Author: marrison.2

Change Your Employee Recruitment and Interview Mindset

by: Rory Lewandowski, Extension Educator Wayne County

Originally written for Dairy Excel column for the 10-31-19 Farm and Dairy

Labor is an important component of any farm operation.  Beyond just checking the box that a certain task has been completed, farm profitability often turns on how well a task was completed, the attention to detail and protocol.  Improving employee recruiting and interviewing skills increases the chance of hiring the right employee for your farm situation.  For many farms, employee recruitment, interviewing and hiring requires a mindset adjustment.

How do you attract dependable farm employees? What is your goal and objective when you hire a farm employee?  I once heard Bernie Erven, professor emeritus of The Ohio State University, and human resource management specialist, say that too many farms do not manage the employee recruitment and interview process.  Desperate for labor, the only job requirement seemed to be that the person could walk and breathe.  Interview questions consisted of “Have you worked on a farm before? and Do you want the job?”  A management mindset involves developing a recruitment strategy and a process to find employees that are the right fit for your farm.  Donald Cooper, an international management consultant, says that businesses become what they hire.  If your goal is high performance and excellence, you need to recruit and hire above average, high quality persons.

Employee recruitment starts before there is a job vacancy.  Effective recruitment has both an outward and an inward focus.  An outward focus is about developing relationships with persons, organizations and institutions that could provide a contact or recommend a potential employee to the farm.  Some examples include FFA chapters/advisors, career centers, and farm service persons such as veterinarians, feed and equipment dealers, technicians and ag lenders.  In Wayne and surrounding counties, OSU-ATI is an obvious source of potential farm employees.  If you run into someone with the potential to be a good employee, even if you currently don’t have a vacancy, at least collect contact information.  Some farms may even create a temporary position for the person.  Inward recruitment focus is about building a reputation as a great place to work.  If someone were to drive around the county and ask the question, who is the best farm to work for, would the questioner hear the name of you or your farm?

The next important piece in recruitment and interviewing is the job description. Job descriptions guide the interviewing and hiring process.  Specific information included in a job description includes a job title, a short summary of the major job responsibilities, the qualifications for the job including knowledge, education and/or experience necessary, the specific job duties/tasks along with the frequency with which each needs to be performed, who supervises the job and/or supervisory requirements of the job and finally, something about the expectations for hours and weekly or monthly work schedule.

The job description, when well written, helps to provide a prepared list of questions for the employee candidate interview.  Questions should provide the candidate with the opportunity to talk about their skills, knowledge, experience, and personal attributes that match the job description.  According to Bob Milligan of Dairy Strategies, the interview should be designed to determine the qualifications of the candidate, their fit for not only the job requirements but also their fit within the culture of your farm.  The interview should be structured so that the farm owner or manager is promoting the farm and the position in a positive light so that the candidate is likely to accept the job if it is offered to them.

Ask questions that provide you with information about the candidate’s knowledge, ability and attitudes.  Examples of these type of questions are; what are two practices in the milking parlor that can improve milk quality?  Describe an equipment related problem you have solved in the past year.  How did you go about solving it?  I read an article by the founder of a company called Ag Hires entitled “Top 3 Interview Questions Every Farm Should Ask”.  They are: 1. In your past jobs, of the various tasks, roles and projects, what have you enjoyed doing the most and what have you enjoyed the least?  2. What is your superpower; what is it that you are naturally good at and bring to the table wherever you work?  3. If we spoke to your co-workers and managers and asked them what’s it like to work with you, how would they describe you?

These questions are designed to learn what the candidate is passionate about, what they enjoy, what they have a natural tendency toward, and how they interact with others.  Quoting that article, “farm managers have a tendency to place too much emphasis on someone’s work history and not enough emphasis on whether the person is the right fit for the farm.  Smart people with the right attitude, motivation and natural tendencies that align with the farm culture will get up to speed quickly.”

Every farm hire is an important hire.  Farm managers with employee recruitment and interviewing skills increase the rate of successful hires.

Farm Tax Update to be held in Coshocton County

OSU Extension in Coshocton County is pleased to be offering a Farm Tax Update on Monday, December 2 2019 from 7:00 to 8:37 p.m. at the Coshocton County Services Building – Room 145 located at 724 South 7th Street in Coshocton, Ohio.

OSU Extension Educator David Marrison will provide a Farm Tax Update. We will examine year farm tax strategies and learn more about the new Section 199A deduction for Qualified Business Income.  It is not business as usual in the world of farm taxes. Wrap up the year learning how to better manage your farm taxes.

This program is free & open to the public!  However, courtesy reservations are requested so program materials can be prepared. Call 740-622-2265 to RSVP or for more information.

Farm Bill Meetings to be held across Ohio

Click here for complete article with locations of meetings

Ohio State University Extension and the USDA Farm Service Agency in Ohio are partnering to provide a series of educational Farm Bill meetings this winter to help producers make informed decisions related to enrollment in commodity programs.

The 2018 Farm Bill reauthorized the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) safety net programs that were in the 2014 Farm Bill. While the ARC and PLC programs under the new farm bill remain very similar to the previous farm bill, there are some changes that producers should be aware of.

Farm Bill meetings will review changes to the ARC/PLC programs as well as important dates and deadlines. Additionally, attendees will learn about decision tools and calculators available to help, which program best fits the needs of their farms under current market conditions and outlook.

Enrollment for 2019 is currently open with the deadline set as March 15, 2020. Enrollment for the 2020 crop year closes June 30, 2020. Producers can enroll for both 2019 and 2020 during the same visit to an FSA county office. Producers have the opportunity to elect to either ARC or PLC for the 2019 to 2023 crop years, with the option to change their program election in 2021, 2022, and 2023.

To find out about upcoming meetings, and get information about the Farm Bill, visit go.osu.edu/farmbill2019

Corn, Soybean, and Wheat Yield Trends by Ohio County, 1972-2018

by: Carl Zulauf, Robert Dinterman, and Ben Brown, Ohio State University, November 2019

Click here to access full report complete with figures

Yield growth is the primary source of increased production of crops in Ohio and most of the US.  Most land that can be cropped is being cropped.  Understanding historic yield trends is thus important to an informed understanding of Ohio agriculture.  This article examines trends in corn, soybean, and wheat yields since 1972 at the Ohio state level and across Ohio counties.  These three crops composed 87% of Ohio harvested crop acres in the 2017 Census of US Agriculture.  Trend yield is higher for corn than soybean and wheat, both in terms of bushel / acre and percent of yield.  Trend yields vary across Ohio counties, particularly for corn.  Implications are drawn for Ohio crop agriculture, with a particular point of interest being the implication for the CAUV (Current Agricultural Use Value) program that taxes farm land at its agricultural use value rather than its appraised value.

Analysis:  Yield per harvested acre is analyzed.  Source for the data is USDA, NASS (US Department of Agriculture, National Agricultural Statistics Service).  The analysis starts with the 1972 crop and ends with the 2018 crop.  It spans 47 years that include periods of prosperity, financial stress, and tight profit margins.  Not all counties have 47 years of observations for each crop.  It was decided a county should have at least half or 24 years of observations to be included in the analysis.  This decision reflects (1) consideration of the power of statistical tests, (2) that 24 years is a “natural break” in the distribution of number of county yield observations, and (3) a feeling that it seems reasonable to require yields for at least half of all years in order to have confidence in a county’s estimated trend yield.  Counties with 24 years of harvested yields total 86, 78, and 69 for corn, soybeans, and wheat, respectively.  The county yield trends were tested for statistical difference from the yield trend for Ohio.  For additional discussion of the analytical procedures, see the Data Note.

Corn Yield Trend:  Ohio linear corn yield trend is +1.76 bushel / year over 1972- 2018 (see Figure 1).  In comparison, average of the 86 county yield trends estimated for corn is +1.62 bushel / year.  Since the state yield is the average of county yield weighted by the amount of production in the county, the higher state trend yield suggests counties with more corn production had a higher yield trend.

County corn yield trend ranged from +0.66 (Carroll County) to +2.14 (Clinton County) (see Figures 1 and 2).  When examining the range of values, it is useful to assess if the extreme values are outliers.  Examination of the county corn yield trends suggests that both Carroll and the county with the next lowest trend (Belmont – +0.71) are outliers as the next lowest yield trend is +1.09 for Monroe County.

Individual county yield trends were tested for statistically significant deviation from Ohio’s yield trend (see Date Note).  Thirty-five (41%) of county corn yield trends deviated from the state yield trend with the commonly-used 95% level of statistical confidence (see Figure 2).  Corn yield trend was above (below) the state corn yield trend in 9 (26) counties.  It was thus almost three times more likely for statistically significant county yield trends to be below than above the Ohio trend yield. Counties with a statistically significant lower trend have a tendency to be in eastern Ohio (see Figure 2).  Statistically significant higher corn yield trends have a tendency to be in southwestern and central Ohio.

Soybean Yield Trend:  Ohio linear soybean trend yield is +0.48 bushel per year over 1972-2018, the same as the average of the 78 county trend yields estimated for soybeans (see Figure 3).  Unlike corn, this comparison does not suggest county soybean yield trend varied with amount of county production.

County soybean yield trend ranged from +0.23 (Lawrence County) to +0.59 (Fairfield County) (see Figures 3 and 4).  Lawrence County may be an outlier as the next lowest soybean yield trend was Summit County at +0.30 bushel per year.

Statistically significant deviation from the state yield trend was far less common for soybeans than corn.  Only 10 (13%) of county soybean yield trends deviated from the state yield trend with 95% statistical confidence (see Figure 4).  Five were below and 5 were above the state trend.  The small number of counties with statistically significant deviations from the state yield trend calls for caution in making regional categorization of these deviations.  Given this caveat, the 5 counties with trend yield above the Ohio trend yield are in central Ohio.

Wheat Yield Trend:  Ohio’s linear wheat yield trend is +0.76 bushel per year over 1972-2018, nearly identical to the average of the 69 county yield trends estimated for wheat (see Figure 5).  Similar to soybeans and unlike corn, this comparison does not suggest wheat county yield trend varied with amount of county production.

County wheat yield trend ranged from +0.38 (Carroll County) to +0.98 Pickaway County) (see Figures 5 and 6).  There did not appear to be any obvious outlier county wheat yields.

Twenty (29%) of the county wheat yield trends deviated from Ohio’s wheat yield trend with 95% statistical confidence (see Figure 6).  As with corn, it was more common for a county yield trend that differed from the Ohio yield trend with statistical significance to be above than below Ohio’s trend (13 vs. 7).  No clear regional category of deviations from the state wheat trend yield is apparent.  Counties with significant deviations from the state trend are dispersed across Ohio (see Figure 6).

Comparing Yield Trend across Crops:  Comparing yield trend across corn, soybeans, and wheat is complicated by their different yield levels.  Given the use of regression analysis, one useful measure of yield level is the estimated intercept value for 1972.  These intercepts for Ohio corn, soybeans, and wheat are 87, 29, and 40 bushels/acre, respectively.  Taking the ratio of Ohio trend yield to the Ohio intercept finds that yield grew fastest for corn (2.0%) and slowest for soybeans (1.7%) (see Figure 7).  The difference may seem small, but it is an annual difference that has extended over 47 years.

Another useful comparison is to examine the relative variation in county yield trends by crop.  One such measure is the ratio of the standard deviation of county yield trends to the average county yield trend.  Using the values in Figures 1, 3, and 5, the so-called coefficient of variation ratio is 18% for corn, 12% for soybeans, and 16% for wheat.  Eliminating the two outlier county yield trends for corn reduces its coefficient of variation to 15%.  The coefficient of variation thus suggests that soybean yield trends varied less across Ohio counties than did corn and wheat yield trends.

Summary Observations:

►   Linear yield trend is higher for Ohio corn than soybeans, with wheat in between.

►   Among the three crops, soybean yield trends differ the least across Ohio’s counties.

►   County yield trends are more likely to deviate from Ohio’s yield trend with statistical significance for corn than for soybeans.

►   Only readily-apparent regional patterns in yield growth are a higher probability of slower yield growth for corn in eastern Ohio and faster yield growth for corn in central and southwestern Ohio.

►   Corn’s differential yield trends have likely differentially impacted profitability of crop agriculture across Ohio’s counties.

►   Statistically significant differences in county yield growth from state yield growth pose a potential policy issue for Ohio’s CAUV (Current Agricultural Use-Value) Program.  CAUV determines assessed value for a majority of agricultural land in Ohio.  It uses a net-income approach partially based on a soil type’s yield potential for corn, soybeans, and wheat.  Potential yield for a soil type partially comes from the state’s most recent comprehensive soil survey (Zobeck, Gerken, and Powell, 1983). This yield value, from the early 1980s, is then adjusted based on the state-wide trend in harvested yield for each of the three crops.  The significant differences between county and state-wide yield trends raises the potential issues of whether or not the use of state-wide yield trends to adjust a soil productivity index dating to the early 1980s continues to be appropriate policy and thus if an update of the soil productivity index may be an appropriate policy option.

Data Note:  The statistical method used for this analysis is multiple linear regression.  Unit of observation is a county-year in Ohio from 1972 to 2018.  Statewide yield is included as well.  Dependent variable is county yield (for corn, soybeans, or wheat) for a given year.  It is regressed on time, measured as a count of years starting with 1972 equal to zero.  A county specific intercept and a county specific annual trend are estimated.  The statistical test of interest is if a county specific annual yield trend is statistically different from the statewide annual yield trend for a given crop.  Since the county specific annual trend and statewide annual trend are both estimated coefficients, an F-Test is constructed with the null hypothesis that the two trend coefficients are equal to each other.  An F-test rejection of a null hypothesis is a function of both the difference between the two estimated coefficients and the estimated standard error of the coefficients.

References and Data Source:

US Department of Agriculture, National Agricultural Statistics Service.  (April 2019).  2017 Census of Agriculture:  United States  Summary and State Data. Volume 1, Geographic Area Series, Part 51.  AC-17-A-51   www.agcensus.usda.gov

Zobeck, TM, JC Gerken, and KL Powell. 1983. “Ohio Soils with Yield Data and Productivity Index.” Ohio State Univeristy Cooperative Extension Service.  Bulletin 685.

The Case for Looking at the ARC-IC (ARC-Individual) Program Option

by: Carl Zulauf and Ben Brown, Ohio State University, and Gary Schnitkey, Krista Swanson, Jonathan Coppess, and Nick Paulson, University of Illinois at Urbana-Champaign, October 2019

Click here for the complete article as PDF

ARC-IC (Agriculture Risk Coverage – Individual) has received less attention than ARC-CO (ARC – County) and PLC (Price Loss Coverage).  ARC-IC is operationally more complex, thus harder to explain and understand.  It pays on only 65% of program base acres while ARC-CO and PLC pay on 85% of base acres.  Nevertheless, ARC-IC is worth considering if an FSA farm has one or more of the appropriate production attributes.  These attributes include (1) 100% prevent plant acres on a FSA farm, (2) high year-to-year production variability, (3) much higher farm than ARC-CO and PLC yields, and/or (4) acres planted to fruits and vegetables.  The prevent plant attribute is more relevant than normal in 2019.

ARC-IC Overview

►   ARC-IC is a whole farm program option based on the average experience of all covered program commodities planted on the ARC-IC farm.

►   ARC-IC applies to all base acres of all covered commodities on an ARC-IC farm.  It is not elected on a commodity-by-commodity basis.

►   An ARC-IC farm is the sum of a producer’s share in all FSA farms he/she enrolls in ARC-IC in a state.

►   All payment entities on an FSA farm must elect to enroll in ARC-IC.

►   ARC-IC makes a payment if average actual revenue/acre of all covered commodities planted on the ARC-IC farm is less than 86% of the ARC-IC farm’s average benchmark revenue/acre.

►   Revenue/acre for a covered commodity and year is (ARC-IC farm yield times US market year price).

►   ARC-IC farm benchmark revenue/acre equals the sum of the 5-year Olympic average revenue/acre for each covered commodity weighted by current year acres planted to a covered commodity.

►   ARC-IC actual revenue/acre equals the sum of actual revenue/acre for each covered commodity that was planted weighted by current year acres planted to a covered commodity.

►   Payment is made on 65% of total base acres on an ARC-IC farm times ARC-IC payment/acre.

►   Payment/acre is capped at 10% of the ARC-IC farm benchmark revenue/acre.

►   NOTE: Payment depends on program commodities that are planted.

►   NOTE: Prevent plant acres are included in ARC-IC revenue calculations ONLY IF 100% of an ARC-IC farm’s initially reported covered commodities are approved as prevent plant.

►   NOTE: Only initially planted covered commodity and approved double crop acres are included in the revenue calculations.  Any subsequently planted crops are not included in the calculations.

When ARC-IC should be considered:  A farm production attribute must compensate for ARC-IC’s fewer payment acres (65% vs. 85% of base acres for ARC-CO and PLC).  Such attributes include:

(1)  All of an ARC-IC farm’s initially planted covered commodities are approved as prevent plant.  Current year revenue is zero since production is zero, resulting in a payment/acre equal to the payment cap of 10% of ARC-IC benchmark revenue/acre.  In contrast, if any acre is planted to any covered commodity, payment is based on revenue/acre for the planted acre(s).  Given the prevalence of prevent plant acres in 2019, examples are provided below.  To underscore the key point, payment in this situation requires the ARC-IC farm has prevent plant for all covered program commodities on all base acres.

(2)  Production is highly variable from year to year on the ARC-IC farm.  High variability increases the likelihood of ARC-IC payment.  High variability is most likely when1 crop is grown and 1 FSA farm makes up the ARC-IC farm.  ARC-IC averages across crops and FSA farms.  Variability declines as more than 1 crop is grown and/or more than 1 FSA farm makes up the ARC-IC farm.

(3)  ARC-IC benchmark yield is (much) higher than ARC-CO benchmark yield and PLC farm payment yield.  Assuming 1 covered commodity and same percent payment rate for both ARC programs, ARC-IC benchmark yield needs to be more than 30% higher than the county benchmark yield for ARC-IC to pay more than ARC-CO.  Other situations result in different breakeven yields.

(4)  Fruits and vegetables (other than mung beans and pulse crops) or wild rice are planted on a FSA farm.  Payment base acres are 65% for ARC-IC vs. 85% for ARC-CO and PLC.  Non-payment acres are the remaining base acres:  35% for ARC-IC vs. 15% for ARC-CO and PLC.  Payment is reduced if fruits and vegetables (other than mung beans and pulse crops) or wild rice are planted on more than the non-payment acres.  ARC-IC has more acres that can be planted to fruits and vegetables (other than mung beans and pulse crops) or wild rice without losing program payments.  Note, base acres on the FSA farm are not altered in this situation.

ARC-IC Examples – role of prevent plant – Overview:  An ARC-IC farm with all yield information needed to calculate the ARC-IC benchmark revenue is assumed.  This information plus the US market year average price for crop years 2013-2017 and 2019 are in the top half of each table of values for each example.  The farm has 100 acres of cropland and program base, both composed of 60 acres of corn and 40 acres of soybeans.

Calculation of the ARC-IC benchmark revenue is a 3-step process.  In step 1, per acre revenue is calculated for each covered commodity (corn and soybeans in this case) for each of the 5 years in the benchmark calculation window.  In step 2, the Olympic average revenue per acre is calculated.  An Olympic average removes the high and low value before calculating the average of the remaining values.  For the example ARC-IC farm, the Olympic average revenue is $605 for corn and $475 for soybeans.  In step 3, the Olympic average revenues are weighted by the acres planted in the current year (2019 in this case) to covered commodities to determine an ARC-IC farm average revenue per acre.  This calculation for the example ARC-IC farm is:  (($605*60) + ($475*40)) / (60+40), or an ARC-IC benchmark revenue of $553 / acre.

ARC-IC Example 1 – no prevent plant acres:  Actual revenue / acre is $631 (166 bushels / acre times $3.80 / bushel) for corn and $423 (47 bushels / acre times $9.00 / bushel) for soybeans (see Table 1).  These individual crop values are weighted by acres planted to each covered commodity, resulting in an actual revenue / acre for the ARC-IC farm of $548 (($631*60) + ($423*40)) / (60+40).  Since actual revenue of $548 / acre exceeds the ARC-IC coverage revenue of $476 / acre (86% ARC-IC coverage level times benchmark revenue of $553 / acre), ARC-IC makes no payment.

ARC-IC Example 2 – some prevent plant acres: This example has 20 acres of corn prevent plant acres and lower 2019 yields (see Table 2).  Actual revenue / acre is $570 (150 bushels / acre times $3.80 / bushel) for corn and $378 (42 bushels / acre times $9.00 / bushel) for soybeans.  These individual crop values are weighted by acres planted to each program commodity, resulting in an actual revenue / acre for the ARC-IC farm of $522 (($570*60) + ($378*20)) / (60+20).  Only 80 acres is used in calculating actual ARC-IC revenue.  The 20 prevent plant acres are not included in calculating ARC-IC actual revenue.  Since actual revenue of $522 / acre exceeds ARC-IC coverage revenue of $493 / acre (86% ARC-IC coverage level times benchmark revenue of $573 / acre), ARC-IC makes no payment.  ARC-IC benchmark revenue and coverage revenue is higher in Example 2 than Example 1.  The reason is the combined impact on the weighted averages of (a) higher revenue per acre for corn than soybeans and (b) fewer acres planted to soybeans (20, not 40).

ARC-IC Example 3 – all prevent plant acres:  This example has no planted acres, with all initial planted covered commodity acres approved for prevent plant (see Table 3).  Actual revenue / acre is $0 since no initial covered commodity is planted.  Because no acres are planted to covered program commodities and all acres of initial planted covered commodities are approved as prevent plant, a benchmark revenue exists.  It equals the benchmark revenue in example 1 ($553 / acre).  ARC-IC makes a payment since actual revenue of $0 / acre is less than the ARC-IC coverage revenue of $476 / acre (86% ARC-IC coverage level times benchmark revenue of $553 / acre).  Payment is however capped at 10% of the benchmark revenue, or $55 per base acre ($553 times 10%).  Total ARC-IC payment is $5,500 ($55 per base acre times 100 base acres).

Summary Observations: 

►   Crop program choice rests on the production attributes of an FSA farm.

►   ARC-IC may be worth considering more often than commonly thought.

►   Farm production attributes which make ARC-IC potentially attractive include:

  • 100% of program base acres on a FSA farm are prevent plant acres,
  • high production variability from year to year on a FSA farm,
  • much higher farm than county or PLC yields on a FSA farm, and
  • fruits and vegetables are planted on a FSA farm.

►   If prevent plant is the production attribute of interest, all covered commodity acres on the ARC-IC farm must be prevent plant for ARC-IC to make a payment.

►   If high production variability is the production attribute of interest, ARC-IC is more attractive if only 1 FSA farm in a state with only 1 program commodity is elected into ARC-IC.  ARC-IC pays on the average experience across all program crops on all FSA farms in the ARC-IC farm.  Averaging across multiple crops and FSA farms usually reduces variability and thus payment probability.

►   Program sign up is for 2019 and 2020.  Expected payments in both years need to be considered for ARC-IC, ARC-CO, and PLC.  It is highly possible that the program with the highest expected payment will differ for 2019 and 2020, especially if ARC-IC has the highest expected payment for one year.

►   This article is not an argument for electing ARC-IC.  It is an argument for not dismissing ARC-IC without thinking about the individual FSA farm production attributes.

 

Table 1.  ARC-IC Example 1 – no prevent plant acres
  corn corn corn beans beans beans corn beans corn beans ARC-IC
yield MYA ARC-IC yield MYA ARC-IC plant plant prevent prevent farm
price revenue price revenue acres acres plant plant per
year / calculation acres acres acre
2013 155 $4.46 $691 43 $13.00 $559 60 40 0 0  
2014 169 $3.70 $625 47 $10.10 $475 60 40 0 0
2015 166 $3.61 $599 48 $8.95 $430 60 40 0 0
2016 172 $3.36 $578 52 $9.47 $492 60 40 0 0
2017 174 $3.40 $592 49 $9.33 $457 60 40 0 0
2019 166 $3.80 $631 47 $9.00 $423 60 40 0 0
Olympic average (’13-’17) $605 $475
benchmark revenue $553
revenue coverage (86%) $476
actual revenue $548
revenue loss $0
payment $0
total ARC-IC payment                     $0

 

 

 

 

 

Table 2.  ARC-IC Example 2 – some prevent plant acres
  corn corn corn beans beans beans corn beans corn beans ARC-IC
yield MYA ARC-IC yield MYA ARC-IC plant plant prevent prevent farm
price revenue price revenue acres acres plant plant per
year / calculation acres acres acre
2013 155 $4.46 $691 43 $13.00 $559          
2014 169 $3.70 $625 47 $10.10 $475
2015 166 $3.61 $599 48 $8.95 $430
2016 172 $3.36 $578 52 $9.47 $492
2017 174 $3.40 $592 49 $9.33 $457
2019 150 $3.80 $570 42 $9.00 $378 60 20 20 0
Olympic average (’13-’17) $605 $475
benchmark revenue $573
revenue coverage (86%) $493
actual revenue $522
revenue loss $0
payment $0
total ARC-IC payment                     $0

 

Table 3.  ARC-IC Example 3 – 100% prevent plant acres
  corn corn corn beans beans beans corn beans corn beans ARC-IC
yield MYA ARC-IC yield MYA ARC-IC plant plant prevent prevent farm
price revenue price revenue acres acres plant plant per
year / calculation acres acres acre
2013 155 $4.46 $691 43 $13.00 $559          
2014 169 $3.70 $625 47 $10.10 $475
2015 166 $3.61 $599 48 $8.95 $430
2016 172 $3.36 $578 52 $9.47 $492
2017 174 $3.40 $592 49 $9.33 $457
2019 0 $3.80 $0 0 $9.00 $0 0 0 60 40
Olympic average (’13-’17) $605 $475
benchmark revenue $553
revenue coverage (86%) $476
actual revenue $0
revenue loss $476
payment $55
total ARC-IC payment                     $5,500

 

Ohio CAUV Values Projected to Decline Through 2020

The Current Agricultural Use Valuation (CAUV) program allows farmland devoted exclusively to commercial agriculture to be taxed based on their value in agriculture, rather than the full market value, resulting in a substantially lower tax bill for the farmer.

The formula for CAUV values incorporates agricultural factors (soil types, yields, prices, and non-land costs for corn, soybeans, and wheat) to calculate the capitalized net returns to farming land based on the previous 5 to 10 years. CAUV underwent large-scale changes to its calculation in 2017 that was targeted to reduce the property tax burden of farmland.

A new report, Ohio CAUV Values Projected to Decline Through 2020, shows the projection of CAUV values though 2020. According to the study authors, OSU agricultural economists Robert Dinterman and Ani Katchova forecast a decrease in the assessed value of agricultural land to an average CAUV value of approximately $600 in 2020.

Access this report at:

https://aede.osu.edu/sites/aede/files/publication_files/CAUVProjectionsFall2019.pdf

Ohio Agricultural Loan Delinquencies Have Stabilized in 2019

Financial stress, expressed as the ability of farmers to repay loans, is important to follow during times of low farm income. A new report “Ohio Agricultural Lending Outlook: Fall 2019,” published by Kevin Kim, Robert Dinterman, and Ani Katchova with the OSU AEDE’s Farm Income Enhancement Program, points to good news for Ohio farmers. The report provides information on agricultural loan volumes and delinquencies for Ohio farmers.

Agricultural loans issued by FDIC insured banks have increased in volume both nationally and in Ohio. For Ohio, the total number of agricultural loans reached $3.8 billion in 2018. There has been a slight uptick in delinquency rates, but they remain under 2%, which is a significant benchmark as delinquency rates remained above 2% for several years following the 2008 Farm Financial Crisis. The average delinquency rate for Ohio farm production loans for the recent 12 months was 1.06%, while for real estate loans it was 1.83%, seeing declines from last year’s rates.

Access this report at:

https://aede.osu.edu/sites/aede/files/publication_files/AgLendingOutlook2019.pdf

 

Ohio’s Proposed Hemp Rules Are Out

By Peggy Kirk Hall and Ellen Essman

OSU Agricultural & Resource Law Program

Ohio’s newly created hemp program is one step further toward getting off the ground.   On October 9, the Ohio Department of Agriculture (ODA) released its anxiously awaited proposal of the rules that will regulate hemp production in Ohio.   ODA seeks public comments on the proposed regulations until October 30, 2019.

There are two parts to the rules package:  one rule for hemp cultivation and another for hemp processing.   Here’s an overview of the components of each rule:

  1. Hemp cultivation

The first rule addresses the “cultivation” of hemp, which means “to plant, water, grow, fertilize, till or havest a plant or crop.”  Cultivating also includes “possessing or storing a plant or cop on a premises whre the plant was cultivated until transported to the first point of sale.”  The proposal lays out the rfollowing egulatory process for those who wish to cultivate hemp in Ohio.

Cultivation licenses.  Anyone who wants to grow hemp must receive a hemp cultivation license from the ODA.  Licenses are valid for three years.  To obtain a license, the would-be hemp cultivator must submit an application during the application window, which will be between November 1 and March 31.  The application requires the applicant to provide personal information about the applicant, and if the applicant is a business, information about who is authorized to sign on behalf of the business, who will be primarily responsible for hemp operations and the identity of those having a financial interest greater than ten percent in the entity.    The cultivation license application will also seek information about each location where hemp will be grown, including the GPS coordinates, physical address, number of outdoor acres or indoor square footage, and maps of each field, greenhouse, building or storage facility where hemp will grow or be stored.  Cultivators must pay a license application fee of $100, and once licensed, an additional license fee of $500 for each growing location, which is defined as a contiguous land area or single building in which hemp is grown or planned to be grown.  All applicants and anyone with a controlling interest ithe hemp cultivation business must also submit to a criminal records check by the bureau of criminal identification and investigation.

Land use restrictions.  The proposed rules state that a licensed hemp cultivator shall not:

  • Plant or grow cannabis that is not hemp.
  • Plant or grow hemp on any site not approved by the ODA.
  • Plant, grow, handle or store hemp in or within 100 feet of a residential structure or 500 feet of a school or public park, unless for approved research.
  • Comingle hemp with other crops without prior approval from ODA.
  • Plant or grow hemp outdoors on less than one-quarter acre, indoors on less than 1,000 square feet, or in a quantity of less than 1,000 plants without prior approval from ODA.
  • Plant or grow hemp within half a mile of a parcel licensed for medical marijuana cultivation.
  • Plant or grow hemp on property that the license holder does not own or lease.

Hemp harvesting.  Licensed growers would be required to submit a report to ODA at least 15 days before their intended harvest date and pay a pre-harvest sample fee of $150.  ODA then has to sample the hemp for THC content, and only if approved can a cultivator harvest the crop, which in most cases must occur within 15 days after the sample is taken.  Failing to harvest within the 15-day window might require a secondary sampling and sampling fee.  A cultivator would be required to have a hemp release form from ODA before moving any harvested materials beyond the storage facility.

Random sampling.  The proposed rules also allow for random sampling of hemp by ODA and provide details on how ODA will conduct the sampling and charge sampling fees.  Any cultivator is subject to random sampling in each location where hemp has been cultivated. ODA will report testing results that exceed 0.3 THC to the cultivator, who may request a second sample.  A cultivator must follow procedures for destroying any leaf, seed, or floral material from plants that exceed 0.3 THC and any material that was co-mingled with the 0.3 THC materials, but may harvest bare hemp stalks for fiber.

Destruction of hemp.   Under the proposed regulations, a license holder must submit a destruction report before destroying hemp and ODA must be present to witness the destruction.  The proposed rules also authorize ODA to destroy a crop that was ordered destroyed, abandoned, or otherwise not harvested and assess the costs against the licensee.

Reporting and recordkeeping are also important in the proposed rules.  Licensed cultivators must submit a planting report on an ODA form for each growing location by July 1 or within 15 days of planting or replanting, which shall include the crop’s location, number of acres or square footage, variety name, and primary intended use.  The rule would also require licensees to submit a completed production report by December 31 of each year.    A licensee that fails to submit the required reports would be subject to penalties and fines. Cultivators must maintain planting, harvest, destruction and production reports for three years.

Control of volunteer plants.  A licensee must scout and monitor unused fields for volunteer hemp plants and destroy the plants for a period of three years past the last date of reported planting.  Failing to do so can result in enforcement action or destruction of the plants by ODA with costs assessed to the licensee.

Pesticide and fertilizer use.  The laws and rules that apply to other crops will also apply to hemp, except that when using a pesticide on a site where hemp will be planted, the cultivator must comply with the longest of any planting restriction interval on the product label.   ODA may perform pesticide testing randomly, and any hemp seeds, plants and materials that exceed federal pesticide residue tolerances will be subject to forfeiture or destruction without compensation.

Prohibited varieties.  The proposed rule states that licensed cultivators cannot use any part of a hemp plant that ODA has listed as a prohibited variety of hemp on its website.

Clone and seed production.  Special rules apply to hemp cultivators who plan to produce clones, cuttings, propagules, and seed for propagation purposes.  The cultivator can only sell the seeds or plants to other licensed cultivators and must maintain records on the variety, strain and certificate of analysis for the “mother plants.”  The licensee need not submit a harvest report, but must keep sales records for three years of the purchaser, date of sale, and variety and number of plants or seeds purchased.

Cultivation research.  Universities may research hemp cultivation without a license but private and non-profit entities that want to conduct research must have a cultivation license.  Cultivation research licensees would be exempt from many parts of the proposed rules, but must not sell or transfer any part of the plants and must destroy the plants when the research ends.

Enforcement.  The proposed rule grants authority to the ODA to deny, suspend or revoke cultivation licenses for those who’ve provide false or misleading information, haven’t completed a background check, plead guilty to a felony relating to controlled substances within the past 10 years, or violated the hemp laws and rules three or more times in a five-year period.

  1. Hemp processing

The proposed rules package by ODA also addresses processing, which the rule defines as “converting hemp into a hemp product” but does not include on-farm drying or dehydrating of raw hemp materials by a licensed hemp cultivator for sale directly to a licensed hemp processor.    Because of this definition, many farmers who want only to grow and dry hemp would need only a cultivation license.  Growers who want to process their licensed hemp into CBD oil or other products, however, must also obtain a processing license.  The processing rules follow a similar pattern to their cultivation counterpart, as follows.

Processing licenses.  In addition to submitting the same personal, business and location information as a cultivation license requires, a hemp processing license application must list the types of hemp products that the processor plans to produce.   An “extraction operational plan” including safety measures and guidelines is required for processors who want to extract CBD from hemp to produce their product, and an applicant must indicate compliance with all building, fire, safety and zoning requirements.  The amount of the license fee depends on what part of the hemp plant the processor plans to process.  Processing raw hemp fiber, for example, requires a $500 license fee for each processing site, whereas processing the raw floral component of hemp requires a $3000 fee for each site.  Like the cultivation license, a processing license is valid for three years.  Applicants and those with a controlling interest in the business must submit to a background check.

Land use restrictions.  The proposed regulations would prevent a licensed processor from:

  • Processing or storing any cannabis that is not hemp.
  • Processing or storing hemp or hemp products on any site not approved by ODA.
  • Processing, handling, or storing hemp or hemp products in or adjacent to a personal residence or in any structure used for residential use or on land zoned for residential use.
  • Processing hemp within 500 feet of a school or public park, except for approved research.

Financial responsibility.    A licensed processor must meet standards of financial responsibility, which require having current assets at least $10,000 or five percent of the total purchase of raw hemp materials in the previous calendar year, whichever is greater, and possessing a surety bond.

Inspection and sampling.  As with cultivation licensees, hemp processing licensees would be subject to inspection and sampling by ODA under the proposed rule.

Food safety regulations.  The proposed rule requires hemp processes to comply with federal and state food safety regulations.

Sources and extraction of cannabinoids (CBD). A processor who wants to extract or sell CBD products must obtain the materials from a licensed or approved cultivator or processor in Ohio or another state with hemp cultivation licenses.  The regulation outlines components of the extraction operational plan that a processor must submit with the processing application, as well as acceptable extraction methods and required training.

Product testing.  A hemp processor must test hemp products at an accredited testing laboratory before selling the products.   The proposed rule describes the testing procedures, which address microbial contaminants, cannabinoid potency, mycotoxins, heavy metals, pesticide and fertilizer residue and residual solvents.  There are testing exemptions, however, for hemp used exclusively for fiber, derived exclusively from hemp seed and hemp extracts.  The testing laboratory must create a certificate of analysis for each batch or lot of the tested hemp product.

Processor waste disposal.  Under the proposed rule, a licensed processor must follow procedures for proper disposal of hemp byproducts and waste and must maintain disposal records.

Product labeling requirements are also proposed in the rule.  A processor must label all hemp products except for those made exclusively from hemp fiber as outlined in the rule and in compliance with federal law and other existing Ohio regulations for standards of identify and food coloring.

Recordkeeping.  As we’d expect, the proposal states that hemp processors must maintain records for five years that relate to the purchase of raw, unprocessed plant materials, the purchase or use of extracted cannabinoids, and the extraction process.

Prohibited products.  Finally, the proposed rules include a list of hemp products that cannot be offered for sale, which includes hemp products with over 0.3 percent THC by dry weight basis, hemp products which laboratory testing determines do not meet standards of identity or that exceed the amount of mytoxins, heavy metals, or pesticides allowed, and any hemp products produced illegally.

What’s next for the hemp rules?

Keep in mind that these rules are not yet set in stone; they are a simply a proposal for hemp licensing rules in Ohio.  Those interested in cultivating or processing hemp in the future should read the draft rules carefully.  The proposed rule for hemp cultivation is here and the proposal for hemp processing is here.  Anyone can submit comments on the proposed rules here.  Your comments could affect what the final hemp rules require for hemp cultivators and processors.  After ODA reviews all comments, it will issue its final hemp licensing regulations.

Federal law requires that after Ohio finalizes its rules, ODA must submit them to the USDA for approval.  That approval won’t occur, however, until USDA completes its own hemp regulations, which are due out in proposal form any day now.  Ohio’s rules will become effective once USDA approves them, hopefully in time for the 2020 planting season.  Stay tuned to the Ag Law Blog to see what happens next with hemp production in Ohio.

 

Agricultural & Natural Resources Income Tax Issues Webinar

by: Barry Ward, Director, OSU Income Tax Schools

Tax practitioners, farmers and farmland owners are encouraged to connect to the Agricultural and Natural Resources Income Tax Issues Webinar on Dec. 16 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 timely topics and key regulations of the Tax Cuts and Jobs Act.

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 in the Ag Tax Issues Workbook that is provided to all participants include:

Tax planning for farmers

Proposed §199A Cooperative Regulations

199A and farm rentals

Form 4797 issues

Form 4562 depreciation and expensing issues

Disaster-related tax issues

Farming C corporations electing S corporation status

Getting out of the farming business

Allocating purchase price to depreciable items

Discounted sales and leases

Current H2A labor issues

Taxation of contract feeding arrangements

Industrial hemp considerations

Timber tax issues

Conservation easements

Case study and forms update

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. 16 presentation.

Host locations include:

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

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

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

Wayne County, Wayne County Administration Building, 428 West Liberty St., 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.

 

 

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

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

How to deal with the new tax law (Tax Cuts and Jobs Act) for both individuals and businesses are among the topics to be discussed during the upcoming Tax School workshop series offered throughout Ohio in late 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 2019 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. The schools offer continuing education credit for certified public accountants, enrolled agents, attorneys, annual filing season preparers and certified financial planners.

This is another important year for tax education as the new tax law continues to create some challenges for tax practitioners to prepare tax returns. We have an excellent set of instructors with a great deal of experience and training along with a top reference workbook to prepare tax practitioners to best serve their clients during this ongoing process of incorporating recent tax law changes in completing tax returns.

The workbook alone is an extremely valuable reference as it offers over 700 pages of material including helpful tables and examples that will be valuable to practitioners. Sample chapters of the reference workbook can be found at: https://go.osu.edu/WorkbookChapters.

In addition to the tax schools, the program offers a separate, two-hour ethics webinar that will broadcast Dec. 11 at 1 p.m. and again on Dec. 13 at 10 a.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

Register two weeks prior to the school date and receive the two-day tax school early-bird registration fee of $375. This includes all materials, lunches and refreshments. The deadline to enroll is 10 business days prior to the date of each school. After the school deadline, the fee increases to $425.

Participants can also choose to attend just day one of the workshop for $250. Additionally, the 2019 RIA Federal Tax Handbook is available to purchase by participants for a discounted fee of $40 each. Registration information and the online registration portal can be found online at:
http://go.osu.edu/taxschools
The schools run from 8 a.m. to 4:30 p.m. on the following dates and locations:

• Oct. 30-31 — Ole Zim’s Wagonshed, 1387 State Route 590, Gibsonburg.
• Nov. 4-5 – Sheraton Suites, 1989 Front St., Cuyahoga Falls.
• Nov. 6-7 — Ashland University Convocation Center, 820 Claremont Ave., Ashland
• Nov. 12-13 — Presidential Banquet Center, 4548 Presidential Way, Kettering.
• Nov. 14-15 — Old Barn Out Back, 3175 W. Elm St., Lima.
• Nov. 19-20 — Der Dutchman Restaurant, 445 S. Jefferson Rt. 42, Plain City.
• Nov. 21-22 – Christopher Conference Center, 20 N. Plaza Dr., Chillicothe.
• Dec. 2-3 — Ohio University, Zanesville Branch Campus Center, 1425 Newark Road, Zanesville.
• Dec. 5-6 — The Ohio State University, Nationwide & Ohio Farm Bureau 4-H Center, 2201 Fred Taylor Dr, Columbus.

A daylong webinar on Ag Tax Issues will be broadcast Dec. 16 from 9 a.m. to 3 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 regulations of the Tax Cuts and Jobs Act related specifically to those income tax returns.

You can choose to attend a host location or participate at home or in the office. Host locations will provide a facilitator, refreshments and lunch. You are encouraged to bring your computer as there will be real-time Q&A. If you choose not to attend a host location, a web address will be e-mailed to you 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/2019taxschools. Participants may contact Ward at 614-688-3959, ward.8@osu.edu or Julie Strawser 614-292-2433, strawser.35@osu.edu for more information.