Evaluating the Prevent Plant Option

By: Eric Richer & Chris Bruynis, OSU Extension Educators

Planting progress goes differently every year and in each part of the state. This year is no different in Ohio. Some places got in early and are finished. Others had their ‘normal’ planting progress with ‘normal’ Mother Nature breaks, perhaps with some re-plant needed. And still others have not had ideal conditions all spring to plant.  As such, we have received some recent calls regarding the mechanics and economics of utilizing the Prevent Plant through crop insurance this year in certain parts of the state. First and foremost, we are not crop insurance agents, so speaking with your agent is of utmost importance. In this article, we will walk through an example on the economics of electing Prevent Plant.

In Ohio, once you arrive at the final plant date of June 5 for corn (already passed) and June 20 for soybeans, you basically have 3 options in a corn scenario: Continue reading

Central Ohio Agronomy School – Night #2

David Marrison, Coshocton County ANR Educator shares insights and options on retirement planning for you and your farm.

Night 3 Speakers – Monday March 21

Corn Disease Update

Dr. Pierce Paul, OSU Plant Pathology
Tar Spot – Do we have it, Can we control it? Aerial Applications of Fungicides … is 2 gallons really enough? Vomitoxin Research Results.

Carbon Credits – Is There Really A Market In Ohio?

Mike Estadt, ANR Educator Pickaway County
What is a carbon credit? What is a carbon credit worth? What do I have to do? Mike will answer these and many other questions about selling carbon credits.

Central Ohio Agronomy School – Night 2

John Linder, Chairman National Corn Growers Association and Tadd Nicholson, Executive Director Ohio Corn & Wheat share their insights on the “Big Picture” of Agriculture at night #2 of the Central Ohio Agronomy School.

Night 3 Speakers – Monday March 21

Corn Disease Update – Dr. Pierce Paul, OSU Plant Pathology
Tar Spot – Do we have it, Can we control it? Aerial Applications of Fungicides … is 2 gallons really enough? Vomitoxin Research Results.

Carbon Credits – Is There Really A Market In Ohio? – Mike Estadt, ANR Educator Pickaway County
What is a carbon credit? What is a carbon credit worth? What do I have to do? Mike will answer these and many other questions about selling carbon credits.

 

ARC/PLC Program Election and OSU Extension Decision Tool

by: Chris Zoller, Extension Educator, ANR, Tuscarawas County

Introduction

The 2018 Farm Bill reauthorized the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) safety net programs that were in the 2014 Farm Bill. Producers must enroll in ARC/PLC for the 2022 crop year through their local Farm Service Agency office. The signup period for the 2022 crop year is open now, and the deadline to enroll and make amendments to program elections is March 15, 2022.

If changes are not made by March 15, 2022 deadline, the election defaults to the programs selected for the 2021 crop year with no penalty.

 ARC/PLC Program Options

Producers again have the option to enroll covered commodities in either ARC-County, ARC-Individual, or PLC. Program elections are made on a crop-by-crop basis unless selecting ARC-Individual where all crops under that FSA Farm Number fall under that program. ARC program payments are made when crop revenue falls below a guaranteed level, while PLC payments are made when a crops specific effective price is lower than its reference price.

Reference Prices

While the 2018 Farm Bill does allow for reference prices to change, indications are that we will not see any changes in 2022.  The established reference prices are: corn $3.70; soybeans $8.40; and wheat $5.50.  Unless we experience significant reductions in yield and/or price, it is unlikely any ARC/PLC payments will be made this year.

Decision Tool

OSU Extension has a newly updated software program to assist producers with evaluating ARC/PLC scenarios and options.  This tool is available by contacting your local Extension Educator or by accessing it on-line at: https://farmoffice.osu.edu/farm-management-tools/decision-aids

The 2022 PLC and ARC Decision

By: Gary SchnitkeyNick Paulson, and Krista Swanson, Department of Agricultural and Consumer Economics, University of Illinois and Carl Zulauf, Department of Agricultural, Environmental and Development Economics Ohio State University.

Farmers will again have until March 15 to make commodity title program selections. Given the current high prices, commodity title payments are not expected from any program option for the 2022 marketing year. If a change in conditions resulted in payments, those would be received in October 2023, after the close of the 2022 marketing year. Farmers wishing to purchase the Supplemental Coverage Option (SCO) crop insurance policy must select Price Loss Coverage (PLC) as the commodity title choice. Based on current price projections, Agriculture Risk Coverage at the county level (ARC-CO) will maximize the chance of payment for soybeans, although that chance will be small. The probability of payments is roughly the same for corn and soybeans.

Decision Overview

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A flurry of tax proposals in Congress

Source: Peggy Kirk Hall, Associate Professor, Agricultural & Resource Law

 

Taxes, Taxes and More Taxes.  

WOW … Just WOW!! 

Part II

 

You can count on tax law to generate interest in the agricultural community and that’s certainly the case with several tax bills recently introduced in Congress.  Within the last month, members of Congress proposed a flurry of tax proposals that could impact agriculture if enacted.  Of course, passing tax legislation is always difficult and subject to partisanship, and we expect that to be the case with these bills.

Here’s a look at the tax proposals receiving the most attention.

Death Tax Repeal Act of 2021.  Sen. Thune (R-SD) and Rep. Smith (R-MO) are the primary sponsors of S. 617 and H.R. 1712, companion bills introduced March 9 that propose to repeal the federal estate tax, which the sponsors claim to be “the most unfair tax on the books.”  The Act would also repeal the generation-skipping tax and make modifications to the computation of the federal gift tax, beginning at 18% under $10,000 and incrementally increasing by an additional 2%.  Cosponsors of the Senate proposal includes 30 other Republicans, and the House bill has 137 cosponsors including one Democrat.  The bills were referred to committee but have yet to see any further action.

For the 99.5 Percent Act.  Introduced March 25 by Senators Sanders (D-VT), Gillibrand (D-NY), VanHollen (D-MD), Reed (D-RI) and Whitehouse (D-RI) to “tax the fortunes of the top 0.5% and reduce wealth inequality,” this bill would reduce the federal estate tax exemption from its current level of $11.7 million per individual.  Under the proposal, estates in excess of $3.5 million per individual and $7 million per couple would pay the estate tax, which would begin at 45% for estates between $3.5 and $10 million.  The tax would increase incrementally, reaching 65% for estates over 1 billion.  The proposal would also reduce the lifetime gift tax exemption from its current level of $11.7 million to $1 million but would not reduce the annual $15,000 per person per year gift tax exemption for cash gifts.  It would limit the exemption for gifts to trust at $20,000 per year.  Protections for farmland include allowing farmland value to be lowered by up to $3 million for estate tax purposes and increasing the maximum exclusion for conservation easements to $2 million.  The bill would also prohibit reduced valuation for assets held in a pass-through entity, affecting the 35% valuation discount that is typical for farmland LLCs.

Sensible Tax and Equity Promotion (STEP) Act.  A group of Democrats in the Senate introduced the STEP Act on March 29 in an effort to “close the stepped-up basis loophole by taxing unrealized capital gains when heirs inherit huge fortunes on which the original owner never paid income taxes.”  The proposal would tax the transfer of property that has a net gain either during lifetime or at death.  During lifetime, a completed transfer to a non-grantor trust or individual other than spouse would be subject to tax but the first $100,000 of cumulative gain would be exempt.  At death, the first $1 million of appreciated assets would pass without taxation.  Transfers to charity, spouses, charitable trusts, qualified disability trusts would be exempt, as would gains on residences up to $250,000 per individual or $500,000 for married couples.  Taxes on illiquid property such as farms and some farm assets could be paid in installments over a 15-year period, and any taxes paid under the Act would be deductible from the federal estate tax.  The bill would also require gains on non-grantor irrevocable trusts to be reported every 21 years.

Corporate Tax Dodging Prevention Act.  Another bill by Sen. Sanders (D-VT) would go after the corporate tax rate.  The bill would restore the top corporate tax rate to 35%, its level prior to the reduction to 21% by the Tax Cuts and Jobs Act of 2017.  It also includes a number of provisions to reduce the ability of corporations to avoid paying federal taxes by moving income and profits offshore.

We are likely to see several more tax proposals in Congress in the coming year and time will tell whether any of them will have traction.  Some may merely be bargaining chips among the many legislative agendas in Washington.  One thing is certain–tax bills will continue to generate interest in the agricultural world, so we’ll keep readers updated on these and future proposals.

Taxes, Taxes and More Taxes. WOW … Just WOW!!

Source: Ohio Farm Bureau

Taxes are becoming more of a hot topic in Washington D.C. and some of the plans being proposed would have a disastrous impact on rural Ohio and rural America as a whole. Proposed legislation in Congress would tax capital gains at death and eliminate stepped-up basis as a way to raise revenue for government spending, causing Farm Bureau to issue an Action Alert to our members. Ty Higgins has more with OFBF’s public policy vice president, Jack Irvin.

Click here for more information

 

USDA Agricultural Projections to 2030

Source: Chris Zoller, Extension Educator, ANR, Tuscarawas County

Click here for PDF version–easier to view Figures

The United States Department of Agriculture (USDA) recently released the interagency report: USDA Agricultural Projections to 2030.  These long-term projections include several assumptions related to the Farm Bill, macroeconomic conditions, farm policy, and trade agreements.  While long-term projections are based on assumptions and many unknowns, they do provide a glimpse of how U.S. farm commodity prices may perform over the next several years.  Anyone interested in reading specific details is encouraged to see the report available here: https://www.ers.usda.gov/webdocs/outlooks/100526/oce-2021-1.pdf?v=3513.2.

This article briefly summarizes selected selections of the 102-page report, including U.S. crop prices, milk production, U.S. farm income, and government payments.  Figures from the report are included to accompany the text.

U.S. Crop Prices

Rising global demand for diversified diets and protein will continue to stimulate import demand for grains. Increased demand for these crops is accompanied by rising competition for market share from countries such as Brazil, Argentina, the EU, and the Black Sea region. The United States also faces challenges related to ongoing tensions with trade partners and a relatively strong U.S. dollar. Although strong trade competition continues, U.S. commodities remain generally competitive in global agricultural markets, with U.S. corn and soybean exports projected at record highs by 2030/31. Nominal prices for wheat, cotton, and rice are expected to rise modestly between 2021/22 and 2030/31.

  Continue reading

Farm Office Live Continues!

Source: Barry Ward, David Marrison, Peggy Hall, Dianne Shoemaker – Ohio State University Extension

“Farm Office Live” continues this winter as an opportunity for you to get the latest outlook and updates on ag law, farm management, ag economics, farm business analysis and other related issues from faculty and educators with the College of Food, Agricultural and Environmental Sciences at The Ohio State University.

Each Farm Office Live begins with presentations on select ag law and farm management topics from our specialists followed by open discussions and a Q&A session. Viewers can attend “Farm Office Live” online each month on Wednesday evening or Friday morning, or can catch a recording of each program.

The full slate of offerings remaining for this winter are:

  • March 10th 7:00 – 8:30 pm
  • March 12th 10:00 – 11:30 am
  • April 7th 7:00 – 8:30 pm
  • April 9th 10:00 – 11:30 am

Topics to be addressed in March include:

  • Coronavirus Food Assistance Program (CFAP)
  • Proposed Stimulus Legislation
  • General Legislative Update
  • Ohio Farm Business Analysis – A Look at Crops
  • Crop Budget & Rental Rates

To register or view past recordings, visit https://go.osu.edu/farmofficelive

For more information or to submit a topic for discussion, email Julie Strawser at strawser.35@osu.edu or call the farm office at 614-292-2433. We look forward to you joining us!