Estimates for Agricultural Risk Coverage and Price Loss Coverage Payments for Program Year 2017

by Ben Brown, Department of Agricultural, Environmental, and Development Economics- The Ohio State University

Click here for complete report with figures & tables

The Agricultural Adjustment Act of 2014 ushered in two programs to the safety net for producers in Ohio and across the country: Agricultural Risk Coverage (ARC0-CO) and Price Loss Coverage (PLC). Both programs serve as shallow loss programs protecting against large variations in revenue and price respectively. The two programs opperate differently and should not be compared as substitute programs. However, producers were allowed a one time choice at the beginning of the farm bill to enroll each commodity in either ARC-CO or PLC. Participation rates in Ohio largely followed the national participation rates for corn and soybeans but differed for wheat. The national participation rate for wheat favored PLC, whereas in Ohio, producers favored heavily toward ARC-CO. Nonetheless there are producers in Ohio that are enrolled in ARC-CO and PLC for corn, soybeans, and wheat. This report looks toward the end of the marketing year to estimate county level payments for ARC-CO and PLC in Ohio. As a reminder, payments finalized in October 2018 will be for program year 2017. This information will be important for producers and lenders wishing to estimate their autumn cash flow.

In October of 2017, the majority of producers in Ohio received some form of commodity program payment for the program year 2016. In fact, every county across Ohio triggered a corn ARC-CO payment except Ashtabula county. Soybean ARC-CO payments for Ohio in program year 2016 were smaller and sparce compared to corn. The majority of Ohio counties triggered a wheat ARC-CO payment, but smaller base acres of wheat exist. In program year 2017, it is estimated six counties triggered corn payments while nearly half triggered soybean payments and two thirds triggered wheat payments.

 

Data Source and Calucation:

ARC-CO payments are based on a formula seperated into two parts: historical revenue benchmark and actual year revenue. The historical revenue benchmark is the Olympic average of yields and prices for the five previous cropping years at 86% of the total. The actual year revenue is the current year yields multiplied by the Marketing Year Average (MYA) price for each commodity. In the case where the curent year revenue falls below the historical revenue benchmark, a payment is triggered up to a 10% cap. If the current year revenue is higher than historical revenue then no payment is triggered.

As a reminder both ARC-CO and PLC payments are calculated from a formula using Farm Service Agency (FSA) yields and marketing year average prices. The estimations for this report use National Agricultural Statistic Service (NASS) yields for 2017. It should be noted that FSA yields are historically lower than NASS yeilds and should be treated as a lower bound for possibile payments. NASS does not provide county yields for all counties, particially due to a low survey respone rate. Counties with a NASS yield are included.

The corn and soybean marketing year is September 1st to August 31st meaning that final prices won’t be known for several more months. Using World Agricultural Supply and Demand Estimates (WASDE) average prices from May, MYA prices of $3.40 for corn, $9.35 for soybeans, and $4.70 for wheat are applied. As the marketing year progresses, it is likely that these estimates will flucuate with price. Higher price results in a smaller payment, similarily, a lower price results a larger payment.

MYA prices used in the historical calculation are as followed:

 

MYA 2012/13 MYA 2013/14 MYA 2014/15 MYA 2015/16 MYA 2016/17
Corn $6.89 $4.46 $3.70 $3.70 $3.70
Soybeans $14.40 $13.00 $10.10 $8.95 $9.50
Wheat $7.77 $6.87 $5.99 $5.50 $5.50

 

Years where the MYA price finished below the fixed reference price are replaced with the respective value and represented in bold above. Payments would be lower if the actual MYA price was used in the calculation. Soybeans have never finished below the reference price. Crossed out prices represent the highest and lowest values; these are thrown out in the Olympic average.

Established in the program payment calculations is a limit for payments on 85% of base acres. For simplicity purposes, these figures are adjusted to rates that represent the payment on 100% of enrolled acres. Because of the Budget Control Act of 2011, a 6.8% government sequester has been applied similar to payments made in program years 2014, 2015 and 2016. There is uncertainty as to how the Tax Cuts and Jobs Act of 2017 will impact the sequestration level.

Corn Estimates

Expectations for program year 2017 corn ARC-CO payments will be smaller and rare across much of Ohio. This is largely because of the formula benchmark lowering each year as a result of lower prices. In previous years the historical five year revenue included high prices from MYA 2011/12 and 2012/13. Those have been worked out of the formula and the probability of triggering a payment has lowered. The 5 year olympic average price in 2016 was $4.79 compared to a price of $3.95 in 2017. Payment variations across counties happen due to variations in yields. Highland County tiggers the largest estimated payment at $24 per acre as a result of a 2017 yield of 167 bu/acre compared to a 2016 yield of 176. The average payment in 2016 was $57 whereas in 2017 it is estimated at $8. Fewer counties are expected to receive a payment with a smaller average payment in comparison from 2016.

Soybean Estimates

In a complete reverse of 2016, the majority of counties in Ohio are expected to trigger a soybean ARC-CO payment due to smaller county soybean yields and a lower historical revenue benchmark. County yields across Ohio were closer to historical trend than previous years and the five year MYA prce was $10.86 in 2017 compared to $11.86 in 2016. Payments are projected larger in the northern part of the state where soybean acres are more prevelant. In 2016, 29 Ohio counties triggered an ARC-CO payment whereas in 2017, 38 counties are expected to trigger a payment. The average payment in 2016 was $18, whereas in 2017 the average payment is projected at $23. In difference to corn more counties are expected to trigger a payment this year than last.

Wheat Estimates

Corn and soybeans represent the majority of commodity base acres in Ohio with over 4 million base acres of corn and over 3 million base acres of soybeans. Wheat has just over 800 thousand base acres enrolled in ARC-CO or PLC. However, 82% of wheat base acres have ARC-CO enrollment. In 2016, all but four Ohio counties triggered an ARC-CO payment with an average payment rate of $32. In 2017, the estimated average payment rate is $24 in roughly two-thirds of Ohio’s counties. The lower rate is a product of a higher expected MYA price for the current year of 2017/18. The largest payments are located along the Indiana/Ohio boarder.

PLC Payments

PLC county payments estimates can be made at this time, but with less certainty. Largely because the PLC program has a higher focus on the current MYA price, which is being replaced with the WASDE estimated average price. In Ohio, 3% of soybean base acres, 7% of corn acres and 18% of wheat acres are enrolled in the PLC program. PLC calculation includes taking the positive difference of the fixed reference price minus the current MYA price. Fixed reference prices are as followed: corn- $3.70, soybeans- $8.40, and wheat- $5.50. Given current WASDE projections for a high, low and average MYA price, a PLC payment is triggered at all three levels for corn and wheat with differing levels of size while soybeans do not trigger a payment at any level. PLC payments are expected to be larger for corn than last year while smaller for wheat. Soybeans have never triggered a PLC payment since the creation of the farm bill.

Summary

Payments for ARC-CO and PLC won’t be made until later in the calendar year, but for cash flow planning an estimate can be seen as important. Estimates for program year 2017 include fewer counties in Ohio triggering a corn ARC-CO payment in 2017 compared to 2016 with a smaller average payment of $8. This is due to a lower historical benchmark after high prices were removed from the five year Olympic average. In relation to 2016, more Ohio counties are expected to trigger a soybean ARC-CO payment with a higher per acre average payment rate. Yields closer to a historical trend line have created a higher probability of a soybean payment for half of Ohio’s 88 counties. Like corn, a similar story exists for wheat where fewer counties are expected to receive a payment with a lower average per acre payment rate compared to 2016. A higher expected current year marketing year average brings the current year revenue above the historical benchmark for a third of Ohio’s counties. PLC payment rates are expected to be higher for corn and lower for wheat in 2017 than 2016, but applies to a small percentage of Ohio base acres. Soybeans are not expected to trigger a PLC payment. Estimates for ARC-CO and PLC for each county are included in the appendix.

These are estimates of what payment rates could look like in the majority of Ohio’s 88 counties. Yields and prices will be finalized by the Farm Service Agency later in the calendar year.

Data Sources:

United State Department of Agriculture- Farm Service Agency. ARC/PLC Program. Washington, D.C.: United States Department of Agriculture, 2018.

United States Department of Agriculture- National Agricultural Statistics Service. County Yields. Washington, D.C.: United States Department of Agriculture, 2018

United States Department of Agriculture- World Agricultural Outlook Board. World Agricultural Supply and Demand Estimates, WASDE-574, February 8, 2018.

Ben Brown Program Manager: Ohio Farm Management Program College of Food, Agricultural, and Environmental Sciences Department of Agricultural, Environmental, and Development Economics 235 Agricultural Administration, 2120 Fyffe Rd., Columbus, OH 43210-1067 614-688-8686 Office

Net Farm Income Expected to Decline Again in 2018 After a Small Rebound Last Year

by: Ana Claudia Sant’Anna[1], Ani Katchova[2] and Ben Brown[3]

Department of Agricultural, Environmental, and Development Economics, The Ohio State University

Click here for full article with graphs

The United State Department of Agriculture (USDA), on August 30, forecasted U.S. net farm income for 2018 to decline 13% from last year, from $75.5 billion in 2017 to $65.7 billion in 2018 (USDA 2018). If realized, U.S. net farm income would decrease to levels witnessed in 2016 (Figure 1). This decline is even larger when we consider inflation-adjusted values, showing a 14.8% decrease in real U.S. net farm income. The USDA also made a similar downward forecast for U.S. net cash income. Net cash income is projected to drop 12% in 2018, from $104 billion in 2017 to $91.5 billion in 2018. These declines in farm income reverse the small rebound in income in 2017 to what would be the second lowest values in inflation-adjusted terms since 2002.

The latest USDA forecast did not consider or include payments made under the Market Facilitation Program (MFP) to producers in response to decreased prices, as a result of ongoing trade negotiations with several U.S. trading partners. A question which may arise is how MFP could change the forecast for U.S. net farm income. The MFP program is expected to make direct payments to farmers close to $4.7 billion with purchases of excess commodities of $1.2 billion and $200 million reserved for identifying new international markets through the Foreign Agricultural Service for an initial total of $6 billion on agricultural commodities (USDA, Sept. 2018). If trade negotiations continue to weigh on commodity prices, another payment of $4.7 billion could be released to U.S. producers later this fall. Considering that in the 2018 forecast, net government payments represented 7.8% of net farm income and that net government payments (i.e. government payments subtracted from federal taxes paid by producers) were negative (- $5.2 billion), an increase in government benefits could mean a smaller decline in net farm income than expected. Nevertheless the downturn in the farming sector, witnessed since 2013, would still be present.

The USDA also released the estimates for Ohio net farm income for 2017. Similar to the U.S. estimates from 2017, Ohio net farm income showed an increase after large declines since 2013 (Figure 1). In fact, net farm income in Ohio in 2017 was about 3 times larger than that of 2016 (from $0.4 billion to $1.3 billion). The concern, though, is that the 2018 Ohio farm income would experience a downturn similar to the forecast for the 2018 U.S. net farm income. Figure 1 illustrates how Ohio and U.S. net farm income have trended in the past. They seem to follow similar trends which may mean that Ohio net farm income would probably see a decrease in 2018 with respect to 2017.

Net farm income for Ohio dating back to 1949 shows that the Ohio farm sector is not doing as well as it was 5 years ago (Figure 2). Although the drop in net farm income witnessed in 2016 was not as low as that during the 80s farm crisis, it is still the lowest since the 1980s in real terms. In fact, since 2014 Ohio net farm income has been below the 69 year average of $2 billion in 2018 dollars (Figure 2). The length of time which Ohio net farm income remains below its long-term average is concerning. In the twenty first century, Ohio net farm income remained below the 69 year average a couple of periods, but the longest duration was for four years (2005 to 2008). Current statistics, though, point to 2018 possibly being the fifth consecutive year that Ohio net farm income is below the long-term average. Greater emphasis should be placed on the length of the downturn rather than the fact that net farm income in Ohio is not as low as it was during the farm crisis. These observations made for Ohio echoes those of Gloy and Widmar for the U.S. net farm income (Gloy and Widmar 2018)

 

References

Gloy, B. and Widmar, D. (2018, September 4). “After 2017 Rebound, Net Farm Income to fall in 2018”. Agricultural Economic Insights. Retrieved September 10, 2018, from: https://ageconomists.com/2018/09/04/after-rebounding-in-2017-net-farm-income-to-slump-in-2018/

United State Department of Agriculture (USDA), Economic Research Service (ERS). (2018). 2018 Farm Sector Income Forecast. Retrieved September 10, 2018, from https://www.ers.usda.gov/topics/farm-economy/farm-sector-income-finances/farm-sector-income-forecast/

United State Department of Agriculture (USDA). (2018, September 4). USDA Launches Trade Mitigation Programs [Press release]. Retrieved September 10, 2018, from https://www.usda.gov/media/press-releases/2018/09/04/usda-launches-trade-mitigation-programs

[1] Post-Doctoral researcher in the Farm Income Enhancement Program

[2] Associate Professor and Farm Income Enhancement Chair

[3] Program Manager for the Farm Management Program

World Supply and Demand Estimates for September 12, 2018

by Ben Brown, Program Manager- Farm Management Program College of Food, Agricultural, & Environmental Sciences  Department of Agricultural, Environmental, and Development Economics 2120 Fyffe Road, Columbus, OH 43210

614-688-8686 Office

brown.6888@osu.edu

USDA released their monthly supply and demand estimates today and similar to years past the September WASDE was an important one given its proximity to the end of harvest in the United States. This year’s September WASDE could have more influence on final yields compared to years past taking into consideration how quickly the crops are progressing. The crop progress report that came out earlier this week reported that corn completion is 2% further along than our five-year average- an adjustment from 3% to 5%. However, considering the majority of the corn production is located in the Midwest and Upper Plains, the percent of corn entering dent stage is important. USDA reports that 86% of the U.S. corn crop is in the dent stage compared to the 5-year average of 75%. For soybeans the percent of the U.S. crop dropping leaves is at 31% compared to the five-year average of 19%. Historically the October report has been the best indicator of final crop yields, but since 1964 when a crop is this far along there is significant correlation with the September yield forecasts.

As far as commodity prices received to producers, this was another WASDE to burn. However, producers will have to shake it off because while complaining about prices might make one feel better, it historically hasn’t changed the result. The yield forecast confirmed early reports by the Pro-Farmer Tour and Ohio Ag Net that this had the potential to be a record crop. The Pro-Farmer Tour had results of 177bu./acre for corn and 53bu./acre for soybeans for a national average. Ohio yields were 184 bu./ acre for corn and 60 bu./acre for soybeans. Both would be new yield records for Ohio beating previous records of 177 bu./acre for corn in 2017 and 54.5 bu./acre for soybeans in 2016. The Crop Production Report released today had an Ohio corn yield of 188 bu./acre and a Ohio soybean yield of 58 bu./acre. Multiplied by expected harvested acreage, this would be Ohio’s second largest corn crop and largest soybean crop in terms of production. Total U.S. yields were 181.3 bu./acre for corn and 52.8 bu./acre for soybeans.

Preventive plant numbers and failed acreage reports filed through USDA have to this point been lower than the 5-year average. It is likely that the harvested acreage estimates won’t move much through the remainder of the growing season, which leaves yield as the determining factor for total production. Total corn production is estimated at 14,827 billion bushels. Total soybean production is estimated at 4,693 billion bushels. That’s a lot of grain to store and sell. Some farmers or cooperatives will have a blank space and they will probably use it to pile corn, given the large size of both crops and significant carry over from 2017.

Moving to the demand side, export numbers for soybeans would suggest the there is some bad blood in the water between the United States and China and develops the question “will the U.S. and China ever get back together”. Trade theory would suggest that the U.S. price will either be bid lower on excess supply and weakened demand or the rest of the world price (mainly large exporters like Brazil) will be bid higher on stronger demand for their product until the U.S. price plus the tariff is equal to the Brazilian price. With an additional 25% Chinese tariff on U.S. soybeans, that would mean that the U.S. soybean price will would need to be 80% of the rest of the world price (i.e. Brazil) for the two prices to be substitutable to Chinese buyers. That wedge as of today sits at 83%, meaning that the Brazil price is still not high enough or the U.S. price has not hit it’s floor yet. Sorry for the bad news.

Due to the higher world price, Chinese, Brazilian and European producers are getting the signal to produce more product. Similarly, Chinese consumers are getting the signal to consume less. This creates a decrease in the amount of soybean imports for China, holding everything else constant.

Looking at the May WASDE, which in this case represents the before tariff estimates and the September WADE, which represents post tariff estimates we can draw conclusions about use. Chinese soybean production in the September WASDE is increased from the May WASDE by 6%, and their imports of soybeans are decreased by 9 million metric tons or 8.7%. This follows the logic in the paragraph above.

Time for some good news. As expected, a lower commodity price will spur domestic use. Corn ethanol production is up 50 million metric tons compared to a year ago and finally we are seeing increases in the feed and residual use value- up 125 million bushels from 2017. This value was also increased 50 million bushels from the August report. Exports for the 2018 crop are still down from 2017, but raised from the August report on strong growth in sales to Egypt, Columbia, and Mexico.

Soybean use, shows a 15 million bushel increase in crush- driven by profit margin of soybean oil. Bio-diesel is increased 800 million pounds on the resulting increase in soybean oil. It’s like a peanut butter sandwich- to get a sandwich, one need equal parts of peanut butter and jelly. For soybeans, increased crushing to get more soybean oil also produces more soybean meal. The increase in soybean meal pushes down meal prices and a decrease of $20/ short ton is represented in the WASDE report. Soybean export continue to be stronger than normal right now to countries not named China. This increase in exports is not expected to continue through the remainder of the marketing year. Soybean export estimates have been reduced 70 million bushels compared to a year ago, even with the record crop.

Total soybean use is reduced to 24,200 million bushels and ending stocks are increased to 845 million bushels. For corn, total use is increased to 15,105 million bushels, but not enough to counter the large production, as ending stocks are also increased to 1,774 million bushels.

The markets were expecting corn production around 14.5 billion bushels. The larger than expected corn crop pushed futures prices lower today. December corn futures reached their lowest levels of their existence settling at $3.52/bu. November soybean futures traded sideways as the increase in production was close to expectation. The season marketing average for corn is now projected at $3.50/bu. and for soybeans at $8.60/bu. As a reminder the season marketing period for both corn and soybeans is September 1, 2018- August 31, 2019.

Grain marketing this winter and early spring will be tough for producers, because the low prices are expected to continue. Any talk of a resolution to the trade situation has been a positive sign to markets and one could expect that if resolved could send corn and soybean prices significantly above current futures prices. However, a large South American crop this winter followed by another above trend U.S. crop would possibly send U.S. prices to their lowest levels since the early 2000s. It’s completely their choice, but personally- I’d rather be safe than sorry.

 

It’s almost that time of year … Don’t forget to calibrate your yield monitor!

Source: John Barker, OSU Extension – Knox County

Remember the old adage … Garbage in = Garbage out. Many of us use our yield data to make additional management decisions on our farms such as hybrid or variety selection, fertilizer applications, marketing, etc. Data from an uncalibrated yield monitor can haunt us for many years by leading us into improper decisions with lasting financial affects. In today’s Ag economy we can ill afford any decision with adverse financial implications.

The two biggest reasons I usually hear for not calibrating a yield monitor are 1) I just don’t have time to do it or 2) I can’t remember how to do it without getting my manual out. While i know it’s easy to criticize from “the cheap seats”, I would argue that this could be some of the most important time you spend in your farming operation each year. Like many other tasks on our farm, the more we do it, the easier it gets. To learn more read 2018 Yield Monitor Calibration

Ohio Farm Custom Rates 2018

by: Barry Ward, Leader, Production Business Management OSU Extension, Agriculture and Natural Resources and John Barker, Extension Educator Agriculture/Amos Program Ohio State University Extension Knox County

Farming is a complex business and many Ohio farmers utilize outside assistance for specific farm-related work. This option is appealing for tasks requiring specialized equipment or technical expertise. Often, having someone else with specialized tools perform a tasks is more cost effective and saves time. Farm work completed by others is often referred to as “custom farm work” or more simply, “custom work”. A “custom rate” is the amount agreed upon by both parties to be paid by the custom work customer to the custom work provider.

Ohio Farm Custom Rates

This survey summary reports custom rates based on a statewide survey of 352 farmers, custom operators, farm managers, and landowners conducted in 2018. These rates, except where noted, include the implement and tractor if required, all variable machinery costs such as fuel, oil, lube, twine, etc., and the labor for the operation.

Some custom rates published in this study vary widely, possibly influenced by:

  • Type or size of equipment used (e.g. 20-shank chisel plow versus a 9-shank)
  • Size and shape of fields,
  • Condition of the crop (for harvesting operations)
  • Skill level of labor
  • Amount of labor needed in relation to the equipment capabilities
  • Cost margin differences for full-time custom operators compared to farmers supplementing current income

Some custom rates reflect discounted rates as the parties involved have family relationships or are strengthening a relationship to help secure the custom farmed land in a cash or other rental agreement. Some providers charge differently because they are simply attempting to spread their fixed costs over more acreage to decrease fixed costs per acre and are willing to forgo complete cost recovery.

The measures shown in the summary tables of the survey respondents. The measures are the average (or mean), standard deviation (a statistical measure of variability of the responses), range, median, minimum, and maximum. Average custom rates reported in this publication are a simple average of all the survey responses. Range identified in the tables consists of two numbers. The first is the average plus the standard deviation, which is the variability of the data from the average measure. The second number of the range is the average minus the standard deviation. The median represents the middle value in the survey responses. The minimum and maximum reported in the table are the minimum and maximum amounts reported from the survey data for a given custom operation.

Charges may be added if the custom provider considers a job abnormal such as distance from the operator’s base location, difficulty of terrain, amount of product or labor involved with the operation, or other special requirements of the custom work customer.

As a custom provider, the average rates reported in this publication may not cover total costs for performing the custom service. As a customer, you may not be able to hire a custom service for the average rate published. Calculate your own costs carefully before determining the rate to charge or pay.

The complete summary of Ohio Farm Custom Rates is available online at the Farmoffice website:

https://farmoffice.osu.edu/farm-management-tools/custom-rates-and-machinery-costs

Understanding the Generational Differences

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

We hear about and read labels for different generations and we know there are differences among them.  What do the differences mean if you are managing people from different generations?  Depending upon the publication you read or with whom you speak, there may be a slight difference in birth start and end years, but the following table provides some general guidelines.

Generation Name Births Start Births End Age Range
Baby Boomer 1946 1964 72 – 54 yrs. old
Generation X (the lost generation) 1965 1985 53 – 33 yrs. Old
Generation Y (Millenials) 1980 1994 38 – 24 yrs. Old
Generation Z

(the unknown)

1995 2012 23 – 6 yrs. Old
Generation Alpha 2013 2025 5

 

Each generation has its thoughts, beliefs, and ideals with respect to a number of items.  What are the differences with respect to employment?  It’s not accurate or fair to say that every person who falls into a particular generational category is the same.  However, general statements can be made about each generation.

Generational Differences:

  Baby Boomers Generation X Generation Y
Business Focus Long Hours Productivity Contribution
Work Ethic & Values Loyal

Question authority

Strive to be their best

Value ambition, collaboration, equality, personal growth, & teamwork

Work efficiently

Want respect from younger workers

Willing to take risks

Care more about work/life balance

Work/family balance is important

Like a casual work environment

Outcome oriented

Output focused

Rely on technology

Work ethic no longer mandates 10 hr. work days

Criticized for not being loyal to a particular job/employer

Believe technology allows them to work flexibly

Work ethic no longer mandates 10 hr. work days

High expectation to be mentored

Goal oriented

Looking for meaningful work

Obsessed with career development

Prefer diversity, informality, technology, and fun

Thrive on collaboration

Training is important

Preferred Work Environment Humane

Equal opportunity

Warm, friendly

Functional, positive, & fun

Fast paced & flexible

Access to leadership

Access to information

Collaborative

Creative

Positive

Diverse

Fun, flexible, want continuous feedback

 

Work is…

 

Exciting

A career

Work & then retire

 

Difficult challenge

Just a job

 

A means to an end

Fulfillment

Flexible work arrangements

 

What They are Looking for in a Job

Ability to “shine”

Make a contribution

Team approach

Need clear and concise job expectations

Dynamic leaders

Cutting edge with technology

Flexible scheduling

Input valued on merit, not age/seniority

Must see the reason for the task

Want to be challenged

Treated with respect

Friendly environments

Flexible scheduling

Expect to be paid well

Want to make a difference

As a product of the “drop down and click menu”, may need to be given options

Work Ethic Driven

Workaholic – 60 hr. weeks

Quality

Balance

Not work long hours

Self-reliant

Skeptical

Ambitious

What’s next?

Multitasking

Entrepreneurial

View on Work/Life Balance Hesitant to take time off – result is an imbalance between work & family More focus on maintaining a balance

Don’t worry about losing their place if they take time off

Flex time, job sharing

Balance work, life, and community involvement

(Source: www.wmfc.org/uploads/GenerationalDifferencesChart)

 

So what does this mean for agricultural employers?

  • The Baby Boomer generation is reaching retirement age.
  • Generations X and Y have a different outlook on work and family life as compared to previous generations. The more recent generations place a greater value on maintaining a balance between family and work.  Workers in these generations are less likely to willingly work extra hours.  They are not workaholics like the Baby Boomer generation.
  • Flexibility is a key word when it comes to Generation X and Y. Members of this generation want to be able to attend their son or daughter’s baseball game or have dinner with their family and then return to work.
  • Money may not be the motivating factor for some in Generation X or Y. Members in these groups often want flex scheduling, to collaborate with others, and not perform routine tasks.
  • Generations X and Y have a greater focus on technology. This can be a real plus to a farm as the use of technology grows.  These generations are much more familiar with and accepting of technology.
  • Generations Z and Alpha are too young to make any conclusions. However, we do know that these generations are heavily focused on technology.  Stay tuned…

The article is an introduction to the topic of understanding the differences across the generations.  Each generation brings with it challenges and opportunities.  As you think about your next employee or the next generation to enter your business, what factors must you consider? Use the information provided here as you plan for additions to your farm team.

(Sources: www.wmfc.org/uploads/GenerationalDifferencesChart; https://www.forbes.com/sites/deeppatel/2017/09/21/8-ways-generation-z-will-differ-from-millennials-in-the-workplace/#34be355576e5)

(Note: This article was published originally in the Farm and Dairy, July 26, 2018)

Margin Protection Program Update

By: Dianne Shoemaker, Field Specialist, Dairy Production Economics

The Dairy Margin Protection Program (DMPP) underwent a substantial change earlier this year resulting from language included in the 2018 Bipartisan Budget Act. Program enrollment was re-opened from April 9 through June 8, 2018. Significant changes benefiting dairy farmers included a one million pound increase in a farm’s production history eligible for new Tier 1 premium rates. This change meant that the first 5 million pounds of a farm’s annual production history was eligible for substantially reduced premiums. Tier 2 premiums applicable to any production history above 5 million pounds remained unchanged. Other changes included monthly margin calculations and payments of any indemnities, and the 2018 sign-up being retroactive to 1/1/18.
As a result of these changes and 2018’s challenging milk prices, 888 Ohio dairy farms enrolled in the updated MPP program according to the Ohio Farm Service Agency. By July 26, 876 of those farms had been approved. USDA Farm Service Agency announced that through July 11, $7,071,360 in program payments were processed for Ohio dairy farmers, averaging $8,072 before premium costs for the 876 approved farms. Individual farm payments vary depending on each farm’s production history and margin coverage selections.

On June 25, 2018, the Ohio Department of Agriculture’s Dairy Division reported 2,206 dairy farms in Ohio. This is a substantial decline from the 2,312 dairies recorded in October 2017. Since the Margin Protection Program was initiated in September 2014, 1,091 Ohio dairy farms have established their production history with the USDA Farm Service Agency. The current sign-up is 81.39% of farms that have established base with the FSA, or 40% of all Ohio dairy farms. It is unlikely that Ohio would experience a near-100% enrollment as the large population of Ohio’s Anabaptist farmers are not likely to participate in this type of program.

Find more details about the new MPP program and resources at this link

Grants and Low-Interest Loans for Ohio Small Farms

by: Eric Barrett, Assistant Professor

Are you looking for funding for a new venture on the farm? Are you interested in doing a research project to try something new on your farm?

OSU Extension has a new factsheet on Ohioline.osu.edu to help you find funding sources that match the ideas you have for your farm. The most difficult part of preparing to apply for these programs is developing a business plan. The factsheet includes information on where to get help with a business plan and where to find enterprise budgets to help develop the plan. The OSU South Centers has a website with templates and other information, a Small Business Toolbox to help you get your plan down on paper. The toolbox is located at: http://go.osu.edu/plans.

Grants to support current farming operations are difficult to find, but more available when it comes to trying a new idea. Most grant programs offer funding for research ideas, new ventures on the farm and ways to add value to products grown or produced on the farm. Many Ohio farmers have found the USDA Sustainable Agriculture Grant Program to be a fruitful funding opportunity for project ideas.

Low interest loan programs support all types of family farming operations. The factsheet explains types of loans and gives examples of where to start the search. One example is the AgriLink Deposit Program through the Ohio Treasurer’s Office that helps Ohio farmers get a lower interest rate by partnering with local banks.

The factsheet includes the names and information to use in internet searches to find the right program fits the needs of your farming operation and your ideas.

For complete details, you can read the factsheet at:

http://go.osu.edu/grantsloans

Ohio Farm Custom Rates 2018

Part 1: Soil Preparation, Fertilizer Application, Spraying Pesticides, Mechanical Weed Control, Aerial Applications, Planting Operations, Harvest Operations, Grain Drying and Storage, Hay Harvest

by: Barry Ward, Leader, Production Business Management, Department of Agricultural, Environmental and Development Economics & John Barker, Extension Educator Agriculture/Amos Program, County Director, Ohio State University Extension Knox County

Farming is a complex business and many Ohio farmers utilize outside assistance for specific farm-related work. This option is appealing for tasks requiring specialized equipment or technical expertise. Often, having someone else with specialized tools perform a tasks is more cost effective and saves time. Farm work completed by others is often referred to as “custom farm work” or more simply, “custom work”. A “custom rate” is the amount agreed upon by both parties to be paid by the custom work customer to the custom work provider.

Ohio Farm Custom Rates

This survey summary reports custom rates based on a statewide survey of 352 farmers, custom operators, farm managers, and landowners conducted in 2018. These rates, except where noted, include the implement and tractor if required, all variable machinery costs such as fuel, oil, lube, twine, etc., and the labor for the operation.

Some custom rates published in this study vary widely, possibly influenced by:

  • Type or size of equipment used (e.g. 20-shank chisel plow versus a 6-shank)
  • Size and shape of fields,
  • Condition of the crop (for harvesting operations)
  • Skill level of labor
  • Amount of labor needed in relation to the equipment capabilities
  • Cost margin differences for full-time custom operators compared to farmers supplementing current income

Some custom rates reflect discounted rates as the parties involved have family relationships or are strengthening a relationship to help secure the custom farmed land in a cash or other rental agreement. Some providers charge differently because they are simply attempting to spread their fixed costs over more acreage to decrease fixed costs per acre and are willing to forgo complete cost recovery.

The measures shown in the summary tables are the summaries of the survey respondents. The measures are the average (or mean), range, median, minimum, and maximum. Average custom rates reported in this publication are a simple average of all the survey responses. Range identified in the tables consists of two numbers. The first is the average plus the standard deviation, which is the variability of the data from the average measure. The second number of the range is the average minus the standard deviation. The median represents the middle value in the survey responses. The minimum and maximum reported in the table are the minimum and maximum amounts reported from the survey data for a given custom operation.

The complete summary of part 1 is available online at the Farmoffice website:

https://farmoffice.osu.edu/farm-management-tools/custom-rates-and-machinery-costs

 

 

 

Western Ohio Cropland Values and Cash Rents 2017-18

by: Barry Ward, Leader, Production Business Management, Director, OSU Income Tax Schools  OSU Extension, Agriculture & Natural Resources

Ohio cropland values and cash rental rates are projected to decrease in 2018. According to the Western Ohio Cropland Values and Cash Rents Survey, bare cropland values in western Ohio are expected to decrease anywhere from 1.7 to 3.6 percent in 2018 depending on the region and land class. Cash rents are expected to decline anywhere from 1.2 percent to 3.0 percent depending on the region and land class.

Ohio Cropland Values and Cash Rent

Ohio cropland varies significantly in its production capabilities and, consequently, cropland values and cash rents vary widely throughout the state. Generally speaking, western Ohio cropland values and cash rents differ from much of southern and eastern Ohio cropland values and cash rents. The primary factors affecting these values and rates are land productivity and potential crop return, and the variability of those crop returns. Soils and drainage capabilities are the two factors that most influence land productivity, crop return and variability of those crop returns.

Other factors impacting land values and cash rents are field size and shape, population density, ease of access, market access, local market prices, potential for wildlife damage, field perimeter characteristics, and competition for rented cropland in a region. This fact sheet summarizes data collected for western Ohio cropland values and cash rents.

2018 Study Results 

The Western Ohio Cropland Values and Cash Rents study was conducted from February through April in 2018. The opinion-based study surveyed professionals with a knowledge of Ohio’s cropland values and rental rates. Professionals surveyed were farm managers, rural appraisers, agricultural lenders, OSU Extension educators, farmers, landowners, and Farm Service Agency personnel.

The study results are based on 108 surveys returned, analyzed, and summarized. Respondents were asked to group their estimates based on three land quality classes: average, top, and poor. Within each land-quality class, respondents were asked to estimate average corn and soybean yields for a five-year period based on typical farming practices. Survey respondents were also asked to estimate current bare cropland values and cash rents negotiated in the current or recent year for each land-quality class. Survey results are summarized for western Ohio with regional summaries (subsets of western Ohio) for northwest Ohio and southwest Ohio. See the entire summary at: https://farmoffice.osu.edu/farm-management-tools/farm-management-publications/cash-rents