Newsletter | Past Issues

January, 2010

In This Issue:

Federal Estate Tax in Limbo for 2010

Two New Agriculture Blogs Available for Ag Producers

2009 Year-End Enterprise Budgets for Corn and Soybeans On-line

Future Trends for Profitability Conference in Agriculture Workshop

Annie's Project Workshops Have Begun

OSU Extension Small Farmer Program Announces Two Upcoming Conferences for March 2010

Income Tax Management for 2009

2009 Income Tax Planning for Dairy Farmers

Focus Issues in Labor

ACRE Payments: Will there be any for 2009?

Do you have a question that you would like to ask the Ohio AG Manager Team?  If so, click here to email your question

Federal Estate Tax in Limbo for 2010

David Marrison & Dr. James Skeeles, Extension Educator for OSU Extension

Russell N. Cunningham, OSBA Certified Specialist in Estate Planning, Trust and Probate Law (Barrett, Easterday, Cunningham & Eselgroth, LLP)

It is 2010, and there is officially no Federal Estate Tax. Why and for how long? While the House recently passed a bill to reinstate the federal estate tax in 2010, U.S. Senators failed to reach a deal to temporarily extend the estate tax into 2010. The extension proposed by the House would have kept the 2009 estate tax levels in place. If the bill passed in the House becomes law, the first $3.5 million of an estate will be exempt from federal estate tax and the estate tax rate on the taxable portion of an estate would be 45%. Senate Republicans want a permanent extension to a $5 million exemption and an estate tax rate of 35%. If no compromise can be reached, we may continue with existing law.

Under the Economic Growth and Tax Relief Reconciliation Act of 2001, the federal estate tax exemption increased during the past decade from $1 million to its 2009 level of $3.5 million and the maximum rate decreased from 55 percent to 45 percent. In 2010, there is a full repeal of the federal estate tax. Starting in 2011, the federal exemption is scheduled to revert back to $1 million.

The lack of movement by Congress could cause a huge TAX headache for many of Ohio farm families if someone dies before a compromise can be reached. This is mainly due to the fact there will be only a limited step-up in basis. Under current federal estate tax laws (prior to 2010), the assets of the deceased get a step-up (or step-down) in basis to the fair market value at date of death (or 6 months later). The step-up simply means when heirs sell an inherited asset, they only owe capital gains tax on the asset's appreciation from the day the asset was inherited to the date of sale rather than from the day the asset was originally purchased by the decedent.

In 2010, if the federal estate tax remains repealed, the step-up in basis is limited to $1.3 million for the overall estate, plus $3 million for assets transferred to a surviving spouse. The Executor will be able to add this extra basis to the existing basis of the property. This means that Executors or heirs will have the added complexity of determining the prior basis of the property, which might go back many years or even generations.

With the value of many of our farm estates, the lack of full basis step-up could trigger larger capital gains for farm families who inherit farm assets. As a reminder, tax liability due to capital gain is not triggered until sale of the appreciated asset. If the asset is inherited this tax will not be assessed until later when and if the asset is sold. It also may pass through another estate settlement (before it is sold) which may allow for the full step in basis if Congress passes legislation to allow such (as was allowed prior to 2010). The tax assessed on capital gain is calculated on only the appreciated amount and currently is at a much lower rate (10 to 15%) than the federal estate tax rate.

So what is on the horizon? It appears the full repeal of the federal estate tax in 2010 may be very short lived in 2010. Senate Finance Chairman Max Baucus, D-Mont., and House Ways and Means Chairman Charles Rangel, D-N.Y., have said they will try to repeal the repeal and get the federal estate tax reinstated retroactively for 2010 after the New Year. This will cause confusion, uncertainty and possibly very large tax headaches for those families who have someone pass between Jan 1, 2010 and whenever Congress reaches a compromise. Families in that situation who are inheriting estates exceeding $3.5 million (or for whatever $ level the new federal estate will be) may be surprised when they owe a large federal estate tax bill if the law is changed retroactively.

Farm families are encouraged to meet with professional council and monitor how these changes may affect their estate plan and be watching for further updates in the Ohio Ag Manager newsletter.

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Two New Agriculture Blogs Available for Agricultural Producers

David Marrison, OSU Extension & Peggy Kirk Hall, Director of the OSU Ag & Resource Law Program

OSU Extension has unveiled two new agriculture blogs for agricultural producers in Ohio. These blogs have been developed to provide producers with timely updates in agricultural law and in succession planning. Producers can subscribe to have each new blog post delivered by e-mail.

Ohio Agricultural Law Blog

The Ohio Agricultural Law Blog is located at http://ohioaglaw.wordpress.com/ and is an outreach project of the Agricultural & Resource Law Program at The Ohio State University, a program supported by OSU Extension.  The blog updates Ohioans on legal issues affecting Ohio's farms, food, animals, land and resources. Blog posts cover court cases, statutes, and legal issues from Ohio and around the country.  The primary blog author is Peggy Kirk Hall, attorney and director of the OSU Agricultural & Resource Law Program.   She serves as the Chair for the Ohio State Bar Association Agricultural Law Committee and teaches Agricultural Law, AEDE 470, in the College of Food, Agricultural and Environmental Sciences at The Ohio State University. Additional information and resources on the program can be found at http://aede.osu.edu/programs/aglaw . More information about this blog can be obtained by contacting Peggy Kirk Hall at aglaw@osu.edu .

Ohio Farm Succession Blog

A team of OSU Extension faculty and staff are dedicated to helping farm families as they transition their family business to the next generation. The Ohio Farm Succession Blog is located at: http://ohiofarmsuccession.wordpress.com/ . This blog shares updates on estate planning legislation and tax changes which could affect the transfer of the farm business and provides information on educational programs on succession planning offered for Ohio farmers. Our team encourages producers to blog their thoughts and experiences in farm succession and share resources which can help families transition their business to the next generation. More information about this blog can be obtained by contacting David Marrison at marrison.2@osu.edu

Happy Blogging!

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2009 Year-End Enterprise Budgets for Corn and Soybeans On-line

Barry Ward, Leader, Production Business Management, OSU Extension,

Department of Agricultural, Environmental and Development Economics

Putting together budget projections for the upcoming year can guide you through your decision making process as you attempt to commit resources to the most profitable enterprises on the farm. Crops or Livestock? Corn or Soybeans?

As producers we also need to complete year end budgets to determine whether our projections met the reality of the past year's revenue and expenses. We have put together a set of year-end budgets for corn and soybeans for conditions in much of Ohio. These budgets may assist you in developing your own year-end budgets to evaluate profitability in 2009.

The sample year-end budgets that were developed all include storage and extra transportation costs and include:

Corn – With Higher Fertilizer Costs

Corn – With Higher Fertilizer Costs and Higher Grain Moisture

Corn – With Lower Fertilizer Costs

Corn – With Lower Fertilizer Costs and Higher Grain Moisture

Corn – With Lower Fertilizer Costs and Higher Yields

Corn – With Lower Nitrogen Costs and No P&K Applications

Soybeans – With Lower Grain Price and Higher Fertilizer Costs

Soybeans – With Higher Grain Price and Higher Fertilizer Costs

Soybeans – With Higher Grain Price and Lower Fertilizer Costs

These year-end budgets are available online at the bottom of our Farm Management Publications website: http://aede.osu.edu/Programs/FarmManagement/MgtPublications.htm

Enterprise Budgets projections for 2010 can be accessed at:

http://aede.osu.edu/Programs/FarmManagement/Budgets/

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Future Trends for Profitability in Agriculture Conference

Chris Bruynis, PhD, OSU Extension Educator

OSU Extension is pleased to announce the Future Trends for Profitability n Agriculture Conference will be held in Wyandot County on February 9, 2010.  At this conference, participants will learn future trends that will affect agriculture and strategies to capture profits as a result of these trends.  The workshop will be held at the Wyandot County Fairgrounds, Masters Building 10171 State Route 53 N located in Upper Sandusky, Ohio just south of US 23. The cost is $35.00 per person for registrations postmarked by January 29 and $45.00 for late or at the door registration. Registration opens at 8:30 a.m. with the meeting beginning at 9:00 a.m.

Speakers for this workshop include Dr. Danny Klinefelter from Texas A&M University speaking on the ten best farm management practices as well as peer advisory groups and alternative business arrangements; Dr. Brent Sohngen from The Ohio State University speaking about profiting from ecosystem services: a review of opportunities in new and emerging environmental markets; and Dr. Corinne Alexander from Purdue University speaking about adding value to your crops: ideas for specialty markets and commodity markets.

Participants will also have the opportunity to hear from the sponsors on other critical issues and trends affecting their clientele. Workshop sponsors include Ag Credit and Country Mortgages, Farm Credit Services, Silveus Insurance Group, Ohio Farm Bureau, and The Ohio State University Extension. See flyer at http://extension-cms.cfaes.ohio-state.edu/counties/wyandot/topics/agriculture-and-natural-resources/2010/Future%20Trends%20Meeting%20Flyer.pdf for more details.

For additional information on the key program speakers, please read their bios below:

Dr. Danny Klinefelter is a Professor and Extension Economist at Texas A&M University, specializing in agricultural finance and management development. He is the director of The Executive Program for Agricultural Producers (TEPAP), co-director of the Texas A&M Family and Owner-Managed Business Program, and co-director of the Texas A&M: Texas Tech Agricultural Lending School. In addition, he serves as the Executive Secretary for the Association of Agricultural Production Executives (AAPEX). He is also the coordinator of the Planning the Return to the Farm Program and a member of the board of the Global Agricultural Business Forum. Prior to his graduate work, he spent five years in commercial lending, credit analysis, and farm management with the Marine Bank of Springfield, Illinois.

Dr. Brent Sohngen is a Professor of Environmental and Resource Economics in the Department of Agricultural, Environmental and Development Economics at The Ohio State University. Sohngen conducts research on the economics of land use change, the design of incentive mechanisms for water and carbon trading, carbon sequestration, and non-market valuation of environmental resources.

Associate Professor Corinne Alexander serves as an Extension specialist in the area of grain marketing at Purdue University. Her goal is to assist farmers and agricultural businesses with the marketing of their grain both in commodity markets and in specialty markets.

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Annie's Project Workshops Have Begun, But Still Time to Register for Several Workshops

Julia Nolan Woodruff, Extension Educator, Erie County

Annie's Project, a risk management program for women in agriculture, is being offered throughout Ohio over the next three months. Annie's Project is a six-part course designed to strengthen women's role in modern farm enterprises. The project's namesake was a woman who grew up in a small rural community and spent her adult life learning how to be an involved, successful business partner with her husband. Annie's daughter, Ruth Hambleton, became an Extension educator in Illinois and developed the program in 2000 in honor of her mother's life experience. The program is for women who live and work in a complex, dynamic farm business environment, and it focuses on five broad aspects of risk typical in the agricultural setting: human, financial, marketing, production and legal.

This year, thanks to new collaborations with the Ohio Farm Bureau, Ag Credit, Farm Credit Services of Mid-America and the USDA Farm Service Agency, OSU Extension is offering 12 Annie's Project workshops in areas around the state, with at least one in each of the organization's newly formed Extension Education and Research Areas (EERAs). Registration cost is $65, which includes materials and meals or refreshments.

Ohio workshops are scheduled for January through March. Seating is limited, so early registration is encouraged. In most cases, workshops are sponsored by several county offices of OSU Extension; anyone residing in nearby areas may sign up for any of the workshops. To register or for more information, contact organizers listed below or Annie's Project coordinators Julia Woodruff at woodruff.94@osu.edu or 419-627-7631 and Doris Herringshaw at herringshaw.1@osu.edu or 419-354-9050. A map of locations and other information can be found on the Erie County OSU Extension Web site, http://erie.osu.edu/ -- click on "Women in Agriculture."

Workshops are being hosted in the following counties:

-- Erie County (Erie Basin EERA). Wednesdays 5:30-9:00 p.m. , Jan. 6 - Feb. 10. Recreation Center, 110 Cherry St., Bellevue. Contact Julia Woodruff at woodruff.94@osu.edu or 419-627-7631.

-- Knox County ( Heart of Ohio EERA). Tuesdays 5:30-9:00 p.m. , Jan. 21 - Feb. 25, Knox County office of OSU Extension, 1025 Harcourt Road, Mt. Vernon. Contact John Barker at barker.41@osu.edu or 740-397-0401.

-- Morgan County (Buckeye Hills EERA) . Mondays, 6-9 p.m., Jan. 25 - March 1. Morgan High School Vo-Ag Room, State Route 376, 3.2 miles south of McConnelsville. Contact Chris Penrose at penrose.1@osu.edu or 740-962-4854.

-- Auglaize County (Top of Ohio EERA). Thursdays, 6-9 p.m., Jan. 28 - March 4. Auglaize County Administration Building, 209 S. Blackhoof St., Wapakoneta. Contact Lois Clark at clark.21@osu.edu or 419-738-2219.

-- Wyandot County (Erie Basin EERA). Mondays 5:45-9 p.m., Feb. 1 - March 8. Solid Waste Management District Meeting Room, 11329 County Road 4, Carey. Contact Chris Bruynis at bruynis.1@osu.edu or 419-294-4931.

-- Ross County (Ohio Valley EERA). Tuesdays, Feb. 2 - March 9. Ross County Service Center, 475 Western Ave., Chillicothe. Contact Dave Mangione at mangione.1@osu.edu or 740-702-3200.

-- Defiance County (Maumee Valley EERA). Tuesdays and Thursdays, 4-6 p.m., Feb. 2 - 18. Defiance County office of OSU Extension, 6879 Evansport Road , Defiance . Contact Barb Rohrs at rohrs.3@osu.edu or 419-782-4771.

-- Ashtabula County (Western Reserve EERA). Saturday, Feb. 6, and Thursdays 6-9 p.m. Feb. 11 - March 4. Ashtabula County office of OSU Extension, 39 Wall St. , Jefferson. Contact Abbey Averill at averill.10@osu.edu or 440-567-9008.

-- Stark County (Crossroads EERA). Tuesdays 6-9 p.m., Feb. 9 - March 16. USDA Service Center, 2650 Richville Drive SE, Massillon. Contact Maureen Austin at austin.238@osu.edu or 330-830-7700.

-- Montgomery County (Miami Valley EERA). Tuesdays, 6-9 p.m., Feb. 23 - March 30. Miami Valley Career Technology Center, 6800 Hoke Road, Clayton. Contact Suzanne Mils-Wasniak at mills-wasniak.1@osu.edu or 937-224-9654.   

-- Fairfield County (Heart of Ohio EERA). Tuesdays 1-4 p.m., Feb. 9 - March 16. Fairfield County Agriculture Center, 831 College Ave. (off Rt. 37), Lancaster. Contact Cora French-Robinson at : french-robinson.1@osu.edu or 740-653-5419.

- - Wood County (Erie Basin EERA). Tuesdays, time to be determined, Jan. 12-Feb. 16. Note: The workshop in Wood County will be focused on risk management topics specific to the green industry. Wood County office of OSU Extension, 639 S. Dunbridge Road , Bowling Green . Contact Beth Fausey at fausey.11@osu.edu or 419-354-6916.

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OSU Extension Small Farm Program Announces Two Upcoming Conferences for March 2010

Tony Nye, OSU Extension Educator

The OSU Extension Small Farmer Program is pleased to announce that two Small Farm Conferences & Trades Shows will be held in Ohio this upcoming March.

“Opening Doors To Success” Southwest Ohio Small Farm Conference & Trade Show, Wilmington Ohio – March 12 & 13 2010

The second Annual “Opening Doors to Success” Small Farm Conference and Trade Show will be held in Wilmington , Ohio on March 12-13 at Wilmington College . This conference will feature, “A Night of Organics”: an evening dedicated to investigating the “ins and outs” of Organic Production and the opportunities that exist, including certification, fertility, weed control, marketing and more on Friday, March 12 beginning at 5:30 pm with registration. The conference will continue on Saturday March 13, at 7:30 am and conclude at 4:30 pm. This intensive day will feature over 35 breakout sessions to pick and choose from along with a trade show for small farmers.

Some of the breakout sessions that will be featured at this year's event include: Growing Grapes/Making Wine, Agritourism Opportunities, Bee Keeping Fundamentals for the Small Farm, Poultry Production for the Small Farm, Self Help Veterinarian for the Small Farm, CSA's – Can they work for me?, Fertility Fundamentals for Small Farm Production, Equipment 101, Food Preservation, Introduction To Aquaculture, Cage Fish Culture, High Bush Blueberry Production, Strawberry Production, Raspberry Production, Agricultural Law Considerations for the Small Farm, Fence Line Law, Tax Issues for the Small Farm, Orchard Planning for the Small Farm , Pasture and Hay Production, Business Planning, Branding my Agricultural Product, USDA Services and Programs and Grants and Loans Available to the Small Farm.

Cost of this conference is $20 for the Friday session, $50 for the Saturday only sessions or $60 for both Friday and Saturday sessions. For more information about this conference, contact Tony Nye at nye.1@osu.edu or 937-382-0901 or watch the Clinton County Extension website for details at clinton.osu.edu.

“Opening Doors To Success” Northeast Ohio Small Farm Conference and Trade Show, Massillon , Ohio – March 27, 2010

The inaugural Northeast Ohio Small Farmer Conference and Trade Show will be held on Saturday, March 27 at the R.G. Drage Career Center in Massillon, Ohio from 9:00 a.m. to 4:00 p.m. This conference will include two keynote addresses ( Choosing the Best Farm Enterprise for Your Family and Making Your Small Farm Dream Come True!) and will include a trade show and over 18 break-out sessions for small farmers to attend.

Breakout sessions will be held on: Aquaculture Opportunities in Ohio, Freshwater Shrimp Production, Pond Management, Backyard Poultry Production, Meat Goat Production, Producing Grass-Fed Livestock, Berry Production, Selecting a Fruit & Vegetable Enterprise for Your Farm, Operating a Small Greenhouse, Maple Syrup for Fun and Profit, Developing a Lease Hunting Enterprise, Managing the Woodlot, Line Fence Law and Other Private Property Issues, Tax Issues for the New & Small Farm, Planning For Your Small Farm Dream.

Cost of this conference will be $50. More information about this conference can be obtained by contacting Mike Hogan at hogan.1@osu.edu or 330-627-4310 or by going to clinton.osu.edu. as details become available.

Both conferences are sponsored by: The Ohio State University Extension; Wilmington College; Farm Credit Services; and the U.S.D.A. Departments of Natural Resources Conservation Service, National Agricultural Statistic Services, Farm Service Agency, and Rural Development.

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Income Tax Management for 2009

David Marrison, OSU Extension Educator

January is the time of the year which farm managers begin their annual winter task of compiling their records to complete their schedule F tax form. Farmers can receive a free copy of IRS Publication 225, the Farmers Tax Guide, at their local county Extension office.  Click here to find the location of the OSU Extension County Extension offices The farmers tax guide can also be obtained on-line at: http://www.irs.gov/publications/p225/index.html

This year's tax major tax changes include a new recovery period for certain machinery and equipment.  Certain machinery or equipment placed in service after 2008 and before 2010 will be treated as 5-year property. The maximum amount you can elect to deduct for most section 179 property placed in service in 2009 is $250,000. This limit is reduced by the amount by which the cost of the property placed in service during the tax year exceeds $800,000. Under current legislation, the Section 179 limit is scheduled to drop back to $125,000 with indexing for 2010.

Farmers are also reminded that for the 2008 to 2010 period, individuals in the 15-percent or lower ordinary income tax bracket have a zero-percent tax rate on qualifying long-term capital gains. For individuals in the 25-percent or higher tax bracket, the tax rate on qualifying long-term capital gains is 15 percent. Earnings of up to $106,800 are subject to 12.4-percent tax for social security in 2009 with all earnings are subject to the 2.9- percent Medicare tax. For 2010, the maximum social security portion is unchanged as there is no cost of living adjustment for 2010 benefits.

Producers are encouraged to review Purdue University Professor George Patrick's income tax publication written for agricultural producers.  This 32 page paper explains in detail many of the new agricultural tax changes.  Topics addressed include: reduced capital gain & dividend rates, child tax credit, charitable contributions, alternative minimum tax, depreciation and Section 179 expenses, new recovery period for new machinery, recovering lost depreciation, deferring income and pre-paying expenses, farm income averaging, crop insurance and disaster payments, casualty losses, self-employment tax, and gifts and donations of commodities. This paper can also be accessed at: http://www.agecon.purdue.edu/extension/pubs/taxplan2009.pdf

All producers are reminded to obtain professional tax assistance as each farm business could benefit from different tax strategies.

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2009 Income Tax Planning for Dairy Farmers

Dianne Shoemaker, Extension Dairy Management, The Ohio State University Extension

Most dairy producers are glad see the end of 2009 and are looking forward to better conditions in 2010. Even though many farm families will have net operating losses, income tax management is still an important issue that must be high on the “to-do” list.

Why are income taxes a concern if a farm lost money this year?

It is possible for a farm that lost a considerable amount of money to have a positive cash farm income for tax purposes, and owe income taxes…and not have the dollars available to pay them.

How could a farm lose money all year and still owe income taxes?

This depends on how the family has been able to handle their cash shortfall. If the farm is current on their bills because they used savings, a line of credit or another loan to pay those expenses in 2009, then the expenses are deductible in the 2009 tax year. But, if the farm has open accounts, those dollars are not deductible expenses until they are paid.

What do you mean by open accounts?

Normally, a farm will purchase feed, supplies, parts, or services and then be billed for them. Current accounts are those which are paid within 30 days. Once the balance due has been unpaid for more than 30 days, it is considered an “open” account. After 30 days there is usually an interest charge on the dollars owed to the business. If the vendor is willing to extend this type of credit to a customer so they can keep purchasing inputs, these open account balances could become quite high.

Since the farm owes the money and will pay it eventually, why can't they deduct the expenses now?

For tax purposes, the farm business that uses cash-based accounting can't deduct the expenses until they have actually paid for them. If a line of credit is used to pay the expense, or the payment is financed with a longer term loan, it is considered paid for tax purposes. As the line of credit or loan is paid off, only the interest on that repayment is deductible, not the principal paid…because it represents that expense already deducted on the farm's taxes.

Back to the original question, how can a farm that lost a lot of money still owe income taxes?

This is the frustrating situation that many unsuspecting families may face this year. Income was low and there were not enough dollars from the sale of milk, cull cows, crops, whatever, to stay current on their bills. If they did not have access to other dollars, their open accounts built up instead. All their dollars went to paying as many bills as they could plus family living expenses.

Even though their income could not cover everything, they can't deduct the expenses they incurred but couldn't pay for, those open accounts. On paper, that can leave them with a positive net farm income (their family living expenses are not deductible) for which they could owe income and self-employment taxes…and there isn't money to pay for them.

What about farms that were able to stay current on their accounts but will still have a loss this year?

They will also need to be working with a good income tax practitioner. When there is a net operating loss, there are opportunities to either carry that loss back or forward to offset an income tax liability in a previous or future year. Since 2007 was an excellent year for many dairy farm families, there may be an opportunity to carry a loss back which would generate an income tax refund.

What if a farm won't generate a refund by carrying a loss back?

If carrying this year's net operating loss back will not generate an income tax refund, then the farm can elect to carry it forward for up to 20 years… in other words they could “save it” to use in a future good year.

How do you make these decisions?

This is not an easy question! You can't simply say “I have a $50,000 net operating loss this year and I had a $50,000 net operating income 2 years ago, that would offset each other, so I'll carry it back.” There are deductions that were made when calculating the previous years' tax liabilities that will have to be adjusted for a carryback decision. This is probably one of the areas that we should say “this should be done by a professional!”

Timeliness of this decision is also critical. If the farm decides to carry this year's loss forward, because it will result in little or no tax refund if carried back, then the election to forgo the carryback must be made on a timely filed tax return.

Where does a family find help with these issues? It sounds like they will have to get on top of this as soon as possible!

Even if a farm uses a tax professional to help them make good decisions and prepare their taxes, farm managers should also read up on current tax management issues. Two good sources of information are the IRS's Farmers Tax Guide, available at your local Extension office, and Purdue Extension's “2009 Income Tax Guide for Farmers” which can be downloaded at http://www.agecon.purdue.edu/extension/pubs/taxplan2009.pdf

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Focus Issues in Labor

Francisco A. Espinoza, Ag & Hort Labor Education

For almost a decade, Ag & Hort has participated in the FALCON interagency network's annual Pre-Season Ag Conference for producers, labor and agencies in agriculture. The Conference reviews programs and services for the coming season and seeks to identify and address industry issues. The Pre-Season provides a forum for expressing opinions, concerns and possible solutions toward a successful season for all. Perspective and context are essential to a positive approach. And the expression and understanding of the views of all stakeholders has served as a strong basis for discussion.

Priority Issues Held in Common by Both Producer and Labor:

(1) Availability or lack of sufficient labor; (2) Ohio crops and employment available to workers; (3) Proper form of documentation/amnesty of “legal” labor.

Worker Concerns, as Viewed/Reported by Producers:

(1) Workers in supply states need more information on available Ohio crops/work before they travel north; (2) Workers also need information on services available through agencies; (3) Workers may need emergency services for car/travel enroute from supply states; (4) Workers sometimes need money for travel expenses enroute or family needs when they first get into Ohio. Growers sometimes provide cash advances to address this. (5) Families often don't mix well with singles in the same labor housing.

Producer Issues, as Viewed/Reported by Farmworkers and Agencies:

(1) Need for sufficient skilled labor; (2) Sufficient interaction and communication with labor to be aware of their issues/problems; (3) Language gap between producers and labor could be improved by training farm labor contractors (crew leaders) and other lower management; (4) Producers need to identify provider for WPS pesticide training of labor, like AmeriCorps; (5) Producers need workers with good documents and good work ethics and values.

Good communication and interaction in the workplace will help lead both producer and labor to more positive results. The observations above also serve as a backdrop to recruitment efforts.

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ACRE Payments: Will there be any for 2009?

Chris Bruynis,PhD, OSU Extension Educator

On August 14, 2009, farmers either had signed up for the average crop revenue election (ACRE) or remained in the tradition DCP program. In Ohio, approximately 6% of the farms representing 10% of the farm acres were enrolled in ACRE. Farmers who signed up for ACRE now want to know if it will make a payment for the 2009 crop.

Although this is a legitimate question, I am not sure it is the correct question to ask. I am more inclined to want to know if it was a good decision. However, I will answer the previous question first. Payments will be made if the actual state revenue per crop is less that the state revenue guarantee for that crop. The actual state revenue per crop is determined by multiplying the actual state yield times the average U.S. cash price for each crop. The average U.S. cash price for each crop is the average terminal price starting at harvest and going forward 12 months. For wheat the year starts July 1 and for corn and soybeans it starts September 1. Currently, many of the numbers needed to determine the actual state revenue are either estimated or predicted. If these hold the actual state revenue estimates along with the Ohio state revenue guarantee are listed in the table below.

In examining the state trigger, a payment for corn and soybeans does not appear likely at this time. For corn, the average U.S. cash price would need to average $3.36 or less for the year meaning the next 8 months would need to be lower yet to offset the four months of $3.50 plus corn we have already had. Soybeans are in the same position with a yearly average needing to fall below $8.67 to release the state trigger.

Wheat is the one crop that appears likely to make a payment. However, depending on the proven yields of the farm, there may not be a payment even with the state trigger looking like it might be met. In an example I calculated, the farm had an average yield of 67 bushels and would still receive a payment providing the 2009 wheat yield was below 94 bushels per acre. Each farm would need to calculate their own scenario to determine if they might qualify for an ACRE payment for their wheat acres. Again with my example, the payment would be in the $40 – $50 range per acre not the $90 – $100 range that was possible for this farmer.

Now that we have answered the first question, I will let you determine for yourself if the decision was the correct one. If a farmer was farming 1,000 acres and had 100 acres of wheat, he would have given up approximately $4,000 in direct payments and should receive approximately $4,000 – $5,000 in ACRE payments. Financially it is about a wash, but from a risk management perspective, it was a good decision. What if crop yields were low like in 2008? What if prices had fallen to 2005 levels?

Farmers who did not enroll in ACRE have the opportunity to re-examine the decision in 2010. Study the program parameters and make sure to sign up for the program of your choice by June 1, 2010.

 
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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  marrison.2@osu.edu if you have problems subscribing.

The Ohio Ag Manager newsletter is published in collaboration by OSU Extension Educators and Faculty members of Ohio State University's Department of Agricultural, Environmental and Development Economics.

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.

Ohio State University Extension embraces human diversity and is committed to ensuring that all research and related educational programs are available to clientele on a nondiscriminatory basis without regard to race, color, religion, sex, age, national origin, sexual orientation, gender identity or expression, disability, or veteran status.  This statement is in accordance with United States Civil Rights Laws and the USDA.

Keith L. Smith, Ph.D., Associate Vice President for Agricultural Administration and Director, Ohio State University Extension TDD No. 800-589-8292 ( Ohio only) or 614-292-1868