Valuing Growing Crops on Your Balance Sheet

by: Eric Richer & Clint Schroeder, OSU Extension

With the January USDA Winter Wheat Acreage Report indicating an increase in planted acres up 11% nationally, and more specifically, up 27% in Ohio (USDA-NASS), we thought it might be an opportune time to discuss how to accurately value growing crops (winter small grains and perennial forages) on your farm’s balance sheet. If the average Ohio farm increased winter wheat acreage by 20-30%, then that current asset schedule (or account) on the balance sheet should be impacted similarly.  When completing the balance sheet after the end of the year, it is quite easy to find precise values for the liabilities side (right side) of your balance sheet. However, we often see farmers taking very quick estimates (guesstimates?) of several current asset accounts.  This article will focus on how to accurately and precisely value three current asset schedules on your year-end balance sheet: growing crops, market livestock and crops on inventory.

Growing Crops

As indicated earlier, the growing crops schedule can often be determined with a very rough estimate or ignored completely. Valuing a winter small grain (wheat, barley, rye) that is anticipated for harvest is quite simple.  Simply add all the variable production costs that you have invested into that crop on the current tax year (as of December 31).  Generally, those costs include seed, starter fertilizer, fall herbicide, and perhaps, custom seeding. Often a Growing Crops schedule on the balance sheet asks you to include acres planted multiplied by the costs incurred per acre to date.

For late summer or fall seeded perennial forage crops like alfalfa and other hay, you should show a value of the growing crop in the seeding year.  In the seeding year, you are likely to incur expenses for starter fertilizer, seed, and perhaps, custom seeding. Once that perennial forage crop has been harvested, it is assumed that the crop is at full production. In subsequent years the acres of the crop should be noted on the balance sheet with no associated cost value unless a fertilizer or crop protection application was made after the final harvest for that calendar year.

For both small grains and perennial forages, do not include future land rent, as that will occur in the next tax year, and you already paid rent in the current tax year.

Market Livestock

For market livestock, getting a precise balance sheet value comes down to counting the head of market livestock and estimating approximate weights.  For prices, we encourage you to use your preferred livestock market to place a per pound value on those animals. Some prefer to “use round numbers” to estimate prices, but we would suggest you use exact values at the close of the last trading day (or week) of the year, that is, as of December 31st. Documenting this price in your balance sheet schedule allows you to reference those market prices in the future. It communicates to you “what the price was exactly one year ago”. We acknowledge that marketing on a per head basis may be the standard for some livestock, and in those situations, your judgement and experience should be used to value those livestock at the end of the year.

Crops on Inventory

For grain on inventory, use a similar approach as suggested for market livestock. Determine a good estimate of the bushels you have on inventory (on farm and at the elevator) and use the price at the close of the last trading day of the year from your preferred grain elevator. An exception to this rule would be for any bushels that have a pricing contract in place for the new year. The quantities and values set in the contract should be the numbers used on the balance sheet. If the grain has already been sold, but payment is being deferred until after the first of the year for tax purposes, that number should be reported as Accounts Receivable and not as Crops on Inventory.

For stored forages, we prefer using tonnage of hay and straw for a more universally recognized unit of measure.  In some cases, bales of forage may be the preferred unit. For forage price on December 31st, you can reference your preferred local hay auction yard or use your sales average for the current year.


When completing your balance sheet at the end of the year, we encourage you to use costs incurred for growing crops (wheat and first-year hay) and inventoried units of market livestock, grain on inventory and forages stored times the closing price at your preferred market on December 31st to arrive at accurate and precise current asset values.


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