Farm Policy

Mar

05

2013

Farm Management Webinars Announced

OSU Extension is pleased to announce a series of farm management webinars to be held in the upcoming two months. These webinars are designed to deliver current educational information for farmers, landowners, and other interested participants. There is no pre-registration required for these webinars. Just log on from the comfort of your home or business! Attend all or any of the meetings by logging on to: http://carmenconnect.osu.edu/ohioagmanager. The following is a description of the upcoming webinars. Financial & Tax Implications of Oil & Gas Leases - Wednesday, March 13, 2013, 7:00 p.m. – 9:00 p.m. David Marrison, Associate Professor & OSU Extension Educator, will be the featured speaker for this webinar. Don’t get caught blindsided by the taxes which will be due from signing an oil & gas lease. Learn how the IRS handles oil & gas payments. Learn which payments are subject to ordinary income taxes versus capital gain; about the percentage depletion deduction; and how signing a lease may affect your CAUV status. Learn what questions to ask and receive financial planning tips for managing the potential income from these wells. Navigating the ACRE/DCP Decision in 2013 – Monday, March 18, 2013, 7:00 p.m. – 8:30 p.m. Chris Bruynis, Assistant Professor & Extension Educator will be the featured speaker. With the passage of the 2012 American Taxpayer Relief Act, Congress extended many provisions of the 2008 Farm Bill. Farmers now ca...
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Farm Policy, March 2013, Tax Management, Upcoming Events

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Feb

27

2013

2013 Farm Program Choice: An Initial Perspective

By: Carl Zulauf, Professor, Ohio State University and Gary Schnitkey, Professor, University of Illinois at Urbana-Champaign

Congress extended the 2008 Farm Bill to the 2013 crop. Thus, farms will have the decision to enroll in either the Direct and Counter-Cyclical Program (DCP) or Average Crop Revenue Election (ACRE) program. Enrollment status in the 2012 farm program does not matter. Any Farm Service Agency farm serial number, hereafter simply referred to as a farm, can enroll or not enroll in the 2013 ACRE program. This post discusses this decision. It is not an easy decision. It involves consideration of all 3 farm safety net programs: the traditional DCP program, the ACRE election option, and crop insurance. As in prior years, ACRE appears to offer more risk management assistance than DCP, especially for crops associated with the midwest and plains. However, unlike prior years, ACRE also appears, in general, to offer higher price risk assistance relative to individual crop insurance. Thus, as of late February 2013, the context in which the 2013 ACRE decision will be made is likely to differ from that of prior years. Click here to read the entire article.

Farm Policy, March 2013, Newsletters

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Jan

23

2013

Farm Bill Extension Means Decisions for Farmers

By: Chris Bruynis, Assistant Professor & Extension Educator In 2008 when farmers were first provided the choice between the Direct and Counter-Cyclical Payment Program (DCP) and the Average Crop Revenue Election Program (ACRE) questions arose about what would happen if the 2008 Farm Bill was extended. Since the original rules required farmers that elected ACRE to remain in that program until the Farm Bill expired the question surfaced again when The American Taxpayer Relief Act of 2012 extended the authorization of the Food, Conservation, and Energy Act of 2008 (the 2008 Farm Bill). USDA’s Farm Services Agency recently released the following information: The 2013 DCP and ACRE program provisions are unchanged from 2012, except that all eligible participants in 2013 may choose to enroll in either DCP or ACRE for the 2013 crop year. This means that eligible producers who were enrolled in ACRE in 2012 may elect to enroll in DCP in 2013 or may re-enroll in ACRE in 2013 (and vice versa). FSA will begin sign-ups for DCP and ACRE for the 2013 crops on Feb. 19, 2013. The DCP sign-up period will end on Aug. 2, 2013; the ACRE sign-up period will end on June 3, 2013. Farmers may want to delay making the decision to elect a farm program until later in the spring once planting intentions (and possible planting progress) are known. Projected harvest prices will reflect the planting intentions resulting in a better estimate of crop revenue. Having a good crop revenue...
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Farm Policy, February 2013, Newsletters

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Jan

03

2013

Taxpayer Relief Act of 2012- What does it mean to Ohio Farmers?

By David Marrison, OSU Extension Associate Professor & Chris Bruynis, OSU Extension Assistant Professor The United States Congress worked overtime over the New Year’s Holiday to pass the American Taxpayer Relief Act of 2012 and was signed into law by President Obama. There are many provisions which are allowing members of the agricultural community to breathe a sigh of relief as they head into 2013 and some provisions, such as the farm bill, will cause much debate in the upcoming months. This article provides a summary of some of the provisions passed with this legislation, as well as a few provisions that were not addressed, which will impact agriculture. Farm Bill Extended and No Cows went over the Cliff, Yet The Taxpayer Relief Act includes a nine-month partial farm bill extension. With consumers up in arms over milk prices rising to $7 to $8 per gallon because the milk subsidy program would revert back to an antiquated parity-based price support formula that was implemented in 1949 and would have increased milk prices to close to $40 per hundredweight, more than double the current milk price. This extension of the current subsidy program through December 31, 2013 will keep milk prices stable. Basically, Congress kicked the can down the road on the Farm Bill and making any corrections to the milk pricing system. This extension also extends $5 billion worth of government subsidies for commodities such as corn and soybeans. Other programs includin...
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Farm Policy, January 2013, Tax Management

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Dec

26

2012

Crop Input Outlook 2013

Barry Ward, Leader, Production Business Management OSU Extension, Department of Agricultural, Environmental and Development Economics Crop profitability prospects for 2013 are positive for the three major row crops in Ohio. Input costs have increased from last year but high crop futures prices for 2013 crops will allow producers to plan for positive margins next year. OSU Extension Enterprise Budget projections show positive returns for corn, soybeans and wheat in 2013. These budgets are available online at: http://aede.osu.edu/programs/farmmanagement OSU Extension Budgets show projected variable (cash) costs for corn, soybean, and wheat production to be 4%, 6% and 2.5% higher, respectively in 2013 versus 2012. Higher commodity prices and higher costs point to another risky production year as the cash investment in an acre of corn will top $400 (excluding land, machinery and labor costs) and in some production scenarios be closer to $450 per acre. The cash investment in an acre of soybeans or wheat will be in the $200-$260 range. Fuel The Energy Information Administration (EIA) estimates the average price for Brent Crude Oil at $103.75 per barrel for 2013 which is a 7.3% decrease from 2012. This is due to slightly lower oil consumption growth projections for 2013. The EIA projects natural gas prices to increase 3 percent in 2013. Expected tightness in the market is the reasoning, but this projection is harder to reconcile with the increased production capabiliti...
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Farm Policy, January 2013

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Dec

26

2012

2013 Agricultural Policy and Outlook Conference Preview Meeting – December 3, 2012

Barry Ward, Leader, Production Business Management OSU Extension, Department of Agricultural, Environmental and Development Economics On Monday, December 3, 2012, Ohio State University's College of Food, Agricultural, and Environmental Sciences kicked off its 2013 Agricultural Policy and Outlook Conference Series with a special preview meeting hosted by Bruce A. McPheron, Vice President for Agricultural Administration and Dean of the College. The preview meeting, which included over 125 attendees from the State of Ohio, was held at Ohio State’s 4-H Center. The event featured presentations and Q and A with experts from AEDE, who discussed issues the food and agricultural community should expect in 2013. The event focused on policy changes, as well as market behavior with respect to farm, food, energy resources and the environment. The full schedule of event speakers, including topic overview briefs, presentation files, and presentations can be found online at: http://aede.osu.edu/programs-and-research/agricultural-policy-and-outlook-conferences The Dean's preview event kicks off a series of county meetings to be held statewide in early 2013. More information on these meetings can be found here: http://aede.osu.edu/programs-and-research/agricultural-policy-and-outlook-conferences/county-meetings If you would like more information, or if you have any questions on the Agricultural Policy and Outlook Conference Series, please contact Dr. Matthew C. Robert...
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Farm Policy, January 2013, Upcoming Events

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Dec

20

2012

ACRE Payments not Probable in Ohio for 2012

By: Chris Bruynis, PhD, Assistant Professor & Extension Educator, OSU Extension. Recently I read an article that suggested that an Average Crop Revenue Election (ACRE) payment might be possible for the corn crop in Illinois. So, I thought maybe it might be possible here in Ohio. We have relatively good estimates from the National Agricultural Statistical Service (NASS) on the 2012 yield for Ohio. Corn yield is estimated at 123 bushels per acre and soybeans at 43 bushels per acre. Corn represents a decline of approximately 22% and soybeans are down 10% from the five year Ohio Olympic average. The ACRE revenue guarantee for corn in Ohio is $627. To calculate the actual crop revenue for the state, simply multiply the state average yield times the market average price for the year. The market year starts in September of 2012 and goes through August 2013. Since the market average price is not known, one can determine what the market price needs to be less than by dividing the ACRE revenue guaranty by the average yield. For corn this would be $5.10 per bushel. For September through November the Market year average is $6.76 and the USDA is projecting it to be $7.60 for the year. Unless something drastic happens in the grain markets, it is highly unlikely there will be an ACRE payment in Ohio for the 2012 corn crop. The same calculation can be made for the soybean crop. By dividing the Ohio soybean revenue guarantee of $493 by the average yield of 43 bushels per acre you ...
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Farm Policy, Financial Management, January 2012

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Nov

01

2012

Some of the Major Changes in U.S. Agriculture and the Forces Influencing the Agricultural Economy in the Past Half Century

By: Luther Tweeten, Emeritus Chaired Professor, Department of Agricultural, Environmental, and Development Economics, Ohio State University

The era of falling real price of food is over.

Two “megatrends” are underway, one on the food supply side and another on the food demand side.

First look at food supply. I measure excess production capacity in U.S. agriculture as the surplus of production over market utilization at politically acceptable prices--calculated by adding up production removed by government acreage diversion, net stock accumulation, and the portion of exports due to government subsidies. U.S. excess production capacity totaled 6 percent in 1962 and averaged near that proportion throughout the 1960s (Tweeten 1989). In sharp contrast, excess production capacity in U.S. agriculture today is near zero. As argued later, the rest of the world also has little excess production capacity. World agricultural resources will be challenged indeed to provide food, fiber, and bioenergy in future years without major price increases! The 2012 drought is transitory, but, if the preponderance of today’s climatologists are correct in their judgments, global warming is secularly underway with attendant unusual weather events such as storms and drought. Of greater concern is the falling percentage rate of increase in agricultural yield an...
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Farm Policy, November 2012

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Nov

01

2012

Accelerating Economic Recovery

By: Luther Tweeten, Emeritus Chaired Professor, Department of Agricultural, Environmental, and Development Economics, Ohio State University

Conclusion: After elections, Congress and the President will attempt to address the nation’s fiscal problems. Farm commodity program spending will be scrutinized as never before.

At the annual economic symposium sponsored by the Kansas City Federal Reserve Bank and held this summer at Jackson Hole, Wyoming, bankers and economists wrung their hands in frustration over the persistent torpor of the American economy. Neither monetary nor fiscal policies– traditional means to avoid or ameliorate downturns in the business cycle–have succeeded in lowering the stubborn 8 percent unemployment rate. This brief addresses policies including reforms in fiscal policy institutions to overcome the nation’s economic lethargy. Click here to download the pdf.

Farm Policy, Newsletters, November 2012

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Oct

01

2012

Farm Bill Expiration Impacts FSA Programs

By: Chris Bruynis, Assistant Professor & Extension Educator, OSU Extension, Ross County Agriculture Secretary Tom Vilsack released the following statement today. He stated that "many programs and policies of the U.S. Department of Agriculture were authorized under the Food, Conservation and Energy Act of 2008 ("2008 Farm Bill") through September 30, 2012. These include a great number of critical programs impacting millions of Americans, including programs for farm commodity and price support, conservation, research, nutrition, food safety, and agricultural trade. As of today, USDA's authority or funding to deliver many of these programs has expired, leaving USDA with far fewer tools to help strengthen American agriculture and grow a rural economy that supports 1 in 12 American jobs. Authority and funding for additional programs is set to expire in the coming months. Without action by the House of Representatives on a multi-year Food, Farm and Jobs bill, rural communities are today being asked to shoulder additional burdens and additional uncertainty in a tough time. As we continue to urge Congress to give USDA more tools to grow the rural economy, USDA will work hard to keep producers and farm families informed regarding those programs which are no longer available to them."Many programs and policies of the U.S. Department of Agriculture (USDA) were authorized under the Food, Conservation and Energy Act of 2008 (“2008 Farm Bill”) through Sep. 30, 2012. These incl...
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Farm Policy, Newsletters, October 2012

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Sep

11

2012

Midwest Outlook Conference Presentations Available

The Midwest Outlook Conference was held recently in Missouri featuring faculty from across the Midwest speaking on a variety of topics relevant to today’s agriculture. Farmers and industry personnel can access the presentations at http://www.agmanager.info/events/ExtOutlook/Papers.asp.

Farm Policy, Newsletters, October 2012

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Sep

11

2012

2012 Drought: Yield Loss, Revenue Loss, and Harvest Price Option

By: Carl Zulauf, Professor, Department of Agricultural, Environmental, and Developmental Economics, The Ohio State University

This article examines the impact of the 2012 drought on per acre revenue for corn and soybeans compared with the revenue expected in February. The article also examines the impact of crop insurance and, more specifically, the harvest price option, on per acre revenue. The harvest price option permits the insurance guarantee to be calculated using the higher of the insurance plant price determined in February for corn and soybeans or the price determined at harvest. Despite the reduction in yield caused by the drought, per acre revenue is higher in August than in February for the average U.S. acre of corn and soybeans. To emphasis, the previous statement is for the average acre of corn and soybeans; many farms will have yield declines greater than the average decline. However, the harvest price option may result in some of these farms also having August revenue greater than the February revenue. To read the article click here http://aede.osu.edu/sites/drupal-aede.web/files/publications/Zulauf%20-%202012%20Drought%20-%20Yield%20Loss,%20Revenue%20Loss,%20and%20HPO.pdf.

August 2012, Farm Policy, Financial Management, Newsletters

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Sep

11

2012

2012 Farm Bill Debate: Multiple-Year Risk Assistance Programs

By: Carl Zulauf, Professor, Department of Agricultural, Environmental, and Developmental Economics, The Ohio State University

Most farm safety net provisions in the Farm Bills passed by the full Senate and the House of Representative’s Committee on Agriculture can be classified into 3 categories: (1) enhancements to crop insurance, (2) assistance against shallow losses, and (3) assistance against losses that extend across multiple crop years. This paper focuses on the alternative proposals for multiple-year risk assistance. To read the paper go to http://aede.osu.edu/sites/drupal-aede.web/files/publications/Zulauf%20-%202012%20Farm%20Bill%20-%20Mutiple-Year%20Risk%20Programs.pdf.

August 2012, Farm Policy, Financial Management, Newsletters

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Jul

20

2012

Will the Drought Trigger an ACRE Payment in 2012?

By: Chris Bruynis, PhD, Assistant Professor & Extension Educator, OSU Extension. Those farmers that signed up for the Average Crop Revenue Election created in the previous Farm Bill, are wondering if there might be a payment in 2012. The program was set up with both state and farm level revenue triggers that were based on the five year Olympic average and the previous two year average price for each commodity. Since the state trigger needs to be met before the farm trigger, an examination on the revenue levels and the possibility of falling below these will be discussed first. The Ohio five year Olympic average yield for corn and soybeans are 157 bushels and 48 bushels respectively. The two year average market price currently is projected at $5.69 for corn and $11.85 for soybeans. Both crops probably will increase slightly in price, but because of the 10% cap rules in the legislation the state revenue trigger will be capped for both crops well below the calculated revenue levels. Under the current price projections, the corn revenue level calculates as $893 per acre and the soybean revenue level at $569 per acre. The 10% cap from the 2011 revenue levels has the revenue guarantee at $627 for corn and $493 for soybeans. ACRE payments will be triggered at the state level if the 2012 crop yields times the 2012 average crop price (September 1, 2012 – August 31, 2013) falls below the revenue guarantee level. If December corn ($7.90) and November soybean ...
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Farm Policy, July 2012, Newsletters

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Jul

20

2012

Crop Insurance Management during a Drought

By: Chris Bruynis, PhD, Assistant Professor & Extension Educator, OSU Extension. There is no doubt that crop insurance can be complicated to understand all the nuances surrounding making a claim. There are some common mistakes that producers make that can cost them money. Two of them that we are now seeing happening include: Harvesting the crop in a manner other than insured - If you are harvesting the insured crop in a manner other than intended without informing the crop insurance carrier and have a claim, you will have a problem. For example: the producer has insured his corn as grain, but harvest the corn as silage. If there is no actual harvested grain for the adjuster to measure, the crop must be field appraised for grain content before harvested. The adjuster cannot appraise the grain content of harvested corn silage and the production to count will be assessed at the full guarantee. No indemnity will be paid. Destroying the insured crop without the company's approval - Production for a crop that is destroyed before the claim adjustment is made will be assessed at the full production guarantee and no indemnity will be paid The rules also state that producers need to contact their crop insurance agent within 72 hours after they think they have a crop loss. With a hail storm or flood that call is pretty easy to make, however with the slow decline created by the summer drought, this is a bit more difficult. Even corn and beans that have had some drough...
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Farm Policy, July 2012, Newsletters

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