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Newsletter | Past Issues
July,
2007
In This Issue:
Ethanol Co-Products: Who, What,
Where and Why Not?
Credit
Reports and Agriculture
Adoption
of Genetically Engineered Crops in the U.S.
Whole
Farm Planning Model
Become
More Energy Efficient and Earn Tax Credits
Zoning
in Support of Agriculture in Ohio: What are are the
Options? and Agribusiness Retention and Expansion
Linked
Deposit Programs Provide Small Business Low Interest
Loans for Job Growth or Retention
Web
Site Focuses on Environmental Regulations with Potential
Impact on Agriculture
Do
you have a question that you would like to ask the Ohio
AG Manager Team? If so, click here to email your
question.
Ethanol
Co-Products: Who, What, Where and Why Not?
Brian
Roe, Associate Professor, Dept. AED Economics, Ohio
State University
USDA
released its first-ever report about ethanol co-product
use in the livestock sector. Last winter, the
USDA interviewed more than 9,000 dairy, cow-calf, feedlot
and hog producers across 12 north central states ranging
from Ohio to the Dakotas to establish baseline data
about this increasingly important part of both the ethanol
business and livestock production. Nearly 40%
of the dairy and feedlot operators surveyed reported
using ethanol co-products during 2006, while just over
10% of cow-calf and hog producers reported using these
products. Over half of the cow-calf and hog producers
reported that they were unlikely to ever use co-products,
while only 40% and 30% of dairy and feedlot operators,
respectively, reported not considering using co-products.
Who
is using co-products? The short answer is that
these operations were relatively large and, with the
exception of hog producers, had been using co-products
for quite a while already. For example, feedlots
that reported using co-products were 3 times larger
than those who did not, and those feedlots had been
using co-products for more than 5 years – well before
the current ethanol boom. Cow-calf and dairy farmers
also had considerable experience using co-products (4.7
and 9.2 years, respectively) and were roughly twice
as large as those not using co-products. Hog producers
using co-products were the most recent adopters – the
average producer had been using co-products less than
3 years. But only the biggest hog producers had
adopted – adopters were 5 times larger than non-adopters.
Where
are livestock operators getting the co-products?
It depends on the type of operation. The majority
of feedlots (52%) are getting co-products directly from
the plant, while the other types of livestock enterprises
chiefly work through feed companies or other middle
men to obtain co-products.
What
are the terms of trade for buying the co-products?
More than half of operators in all four categories work
through the spot market to get co-products, though there
are some operators that work off of monthly or annual
contracts as well. For a majority of feedlot and
cow-calf operations, the price of co-products is based
on the prevailing corn price. For hog and dairy
operations, however, co-product pricing is just as likely
to be based on both corn and soybean meal prices.
The smallest percent of producers price co-products
from the price of beanmeal alone.
The
form of co-products can range from wet to coarse meal
to fine meal to pellets – the popularity of each form
differs by livestock sector. Feedlots currently
using co-products relied upon wet forms the most – 64%
used some wet distillers co-products during 2006, while
fewer than 20% of other livestock operators using co-products
tried wet forms. The most popular form among dairy
and hogs producers was dry, fine meal – at least half
of those using co-products used this form. Cow-calf
operators relied slightly more on pelleted and cubed
forms of co-products, though at least 20% of producers
who used co-products had used at least some wet and
some dry forms of co-product.
So,
what is keeping operators from trying ethanol co-products?
The biggest reason stated by those who have yet to try
them is availability – about one-fourth to two-fifths
of producers in each livestock group cited this reason.
The next biggest reason for all the cattle-based producers
was a lack of infrastructure and storage/handling facilities
to deal with this type of feed. The second most
important reason for hog producers was a concern about
the nutritional value of ethanol co-products for their
operation. Only about 5% of all producers claimed
that a lack of knowledge was holding them back from
trying co-products (though who wants to admit being
unknowledgeable on a survey).
USDA
should be commended for taking a first step in documenting
the current status of co-product use among US livestock
producers. One hopes they will expand the reach
of the next survey into other key livestock states and
furthermore ask producers who have recently incorporated
co-products into their rations about difficulties they
suffered during the transition so that non-adopters
interested in trying this increasingly available feedstuff
can learn from the experience of others.
To
help guide in issues surrounding the price of co-products,
I have updated a spreadsheet on my web page (http://aede.osu.edu/people/roe.30/livehome.htm
). The spreadsheet includes weekly Eastern
Corn Belt feed price series, including several ethanol
co-product prices, from the past several years.
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Credit
Reports and Agriculture
Dianne
Shoemaker, Extension Dairy Specialist, Extension Center
at Wooster
Over
the past year we have touched on a variety of topics
related to credit and agriculture. Credit reports are
used by lenders to evaluate your credit worthiness and
the likelihood that you will repay debt if it is extended
to you. A credit report documents your history of managing
debt. This includes both consumer loans and credit cards
that are reported to the company generating the report.
Information on a credit report includes balances on
loans and credit cards, timeliness of payments, missed
payments and relevant public records, such as records
of bankruptcy proceedings.
There
are many companies that generate credit reports, but
three companies are typically used by lenders to 1)
report credit information of their customers, and 2)
evaluate credit worthiness of potential customers. These
three companies are (listed alphabetically):
Equifax
http://www.equifax.com/home/
Experian
http://www.experian.com/index.jsp
Trans
Union http://www.transunion.com/
A
standard recommendation is that a person should check
their credit reports several times a year to check for
accuracy and any indications that their identity is
being used fraudulently. Loans or credit cards listed
that were not initiated by you would indicate that someone
is fraudulently using your information. It is not likely
that that person would make timely (if any!) payments.
Your credit history and subsequently your credit score
would be adversely impacted.
Each
company is required to provide an individual with one
free credit report per year. A report requested from
one of the 3 major companies every 4 months would allow
an individual to monitor their credit reports periodically
through the year at no charge.
Credit
reporting companies use the information included in
the credit report to generate a credit score. Lenders
also use these scores to evaluate credit-worthiness.
This includes not only answering the question “Should
we lend this person money?”, but also “What interest
rate does this person qualify for?” Typically, higher
(better) credit scores qualify loan applicants for lower
interest rates.
Credit
scores are not available for free. Each company charges
for this information. In addition to the numerical score,
ranging from 300 to 859, there will be a summary of
strengths, concerns, and strategies for improving the
score. While interesting, unless you are preparing to
borrow money and want to be sure you have a strong credit
score, it is not usually necessary to purchase credit
score information when checking your credit report.
When
checking your credit report, you may not find all of
your loans or credit cards listed on each report. Not
all lenders or credit card companies report to any or
all credit reporting services. When applying for loans,
it is important to fully report your existing debt (loans
or credit card balances), whether you think the prospective
lender will find it on your credit report or not.
Your
local Extension office is a resource for information
about credit. Early and thorough education about smart
use of credit is particularly important for young people.
As a group, young people are exposed to offers of credit
very early. Mistakes in use of credit can follow a young
person on their credit report for many years. The internet
site http://www.myfico.com/
also has information about credit and credit scores
that may be useful for both young people and established
businesses interested in using credit successfully.
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Adoption
of Genetically Engineered Crops in the U.S.
by
Gene McCluer, OSU Extension Educator, Hardin County
The Economic Research Service of the USDA has just release
information about the adoption of new seed technology.
U.S. farmers have adopted genetically engineered (GE)
crops widely since their introduction in 1996, notwithstanding
uncertainty about consumer acceptance and economic and
environmental impacts. Soybeans and cotton genetically
engineered with herbicide-tolerant traits have been
the most widely and rapidly adopted GE crops in the
U.S., followed by insect-resistant cotton and corn.
This story summarizes the extent of adoption of herbicide-tolerant
and insect–resistant crops since their introduction
in 1996.
Herbicide-tolerant (HT) crops, developed to survive
application of specific herbicides that previously would
have destroyed the crop along with the targeted weeds,
provide farmers with a broader variety of options for
effective weed control. Based on USDA survey data, HT
soybeans went from 17 percent of U.S. soybean acreage
in 1997 to 68 percent in 2001 and 91 percent in 2007.
Plantings of HT cotton expanded from 10 percent of U.S.
acreage in 1997 to 56 percent in 2001 and 70 percent
in 2007. The adoption of HT corn, which had been slower
in previous years, has accelerated, reaching 52 percent
of U.S. corn acreage in 2007.
Insect-resistant crops containing the gene from the
soil bacterium Bt (Bacillus thuringiensis) have been
available for corn and cotton since 1996. These bacteria
produce a protein that is toxic to specific insects,
protecting the plant over its entire life. Plantings
of Bt corn grew from 8 percent of U.S. corn acreage
in 1997 to 26 percent in 1999, then fell to 19 percent
in 2000 and 2001, before climbing to 29 percent in 2003
and 49 percent in 2007. The recent increases in acreage
share may be largely due to the commercial introduction
in 2003/04 of a new Bt corn variety that is resistant
to the corn rootworm, a pest that may be more destructive
to corn yield than the European corn borer, which was
previously the only pest targeted by Bt corn. Plantings
of Bt cotton expanded more rapidly, from 15 percent
of U.S. cotton acreage in 1997 to 37 percent in 2001
and 59 percent in 2007.
Use of Bt corn will likely continue to fluctuate over
time, based on expected infestation levels of European
corn borer (ECB), and the corn rootworm which are the
main pests targeted by the Bt corn. Similarly, adoption
of Bt cotton depends on the expected infestation of
Bt target pests, such as the tobacco budworm, the bollworm,
and the pink bollworm. Adoption appears to have reached
the low-growth phase, as adoption has already occurred
on acreage where Bt protection is needed most. Insects
have not posed major problems for soybeans, so insect-resistant
varieties have not been developed.
These figures include adoption of "stacked" varieties
of cotton and corn, which have both HT and Bt traits.
Stacked cotton reached 42 percent of cotton plantings
in 2007. Plantings of stacked corn made up 28 percent
of corn acres in 2007.
Adoption of all GE cotton, taking into account the acreage
with either or both HT and Bt traits, reached 87 percent
in 2007, versus 91 percent for soybeans. In contrast,
adoption of all biotech corn was 73 percent.
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Whole
Farm Planning Model
David
Marrison, Extension Educator, Ashtabula County
Planning
is one of the most important aspects of managing any
business. This is especially true for farms and agribusinesses
due to their complexity and to the inherent uncertainty
(i.e. weather, commodity prices) associated with agriculture.
Farm families are encouraged to adopt a whole farm planning
approach as they develop strategies for the future success
of their business. This approach allows families to
examine the internal structure of their business and
then develop business, retirement, transition, estate,
and investment plans. Click here to read the full article
on farm business planning:
http://ohioagmanager.osu.edu/news/documents/Whole%20Farm%20Planning%20Model1.pdf
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Become
More Energy Efficient and Earn Tax Credits
Donald
J. Breece, Farm Management Specialist, OSU Extension
In 2006, and now in 2007, a person can earn up to a
$500 Income Tax Credit for the cost of energy efficient
home improvements. The 10% tax credit is for items
in your main home: exterior windows, insulation systems,
exterior doors and metal roofs that meet the Energy
Star requirements. The law also provides for a
$50 credit for such things as an eligible main air-circulating
fan and a $150 credit for a qualified natural
gas, propane or oil furnace or a hot water heater.
The maximum credit per tax year is $500, but no more
than $200 can come from window expense.
There is also a credit for adding qualified soar panels,
solar water heating, or a fuel-cell power plant for
the main home. Taxpayers are allowed a credit
up to 30% to a maximum of $2000 for these qualified
investments. Use Form 5695 for the Residential
Energy Efficient Property Credit. Remember, these
items must be placed in service before January 1, 2008.
IRS has a list available of Alternative Motor Vehicles
, placed in service after 2005, that may qualify for
a tax credit.. Also, there is a newer credit for
a Qualified Hybrid Motor Vehicle. The credit varies
with each one as fuel efficiency is compared with the
2002 models. The full credit amount is $2,600 for the
highest qualified vehicles. For more information,
check out the web site: www.IRS.gov
. The Hybrid Vehicle credit is good through
2010 for passenger cars and light trucks, and 2009 for
other vehicles.
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Zoning
in Support of Agriculture in Ohio: What are are the
Options? and Agribusiness Retention and Expansion
Jill
Clark, Director, Center for Farmland Policy Innovation
OSU's
Center for Farmland Policy Innovation, a research based,
local policy change organization, has recently made
available a new series of policy briefs. These briefs
are designed to address timely topics relevant to issues
faced by Ohio agriculture, and supplement the Center's
roundtable series. Topics covered are Zoning in
Support of Agriculture in Ohio : What are the Options?
and Agri-Business Retention and Expansion
(http://cffpi.osu.edu/policybriefs.htm
) . The zoning brief is presented along
with additional resources on agricultural zoning in
Ohio , including a white paper on the topic, and PDFs
of select Ohio zoning resolutions which support agriculture.
You
can also check the Center website for updates on this
year's 8 th Annual Farmland Preservation Summit of which
the Center is a co-organizer (http://cffpi.osu.edu/summit.htm).
The expected date for this event is November 1, 2007
and the location is the Ohio Department of Agriculture
in Reynoldsburg , Ohio .
If
you would like to learn more about the Center and stay
updated on our projects and efforts to enhance the viability
of Ohio agriculture, become an affiliate by contacting
Jill Clark at 1.614.247.6479, or emailing us at cffpi@osu.edu
.
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Linked
Deposit Programs Provide Small Business Low Interest
Loans for Job Growth or Retention
OARDC
Staff, Ohio State University
Every
small business is faced with a decision at one time
or another to either invest more capital for growth,
or risk falling behind. Considering tougher competition
and evermore demanding consumers it is important for
small businesses to remain competitive in the current
market place.
To
help Ohio's small businesses, and in recognition of
their contributions to the economic growth of the state,
Ohio Treasurer Richard Cordray is ramping up a new initiative
to help those who need help from the bank to remain
competitive and survive in the marketplace.
Cordray's
Small Business Linked Deposits Program is making more
than $500 million available in linked deposit loans.
Essentially, a linked deposit lowers the interest rate
on bank loans by three percent for small businesses
that are creating jobs or preventing layoffs for Ohioans.
For
entrepreneurs who are creating or expanding your business,
a three percent reduction on a loan could provide the
necessary infusion of cash flow that could make job
growth or job creation possible and in turn enhance
Ohio 's economy.
A
number of small businesses have come through the program
already and represent a varied background of industry,
such as, the service industry, manufacturers, retailers
and distributors, financial industry and agricultural.
Here
are the qualifications to receive a Small Business Linked
Deposit and lower a loan's interest rate:
- your
business must employ less than 150 people, and the
majority of them must be Ohio residents;
- your
business must be organized for profit and have offices
in Ohio ;
- the
operating facilities must exclusively be in Ohio ;
- one
full-time equivalent job must be effected for ever
$25,000 requested;
- a
maximum of $250,000 may be requested.
Additionally,
in order to receive the interest rate deduction, the
lending bank must be qualified as a state depository.
For the full list of eligible banks that qualify as
state depositories, go to ohiotreasurer.gov.
The
rate reduction on a loan is passed along to the small
business, for a two-year time period. But, if the loan
arranged through the lender is for more than two years,
the loan will return to the agreed-upon rate after the
linked deposit expires.
Funding
decisions come on a first-come, first-served basis,
and there is no application fee. For more information
on Ohio Treasurer Richard Cordray's Small Business Linked
Deposits Program, or to download application forms,
visit the Web site at www.ohiotreasurer.gov
and click on “linked deposits.”
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Web
Site Focuses on Environmental Regulations with Potential
Impact on Agriculture
Chris
Bruynis , Extension Educator, Wyandot County
EPA has created a new web site containing an easy and
succinct look-up tool listing federal environmental
regulations that could potentially apply to agriculture.
Knowing the regulations beforehand will allow farmers
to address these issues before they become problems.
More information on the agriculture regulatory matrix
is available at http://epa.gov/agriculture/llaw.html
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Readers
can subscribe electronically to this newsletter by sending
an e-mail message to: ohioagmanager-on@ag.osu.edu.
A successful subscription message will receive by an
automatic reply from the listserv. Contact your local
Ohio State University Extension Office or e-mail dmarrison@ag.osu.edu
if you have problems subscribing.
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.
link
TDD
# 1 (800) 589-8292 (Ohio only) or (614) 292-1868
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