972-2018, the same as the average of the 78 county trend yields estimated for soybeans (see Figure 3).  Unlike corn, this comparison does not suggest county soybean yield trend varied with amount of county production.

County soybean yield trend ranged from +0.23 (Lawrence County) to +0.59 (Fairfield County) (see Figures 3 and 4).  Lawrence County may be an outlier as the next lowest soybean yield trend was Summit County at +0.30 bushel per year.

Statistically significant deviation from the state yield trend was far less common for soybeans than corn.  Only 10 (13%) of county soybean yield trends deviated from the state yield trend with 95% statistical confidence (see Figure 4).  Five were below and 5 were above the state trend.  The small number of counties with statistically significant deviations from the state yield trend calls for caution in making regional categorization of these deviations.  Given this caveat, the 5 counties with trend yield above the Ohio trend yield are in central Ohio.

Wheat Yield Trend:  Ohio’s linear wheat yield trend is +0.76 bushel per year over 1972-2018, nearly identical to the average of the 69 county yield trends estimated for wheat (see Figure 5).  Similar to soybeans and unlike corn, this comparison does not suggest wheat county yield trend varied with amount of county production.

County wheat yield trend ranged from +0.38 (Carroll County) to +0.98 Pickaway County) (see Figures 5 and 6).  There did not appear to be any obvious outlier county wheat yields.

Twenty (29%) of the county wheat yield trends deviated from Ohio’s wheat yield trend with 95% statistical confidence (see Figure 6).  As with corn, it was more common for a county yield trend that differed from the Ohio yield trend with statistical significance to be above than below Ohio’s trend (13 vs. 7).  No clear regional category of deviations from the state wheat trend yield is apparent.  Counties with significant deviations from the state trend are dispersed across Ohio (see Figure 6).

Comparing Yield Trend across Crops:  Comparing yield trend across corn, soybeans, and wheat is complicated by their different yield levels.  Given the use of regression analysis, one useful measure of yield level is the estimated intercept value for 1972.  These intercepts for Ohio corn, soybeans, and wheat are 87, 29, and 40 bushels/acre, respectively.  Taking the ratio of Ohio trend yield to the Ohio intercept finds that yield grew fastest for corn (2.0%) and slowest for soybeans (1.7%) (see Figure 7).  The difference may seem small, but it is an annual difference that has extended over 47 years.

Another useful comparison is to examine the relative variation in county yield trends by crop.  One such measure is the ratio of the standard deviation of county yield trends to the average county yield trend.  Using the values in Figures 1, 3, and 5, the so-called coefficient of variation ratio is 18% for corn, 12% for soybeans, and 16% for wheat.  Eliminating the two outlier county yield trends for corn reduces its coefficient of variation to 15%.  The coefficient of variation thus suggests that soybean yield trends varied less across Ohio counties than did corn and wheat yield trends.

Summary Observations:

►   Linear yield trend is higher for Ohio corn than soybeans, with wheat in between.

►   Among the three crops, soybean yield trends differ the least across Ohio’s counties.

►   County yield trends are more likely to deviate from Ohio’s yield trend with statistical significance for corn than for soybeans.

►   Only readily-apparent regional patterns in yield growth are a higher probability of slower yield growth for corn in eastern Ohio and faster yield growth for corn in central and southwestern Ohio.

►   Corn’s differential yield trends have likely differentially impacted profitability of crop agriculture across Ohio’s counties.

►   Statistically significant differences in county yield growth from state yield growth pose a potential policy issue for Ohio’s CAUV (Current Agricultural Use-Value) Program.  CAUV determines assessed value for a majority of agricultural land in Ohio.  It uses a net-income approach partially based on a soil type’s yield potential for corn, soybeans, and wheat.  Potential yield for a soil type partially comes from the state’s most recent comprehensive soil survey (Zobeck, Gerken, and Powell, 1983). This yield value, from the early 1980s, is then adjusted based on the state-wide trend in harvested yield for each of the three crops.  The significant differences between county and state-wide yield trends raises the potential issues of whether or not the use of state-wide yield trends to adjust a soil productivity index dating to the early 1980s continues to be appropriate policy and thus if an update of the soil productivity index may be an appropriate policy option.

Data Note:  The statistical method used for this analysis is multiple linear regression.  Unit of observation is a county-year in Ohio from 1972 to 2018.  Statewide yield is included as well.  Dependent variable is county yield (for corn, soybeans, or wheat) for a given year.  It is regressed on time, measured as a count of years starting with 1972 equal to zero.  A county specific intercept and a county specific annual trend are estimated.  The statistical test of interest is if a county specific annual yield trend is statistically different from the statewide annual yield trend for a given crop.  Since the county specific annual trend and statewide annual trend are both estimated coefficients, an F-Test is constructed with the null hypothesis that the two trend coefficients are equal to each other.  An F-test rejection of a null hypothesis is a function of both the difference between the two estimated coefficients and the estimated standard error of the coefficients.

References and Data Source:

US Department of Agriculture, National Agricultural Statistics Service.  (April 2019).  2017 Census of Agriculture:  United States  Summary and State Data. Volume 1, Geographic Area Series, Part 51.  AC-17-A-51   www.agcensus.usda.gov

Zobeck, TM, JC Gerken, and KL Powell. 1983. “Ohio Soils with Yield Data and Productivity Index.” Ohio State Univeristy Cooperative Extension Service.  Bulletin 685.

The Case for Looking at the ARC-IC (ARC-Individual) Program Option

by: Carl Zulauf and Ben Brown, Ohio State University, and Gary Schnitkey, Krista Swanson, Jonathan Coppess, and Nick Paulson, University of Illinois at Urbana-Champaign, October 2019

Click here for the complete article as PDF

ARC-IC (Agriculture Risk Coverage – Individual) has received less attention than ARC-CO (ARC – County) and PLC (Price Loss Coverage).  ARC-IC is operationally more complex, thus harder to explain and understand.  It pays on only 65% of program base acres while ARC-CO and PLC pay on 85% of base acres.  Nevertheless, ARC-IC is worth considering if an FSA farm has one or more of the appropriate production attributes.  These attributes include (1) 100% prevent plant acres on a FSA farm, (2) high year-to-year production variability, (3) much higher farm than ARC-CO and PLC yields, and/or (4) acres planted to fruits and vegetables.  The prevent plant attribute is more relevant than normal in 2019.

ARC-IC Overview

►   ARC-IC is a whole farm program option based on the average experience of all covered program commodities planted on the ARC-IC farm.

►   ARC-IC applies to all base acres of all covered commodities on an ARC-IC farm.  It is not elected on a commodity-by-commodity basis.

►   An ARC-IC farm is the sum of a producer’s share in all FSA farms he/she enrolls in ARC-IC in a state.

►   All payment entities on an FSA farm must elect to enroll in ARC-IC.

►   ARC-IC makes a payment if average actual revenue/acre of all covered commodities planted on the ARC-IC farm is less than 86% of the ARC-IC farm’s average benchmark revenue/acre.

►   Revenue/acre for a covered commodity and year is (ARC-IC farm yield times US market year price).

►   ARC-IC farm benchmark revenue/acre equals the sum of the 5-year Olympic average revenue/acre for each covered commodity weighted by current year acres planted to a covered commodity.

►   ARC-IC actual revenue/acre equals the sum of actual revenue/acre for each covered commodity that was planted weighted by current year acres planted to a covered commodity.

►   Payment is made on 65% of total base acres on an ARC-IC farm times ARC-IC payment/acre.

►   Payment/acre is capped at 10% of the ARC-IC farm benchmark revenue/acre.

►   NOTE: Payment depends on program commodities that are planted.

►   NOTE: Prevent plant acres are included in ARC-IC revenue calculations ONLY IF 100% of an ARC-IC farm’s initially reported covered commodities are approved as prevent plant.

►   NOTE: Only initially planted covered commodity and approved double crop acres are included in the revenue calculations.  Any subsequently planted crops are not included in the calculations.

When ARC-IC should be considered:  A farm production attribute must compensate for ARC-IC’s fewer payment acres (65% vs. 85% of base acres for ARC-CO and PLC).  Such attributes include:

(1)  All of an ARC-IC farm’s initially planted covered commodities are approved as prevent plant.  Current year revenue is zero since production is zero, resulting in a payment/acre equal to the payment cap of 10% of ARC-IC benchmark revenue/acre.  In contrast, if any acre is planted to any covered commodity, payment is based on revenue/acre for the planted acre(s).  Given the prevalence of prevent plant acres in 2019, examples are provided below.  To underscore the key point, payment in this situation requires the ARC-IC farm has prevent plant for all covered program commodities on all base acres.

(2)  Production is highly variable from year to year on the ARC-IC farm.  High variability increases the likelihood of ARC-IC payment.  High variability is most likely when1 crop is grown and 1 FSA farm makes up the ARC-IC farm.  ARC-IC averages across crops and FSA farms.  Variability declines as more than 1 crop is grown and/or more than 1 FSA farm makes up the ARC-IC farm.

(3)  ARC-IC benchmark yield is (much) higher than ARC-CO benchmark yield and PLC farm payment yield.  Assuming 1 covered commodity and same percent payment rate for both ARC programs, ARC-IC benchmark yield needs to be more than 30% higher than the county benchmark yield for ARC-IC to pay more than ARC-CO.  Other situations result in different breakeven yields.

(4)  Fruits and vegetables (other than mung beans and pulse crops) or wild rice are planted on a FSA farm.  Payment base acres are 65% for ARC-IC vs. 85% for ARC-CO and PLC.  Non-payment acres are the remaining base acres:  35% for ARC-IC vs. 15% for ARC-CO and PLC.  Payment is reduced if fruits and vegetables (other than mung beans and pulse crops) or wild rice are planted on more than the non-payment acres.  ARC-IC has more acres that can be planted to fruits and vegetables (other than mung beans and pulse crops) or wild rice without losing program payments.  Note, base acres on the FSA farm are not altered in this situation.

ARC-IC Examples – role of prevent plant – Overview:  An ARC-IC farm with all yield information needed to calculate the ARC-IC benchmark revenue is assumed.  This information plus the US market year average price for crop years 2013-2017 and 2019 are in the top half of each table of values for each example.  The farm has 100 acres of cropland and program base, both composed of 60 acres of corn and 40 acres of soybeans.

Calculation of the ARC-IC benchmark revenue is a 3-step process.  In step 1, per acre revenue is calculated for each covered commodity (corn and soybeans in this case) for each of the 5 years in the benchmark calculation window.  In step 2, the Olympic average revenue per acre is calculated.  An Olympic average removes the high and low value before calculating the average of the remaining values.  For the example ARC-IC farm, the Olympic average revenue is $605 for corn and $475 for soybeans.  In step 3, the Olympic average revenues are weighted by the acres planted in the current year (2019 in this case) to covered commodities to determine an ARC-IC farm average revenue per acre.  This calculation for the example ARC-IC farm is:  (($605*60) + ($475*40)) / (60+40), or an ARC-IC benchmark revenue of $553 / acre.

ARC-IC Example 1 – no prevent plant acres:  Actual revenue / acre is $631 (166 bushels / acre times $3.80 / bushel) for corn and $423 (47 bushels / acre times $9.00 / bushel) for soybeans (see Table 1).  These individual crop values are weighted by acres planted to each covered commodity, resulting in an actual revenue / acre for the ARC-IC farm of $548 (($631*60) + ($423*40)) / (60+40).  Since actual revenue of $548 / acre exceeds the ARC-IC coverage revenue of $476 / acre (86% ARC-IC coverage level times benchmark revenue of $553 / acre), ARC-IC makes no payment.

ARC-IC Example 2 – some prevent plant acres: This example has 20 acres of corn prevent plant acres and lower 2019 yields (see Table 2).  Actual revenue / acre is $570 (150 bushels / acre times $3.80 / bushel) for corn and $378 (42 bushels / acre times $9.00 / bushel) for soybeans.  These individual crop values are weighted by acres planted to each program commodity, resulting in an actual revenue / acre for the ARC-IC farm of $522 (($570*60) + ($378*20)) / (60+20).  Only 80 acres is used in calculating actual ARC-IC revenue.  The 20 prevent plant acres are not included in calculating ARC-IC actual revenue.  Since actual revenue of $522 / acre exceeds ARC-IC coverage revenue of $493 / acre (86% ARC-IC coverage level times benchmark revenue of $573 / acre), ARC-IC makes no payment.  ARC-IC benchmark revenue and coverage revenue is higher in Example 2 than Example 1.  The reason is the combined impact on the weighted averages of (a) higher revenue per acre for corn than soybeans and (b) fewer acres planted to soybeans (20, not 40).

ARC-IC Example 3 – all prevent plant acres:  This example has no planted acres, with all initial planted covered commodity acres approved for prevent plant (see Table 3).  Actual revenue / acre is $0 since no initial covered commodity is planted.  Because no acres are planted to covered program commodities and all acres of initial planted covered commodities are approved as prevent plant, a benchmark revenue exists.  It equals the benchmark revenue in example 1 ($553 / acre).  ARC-IC makes a payment since actual revenue of $0 / acre is less than the ARC-IC coverage revenue of $476 / acre (86% ARC-IC coverage level times benchmark revenue of $553 / acre).  Payment is however capped at 10% of the benchmark revenue, or $55 per base acre ($553 times 10%).  Total ARC-IC payment is $5,500 ($55 per base acre times 100 base acres).

Summary Observations: 

►   Crop program choice rests on the production attributes of an FSA farm.

►   ARC-IC may be worth considering more often than commonly thought.

►   Farm production attributes which make ARC-IC potentially attractive include:

  • 100% of program base acres on a FSA farm are prevent plant acres,
  • high production variability from year to year on a FSA farm,
  • much higher farm than county or PLC yields on a FSA farm, and
  • fruits and vegetables are planted on a FSA farm.

►   If prevent plant is the production attribute of interest, all covered commodity acres on the ARC-IC farm must be prevent plant for ARC-IC to make a payment.

►   If high production variability is the production attribute of interest, ARC-IC is more attractive if only 1 FSA farm in a state with only 1 program commodity is elected into ARC-IC.  ARC-IC pays on the average experience across all program crops on all FSA farms in the ARC-IC farm.  Averaging across multiple crops and FSA farms usually reduces variability and thus payment probability.

►   Program sign up is for 2019 and 2020.  Expected payments in both years need to be considered for ARC-IC, ARC-CO, and PLC.  It is highly possible that the program with the highest expected payment will differ for 2019 and 2020, especially if ARC-IC has the highest expected payment for one year.

►   This article is not an argument for electing ARC-IC.  It is an argument for not dismissing ARC-IC without thinking about the individual FSA farm production attributes.

 

Table 1.  ARC-IC Example 1 – no prevent plant acres
  corn corn corn beans beans beans corn beans corn beans ARC-IC
yield MYA ARC-IC yield MYA ARC-IC plant plant prevent prevent farm
price revenue price revenue acres acres plant plant per
year / calculation acres acres acre
2013 155 $4.46 $691 43 $13.00 $559 60 40 0 0  
2014 169 $3.70 $625 47 $10.10 $475 60 40 0 0
2015 166 $3.61 $599 48 $8.95 $430 60 40 0 0
2016 172 $3.36 $578 52 $9.47 $492 60 40 0 0
2017 174 $3.40 $592 49 $9.33 $457 60 40 0 0
2019 166 $3.80 $631 47 $9.00 $423 60 40 0 0
Olympic average (’13-’17) $605 $475
benchmark revenue $553
revenue coverage (86%) $476
actual revenue $548
revenue loss $0
payment $0
total ARC-IC payment                     $0

 

 

 

 

 

Table 2.  ARC-IC Example 2 – some prevent plant acres
  corn corn corn beans beans beans corn beans corn beans ARC-IC
yield MYA ARC-IC yield MYA ARC-IC plant plant prevent prevent farm
price revenue price revenue acres acres plant plant per
year / calculation acres acres acre
2013 155 $4.46 $691 43 $13.00 $559          
2014 169 $3.70 $625 47 $10.10 $475
2015 166 $3.61 $599 48 $8.95 $430
2016 172 $3.36 $578 52 $9.47 $492
2017 174 $3.40 $592 49 $9.33 $457
2019 150 $3.80 $570 42 $9.00 $378 60 20 20 0
Olympic average (’13-’17) $605 $475
benchmark revenue $573
revenue coverage (86%) $493
actual revenue $522
revenue loss $0
payment $0
total ARC-IC payment                     $0

 

Table 3.  ARC-IC Example 3 – 100% prevent plant acres
  corn corn corn beans beans beans corn beans corn beans ARC-IC
yield MYA ARC-IC yield MYA ARC-IC plant plant prevent prevent farm
price revenue price revenue acres acres plant plant per
year / calculation acres acres acre
2013 155 $4.46 $691 43 $13.00 $559          
2014 169 $3.70 $625 47 $10.10 $475
2015 166 $3.61 $599 48 $8.95 $430
2016 172 $3.36 $578 52 $9.47 $492
2017 174 $3.40 $592 49 $9.33 $457
2019 0 $3.80 $0 0 $9.00 $0 0 0 60 40
Olympic average (’13-’17) $605 $475
benchmark revenue $553
revenue coverage (86%) $476
actual revenue $0
revenue loss $476
payment $55
total ARC-IC payment                     $5,500

 

Ohio CAUV Values Projected to Decline Through 2020

The Current Agricultural Use Valuation (CAUV) program allows farmland devoted exclusively to commercial agriculture to be taxed based on their value in agriculture, rather than the full market value, resulting in a substantially lower tax bill for the farmer.

The formula for CAUV values incorporates agricultural factors (soil types, yields, prices, and non-land costs for corn, soybeans, and wheat) to calculate the capitalized net returns to farming land based on the previous 5 to 10 years. CAUV underwent large-scale changes to its calculation in 2017 that was targeted to reduce the property tax burden of farmland.

A new report, Ohio CAUV Values Projected to Decline Through 2020, shows the projection of CAUV values though 2020. According to the study authors, OSU agricultural economists Robert Dinterman and Ani Katchova forecast a decrease in the assessed value of agricultural land to an average CAUV value of approximately $600 in 2020.

Access this report at:

https://aede.osu.edu/sites/aede/files/publication_files/CAUVProjectionsFall2019.pdf

Ohio Agricultural Loan Delinquencies Have Stabilized in 2019

Financial stress, expressed as the ability of farmers to repay loans, is important to follow during times of low farm income. A new report “Ohio Agricultural Lending Outlook: Fall 2019,” published by Kevin Kim, Robert Dinterman, and Ani Katchova with the OSU AEDE’s Farm Income Enhancement Program, points to good news for Ohio farmers. The report provides information on agricultural loan volumes and delinquencies for Ohio farmers.

Agricultural loans issued by FDIC insured banks have increased in volume both nationally and in Ohio. For Ohio, the total number of agricultural loans reached $3.8 billion in 2018. There has been a slight uptick in delinquency rates, but they remain under 2%, which is a significant benchmark as delinquency rates remained above 2% for several years following the 2008 Farm Financial Crisis. The average delinquency rate for Ohio farm production loans for the recent 12 months was 1.06%, while for real estate loans it was 1.83%, seeing declines from last year’s rates.

Access this report at:

https://aede.osu.edu/sites/aede/files/publication_files/AgLendingOutlook2019.pdf

 

“Ask the Expert” Area Seeks to Help Farmers at this year’s Farm Science Review

Each year, faculty and staff of The Ohio State University address some of the top farm management and veterinarian medicine challenges which Ohio farmers are facing during the “Ask the Expert” sessions held each day at the Farm Science Review at the Molly Caren Agricultural Center near London, Ohio.

The 20 minute “Ask the Expert” presentations at Farm Science Review are one segment of the College of Food, Agricultural, and Environmental Sciences (CFAES) and the College of Veterinary Medicine comprehensive extension education efforts during the three days of the Farm Science Review which will be held September 17-19 in London, Ohio.

Our experts will share science-based recommendations and solutions to the issues growers are facing regarding weather impacts, tariffs, veterinarian medicine, and low commodity prices. Producers are encouraged to attend one or more of the sessions throughout the day.

The sessions will take place in the Ohio State Area in the center of the main Farm Science Review exhibit area located at 426 Friday Avenue. This year’s featured sessions are:

Tuesday, September 17, 2019
“Tax Strategies Under the New Tax Law” presented by Barry Ward
10:00 – 10:20 a.m.

“Climate Smart- Weather, Climate & Extremes-Oh My!” presented by Aaron Wilson
10:20 – 10:40 a.m.

“Before the Pearly Gates- Getting Your Farm Affairs in Order” presented by David Marrison
10:40 – 11:00 a.m.

“Crop Inputs & Cash Rent Outlook for 2020” presented by Barry Ward
11:00 – 11:20 a.m.

“Farm Stress-We Got Your Back” presented by Dee Jepsen
11:20 – 11:40 a.m.

“The Legal Buzz on Hemp” presented by Peggy Hall
11:40 – 12:00 noon

“Current Status of African Swine Fever” presented by Scott Kenney
Noon to 12:20 p.m.

“Farm Income Forecasts: Are Farmers Experiencing Financial Stress?” presented by Ani Katchova
12:20 – 12:40 p.m.

“How Much Money Stayed on the Farm? 2018 Ohio Corn & Soybean Production Costs” presented by Dianne Shoemaker
12:40 – 1:00 p.m.

“Where Are We on U.S. Trade Policy” presented by Ian Sheldon
1:00 – 1:20 p.m.

“Farm Accounting: Quicken or Quickbooks” presented by Wm. Bruce Clevenger
1:20 – 1:40 p.m.

“Commodity Markets – Finding Silence in the Noise” by Ben Brown
1:40 – 2:00 p.m.

“GMOs, Food Animals, and Consumers” presented by Dr. Gustavo Schuenemann
2:00 – 2:20 p.m.

“Solar Leasing Options” presented by Peggy Hall & Eric Romich
2:20 – 2:40 p.m.

“Poultry Backyard Disease Management” presented by Dr. Geoffrey Lossie
2:40 – 3:00 p.m.

Wednesday, September 18, 2019
“Climate Smart- Weather, Climate & Extremes-Oh My!” presented by Aaron Wilson
10:00 – 10:20 a.m.

“The Legal Buzz on Hemp” presented by Peggy Hall
10:20 – 10:40 a.m.

“Zoonotic Diseases: Can I really get sick from my 4-H Project?” presented by Dr Jacqueline Nolting
10:40 – 11:00 a.m.

“Solar Leasing Options” presented by Peggy Hall & Eric Romich
11:00 – 11:20 a.m.

“Where Are We on U.S. Trade Policy” presented by Ben Brown
11:20 – 11:40 a.m.

“Impact of Peak Electrical Demand Charges in Agriculture” presented by Eric Romich
11:40 – 12:00 noon

“Crop Inputs & Cash Rent Outlook for 2020” presented by Barry Ward
12:00 – 12:20 p.m.

“Commodity Markets – Finding Silence in the Noise” by Ben Brown
12:20 – 12:40 p.m.

Public Perception Risk: Building Trust in Modern Agriculture by Eric Richer
12:40 – 1:00 p.m.

“Farm Stress-We Got Your Back” presented by Dee Jepsen
1:00 – 1:20 p.m.

“How Much Money Stayed on the Farm? 2018 Ohio Corn & Soybean Production Costs” presented by Dianne Shoemaker
1:20 – 1:40 p.m.

“Poultry Backyard Disease Management” presented by Dr. Geoffrey Lossie
1:40 – 2:00 p.m.

“Tax Strategies Under the New Tax Law” presented by Barry Ward
2:00 – 2:20 p.m.

“CRISPR gene editing: Are super animals within our reach?” presented by Dr. Scott Kenney
2:20 – 2:40 p.m.

“Using On-Farm Research to Make Agronomic and Return on Investment Decisions” presented by Sam Custer
2:40 – 3:00 p.m.

Thursday, September 19, 2019
“Horse Health Care and How to Feed a Horse” presented by Dr. Eric Schroeder
10:00 – 10:20 a.m.

“Farm Stress-We Got Your Back” presented by Dee Jepsen
10:20 – 10:40 a.m.

“Tax Strategies Under the New Tax Law” presented by Barry Ward
10:40 – 11:00 a.m.

“The Legal Buzz on Hemp” presented by Peggy Hall
11:00 – 11:20 a.m.

“Solar Leasing Options” presented by Peggy Hall & Eric Romich
11:20 – 11:40 a.m.

“Commodity Markets – Finding Silence in the Noise” by Ben Brown
11:40 – Noon

“Crop Inputs & Cash Rent Outlook for 2020” presented by Barry Ward
12:00 – 12:20 p.m.

“Antibiotic Use in Animals-Does it Impact for Human Health” presented by Dr. Greg Habing
12:20 to 12:40 p.m.

“Where Are We on U.S. Trade Policy” presented by Ben Brown
12:40 – 1:00 p.m.

“Swine Biosecurity” presented by Dr. Carlos Trincado
1:00 – 1:20 p.m.

“Nutritional Support for Ruminants in Winter” presented by Dr. Jeff Lakritz
1:20 – 1:40 p.m.

“How Much Money Stayed on the Farm? 2018 Ohio Corn & Soybean Production Costs” presented by Dianne Shoemaker
1:40 – 2:00 p.m.

The complete schedule for the Ask the Expert sessions and other events at the 2019 Farm Science Review can be found at: https://fsr.osu.edu/

Additional farm management information from OSU Extension can be found at ohioagmanager.osu.edu or farmoffice.osu.edu

Source:
David Marrison, OSU Extension
740-622-2265
Marrison.2@osu.edu

#leanonyourlandgrant

15 Measures of Dairy Farm Competitiveness Bulletin Revised

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

Originally published in 1997, the 15 Measures of Dairy Farm Competitiveness is an Ohio State University Extension publication that has undergone revisions and is now available for use by dairy farmers, lenders, and others interested in dairy farm finances. The bulletin is available at https://dairy.osu.edu or by contacting your local Ohio State University Extension office.

The measures described in the bulletin represent key characteristics of the most competitive dairy producers in the Midwest. While a single dairy may not meet all 15 measures, those that meet the majority should maintain long-term competitiveness. The measures fall into the following broad areas which provide an overview of the competitiveness of a dairy farm business:

  1. Rate of production
  2. Cost control
  3. Capital efficiency
  4. Profitability
  5. Liquidity
  6. Repayment schedule
  7. Solvency
  8. Mission
  9. Maintain family’s standard of living
  10. Motivated labor force
  11. Capturing dairy manure nutrients

The bulletin provides a summary of each measure, along with instructions for calculating, evaluating, and interpreting the measure, followed by a discussion of the competitive range.

The first measure, Rate of Production: Pounds of Milk Sold per Worker, evaluates the pounds of Energy Corrected Milk (ECM) sold per worker. ECM is calculated using the following formula:

ECM = (7.2 x lb of protein) + (12.95 x lb of fat) + (0.327 x lb of milk)

 

Competitive Level Example
1,000,000 lbs per worker 8,500,000 lb of ECM sold/(20,000 hrs/2,500 hrs) = 1,065,500 pounds of milk sold per worker

Pounds of ECM sold per worker is an important tool for evaluating the productivity of workers and cattle. It combines efficient labor utilization with good to excellent herd production. If all feed is purchased, the general rule is to double these benchmarks.

Because free-stall parlor systems can handle more cows, these systems allow more pounds of milk per year per worker than tie stall or stanchion systems. Tie stall or stanchion barns entail considerably higher costs per cow than larger, modern free-stall facilities. The combination of lower investment per cow and more efficient labor utilization make free-stall housing systems much more economical because they generally result in lower costs for producing each unit of milk. However, existing tie stall or stanchion facilities may be able to compete with freestall systems if the operation carries little or no debt.

Fewer pounds of milk per worker will likely be sold per year for small versus large breed herds, but the value of ECM sold per year may be similar under similar management systems. This occurs because of the higher value per cwt of milk for the small breeds of dairy cattle (milk is higher in concentration of fat and protein). However, because the value of milk sold is affected by milk price fluctuations, gross milk sales is not a very useful tool for measuring productivity trends over time.

If the pounds of milk sold per worker is below the competitive level:

  1. Evaluate herd productivity. To achieve the desired level of pounds of ECM sold per worker, cows will most likely need to be above average in production for their breed. Many competitive farmers implement strategies to increase herd productivity. Some strategies include feeding balanced rations, optimizing cow comfort, using proven milking technologies, improving cow flow in the parlor, milking more than two times per day, and filling facilities over 100% when labor is only slightly affected.
  2. Evaluate labor efficiency. Antiquated facilities and uncomfortable working conditions reduce labor efficiency. Careful hiring also plays an important role in labor efficiency. Employee training, motivation, and pride in doing a job well help workers to be more efficient and effective, whether they are family members or unrelated employees. Workers in tie stall or stanchion systems should be able to handle30 to 35 cows per FTE, including raising crops. Workers in free-stall systems should be able to handle 40 to 50 cows per FTE, including raising crops. Efficiently operating parlors will turn a minimum of four times per hour.
  3. Set a realistic goal. Collect information for your own farm, compare your performance with the goal, and take appropriate corrective action, if needed.

For additional information, visit https://dairy.osu.edu to access a copy of the 15 Measures of Dairy Farm Competitiveness bulletin. Ohio State University Extension educators and specialists are available to analyze, evaluate, and provide recommendations to help you be successful.

This article was originally published in Farm and Dairy, August 29, 2019.

 

 

 

 

Ohio Ag Law Blog—Prevented planting, idle land, and CAUV taxation

By: Peggy Kirk Hall, Tuesday, June 18th, 2019
Original Source: https://farmoffice.osu.edu/blog
The decision on whether to take prevented planting is a tough one, but don’t let concerns about increased property taxes on idle land enter into the equation.  Ohio’s Current Agricultural Use Valuation program allows landowners to retain the benefit of CAUV tax assessment on agricultural land even if the land lies idle or fallow for a period of time.

Ohio’s CAUV program provides differential property tax assessment to parcels of land “devoted exclusively to agricultural use” that are ten acres or more or, if less than ten acres, generated an average gross income for the previous three years of $2,500 or more from commercial agricultural production.  Timber lands adjacent to CAUV land, land enrolled in federal conservation programs, and land devoted to agritourism or bio-mass and similar types of energy production on a farm also qualify for CAUV.

There must have been some farmers in the legislature when the CAUV law was enacted, because the legislature anticipated the possibility that qualifying CAUV lands would not always be actively engaged in agricultural production.   The law allows CAUV land to sit “idle or fallow” for up to one year and remain eligible for CAUV, but only if there’s not an activity or use taking place on the land that’s inconsistent with returning the land to agricultural production or that converts the land from agricultural production.  After one year of lying idle or fallow, a landowner may retain the CAUV status for up to three years by showing good cause to the board of revision for why the land is not actively engaged in agricultural production.

The law would play out as follows.  When the auditor sends the next CAUV reenrollment form for a parcel that qualifies for CAUV but was not planted this year due to the weather, a landowner must certify that the land is still devoted to agricultural production and return the CAUV form to the auditor.  The auditor must allow the land to retain its CAUV status the first year of lying idle or fallow, as long as the land is not being used or converted to a non-agricultural use.  If the land continues to be idle or fallow for the following year or two years, the auditor could ask the landowner to show cause as to why the land is not being used for agricultural production.  The landowner would then have an opportunity to prove that the weather has prevented plans to plant field crops, as intended by the landowner.  After three years, the landowner would have to change the land to a different type of commercial agricultural production to retain its CAUV status if the weather still prevents the ability to plant field crops on the parcel.  Other agricultural uses could include commercial animal or poultry husbandry, aquaculture, algaculture, apiculture, the production for a commercial purpose of timber, tobacco, fruits, vegetables, nursery stock, ornamental trees, sod, or flowers, or the growth of timber for a noncommercial purpose, if the land on which the timber is grown is contiguous to or part of a parcel of land under common ownership that is otherwise devoted exclusively to agricultural use.

Being forced out of the fields due to rain is a frustrating reality for many Ohio farmers today.   One positive assurance we can offer in the face of prevented planting is that farmers won’t lose agricultural property tax status on those fields this year.  Read Ohio’s CAUV law in the Ohio Revised Code at sections 5713.30 and 5713.31.

Mid to Late Prevented Planting Decisions

by: Ben Brown, Sarah Noggle, Barry Ward- The Ohio State University

Consistent rains across Ohio and the Corn Belt continue to delay planting progress as the June 17 USDA Planting Progress report showed that 68% of intended corn acres and 50% of intended soybean acres have been planted in Ohio. Nationwide, roughly 27 million acres of corn and soybeans will either be planted or filed under prevented planting insurance. Across Ohio, the Final Plant Date (FPD) for soybeans is June 20. Soybeans can be planted after the FPD, but a one percent reduction in the insurance guarantee occurs. This brief article outlines economic considerations for soybean prevented planting under three scenarios: planting soybeans on corn acres, planting soybeans late, and taking prevent plant soybeans. There are three sections to this article: a brief market update on corn and soybeans, a policy update on Market Facilitation Payments, and then finally the scenarios listed above. This article contains the best information available as of release, but conditions may change. Farmers should check with their crop insurance agents when making prevented planting decisions. OSU Extension is not an authorizing body of federal crop insurance policies.

Market Update

The World Agricultural Supply and Demand Estimates released on June 11, 2019, provided a mixed bag of news for corn prices, but the bullish factors outweighed the bearish factors and the December futures price increased 15 cents by market close. The Outlook Board lowered acreage 3 million acres reflective of relative returns from prevent plant and revenue over variable costs. However, the 10 bu. /acre drop in the national yield, reflective of the late planting across the Corn-Belt, provided possibly the biggest shock to the corn market. Most analysists had a decrease in final yield, but few expected a 10-bushel decrease down to 166 bushels per acre in the June WASDE- a month that rarely sees a decrease in yield given the length of season left. The market seems to have now figured in a yield decline and a reduction of 5-7 million acres. Further declines in yield during the growing season and increases in prevented planting acres favor price increases heading into fall. However, these are still largely unknown factors and market softness could happen as well.

The mixed bag continued with bearish signals in the corn balance sheet- corn exports continue to weaken on large to near record production quantities in Southern Hemisphere and currency exchange rates working against U.S. grain sellers. Strong yields in South America and the price differential may significantly reduce U.S. corn exports. Higher prices and lower production in the U.S. reduce the availability of corn for feed use. U.S. corn exports and corn for feed use estimates were collectively lowered 425 million bushels. The U.S. corn ending stocks to use ratio is lowered to 11.8%, the lowest ratio since the 9.2% experienced during the 2013/14 marketing year. Market increases in the fall of 2019 provide opportunities for producers to market multiple years’ worth of grain at profitable prices.

The soybean balance sheet continues to show market softness with no change in acreage or yield. The March Planting Intentions Report had already lowered soybean acres 4.6 million earlier in the year to 84.6 million acres and planting challenges for corn potentially have shifted some intended corn acres to soybeans. With a couple more weeks to go in the soybean-planting window, final soybean acreage is far from known. However, soybean ending stocks topped the 1 billion bushel mark- an emotional mark for soybean prices. U.S. soybean exports continue to struggle with lower world demand and competitive prices. The U.S. soybean beginning stocks for 2019/2020 were increased on softness in soybean export estimates for the end of 2018/2019. The reduced planting intentions earlier in the year and some switching from corn acreage could mean there is little price rally in a moderate reduction in soybean acreage or yield. An increase in soybean acreage would provide another bearish signal to an already soft market. While an increase in soybean acreage might sound crazy given current planting conditions, the current acreage count was already lowered in March.

Policy Update

A USDA issued press release on June 10th provided some details of the announced trade package.

  1. The 2019 Market Facilitation Program (MFP) payments will be made on a planted acre basis and the rates will be calculated for each county. The rates were not released. All eligible crops in a county will receive the same payment.
  1. If a cover crop is planted and that cover crop has the potential to be harvested, then that cover crop will be eligible for a minimum MFP payment- providing a way to get an MFP payment on prevented plant acres. The definition of a harvestable cover crop was not defined. This payment is not included in the examples below there is no way to know the size of this payment.
  1. The disaster assistance in the “Additional Supplemental Appropriations for Disaster Relief Act of 2019” will be eligible for Secretarial or Presidential declared disaster areas. On June 14, Governor DeWine sent a letter to Secretary Purdue requesting a disaster deceleration request for Ohio. The additional assistance could increase the prevented planting payment value, but the press release indicated a modest increase. The Disaster Bill passed by Congress and signed by President Trump also allows for the use of the higher of the projected price or the harvest price for the targeted areas. Because it is unknown which or if any areas will be included in the disaster aid bill, there is not the inclusion of changes in prevented payments in the examples below.

Acres intended to be planted to Corn

The corn FPD for full crop insurance purposes in Ohio was June 5. Producers could still plant corn in Ohio at a reduced crop insurance guarantee of 1% per day after the FPD or they could take a prevented planting indemnity on Revenue Insurance (RP), Yield Insurance (YP) or other Common Crop Insurance Policies (COMBO). Producers have 4 options available for intended corn acres:

  1. Plant corn
  2. Take a prevented planting payment
  3. Plant soybeans
  4. Take 35% of the corn prevented planting payment and plant soybeans after the late plating soybean period of June 20 in Ohio.

Given the calendar is starting the 3rd week of June, it is unlikely that there are many producers who are still planning to plant corn that have not done so. However, a relatively high 18% was planted last week in Ohio. Planting corn this late in the season is connected to the expectation that prices will increase through the year and be high enough to offset yield losses and added increases in drying costs. Two additional scenarios exist where producers will likely still see the benefits of planting a corn crop.

  1. He or she has applied nutrients and some input costs
  2. He or she needs feed for a livestock operation

Still, it is difficult to see corn reaching black layer before the first fall frost. For acres where no input costs have been applied, yield and insurance guarantee declines along with current futures prices of $4.62/ bushel and an increase to drying costs do not suggest producers should continue to plant corn. As mentioned in the market update section there is a possibility for higher prices, especially if the market is on the high end of acreage estimates and summer weather is not cooperative for moderate yield variations. For producers that have applied some input costs, the window is almost closed for expected returns to be larger than the prevented planting corn payment. This varies on the producer and the level of input costs.

The third option is to plant soybeans on those intended corn acres. As mentioned in a previous OSU Extension article- soybean returns above variable costs at current prices do not return a higher value than taking corn prevented planting payments. Higher soybean prices would tighten the decision, but the current balance sheet does not show the needed support to soybean prices. In the case that soybean planting continues to be delayed, the usual soybean prevented planting payment is considerably lower than the original corn prevented planting payment. Most producers will want to maximize the corn share of their prevented plant acres given the corn/soybean indemnity ratio.

The last option to take 35% of the corn prevented planting payment and plant soybeans become relevant for corn acres after the late planting period has concluded (June 25 in Ohio). Producers do not have this option available to them at this moment. A consideration of this option needs to be made that historical production history or APH yields will be negatively affected decreasing the insurance guarantee in future years. At this time, market signals do not suggest this option provides returns that are larger than straight prevented planting payments of corn. The inclusion of a MFP payment on the planted soybeans could make this option comparable. It is hard to know without the release of county payment rates.

Acres intended to be planted to Soybeans

The FPD for soybeans in Ohio is approaching quickly and with only half the crop planted, there is the potential that large amounts of Ohio soybean acreage will be planted in the late planting period or classified as prevented planting under insurance policies. Producers should continue to plant soybeans up to the FPD if possible. Once the FPD on June 20 is reached, producers have three options:

  1. Plant soybeans
  2. Take the prevented planting payment for soybeans
  3. Wait until the late planting period has finished and plant an alternative crop while taking 35% of the prevented planting payment on soybeans.

After the FPD for soybeans has been reached, the first option for soybean intended acres is to plant soybeans in the late planting period. Remember, like corn, the soybean insurance guarantee decreases a percent per day during this period. Yield declines in soybeans are harder to estimate given the variability in previous late planting years and final yields. The trend line does decrease with late planting but the variation in yields is larger as a percent than that experienced in corn. Economic considerations for planting soybeans versus taking the prevented planting soybean payment should first be calculated on the net return of the soybean crop above variable cost and the net return of soybean prevented planting payment. The calculations below are illustrated for an 80% coverage level on a RP insurance policy and a trend-adjusted actual production history of 50 bu. / acre. As mentioned in the policy section, the Federal Disaster Bill allows for the inclusion of the higher of the projected price or the harvest price. However, that is not guaranteed so the projected price of $9.54/bushel is used in these calculations.

Returns from Planting Soybeans

The insurance guarantee for soybeans in this scenario is

(80% x 50 bu. x $9.54/bu.)= $381.60

However, producers planting soybeans do not receive the projected Variable costs will need to be subtracted from this an addition of a reasonable MFP payment. Using the Farm Budget for soybeans on the OSU Farm Office webpage, a variable cost of $220/ acre on soybeans seems reasonable. Adding in a $45/ acre MFP payment (it is not sacred about this value other than if you weight MFP payments in 2018 for corn and soybean acres the average is close to $45/acre) you get your expected returns for planting soybeans.

Insurance Guarantee of $381.60 minus cost of $220 plus MFP payment of $45 = $206.60/acre

Remember that this insurance guarantee drops 1% per day after the FPD of June 20. Given that current November futures contracts are $9.34/bushel, there is the possibility of an insurance payment being made with a relatively large drop in yield. In this scenario of the price at $9.34/bu. a yield of 41 bushels/ acre would be needed to trigger insurance payments. A lower price would not require as large of a drop in yield similarly as a higher price would require a larger drop in yield.

Returns from Soybean Prevented Planting

Using the same scenario as above- the prevented planting payment would be 60% of the insurance guarantee. Some producers could have bought up to a higher coverage level, but most Ohio producers have a 60% prevented planting coverage level.

Insurance Guarantee of $381.60 x 60% = $228.96

There is no MFP added to this scenario and we are assuming that there is no additional cost to include. It is possible that soybean seed has already been purchased and will need to be factored into the equation. However, a maintenance charge of $25/acre is included to manage the bare acres. This brings the prevented planting return to $203.96/ acre.

In comparison, the net return for planting soybeans was roughly $3/acre higher for planting soybeans given an estimate for possible MFP payments at $45. Outside of planting a soybean crop in 2019 and having low yields that could affect future actual production history values, the minimum returns to planting soybeans is similar to those of taking prevented planting payments. There is some potential upside to net returns if prices strengthen most likely due to further decreases in soybean acreage or U.S. soybean exports increase at the end of 2018/19, the beginning of 2019/20 or both. A price later in the season that provides a cash price (futures minus basis) above $7.63/bu. and a yield that matches the historical production of 50 bu./acre would calculate to a higher net revenue than prevented planting payments. Similarly, a yield of 45 bu./acre would need a cash price above $8.48/bu. to trigger a higher return than the prevented planting payment. Because of yield and insurance guarantees of 1% per day after June 20, the downside risk of planting a soybean crop will grow.

Conclusion

The above analysis is based on a set of assumptions for soybean planting near the FPD of June 20 in Ohio. It is assumed that the MFP payment will be $45/acre (again this is not a final rule, and should be seen as illustration purposes only) and that costs are roughly $220 per acre. Some producers will have variable costs included on prevented planting soybean acres- especially purchases treated soybean seeds.

Decisions around prevented planting will continue to be difficult. However, corn prevented plant payments are estimated to have a higher net return than soybean prevented planting payments. Switching corn intended acres to soybeans and taking a prevented planting payment on soybeans does not seem like the best option. The producer should continue to plant soybeans up to the June 20 FPD, after that the decision is tight between planting a soybean crop and taking the prevented planting payment. There is some upside potential for planting soybeans although the current U.S. soybean balance sheet does not provide many positives. Moving later into the late planting period window decreases the insurance guarantee and soybean yields and improves the possibility of soybean prevented planting net returns being larger than late planted soybean net returns. For most Ohio producers this point comes roughly around June 25, the same day that the late planting period for corn ends. As a final reminder- producers should always consult with their crop insurance provider before making final decisions.

New Podcast Episodes

by: Amanda Douridas, OSU Extension Educator

The Agronomy and Farm Management Podcast has been releasing new episodes every other week since May 2018 and is set to release its 29th episode next Wednesday. To make it easier for listeners to find past episodes, the podcast has a new landing page at http://go.osu.edu/AFM.

Here you will find a listing of all past episodes, descriptions of what we talked about and links to additional resources. We cover a wide range of topics for corn, soybean and small grain farmers on agronomic and farm management topics. Episodes include legal topics such as leases, LEBOR, and hemp; timely seasonal topics like disease, insects and weather; and operational improving strategies related to nutrient management, precision agriculture and grain marketing.

Stay up to date on the latest episodes by following us on Twitter and Facebook (@AFMPodcast) and adding us to your favorites in Apple Podcasts or Stitcher. Give us a good rating and review if you like the podcast! If there is a listening platform you would like us to broadcast on or you have a topic suggestion, reach out on social media or by email at Douridas.9@osu.edu.