Newsletter | Past Issues

June, 2005

In This Issue:

Should Farmers Sign an Air Quality Compliance Agreement with EPA?

Crop Insurance Coverage of Replants, Late Plantings and Prevented Plantings

Agricultrual Employers Not Exempt from "New Hire" Law

The Ohio Department of Job & Family Services Offers Migrant Labor Assistance to Agricultural Employers

On-Farm Fuel Storage Rules

The Pricing Performance of Market Advisory Services in Corn and Soybeans Over 1995-2003: A Non-Technical Summary

Ohio Farmers' Conservation Decisions: 2004 Survey Results

Economic and Policy Trends Likely to Influence the Future of Forests in Ohio

Economics of Forages - A Set of Resources

Forage Harvest Costs with Higher Fuel Prices

Should Farmers Sign an Air Quality Compliance Agreement with EPA?

Gene McCluer, Agriculture Extension Educator, Hardin County

Chris Zoller, Agriculture Extension Educator, Tuscarawas County

Public concern over air quality impacts from animal feeding operations is increasing in some areas of the US. The U.S. EPA announced on January 21, 2005 that it had reached an agreement to study air emissions from livestock and poultry operations. The study will be done as a component of the Air Quality Compliance Agreement. This is a voluntary agreement between the EPA and individual animal feeding operations.

The compliance agreement involves payment of a “penalty” for past violations that may have occurred. Most local livestock operations are expected to fall well below the daily ammonia, dust and hydrogen sulfide levels the EPA is expected to regulate. However, on the days that manure is handled, these farms could produce enough ammonia to reach a level the EPA establishes for regulation.

An informational meeting sponsored by Ohio State University Extension has been scheduled for Wednesday, June 8th, at multiple locations across the state. Counties hosting the program include: Auglaize, Columbiana/Mahoning, Coshocton, Hardin, Knox, Lorain, Miami, Putnam, Shelby, Tuscarawas and Wayne/Holmes. At all locations the program will begin at 7:30 p.m. and conclude at 9:30 p.m.

Questions asked by many producers include “What size operations should sign the agreement?” and “What are the pros and cons of signing or not signing the agreement?” Speakers will review the consent agreement and identify the benefits and risks of participating or not participating in the EPA agreement. Each producer must decide individually if they should or will participate. The deadline for animal feeding operations to sign the agreement has been extended until July 1, 2005.

This program is geared towards dairy farms, but pork, beef, and poultry producers will also benefit from attendance and participation. Prerecorded presentations by Mike Brugger, OSU Extension Agriculture Engineer and Peggy Kirk Hall OSU legal educator and attorney will begin at 7:30 pm. A live question and answer session will follow. The Q&A session will be conducted via a conference call/speaker phone with Peggy Kirk Hall and Lingying Zhao, OSU Extension Agriculture Engineer responding to questions.

Please contact the location nearest you for additional details and to pre-register by Monday, June 6.

Program Locations:

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Crop Insurance Coverage of Replants, Late Plantings and Prevented Plantings
Barry Ward, Leader Production Business Management

The 2005 planting season has been unpredictable at best. Reasonably good weather for most of Ohio in early to mid April had most optimistic about spring planting. A bit of concern about dry weather in late April gave way to wet, cold weather for the late April early May time period. Sporadic periods of warm and dry weather in mid May have given much of Ohio planting windows to finally make some progress in getting crops in the ground. But most haven’t escaped without some replanting this spring. The cold wet weather and crusting soils have caused problems for many producers around the state.

What are the insurance ramifications of replanting, late planting or prevented plantings? It depends on the type of crop insurance policy that you carry and the nature of the damage. Let’s examine each of the provisions, some examples and how they might apply to your situation.

Replanting Provisions
If your insured crop is damaged and will not produce at least 90 percent of the guaranteed yield, you can receive a payment equal to your costs for replanting. Your replant payment can be up to 20% of the guaranteed yield (up to 8 bushels for corn and 3 bushels for soybeans) multiplied by the price election chosen in the policy. These replant provisions are applicable for both Average Production History (APH) (which is the old Multiple Peril Crop Insurance (MPCI) policy), and Crop Revenue Coverage (CRC). Replant provisions are not available for catastrophic (CAT) level coverage or the group risk plan (GRP). If you do replant, the production guarantee is still based on the original planting date.

Example 1: Replanting
You have a late frost and your soybean crop is projected to yield only 20 bushels per acre. This is below the 90 percent guaranteed yield (APH policy) for that parcel of 33 bushels per acre (44 bushels APH x 75% coverage level). You decide to replant soybeans, which entitles you to a replant payment. Since 20% of your guaranteed yield is (33 bushels “production guarantee” x 20% = 6.6 bushels) more than 3 bushels, you can receive a maximum payment equal to the indemnity value of only 3 bushels per acre. The payment received then is $15 per acre (3 bushels x $5 per bushel APH price guarantee).

Late Planting Provisions
The last dates to plant crops in Ohio and retain the right to receive full crop insurance production guarantees are June 5th for corn and June 20th for soybeans. Crops planted after these dates are subject to late planting provisions. There is a 25 day late planting period where the production guarantee is reduced 1 percent per day for a maximum reduction of 25%. Premiums do not change on the planted acres.

Example 2: Late planting
You have an APH corn yield of 128 bushels per acre insured at the 75 percent coverage level. The production guarantee is 96 bushels per acre (125 bushels x 75% = 96 bushels). Wet weather prevents you from planting until June 20th. The production guarantee is reduced by 15% (June 6-20, 1% x 15 days). The new guarantee is 81.6 bushels per acre (96 x 85%).

Insured acres not planted until after the end of the late planting period (June 30th for corn and July 15th for soybeans) due to insurable causes will continue to be covered at the 60% level of the original production guarantee. Late planting provisions are a part of APH, CRC and CAT policies.

Prevented Planting Provisions
Prevented planting (PP) is an option for producers who are unable to plant because of an insured cause, including excess moisture. Policy holders (APH and CRC) who are prevented from planting some crop acres until after the final planting date may choose to not plant the crop at all and still receive 60 percent of the original production guarantee, (CAT and GRP policies are not eligible for PP benefits). For an additional premium, PP coverage can be increased to 65 or 70 percent of the original coverage. This choice must be made when the policy is purchased, however.

If a second insurable crop (soybeans, for instance) is planted before the end of the late planting period of the first crop (June 30th for corn in Ohio) coverage for the second crop simply replaces the coverage for the first crop (with late planting production guarantee changes as appropriate for the second crop). If the second crop is planted after this date, the second crop can still be insured and the producer also receives a payment equal to 35% of the PP payment of the first crop.

If the second crop is insured and the producer suffers no loss on this crop, they get the 35% of the PP payment for the original crop and then the remaining 65% of the PP payment of the first crop after harvest. If the second crop suffers a loss, the producer gets the 35% PP payment for the original crop and then the larger of 65% PP payment for the original crop or 100% production guarantee payment for the second crop.

Example 3: Prevented Planting
Due to extreme wet conditions throughout the spring, you have 50 acres of corn left to plant as of July 1st. Your production guarantee is 105 bushels (APH Yield of 140 bushel per acre x 75% coverage level on an APH Policy). You can still plant corn but with a production guarantee of only 63 bushels per acre (105 bushel production guarantee x 60% due to planting after the late planting period) OR

You can plant soybeans, receive 35% of the corn production guarantee of $48.51 (105 bushels x 60% per PP provision x $2.20 per bushel APH price guarantee x 35%) now and either the remaining 65% after harvest or soybean production loss payment, whichever is greater OR

You can take the PP payment of $138.60 per acre (105 bushel production guarantee x 60% per PP provision x $2.20 per bushel APH price guarantee).

Other notes:
Forage crops to be hayed or grazed cannot be planted on PP acres. Cover crops can be planted on PP acres. Check with your crop insurance provider for details.

An important provision to note: Notify your crop insurance agent within 72 hours after the Final Planting Date (FPD) if you are prevented from planting. With the exception of new producers, for an insured crop to be eligible for PP, you are required to have planted the crop at least once during the last four years. Unless you purchased a higher PP coverage option prior to the March 15 sales closing date, PP coverage is 60 percent of your crop insurance policy, minus premium costs, regardless of crop or if the product is a standard multi-peril policy or CRC.

Small land areas do not qualify for late or prevented planting coverage, or fro replanting payments. Affected areas must be greater than 20 acres, or 20% of the insured acreage that was intended to be planted for units over 100 acres. If one portion of the insured acres meets the minimum size criteria, then other smaller areas may be combined with it.

For revenue insurance policies, all indemnity payments are calculated based on guaranteed and actual revenues rather than bushels. The same coverage reductions apply, though.

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Agricultural Employers Not Exempt from "New Hire" Law

David Marrison, Extension Educator, Ashtabula County

One trend emerging in agriculture is that more farms are using hired labor to accomplish their goals. Farm labor laws, while retaining some exceptions, are becoming more reflective of non-farm laws and regulations. Because of this, many of our Ohio farm managers may be unaware of regulations that are applicable to their business.

One law that farmers and agribusinesses may be unaware of is the “Personal Responsibility and Work Opportunity Reconciliation Act” of 1996 (a.k.a. New Hire Law). This law requires all employers to report newly hired employees to a state directory within twenty days of their hire date (this includes all agricultural employers). This new hire information is utilized to speed up the child support income withholding process, expedites collection of child support from parents switching jobs frequently and helps to locate non-custodial parents to enforce child support orders. New hire reporting also helps children receive the support they deserve and helps prevent fraudulent unemployment payments, workers compensation, or welfare benefit payments.

Employers are required to submit the employee’s full name, address, social security number, date of birth, and date of hire. The Ohio New Hire Reporting center offers employers a variety of ways to report new hires including submitting electronically or by mailing or faxing. Producers can receive the reporting form or can complete entries electronically by linking to the following web page: https://newhirereporting.com/oh-newhire/

New hires reporting legislation requires all “employees” to be reported. Any individual who is an employee for purposes of federal income tax withholding should be reported. This includes seasonal workers even if they are hired for a short period of time to help bale hay, relief milk on a dairy farm or harvest fruit crops.

Questions can be directed to the Ohio New Hire Reporting Center at (614) 221-5330 or (888) 872-1490. Frequently asked questions can also be viewed at the Ohio New Hire website located at
https://newhirereporting.com/oh-newhire/FAQ.asp?State=OH&SessionID=

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The Ohio Department of Job & Family Services Offers Migrant Labor Assistance to Agricultural Employers

David Marrison, Extension Educator, Ashtabula County

As farm labor becomes an increasing strain on agricultural managers, it is imperative that managers explore all possibilities to meet their labor needs. Most agricultural employers may be unaware that the Ohio Department of Job & Family Services (ODJFS) is available throughout the State of Ohio to help link managers with migrant labor workforce.

ODJFS coordinates the Agricultural Recruitment System which helps agricultural employers find qualified, temporary, migrant workers. Using a national network, ODJFS is able to help managers locate and recruit interested workers from across the United States. This program should not be confused with the H2A program. The H2A program allows firms to request approval to recruit nonimmigrant alien workers for temporary work and may only be accessed when there is an anticipated shortage of domestic agricultural workers. The agricultural recruitment system can be utilized at any time.

In short, the Agricultural Recruitment System is a free, public-operated, recruitment and referral system designed to help qualified agricultural workers find temporary employment. The general requirements of this program include that workers be paid at least the State minimum wage, Federal minimum wage or the prevailing wage, whichever is the highest and that wages, working conditions, and housing meet Federal and State Standards. Click the following link to view complete details of the Ohio Agricultural Recruitment System: http://jfs.ohio.gov/agriculture/ag_recruitment_packet.pdf

The ODJFS also offers the Ohio Migrant Hotline (1-800-282-3525) which serves as a clearing house of information on migrant workers. Additional information on how ODJFS is helping to meet the needs of the Ohio agricultural and migrant communities can be found at:  http://jfs.ohio.gov/agriculture/ and local contact information can be found at: http://jfs.ohio.gov/localservices/.

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On-Farm Fuel Storage Rules

Chris Bruynis, Extension Educator, Wyandot County

Most agricultural businesses have some form of fuel storage on the premises. As our businesses grow so have our fuel storage needs as well as our environmental liabilities. Recently, some insurance companies have started requiring agriculture businesses to adhere to the state fire code or be assessed higher premium rates.

Under the current regulations, the Ohio Fire Marshall’s office considers on-farm fuel tanks to fall under the private fleet fueling facility guidelines. A summary provided by the Code Enforcement Bureau highlighted the following regulations.

A permit needs to be applied for if you are removing, installing, abandoning or altering a fuel storage facility. This would apply if you moved the tank from one location on the farm to another. When applying for a permit, a cut sheet from the manufacturer showing the tank is approved for fuel storage use needs to be included. If a cut sheet is not available determination is required to be made on site to show that the tank being proposed to be used is code compliant. A picture of the tank and any labels or UL tags can be submitted showing the listing. If there are no markings on the tanks, the determination would need to be made by the manufacturer (if noted) via a site visit to determine that with a letter from the manufacturer submitted by the manufacturer.

Single walled tanks should be 100 feet from the property line and 50 feet from “important” buildings. Also required for single walled tanks is a spill containment structure. Recommended is some structure that can hold 110% of the tank capacity. Double walled or fire resistant tanks can be 50 feet from the property line and 25 feet from buildings. These tanks do not require a secondary containment structure.

Regardless of tank construction, all tanks should be enclosed in a chain link fence, no less than 6 feet high and 10 feet away from the tank perimeter. A property perimeter fence that is secure will also meet this requirement. In addition to having a secure location, the safety cut-off switch should be located between 20 feet and 100 feet from the tank to allow easy access in the event of an emergency. The Ohio fire code also specifies that at least one portable fire extinguisher be located within 30 feet of the tank.

A permit application can be found at http://www.com.state.oh.us under State Fire Marshal; Forms and applications; Flammable and combustible liquids stationary tank and piping permit application. The regulations are currently being examined and the proposed new Ohio Fire Code should be re-filed in the near future.

If you are planning on changing your fuel storage tanks, it would be prudent to follow the regulations. Doing it right the first time might be a lot less costly than doing it again or being penalized for doing it wrong.

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The Pricing Performance of Market Advisory Services in Corn and Soybeans Over 1995-2003: A Non-Technical Summary
Scott H. Irwin, Darrel L. Good, Department of Agricultural and Consumer Economics at the University of Illinois at Urbana-Champaign. Joao Martines-Filho, University of São Paulo, Brazil, Lewis A. Hagedorn, Department of Agricultural and Consumer Economics at the University of Illinois at Urbana-Champaign.

Farmers in the US consistently identify price and income risk as one of the greatest management challenges they face. Surveys suggest that numerous farmers view professional market advisory services as an important tool in managing price and income risk. As a result, there is a need to develop an ongoing "track record" of the performance of market advisory services to assist farmers in identifying successful alternatives for marketing and price risk management. The Agricultural Market Advisory Service (AgMAS) Project was initiated in 1994 with the goal of providing such information.

The purpose of this research report is to summarize the pricing performance of professional market advisory services for the 1995-2003 corn and soybean crops. Readers can view the Non-Technical Summary report at: http://www.farmdoc.uiuc.edu/agmas/reports/05_02/AgMAS05_02.html

or http://www.farmdoc.uiuc.edu/agmas/reports/05_02/AgMAS05_02.pdf

The results for 1995-2001 were released in earlier AgMAS research reports, while the results for the 2002 and 2003 crop years are new. Complete details on data collection, computation of net advisory prices and benchmarks and pricing performance tests can be found in the full AgMAS research report by Irwin et al. (2005) at:

http://www.farmdoc.uiuc.edu/agmas/reports/05_01/AgMAS05_01.html

or http://www.farmdoc.uiuc.edu/agmas/reports/05_01/AgMAS05_01.pdf

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Ohio Farmers Conservation Decisions: 2004 Survey Results
Wei Hua, Carl Zulauf, Brent Sohngen

Graduate Research Assistant, McCormick Professor, and Associate Professor, Department of Agricultural, Environmental, and Development Economics, Ohio State University

A survey of 1,500 Ohio farmers with $50,000 or more in sales from farming was conducted during March and April 2004 to assess farm environmental issues and programs. Responses numbered 613, with 525 usable for this analysis. Compared with the 2002 U.S. Census of Agriculture, respondents in our survey earned a larger share of gross farm income from grains and oilseed, as well as from dairy; but a smaller share from horticultural and greenhouse crops, as well as from poultry.

Tillage Practices: Farmers who rented land used no-till more often than did full owner operators. Tillage practices of part owner operators were similar on owned and rented land.

Environmental Best Management Practices: Grass waterways were the most common best management practice. Approximately 40% of respondents reported having them. Over half of respondents with a best management practice on owned land reported that they did NOT receive government payments for installing these practices.

Conservation Compliance: Thirty seven percent of respondents had a written Conservation Compliance plan for highly erodible land (HEL) that they owned. Implementation of the plan required 38% of these respondents to change tillage practices. Analysis of the survey data found that Conservation Compliance was associated with a greater use of conservation tillage not only on HEL land but also on non-HEL land.

Participation in Farm Conservation Programs: One quarter of respondents had participated in farm conservation programs. The Conservation Reserve Program (CRP) had the highest participation rate (15%). Next highest was the Environmental Quality Incentive Program (EQIP) (6%).

Participation in Watershed Groups: Seventeen percent of respondents had participated in watershed group activities near their farm. The recent growth in watershed groups is illustrated by the finding that half of the participating respondents had done so since 1995.

Farmer’s views towards Environmental Issues: The responding farmers overwhelmingly agree (93%) that water is an important resource that needs to be protected. Only 15% agree that water pollution is a major problem in their area. Even fewer agree that farming is a major source of water pollution in Ohio (10%) and that farming activities contribute more to water pollution than do non-farming activities (5%). Eleven percent agree that government should regulate farming practices to improve water quality while 47% think government should pay farmers for adopting conservation practices.

The complete document is available here:

http://ohioagmanager.osu.edu/resources/Farmer_Conservation Decisions_04.pdf

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Economic and Policy Trends Likely to Influence the Future of Forests in Ohio

Brent Sohngen, Department of Agricultural, Environmental, and Development Economics, Ohio State University

This article addresses economic aspects of several management and policy issues related to forestry in Ohio. First, the article describes historical trends in Ohio forests. Second, the article considers trends in timber management on Ohio private and public forests. To address timber management, two issues are considered, the growth of the stock of forests, and timber prices. Timber prices can have a large influence on the management of forestlands. Understanding what may happen to prices in the future can help illuminate the market pressures landowners may face to harvest their trees. Potential harvest and price trends for private timberland can also help policy-makers evaluate the efficiency of harvests on public timberland. Third, the article describes recent projections of potential future land use change in Ohio, including estimates of changes in forestland, cropland and developed land. The projections are based on a recently estimated model of land use in Ohio counties.

The complete article is available at: http://aede.osu.edu/people/sohngen.1/OER/OER2(3).htm

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Economics of Forages - A Set of Resources

Donald J. Breece, Farm Management Specialist, OSU Extension Center at Lima

A number of resources are available concerning forage economics. The University of Kentucky has a 2005 publication concerning the economics of rotational grazing. It uses a partial budget to address the increased costs of fencing vs improved performance and increased stocking rates. Find this article at: http://www.uky.edu/Ag/AgEcon/pubs/ext_aec/ext2005-02.pdf.

For beef producers grazing endophyte infected Fescue, the University of Kentucky also has an article discussing the costs involved with replacement at: http://www.uky.edu/Ag/Forage/AEC%202005-001C.pdf.

An Extension agent from Wisconsin developed a spread sheet to evaluate the economics of the length of an alfalfa stand and looking at a corn silage/alfalfa rotation sequence: http://www.uwex.edu/ces/crops/uwforage/lengthalfalfa.xls.

There is an Internet hay exchange at: http://www.hayexchange.com/hay.htm.

The National Hay Association was formed in 1895 and has a web site at: http://www.nationalhay.org/.

The University of Missouri has a useful article about "Sizing and Siting Hay Barns" at: http://outreach.missouri.edu/webster/ag-edge/forage/haybarn-size.html.

"Round Bale Hay Storage Economics in Kentucky" is found at: http://www.ca.uky.edu/agc/pubs/agr/agr171/agr171.htm.

"Planning for a Farm Storage Building," including spread sheets, was developed in Virginia and is found at: http://www.ext.vt.edu/pubs/bse/442-760/442-760.html.

A "Constructing Hay Feeding and Storage Pads" fact sheet was developed by Ohio Extension and is found at: http://ohioline.osu.edu/aex-fact/0332.html.

Mike Hutjens, Extension Dairy Specialist, University of Illinois, Urbana wrote an article comparing bag vs bunker vs upright storage systems at: http://www.traill.uiuc.edu/dairynet/paperDisplay.cfm?ContentID=578.

Kansas offers a spread sheet and accompanying article comparing the ownership of a big round vs a big square baler at: http://www.agmanager.info/farmmgt/machinery/OwnBaler2004.pdf.

Ohio has enterprise budgets for forages at: http://aede.osu.edu/Programs/FarmManagement/Budgets/index.htm and custom rate information at: http://aede.osu.edu/Programs/FarmManagement/Budgets/custompage.htm.

This represents a partial list of useful information concerning the economics of forages. For more information contact your local county Extension Educator.

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Forage Harvest Costs with Higher Fuel Costs

Barry Ward, Leader Production Business Management

The global implication of a tighter petroleum market is hitting managers’ bottom line every time they fuel up their machines before heading to the field. The additional costs associated with the rise in fuel prices is estimated for several typical forage harvesting methods. This information may be useful for those budgeting their own forage harvesting needs and for those negotiating custom rates. The cost estimates convert a 54% ($0.65) increase in diesel price into the per acre increase in machine operating costs for 20 different forage harvesting setups. The per acre increases in costs range from $0.22 for smaller mowers to more than $2 for more complex machinery.

The complete Forage Harvest Cost table is available here:

http://ohioagmanager.osu.edu/resources/Forage_Harvest_Costs_Table.pdf

For further information, contact:
Barry Ward
Assistant Professor
Leader, Production Business Management
Ohio State University Extension
Department of Agricultural, Environmental and Development Economics
email ward.8@osu.edu
http://aede.osu.edu/people/ward.8

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Ohio Ag Manager Team Leaders: Chris Bruynis & David Marrison

Web Page Managers: David Marrison & Andy Kleinschmidt

Information presented above and where trade names are used, they are supplied with the understanding that no discrimination is intended and no endorsement by Ohio State University Extension is implied.

All educational programs conducted by Ohio State University Extension are available to clientele on a nondiscriminatory basis without regard to race, color, creed, religion, sexual orientation, national origin, gender, age, disability or Vietnam-era veteran status.

Issued in furtherance of Cooperative Extension work, Acts of May 8 and June 30, 1914, in cooperation with the U.S. Department of Agriculture, Keith L. Smith, Director, Ohio State University Extension.

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