RP94-217 No. 18 Use of Crop Futures and Options by the Nontrader

Crop producers make a number of decisions that are market related. They may be categorized as financial decisions, production decisions, or marketing decisions. All three decisions depend on what prices are likely to be at some specific time in the future. The marketing decisions is complex. This research publication discusses the number of alternatives that are available even for the producer who does not directly buy or sell futures or options contracts.

Optimism of Rural Nebraskans

Results from the 2008 Nebraska Rural Poll showed rural Nebraskans were more optimistic about their lives than they have been in previous years. More Nebraskans believed they were better off than they were five years ago, and more were optimistic about their futures. They had reason to be optimistic last year, the agricultural economy in 2007 was strong, especially for crop producers. The poll was taken between March and May, 2008, before the national economy began to falter in October. Thus the 2009 Nebraska Rural Poll will help clarify how rural Nebraskans are responding to the current economic times.

Assessing Needs for Computer Pest Management Software in Nebraska Agriculture

A mail survey was conducted to assess current computer hardware use and perceived needs of potential users for software related to crop pest management in Nebraska. Surveys were sent to University of Nebraska-Lincoln agricultural extension agents, agribusiness personnel (including independent crop consultants), and crop producers identified by extension agents as computer users. There were no differences between the groups in several aspects of computer hardware use (percentage computer use, percentage IBM-compatible computer, amount of RAM memory, percentage with hard drive, hard drive size, or monitor graphics capability). Responses were similar among the three groups in several areas that are important to crop pest management (pest identification, pest biology, treatment decision making, control options, and pesticide selection), and a majority of each group expressed the need for additional sources of such information about insects, diseases, and weeds. However, agents mentioned vertebrate pest management information as a need more often than the other two groups. Also, majorities of each group expressed an interest in using computer software, if available, to obtain information in these areas. Appropriate software to address these needs should find an audience among all three groups.

Avian Use of Harvested Crop Fields in North Dakota During Spring Migration

Broad-spectrum herbicide applications and improved harvesting efficiency of crops have reduced the availability of weed seeds and waste grains for game and nongame wildlife. Over the last decade, corn and soybean plantings have steadily increased in the Prairie Pothole Region (PPR) of North Dakota, while sunflower plantings have declined. The PPR is an important corridor for migratory birds, and changes in food availabilities at stopover habitats may affect how food resources are used. In early spring 2003 and 2004, we compared bird use of harvested fields of sunflower, soybeans, small grains, and corn in the PPR of North Dakota. Across both years and all crop types, we observed 20,400 birds comprising 29 species. Flocks of Lapland Longspurs (Calcarius lapponicus) and Horned Larks (Eremophila alpestris) and flocks of Red-winged Blackbirds (Agelaius phoeniceus) made up 60% and 15%, respectively, of the bird counts. We found that species richness and bird densities were higher in harvested sunflower fields and cornfields than in harvested small-grain and soybean fields, with soybean fields harboring the fewest species and lowest bird density. Blackbird densities tended to be lower in fields tilled after fall harvest than in fields not tilled. These results suggest that some granivorous bird populations in the Northern Great Plains could be positively affected by planting of row crops with postharvest vertical structure (e.g., sunflower, corn) and use of no-till land management practices.

Crop, Native Vegetation, and Biofuels: Response of White- Tailed Deer to Changing Management Priorities

The expansion of the cellulosic biofuels industry throughout the United States has broad-scale implications for wildlife management on public and private lands. Knowledge is limited on the effects of reverting agriculture to native grass, and vice versa, on size of home range and habitat use of white-tailed deer (Odocoileus virginianus). We followed 68 radio-collared female deer from 1991 through 2004 that were residents of DeSoto National Wildlife Refuge (DNWR) in eastern Nebraska, USA. The refuge was undergoing conversion of vegetation out of row-crop agriculture and into native grass, forest, and emergent aquatic vegetation. Habitat in DNWR consisted of 30% crop in 1991 but removing crops to establish native grass and wetland habitat at DNWR resulted in a 44% reduction in crops by 2004. A decrease in the amount of crops on DNWR contributed to a decline in mean size of annual home range from 400 ha in 1991 to 200 ha in 2005 but percentage of crops in home ranges increased from 21% to 29%. Mean overlap for individuals was 77% between consecutive annual home ranges across 8 years, regardless of crop availability. Conversion of crop to native habitat will not likely result in home range abandonment but may impact disease transmission by increasing rates of contact between deer social groups that occupy adjacent areas. Future research on condition indices or changes in population parameters (e.g., recruitment) could be incorporated into the study design to assess impacts of habitat conversion for biofuel production.

Analyzing the ACRE Program

The new farm bill enacted by Congress in June 2008 includes a new revenue-based safety-net, the Average Crop Revenue Election (ACRE) Program, that will be available to producers beginning with the 2009 crop year. This analysis of the mechanics of ACRE and the relevant yields and prices to include in ACRE can help producers assess whether ACRE will be a good choice for this crop year and beyond.

Analyzing ACRE: Results for 2009 and Decisions for 2010

In 2009, agricultural producers participating in federal farm programs had to decide between staying in the existing Direct and Counter-Cyclical Program (DCP), and the new Average Crop Revenue Election Program (ACRE). If producers chose to keep the DCP, their farm income safety net is strictly tied to crop prices, with a combination of marketing loans, counter-cyclical payments and direct payments. If producers chose the new ACRE program, they changed their farm income safety net to a combination of price and revenue. The new ACRE component is based on revenue and replaces the counter-cyclical payment. The other parts of the safety net for ACRE participants remain tied to price, albeit at lower levels (direct payments reduced 20 percent, marketing loan rates reduced 30 percent).

Analyzing the ACRE Program

The new farm bill enacted by Congress in June 2008 includes a new revenue-based safety net, the Average Crop Revenue Election (ACRE) Program, that is available to producers beginning with the 2009 crop year. While final details and implementation of the program is yet to be announced by the USDA Farm Service Agency (FSA), an analysis of the mechanics of ACRE and the relevant yields and prices to include in ACRE can help producers assess whether ACRE will be a good choice for this crop year and beyond.

Making an ACRE Decision for 2009

The initial sign-up period for 2009 farm commodity programs and the choice between the new ACRE (Average Crop Revenue Election) program and the existing DCP (Direct and Counter-Cyclical Payment) program is quickly winding down. But as the current August 14 deadline approaches, producers know more and more about the potential safety net provided under the ACRE program, and have a better opportunity to analyze the economics of choosing ACRE versus the DCP program before visiting their USDA Farm Service Agency (FSA) office.

New 2010 Crop Enterprise Budgets

The 2010 Crop Enterprise Budgets will soon be published. They will be available on the web in two places: the University of Nebraska’s “Crop Watch” website (http://cropwatch.unl.edu) in the Economics and Marketing section, and on the Agricultural Economics website at http://www.agecon.unl.edu.

CROP DEPREDATIONS BY WATERFOWL IN WISCONSIN

On December 5, 1965 the Governor of Wisconsin signed into law a statute permitting claims against the State for damages to crops by wild geese and ducks. This law had been rushed through the legislature in the wake of a rash of crop depredation complaints caused by Canada Geese in their off-refuge feeding flights from the Horicon National Wildlife Refuge. This paper reviews our experiences with waterfowl depredations in the development of a cooperative program by State and Federal wildlife agencies that has held a potentially serious wildlife problem to a minimum of financial losses and public relations concern.

BIRD DEPREDATION ON RICE AND OTHER GRAINS IN ARKANSAS

In Arkansas, blackbirds are responsible for appreciable damage to rice, grain sorghum, oats, wheat, rye, and corn. By far, the greatest damage is to rice. As is shown in the following table, the losses to rice producers amounted to an estimated $3,049,055 in 1968, the last year that a survey was made. Nearly two-thirds (63%) of this loss was to standing rice destroyed and to the cost of bird control measure in standing rice. The remaining losses ($2,140,320 ) are to seeding or to efforts to control bird depredations to new seeding, (see Table 1). Blackbird damage to grain sorghum and corn was mostly to standing grain; that to oats, wheat and rye, to seeding, although there is occasional damage to standing grain. Additional problems are caused by blackbirds in feed lots. The total losses to Arkansas agricultural producers due to blackbirds in 1968 was about $3,500,000. Bird damage in a specific locality and on specific crops seems to vary in intensity from year to year. However, surveys during the past ten years suggest a fairly consistent level of total damage state-wide. The damage in 1968-and I believe in 1969—was somewhat lighter than we have come to expect from past exper¬ience. (See table 2.) On a per acre basis the damage in 1968 showed a considerable decline when compared to previous years. A part of this decline is probably a temporary situation. Some of the decline in losses to rice and grain sorghum, however, are due to changes in varieties, such as development of bird-resistant milo, and to changes in cultural methods. Further appreciable reductions due to changes in these factors seem unlikely, (see table 3.) Since rice producers sustain the greatest losses to birds, they have generated the greatest demand for bird control programs. Three species are responsible for most of the damage to rice. They are the red-winged blackbird, common grackle and brown-headed cowbird. These birds have created problems for rice producers since the first successful rice crop was grown near Lonoke, Arkansas, in 1904.