Ohio Agricultural Lending Outlook: Fall 2018

Sources: Eric C. Davis, Robert Dinterman, and Ani L. Katchova
Farm Income Enhancement Program
Department of Agricultural, Environmental and Development Economics
The Ohio State University

Financial stress is a problem afflicting numerous Americans. The Financial Health Institute describes it as a “result of financial and/or economic events that create anxiety, worry, or a sense of scarcity”1. When trying to understand the level of financial stress that farmers are facing, the most tangible window through which to glimpse that condition is loan payments. By understanding whether or not farmers are able to make timely loan payments, one can know if farm income is sufficient to allow debts to be covered, and the most common way of doing this is by examining delinquency data, which is information that lending institutions report concerning the value of loans that are more than 90 days overdue. Read the full article by clicking on this link: Ag Lending Outlook FIE 2018-1mkmj88

Syngenta Corn Seed Settlement Claims Due on October 12

by Peggy Hall

Those post cards advising producers of a $1.51 billion settlement in the Syngenta corn seed lawsuits are legitimate, and corn producers seeking compensation from the settlement must file claims by 11:59 p.m. on October 12, 2018.  The settlement is the result of class action and individual lawsuits alleging that Syngenta failed to receive import approval from China before selling its genetically modified Viptera and Duracade seeds in the United States, which led to the rejection of U.S. corn shipments and a lowering of corn prices from 2013 to 2018.

Who can file a claim?

Three types of claimants that were involved in the U.S. corn market between September 15, 2013 and April 10, 2018 may file claims:

  • Corn producers, which includes any owner, operator, landlord or tenant who shared in the risk of producing any variety of corn, not just Syngenta varieties.  Landlords who operated under fixed cash leases are not eligible.
  • Grain handling facilities that purchased, transported, stored, handled and sold any variety of corn.
  • Ethanol production facilities that produced, purchased and sold dried distillers’ grains from any variety of corn.

How to file a claim?

File electronically through a secure, encrypted portal at www.CornSeedSettlement.com or download a printed form on the same website to file via U.S. mail.  Claimants must file using either a federal tax ID number or social security number and must file a separate claim for each Form 578 filed with FSA.  Note that the settlement claims administrator states that all claims information is confidential and will be destroyed after the payment of claims.

How much will a claimant receive?

Payments will vary and will depend upon the total number of filed claims.  For corn producers, the claims administrator will determine payments based on the following factors: (1) compensable recovery quantity as calculated by number of acres, ownership interest, NASS county yields and predetermined marketing year averages, (2) the year of planting, (3) the producer’s ownership interest, and (4) whether the producer purchased and planted Agrisure Viptera or Duracade seed or a different variety.

When will claimants receive payments?

A claimant might not receive a payment for about a year.  A court hearing to approve the settlement will take place in the U.S District Court in Kansas on November 15, 2018.  If the court approves the settlement, those who object to the approval can file appeals.  Final payments won’t occur until the court resolves all appeals, which could take about a year or more.

Must claimants report payments as income?

Class action settlement payments that compensate for the loss of business income should be reported for tax purposes.  Claimants should consult with tax advisors to determine IRS reporting requirements.

For more information, an extensive list of frequently asked questions about the Syngenta corn seed settlement is available at: https://www.cornseedsettlement.com/Docs/FAQs.pdf

 

Ohio State University Extension On-Farm Energy Demand Monitoring Project

Chris Zoller –Extension Educator, ANR & Eric Romich- Extension Field Specialist, Energy Education

Greater automation on farms has resulted in an increase in energy consumption on many farms. Due to increased electrical usage, many farms are now billed on a commercial rate structure. Unlike residential rates, which are based primarily on total energy usage measured in kilowatt hours (kWh), commercial accounts are also charged for the highest peak demand usage spike over a short time period measured in kilowatts (kW).

Ohio State University Extension secured grant funding to investigate how peak energy demand affects livestock facilities and, in turn, the manner by which farmers can implement energy management strategies, and make investments in equipment to minimize costs and promote long-term sustainability. We have equipment installed on six university and/or private swine and dairy farms across the state. Monitoring equipment installation was finalized earlier this year and we have begun collecting data from each cooperating farm. OSU Extension personnel involved in the project include Eric Romich, Tim Barnes, Rory Lewandowski, Eric Richer, Dale Ricker, and Chris Zoller.

While we are have not collected enough data to make any specific recommendations, we have a few months of data collected that has provided us the opportunity to make sure our monitoring equipment is functioning properly. As data is collected, it is shared with faculty and students in the Ohio State University College of Computer and Electrical Engineering. Students and faculty in the college analyze the data to develop a model that will help us interpret the findings.

Click Here to Access Full Report Which Shows Results

Observations

Many farmers are aware if they are on a demand rate. However, fewer farmers fully understand the details of how their demand charges are calculated including monthly measured demand formulas, power factor correction penalties, and if they are charged a minimum monthly demand based on seasonal spikes. These specific electric rate details greatly influence possible solution strategies.

Based on the preliminary data, there appears to be some motor loads that can be shifted (load shifting) to perform work during times when other critical motor loads are idle, thus reducing demand charges. Ultimately, energy management strategies to reduce demand cost will likely include a mixture of energy conservation, energy efficiency technologies, programmable logic controls and timers to preform load shifting, and possible on-site electric generation.

Summary

Obviously, farmers are interested in ways to reduce energy operational cost. However, before making investments in energy efficiency and renewable energy equipment, it is important to understand how you are charged for electricity. Some farms are still on residential electric rate tariffs and their bills are relatively easy to understand. However, because farms are using more electric, many farms are now on commercial electric rate tariffs that are more complex. Taking the time to investigate your rate tariff and analyze your consumption patterns will help you prioritize potential energy savings solutions, providing you the greatest return on your investment.

Ag Lender Seminars feature Federal Reserve Bank of Kansas City Economist

By Wm. Bruce Clevenger, Amanda Douridas & Rory Lewandowski, Extension Educators

The 2018 OSU Extension Agricultural Lender Seminars will feature keynote speaker, Courtney Cowley, Economist at the Federal Reserve Bank of Kansas City, Omaha, Nebraska.  Cowley will speak to each of the three regionally offered Ag Lender seminars scheduled in October 2018.  She will share her research and the role of the Federal Reserve Bank with her topic “Outlook for the U.S. Economy with Implications for the Ag Sector.”  Cortney Cowley is an economist in the Regional Affairs Department of the Federal Reserve Bank of Kansas City. Her current research focuses on agricultural finance, commodity markets, farm management, and natural resource economics and policy. Cowley’s responsibilities also include writing for the Tenth District Survey of Agricultural Credit Conditions and the Federal Reserve System’s Agricultural Finance Databook.    Cowley joined the Bank in 2015 after completing her Ph.D. in Agricultural Economics at Oklahoma State University. She also holds a B.S. degree in Biosystems Engineering from Oklahoma State and a M.S. degree in Civil Engineering from Colorado State University.

Additional speakers at each location include: Farm Policy & Commodity Outlook – Ben Brown, OSU CFAES, Farm Mgmt. Program Mgr.; Ohio Farm Economy & Production Economics – Barry Ward, OSU Extension, CFAES, Production Business Management; Dairy Production Economics – Dianne Shoemaker, OSU Extension, CFAES, Field Specialist; Hops, Barley & Ohio’s Specialty Crops – Brad Bergefurd, OSU Extension, CFAES, Extension Educator & Horticulture Specialist.

The three Ag Lender Seminars will be as follows:

Tuesday, October 16

Champaign Co. Community Center Auditorium

1512 South US Highway 68

Urbana, OH  43078

 

Wednesday, October 17

Putnam Co. Educational Service Center

Assembly Hall

124 Putnam Parkway

Ottawa, OH 45875

 

Thursday, October 18

Buckeye Agricultural Museum

877 West Old Lincoln Way

Wooster, OH 4469

Seminar programs begin promptly at 9:15 a.m. and conclude by 3:15 pm.  Registration information is available at: https://u.osu.edu/aglenderseminars/  or by contacting Bruce Clevenger, OSU Extension Educator, Defiance County at 419-782-4771 or clevenger.10@osu.edu.

OSU Extension conducts the seminars from input from Ag Lenders, County Extension Educators and Extension Specialists.  The seminars are designed to provide information that Ag Lenders will use directly with their customers, indirectly within the lending industry, and as professional development for current issues and trends in production agriculture.  OSU Extension has been offering Ag Lenders seminars for nearly 30 years.

 

 

Hops Production & Management Workshop Planned

by Chris Zoller, Extension Educator

 Are you looking for a way to diversify your farm income?  If so, raising Hops may be of interest.  The number of craft breweries has grown substantially in Ohio and many breweries are interested in sourcing locally grown hops.

The Tuscarawas County office of Ohio State University Extension will host a Hop Production & Management workshop on October 25th.  The workshop will begin at 5pm at the Mike McCoy Farm with a tour of the hop yard.  Discussion will continue at 7 pm at the Bolivar Fire Department.  Presenters include Brad Bergefurd, Horticulture/Hops Specialist, Ohio State University Extension; Andrew Marburger, Lockport Brewery; and Mike McCoy, Hops grower.

There is no cost to attend, but pre-registration is requested no later than October 18.  Reservations can be made by calling 330-339-2337.

What You Need to Know About Managing Millennials in Agriculture

by: Chris Zoller- Extension Educator, ANR

The exact dates vary depending upon your source, but the Pew Research Foundation has established birth years between 1981 and 1996 as the Millennial generation (also referred to as Generation Y or Gen Y) .  Researchers Neil Howe and William Strauss have identified the birth years for millennials as 1981 to 2004. Interestingly, Baby Boomer (those born between 1946 and 1964) is the only generation the United States Census Bureau defines.

What considerations should you have as an employer if you have employees (family or non-family) that are considered a part of this generation?  It’s not fair to paint all Millennials with a broad brush when describing this generation, but following are a few considerations when working with this generation.

The Millennial Generation
This is considered to be the most energetic, educated, and diverse generation that is also technology savvy and conscious of social issues.  Members of this generation have been influenced by terrorist attacks, school shootings, and the emergence of the Internet.  Approximately one-third of the U.S. workforce is made up of Millennials and it’s estimated they will comprise nearly one-half of the workforce by 2020.

Work-Life Balance and Flexibility
Millennials are very protective of their time away from work.  Millennials are leaders when it comes to having flexibility in the workplace.  A Bentley University study found that Millennial employees are almost twice as likely to have a spouse or partner working at least part-time compared to the Boomer Generation.  As a result, Millennials report finding time for themselves, getting enough sleep, and managing their personal and work life as being significant concerns.
The following question was asked of the Bentley University study participants: How much do you agree or disagree with the following statements if your company provided increased flexibility and/or paid parental leave?

What Do Millennials Value?  What Motivates Millennials?

Millennials are not unlike previous generations when it comes to wanting to perform meaningful work and contribute to the mission of the business.  “A survey published by the Harvard Business Review found that employees of all generations value meaningful work, yet every generation perceived that the other generations are only in it for the money, don’t work as hard, and do not care about meaning.”  I’ve reached an age where I find myself saying things like those reported in the Harvard Business Review…  Millennials also value mentoring, want to develop relationships with their employer and co-workers, desire to enhance their skills, believe training is important, and embrace technology.  This generation tends to believe that the work day doesn’t have to be ten hours.
Millennials are motivated to find ways that make production agriculture more efficient and profitable.  The entrepreneurial spirit and knowledge of technology this generation has will continue to impact agriculture.  It’s happening all around us – robotic milkers, the use of drones, apps, etc.

Work Assets
The Millennial generation has many assets they can offer to agriculture that are positive.  A consumer mentality is one started with Generation X and continues today with Millennials.  This mentality will continue to force everyone in agriculture to re-think food production and be cognizant of what consumers want, need, and desire.  Knowledge of computers and related technology can help farms better manage and interpret data to make more informed decisions.  Technology is fast paced, ever changing, and will continue to influence food production.  Millennials tend to be optimistic, goal oriented, have a positive attitude, and enjoy working with others.  These are positive attributes of employees in any business.

Work Liabilities
As with all young people, Millennials lack experience.  This is normal.  Just remember this as you work with employees in this generation – they have high expectations, focus on achieving goals, and are able and willing to learn.  Millennials prefer a structured work environment, need supervision, can be impatient, and may lack skills needed to effectively deal with difficult people.

Summary
What does all of this mean for you as an employer?  Your approach to employee scheduling may be a bit different than how you’ve done it in the past – keep in mind the high value that Millennials place on achieving a work-personal life balance.  Capitalize on the desire many in this generation have to achieve goals, perform work that is meaningful, work with others, and engage in training.  In addition, allow employees with the technology skills to help you better manage your farm for the future.  Technology will continue to impact agriculture and you will need to continually explore and evaluate the best technology for your farm business.  More employees are entering agriculture with no or limited production experience.  Be aware that your training programs may need to be more focused and incorporate hands-on activities.
Sources
Multi-Generational Impacts on the Workplace, Bentley University, 2017
Generational Differences Chart, West Midland Family Center, www.wmfc.org
Millennials in Agriculture – Part 1, Michigan State University Extension, 2017

(Originally published in Farm & Dairy, September 27, 2018)

Annie’s Project Course- Empowering Women in Agriculture

by: Jacqueline Kowalski & Robin Christensen, Extension Educators

 

 

OSU Extension in Summit and Portage Counties are teaming up to offer Annie’s Project from October 9th– November 13th, 2018. Annie’s project is a six-week program designed to address risk management education for farm women. Its objective is to educate women entrepreneurs so that they are more prepared to make farm management decisions. While a large number of farm women own and operate farms, others play a major role in the decision-making process of farm operations for farm families. Annie’s Project provides in-depth sessions on topics that are important for decision-making of the family farm. The program topics covered include human resources, legal risks, financial risks, marketing risks, and production costs and risks. Sessions are designed to be very interactive between the presenters and the participants. Information presented is tailored to meet the needs of participants in their own geographical areas.

Annie was a woman who grew up in a small rural community with the life-long goal of being involved in production agriculture. She spent her lifetime learning how to be an involved business partner with her husband, and together they reached their goals and achieved success. Annie’s daughter, Ruth Hambleton, a former Extension Educator for the University of Illinois, founded Annie’s Project in 2000 in honor of her mother. Annie’s Project is designed to take Annie’s life experiences and share them with other women in agriculture who are living and working in this complex, dynamic business environment. Additional details on Annie’s life can be found https://www.anniesproject.org/

The 6-week training will begin on Tuesday October 9th at 6:00pm, with dinner starting at 5:30pm. Registration is due October 5th, 2018. Classes will rotate between the Summit and Portage County Extension offices in Stow and Ravenna. The course fee is $100.

Please contact Robin Christensen with questions or for an application at 330-296-6432 or e-mail at Christensen.227@osu.edu

 

Consider Pros, Cons of Alternative Grain Storage Methods

by: Source: Chris Bruynis, OSU Extension Ross County

Farmers are faced with making some tough decisions this fall going into harvest. I am hearing there are large quantities of 2017’s crop still in storage in the local elevators which could lead to limited hours and inadequate storage for the 2018 large crop that is being harvested. Also there are pricing and basis concerns which clearly favor keeping the grain on the farm. These issues are making farmers scramble to find storage options and find them quick.

Ken Hellevang, North Dakota State University Extension agricultural engineer offers some advice that we need to think about when making this decision.  The important point is that all storage options should keep the grain dry and provide adequate aeration to control grain temperature. Grain must be dry and cool (near the average outdoor temperature) when placed in alternative storage facilities because providing adequate, uniform airflow to dry grain or cool grain coming from a dryer is not feasible.

Also farmers need to think about the structural issues of the building. Grain pushing against walls can damage buildings not built for grain storage. The wall must be anchored securely, and its structural members must be strong enough to transfer the force to the building poles or support structure without breaking or excessive bending. He suggests hiring an engineer to complete a structural analysis and follow the recommendations to reinforce the structure. The last thing farmers need is structural failure where we lose the grain and the structure.

Other option beside existing buildings could include poly bags, but it does not prevent mold growth in damp grain or insect infestations. Place grain in the bag at recommended storage moisture contents based on grain and outdoor temperatures during the potential storage period. Heating will occur if the grain exceeds a safe storage moisture content and it cannot be aerated to control heating. The average temperature of dry grain will follow the average outdoor temperature. If considering this option, select an elevated, well-drained site for the storage bags. Run the bags north and south so solar heating is similar on both sides. Sunshine on just one side heats that side, which can lead to moisture accumulation in the grain and spoilage on the cool side.

Grain covers over a pile could be an option as well, but site preparation might be costly. A combination of restraining straps and suction from the aeration system, when designed correctly, holds grain covers in place. This system can also provide adequate airflow through the grain to control grain temperature. Place perforated ducts on the grain under the cover to provide a controlled air intake for the aeration system and airflow near the cover to minimize condensation problems under the cover. Place properly sized and spaced ducts under the pile on the ground to pull air through the grain. Some storage options use a perforated wall for the air inlet.

For additional information and building specifications on alternative storage option go to https://www.ag.ndsu.edu/pubs/ageng/grainsto/ae84.pdf.

OSU Extension Income Tax Schools Focus on New Tax Law

by: Barry Ward and Julie Strawser, OSU Income Tax Schools

How to deal with the Tax Cuts and Jobs Act—the new tax law for both individuals and businesses–is among the topics to be discussed during the upcoming Income Tax School workshop series offered throughout November and December.

The annual series helps tax preparers learn about federal tax law changes and updates for this year, as well as learn more about issues they may encounter when filing individual and small business 2018 tax returns.

The tax schools are intermediate-level courses that focus on interpreting tax regulations and changes in tax laws to help tax preparers, accountants, financial planners and attorneys advise their clients, he said. The schools offer continuing education credit for accountants, enrolled agents, attorneys, annual filing season preparers and certified financial planners.

This is an important year for tax education as the new tax law creates some challenges for tax practitioners to prepare themselves for the next filing season. Our instructors have great deal of experience and training and the accompanying workbook will be a top reference to prepare tax practitioners to best serve their clients during this transition to the new tax law.

The workbook offers over 700 pages of reference material including reference tables and examples that will be valuable to practitioners. Sample chapters of the reference workbook can be found at:

http://taxworkbook.com/about-the-tax-workbook/

The tax school will also feature a separate, two-hour ethics webinar that will broadcast Dec. 12 at 1 p.m. and again on Dec. 14 at 10 a.m. The webinar is approved by the IRS and will be available to tax school participants enrolled in the two-day tax school at no extra charge.

The registration fee for each workshop is $375, with a $50 late fee if not registered two weeks prior to the school. The fee includes all materials, lunches and refreshments. The deadline to enroll is 14 days prior to the date of each school. Participants can also choose to attend just day one of the workshop for $250. Additionally, the 2019 RIA Federal Tax Handbook and the Wolters Kluwer Master Tax Guide are both available for participants to purchase for a discounted fee of $40 each. Registration information and the online registration portal can be found at:

http://go.osu.edu/taxschools

The tax schools run from 8 a.m. to 4:30 p.m. on the following dates and locations:

  • Oct. 31- Nov. 1 — Ole Zim’s Wagonshed, 1387 State Route 590, Gibsonburg.
  • Nov. 5-6 – Sheraton Suites, 1989 Front St., Cuyahoga Falls.
  • Nov. 7-8 — Ashland University Convocation Center, 820 Claremont Ave., Ashland
  • Nov. 13-14 — Presidential Banquet Center, 4548 Presidential Way, Kettering.
  • Nov. 15-16 — Old Barn Out Back, 3175 W. Elm St., Lima.
  • Nov. 26-27 — Der Dutchman Restaurant, 445 S. Jefferson Rt. 42, Plain City.
  • Nov. 28-29 — Ross County Service Center, 475 Western Ave., Chillicothe.
  • Dec. 3-4 — Ohio University, Zanesville Branch Campus Center, 1425 Newark Road, Zanesville.
  • Dec. 5-6 — The Ohio State University, Fawcett Center, 2400 Olentangy River Road, Columbus.

A daylong webinar on Ag Tax Issues will be broadcast Dec. 17 from 9 a.m. to 3 p.m.

Tax practitioners representing farmers or rural landowners, as well as farmers or farmland owners preparing their own taxes, will benefit from the five-hour webinar. The focus will be key regulations of the Tax Cuts and Jobs Act related specifically to those income tax returns.

Participants can choose between attending a host location or participating at home or in the office. Host locations will provide a facilitator, refreshments and lunch. Participants are encouraged to bring a computer to engage in the real-time Q&A. Participants who choose not to attend a host location, will have a web address emailed prior to the webinar.

Registration, which includes the Ag Tax Issues workbook, is $150. Register by mail or on-line at http://go.osu.edu/AgIssuesReg

More information on the workshops, including how to register, can be found at go.osu.edu/taxschools. Participants may contact Ward at 614-688-3959, ward.8@osu.edu or Julie Strawser at 614-292-2433, strawser.35@osu.edu for more information.

Agricultural Tax Issues Webinar

by: Barry Ward, OSU Extension, Director, OSU Income Tax Schools

Tax practitioners, farmers and farmland owners are encouraged to connect to the Ag and Natural Resources Income Tax Issues Webinar on Dec. 17 from 9 a.m. to 3 p.m. The event is sponsored by Ohio State University Extension and participants can attend the webinar at host locations throughout Ohio or connect at home or office.

The webinar focuses on issues specific to farm tax returns related to agriculture and natural resources, and will highlight key regulations of the Tax Cuts and Jobs Act related specifically to those income tax returns.

The program is an intermediate-level course for tax preparers whose clients include farmers and rural landowners. Farmers who prepare and file their own taxes will also benefit from the webinar.

Topics to be discussed during the webinar include:

New Section 199A 20% Pass-Through Deduction

Learn how pass-through business owners (most all businesses except those organized as C-Corps) can qualify for this new deduction

Farm Loss Deduction Limits

Review the special rules and limits that apply to farm losses and farm net operating losses.

Depreciation of Farm Assets

Discuss new rules impacting the depreciation and expensing of farm assets. Also review the impact of the elimination of IRC § 1031 like-kind exchange treatment for personal property on farm trades.

Farm and Ranch Tax Elections

Identify general rules applicable to making and revoking elections allowed to farm businesses.

Section 199A and Agricultural and Horticultural Cooperatives

Define the new tax law applicable to sales by patrons through cooperatives.

Farm Lease Income and the QBI Deduction

Application of the QBI Deduction to farm lease income.

Entity Considerations

Review entity planning considerations for farm clients necessitated by the new tax law.

Involuntary Conversions:

Involuntary conversions may be the result of a condemnation, a sale under a threat of condemnation, sales of livestock due to weather conditions, or a casualty. The webinar will describe the tax rules associated with these dispositions.

Taxation of Wetland Mitigation Credits

Discuss how wetland mitigation credits are created and how credits might be taxed upon sale or disposition by farmers and ranchers.

Commodities Futures and Options Contracts

Review the tax implications of hedging transactions and options contracts.

Non-Cash Transactions

Identify some of the common challenges associated with non-cash transactions—such as commodity gifts and wages, bartering, and non-cash patronage dividends—and discusses their tax consequences.

Tax Implications of Payments from Energy Companies

Explore the tax treatment of various payments that a landowner or mineral owner may receive from oil and gas exploration, drilling activity, or from wind or solar energy produced on his or her land.

Case Study with Forms

Presentation with a typical farm client and walk through form preparation for that client’s tax return.

The cost for the one-day school is $150, and applications have been made for the following continuing education credits:

  • Accountancy Board of Ohio, CPAs (6 hours)
  • Office of Professional Responsibility, IRS (6 hours)
  • Supreme Court of Ohio, Attorneys (5 hours)

Registration includes the Agricultural Tax Issues workbook. The deadline to register is Dec. 6 to ensure participants will receive the workbook in the mail before the workshop. The live webinar, which will also feature a real-time Q-and-A, can be viewed at several host locations statewide and will include lunch.

Participants also have the option to view the webinar from home if unable to attend a host location.

For those who choose not to attend at a host location, a web address for the webinar will be sent in advance of the Dec. 17 presentation.

Host locations include:

Auglaize County, OSU Extension Office, 208 S. Blackhoof St., Wapakoneta

Clermont County, OSU Extension Office, 1000 Locust St., Owensville

Miami County, OSU Extension Office, 201 W. Main St., Old Courthouse, Troy

Putnam County, OSU Extension Office, 1206 E. Second St., Ottawa

Wayne County, Fisher Auditorium, 1680 Madison Ave., Wooster

Wyandot County, Elks Lodge, 320 E. Wyandot Ave., Upper Sandusky

More information on the workshop, including how to register, can be found at go.osu.edu/agissuesreg

Contact Barry Ward at 614-688-3959, ward.8@osu.edu or Julie Strawser at 614-292-2433, strawser.35@osu.edu with questions.