The OSU Farm Office is Open! COVID-19 and Other Hot Topics on Monday, April 6 at 8:00 p.m.

Starting Monday April 6th, the OSU Farm Office Team of Peggy Hall, Dianne Shoemaker, Ben Brown, David Marrison and Barry Ward will be holding weekly live office hours from 8:00-9:30 pm EST to provide short updates on emerging topics and to help answer questions. Each evening will start off with a quick 10-15-minute summary of select farm management topics from our experts and then we will open it up for questions and answers from attendees on other topics of interest.

Each farm session is limited to 500 people. Recordings will be posted on farmoffice.osu.edu the following day. For Monday evening April 6th, emphasis will be given to the newly passed CARES Act. Register at: go.osu.edu/farmofficelive

The CARES Act’s Paycheck Protection Program for Small Businesses

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

We love blogging about agricultural law, but sometimes we don’t feel the need to interpret a law that one of our colleagues has already explained perfectly.  Such is the case with an article about the new Paycheck Protection Program recently enacted by Congress in the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  Our colleague Kristine Tidgren at Iowa State’s Center for Agricultural Law and Taxation has written an excellent explanation of the new loan program here.

A few questions about the Paycheck Protection Program that Kristine answers in detail in her blog post are:

  • Who’s eligible for the loans?  Any small business concern, business concern, 501(c)(3) nonprofit, veterans’ organization or tribal business concern employing 500 or fewer employees and eligible self-employed individuals including independent contractors may apply for a loan.  Farm businesses with less than 500 employees fit within these eligibility parameters.
  • How much are the loans?  The program has a maximum loan amount of the lesser of either $10 million or 250% of the average monthly payroll costs in the one year prior to the loan plus refinanced Economic Injury Disaster loans received after 1/31/20.
  • What can the loans be used for?  Certain payroll costs, as well as group health care benefits, salaries, commissions and similar compensation, mortgage interest, rent, utilities, and other previous debt obligations.
  • What are the terms?  The loans have a maximum maturity of 10 years and the interest rate can’t exceed 4%.  Lenders have to defer both interest and principal payments for at least the first 6 months.  Note the forgiveness provisions below, however.
  • What about loan forgiveness?  A borrower is eligible for loan forgiveness in an amount equal to the sum of certain payroll, mortgage interest, rent, and utility payments made during the 8-week period after the loan’s origination date.  The loan forgiveness can’t exceed the principal amount and is subject to a number of reduction factors, which Kristine explains.
  • What considerations apply to loan approval?  In reviewing loan applications, a lender must consider whether the borrower was in operation on Feb. 15, 2020 and had employees for whom the borrower paid salaries and payroll taxes.  Applicants must also certify that the uncertainty of current economic conditions makes the loan request necessary to support ongoing operations; funds will be used to retain workers and pay eligible expenses; the applicant does not have an application pending for another loan for the same purpose; and that the applicant has not received amounts under the program for the same purpose for the period of February 15 to December 31, 2020.
  • How to apply?  According to the Small Business Administration: “Businesses can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program.”   Consult with your local lender as to whether it is participating in the program. Visit www.sba.gov for a list of SBA lenders.
  • When to apply?  Lenders may begin processing loan applications for most businesses as soon as April 3, 2020, and for independent contractors and self-employed individuals by April 10, 2020.
  • Where to learn more?  The Treasury Department and the Small Business Administration have posted extensive information and the application the loan program on their websites.

Watch for more resources about the CARES Act and other COVID-19 legislation here on our blog and on OSU’s Farm Office website at farmoffice.osu.edu.

Health insurance options for farm families

Press Release from the National Farm Medicine Center March 30, 2020:

Health insurance options for farm families

Many farm families rely on off-farm jobs for health insurance, and the sudden layoffs and furloughs might mean that farm families are losing their coverage unexpectedly. Other families, who have not had insurance, might be looking to purchase a plan in these uncertain times.

Health insurance marketplaces and eligibility criteria for public coverage vary from one state to another, but a search for coverage could start by contacting an insurance agent, or checking your state’s health insurance exchange https://www.healthcare.gov/.

“Loss of job-based health insurance coverage is a qualifying event to purchase coverage outside of the open enrollment period and this can be a cheaper alternative to paying for continuation of employer-based health coverage through COBRA,” said Florence Becot, Ph.D., a rural sociologist and associate scientist with the National Farm Medicine Center, Marshfield Clinic Research Institute, Marshfield, Wis.

Furthermore, said Becot, because of the extraordinary nature of COVID-19, as of March 26, 11 states have re-opened their health insurance exchange for a special enrollment period (California, ColoradoConnecticutMarylandMassachusetts, Minnesota, NevadaNew YorkRhode Island, Vermont, and Washington). The Centers for Medicare and Medicaid Services is also considering opening a special enrollment period for the 32 states that are run by the federal government.

Becot also suggests checking out the Health Insurance, Rural Economic Development and Agriculture website (HirednAg), for more information on tools and resources about health insurance for the agricultural sector.

Becot’s research program focuses on the health, well-being, safety, and economic viability of farm families.

CONTACT: Scott Heiberger
Heiberger.Scott@marshfieldresearch.org
715-389-7541

 

Lady Landlord Program Slated for March 31

by: Eric Richer, Extension Educator

Do you have questions for what are the best practices for farmland leasing? Would you like to incorporate conservation practices or other items into your lease agreement? Do you know what should be in writing? If you are a farmland owner or farmer and you have these types of questions, consider attending the Lady Landlord program on Tuesday, March 31st from 9 am to 1 pm at the Robert Fulton Ag Center, 8770 State Route 108, Wauseon, OH. Attorney Peggy Hall, OSU Extension Ag Law Specialist, will discuss the legal aspects of farmland leasing.  Other topics will include understanding the current market’s cost of production (enterprise budgets), incorporating conservation into leases, landlord-tenant communication, and farmland liability coverage.  This program is open to all farmland owners and farmers. Registration cost is $20 per landowner or farm family and is due by March 27th.  Lunch and materials are included in registration. More information can be found by visiting www.fulton.osu.edu or calling 419-337-9210.

Mental Health First Aid Training for Agricultural Professionals Offered by OSU Extension

by: Chris Zoller, Extension Educator, ANR

The wet weather of 2019 caused a great deal of stress for farmers and Ohio’s agricultural industry.  While we don’t know what Spring 2020 will bring, there are indications that we may have another delayed start to the planting season.  Ohio State University Extension educators and specialists responded last year with the creation of a website (https://u.osu.edu/2019farmassistance/home/) to address Ohio’s agricultural challenges.  This website continues to be maintained with resources that address agronomic crops, financial management, and stress management.

Through a grant from the USDA Farm Stress and Rural Assistance Network, Ohio State University Extension is able to offer Mental Health First Aid Training for agriculture professionals at seven locations across Ohio between mid-March and mid-April.  Training dates and locations include:

March 18             FABE Building at OARDC Wooster

March 19             OSU Extension Regional Office, Caldwell

March 27             OSU Extension Fayette County

March 30             OSU Piketon

April 9                   OSU Lima Campus

April 14                 OSU Extension Butler County

April 17                 OSU Extension Franklin County

The registration fee is $20 per person and includes eight hours of training by OSU Extension professionals, materials, and lunch.  Space is limited at each location.  Training begins at 8:15 am and will conclude by 5 pm.  To register, please click here: https://go.osu.edu/mhfa20

Ag Outlook Meeting to be hosted in Darke County

Ohio State University Extension, Darke County is pleased to announce the 2020 Agricultural Outlook Meeting. The Outlook Meeting topics and presenters are:

  • A Look at The 2020 Grain Markets
    • Ben Brown – Assistant Professor, OSU AEDE, Professional Practice in Agricultural Risk Management
  • Examining the 2020 Ohio Farm Economy
    • Barry Ward – Assistant Professor, OSU Extension Production Business Management
  • 2020 Weather Outlook
    • Aaron Wilson – Atmospheric Scientist, Byrd Polar Research Center and OSU Extension
  • Weather the Storm in Agriculture
    • Sarah Noggle – OSU Extension ANR Educator, Paulding County
  • 2018 Farm Bill Decisions – IT IS GAME TIME
    • Sam Custer, OSU Extension ANR Educator, Darke County

Join the faculty from Ohio State University Extension and Ohio State Department of Agricultural, Environmental, and Development Economics as they discuss the issues and trends affecting agriculture in Ohio. The Outlook meeting is being sponsored by Darke County Farm Bureau, Farm Credit Mid-America, Second National Bank and The Farmers State Bank. The outlook meeting is scheduled for:

February 21, 2020- Western Region Outlook- 8:00 am

Romer’s Catering- 118 E. Main, Greenville OH 45331

RSVP by: February 14th — $20 registration

Contact the Darke County Extension Office 937-548-5215

For more information about OSU Extension, Darke County, visit the Darke County OSU Extension web site at www.darke.osu.edu, the OSU Extension Darke County Facebook page or contact Sam Custer, at 937.548.5215.

January is a Great Time to Complete the Farm Balance Sheet

Eric Richer, OSUE Fulton County

 The balance sheet is a “snap shot” in time of your farm’s financial position, including what assets you own and how they are financed. The balance sheet is also known as the net worth statement. When completed precisely and timely, the balance sheet and corresponding ratios can be a very valuable tool to determine farm financial health. The balance sheet objectively measures farm business growth, liquidity, solvency, and risk capacity.

Categorizing Balance Sheet Items

The assets and liabilities on the balance sheet (including the financing of the assets) are used to determine the equity, or net worth, of the farm owner. The owner’s equity is used by lenders and insurers to determine a farm business’ value.  There are two ways to calculate the owner’s equity, or net worth. The first simply subtracts the liabilities from the assets:

Assets – Liabilities = Owner’s Equity

The second calculation adds the owner’s equity with liabilities to determine the assets:

Liabilities + Owner’s Equity = Assets

Terms of Assets and Liabilities

Beyond the broad categories of either an asset or liability, a balance sheet categorizes items into “time compartments” or terms of useful life. Useful life is a term for the amount of time an item can be utilized for the farm business. Depreciation allocates the cost of this asset over its useful life. Both assets and liabilities can be categorized into current, intermediate, and long, or fixed, terms of useful life.

Assets – Current assets can be converted to cash in one year or less. Common current assets are cash, growing crops, harvested crop inventory, market livestock, accounts receivable, and other similar items. Intermediate assets have an assumed useful life or depreciable value of one to ten years. Common intermediate assets are breeding livestock, machinery and equipment, titled vehicles, and not-readily-marketable bonds and securities. Long term, or fixed, assets are typically permanent items with value—depreciable or not—for more than ten years and include farmland, buildings, farmsteads, and other similar items.

Liabilities – Current liabilities are obligations that are due and payable in the next twelve months. Most common current liabilities include accounts payable (bills), credit card bills, operating lines of credit, accrued interest, and the current portion of principal on loans due this year. Intermediate liabilities are obligations that due to be paid back within one to ten years and are usually associated with intermediate farm assets on the left side of the balance sheet. Common intermediate liabilities are the principal remaining on machinery and equipment loans or breeding livestock purchases. Finally, long term, or fixed, liabilities are debts with terms greater than ten years like the principal balance remaining on a farmland or building mortgage.

Assets: Market Value vs. Cost Value

Market value – Today’s market values minus selling costs are used to determine market value. For example, a fully depreciated 15-year-old tractor certainly has a current market value greater than zero. A realistic current market value for this tractor can be obtained with an appraisal, or by looking at current sales of similar tractors online. Similarly, farmland bought 30 years ago likely has a different current market value today. In general, lenders may prefer the use of current market values in a balance sheet for asset valuation.

Cost value – The net book value, or the cost of the item minus accumulated depreciation, is the cost value. For example, a fully depreciated 15-year-old tractor has a cost value of $0 in a cost based balance sheet. No appraisal is needed; only record the cost minus accumulated depreciation. Farmland (a non-depreciable, long term asset) purchased 30 years ago has a balance sheet value of the purchase cost.  In general, accountants prefer cost value balance sheets as a more clear reflection of business success, based on business decisions rather than inflation, depreciation, or appreciation of investments.

In a precisely completed balance sheet, the cost value and the market value columns usually produce different total asset values.

Keys to Completing the Balance Sheet

Several keys can help farmer improve their accuracy, effectiveness, and efficiency for completing year-end balance sheets.

  • Complete the balance sheet on the same date each year, usually as of December 31st. The information will never be more accurate than immediately after the end of the year.
  • Inventory all assets, including standard weight and measure units (ie. Lbs, head, bushels, bales, etc).
  • Utilize current market prices for crop and livestock inventories.
  • Calculate cost value for growing crops.
  • Include government payments and insurance indemnities yet to be received in accounts receivable.
  • Apply conservative breeding livestock values, avoiding large year-to-year changes.
  • Maintain a separate, easy-to-update depreciation schedule for depreciable assets.

Balance Sheet Tools

Balance Sheet Ratios to Evaluate Financial Health

The scorecard uses these three accounting statement to determine financial ratios and measurements to benchmark a farm operation against acceptable industry standards.

References:

Hachfeld, G. A., D.B. Bau, C.R. Holcomb. 2016. Balance Sheet. Farm Financial Series, #1, University of Minnesota Extension.

Langemeier, M. R. 2011. Balance Sheet—A Financial Management Tool. MF-291, Department of Agricultural Economics, Kansas State University Extension. Available online at: www.agmanager.info

OSU Extension to Host Two Northwest Ohio Farm Transition Programs

by: Eric Richer, OSU Extension Fulton County & Sarah Noggle, OSU Extension Paulding County

Are you interested in starting the conversation for a successful farm transition to the next generation?  OSU Extension in Northwest Ohio is holding two separate but identical farm transition meetings to assist farmers in navigating the farm transition process.

The first night will focus on the senior generation (all are invited) including estate and Medicaid planning, communication through the process, farm financial affairs and vision/management transition. The second night will focus on the next generation (all are invited) including entity formation and use in transition planning, a recap of wills & trusts, accounting implications like capital gains, gifting and share valuation, and committing to the process. Local legal and accounting professionals will be teaching sessions along with local county Extension educators.  For either program location, the cost is $20 per farm entity for both nights and including refreshments and materials.

In Fulton County, the 2-night program will be held at the Robert Fulton Ag Center, 8770 State Route 108, Wauseon, OH 43567 on January 28th and February 11th from 6:30-9:00 pm. If you are interested in the Fulton County program, download the registration form at www.go.osu.edu/fultonagprograms2020 or visit www.fulton.osu.edu. Pre-registration closes Friday, January 24th.

In Paulding County, the 2-night program will be held at the Paulding County Extension Office, 503 Fairgrounds Drive, Paulding, OH 45879 on February 20th and 27th from 6:30-9:00 pm. If you are interested in the Paulding County program, visit www.paulding.osu.edu for registration details. Pre-registration closes February 6.

Planning for the Future of Your Farm Program Planned in Tuscarawas Country

by: Chris Zoller, Extension Educator, ANR

A two-evening “Planning for the Future of Your Farm” program will be held February 12 and 19 from 7:00 pm to 9:30 pm each evening.  The program will be held at the Village of Tuscarawas Community Center on Cherry Street in Tuscarawas.

David Marrison, OSU Extension Educator, Agriculture and Natural Resources, Coshocton County, will discuss developing the next generation of managers, family communications, providing income for multiple generations, keeping your farm competitive, and preparing for the unexpected.  These topics will be discussed the evening of February 12.

The evening of February 19 will feature Peggy Hall, Attorney and OSU Extension Ag Law Specialist, and Robert Moore, Attorney, Wright and Moore Law.  Peggy and Robert will discuss farm business structures, estate and transfer strategies, trusts, life insurance, tax planning, and much more.

Registration for the program is $25 per person or $35 per family.  Please make your check payable to OSU Extension-Tuscarawas County, 419 16th St. SW, New Philadelphia, OH 44663.  Please RSVP by February 5.  Questions may be directed to Chris Zoller at 330-339-2337 or zoller.1@osu.edu.

 

Farm Succession Workshop to be held in Kenton, Ohio

by: Jeff Stachler, Agriculture and Natural Resources Extension Educator

A two-day workshop about Farm Transition / Succession is planned for February 3 and 25, 2020.  Participants must attend both days.  The workshop will be held at Mid-Ohio Energy conference room which is located at 1210 Lima Street, Kenton, OH 43326.  Each day the program runs from 10:00 am to 3:00 pm with registration at 9:30 am.

One of Extension’s most knowledgeable individuals regarding Farm Transition is David Marrison from Coshocton County.  On the first Day of the workshop David will discuss about the Key questions to answer when planning for the future of the family farm business, Providing income for multiple generations and developing the next generation of farm managers, Retirement strategies, and much more.

The speakers for the second day are Robert Moore of Wright and Moore Law Co. and Peggy Hall, OSU Field Specialist for Agriculture and Resource Law.  They will focus on topics such as Analyzing risk in today’s world, Estate and transfer strategies, Buy/sell agreements, Tax implications of estate and transition planning, and much more.

Cost of the program is $30 per person made payable to OSU Extension – Hardin County.  It is preferred that you send in your registration fee prior to the program to the following address:  1021 W. Lima Street, Suite 103, Kenton, OH 43326.  If you have questions about registering feel free to call the Hardin County Extension Office at 419-674-2297 or e-mail Jeff Stachler (stachler.1@osu.edu).