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Ohio crop coverage options to be outlined in meetings series
 
Ohio crop coverage options to be outlined in meetings series

By VICKI JOHNSON
Ohio Correspondent

ATTICA, Ohio — The puzzle of which agriculture program to choose was one of three topics covered Dec. 11 during an Ohio Agriculture Policy and Outlook Conference. Also highlighted were expectations for land values and cash rent prices, as well as the overall ag economic outlook, during the annual meeting hosted by Sutton Bank at the fairgrounds in Attica.
Carl Zulauf, professor in the Depart-ment of Agricultural, Environmental and Development Economics at The Ohio State University, outlined the three farm program options available to farmers and landowners. He said the choices are necessary because there was so much disagreement during farm bill debates.
“There would be no farm bill without this choice,” he said. He had no recommendation on which program was best, though; “I don’t think there’s any right or wrong answer.”
However, he did say the best answer for individual farmers depends on asking the right questions: “These are big decisions. This is a far bigger decision than most people think. I don’t think there’s any right or wrong answer.”
The three options in basic terms as explained by Zulauf are PLC, ARC-CO and ARC-IC. Price Loss Coverage, or PLC, payments, occur if U.S. average market price for the crop year is less than the crop’s reference price. Reference prices are $5.50 for wheat, $3.70 for corn and $8.40 for soybeans.
County ARC, or ARC-CO, payments occur when actual crop revenue is below the ARC revenue guarantee for a crop year. A simplified explanation is that County ARC coverage is 76-86 percent of the county’s average for the preceding five years. Individual farm ARC, or ARC-IC, is a whole farm, not an individual crop, program. In essence, he said it is based on the average of the individual farm.
Under the PLC and ARC-CO programs, payment acres for a crop are 85 percent, while payments for ARC-IC are based on 65 percent. “This is a decision under uncertainty,” Zulauf said. “You have to accept that right from the get-go.” He suggested diversifying if possible because that’s the classic method of dealing with uncertainty. “You can mix and match these programs.”
But that depends on which programs a farmer chooses. To add another element to the mix, he said the best type of crop insurance for a farm depends on which option is selected. But crop insurance is not a requirement for choosing a program.
For more detailed explanations by Zulauf, he suggested visiting http://aede.osu.edu/research/crop-program-decisions for a list of resources.
Barry Ward, leader in production business management at OSU, said agriculture is expected to be entering a year of lower prices. But he doesn’t expect conditions to get as bad as they were in the late 1970s and early 1980s. “There’s not a lot of good news,” he concluded.
He explained land values are expected to hold their own in 2015, but not to increase. “I think the general consensus is the rate of increase is slowing,” he said. “It’s essentially a flattening-out in farmland values.”
Ward said cash rents are not expected to decrease despite lower crop prices. He said farm balance sheets are “healthy” from recent years of good prices, and landowners will be dealing with higher property taxes because of the changes in Current Agricultural Use Values.
Regarding input costs, he said fuel costs are expected to decrease, but fertilizer prices, seed costs and chemical prices probably will remain the same or moderately higher.
Matt Roberts, associate professor in the Department of Agricultural, Environ-mental and Development Economics, forecasted corn prices to be in the $3.50-$4 range long-term, while soybeans are expected to be in the $9-$10 range.
He explained how the global economic climate affects the price of local crops. Two of the largest factors are exports to China and dropping oil prices, which leads to less ethanol production and less of a market for corn.
Outlook meetings continue in January:
•Jan. 5: Darke County, Anderson Ethanol, Greenville, 8:30 a.m., $20 per person; RSVP to Darke County extension, 937-548-5215 or custer.2@osu.edu by Dec. 22.
•Jan. 5: Mercer County, Central Services Building meeting room, Celina, 11:30 a.m., $20 per person with RSVP or $30 at the door; RSVP Mercer County extension, 419-586-2179 or riethman.24@osu.edu by Dec. 22.
•Jan. 6: Pickaway County, Circleville Presbyterian Church, Circleville, 7:30 a.m., $10 per person; RSVP Pickaway County extension, 740-474-7534 by Dec. 29.
•Jan. 7: Erie County, Bellevue VFW Hall, Bellevue, 4 p.m., free with RSVP or $22 per person at the door; RSVP Valerie Bumb, 419-483-7340 or BumbV@fnblifetime.com by Jan. 2.
•Jan. 8: Wyandot County Fairgrounds, Masters Building, Upper Sandusky, 7:30 a.m., $15 per person; RSVP Ag Credit Upper Sandusky, 419-294-4933 by Jan. 2.
•Jan. 8: Wood County Fairgrounds, Junior Fair Building, Bowling Green, noon, $15 per person at the door; RSVP Wood County extension, 419-354-9050 by Jan. 5.
•Jan. 8: Defiance County, Jewell Community Center, Defiance, 5:30 p.m., $15 per with RSVP or $30 at the door; RSVP Defiance County Extension, 419-782-4771 or clevenger.10@osu.edu by Jan. 5.
•Jan. 9: Putnam County, Kalida KC Hall , Kalida, 7:30 a.m., $20 per person with RSVP or $30 at the door; RSVP Putnam County extension, 419-523-6294 by Dec. 30.
•Jan. 9: Greene County Career Center, Xenia, 1 p.m., $10 per person; RSVP Mary Griffith at griffith.483@osu.edu or 937-372-9971, ext. 114 by Jan. 5.
•Jan. 22: Union County Services Building, Marysville, 5:30 p.m., free with RSVP or $20 at the door; RSVP Union County extension at 937-644-8117 by Jan. 15.
•Jan. 29: Washington County Career Center, Marietta, 5:30 p.m., $20 per person; RSVP Washington County extension at 740-376-7431 by Jan. 22.
12/17/2014