FARE Blog

Food, Agriculture, and Resource Economics

Implications of Hurricane Michael on the Seed Cotton ARC/PLC Selection Decision

By Don Shurley and Yangxuan Liu

Download the PDF version of the factsheet.

We recently released a factsheet which compares between the Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) for this year after Hurricane Michael. We conducted the analysis based on some representative counties in GA.  With the hurricane causing tremendous damages to our cotton industry, a lot of counties suffer from tremendous yield losses. For some heavily-impacted counties, the yield loss might trigger for ARC payments. Below are the main points from this factsheet.

  • Many producers were expecting very high yields for both irrigated and non-irrigated, especially non-irrigated compared to average. Some producers report little difference in yield between irrigated and non-irrigated.
  • For 2018, ARC is most likely going to be the way to go for producers in a county with 50 to 60% or more yield loss—“loss” being measured relative to the yield that was expected pre-Michael.
  • ARC vs PLC also depends on the farms seed cotton PLC payment yield.  Landowners can update the payment yield but if this can’t be done and/or if the PLC payment yield is low compared to county yields used for ARC, then PLC may already be at a disadvantage or have less of an advantage than it otherwise have.
  • There are uncertainties.  Any PLC payment for 2018 is a moving target.  The Seed Cotton (SC) Marketing Year Average (MYA) Price is yet to be determined.  This will also effect ARC because the 2018 SC MYA Price partially determines 2018 Actual Revenue.  The 2018 SC county yield is also TBD.  We used estimates provided by UGA county Extension agents.  There is also the uncertainty of another ARC/PLC election opportunity for any farm bill extension.  Both House and Senate versions call for another election in a new farm bill.

Agriculture Disaster Assistance Information Session for Producers

By Adam N. Rabinowitz

On Monday, October 22, 2018, the University of Georgia Tifton Campus hosted an information session for agricultural producers in response to Hurricane Michael.  The roughly 2-hour long program focused on disaster assistance information from U.S. Department of Agriculture (USDA) agencies including the Farm Service Agency (FSA), Natural Resources Conservation Service (NRCS), Rural Development (RD), Risk Management Agency (RMA), and National Agricultural Statistics Service (NASS).  Additional information was presented by the Georgia Forestry Commission, Southwest Georgia Farm Credit, and Georgia Department of Behavioral Health.  Congressman Austin Scott provided remarks and answered questions at the end of the session.

Presentation slides (where available) and a video of the event are provided in the links below.

Video of the disaster assistance information session (provided by The Georgia Peanut Commission)

Agenda:

  • Welcome by Tas Smith, State Executive Director, Farm Service Agency
  • Opening Comments by Adam Rabinowitz, Ag Economist (Moderator), University of Georgia
  • Farm Programs Update by Brett Martin, Chief, Farm Programs, Farm Service Agency (Presentation Slides)
  • Farm Loans Update by Dean Lewis, Farm Loan Specialist, Farm Service Agency (Presentation Slides)
  • NRCS Update by Terrance Rudolph, State Conservationist, National Resource Conservation Service (Presentation Slides)
  • RD Update by Joyce White, State Director, Rural Development
  • RMA Update by Davina Lee, Director, Valdosta Regional Office
  • NASS Update by Jim Ewing, Regional Director, National Agricultural Statistics Service (Presentation Slides)
  • GFC Update by Scott Griffin, Forest Management Chief, Georgia Forestry Commission
  • Loan Overview by Paxton Poitevint, Chief Executive Officer, Southwest Georgia Farm Credit
  • Health Related by Jennifer Dunn, Regional Services Administrator, Georgia Department of Behavioral Health
  • Congressional Update by Congressman Austin Scott
  • Wrap-Up by Adam Rabinowitz

Additional Resources:

University of Georgia Emergency Resources

NRCS disaster information page for Hurricane Michael.

Georgia Organics The Farmer Fund – support for farmers in the face of natural disasters.

Georgia Vegetable Estimated Losses Due to Hurricane Michael

By Esendugue Greg Fonsah, Andre da Silva, Bhabesh Dutta and Timothy Coolong

The UGA Vegetable Team recently conducted damage assessments aimed at preparing a comprehensive report to determine the potential losses incurred to the Georgia Fruit and Vegetable Industry caused by the hurricane Michael. Calculations were based on the information gathered by the Vegetable Assessment Team, growers and county extension agents during farm visits in southwest Georgia. Total acreages, estimated percentage of damaged field, yield losses, and current prices for the various vegetable crops were taken into consideration.

There were significant losses per crop across the state of Georgia, but nothing compared to losses incurred in southwest Georgia, where most of vegetable crops are produced in the state. A portion of early maturing fall crops had already been harvested before hurricane Michael makes landfall. However, the majority of crops were still in the field, which increased losses to Georgia vegetable growers. For instance, bell and specialty pepper, eggplants, tomato, sweet corn, squash, and cucumbers sustained approximately 70 – 90% losses in the most impacted areas while other vegetables like cabbage, greens, snap beans and broccoli sustained damages from 20 – 50%.

Our estimate thus far depicts a total loss of $480.31 million to the Georgia Vegetable Industry. According to the Vegetable Team report the vast majority of initial crop damage was caused by the strong winds, which resulted in lodging or defoliation of plants. Further, damages were sustained after the hurricane due to “sunburn” of exposed fruit. This is because most of the foliage in crops were either damaged due to the strong winds.  It is projected that the secondary damage and losses will exceed initial losses caused by the hurricane. Losses were exacerbated due to power outages, which prevented growers from properly cooling or storing harvested produce.  Power outages also impacted the ability to irrigate crops remaining in the field.

These values are subjected to changes as it does not include property losses. Losses caused by hurricane Michael left a devastating blow not only to our farmers, but equally to the community and the Georgia economy at large.

For more information contact the Vegetable Team Members:

Dr. Esendugue Greg Fonsah, Professor and Fruits and Vegetable Extension Economist, Department of Agriculture and Applied Economics, Tifton, GA 31793. Email: gfonsah@uga.edu Tel: 229-386-3512.

Dr. Bhabesh Dutta, Assistant Professor and Extension Vegetable Disease Specialist, Plant Pathology.  Email: bhabesh@uga.edu Tel: 229-386-7495.

Dr. Timothy Coolong, Associate Professor specialized in vegetable production, Horticulture Department, University of Georgia, Athens, GA 30602.  Email: tcoolong@uga.edu  Tel: 229-386-7495

Dr. Andre Luiz Biscaia Ribeiro da Silva, Assistant Professor specialized in vegetable production, Horticulture Department, University of Georgia, Email: adasilva@uga.edu  Tel: 229-386-3806

Preliminary Estimation of Cotton Damages from Hurricane Michael

By Yangxuan Liu and Amanda R. Smith

Download the PDF version of this article. 

Hurricane Michael unexpectedly gained power and quickly grew into a Category 4 storm overnight, which made it nearly impossible for Georgia cotton farmers to prepare and respond. Much of Georgia’s cotton had been defoliated and was ready for harvest before Hurricane Michael hit on October 10, 2018.

Prior to the hurricane, USDA estimated that only 12% of cotton was harvested and 88% of cotton bolls were opened in Georgia. These opened bolls of cotton on the stalk were exposed and susceptible to the wind brought by Hurricane Michael. Some harvested cotton modules in the field were damaged by wind and rain, which might degrade quality. The cotton harvested after the hurricane might face quality discounts as well, because more mature bolls of possibly higher quality were lost.

The UGA Cotton Team and County Extension Agents have been working hard to determine total crop losses for Georgia cotton farmers and provide them support during these difficult times. Crop losses varied significantly across the state. The southwest region, where the heart of cotton production is centered, was affected the most. Cotton farms directly in the path of the hurricane suffered from tremendous loss. In some cases, total crop losses have been reported by cotton producers in the southwest region of the state, while losses in the northwestern part of the state were lower.

UGA Cotton Agronomist, Dr. Jared Whitaker, collected handpicked field data from agents, specialists and cotton farmers across the state to determine yields before and after the hurricane. As of October 19, losses documented from handpicked field data range from 1% to 81%, depending upon location and days after defoliation.

“Observations at UGA’s Stripling Irrigation Research Park, which is located near Camilla in Mitchell County of Georgia, show that maturity of cotton played a big role in crop losses,” said Dr. George Vellidis, UGA Crop and Soils Scientist. “Cotton, which had already been defoliated 10–14 days and was ready for harvest, suffered more severe losses,” said Dr. Vellidis.

UGA Economists, Drs. Yangxuan Liu and Jeff Dorfman, worked with Dr. Whitaker to estimate the losses for Georgia cotton farmers based on the data collected from specialists, County Extension Agents, growers, cotton gins and USDA. “We took into consideration yield loss variation across the state and adjusted our estimates accordingly,” said Dr. Liu, “Our initial estimates of farm gate value loss from Hurricane Michael range from $550 million to $600 million for the Georgia cotton industry. This includes losses related to cotton lint, cottonseed, and fiber quality reductions. We are still in the process of gathering more data from cotton farmers and county agents. Our estimated value of loss for cotton is still preliminary. As more data is collected, we will update these values accordingly.”

“We greatly appreciated Georgia County Extension Agents, cotton farmers and cotton gins in working together with the UGA Cotton Team to estimate yield losses,” said Dr. Whitaker.

Dr. Dorfman added “The impact of Hurricane Michael will extend beyond the farm gate level. Cotton gins, local communities and the entire Georgia economy are likely to experience the ripple effect of Hurricane Michael for years to come.”

Cotton was not the only crop affected by the hurricane and most farm operations are diversified with a variety of crops that also experienced losses. When reflecting upon the farm as a whole, our colleague, Dr. Esendugue Greg Fonsah, UGA Fruits, Vegetables and Pecans Economist, said it best: “Our hearts go out to all of the hardworking farmers and affected communities who are going through these difficult times.”

 

For more information, please feel free to contact:

Jared R. Whitaker, Cotton Extension Agronomist, Department of Crop and Soil Sciences, University of Georgia, Tifton, GA 31793; jared@uga.edu Tel: 229-386-3006.

Yangxuan Liu, Assistant Professor and Cotton Extension Economist, Department of Agricultural and Applied Economics, University of Georgia, Tifton, GA 31793; Yangxuan.Liu@uga.edu  Tel: 229-386-3512

Jeffrey H. Dorfman, Professor, Department of Agricultural and Applied Economics, University of Georgia, Athens, GA, 30602; jdorfman@uga.edu Tel: 706-542-0754

Pecan Preliminary Estimated Losses Due to Hurricane Michael

By Esendugue Greg Fonsah, Lenny Wells and Jeffrey H. Dorfman

Continuous assessments of the impact of Hurricane Michael by the Georgia Pecan Team shows approximate acreages, trees and values lost as a result of the hurricane. Our assessment depicts that at least 17% of the total Georgia pecans equivalent to 27,455 acres or 741,285 trees were lost. Our preliminary estimate shows that the current crop loss is $100 million and the tree loss is $260 million while the loss of future income is $200 million. Summing these up reveals a total loss of $560 million to the Georgia Pecan Industry as a results of Hurricane Michael. These values are preliminary and subject to change as more data is gathered.

According to Lenny Wells, “one of Georgia’s most popular pecan varieties is ‘Desirable’, which is a favorite of both the gift pack and export markets due to its large size and high quality. There was a high percentage of ‘Desirable’ pecans grown in the Dougherty/Lee/Mitchell County area, which suffered some very severe losses.” However, growers in those ‘Desirables’-heavy counties still have enough trees to keep them operational while they start replanting to replace the fallen trees. ‘Desirables’ are difficult to grow and manage in the warm, humid climate of Southwest Georgia. As a results, most of these farmers, who have been in the pecan business for generations, will replant their groves with more scab resistant, lower cost, and easily grown varieties.

This loss will impact not only our farmers, some of whom have been growing pecans for generations, but also the community and entire Georgia economy.

Our hearts go out to the hardworking pecan farmers and affected communities as they go through these difficult times.

For more information, contact the Georgia Pecan Team:

Lenny Wells, Associate Professor and Extension Horticulture Specialist for pecans, University of Georgia, Tifton, GA 31793; lwells@uga.edu Tel: 229-386-3424.

Esendugue Greg Fonsah, Professor and Extension Agribusiness Extension Economist, Fruits, Vegetables and Pecans, University of Georgia, Tifton, GA 31793; gfonsah@uga.edu Tel: 229-386-3512

Jeffrey H. Dorfman, Professor, Department of Agricultural Economics, University of Georgia, Athens, GA, 30602; jdorfman@uga.edu Tel: 706-542-0754

Information on Disaster Assistance Programs

By Adam N. Rabinowitz

Click here for a PDF version of this post.

Last week Hurricane Michael ripped through the heart of Georgia agriculture, devastating the southwest region and destroying a significant amount of our farmers’ hard work.  While government programs can never fully replace the loss, there are a number of resources that are available to help farmers recover from disasters.  Some general tips and good practices include:

  • Collect documentation! Prior to starting any cleanup activity, make sure to take pictures of damage and losses that have occurred.
  • If you have crop insurance, contact your crop insurance agent to report losses or damages. It is important to do this before starting any cleanup activities so that everything can be documented properly.   Furthermore, farmers need to notify their crop insurance agent within 72 hours of discovery of a loss.  Beyond that, farmers should make sure that a signed written notice is provided within 15 days of the loss.
  • If you have noninsured crop disaster assistance or are eligible for other disaster assistance programs, contact the local FSA office. It is important to do this before starting any cleanup activities so that everything can be documented properly and a waiver can be issued prior to cleanup.

Important Disaster Resources

The USDA has a disaster website for Hurricane Michael that can be accessed at: https://www.usda.gov/topics/disaster/storms.  At that link there is information on FEMA and other disaster programs.  There is also a more direct resource related to agriculture that can be accessed at: https://www.farmers.gov/recover.  Some of the disaster assistance programs potentially applicable to hurricane losses include:

More information about each of these programs can be found at the above websites.  In addition, there have been some specific disaster related questions which are answered below.

  • What is the next step(s) after receiving crop damage? (reporting claims, documentation, etc.)

Depending on the program, contact either your crop insurance agent or local FSA office.  Make sure to take pictures of the damage and do not burn any debris.  An adjuster or FSA representative will need to survey the damage, thus it is important to wait before starting any cleanup until this has happened or permission to cleanup has been granted.

Keep in mind certain crop insurance deadlines.  Notice to your crop insurance agent must occur before abandoning a crop within 72 hours of a loss.  A written notice needs to be signed within 15 days of loss.

In addition to documenting the damage and loss, keep track of expenses related to cleanup.  It is advisable to keep records of all activities related to the disaster.

  • Do farmers have to pick the crop (in certain situations)? (requesting an appraisal, pros/cons of picking vs. taking the appraisal)

This is a difficult question that depends on individual circumstances.  Some issues that need to be considered is whether there is any salvage value of the crop and the quality of anything that can still be harvested.  If it is a good crop then it should be harvested.  The farmers crop insurance agent can help make a determination of how to proceed.

  • If you don’t pick the crop, how bad will it hurt the established yield?

If there is crop available to pick and you choose not to then it will count against the loss.

  • What if a farmer has an FSA loan on a structure that was damaged?

Contact the local FSA office immediately to report this damage.

  • What additional disaster relief may become available and when?

After many natural disasters that result in widespread damage there are often additional programs that become available to aid with agricultural losses.  This, however, is not guaranteed and it does take time before they are available as they require a special appropriation from the U.S. Congress and signature of the President.  One such example is the 2017 Wildfires and Hurricanes Indemnity Program (WHIP) that covered losses from Hurricane Irma that caused widespread damage in September 2017.  Allocation for that program was not made until February 9, 2018 as part of the Bipartisan Budget Act of 2018.  Sign up for that program did not begin until July 16, 2018.

While a special allocation may not be immediately available, it is important to document losses and to communicate to your legislators in a way that illustrates the impact that Hurricane Michael has had on your farming operation.  This information will help drive policy decisions and additional allocations that may become available.

 

Disclaimer

The information provided in this document is not a specific recommendation.  Producers should make disaster assistance decisions in consultation with their crop insurance agent local Farm Service Agency or other government entity responsible for program administration.

 

Hurricane Michael Hit Georgia Pecans Industry

By Esendugue Greg Fonsah, Doug Collins, Lenny Wells and Will Hudson

Hurricane Michael arrived the heart of Georgia pecans producing areas in the early morning of Wednesday October 10, 2018 and left a devastating blow to the entire industry.  Speaking with County Agents and Specialists, Mitchell, Lee, and Dougherty Counties that contribute to a third of total Georgia pecans suffered close or more than 50%.  The hurricane came at the most vulnerable time imagine.  Pecans crops that were close to harvest were destroyed.  Several pecan trees and nuts were knocked down.   Other producing areas such as Peach, Crisp, Leesburg and Bainbridge were affected with varying losses ranging from 20- 40% according to initial reports.  There were also structural damage.  Although initial loss is valued at about $200 million, this might change quickly after a comprehensive assessment is carried out.

Courtesy of Dr. Lenny Wells.

Hurricane Michael Hit Georgia Vegetable Industry

By Esendugue Greg Fonsah, Andre Da Silva, Bhabesh Dutta, Timothy Coolong and Scott Carlson

Hurricane Michael touched down Wednesday morning, October 10th, 2018 leaving behind a devastating blow to the South Georgia population, the community and the fruit and vegetable growers industry.  Farmlands and crops were blown off, trees blown down and electricity shut down in most areas.  Our major fall crops such as bell peppers, tomatoes, cucumbers, eggplants, squash, zucchini, sweet corn and snap beans were all affected.  The magnitude of the damage varied from crop to crop and from location to location but a rough initial estimate puts the damage around 40-60%, equivalent to about $250-$300 million.  The UGA Vegetable Team is currently conducting a full damage assessment and prepare a comprehensive report to determine the actual loss value to the Georgia Fruit and Vegetable Industry.

Courtesy of Dr. Andre Da Silver

Market Facilitation Program: What is available to cover my marketing losses from trade tariffs?

By Yangxuan Liu

Download the PDF version of this article. 

U.S. Department of Agriculture releases details about the spending plans for $12 billion in trade aid package for farmers. The main component of the aid package is the Market Facilitation Program (MFP). MFP is authorized under the Commodity Credit Corporation (CCC) and administered by Farm Service Agency (FSA). MFP provides a direct payment to help producers who have been negatively impacted by foreign governments imposing tariffs on U.S. agricultural products.

MFP payment rates will consist of two announced payment rates. The first rate is announced on September 4, 2018 for the first payment rate and applies to 50% of the producer’s 2018 actual harvest production. On or near December 3, 2018, if applicable, the second payment rate will be announced and will apply to the remaining 50% of the producer’s 2018 production. For each commodity covered, USDA has set the first payment rates for the 50% of the producer’s 2018 actual harvested production as follows:

  • Cotton – $.06 per pound, estimate total payments of $277 million
  • Corn – $.01 per bushel, estimated total payments of $96 million
  • Soybeans – $1.65 per bushel, estimated total payments of $3.6 billion
  • Sorghum – $.86 per bushel, estimated total payments of $157 million
  • Wheat – $.14 per bushel, estimated payments of $119 million
  • Hogs – $8 a head, estimated payments of $290 million
  • Milk – $.12 a hundredweight, estimated payments of $127 million

The signup started on Tuesday, September 4, 2018 until Tuesday, January 15, 2019. For cotton producers, you can sign up with FSA now and update later to FSA with your production record, e.g. ginning records.

MFP payments are capped per person or legal entity at a combined $125,000 for corn, cotton, sorghum, soybeans and wheat, and another $125,000 for dairy and hogs. This payment cap applies to MFP only. The $125,000 payment cap for Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) payments is a separate cap. Eligible applicants must have an ownership interest in the commodity, be actively engaged in farming and have an average adjusted gross income (AGI) for tax years 2014, 2015 and 2016 of less than $900,000. Producers will have the option to submit CCC-910’s and report production in person, by mail, or electronically to FSA.

Economic Productivity and Profitability Analysis for Whiteflies and Tomato Yellow Leaf Curl Virus (TYLCV) Management Options

By Esendugue Greg Fonsah, Chen, Yu, Stan Diffie, Rajagopalbabu Srinivansan and David Riley

Introduction: (Complete version of journal article is attached here).

In 2015, the United States was the second largest producer of tomatoes in the world.   The U.S. produces tomato for fresh and processed markets respectively, and both markets contribute over $2 billion in annual farm cash receipts. In the state of Georgia, tomato is one of the most important commercial crops and ranks amongst the top ten vegetables in terms of farm gate value.  For instance, from 2009 to 2014, tomato contributed over $265 million to the state economy. Tomato yellow leaf curl virus (TYLCV), transmitted by whiteflies, are a major threat to tomato production around the world.  The spread of the virus in the field and in glass houses is directly correlated to increase in whitefly population. The virus was first seen in Israel in 1950.  Almost 50 years later, the virus was seen in Florida, Georgia, the Carolinas, Texas and California.  Infected plants show symptoms of stunting, flower abortion, curling of leaflet margins, yellowing of young leaves, inferior overall cosmetic appearance of fruits quality and decreased yields.  It is common to experience yield losses of up to 100% in affected fields.  Also there is no official estimate of losses caused by this virus but it is assumed to be in the tens of millions of dollars.

Although several studies discussed the economic evaluation for preventing tomato with respect to pesticide use, exclusion screen, intercrop and cultivars, there are limited studies that provide economic analyses of TYLCV prevention and management options. As a result, the objective of this study was to develop an economic productivity and profitability analysis aimed at determining the financial and economic viability, if any, of managing TYLCV.

Methods

This experiment was conducted at the Horticulture Farm, Coastal Plains Research Station, University of Georgia, Tifton, during the summers of 2013-2015.  We specifically evaluated the use of TYLCV-resistant cultivars, metallic silver mulch, and the use of the insecticides relative to white mulch, a TYLCV-susceptible tomato, and a no insecticide check, respectively.  The experimental response variables measured were whitefly adult, immature and egg incidence, TYLCV symptom severity, and marketable yield.  Tomato cultivars used included Shanty, Security, Tygress and the susceptible cultivar FL-47.  The types of mulch used were reflective and a standard non-reflective white mulch.  Insecticides used were cyantraniliprole, applied at 13.5 fl. oz. per acre, imidacloprid at 10.5 fl. oz. per acre and water as a control.   Each treatment was replicated 4 times.

Results

The inputs used in the economic analysis of insecticides for the management of whitefly- transmitted TYLCV in tomato production were slightly different from the conventional tomato production practices.  For instance, the planting materials were TYLCV-resistant lines plants, which cost $466/ac.  Silver mulch was $513/ac while insecticide used to control white flies was $159/ac.  The combined fertilizer cost was $692/ac.  Fumigation, fungicides and labor costs were $570, $189 and $550/ac respectively.  Total pre-harvest variable cost (P-H VC) was $4,200/ac.

A sensitivity analysis based on total cost of production showed that an expected net return of producing tomatoes in the presence of TYLCV was $1,958/ac and obtainable 50% of the time.  The result further showed that $-887 may be obtained 7% of the time in a worst case scenario while a rare net return of $4,802 is also realizable 7% of the time.  These results reconfirm the importance of good agricultural practices and adherence to management recommendations from research and extension scientists in successfully managing whitefly-transmitted TYLCV (Table 1).

Table 1:  Sensitivity Net Return of producing tomatoes in the presence of whitefly-transmitted tomato yellow leaf curl virus (TYLCV) in the Southeast USA, 2017.

Net return levels (TOP ROW);
The chances of obtaining this level or more (MIDDLE ROW); and
The chances of obtaining this level or less (BOTTOM ROW).
Best Optimistic Expected Pessimistic Worst
Returns ($) 4,802 3,854 2,906 1,958 1,010 62 -887
Chances (%) 7% 16% 31% 50%
Chances (%) 50% 31% 16% 7%
Chances for Profit 85% Net Revenue $1,958

Acknowledgment: We acknowledge the technical help rendered by Mr. Simmy Meckeown, and numerous student workers at the vector biology laboratory, UGA, Tifton, during the course of this study.  This project was partially funded by USDA AFRI Grant 2012-67007-19870 for which the authors are grateful.