Author: Sarah

Farm Program Payments Revisited: Farmers May Choose Between County of Administration or Geographic County Location

By: Chris Bruynis, OSU Extension Educator, Ross County

Farmers with the administration of their farms consolidated at one FSA office may want to examine their 2014 and 2015 ARC-CO payment calculations. Original 2014 ARC-CO payments were calculated on the average yields for the administrative FSA office county, regardless of where the land was physically located. Recently FSA announced that farmers could elect to have the 2014 and/or the 2015 ARC-CO payments calculated on the county in which the land is physically located.  For some farms this would be financially beneficial and needs to be requested by April 15, 2016. FSA has calculated the results for the 2014 payments and for the farms where this election is beneficial, farmers simply need to sign the forms at their local FSA office. This will only affect farmers with land in more than one county. Click on Farm Program Payments Revisited to download the full article and maps.

CAUV Bills Awaiting Committee Action

Legislation proposing changes to Ohio’s current agricultural use valuation (CAUV) program has remained on hold in the General Assembly since last fall. Senator Cliff Hite (R-Findlay) and Representative Brian Hill (R-Zanesville) introduced the companion bills on November 18, 2015. The Senate referred its bill, SB 246, to the Senate Ways and Means Committee on December 9, 2015 and House Bill 398 was referred to the House Government Accountability and Oversight Committee on January 20, 2016. Neither committee has acted on its bill.

A Checklist to Farm Succession

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

The cold winter months provide an opportunity to spend time thinking about your successor. Determining who will take over the management and ownership of your farm is not an easy or simple process, but one that takes time and planning.  Scheduling time to meet with your advisors (lender, attorney, accountant, veterinarian, Extension professional, etc.), family, and prospective successors is critical.

Alan Miller and Craig Dobbins from Purdue University have developed the Planning for Farm Succession – Step-by-Step Checklist and Action Plan for Management Succession document.   Below is a summary of key points all farmers should consider when planning for the orderly succession of their farm business.

Step One: Gather Information and Ideas and Discover Expectations

  • Have you attended an introductory workshop/seminar to gather ideas?
  • Have you read articles on farm succession planning?
  • Have you discussed general succession issues with family, friends, advisors, and other farmers?
  • Have you selected someone (family or non-family) to guide the process?
  • Have you decided to involve/hire a facilitator?
  • Have you identified professionals who can assist with the process?
  • Have you completed a financial analysis of your business? Does it provide sufficient cash flow? Will it support the additional members? Will it be financially viable in the future?
  • Have you evaluated family loving costs? How might these change?
  • Have you discussed everyone’s goals, objectives, and expectations?
  • Has the family assessed the compatibility of everyone’s goals, objectives, and expectations?
  • Have you examined the technical and human aspects of retirement?
  • Do you hold regular family meetings?
  • Have you considered:
    • Fair and equitable transfer of ownership
    • Who will take over? When? How?
    • How will decision making be changed?
  • Have you acquired basic knowledge of:
    • Methods of transfer
    • Financing
    • Tax implications
    • Legal implications

Step Two: Generate and Examine/Evaluate Options

  • How will the senior generation prepare for and secure their retirement?
  • What can be done to treat children fairly and equitably?
  • Have you evaluated business arrangements?
  • Retirement issues – where will money come from? How will the retiring generation be involved?
  • Who will the successor(s) be? How will management and labor be transferred?
  • How do you want to involve off farm family members, if at all?
  • How will you treat non-family employees, if applicable?
  • If you have a proposed plan where are you in terms of obtaining buy-in?
  • Have you started to write the plan?
  • Do you have a timeline for implementation?

Step Three: Make Preliminary Decisions and Check with Experts

  • Have you started using your list of options to make preliminary decisions?
    • Management control? Retirement? Succession?
  • Have you put together a rough draft of your options?
  • Have you assembled a team of succession planning professionals?
  • Have you met with your transition team?

Step Four: Decide on and Develop the Plan

  • Have you created and written down draft ideas and potential plans that incorporate your preliminary decisions?
  • Have you decided which plan best achieves what family members want to see happen?
  • Have you reviewed the plan with family and asked for feedback?
  • Have you met with each of your advisors to discuss your ideas and get their feedback?
  • Has the family sat down with the advisors to discuss the plan?
  • Have you taken the advisor’s ideas and advice and incorporated them into the plan?
  • Have you finalized the plan? Is it in writing?
  • Does you succession plan contain:
    • A retirement plan?
    • A plan to transfer management and labor?
    • A plan for transfer of ownership?
    • A contingency plan?
    • An exit plan? A timeline for implementation?
  • Does your plan address on-farm vs. off-farm heirs and future generations?
  • Is there flexibility to allow changes in the future?
  • Has there been an open process for farming and non-farming children to review the plan?

Step Five: Implement the Plan:

  • Do the parties at interest understand what will be required to implement the plan?
  • Have any family members started to put the plan into place?
  • What has been done? What still needs done? When?
  • Has property been transferred?
  • Is there a timeframe for review of and adjustments to the plan?
  • Remember to give credit where credit is due – enjoy your achievements. Succession planning is not an easy process and there is no “recipe” that all farms can follow. However, using the items outlined in this checklist will keep you focused. For some, many of these items can be checked off the list. For others, I hope it serves as a motivator to get the succession planning process underway. Utilize your team of advisors to help guide you through the process in developing a plan that addresses the needs of everyone involved and contributes to the long-term success of your farm business.  (Originally printed in the Farm & Dairy Newspaper)

Sixth Circuit Court of Appeals will hear challenge to WOTUS Rule

In a case successfully argued by Ohio’s Solicitor Eric Murphy, the Sixth Circuit Court of Appeals based in Cincinnati has determined that it has jurisdiction to hear challenges to the Clean Water Rule (WOTUS Rule) proposed by the U.S. EPA and Army Corps of Engineers.  The Rule expands the geographic extent of the “waters of the United States” (WOTUS) that are subject to the Clean Water Act. 

A brief background

Changes Made to Ohio's Cottage Food Regulations

The Ohio Department of Agriculture (ODA) has revised regulations that implement Ohio’s Cottage Food Law, which addresses the production and sale of certain “non-potentially hazardous” foods. An operation producing a “cottage food” may do so without licensing and inspection by ODA, but must follow labeling requirements and is subject to potential food sampling by ODA.

Changes to Ohio’s cottage food regulations include the following:

New cottage food products

The Legal and Practical Aspects of the Agricultural Sales Tax Exemption

By Larry R. Gearhardt, Assistant Professor and Field Specialist in Taxation, OSU Extension

Farmers have enjoyed an exemption from the Ohio and county sales tax for many years. Historically, obtaining the exemption from the sales tax was relatively simple. The farmer merely filled out a post card sized exemption form at his local agricultural retailer, checked the box that he was involved in “agriculture,” and most of his subsequent purchases from that agricultural retailer were exempt.

Dairy Calf Management Workshop to be held on March 8, 2016

by:  Rory Lewandowski, Extension Educator Wayne County

OSU Extension Wayne County is hosting a Dairy Calf Management Workshop on Tuesday March 8 from 9:00 am until 3:00 pm. The workshop consists of morning classroom sessions and an afternoon on-farm session. Raising dairy heifer calves to freshen at 22 to 24 months of age requires good management that maintains calf health. Each dairy heifer represents a two-year investment before any economic returns are realized. In these times of low milk prices, volatile market conditions and high feed prices, dairy producers and managers need to evaluate their calf rearing program and make sure that it is effective and efficient.

The purpose of the dairy calf management workshop is to help participants:

  • Improve the growth efficiency of dairy heifer calves
  • Foster sound health of calves through management of their feeding and housing programs along with a prescribed vaccination program
  • Improve the financial understanding and implications of raising dairy heifer calves
  • Review the pros and cons of various rearing systems
  • See an example of a local dairy calf rearing system

The workshop will begin with registration and refreshments at 9:00 am at the Wayne Presbyterian Church located at 7152 Burbank Rd (SR 83) Wooster at the intersection of SR 83 and Jentes Roads. The program will begin at 9:30 am. Morning topics include: Feeding, Housing Options/systems, Costs of Raising Heifers and Developing a Vaccination Program for Heifer Calves. A hot lunch will be provided at noon. The afternoon session will take place at the Virgil Gasser dairy farm located at 3093 E Pleasant Home Rd, Creston OH 44217. At the Gasser farm participants will see an automated calf feeding system and hear about the farms calf raising program.

The cost of the program is $25/person or $40 /farm (2 persons). Checks can be made payable to “OSU Extension”. The cost includes refreshments, lunch, and program handout materials. Pre-registration is required and the workshop limit is 32 persons. Registration deadline is Tuesday, March 1. Registrations can be sent to: Rory Lewandowski, OSU Extension Wayne County, 428 West Liberty Street, Wooster OH 44691.   A brochure that includes more details about the topics and a registration form is available on the Wayne County Extension web site at: http://go.osu.edu/calfmgmtworkshop .  For more information contact Rory Lewandowski at the Wayne County Extension office at 330-264-8722 or via email at: lewandowski.11@osu.edu.

Ohio State University Extension Announces Two Upcoming Conferences to Help Small Farm Owners

by Tony Nye, OSU Extension Educator, Clinton County Agriculture and Natural Resources

The agricultural landscape of today is very different than it was 20 – 25 years ago. Farms today are getting fewer in number and the ones that are left are growing in acreage. However, as the Small Farm Program Coordinator for Ohio State University Extension I continue to see a huge interest in small farm production.

The “Small Farmer” is a term used for individuals who are practicing agriculture on a small amount of acreage, usually with less than 100 acres. These farmers are many times new to agriculture and are looking to begin a different lifestyle.

Since 2005, we at Ohio State have tried addressing producer needs for small farm production. Our two main efforts include an eight week Small Farm College and the second is through Small Farm Conferences.

This month I want to highlight our two conferences in March and April 2016, which will be sponsored by OSU Extension’s Small Farm Program. These conferences are designed for small farm owners who want to learn more about how to make their farms work better for them or expand their operations, or those new to agriculture who are looking for ways to utilize acreage. Land owners can attend workshops and presentations on these issues and more during the two conferences: “Opening Doors to Success” and “Living Your Small Farm Dream”.

The two conferences, combined with a trade show, are set up to help participants learn tips, techniques and methods for diversifying their opportunities into successful new enterprises and markets as a way to improve economic growth and development on their farms.

Through the conferences, we try to give participants a smorgasbord of ideas that may interest them and opportunities to learn in-depth about an issue, gain resources, and study how to finance a new venture. Although similar in content, the two conferences are not set up to contain the same sessions nor are they located in the same location.

The “Opening Doors to Success” Conference and Trade Show will be held March 11-12, 2016 at the Wilmington College Campus Boyd Cultural Arts Center, Wilmington, Ohio. This conference will kick off Friday afternoon with two really neat hands-on workshops focusing on Meat Goat Production and Water Management and Irrigation Techniques.

The Meat Goat Management program will be presented by Dr. Richard Browning, Tennessee State University and Dr. Maria L. Leite-Browning of Alabama A & M University. Both Richard and Maria are widely known across the country for their meat goat research and expertise in meat goat production. They will provide training on artificial insemination in meat goats, FAMACHA eyelid scoring training for the treatment and control of Haemonchus contortus (Barber’s Pole worm) in goats and sheep, criteria for culling, keeping, and purchasing breeding stock for genetic improvement in commercial or seedstock meat goat operations.

Micro Irrigation Essentials and Management will be taught by OSU Horticulture specialist, Brad Bergefurd. He will cover such topics as evapotranspiration, ground-based and remote moisture sensing, deficit irrigation, micro-irrigation, irrigation scheduling, fertigation basics, irrigation planning resources, and more.

On Saturday, the conference will feature 25-plus sessions from Ohio State University and industry experts as well as a trade show for small farmers that will offer information that can benefit a variety of growers.

The “Living Your Small Farm Dream”, Conference and Trade Show will be held April 2, 2016 at the Shisler Conference Center on the Ohio State University Campus in Wooster, Ohio. Participants at this conference will be able to choose from more than 25 sessions from Ohio State and industry experts as well as question producer speakers on issues related to small farms.

OSU Extension is the outreach arm of Ohio State University’s College of Food, Agricultural, and Environmental Sciences. The overall goal of these events and the mission of the OSU Small Farms Program is to provide a greater understanding of production practices, economics of land-use choices, assessment of personal and natural resources, marketing alternatives, and the identification of sources of assistance.

I encourage you to attend both conferences as they will not cover all the same speakers or topics. We try to keep the two conferences different so we can reach more producers and help them with their operation needs.

Some of the topics (Subject to Change) we plan to cover at the two conferences are:

  • Women in Agriculture
  • Goat production
  • Poultry production
  • Farm Business Planning
  • Artisan Cheese Making
  • Direct marketing
  • Organics
  • Starting a business
  • Hand Sprayer Calibration
  • Legal issues for small farms
  • Soil basics
  • Fertility Management
  • High tunnels
  • Beekeeping
  • Vegetable and fruit production
  • Financing/loans
  • Estate Planning

For more information about these two conferences, please visit http://agnr.osu.edu/small-farm-programs or contact Tony Nye at (937) 382-0901 or nye.1@osu.edu.

Protecting Americans from Tax Hikes (Path) Act Restores Higher Deduction for Donation of Qualified Conservation Easement

By Larry R. Gearhardt, Field Specialist, Taxation

On December 18, 2015, Congress passed and the President signed into law an agreement on tax extenders and numerous other tax provisions in the “Protecting Americans from Tax Hikes (PATH) of 2015” (the Act). Tax extenders are the 50+ tax provisions that are routinely extended by Congress on a one- or two-year basis. The Act makes permanent many of the individual and business extenders. One provision of the PATH Act restores the higher charitable deduction for donations of qualified conservation easements for farmers and ranchers.

QUALIFIED CONSERVATION CONTRIBUTIONS

A taxpayer’s aggregate qualified conservation contributions (i.e., contributions of appreciated real property for conservation purposes) were, for tax years beginning before Jan. 1, 2015, allowed up to the excess of 50% of the taxpayer’s contribution base over the amount of all other allowable charitable contributions (100% for qualified farmers and ranchers), with a 15-year carryover of such contributions in excess of the applicable limitation.

Under pre-Act law, these rules didn’t apply to any contribution made in a tax year beginning after Dec. 31, 2014, and contributions made thereafter were to be subject to the otherwise applicable 30% limit for capital gain property (50% limit for qualified farmers and ranchers).

New law. Effective for contributions made in tax years beginning after Dec. 31, 2014, the Act retroactively revives and permanently extends the charitable deduction for contributions of real property for conservation purposes and the enhanced deduction for certain individual and corporate farmers and ranchers. (Code Sec. 170(b)(1)(E)and Code Sec. 170(b)(2)(B), as amended by Act Sec. 111(a)).

A “qualified farmer or rancher” is a taxpayer more than 50% of whose gross income for the tax year is from the trade or business of farming.

Any contribution of property which is used in agriculture or livestock production (or available for such production) must remain available for production for the deduction to apply. Therefore, there must be a restriction that the property remain in agriculture.

 

 

 

Farm Liability Insurance – What’s in Your Policy?

By: Emily Adams, OSU Extension Educator and Peggy Hall, Asst. Professor, OSU Extension Agricultural & Resource Law

On one hand there are the optimists. They see the glass half empty and expect the best to happen in all situations. Then on the other hand are the pessimists, who often refer to themselves as realists. They anticipate what could go wrong and spend time thinking about alternate plans for when those unfortunate things actually happen. Pessimists, this article may not be for you, because you’ve thought these things through. So optimists- read on!

How often do you think about your farm liability insurance? When is the last time you reviewed your policy with your insurance provider to make sure that you really are covered for everything for which you think you are covered?

Farm liability insurance is one of the most common tools for agricultural risk management. Liability coverage helps you manage your liability for harm unintentionally caused to other people or property by your farming activities. It makes payments on your behalf to an injured party. It also defends you against lawsuits brought by a third party alleging liability within the scope of your policy.

We are all wired differently in our risk management personalities. For some people it seems like a waste of time to anticipate what could go wrong on your farm. You’ve got insurance; it’s probably covered, right?

Maybe, but maybe not. Depending on your policy and everything that you are doing in your farm operation, general farm liability insurance might not cover as much as you think. You should annually review your insurance policies with your insurance agent to make sure that all aspects of your farming operation are covered.

What levels of liability coverage are recommended?

According to Virginia Cooperative Extension, the consensus of insurance professionals is that any type of farm should have at least $1 million in coverage. But $1 million may not be enough for many farm operations in Ohio, based upon the farm’s assets and activities. A rule of thumb suggests an amount of coverage equal to the extent of your assets. For example, $5 million worth of real estate would mean $5 million in coverage. Another rule of thumb from Virginia Cooperative Extension is to obtain sufficient coverage to help you sleep at night. Request a quote for varying levels of coverage, and then gauge the increased cost compared to the increased comfort of higher coverage.

What should you review in your liability policy?

  • What is the aggregate limit of the policy? The aggregate limit is the maximum amount your insurer will pay to settle your claims during the policy period, which is typically on an annual basis.  Is this amount sufficient to address your risk?
  • What types of incidents are covered by your general liability insurance?  A standard policy covers liability for bodily injury or property damage arising from incidents related to the farm business and its premises and operations, and can include incidents arising from sales of raw produce from a farm roadside stand.  Does this general coverage address all of your farming activities?
  • What activities are not covered by your general liability insurance? A standard policy lists activities that are specifically excluded from coverage, which might include custom farming, special events on the farm, processed food products, farmer’s market sales and other off-farm activities, and non-farming businesses like excavation, snow removal or landscaping. Are you in need of additional coverage for these types of activities?
  • How does your policy address harm from manure, fertilizers, chemicals or contaminants? Most often, this type of harm is deemed “pollution” that is excluded from general liability coverage.  A standard policy will likely define “pollution” as a discharge or dispersal of chemicals, wastes or contaminants on the farm premises, on another property or during transport.  Is there is high risk of discharge of manure, fertilizer or chemicals in your farming operation that is not covered by your policy?
  • Does your coverage extend to your employees, family members and representatives and their actions?  It is important to understand who a policy defines as “the insured,” which typically includes you as the policyholder and any legal entities you name for the farm business.  A standard policy might also include farm employees and relatives residing with the policyholder as insured parties.  Is everyone involved in your farm’s operations included in the policy?

What gaps might exist in your liability policy?

  • What changes have been made in structures, land, equipment or other farm assets? If the value of your assets has grown since you first obtained your policy, you may need to revise your coverage limits.
  • What additional agricultural activities or other enterprises are in need of coverage? If you are involved in new enterprises or agricultural activities, you may need to increase your coverage or obtain an additional policy endorsement that addresses the activity.
  • Do you need to address pollution risk?  If you use, store or transport manure, fertilizer or chemicals, you should assess the risk of a discharge that could affect crops, livestock, a waterway or another’s property.  Supplemental coverage is available to address “pollution” incidents, which typically addresses sudden, accidental discharges of materials used in normal farming operations.  Because pollution coverage can vary widely, it is important to understand both your risk of an incident as well as the limitations of your pollution coverage.

What would happen if…

  • You cause a chemical spill when traveling from one farm location to another?
  • One of your farm employees causes an accident while driving machinery on a roadway?
  • You are the cause of an accident while plowing snow for a neighbor?
  • A family member is involved in an accident while custom baling hay on someone else’s property?

It can be painful for the optimist to sit down and consider the “what if’s” of life. But it is much more painful to have the unexpected happen and result in costly expenditures that could even mean losing the farm. Make the time to know what’s in your policy.

Some excellent resources:

eXtension Insurance, Records and Planning

University of Wisconsin Extension – Farm Liability Insurance A3917

Virginia Cooperative Extension – Insurance Factsheet

Virginia Cooperative Extension – How Much Liability Insurance Coverage Should I Have?

Virginia Cooperative Extension – Questions to Ask When Comparing Insurance Coverage