Back to Ag Home Page 

County Home Page

Previous Issues:

Jan 2003

Oct 2002

Sept 2002

Drought Edition

Jul/Aug 2002

Jun 2002

May 2002

Apr 2002

Mar 2002

Feb 2002

Jan 2002
 

 IN THIS ISSUE...   November  2002

Tough Times Never Last But Tough People Do!
That's the name of a book by Robert Schuller, but it could also describe the situation facing many farm families in Carroll, Harrison, and Jefferson Counties right now. Milk prices have tanked, crop yields were miserable due to the drought, first cutting hay which was baled is low quality thanks to the May-June monsoon season which preceded the July-August drought season...and the list goes on.

Farming has certainly seemed like a roller coaster the past several years with periods of higher prices and returns, followed by periods of lower returns and profitability. We wish that we could tell you that this pattern will soon change, but most agricultural economic indicators seem to point toward continued wide swings in prices, returns, and levels of profitability in many farm enterprises, as is the case in many other industries throughout the globe (think stock market, steel production, the airline industry, microcomputers, telecommunications, energy prices, or even the entire Japanese economy of the late 1990's!).

So what's a person to do in these tough times? Well three things come to mind:
1. Pay attention to the health and well-being of you and your family. Too often farm families suffer health (including mental health) problems because of lingering economic problems. Take your wife out to dinner, go to your daughter's basketball game, or read a good book.

2. Push the pencil, know exactly where you are financially, and search for ways to survive the current period of low prices. If you don't have enough hay to winter your brood cows, consider buying corn instead of hay. Can you sell some timber? Can you refinance some debt to take advantage of reduced interest rates? We are planning a workshop in Carrollton for dairy farmers, and beef schools on these very topics in January. Let Ken and me know how else we can help you with this task.

3. Think about diversifying or doing something differently. Doing things on the farm just as we have always done them, and expecting different results is a recipe for disaster in today's farm economy. Now would be a great time to identify ways to diversify the economic risk of your operation. Alternative farm enterprises or alternative production systems such as managed-grazing can help buffer your family's balance sheet from the wide commodity price swings which will likely continue in the future.

Remember, tough times never last but tough people do, and nobody is tougher than the American farmer!

back to top
 

P & K Requirement Following a Poor Crop Year
In many areas the dry weather has caused lower than expected yields for 2002. Since phosphorus and potash rates were applied for higher yields, producers have asked: will these nutrients be available for future crops, and may I reduce application rates for 2003? Phosphorus and potash not removed by the present crop will generally accumulate (build-up) for future crops. However, a soil test will be needed to make adjustments to your overall program. Understanding the relationship between soil levels and crop response should help determine whether your soils have more than adequate, or deficient levels of phosphorus and potash for next year's corn or soybean crop.

Generally corn and soybeans have more than adequate phosphorus when levels are above 40 ppm (80 lb). Additional applications at or above this level will accumulate in the soil but not benefit the crop, and may even cause environmental concerns. At adequate levels (15 - 30 ppm/30 - 60 lb), additional phosphorus should be applied to equal the amount removed by the crop. For corn, crop removal equals the yield goal multiplied by 0.35; for soybeans, crop removal equals the yield goal multiplied by 0.83. Between 30 - 40 ppm, application amounts less than crop removal would be recommended. If soil levels were below 15 ppm, then applications would include crop removal and a program that raises the overall soil P level. For example, if soil P levels were 10 ppm (20 lb), then a 160 bu/A corn crop would require 85 lb/A P and a 50 bu/A soybean crop would require 65 lb/A.

Potash recommendations follow the same philosophy as phosphorus except consideration is given for soil cation exchange capacity (CEC). Since applied potash may be held more tightly by soils with high CEC, potash rates increase as the soil CEC increases. Regardless of CEC and yield goals, corn and soybean yields would not respond to additional potash at soil potash levels above 200 ppm (400 lb). Corn and soybeans grown on soils that have a CEC <10 would not respond to additional potash when the soil test level >150 ppm (300 lb). Tables on page 14 in the Tri-State Fertilizer Recommendations for Corn, Soybeans, Wheat, and Alfalfa guide provide potash rates for corn and soybeans at various yield goals and soil CES. Many private soil testing laboratories have the capability to make recommendations from this guide upon request. If you are not sure whether a private lab follows these recommendations, a computer program using the tri-state recommendations may be downloaded from the Internet at http://ohioline.osu.edu/lines/farm.html and selecting the software option.

In summary, by understanding your soil tests, phosphorus and potash rates may be reduced without lowering corn and soybean yields. This may be one way to lower input costs following a year of poor crop performance.

More details on soil fertility may be obtained in Tri-State Fertilizer Recommendations for Corn, Soybeans, Wheat, and Alfalfa, Bulletin E-2567, available through your county Extension office. Recommendations from this publication incorporate over 40 years of data from field calibration and correlation studies.
-Corn #32

back to top
 

Cooperative Mineral Purchasing Program
The Carroll County Cattlemen's Association is once again sponsoring a cooperative mineral purchasing program in order to help beef producers from any county improve the nutrition of their cow herd, and save money. Participants can save up to $3.50 per 50 pound bag by participating in the cooperative purchase! An order form is enclosed with this newsletter. Orders must be received by December 14 and minerals will be available for pickup anytime between December 28 and January 10.

Cattle Outlook Improving as Feedlot Inventories Dwindle
Since the 4th of July, winter and spring futures prices for fed cattle have risen by $5, though local cash prices have only increased about half that much and currently dwell in the mid-$60's. Local prices should rise to the upper-$60's or low-$70's by December and then approach and remain in the low-$70's from February through April with a good chance of several weeks in the mid-$70's. Prices during the summer of 2003 are currently projected in the upper-$60's, though some upside remains possible. Let's take a look at several factors driving recent optimism.

First, since July, USDA has confirmed what analysts had long expected: feedlot inventories are significantly below year-ago levels. With a cyclically small breeding and replacement herd that has been stressed and, in some cases, relocated due to drought, smaller calf crops are likely for the next few years. In addition, imports of Mexican feeder cattle have slowed as exporters deal with new TB import requirements, though the importation of Canadian feeder cattle due to drought has partially offset the Mexican slowdown. In addition to a reduction in the total number of cattle on feed, it appears cattle weights may finally moderate. The stellar rates of gain observed on the Plains this summer will be tempered by unseasonable cold and wet fall weather while increased feed prices will pressure feedlots to avoid higher slaughter weights.

Several demand-side developments also spark optimism. First, both the pork and poultry sectors appear to have made the necessary adjustments to reduce competing meat supplies in the upcoming year. USDA projects a 2% reduction in pork supplies for 2002, while broiler egg sets are lower than year previous. Beef export news continues to do better than initially expected . While the value of all US beef exports is down about 3%, it could have been much worse given the value of exports to Japan, our largest buyer, are down 40% so far in 2002 due to that country's weak economy and BSE-induced beef aversion. August's exports are only 34% behind last year, suggesting some recovery in sales to Japan. The value of exports to South Korea (+129%) to Mexico (+95) have nearly offset Japan's shortfall.
Improved optimism in fed cattle prices has also driven futures markets for 2003 feeder cattle to appreciate by about $5 since the 4th of July. A greater appreciation would have occurred if corn prices had not dramatically increased this past summer; indeed, the recent moderation of corn prices have been supportive to prices. Ample rains in the wheat pasture areas of the lower Plains have also supported lighter feeder calf prices. My feeder cattle price projections suggest stronger prices for mid-weight cattle next year. Cow-calf operators with lightweight calves (350 lbs) this November may find it advantageous to hold calves on back grounding programs until next year to take advantage of these improved prices, while those with slightly heavier calves (450 lbs) could also benefit from back grounding if calves can attain feed to gain ratios of 6.0 or less. See my full feeder cattle price projections by weight group and projected returns to back grounding under various assumptions under the cattle slides link at: http://aede.osu.edu/people/roe.30/livehome.htm .

On a final note, cow-calf operators need to be aware that the voluntary country of origin labeling program recently introduced by USDA will become mandatory as of September 2004. The meat from animals without verified documentation concerning birthplace may not be eligible for sale at many typical retail outlets and may be relegated to the processed meat markets, potentially decreasing the animal's value within the US marketplace. Hence, producers need to begin developing ways of coming into compliance with these regulations or be prepared to take lower prices for ‘undocumented animals' in the market.
-Brian Roe
OSU Department of Ag Econ

back to top
 

Livestock Mortality Composting Training and Certification Program
Dead beef, dairy, sheep, swine, or poultry can be safely composted using sawdust, corn stover, poor quality hay, or yard wastes as the carbon source. If you are interested in becoming certified in this process, or just want to learn about the process, plan on participating in this workshop scheduled for Monday, December 9, 2002 at the Mahoning County Farm across from the Canfield Fairgrounds. A registration fee of $5 is required by December 6. Contact your local OSU Extension Office for a registration flyer.

2002 Income Tax Update
The year 2002 has been one of extremes–from too much rain during the spring to very little or no rain during the growing season; from normal prices for livestock and livestock products early in the year to very low prices later in the year. Everything that has happened weather-wise and price-wise during 2002 has created a lot of stress on farm families. While working on farm records may not be the favorite job around the farm, using those farm records now to do some preliminary income tax planning can help ease some of the year-end stress.

The goal of income tax management is to avoid large year-to-year fluctuations in taxable income while making sure that there is at least sufficient income to offset personal exemptions and deductions. The 2002 standard deduction for a married couple filing jointly is $7,850; single is $4,700 and the personal exemption is $3,000. A married couple with no children can have $13,850 of income before they will pay any income tax. Self-employment taxes start at $400 net from self-employment so generally self-employment taxes will be paid before any income taxes are due.

Tax Planning in a Drought Year
With drought conditions comes the potential of additional income and expenses, e.g., crop insurance and crop disaster payments, additional livestock sales due to reduced feed and water supplies, and additional government payments for drought assistance. If your county has been declared a disaster area because of the drought, any crop insurance proceeds and crop disaster payments received in 2002 can be deferred until the following year. This deferral can be made if you can show that your normal marketing pattern is to sell your crops in the year following their production and harvest. If payments are made for more than one crop, the payments must be reported in the same manner for all crops.

Income from excess sales of any type of livestock can also be deferred to 2003 if the sales were caused by the 2002 drought. If the excess livestock sold is held for draft, breeding, or dairy purposes, the gain on those animals can be treated as an involuntary conversion ans postponed if similar animals are purchased animals within a two-year period. The "excess" amount of income or gain that can be deferred or postponed is the amount over and above the amount that would have normally been reported.

Other government drought assistance payments are generally taxable in the year received. Be sure to examine your tax situation carefully before you decide whether to defer or not defer additional payments or income you received because of the weather. The Farmers Tax Guide has an excellent discussion on making the elections necessary to defer income related to drought conditions.

Depreciation Planning and Changes
The Job Creation and Worker Assistance Act of 2002, signed during March 2002, includes a provision for an optional 30% first year additional depreciation deduction for the taxable year in which qualified property is placed in service. Qualifying property must meet all the following requirements: 1) must be MACRS property with a recovery life of 20 years or less; 2) property must be brand new (not used) and use must start after September 10, 2001; 3) property must have been purchased after September 10, 2001, and before September 11, 2004, and 4) property must be placed in service before January 1, 2005. You have to elect out of the additional 30% depreciation on Form 4562, Depreciation and Amortization, if you do not want to claim it.

Ohio personal income taxes have been calculated starting with the Federal adjusted gross income from Form 1040. However, the Ohio General Assembly passed legislation during 2002 that "decouples" depreciation for Ohio income taxes from the 30% additional depreciation allowed for Federal tax purposes. This will affect all Ohio taxpayers that use Federal income as a basis for Ohio tax calculations.

To make the adjustment for Ohio income taxes, the amount of the 30% additional depreciation claimed is divided by 6 and that 1/6th amount is added to the regular Federal deprecation claimed for years 1-6. The result of this change is that you will get the full benefit of the 30% additional depreciation on your Ohio income taxes, but the amount will be claimed over six years rather than just in the first year. Additional details on this adjustment for Ohio income taxes can be found at: http://www.state.oh.us/tax/Information_Releases/picft200201.html.

While this change does not require a separate depreciation schedule for Ohio, it will require some extra record keeping to track the depreciation amounts claimed over time.

Summary
The decision to postpone reporting income related to drought conditions should not be automatic. Likewise, claiming the additional 30% depreciation is not an automatic decision. Both tax provisions should be considered as part of an overall income tax management strategy for 2002 and 2003. Be sure to check with your tax advisor about your individual situation.

back to top
 
 

Feeding Dairy Cows in a Drought Year
Much of Ohio had substantially less rain than normal during this growing season. The result will be lower forage yields, altered nutrient composition of the forages and overall higher feed costs. Diets will probably have to be changed to maintain production, health, and net income.

Lower Forage Yields
Yields of corn silage and hay crop forages this year will be lower and in some cases substantially lower, than average. Dry growing conditions in other areas of the country will limit the supply of hay available for purchase. Because of higher prices and less availability, producers may have to reduce the amount of forages in diets for dairy cows. If diets are formulated properly, the concentration of forages (hay and silages) can be as low as 35% of the diet dry matter without reducing milk yield or causing health problems. However, the risk of developing problems related to ruminal acidosis increases as the amount of forages in diets decrease. Under practical feeding conditions a lower limit of 40 or 45% forage in diets is more reasonable. As the amount of forage in diets decrease, other changes in the diet must be maintained to avoid rumen acidosis and associated health problems (e.g., increased risk for laminitis, displaced abomasum, ketosis, etc.). The most important change to make as forage is reduced is to increase total dietary neutral detergent fiber (NDF) and decrease nonfiber carbohydrate (NFC). The three values on a diet evaluation sheet that have to be examined closely when low forage diets are fed are the concentration (% of DM) of forage NDF, total NDF and total NFC. The desired concentrations of these fractions are related and are not constant. As the amount of forage NDF in a diet decreases, the desired concentration of total NDF increases and the desired concentration of NFC decreases. The table below (from the 2001 NRC Dairy Requirements book) is a good starting point when evaluating lower forage diets, but adjustments may be needed for specific situations.
Recommended Carbohydrate Fraction in Diets 
(% of DM) for Lactating Cows

Forage NDF       Minimum Total NDF             Maximum NFC
     >19%                           28%                                     43%
       18%                           30%                                     41%
       17%                           32%                                     39%
       16%                           34%                                     37%
       15%                           36%                                     35%
 

Necessary Adjustments

1.  Diets with high moisture corn, especially high moisture corn with more than 30% moisture should have more NDF and less NFC than shown in the table (probably 1 or 2 units).

2. Diets with finely chopped forage need more total NDF and less NFC than shown in the table.

As the amount of forage in diets is reduced, alternative fiber sources must be included. The best alternative for forages is probably whole linted cottonseed. This feed is high in NDF (45 to 50%) and stimulates chewing and rumination. Many other byproducts (e.g. soyhulls, corn gluten feed, wheat midds, and beet pulp) have high concentrations of NDF (>40%) but these feeds do not stimulate chewing as well as forages or whole cottonseed. These feeds are useful in low forage diets but if the diet is very low in forage (<17% forage NDF) or if the forage is finely chopped they will probably not be adequate to maintain chewing. Whole cottonseed should be fed in those diets.

Nutrient Composition of Drought-Stressed Forages
Drought-stress changes the nutrient composition of forages and also increases variability in composition among plants and among fields. Forage testing is always important but it is really important for drought-stressed forages. The frequency of sampling and forage testing should be increased with drought-stressed forages.

Although yields may be greatly reduced by drought, forage quality generally is improved. A water deficiency slows the nutrient changes associated with plant maturity. Midbloom alfalfa that is drought-stressed usually has similar nutrient composition as non-stressed alfalfa harvested in the late bud or early flower stage. Expect lower than normal NDF concentration in drought-stressed alfalfa and the NDF usually is more digestible than alfalfa grown with adequate water. Drought-stressed corn silage will have substantially more NDF and less starch than normal corn silage because the amount of grain in the crop will be reduced. This change usually reduces the energy concentration of the silage. The reduction in energy is not as great as would be expected based on NDF. concentrations because the NDF is usually more digestible. The estimated energy values obtained from labs should be carefully evaluated. Many equations used by labs to estimate energy will underestimate the energy concentration in drought-stressed corn silage. The higher NDF concentration of drought-stressed corn silage will mean that the amount of corn silage fed can be reduced without reducing the concentration of forage NDF in diets. The protein concentration of drought stressed corn silage is usually slightly higher than that found in normal corn silage.

Higher Feed Costs
The poor growing conditions in much of the country will reduce supply of the major feedstuffs used by dairy cows. The price of soybean meal has increased dramatically in the past few weeks and is expected to continue to be high. Corn prices are also starting to increase. The higher price for soybean meal means that farmers must consider alternative protein sources (such as distillers grains, corn gluten feed, and brewers grains) and consider reducing the protein concentration in diets. Diets should be balanced for rumen degradable (RDP) and rumen undegradable protein (RUP), not crude protein. A diet balanced properly for RDP and RUP often can have less crude protein without reducing milk yield. A full lactation study from Wisconsin found that cows could produce 25,000 lbs of milk per 305 days when fed a properly balanced diet containing 17.5% crude protein the first 16 weeks of lactation followed by a 16% crude protein diet during the last 28 weeks of lactation. Farmers should work closely with their nutritionist to evaluate diets to determine whether protein supplementation can be reduced.
-William Weiss, PhD
 Dairy Nutrition & Forages, OSU, OARDC

Ohio Dairy Management Conference
The 2002 Ohio Dairy Management Conference will be held on December 16 and 17, 2002 at the University Plaza Hotel and Conference Center near the OSU Campus in Columbus. We realize that with current conditions in the dairy industry, it's difficult to get excited about going to a conference such as this one, but this conference is sure to help you fine-tune some aspect of your operation in order to help offset low milk prices. See the registration flyer enclosed with this newsletter for an agenda and registration form.

back to top
 

Buckeye Shepherds Symposium
The annual Buckeye Shepherds Symposium is scheduled for December 13 and 14, 2002 at the Airport Radisson Hotel in Columbus. The two-day educational event will feature programs on topics such as the USDA Scrapie Eradication Program, parasite control, grazing, carcass quality, and lots more. A Sheep Youth Knowledge College will also be held at the symposium. For a copy of the complete agenda and registration flyer, contact your local OSU Extension Office.

Lamb 509
The popular 509 series of livestock meat quality educational programs is now available for shepherds. Lamb 509 is a three day short course designed to teach in-depth topics related to producing consistent, high-quality, wholesome lamb products at the farm, packer, and retail levels. The short course includes hands-on training activities with live animals as well as lamb carcasses meat products in the meats lab. Lamb 509 will be held December 16-18 at the OSU Animal Sciences Building in Columbus, and will cost just $100 per participant. If you'd like a copy of the registration flyer for Lamb 509, contact your local OSU Extension Office...

back to top

Sincerely,
 

Mike Hogan Extension Agent Agriculture & Natural Resources  Community Development

Ken Simeral Extension Agent Agriculture & Natural Resources Community Development

tr

Trade names are supplied with the understanding that no discrimination is intended and no endorsement by Ohio State University is implied.

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

OSU Extension will provide accommodations to handicapped persons needing assistance to participate in Extension programs. If you require some type of assistance/accommodations to attend programs, utilize written materials or visit the Carroll, Harrison, or Jefferson County Extension Offices, please contact that office or TTD#1-800-589-8292.

Visit Ohio State University Extension’s WWW site “Ohioline” at: hhtp:/www.ag.ohio-state.edu/~ohioline/
back to top

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.
TDD # 1 (800) 589-8292 (Ohio only) or (614) 292-1868