Profitability vs Cash Flow

By Pauline Van Nurden University of Minnesota, Center for Farm Financial Management

Profitability and cash flow are two important business concepts that can be confused by many small business owners. Just because a business is profitable, doesn’t necessarily mean it cash flows. Alternatively, a business can have positive cash flows and not be profitable.  These are topics that are often difficult to understand, so let’s dig into how these statements are possible. First off, let’s take a deeper look at profitability and cash flow.

What is Profitability?

Profitability is the ability of a business to earn a profit, meaning business revenues exceed business expenses. The income statement is used to analyze business profitability. This seems simple and straightforward, but one needs to remember that not all checkbook debits are business expenses. One common example of this are loan payments. Specifically, principal payments on loans are not business expenses. Remember, a loan payment is comprised of two components – principal and interest. Interest paid on business loans qualifies as a business expense. Principal payments do not. Principal payments made on loans impact the balance sheet and statement of cash flows but do not impact the income statement.  What replaces principal payments on term loans as deductions on the income statement? Depreciation. Depreciation is a deductible expense on the income statement. But, depending on tax management strategies, these two items may not align. If “fast depreciation” strategies are used for tax management, like Section 179 expensing and Bonus Depreciation, and loans are taken out to finance capital purchases; principal payments may be a cash flow detriment beyond the depreciation expense. Continue reading Profitability vs Cash Flow

Yield Monitor Calibration: Garbage In, Garbage Out

By: R.L. (Bob) Nielsen Purdue University

Understand this one simple fact about grain yield monitors: They do not measure grain yield.

How’s that for an opening statement?

Flow sensorWhat I want you to understand is that yield monitors ESTIMATE yield by converting electrical signals received from a mass impact or optical sensor, located somewhere in the clean grain elevator of the combine, into ESTIMATES of grain flow (lbs) per second or two of travel time. Along with ESTIMATES of distance traveled (usually based on differentially corrected GPS signals), header width, and ESTIMATES of grain moisture content… the yield monitor’s firmware / software then ESTIMATES “dry” grain yield per acre, at a moisture content of your choice, and records those yield estimates, and their geographic location in the field, every second or two in the display’s memory or uploaded by cellular data connection to a Cloud-based Web server.

Yield monitor calibration involves a series of steps taken to ensure that the ESTIMATION of each of these factors is accurate. One of those steps involves the harvesting of calibration “loads” of grain that are used to “teach” the yield monitor’s “black box” how to accurately convert the electrical signals from the sensors into ESTIMATES of grain flow rates. Continue reading Yield Monitor Calibration: Garbage In, Garbage Out

Fall-Applied Herbicides: Odds and Ends

A commonly asked question about fall herbicides – how late in the fall can herbicides be applied and at what point is it too cold to apply?  We have applied well into December under some very cold conditions and still obtained effective control of winter annuals.  We suggest applying before Thanksgiving and aiming for a stretch of warmer weather if possible, but the effective treatments should work regardless.  Extended periods of freezing weather will cause the perennials to shut down – dandelion, thistle, dock.

We received a lot of questions about annual bluegrass this year, especially regarding difficulty in controlling it in the spring.  Fall is a good time to control this weed.  This will require the addition of glyphosate to whatever herbicide mix is being used. Continue reading Fall-Applied Herbicides: Odds and Ends

Extended Drydown in Corn

By:  Alex Lindsey OSU Extension

As fall is progressing, crop harvest is also occurring throughout the state. However, many producers are seeing slower than usual drydown in their corn fields this October. This may be in part due to how the weather conditions impacted corn growth and development this year.

In many parts of Ohio in 2020, temperatures were near the long-term average this season. One marked difference though was that precipitation was below normal for much of the season around the state. In the table below, I have shown 2020 weather progression compared to that of 2018 at the Western Agricultural Research Station, specifically highlighting average temperature and accumulated precipitation. Continue reading Extended Drydown in Corn

Farmer and Farmland Owner Income Tax Webinar

By:  Barry Ward, Director, OSU Income Tax Schools
College of Food, Agricultural and Environmental Sciences, OSU Extension

Are you getting the most from your tax return? Farmers and farmland owners who wish to increase their tax knowledge should consider attending this webinar that will address tax issues specific to this industry. Content focuses on important tax issues and will offer insight into new COVID related legislation.

Mark your calendars for December 3rd, 2020 to participate in this live webinar from 6:30 to 8:30 pm. The event is a joint offering from OSU Income Tax Schools which are a part of OSU Extension and the College of Food, Agricultural and Environmental Sciences and Purdue University Income Tax Schools.  If you are not able to attend the live webinar, all registered participants will receive a link to view the recorded webinar at a time of their convenience. This link will be available through the tax filing season. Continue reading Farmer and Farmland Owner Income Tax Webinar

Are those Mosquitoes on Steroids…No, They are just Crane Flies.

By Curtis Young OSU Extension

Crane flies (a.k.a. daddy longlegs and mosquito hawks) belong to the insect Order Diptera (the true flies) in the Family Tipulidae. There are some 15,000 species of crane fly throughout the world. Crane flies and mosquitoes belong to a common subgroup of the flies and crane flies do look superficially like giant mosquitoes. Crane flies fortunately do not possess the mosquito piercing/sucking mouthparts for taking a blood meal. Therefore, they do not bite other animals for blood. Some adult crane flies do not eat in their short life span or feed on liquids from plants. Adults live for upwards of 10-14 days.

The larvae of crane flies are maggots called leatherjackets because of their tough, leathery outer covering (exoskeleton). Depending on the species of crane fly, the larvae may be aquatic, semi-aquatic or terrestrial living in soils that are high in organic matter and relatively moist for most of the year. Some species can attack living plants eating root hairs, small roots, outer coverings of roots and stems, and occasionally eating leaves such as grass blades. Continue reading Are those Mosquitoes on Steroids…No, They are just Crane Flies.

Gibberella Ear Rots Showing up in Corn: How to Tell It Apart from Other Ear Rots

By:  Pierce Paul and Felipe Dalla Lana da Silva

Ear rots differ from each other in terms of the damage they cause (their symptoms), the toxins they produce, and the specific conditions under which they develop. GER leads to grain contamination with mycotoxins, including deoxynivalenol (also known as vomitoxin), and is favored by warm, wet, or humid conditions between silk emergence (R1) and early grain development. However, it should be noted that even when conditions are not ideal for GER development, vomitoxin may still accumulate in infected ears.

A good first step for determining whether you have an ear rot problem is to walk fields between dough and black-layer, before plants start drying down, and observe the ears. The husks of affected ears usually appear partially or completely dead (dry and bleached), often with tinges of the color of the mycelium, spores, or spore-bearing structures of fungus causing the disease. Depending on the severity of the disease, the leaf attached to the base of the diseased ear (the ear leaf) may also die and droop, causing affected plants to stick out between healthy plants with normal, green ear leaves. Peel back the husk and examine suspect ears for typical ear rot symptoms. You can count the number of moldy ears out of ever 50 ears examined, at multiple locations across the field to determine the severity of the problem. Continue reading Gibberella Ear Rots Showing up in Corn: How to Tell It Apart from Other Ear Rots

Closing Time: Optimal Wheat Seeding Window Nears Completion

By Clint Schroeder OSU Extension

There are several reasons that producers might be taking a second look at bringing wheat back into their rotation or increasing acres in the fall of 2020. Between conservation program incentives and recent grain market action there is reason to believe that this crop could once again be financially competitive in Northwest Ohio. Here are a few key factors to keep in mind as we near the end of the ideal fall seeding period.

1.) Select high-yielding varieties with high test weight, good straw strength, and adequate disease resistance. Do not jeopardize your investment by planting anything but the best yielding varieties that also have resistance to the important diseases in your area. Depending on your area of the state, you may need good resistance to powdery mildew, Stagonospora leaf blotch, and/or leaf rust. Avoid varieties with susceptibility to Fusarium head scab. Plant seed that has been properly cleaned to remove shriveled kernels and treated with a fungicide seed treatment to control seed-borne diseases. The 2020 Ohio Wheat Performance Test results can be found at:

Continue reading Closing Time: Optimal Wheat Seeding Window Nears Completion

2020 Harvest Preview

By Clint Schroeder OSU Extension

There are certainly no shortage of challenges for those involved in production agriculture. After a soggy 2019 growing season that saw record acres unplanted in Northwest Ohio, many farmers were hoping for a more “normal” cropping year in 2020. Unfortunately, 2020 combined some familiar challenges to farmers with several new ones.

While crops are generally planted in late April through mid-May in this region the planning begins much sooner. With fewer corn acres planted in 2019, Ohio farmers reduced their grain inventories despite higher than average yields. This led to a strong basis that encouraged corn from surplus areas to the west to be shipped into Ohio. These factors coupled with weak soybean exports set the stage for increased corn plantings throughout Northwest Ohio at the beginning of 2020. The development of widespread Covid-19 in the United States begin in early March. With much of the country sheltering in place the need for ethanol production was significantly impacted. By mid-April as farmers began to make field preparations, ethanol usage was down 49% compared to the previous year. This led to a lot of uncertainty in the futures market with most commodities trading down over 10% to open the second quarter.

With so many variables in play it appears that farmers stuck pretty close to their intentions when they were able to make significant planting progress the last week of April and first week of May. Soil moisture conditions were nearly ideal in most parts of the region for this time frame, but cooler than average temperatures were a reason for concern. These cold temperatures led to a minor frost event in May and delayed emergence for many corn and soybean acres. The next major challenge would come in the form of heavy widespread rains that flooded many fields from May 15th-17th. As things slowly dried out farmers began to survey the damage and make plans on what acres had suffered enough damage to warrant replanting the crop. The next window for field work came the first week of June and saw most farmers finish first plantings and spot plant any areas with less than ideal stands.

Hindsight is always 20/20, but it appears that those farmers with reduced stands may have left them alone if they knew of the drought conditions on the horizon. By the end of June, Putnam and Van Wert counties were listed as abnormally dry on the weekly national drought monitor. Allen County would join them on the list the following week. While this was certainly concerning, the silver lining to being dry at that point of the growing season is that it allowed for timely sidedress fertilizer applications and the ability to better manage weed growth. Unfortunately, the dry conditions only worsened over the next month and most of the region was listed as being in a moderate drought. There were several pop-up showers that brought relief to small, localized areas, but this only increased the variability of the crops throughout the region. Conditions improved marginally at the beginning of August and would continue to do so throughout the month. As September began there was finally enough widespread rain that allowed Allen, Putnam, and Van Wert counties to be removed from the drought monitor.

The extreme weather cycles had several impacts on both the corn and soybeans. This year saw less foliar disease pressure in both crops due to the dry weather. The early moisture and cold temperatures did impact root health and those issues became evident later in the form of premature death and poor grain fill. Insect pressure was highly variable with the most common complaint throughout the region being spider mite migration into soybean fields. With fewer plant health and insect issues many farmers were able to forego fungicide or insecticide applications, which will lower costs during these times of tight margins. The drought conditions undoubtedly had a negative impact on corn pollination, but certainly not to the extent observed in the 2012 growing season. Harvest will also reveal the impact August rains played on grain fill. Kernel depth and bean size vary greatly throughout the region and will play a large factor in the final yield.

With the variability mentioned it is challenging to estimate regional crop yields with much certainty. While the 2020 growing season has been anything but “normal” it is very likely that final yields will come in near the 5 year trend line adjusted mark. Strong export demand in recent months have helped soybeans rally on the futures markets heading into harvest. Corn futures have also traded higher as ethanol production has returned near levels observed prior to Covid-19. This price support should allow many producers the opportunity to market their grain near break-even levels to close out the 2020 growing year.

2020 Virtual Agricultural Lender Seminar

2020 Virtual Agricultural Lender Seminar
Wednesday October 21, 2020
9:00 am—12:00 pm
Registration Is Now Open
Cost $25

Topics and speakers:
Grain Prices and Farm Policy – Ben Brown, OSU AEDE
Enterprise Budgets and Returns per Acre – Barry Ward, OSU Extension
Niche/Small Farm Legal Issues – Peggy Hall, OSU Extension
Growing Customer Relationships – Rob Leads, OSU Extension
U.S. Ag & Financial Conditions – David Oppedahl, Federal Reserve Bank, Chicago

Feel free to contact OSU Extension Defiance County at 419-782-4771 or