Author: marrison.2

Agricultural Outlook from the Farm Science Review  

by: Professors Ani Katchova, Farm Income Enhancement Chair, Seungki Lee, Ian Sheldon, Andersons Chair of Agricultural Marketing, Trade, and Policy, Department of Agricultural, Environmental, and Development Economics (AEDE), and Chris Zoller, Agriculture & Natural Resources Ohio State University Extension (OSUE) – Tuscarawas County

At this year’s Farm Science Review a panel of AEDE economists chaired by OSUE’s Chris Zoller answered questions about global uncertainty and its impact on agriculture.  Their outlook for farm income, production, and global markets is summarized here.

Farm Income Outlook

Net farm income is expected to increase in 2022, up 5.2 percent from last year, mostly due to higher cash receipts which are offset by lower government payments and higher production expenses (ERS-USDA). High commodity prices are expected to more than buffer the largest-ever year-to-year increase in production expenses. However, farm income is projected to decline in 2023 and 2024 as commodity prices are expected to soften, and then hold steady through 2027 (USDA, Baselines).

The demand for farmland has surged this year due to higher farm income and high farm liquidity. With the return to normal supply of cropland for sale, farmers who have experienced several years of high grain prices have continued to strongly bid for land. Individual investors have also entered the land market as farmland is considered a safe, long-term inflation-hedging investment. This combined heightened demand propelled land prices higher in 2022. This year’s high inflation rate at 8.5 percent is another leading contributor to buoyant land values, yet high interest rates have counteracted it.

In line with high farm income, agricultural credit conditions have also remained strong in 2022, but the pace of improvement has slowed, with higher repayment rates and lower demand for agricultural loans (Federal Reserve Bank of Kansas City). In the past couple of years, the total agricultural loan volume has declined, mostly because of higher farm incomes resulting in fewer production loans. The trends for Ohio farms have followed those for US farms, although the reduction in production loans has not been as large for Ohio.  The rise in interest rates (currently about 3 percent and expected to increase more) to the levels seen in 2018 and 2019 are a major factor contributing to lower loan demand. Overall, an economy with an inflation rate at about 8.5 percent, which boosts land values but also increases farm production expenses, and a higher interest rate, will dampen the farmer’s ability to service debt.

Farm financial performance has improved in 2022 as the agricultural economy has been recovering from the pandemic. Agricultural loan delinquency rates have remained low this year, at 1.9 percent as of the end of the second quarter of 2022, compared to as much as 4 percent in 2012 (FDIC). For Ohio, the delinquency rate was even lower at 1.5 percent, with a total of two Chapter 12 bankruptcies in 2022 so far (FDIC and US Courts). Farm balance sheets are stronger this year than 2021 with an inflation-adjusted increase in assets and equity of about 4% each and a decrease in inflation-adjusted debt by 1.2 percent (ERS-USDA). The increase in farm income is associated with the first decline in total debt since 2012 and the bankruptcy rate being at its lowest level since 2004.

Negative Shifts in Supply and Demand Added to Grain Market Uncertainty

In the September WASDE report, USDA adjusted down its forecasts of both production and usage for major grains. So far, the drop in production has been somewhat overwhelming, resulting in persistently high commodity prices: corn and soybeans were anticipated to have average season prices of $6.75 and $14.35 per bushel respectively. However, prices are equilibrium outcomes, so they are limitedly instructive in a current market featured by contemporaneous shifts in both supply and demand. Consequently, it is important to explore both sides of the market.

In comparison to August, corn and soybean planted acreage and yield expectations have decreased, resulting in total corn and soybean production expected to be down by 5 and 1.5 percent respectively from 2021. Forecast corn and soybean use were reduced by 250 million and 93 million bushels from August. Exports drove the drop. Good weather in its northeast regions is boosting China’s harvest, which will reduce demand for US grain. Brazil is also expected to produce record volumes of corn and soybeans according to the latest observation of planting. Compared to last year, 21 percent more soybeans and 9 percent more corn are expected. As La Niña is expected to be less influential in 2023, the optimistic forecasts for Brazilian production should be taken seriously as it could be the coming season’s most bearish influence.

Lastly, several wildcards exist outside the market. First, the Federal Reserve has raised interest rates to 3 percent this year. Despite interest rates not being highly correlated with commodity prices, such a rate hike can have critical implications. The drastic increase in rates will certainly increase farm capital costs and reduce price competitiveness due to a strong dollar in export markets. Thus, a higher interest rate may burden farmers in terms of both supply and demand. Second, the ongoing war in Ukraine could be another game changer as it could induce further tightening of the energy market if the war continues through winter.

Volatility Will Characterize the Global Market

The global market outlook will be one characterized by continuing price volatility, due to the ongoing effects of the Russian invasion of Ukraine, the impact of drought on global grain production, slow rebuilding of stocks, along with various policy choices.  After two months of the export deal brokered by Turkey and the United Nations (UN) to get Ukrainian grain out through the Black Sea, 218 vessels have already left carrying a total of 4.85 million tonnes, only marginally denting the 20-25 million tonnes trapped in storage (Reuters, September 18).  With Ukrainian exports down 46 percent this year (Reuters, September 25), Russia finding it difficult to export its grain (Bloomberg, September 22), and persistent drought conditions in the United States, South America, and Europe affecting yields, not surprisingly futures prices for wheat, corn and soybeans have risen 17, 28, and 14 percent respectively over the past 12 months (Wall Street Journal, September 21, 2022).

At the same time, commodity prices are proving sensitive to policy pronouncements.  Threats by President Putin to stop Ukrainian grain exports in early-September pushed up wheat futures by 7 percent (Bloomberg, September 7, 2022), while his recent mobilization of Russian reservists and his suggested use of nuclear weapons in Ukraine immediately pushed up both wheat and corn futures (Wall Street Journal, September 21, 2022).  On top of this, India recently announced a 20 percent duty on two thirds of its rice exports, placing more pressure on already high levels of global food insecurity (Bloomberg, August 29, 2022).  With global grain supplies currently remaining tight, analysts are predicting two years of good harvests will be needed to rebuild global grain stocks and relieve market pressure (Wall Street Journal, September 20, 2022).

Planning for 2023

As we review the topics presented by our AEDE experts, phrases like declining farm income, inflation, the war in Ukraine, supply and demand, and global policy movements are evident.  It is becoming increasingly more important to analyze your current situation, critically analyze where and how each dollar is spent, develop a plan (along with back-up plans), execute your plan, and monitor performance.

As you wrap-up harvest, assemble a team of advisors (examples include accountant, lender, agronomist, nutritionist, and Extension Educator) to discuss your production and financial performance in 2022, plan strategies for the coming year, and schedule regular check-in times to monitor progress.

OSU Extension Offering Beginner & Small Farm College in Coshocton and Greene Counties

The Extension offices in Coshocton and Greene counties will be hosting the 2022 Beginner & Small Farm College on October 24, 31 and November 7 from 6:30 to 9:00 p.m. This college is designed to help landowners examine potential ways to increase profits on their small acreage properties. The program is open to all new or aspiring farmers, new rural landowners, small farmers, and farm families.

During this college, participants will be challenged to develop realistic expectations for their new farm business. They will receive information on getting started, identifying the strengths and weaknesses of their property, and developing a farm business plan. Information on farm finances, insurance, liability, labor and marketing will be covered during the college. The topics included in this workshop include:

October 24th-Getting Started on Your New Farm Business

  • Developing real-life expectations for your farm.
  • Examining the available resources and opportunities for your property.
  • Developing a farm business plan, including setting your family and farm mission, goals and objectives.
  • An introduction to marketing and selling agricultural products.

October 31st–Money, Money, Money! Managing your Farm Finances

  • Developing a family and farm balance sheet.
  • Using enterprise budgets to project farm income.
  • Recordkeeping for farm businesses and farm taxes.
  • Managing family and farm income and expenses.

November 7th–There’s More to Farming than Just Growing Stuff!

  • Farm Management for New Farms
  • Setting up your farm business, including choosing a business entity and obtaining employer identification numbers.
  • Farm taxes.
  • Obtaining farm financing.
  • Insurance and liability for farms.
  • Licenses and permits needed for a small farm business.
  • Employer responsibilities related to farm labor and labor laws.

Farm Tour (Date & Location TBD)

Each site host will be planning a farm tour so participants can visit with a successful local farming operation to learn how they started and what they have learned during the development of their farm business.

Registration: The cost is $30 for the first person and $15 for each additional. Registration is limited to the first 50 registrants per location. Registration deadline is October 17th. There are two methods to register for this college.  Registration on-line can be made at: go.osu.edu/smallfarmcollegereg  Registration can also be made by mailing in a registration form to the site host for the location you plan to attend. Click here for registration flyer.

Mail Registrations for Coshocton County Site to:

OSU Extension –Coshocton County

c/o David Marrison

724 South 7thStreet, Room 110

Coshocton, OH 43812

Mail Registrations for Greene County Site to:

OSU Extension –Greene County

c/o Trevor Corboy

100 Fairground Road

Xenia, OH 45385

More Information:

For more information about the Coshocton County location, contact David Marrison at

marrison.2@osu.edu or (740)722-6073

For more information about the Greene County location, contact Trevor Corboy at corboy.3@osu.edu or (937)736-7203

Ohio State University (OSU) Extension’s Ohio Women in Agriculture Program announces opportunities to Learn, Grow, Connect, Inspire and Empower at the 2022 Farm Science Review!

Some of the best conversations and discussions have occurred around the family kitchen table. Grab a cup of your favorite beverage, lunch, or snack and join us from our kitchen table or yours to engage in conversations in-person or “virtually” on September 20, 21, and 22, 2022 for “Kitchen Table Conversations” hosted by the Ohio Women in Agriculture of Ohio State University Extension.

These sessions are offered during the Farm Science Review daily from 11:30 AM-12:30 PM. In-person sessions will be located on the north side of the Firebaugh Building at 384 Friday Avenue at our kitchen table. ZOOM session registration is required to participate. Register @ https://go.osu.edu/2022fsrkitchentableconversation

Programs will focus on key topics related to health, marketing, finance, legal, and production for women in agriculture.  Each topic will feature a leading expert and moderators to generate dialogue and empower discussion among participants.  A list of daily topics and leaders is provided below.

TUESDAY

When Death Happens- Managing the Farm Without Your Business Partner

Death can change everything, especially your ability to manage the farm without your business partner.  How can you better prepare to manage your farm business without your spouse or sibling?  Learn some strategies that can help you plan for the challenge of managing a farm alone.

SPEAKER: David Marrison, OSU Extension Educator, Coshocton County

WEDNESDAY

Female Farmer Financing Options: Opportunities with USDA Farm Service Agency (FSA) Loans

Come participate in this kitchen table conversation on how you can find unique farmland financing options for females, veterans, and minority farmers. Learn a little bit more about the requirements, normal rates, and roles.

SPEAKER: Eric Richer, OSU Extension Educator, Fulton County

THURSDAY

The Devil is in the Details: Communication and Record Keeping for Improving Farm Management

Family farms are only as good as their communication.  A record-keeping system is a valuable form of communication when the level of detail fits the needs of the farm decision-makers.  Useful record keeping can move a farm management team beyond the basic tax return to exploring problem-solving and strengthening the family farm business.

SPEAKER: Bruce Clevenger, OSU Extension Educator, Defiance County

Your host for the event will be Extension Professionals of the OSU Extension Ohio Women in Agriculture Team. Visit our display inside the Firebaugh Building for additional women in agriculture opportunities.

For more information: Gigi Neal, neal.331@osu.edu, 513-732-7070 or Heather Neikirk, neikirk.2@osu.edu, 234-348-6145

Blog site: u.osu.edu/ohwomeninag

 

USDA Announces Details for the 2022 Census of Agriculture 

Source: Jodi Halvorson, National Agricultural Statistics Service

America’s farmers and ranchers will soon have the opportunity to be represented in the nation’s only comprehensive and impartial agriculture data for every state, county and territory. The U.S. Department of Agriculture (USDA) will mail the 2022 Census of Agriculture to millions of agriculture producers across the 50 states and Puerto Rico this fall.

The 2022 Census of Agriculture will be mailed in phases, starting with an invitation to respond online in November followed by paper questionnaires in December. Farm operations of all sizes, urban and rural, which produced and sold, or normally would have sold, $1,000 or more of agricultural product in 2022 are included in the ag census.

“Census of Agriculture data are widely used by federal and local governments, agribusinesses, trade associations, extension educators, and many others to inform decisions about policy and farm programs and services that aid producers and rural communities,” said NASS Administrator Hubert Hamer. “By responding to the Census of Agriculture – by being represented in these important data – producers are literally helping to shape their futures.”

Collected in service to American agriculture since 1840 and now conducted every five years by USDA’s National Agricultural Statistics Service (NASS), the Census of Agriculture tells the story and shows the value of U.S. agriculture. It highlights land use and ownership, producer characteristics, production practices, income and expenditures, among other topics. Between ag census years, NASS considers revisions to the questionnaire to document changes and emerging trends in the industry. Changes to the 2022 questionnaire include new questions about the use of precision agriculture, hemp production, hair sheep, and updates to internet access questions.

To learn more about the Census of Agriculture, visit www.nass.usda.gov/agcensus or call 800-727-9540. On the website, producers and other data users can access frequently asked questions, past ag census data, partner tools to help spread the word about the upcoming ag census, special study information, and more. For highlights of these and the latest information on the upcoming Census of Agriculture, follow USDA NASS on twitter @usda_nass.

 

What are the Market Implications of the Ukrainian Grain Export Deal?  

by: Ian Sheldon, Professor and Andersons Chair of Agricultural Marketing, Trade, and Policy, Agricultural, Environmental, and Development Economics, Ohio State University and Chris Zoller, Associate Professor and Extension Educator, Agriculture & Natural Resources, Ohio State University Extension – Tuscarawas County

The Ukrainian Grain Export Deal

A grain export deal was finally signed by Ukraine, Turkey, Russia, and the United Nations (UN) on July 22 (USDA, Foreign Agricultural Service, Grain: World Markets and Trade, August 2022).  With much media fanfare, the first shipment of Ukrainian corn left the Bosphorus strait headed for Lebanon on August 3 (Financial Times, August 3, 2022).  The agreement, set to last for 120 days with potential for renewal, provides for the safe passage and inspection of grains from three Ukrainian ports on the Black Sea – Odesa, Chornomorsk, and Pyvdenny – shipments following a route to Turkish ports approved by the Russian navy, with an agreed 10 nautical mile buffer zone (Reuters, August 8, 2022).  The movement of grain will be monitored from a center in Istanbul, and before their return to Ukraine, vessels will be jointly inspected by teams from Russia, Ukraine, Turkey, and the UN to ensure they carry no weapons (New York Times, August 1, 2022).

At the latest count, a total of 33 vessels carrying 719,549 tonnes of grain have left Ukraine, with a further 18 vessels either loading or waiting to leave port (Reuters, August 23, 2022).  While the opening of Ukrainian grain export channels is an important step, it should be placed in perspective, Ukraine’s infrastructure minister Oleksander Kubrakov warning it will take months for its grain exports to reach pre-invasion levels (Financial Times, August 2, 2022).  In August 2021, 194 grain-carrying vessels left Ukrainian ports, Odesa, Chornomorsk, and Pyvdenny handling about 60 percent of export shipments, and with 20-25 million tonnes of grain trapped in Ukraine, it will take 371 vessels averaging 67,000 deadweight tonnes just to clear the backlog (Financial Times, August 2, 2022), all in the context of grain storage space filling up with the current harvest of wheat and barley (Wall Stret Journal, August 2).

While the opening of a safe grain export passage is welcome, particularly for importers in the Middle East and Africa, as well as for the Ukrainian economy and its farmers, the rate of shipments is constrained by the continuing conflict affecting port infrastructure, the demining of both ports and shipping routes, and the high logistical costs associated with transport and insurance (USDA, Foreign Agricultural Service, Grain, World Markets and Trade, August 2022).  The latter challenge is critical, with shipowners being understandably concerned about sending their vessels through mined shipping routes, all the time facing high cargo and war insurance costs (Bloomberg, August 6, 2022).

The shipping and insurance industry has made it very clear they want assurances of a secure journey to and from the Black Sea ports, with no threat of mines or attacks on their vessels and crews (Reuters, August 8, 2022).  Even though major marine insurance brokers such as Marsh and Ascot are providing a coverage facility up to $50 million for shipments, premiums for vessels sailing into the Black Sea are currently set at 5 percent of the value of the vessel compared to 0.025 percent before the invasion (Reuters, August 23).  On top of this, problems have already arisen with exports, the first cargo from Ukraine being refused by the Lebanese-based buyer on the grounds of poor-quality grain due to war-delayed shipment (Middle East Eye, August 8, 2022), a problem likely exacerbated by Ukrainian grain silos not being equipped with aeration systems for long-term storage (USDA, Foreign Agricultural Service, Grain, World Markets and Trade, August 2022).

 Global Market Implications of the Grain Export Deal

Notwithstanding the small number of vessels departing Ukrainian ports, many analysts suggest this has already had a dampening effect on global grain and food prices.  For example, wheat prices have returned to their pre-invasion level, although they remain 25 percent higher than they were a year ago (see figure, Bloomberg, August 17), and double the price it was five years ago (Wall Street Journal, August 2, 2022).  Critically, global food prices declined by 11.5 percent in July, the largest fall since 2008, although still up 17 percent from a year earlier (Bloomberg, August 5, 2020; Wall Street Journal, August 5, 2020).

Of course, the Ukrainian grain export deal is only one of several factors leading to prices declining.  For example, in the case of wheat, both production and exports from key suppliers such as Russia, Canada and the United States are currently forecast to be higher than expected earlier in the year (USDA, Foreign Agricultural Service, Grain, World Markets and Trade, August 2022).  However, with lower grain prices US farmers face a double-edged sword here: although crop prices have roughly doubled over the past two years, there have also been substantial increases in farm input costs (Des Moines Register, August 18, 2022), with fertilizer prices increasing fourfold in the past two years (Iowa State University, June 2022).

On the other hand, falling food prices is positive news on the consumption side, especially for those facing threats to their food security, although relief for importing countries will not be immediate with 50 million people in 45 countries currently facing famine according to World Food Program Chief David Beasley (Los Angeles Times, August 8, 2020).  However, beyond the impact of the Russian invasion of Ukraine, food prices are likely to remain volatile in the face of global weather events affecting production of key staples.  For example, India, the world’s largest rice exporter has seen a significant reduction in area planted due to lack of rainfall this season (Bloomberg, August 2, 2020), while dry weather conditions are affecting food production across the Northern Hemisphere from China through the United States, to Spain, Portugal, France, and Italy, the latter countries facing their worst drought in 500 years (Wall Street Journal, August 21, 2022).  In the case of China, the impact of drought could lead them to import more corn from the United States and Brazil (Wall Street Journal, August 17, 2020), with the potential for spillover effects on the world price.  The bottom line is that the price relief due to freed up Ukrainian grain is not a silver bullet in terms of global food security, global weather conditions also being a critical factor in driving production levels and prices.

The Russian invasion of Ukraine has passed the six-month mark and there is no clear end in sight.  The war and other factors continue to impact commodity markets.  Grain prices have seen their share of price swings recently.  While the rate of increase in fertilizer prices has slowed, they remain high.  In addition to fertilizer, we can expect most other inputs will continue to see an increase in their price.

Suggestions Moving Forward

Planning and analysis are always important, but with so many unknowns, these become even more critical.  A critical analysis of business performance and enterprise analysis can help identify profit centers and those areas that are less profitable.  The OSU Extension Ohio Farm Business Analysis and Benchmarking Program provides farmers the opportunity to do in-depth analysis and evaluation.  Additional information about the program is available here:

https://farmprofitability.osu.edu/.

Developing a budget for the crops and livestock you raise is of great importance, especially with so many factors impacting agriculture.  OSU Extension Enterprise Budgets are available here: https://farmoffice.osu.edu/farm-management/enterprise-budgets#2022.  Look for 2023 crop enterprise budgets to be released at the Farm Science Review.  These Excel spreadsheets allow you to use projected income and expenses for your farm to assist in planning.

We encourage you to talk to your Extension Educator, lender, input suppliers, and other trusted advisors that can help you navigate.  If you haven’t done so, now may be an excellent time to assemble a farm advisory team.  This team meets periodically throughout the year to assist with goal setting, monitoring production and financial performance, and providing recommendations to help you succeed.

 

OSU Income Tax Schools 2022- Two-Day Tax Schools for Tax Practitioners & Agricultural & Natural Resources Income Tax Issues Webinar

By: Barry Ward & Jeff Lewis, OSU Income Tax Schools

Tax provisions related to new legislation as well as continued discussion related to COVID-related legislation for both individuals and businesses are among the topics to be discussed during the upcoming OSU Income Tax Schools offered throughout Ohio in October, November, and December.

The annual series is designed to help 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 2022 tax returns.

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

Attendees also receive a class workbook that alone is an extremely valuable reference as it offers over 600 pages of material including helpful tables and examples that will be valuable to practitioners. Summaries of the chapters in this year’s workbook can be viewed at this site:

https://farmoffice.osu.edu/tax/2022-tax-school-chapters

A sample chapter from a past workbook can be found at:

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

This year, OSU Income Tax Schools will offer both in-person schools and an online virtual school presented over the course of four afternoons.

In-person schools:

October 27-28, Ole Zim’s Wagon Shed, Gibsonburg/Fremont

October 31-November 1, Presidential Banquet Center, Kettering/Dayton

November 3-4, Old Barn Restaurant & Grill, Lima

November 8-9, Muskingum County Conference and Welcome Center, Zanesville

November 21-22, Ashland University, John C. Meyers Convocation Center, Ashland

November 29-30, Nationwide & Ohio Farm Bureau 4-H Center, Columbus

December 5-6, Hartville Kitchen, Hartville

Virtual On-Line School presented via Zoom:

November 7, 10, 14 & 18, 12:30 – 4:45 p.m.

Register two weeks prior to the school date for the two-day tax school early-bird registration fee of $400.  This includes all materials, lunches, and refreshments. The deadline to enroll is 10 business days prior to the date of each school. After the early-bird deadline, the fee increases to $450.

Additionally, the 2022 Checkpoint Federal Tax Handbook is available to purchase by participants for a discounted fee of $60 each. Registration information and the online registration portal can be found online at:

http://go.osu.edu/2022tax

In addition to the tax schools, the program offers a separate, two-hour ethics webinar that will broadcast Thursday, Dec. 8 at 1 p.m. The webinar is $25 for school attendees and $50 for non-attendees and is approved by the IRS and the Ohio Accountancy Board for continuing education credit.

A webinar on Ag Tax Issues will be held Tuesday, Dec. 13 from 8:45 a.m. to 3:20 p.m.

If you are a tax practitioner that represents farmers or rural landowners or are a farmer or farmland owner that prepares your own taxes, this five-hour webinar is for you. It will focus on key topics and new legislation related specifically to those income tax returns.

Registration, which includes the Ag Tax Issues workbook, is $160 if registered at least two weeks prior to the webinar. After November 29, registration is $210. Register by mail or on-line at https://go.osu.edu/agissues2022.

Participants may contact Ward at 614-688-3959, ward.8@osu.edu or Jeff Lewis at 614-247-1720, lewis.1459@osu.edu for more information.

 

Western Ohio Cropland Values and Cash Rents 2021-22

by: Barry Ward, Leader, Production Business Management, Director, OSU Income Tax Schools, OSU Extension, Agriculture & Natural Resources

High crop prices and COVID era legislative ad-hoc government payments coupled with lower interest rates (among other factors) over the last 2 and half years have given strength to farmland markets. Higher input costs over the last year and half together with rising interest rates have offset some of this strength but farmland values continue to increase. Many of these same factors have given strength to the farmland rental markets which have also seen increases this last year and will likely see additional increases in 2022.

According to the Western Ohio Cropland Values and Cash Rents Survey, cropland values in western Ohio are expected to increase in 2022 by 8.0 to 11.3 percent depending on the region and land class. This is on top of increases from 2020 to 2021 of 7.2 to 26.6 percent depending on region and productivity class.

Cash rents are expected to increase from 5.8 to 6.8 percent depending on the region and land class. This is on top of rental increases of 1.5 to 7.7 percent from 2020 to 2021.

Ohio Cropland Values and Cash Rent

Ohio cropland varies significantly in its production capabilities and, consequently, cropland values and cash rents vary widely throughout the state. Generally, western Ohio cropland values and cash rents differ from much of southern and eastern Ohio cropland values and cash rents. The primary factors affecting these values and rents are land productivity and potential crop return, and the variability of those crop returns. Soils, fertility and drainage/irrigation capabilities are primary factors that most influence land productivity, crop return and variability of those crop returns.

Other factors impacting land values and cash rents may include field size and shape, field accessibility, market access, local market prices, field perimeter characteristics and potential for wildlife damage, buildings and grain storage, previous tillage system and crops, tolerant/resistant weed populations, USDA Program Yields, population density, and competition for the cropland in a region. Factors specific to cash rental rates may include services provided by the operator and specific conditions of the lease. This fact sheet summarizes data collected for western Ohio cropland values and cash rents.

Study Results 

The Western Ohio Cropland Values and Cash Rents study was conducted from January through April in 2022. The opinion-based study surveyed professionals with a knowledge of Ohio’s cropland values and rental rates. Professionals surveyed were rural appraisers, agricultural lenders, professional farm managers, ag business professionals, OSU Extension educators, farmers, landowners, and Farm Service Agency personnel.

Respondents were asked to group their estimates based on three land quality classes: average, top, and poor. Within each land-quality class, respondents were asked to estimate average corn and soybean yields for a five-year period based on typical farming practices. Survey respondents were also asked to estimate current bare cropland values and cash rents negotiated in the current or recent year for each land-quality class. Survey results are summarized for western Ohio with regional summaries (subsets of western Ohio) for northwest Ohio and southwest Ohio.

The complete survey summary can be accessed and downloaded at our Farm Office page:

https://farmoffice.osu.edu/farm-management-tools/farm-management-publications/cash-rents

 

A Guide to Accessing Farm Service Agency Programs

By:  Dean Kreager, Extension Educator, ANR in Licking County

The Farm Service Agency (FSA) is one of the agencies of the U.S. Department of Agriculture.  Originally established in the 1930’s to provide a safety net for farmers during the great depression, their services have evolved over the years.  The benefits of services offered by FSA are often underutilized.  This may be due to fear of difficulty working with a government agency or just not knowing the extent of services that exist.  Many do not realize that FSA provides services to all types of farms and farmers and not just large conventional farms and ranches.

The FSA is trying to improve its reach of socially disadvantaged farmers and ranchers.  The USDA defines socially disadvantaged farmers and ranchers (SDFRs) as those belonging to groups that have been subject to racial or ethnic prejudice. SDFRs include farmers who are Black or African American, American Indian or Alaska Native, Hispanic or Latino, and Asian or Pacific Islander. For some but not all USDA programs, the SDFR category also includes women.

Often, FSA offices are associated with price support programs and disaster payments, but their services go way beyond that.  The agency provides a safety net for farmers of all types and sizes.  Loans, conservation practice cost shares and disaster payments are just a few of their services.  OSU Extension has been working to spread the word about several FSA programs that can help all types of farmers be successful.

If having a safety net in case of natural disasters or catastrophic events such as COVID, access to very low interest loans even for those that are unable to qualify for conventional loans, or the ability to receive financial assistance for conservation related improvements is important, now is the time to register your farm with FSA.  Registering your farm with FSA and signing up for the county FSA newsletters will keep you informed about services that can benefit you.

Getting your farm enrolled in the system is not a difficult process. Call or set up an appointment to visit your local FSA office.  Most counties have an office.  If you are unsure which FSA office services your county, please visit:  https://offices.sc.egov.usda.gov/locator/app?state=oh&agency=fsa. If you do not have a farm number, they can assign one.  You do not necessarily need to own the property to qualify.  Leasing may qualify you depending on the program.

During your first visit, be sure to bring:

  • Proof of identity (driver’s license, social security card, IRS EIN number)
  • Proof of Ownership (copy of recorded deed)
  • Leases for non-owned land
  • For partnerships, entities, or joint operations, bring entity Identification Status (articles of incorporation, trust & estate documents, or partnership agreement to determine who has authority to make decisions for the business).

When you go in for your appointment you can expect to sit down with an FSA employee that will verify your paperwork and register your farm in the system.  They will talk with you about your operation and possible ways they can be of assistance to help you succeed in meeting your goals.  You may learn of options that you did not know exist.

FSA will provide the application and help answer any questions the producer has on the programs. It takes time for the paperwork to be processed and additional information may be needed. Please start this process early in order to ensure you are eligible prior to any program sign-up cut-off dates. Some programs have cut off dates while others have open enrollment throughout the year.

Once you are registered in the system you will receive notifications about new programs and changes to existing programs.  Participating in future programs will be much easier.  Please contact your local FSA office with questions and to get the process started.

Ohio Farm Custom Rates 2022

By: Barry Ward, Leader, Production Business Management, OSU Extension, Agriculture and Natural Resources; John Barker, Extension Educator Agriculture/Amos Program, Ohio State University Extension Knox County and Eric Richer, Extension Educator Agriculture & Natural Resources, Ohio State University Extension Fulton County

Farming is a complex business and many Ohio farmers utilize outside assistance for specific farm-related work. This option is appealing for tasks requiring specialized equipment or technical expertise. Often, having someone else with specialized tools perform tasks is more cost effective and saves time. Farm work completed by others is often referred to as “custom farm work” or more simply, “custom work”. A “custom rate” is the amount agreed upon by both parties to be paid by the custom work customer to the custom work provider.

Ohio Farm Custom Rates

The “Ohio Farm Custom Rates 2022” publication reports custom rates based on a statewide survey of 223 farmers, custom operators, farm managers, and landowners conducted in 2022. These rates, except where noted, include the implement and tractor if required, all variable machinery costs such as fuel, oil, lube, twine, etc., and labor for the operation.

Some custom rates published in this study vary widely, possibly influenced by:

  • Type or size of equipment used (e.g. 20-shank chisel plow versus a 9-shank)
  • Size and shape of fields,
  • Condition of the crop (for harvesting operations)
  • Skill level of labor
  • Amount of labor needed in relation to the equipment capabilities
  • Cost margin differences for full-time custom operators compared to farmers supplementing current income

Some custom rates reflect discounted rates as the parties involved have family or community relationships, Discounted rates may also occur when the custom work provider is attempting to strengthen a relationship to help secure the custom farmed land in a future purchase, cash rental or other rental agreement. Some providers charge differently because they are simply attempting to spread their fixed costs over more acreage to decrease fixed costs per acre and are willing to forgo complete cost recovery.

New this year, the number of responses for each operation has been added to the data presented. In cases where there were too few responses to statistically analyze, summary statistics are not presented.

Charges may be added if the custom provider considers a job abnormal such as distance from the operator’s base location, difficulty of terrain, amount of product or labor involved with the operation, or other special requirements of the custom work customer.

The data from this survey are intended to show a representative farming industry cost for specified machines and operations in Ohio. As a custom farm work provider, the average rates reported in this publication may not cover your total costs for performing the custom service. As a customer, you may not be able to hire a custom service for the average rate published in this factsheet.

It is recommended that you calculate your own costs carefully before determining the custom rate to charge or pay. It may be helpful to compare the custom rates reported in this fact sheet with machinery costs calculated by economic engineering models available online. The following resources are available to help you calculate and consider the total costs of performing a given machinery operation.

Farm Machinery Cost Estimates, available by searching University of Minnesota.

Illinois Farm Management Handbook, available by searching University of Illinois farmdoc.

Estimating Farm Machinery Costs, available by searching Iowa State University agriculture decision maker and machinery management.

Fuel price changes may cause some uncertainty in setting a custom rate. Significant volatility in diesel price over the last several months has caused some concern for custom rate providers that seek to cover all or most of the costs associated with custom farm operations. The approximate price of diesel fuel during the survey period ranged from $4.50 – $5.25 per gallon for off-road (farm) usage. As a custom farm work provider, if you feel that your rate doesn’t capture your full costs due to fuel price increases you might consider a custom rate increase or fuel surcharge based on the increase in fuel costs.

For example, let’s assume the rate you planned to charge for a chisel plow operation was based on $4.50 per gallon diesel costs and the current on-farm diesel price is $5.50 per gallon. This is a $1 per gallon increase. The chisel plow operation uses 1.15 gallons of fuel per acre so the added fuel surcharge could be set at $1.15 per acre (1.15 gallons x $1 gallon).

The complete “Ohio Farm Custom Rates 2022” publication is available online at the Farm Office website:

https://farmoffice.osu.edu/farm-management/custom-rates-and-machinery-costs

 

 

 

Planning for the Future of Your Farm Workshop Slated for July 29 in Darke County

by: Taylor Dill, OSU Extension Extension Educator

Many farms are lost in the modern farm community because of an unsuccessful transition from one generation to the next. The farm transition is a difficult task to plan for financially and can be even more difficult to just talk about between family members. It is estimated that more than half of farmers and ranchers do not have an estate plan. Estate planning is crucial for a successful transition to the next generation, while also keeping the family together. Ohio State Extension has many farm management specialists to assist in this undertaking.

Join OSU Extension Darke County in welcoming David Marrison, Coshocton County Extension Educator and Robert Moore OSU Farm Law Attorney for a Planning for the Future of Your Farm event! David and Robert will be covering; developing goals for estate and succession, planning for the transition of control, planning for the unexpected, communication and conflict during the farm transfer, selecting an attorney, legal tools and strategies, developing your team, and getting your affairs in order. David and Robert are well renowned in extension and their mission is to save family farms from collapse because of poor transition planning.

The event will be July 29th at the Anderson’s Ethanol Plant Meeting Room, 5728 Sebring Warner Rd. #E, Greenville starting at 8:30 a.m. and ending at 4 p.m. The cost for the class is $45 covering two family members and course materials. Lunch has been generously provided by Farm Credit. Pre-registration is required as seats are limited! Please RSVP to Dill.138@osu.edu or call 937-548-5215