Ohio Agriculture Risk Coverage and Price Loss Coverage Payments for Program Year 2016

By Ben Brown and Chris Bruynis

As the calendar turned to October producers around Ohio and the country started to receive federal assistance in the form of commodity payments from the Farm Service Agency (FSA) in regards to yields and prices experienced in the 2016 cropping year and 2016/2017 marketing year respectively; that is if their county triggered payments. The Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) were two new programs created in the Agriculture Adjustment Act of 2014 (2014 farm bill), designed to project producers against shallow losses in revenue and price declines respectively with crop insurance designed to cover deeper losses experienced by floods or droughts. Considering both programs rely on Marketing Year Average (MYA) prices to calculate payment rates, the 2016 program year didn’t officially end until the marketing year was completed: September 1st 2017 for corn and soybeans and June 1st 2017 for wheat. After calculations by FSA in September, payments have started to arrive here in October. This report will look at the payment rates created by ARC-CO and PLC for corn, soybeans, and wheat in the 88 Ohio counties for the 2016 program year. Click here to read the story.

U.S. Senate passes changes to federal Harmful Algal Bloom and Hypoxia Research and Control Act

Written by Ellen Essman, Law Fellow, Agricultural & Resource Law Program

The U.S. Senate has passed a bill sponsored by Ohio senators Sherrod Brown and Rob Portman that intends to improve the federal response to water pollution by amending the Harmful Algal Bloom and Hypoxia Research and Control Act of 1998.  Senate Bill 1057 will now move on to the House of Representatives for debate.

What are harmful algal blooms and hypoxia?

The EPA defines harmful algal blooms as “overgrowths of algae in water,” some of which “produce dangerous toxins in fresh or marine water.” The toxins can be dangerous for humans and animals. One major contributor to algal blooms is an excess of nitrogen and phosphorus in the water.  Hypoxiacan also be caused by too much nitrogen and phosphorus in the water. The EPA defines hypoxia as “low oxygen” in water. Hypoxia sometimes goes hand-in-hand with algal blooms, because as algae dies, it uses oxygen, which in turn removes oxygen from the water. Algal blooms and hypoxia have been a problem in Lake Erie and other parts of the country.

Background of the law

The Harmful Algal Bloom and Hypoxia Research and Control Act was passed in 1998 in response to harmful algal blooms and hypoxia along the coast of the United States. When passing the law, Congress cited scientists who said both problems were caused by “excessive nutrients.” Furthermore, Congress found that harmful algal blooms had caused animal deaths, health and safety threats, and “an estimated $1,000,000,000 in economic losses” in the previous decade.

The law established an interagency Task Force on Harmful Algal Blooms and Hypoxia (Task Force), which was charged with submitting an assessment to Congress on the “ecological and economic consequences” of both harmful algal blooms and hypoxia. The assessments were to include “alternatives for reducing, mitigating, and controlling” harmful algal blooms and hypoxia. A number of other reports and assessments were also required, which were to all culminate in a plan to combat and reduce the impacts of harmful algal blooms. Additionally, the Act singled out the areas of the Northern Gulf of Mexico and the Great Lakes. For these two areas, the Act required additional progress reports and mitigation plans.

The Act has undergone a few amendments throughout the years. The amendments have expanded and/or renewed the duties of the Task Force and other state and federal actors. Most notably, amendments in 2014 created the national harmful algal bloom and hypoxia program (Program) and a comprehensive research plan and action strategy. Under the Program, the National Oceanic and Atmospheric Administration (NOAA) was charged with administering funding to programs combatting algal blooms and hypoxia, working with state, local, tribal, and international governments to research and address algal blooms and hypoxia, and supervising the creation and review of the action strategy, among other duties. The action strategy identified the “specific activities” that the Program should carry out, which activities each agency in the Task Force would be responsible for, and the parts of the country where even more specific research and activities addressing algal blooms and hypoxia would be necessary.

What changes are proposed?

SB 1057 would make a number of changes and additions to the current law. Overall, the goal of the bill seems to be to strengthen the federal government’s ability to research and respond to water pollution in the form of algal blooms and hypoxia. The most important amendments in the bill would:

  • Add the Army Corps of Engineers to the list of agencies on the Task Force.
  • Combine the sections on freshwater and coastal algal blooms, and require that scientific assessments be submitted to Congress every five years for both types of water.
  • Establish a website that would provide information about the harmful algal bloom and hypoxia program (Program) activities to “local and regional stakeholders.”
  • Require the Task Force to work with extension programs to promote the Program and “improve public understanding” about harmful algal blooms and hypoxia.
  • Require the use of “cost effective methods” when carrying out the law.
  • Require the development of “contingency plans for the long-term monitoring of hypoxia.”
  • Fund the Program and the comprehensive research plan and action strategy from 2019 through 2023.

Most importantly, SB 1057 would add a completely new section to the law that would allow federal officials to “determine whether a hypoxia or harmful algal bloom event is an event of national significance.” Under the new language, the federal official can independently determine that such an event is occurring, or the Governor of an affected state can request that a determination to be made.

When making the determination, the federal official would have to take a number of factors into consideration including:

  • Toxicity of the harmful algal bloom;
  • Severity of the hypoxia;
  • Potential to spread;
  • Economic impact;
  • Relative size in relation to the past five occurrences of harmful algal blooms or hypoxia events that occur on a recurrent or annual basis; and
  • Geographic scope, including the potential to affect several municipalities, to affect more than one State, or to cross an international boundary.

Finally, in the case an event of national significance is found, the the federal official would have the power to give money to the affected state or locality to mitigate the damages. However, SB 1057 states that the federal share of money awarded cannot be more than 50% of the cost of any activity. The federal official would have the power to accept donations of “funds, services, facilities, materials, or equipment” to supplement the federal money.

The bill now goes to the House of Representatives for consideration. Text and information on SB 1057 is available here. To read the current law, click here. For further information on water pollution, check out the EPA’s pages on harmful algal blooms and hypoxia.

Workshop Designed to Teach Women Landowners Negotiation Skills

by Tracy Turner

COSHOCTON, Ohio – Women landowners and tenants can learn the art of negotiation, drawing up lease contracts and other facets of land-lease agreements during a workshop offered by the College of Food, Agricultural, and Environmental Sciences at The Ohio State University.

The Ladies on the Land workshop is Oct. 20 from noon to 4:30 p.m. and will be held simultaneously in two locations: at the Frontier Power Community Room, 770 South 2nd St. in Coshocton; and at the Putnam County Extension Office, 1206 East 2nd St., in Ottawa.

The event is targeted toward female landowners and renters, said Emily Adams, an Ohio State University Extension educator and co-organizer of the event. OSU Extension is the outreach arm of CFAES. The goal of the workshop, she said, is to provide women landowners with the confidence, skills and resources necessary to successfully interact with tenants and also help both tenants and landowners develop and negotiate land-lease arrangements.

“Some women will find themselves in a situation where they haven’t been the primary landowners, but with the death of their parents or husband or other life experiences, they now are,” Adams said. “This will help them learn how to talk to tenants about what goes into a lease, how to feel confident in their abilities as a manger of their properties and to give them the tools they need to have those tough conversations.

“They may not have had the prior experience in negotiating tenant or land-lease agreements, so this workshop can help them understand the leasing process and what expectations they should have of their tenants from a land stewardship and economic standpoint.”

Statewide, some 31,413 women are reported as principal operators of farms. Combined, those farms cover some 3.8 million acres and contribute $230 million in economic impact, according to the 2012 U.S. Department of Agriculture’s Census of Agriculture.

The workshop will focus on:

  • The risks of leasing
  • Verbal leases versus written leases
  • The nuts and bolts of a lease
  • Communications with your tenant
  • The negotiation process and negotiation skills
  • Factors that affect the rental rate

Registration is $20 and includes lunch and any handouts. Information is available at u.osu.edu/ohwomeninag/or by calling Adams at 740-622-2265 or Beth Scheckelhoff at 419-592-0806. The registration deadline is Oct. 13.

OSU Extension to offer Ag Lender Workshops

By: Wm. Bruce Clevenger, Extension Educator, Agriculture and Natural Resources, Defiance County

Ohio State University Extension has scheduled three seminars in Ohio for Agricultural Lenders. The dates are Tuesday, October 24th at the OSU Extension Champaign County Community Center Auditorium in Urbana, Ohio; Friday, October 27th at the OARDC Fisher Auditorium in Wooster, Ohio; and  Monday, October 30th at the Putnam County Educational Service Center in Ottawa, Ohio;  These seminars are excellent professional development opportunities for Lenders, Farm Service Agency personnel, county Extension Educators and others to learn about OSU Extension research, outreach programs and current agricultural topics of interest across the state.

2017 Featured Speakers

All three 2017 Ag Lender Seminar locations will feature…

  • Barry Ward, OSU Extension, Assistant Professor, Leader Production Business Management – Examining Land Values, Rents, Crop Input Costs & Margins – 2018
  • Carl Zulauf, Ph.D., OSU Emeritus – Outlook for the 2018 Farm Bill

Additional 2017 Speakers by location:

Urbana, OH – October 24th

  • Grain Market Outlook & Strategies the Farm CEO and Lender Should Know Together, Jim Byrne, Byrne Investment Services
  • Clemens Food Group Hog Processing, Coldwater MI., Dan Groff, Director of Hog Supply, Clemens Food Group
  • USDA Farm Service Agency Update, Darin Leach, FSA Champaign County
  • Fertilizer Applicator Cert Survey Results, Amanda Douridas, OSU Extension

Wooster, OH – October 27th

  • Grain Market Outlook & Strategies the Farm CEO and Lender Should Know Together, Jim Byrne, Byrne Investment Services
  • Looking for Profitability: Managing Dairy Production Costs, Diane Shoemaker, Field Specialist, Dairy Prod. Econ., OSU Extension
  • Clemens Food Group Hog Processing, Coldwater MI., Dewey Shaffer, Growth & Business Div. Coord. Country View Family Farms – Procurement Div. of the Clemens Food Group
  • Water Quality Regulations & Manure Management Considerations, Rory Lewandowski, OSU Extension Educator

Ottawa, OH – October 30th

  • Grain and Livestock Outlook, Chris Hurt, PhD, Purdue University, Professor of Ag Economics
  • Current Ag Law Topics, Peggy Hall, J.D. Ohio State University Extension Field Specialist, Assistant Professor and Director, Ag & Resource Law
  • Clemens Food Group Hog Processing, Coldwater MI., Dan Groff, Director of Hog Supply, Clemens Food Group
  • USDA Farm Service Agency Update, David Drake, Chief, USDA, FSA Ohio State Office

The registration cost to attend one of the Ag Lender Seminars is $65.00 and the registration deadline is one week prior to the seminar you are attending. Payments can be made by check by mail or by credit card (by phone only to 419-782-4771). Registration forms are available online at: https://u.osu.edu/aglenderseminars/

Registration questions can be directed to OSU Extension Defiance County 419-782-4771 or email clevenger.10@osu.edu

Ohio Corn, Soybean and Wheat Enterprise Budgets Project Low Returns for 2018

by: Barry Ward- Leader, Production Business Management, Ohio State University Extension

Production costs for Ohio field crops are forecast to be flat to slightly lower in 2018 depending on the crop and the profit picture remains poor, much the same as in 2017. Variable costs for corn for 2018 are projected to be $322 to $397 per acre depending on land productivity. Lower nitrogen fertilizer costs will likely be offset by somewhat higher fuel, chemical and interest costs.

Variable costs for 2018 Ohio soybeans are projected to range from $195 to $211 per acre. Wheat variable expenses for 2018 are projected to range from $161 to $189 per acre.

With continued low crop prices expected for 2018, returns will likely be low to negative for many producers. Projected returns above variable costs (contribution margin) range from $176 to $350 per acre for corn and $193 to $371 per acre for soybeans. (This is assuming fall cash prices of $3.75 per bushel for corn and $9.60 per bushel for soybeans.) Projected returns above variable costs for wheat range from $130 to $244 per acre (assuming $4.80 per bushel summer cash price).

Returns to land for Ohio corn (Gross Revenue minus all costs except land cost) are projected to range from -$46 to $116 per acre in 2018 depending on land production capabilities. Returns to land for Ohio soybeans are expected to range from $22 to $190 per acre depending on land production capabilities. Returns to land for wheat (not including straw or double-crop returns) are projected to range from -$46 to $61 per acre.

Total costs projected for trend line corn production in Ohio are estimated to be $778 per acre. This includes all variable costs as well as fixed machinery, labor, management and land costs. Fixed machinery costs of $130 per acre include depreciation, interest, insurance and housing. A land charge of $187 per acre is based on data from the Western Ohio Cropland Values and Cash Rents Survey Summary. Labor and management costs combined are calculated at $76 per acre. Returns Above Total Costs for trend line corn production are negative at -$155 per acre.

Total costs projected for trend line soybean production in Ohio are estimated to be $566 per acre. (Fixed machinery costs – $108 per acre, land charge – $187 per acre, labor and management costs combined – $54 per acre.) Returns Above Total Costs for trend line soybean production are also negative at -$81 per acre.

Total costs projected for trend line wheat production in Ohio are estimated to be $541 per acre. (Fixed machinery costs – $126 per acre, land charge – $187 per acre, labor and management costs combined – $40 per acre.) Returns Above Total Costs for trend line wheat production are also negative at -$179 per acre.

These projections are based on OSU Extension Ohio Crop Enterprise Budgets. Newly updated Enterprise Budgets for 2018 have been completed and posted to the Farmoffice website:

https://farmoffice.osu.edu/farm-management-tools/farm-budgets

 

 

 

 

 

 

 

 

 

Points to Consider Before Starting a Hops Operation

By: Brad Bergefurd, Horticulture Specialist, OSU South Centers

Hop farming requires a substantial investment in capital, time and management. A business and marketing plan is essential to developing a successful hops operation. A new factsheet has been released by OSU Extension to outline the pre-planning points that should be addressed to create a financially successful hops operation.

Economic considerations and site preparation are two important points for a successful hops operation and integral to a business and marketing plan. Planning in these two areas is essential, and the business and marketing plan should be developed at least one year prior to planting the first hop plants.

New hop growers are also encouraged to consider the details in this fact sheet before making an investment. Production budgets indicate at least $25,000 per acre may be needed to establish a high trellis hop planting and at least a $100,000 investment for a small-scale hop processing, drying, pelletizing, cooling, packaging and freezing facility built to federal and state food safety regulatory standards. This fact sheet looks at:

  • Market establishment
  • Labor needs and availability
  • Facilities for processing and storage
  • Insurance considerations
  • Financial and planning resources
Site preparation considerations including:
  • Site selection
  • Field preparation
  • Plant selection
  • Plant nutrition and fertilization
  • Pest management

The complete fact sheet can be accessed at: https://ohioline.osu.edu/factsheet/anr-58 or can be obtained by calling your County Extension office.

Management Implications from the Scientific Journals

by: Brian E. Roe, Van Buren Professor, AED Economics, Ohio State University Leader, Ohio State Food Waste Collaborative

Sometimes good management advice is difficult to parse from cutting edge academic research.  Below I share a few articles I’ve run across from my reading of the journals that might have some ready implications for managers across the state

Marketing your food locally, and looking for another angle to enhance that ‘local’ premium?

David Willis and colleagues found that consumers were willing to pay nearly twice the premium for local (versus non-local) produce and animal products if the farmer made a donation to a local food bank as part of the sale price. This created a win-win – for the farmer with the enhanced price premium and the local food bank with the donation

Ever wonder if those commercials telling you to drink milk or eat beef are worth the check-off dollars?

It’s tough to tell for sure unless the advertising totally stops, like it did for orange growers a few years ago. Oral Capps and colleague at Texas A&M found that when generic orange juice promotion essentially stopped for a few months during 2001, it resulted in more than a $50 million drop in sales.

 Better to shift to fall calving for beef cow herds?

According to Gavin Henry and colleagues from the University of Tennessee, fall calving was better in their simulations based on the last 20 years of data. Fall calving was more profitable than the spring calving for all feed rations and weaning months. Fall calving was also preferred because it was less risky in terms of profits than spring calving.

How often is it economically optimal to test your soil?

For cotton producers, when considering Potassium, it turns that about every other year makes the most sense, though not much is lost if an every third year schedule is followed instead. Check out these results from Xavier Harmon and colleagues from the University of Tennessee.

Western Ohio Cropland Values and Cash Rents 2016-17

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

Ohio cropland values and cash rental rates are projected to decrease in 2017. According to the Western Ohio Cropland Values and Cash Rents Survey, bare cropland values in western Ohio are expected to decrease from 4.4 to 8.2 percent in 2017 depending on the region and land class. Cash rents are expected to decline from 1.4 percent to 4.2 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.

2017 Study Results 

The Western Ohio Cropland Values and Cash Rents study was conducted from February through April in 2017. 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 120 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.

Factors Affecting Cash Rental Rates

Ultimately, supply and demand of cropland for rent determines the cash rental rate for each parcel. The expected return from producing crops on a farm parcel and the variability of that return are the primary drivers in determining the rental rates. Many of the following factors contribute to the expected crop return and the variability of that return. Secondary factors may exist and could affect potential rental rates. These secondary factors are also listed.

Expected Crop Return

Rent will vary based on expected crop return. The higher the expected return, the higher the rent will tend to be.

Variability of Crop Return

Land that exhibits highly variable returns may have rents discounted for this factor. For example, land that is poorly drained may exhibit variability of returns due to late plantings during wet springs.

Factors Affecting Expected Crop Return and Variability of Crop Return:

Land (Soil) Quality: Higher quality soils translate into higher rents.

Fertility Levels: Higher fertility levels often result in higher cash rents.

Drainage/Irrigation Capabilities: Better surface and sub-surface drainage of a farm often results in better yields and higher potential cash rent. Likewise, irrigation equipment tied to the land will allow for higher yields, profits and rents.

Size of Farm/Fields: Large farms/fields typically command higher average cash rent per acre due to the efficiencies gained by operators.

Shape of Fields: Square fields with fewer “point rows” will generally translate into higher cash rents as operators gain efficiencies from farming fields that are square.

Previous Tillage Systems or Crops: Previous crops and tillage systems that allow for an easy transition for new operators may enhance the cash rent value.

Field Border Characteristics: Fields surrounded by tree-lined fencerows, woodlots or other borders affecting crop growth at the field edge will negatively impact yield and therefore should be considered in rental negotiations.

Wildlife Damage Potential: Fields adjacent to significant wildlife cover including woodlots, tree lined fencerows, creeks, streams, and such may limit production potential to border rows and should be considered in rental negotiations.

Secondary Factors Affecting Rental Rates:

Buildings and Grain Storage Availability: Access to machinery and grain storage may enhance the value of the cropland rental rate.

Location of Farm (Including Road Access): Proximity to prospective operators may determine how much operators are willing to bid for cash rents. Good road access will generally enhance cash rent amounts.

USDA Farm Program Measurables: Farms that participate in the USDA Farm Program and have higher “program yields” may command higher cash rents than non-program farms.

Services Provided by Operator: Operators that provide services such as clearing fence rows, snow removal and other services may be valued by the landowner. This may even be a partial substitute for cash rent compensation.

Conditions of Lease: Conditions placed on the lease by the landowner may result in fewer prospective operators and a lower average cash rent.

Payment Dates: Leases that require part or all of the rent to be paid early in the year (up-front) may result in lower rental rates due to higher borrowing or opportunity costs for the operator.

Reputation of Landowner/Operator: Reputations of the parties may play a part in the cash rental negotiations. A landowner with a reputation of being difficult to work with may see cash rents negatively affected by this reputation. Farmers with a similar negative reputation may have to pay higher rents.

Special Contracts: Farms with special contract commitments may restrict the operator from changing crops based on market conditions. This may negatively impact cash rents. There may also be contracts that positively affect cash rents such as high value crop contracts or contracts for receiving livestock manure.

 

To access the complete summary go to:

https://farmoffice.osu.edu/farm-management-tools/farm-management-publications/cash-rents

 

Farm Management Program Manager Career Opportunity at Ohio State University

Source: The Department of Agricultural, Environmental, and Development Economics

The Department of Agricultural, Environmental, and Development Economics (AEDE) at The Ohio State University (OSU) is searching for new position as Manager for our Farm Management Program. The incumbent will develop and implement a comprehensive and innovative farm management program that addresses critical farm management issues affecting Ohioans, including marketing and price analysis, farm financial management and investing, risk evaluation and management, agricultural processing, environmental issues, and farm entry among other issues, and integrates AEDE’s research, teaching and outreach in the area.  The Farm Management Program Manager acts as a liaison between faculty members in the AEDE Department who are conducting research on areas related to Farm Management, and with OSU Extension faculty and field specialists throughout the state.  The Manager will also lead and/or collaborate on externally funded research projects that integrate OSU faculty in the field with AEDE faculty.  In collaboration with the AEDE Outreach and Communications Manager, the Farm Management Program Manager will develop and manage communications and outreach strategies, and contributes communications content for AEDE’s farm management program and serves as an active member of the AEDE Outreach Committee.

Candidates for this position will have at least a Master’s Degree in economics, applied economics or agribusiness or equivalent educ/exp, and are also required to have experience in agribusiness/farm management.  Candidates will have the ability to lead integrated initiatives from inception to implementation, will have experience in program planning and administration, and must be collaborative and work well in a diverse team-oriented environment with superior verbal and written communications skills.

Applications will be accepted through the Careers at OSU website, https://www.jobsatosu.com/postings/79928, starting July 8 and running through August 6.  We will begin screening application on August 6.

For question on this position, please contact the AEDE Outreach Program Director, Professor Brent Sohgnen, at sohngen.1@osu.edu.

Proposal extends hunting and fishing license exemptions for grandchildren

By: Peggy Hall, Agricultural Law Specialist, OSUExtension

A bill in Ohio’s House of Representatives proposes amending Ohio’s hunting and fishing laws to expand exemptions from hunting, fishing and trapping licenses for grandchildren of landowners.

House Bill 272, sponsored by Rep. Householder (R—Glenford) and Rep. Kick (R—Loudonville) proposes a change to current law, which permits grandchildren to hunt, fish or trap on their grandparent’s land without a license only up to the age of 18.  The proposal revises the law to allow grandchildren “of any age” to be exempt from licensing requirements when hunting, fishing or trapping on their grandparent’s land.

The bill also extends hunting and fishing privileges to veterans. The proposed legislation would provide a partially disabled veteran the same free hunting and fishing license privilege currently afforded to a veteran with a total disability.

“Hunting and fishing are family activities,” said Rep. Householder upon introducing the bill. “They should be enjoyed without government intrusion.”

H.B. 272 is currently before the House Energy and Natural Resources Committee and is available for viewing here.