Cover Crops and Prevented Planting Update for Illinois, Indiana, Michigan and Ohio

SPRINGFIELD, Ill., June 10, 2011 – An announcement made by the Risk Management Agency (RMA) today states that producers are eligible for prevented planting on acreage where the cover crop was not timely terminated and the subsequent crop was prevented from planting due to an insurable cause of loss.

The statements in the Special Provisions of Insurance are relevant to insuring a spring crop (e.g. corn, soybeans, etc.) following a crop or small grain crop that has reached the headed stage. Producers who plant a crop after a cover crop that has headed, budded, or has been harvested in the same calendar year are required to request a written agreement through their crop insurance agent. Producers have until July 15th to request a written agreement request through their agent, but are encouraged to submit their request as early as possible because a crop inspection is required as part of the written agreement. The inspection must show a yield potential equal to 90 percent of the guarantee. Filing a request early will ensure producers are protected from losses during the growing season.

Producers are encouraged to talk to their insurance agent and ask questions related to their insurance policy, coverage, and prevented planting. Click here to Access the Cover Crops and Prevented Planting RMA News Release

ODA Denies Egg Farm Permit as Legislation Proposes Change to Permit Program

Current bill in House would yield different outcome for Hi-Q CAFF permit

In a unique and controversial case, the Ohio Department of Agriculture (ODA) has denied an application under its Livestock Environmental Permitting Program for Hi-Q Egg Products, LLC to establish an egg laying facility in Union County.   In denying the application, ODA Director Zehringer followed the recommendations made in April 2011 by the ODA hearing officer who reviewed the permit application (see our earlier post).  The hearing officer had recommended denial on the basis of an incomplete application, because  Hi-Q’s application did not include a written statement from local officials certifying that final recommendations had been made for local infrastructure improvements and costs, as required by program regulations (OAC 901:10-1-02(A)(6)).  Hi-Q claimed that the county and township failed to provide the recommendations, while the county and township argued that there were no final recommendations because  Hi-Q refused to discuss an alternative transportation route.  In agreeing that the recommendations were not included in the application, Director Zehringer stated that there was “no other viable option but to deny the [permit] due to an incomplete application.” 

Ohio’s  Livestock Environmental Permitting Program (LEPP) regulates the installation and operation of  large Confined Animal Feeding Facilities (CAFFs).  Critics have long complained that the program fails to consider the potential impacts of CAFF development  upon the local community.  Those concerned about local impacts have used the public hearing process to voice opposition to CAFF permits, but have never successfully prevented approval of a permit.  Until now, the program’s obscure requirement for county and township approval of infrastructure improvements has gone unnoticed as a prevention mechanism by such opponents.   

While the Hi-Q denial is a first, opponents of large livestock operations won’t have cause to celebrate the decision for long if a current legislative proposal meets with success.  H.B. 229, introduced May 17, 2011 by Rep. Buchy, will place a time limit on the county and township officials who must consider local infrastructure improvements needed for a CAFF permit application.  According to the proposal,  local officials would have 75 days after receiving notice of the proposed facility to render a written statement on local infrastructure improvements and costs.  After 75 days, the permit applicant may submit a notarized affidavit stating that it had provided local officials with notice but did not receive any written final recommendations from the local government within the required timeframe.  Under the law as proposed by H.B. 229, ODA could not deny a permit application that lacks the written statement from local officials as long as 75 days have passed after giving notice and the permit applicant submits the notarized affidavit rather than the written statement from local officials. 

H.B. 229 is currently before the House Agriculture and Natural Resources committee.  Visit this link to view H.B. 229 and here for Director Zehringer’s press release on the Hi-Q permit.

How Well Do Farmers Tolerate Risk? Part 1

By: Brian Roe, McCormick Professor, Department of Agricultural, Environmental and Development Economics, Ohio State University

Flood and drought.  Late plantings.  Delayed harvesting.  Crazy price swings.  Dangerous working conditions.  Today’s successful farmers may have more in common with professional poker players than with the stolid managers of generations past as crucial decisions balancing risk and reward must be made on a regular basis and, often, on the fly.   

So, has this constant exposure to risk and risky decisions made U.S. farmers better able to tolerate risk than other people?  Or has it gone the other way and made farmers more likely to want to avoid future risks? 

One classic view of risk tolerance is that risk tolerant people seek entrepreneurial activities such as owning a small business or becoming otherwise self-employed.  Several studies over the years have validated this logic – risk seekers seek entrepreneurial activities.

But farming isn’t exactly like other forms of small business ownership and self employment, is it?  Sometimes entering farming is more the outcome of intergenerational inertia than of a free, unfettered choice among all feasible professions.  I would argue that, more than other forms of small business, family ties are crucial to farming entry decisions because they often provide the key knowledge, experience and skills necessary to become a successful farmer.  And that’s not to mention the fact that family ties often provide the access to land and other crucial, expensive assets.  So, while the city kid who loves risk will choose to run a small business rather than take a government job, the farm kid who, deep down, doesn’t really like to take risks, may end up running the family farm even if that safe government job was available. 

Farming is also different in that, for some sectors of farming and some regions of the country, federal and state programs provide some downside risk protection through subsidized insurance products and various program payments.  Do these modest protections blunt the risk enough and keep some folks in farming that would have otherwise left for less risky occupations? 

The question I am interested in is this: when you put all these factors together, does it mean that U.S. farmers, as a group, are more or less tolerant of risk than the rest of Americans?

To answer this question, I asked a question.  Specifically, I asked farmers, small business owners and other people around the U.S. the following:

“How do you see yourself?  Are you generally a person who is fully prepared to take risks or do you try to avoid taking risks?”   Please mark one response below.

Don’t like to take risks                   Fully prepared to take risks
                0 1 2 3 4 5 6 7 8 9 10
                     
                     

I asked this question because, perhaps surprisingly, the answer to this question has proven very effective in predicting a broad range of observed behaviors when used by other researchers.  For example, this question was asked of tens of thousands of Germans as part of a large, ongoing study of the German population.  Researchers have found that it predicts behaviors such smoking, traffic offenses, investment behavior and willingness to migrate and be self-employed.  However, it had never been used with a U.S. population.

Next month, I’ll share with you how I conducted the surveys and give you the answer to the question “Who can better tolerate risk: farmers, business owners or the average American?”  This will coincide with my presentation of these results to the Agricultural and Applied Economics Association Annual Meetings, which are being held in Pittsburgh this year.

Training & Employment Services Offered through PathStone Corporation

By David Marrison, OSU Extension Educator

Are you an Employer who would like to upgrade the current skill level of your employee(s)? Would you like assistance in developing and upgrading the current skill level of your agricultural workers? If your employees meet certain eligibility requirements, you may wish to explore working with the Farm worker Training & Employment Services through PathStone Corporation.

PathStone Corporation is a private not for profit regional community development and human service organization which provides training services in New York, Ohio, Pennsylvania, New Jersey, Vermont, and Puerto Rico.

Some of the services provided by PathStone include: #1) English as a Second Language; #2) Occupational Skills/and or Agriculture Upgrade Trainings and Certifications; #3) Skill Upgrading and Retraining; and #4) On- the- job training (OJT) where PathStone will subsidize up to 50% of the employee’s wages while training in a new position.

PathStone’s goal is to provide your farm/and or business with services that will save you money, while providing you with trained and skilled employees. And PathStone is able to provide these services to you the employer for free!!!

PathStone Corporation has 5 offices across Ohio in Liberty Center, Fremont, Tipp City, Painesville and Alliance.

To be eligible for the training program you must be a farm worker or the dependent/spouse of a farm worker who has worked 25 days or earned at least $800 in farm work.

For more information on training/and or upgrading the skills of your employee’s please contact:

Cindy Martin Placement & Career Manager – Ohio Division at cmartin@pathstone.org or 419-310-1174.

Cover Crop Rule Change for 2011 Only

Farmers who are growing a cover crop in Ohio have until June 1st to terminate the cover crop if they are planning to grow corn and until June 10th for soybeans. These rules also specify that only crops planted after the termination of cover crop growth will be made insurable. An inspection will be required for any acreage that has been planted to the insurable crop. These crop termination dates differentiate a crop following another crop (FAC acreage) from a crop following a cover crop (FCC acreage). For corn following termination of a grass cover crop (FCC acreage), this includes a two week waiting period to limit the allelopathic effect of the grass to dissipate before planting corn. This two week waiting period all but eliminates corn on FCC acres except possible some late corn silage for dairy producers. See http://www.rma.usda.gov/fields/il_rso/2011/526uwgmemo.pdf for the USDA informational memorandum.

Late Planting Decision Aid Updated

Chris Bruynis, PhD, Assistant Professor & Extension Educator and Barry Ward, Assistant Professor & Program Leader.

As each storm roles through Ohio delaying planting even further, the decision to plant corn, switch to soybeans, or take prevented plant becomes more challenging. A decision aid was created to assist farmers in making this decision. Since last Friday, there has been some additional information incorporated into the program.

Since yield will vary from field to field or farm to farm, the ability to enter an expected harvest yield was added to the program. This will allow farmers to fine tune their decision by allowing them to examine the potential profitability ranging from the highly productive fields/farms to the poorer producing farms and make decisions based on profit potential.

Also there are costs associated with selecting prevented plant insurance payments that should be considered when making the decision. Reports are coming in that there could be a “restocking fee” for returning seed or other inputs that have been ordered. Also there will probably be storage charges for fertilizer and other prepaid but not yet delivered inputs or a buyback discount of some kind. On inputs that will be kept until next year, farmers should charge the increased interest expense associated with their operating loan. The crop insurance premium will still be paid, and there is a place to insert any other miscellaneous costs not already mentioned.

This program is a tool for farmers to be able to input their cost of production under different yield and price scenarios to determine possible returns to each decision. The program also allows for farmers to insert their coverage level and farm APH (actual production history) to compare prevented plant insurance payments to continuing to plant corn or switch to soybeans. There is even a place to enter anticipated planting date so the insurance discount (1% per day after June 5th) is reflected in the decision outcome. Note: this program is provided “as is” without warranties as to performance or merchantability. OSU Extension will not be liable for any damages suffered by the customer as the result of the use of this spreadsheet.

Click here to download Decision Aid

Enterprise Budgets Provide Another Tool to Evaluate Your Planting Decisions

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

Wet weather and atrocious planting conditions in Ohio in 2011 have led to a lot of hand wringing this year. Tough decisions lay ahead for many Ohio farmers as we approach June 5th, the “final planting date” for corn for crop insurance purposes. After this date, producers may take prevented planting payments on the farm or see their crop insurance coverage decrease each day of delay. Comparing your prevented planting payment to potential returns to corn or soybean planting may be a daily activity as we enter June.

Enterprise budgets comparing corn and soybean returns have been compiled and posted to our Enterprise Budget webpage to show an example of what late planting economics might look like for corn and soybeans.
http://aede.osu.edu/Programs/FarmManagement/Budgets/crops-2011/index2011.htm

For the “Late Planting Budget” (Planting date May 28 through June 5) we assume corn suffers a 21% yield loss while soybeans suffer a 10% yield loss. Corn drying costs are also increased in this late planting scenario.

“Returns to Labor and Management” is a measure that is calculated by subtracting all expenses except unpaid operator labor and management from gross revenue. “Returns to Labor and Management” for corn planted during this window (assuming 155bpa yield in a normal year and 122bpa due to late planting) are estimated to be $184/acre. “Returns to Labor and Management” for soybeans planted during this late window (assuming 48bpa yield in a normal year and 43.2bpa due to late planting) are estimated to be $183/acre. These returns can be compared to your Prevented Planting Payment less any expenses to assist in your decision making. Although many costs will be saved by taking the prevented planting route, some costs remain and should be counted against your prevented planting proceeds. Age and obsolescence related fixed machinery costs and fixed land costs are incurred regardless of whether you produce a crop or not. There may also by chemical, fertilizer, crop insurance and interest expenses that were incurred regardless of your prevented planting decision.

The big unknown in this analysis is the relative prices for corn and soybeans at harvest. Our assumptions for this set of budgets are a fall cash price of $6.40 per bushel for corn and $13.05 per bushel for soybeans. Fewer acres due to prevented plantings may change these price expectations.

Your numbers will, of course, differ from these. Download the spreadsheets to calculate returns for you farms. There is also a new Decision Aid tool titled “Estimated Yield and Profit by Planting Date – Corn, Soybeans or Preventative Planting Crop Insurance” that may be valuable as you contemplate this important decision. It is available online at:
http://ohioagmanager.osu.edu/farm-policy/new-decision-aid-to-determine-late-planting-options/

OSU to host Law Symposium on Oil and Gas

With shale development hitting Ohio at a rapid pace, OSU’s Agricultural & Resource Law Program will host our first Ohio Oil and Gas Law Symposium on Thursday, June 16, 2011.  “The New Ohio Oil and Gas Boom:  Drilling into Legal Issues,” will take place at the Longaberger Golf Club near Newark, Ohio.  The day-long educational program for attorneys will address many of the initial legal issues related to development of Ohio’s Marcellus and Utica shale resources, including these topics and speakers:

  • “An Overview of the Shale Resource” with Tom Murphy of Penn State’s Marcellus Center for Outreach and Research.
  • “Mandatory Pooling and Current Regulatory Issues,” by Sandra Ramos, Legal Counself for Ohio Department of Natural Resources Division of Mineral Resources Management
  • “Dealing with Dormant Minerals and Old Leases,” by Eric Johnson of Johnson and Johnson Law Firm, Canfield
  • “Ohio Oil and Gas Leases:  A Primer,” with Gregory Russell of Vorys, Sater, Seymour and Pease, LLP, Columbus
  • Landowner Leasing Issues Panel Discussion
  • “Representing Landowner Groups in Oil and Gas Leasing,” with Chris Finney of Logee, Hostetler, Stutzman and Lehman, LLC, Wooster

For more information on our Ohio Oil and Gas Law Symposium, visit https://www.regonline.com/OilandGasLaw.

New Decision Aid to Determine Late Planting Options

By: Chris Bruynis, Extension Educator and Barry Ward, Leader Production Business Management

With continued wet soil conditions throughout Ohio, farmers are evaluating whether to plant corn, switch to soybeans, or opt for preventative planting crop insurance payments.  OSU Extension has developed the decision aid, “Estimated Yield and Profit by Planting Date – Corn, Soybeans or Preventative Planting Crop Insurance” which is a downloadable Excel spreadsheet.   It allows farmers to enter their own production information to determine which choice might be best for their operation.  Many factors enter into this critical decision. Actual planting date and potential yield loss associated with later planting, relative yield potential of corn and soybeans of the farm, relative prices of corn and soybeans, market basis differences due to a later harvested crop, potential savings of crop inputs due to a later planting date, potentially higher costs of grain drying, and crop insurance APH yield and coverage level are some of the major factors impacting a producers decision. This decision aid allows users to enter their own assumptions about maximum yield potential, harvest market prices, input costs, and crop insurance coverage levels. Click here to download Decision Aid.

The “Estimated Yield and Profit by Planting Date – Corn, Soybeans or Preventative Planting Crop Insurance” decision aid was created using historical yield data for Ohio to determine potential corn and soybean yields for late planted crops. Since the data in this decision aid is historical and yield losses with current technology and productions methods may not be as limiting, the profit estimates are conservative. Unforeseen weather conditions during the remainder of the growing season may cause a different outcome from these initial estimates. Examples include the 2009 growing season when favorable weather conditions allowed for better than predicted crop yields after a late planting season while the 2002 growing season with adverse growing conditions after a late planting season caused poor yield over much of Ohio.  The model also provides a chart on typical grain moistures at later planting dates allowing the user to adjust the drying charges.

The “Estimated Yield and Profit by Planting Date – Corn, Soybeans or Preventative Planting Crop Insurance” OSU Extension Decision Aid can be downloaded from the Ohio Ag Manager (OAM) homepage at http://ohioagmanager.osu.edu.  This model was patterned after the decision aid created by Ryan Batts, Emerson Nafziger, and Gary Schnitkey at the University of Illinois located at: http://www.farmdoc.illinois.edu/fasttools/index.asp.

Motivating Employees When Work is Not Fun

By: Julia Nolan Woodruff, Extension Educator

It’s a great time to think about employee motivation. Dark, rainy, muddy days make for long work days around the farm. As we all wait for the skies to clear and the sun to come back, it is natural to begin feeling frustrated, stressed out, and just down right negative. I would challenge farm managers to spend some time thinking about and implementing some new or revised management practices that will help improve employee motivation and encourage a more positive feeling throughout the farm and the family.

How do you know what motivates your employees to come to work every day? How do you continue to motivate employees for the long term? These are the two big questions you must find answers to, as the farm manager. In order to begin uncovering these answers, sit down with your employees and ask them what is important to them. This can be done by having a conversation or by providing a simple list and asking employees to rank the following items from most important to least important to them. The list might include:

  • Fair pay and benefits
  • Job security
  • Opportunity for advancement
  • Being a part of the team
  • Safe working conditions
  • Ability to make decisions
  • Appreciation of work done and effort given
  • Work that is interesting – challenging
  • Recognition for new ideas and successful implementation

Employee ranking of these items may surprise you. Use your employee rankings as a way to start a conversation about what employees would like to see in the future. Are there ways to improve working conditions or maybe improving communication could help all employees feel more a part of the team.

Money is a motivating factor to work for everyone, but once that need is met with fair wages employees typically prioritize other items on this list as more important than money. So the question remains, what is it that motivates an employee to do his/her best to make sure your animals are well cared for and the farm is efficient and profitable? Three points to think about according to a 2005 study by Massachusetts Institute of Technology researches are: Autonomy, mastery and purpose.

Employees value the ability to make decisions on their own and this is also a valuable tool for the employer. Employees that can make decisions without checking in with their supervisors all time are more efficient. This concept ties together with mastery of specific skills very well. As employees are given opportunities to develop their skills the next natural step is for the manager is to empower them to use their skills to make decisions on their own that will benefit the farm operation.

Purpose can be a strong motivator for employees at any job. We all want to know why we have to do specific tasks and does it really matter? It is important for employees to know the farm’s mission and buy into that concept. Once employees understand working toward the mission, help them see how each chore or decision they make affects the overall ability of the farm to reach its mission.

For example, if proper milking protocols are not being followed share the affect that it has on milk production and/or udder health. Help employees, especially new employees understand how the little things fit together to impact the bottom line. Also remember the bigger picture as well, the production of a safe and healthy product for our family, friends and other consumers. These explanations will help employees be more connected to their work and feel like even the little jobs have a grander purpose.

It is also important to remember not everyone is motivated by exactly the same thing. Knowing what makes your employees tick is an important part of motivation. As you communicate with your employees you may learn that you are already providing positive motivation and only small changes will need to be made here or there. These changes, although many times very simple or inexpensive can provide a big return for the farm. Whether the result is keeping employees longer or improved performance, both will mean a more efficient and profitable farm.

Involving employees in the team and asking for their ideas will also help provide motivation. Feelings of involvement and appreciation are strong motivation for employees to make sure they do their best and show up for work, even on rainy, muddy days.