Western Ohio 2017 Agriculture Outlook Meeting

by Sam Custer, Extension Educator

What does 2017 look like for Western Ohio farmers and agricultural businesses?

Learn what to expect this year during an agricultural outlook meeting February 3 at noon presented by agriculture economists and swine specialist with the College of Food, Agricultural, and Environmental Sciences at The Ohio State University.

The presentation is part of the 2017 Agricultural Policy and Outlook series offered by The Ohio State University Extension, the outreach arm of the college. The meeting is being hosted by the Agriculture and Natural Resources Educators from Auglaize, Darke, Miami, Mecer and Shelby Counties.

The meeting is partially sponsored by Farm Credit Mid America Merchants Bank of Indiana, Minster Bank, Second National Bank, The Andersons and Ohio’s Country Journal and Ohio Ag Net.

The meeting will feature presentations on matters the agricultural community should expect in 2017, including policy changes, key issues and market behavior with respect to farm, food and energy resources, and the environment, said Sam Custer, OSU Extension, Darke County Educator.

“Participants can listen and learn from Ohio State faculty as they discuss the opportunities and challenges for the agricultural sector as well as interpret the impact of recent policy decisions,” Custer said.

Speakers for the outlook meeting are:

Dale Richer, State Swine Specialist, OSU Extension

Carl Zulauf, Professor Emeritus, Ohio State University

Barry Ward, Asst. Professor, OSU Extension, Production Business Management

David Marrison, Assoc. Professor, OSU Extension

What we’ll cover:

  • Ohio Swine Production Update
  • Speculation on President Trump’s Policy Agenda
  • Examining Land Values, Cash Rents, Input Costs & Potential Crop Profitability in 2017
  • What Are Grain Markets Telling Us?
  • Farm & Estate Tax Laws – Planning for an Uncertain Future

“These presentations will provide excellent information and insights that will benefit farmers and agricultural leaders as they make plans for 2017 and beyond,” Custer said.

The meeting will be held at the Romer’s Party Room, 118 East Main Street, Greenville, Ohio.

Registration for the meeting is $20 (includes lunch) by January 27.  A registration flyer can be downloaded at http://go.osu.edu/2017darkeagoutlook.

For more information about the meeting, contact Custer at custer.2@osu.edu or 937.548.5215.

 

For more detailed information, visit the Darke County OSU Extension web site at www.darke.osu.edu, the OSU Extension Darke County Facebook page.

Ag Outlook and Policy Meeting to be held on February 2 in Wooster, Ohio

So what’s ahead for farmers and Ag businesses in 2017?  OSU Extension invites producers to attend the Ag Outlook and Policy meeting on Thursday, February 2, 2017 from 9:30 a.m. to 3:15 p.m. at the Fisher Auditorium OARDC located at 1680 Madison Avenue in Wooster, Ohio. A wide variety of experts will be on hand to share their agricultural outlook for 2017.

The following presentations will be made during the program:

Speculation on President Trump’s Policy Agenda and What Are Grain Markets Telling Us?- By: Carl Zulauf, Ag Policy Specialist and Professor Emeritus from The Ohio State University will provide “

Dairy Economic Update- By: Dianne Shoemaker: OSU Extension Dairy Production Economics Field Specialist

Beef Cattle Outlook- By: John Grimes: Extension Beef Program Specialist

Ten Legal Trends That Could Change Agriculture- Peggy Hall: OSU Extension Ag Law and Resources Program

Crop Budget and Cropland Rental Update- Rory Lewandowski: Extension Educator Wayne County

Farm & Estate Tax Laws – Planning for an Uncertain Future- David Marrison: Extension Educator Ashtabula County

This program is being sponsored by OSU Extension, Farmers National Bank, and Farm Credit.  The registration cost is $15 per person with the deadline of January 26, 2017. Make checks payable to OSU Extension. Please send checks and registration to: OSU Extension- Wayne County, 428 W. Liberty Street – Suite 12, Wooster, Ohio 44691.  More information can be obtained by calling the Wayne County Extension office at 330-264-8722 or email Rory Lewandowski at Lewandowski.11@osu.edu

Farm Financial Management School to be held in Wayne County

Wayne County Extension is hosting a 6-evening farm financial management school on Thursday evenings in January and February.   The school will begin the evening of January 12 and run six consecutive Thursday evenings through February16.  This year’s school is going to focus on helping participants to answer 3 basic financial questions:

  • Where am I (the farm) financially?
  • Where do I (the farm) want to be financially?
  • How do I (the farm) get there?

The school will be structured to include presentations, discussion, and hands-on activities.  Participants will learn how to put together and use financial documents to measure their current farm financial situation, track expenses and cash flow, make decisions to help improve or maintain the financial situation, and work more effectively with Ag lenders.  Topics that will be covered over the 6 week school include: mission statements, balance sheets, cost of production, family living expense, farm income statements, farm cash flow statements, enterprise budgets, bench marking, financial standards/ratios, record keeping, budgeting,  working with ag lenders,  marketing, and crop insurance.  Each participant will receive a 3-ring binder notebook with materials and handouts from each session.

The school will be held in the commissioners meeting room located in the upper level of the county administration building.  A light meal will be available each evening at 6:45 pm and class instruction will begin at 7:00 pm and conclude by 9:30 pm each evening.  The registration cost is $50/person.  Sponsorships provided by Farm Credit Mid-America, Farmers National Bank and Wayne Savings Community Bank are helping to cover presenter costs, mileage and materials.

Pre-registration is requested to the Wayne County Extension office at 330-264-8722 by Friday, January 6 or by email to Lisa Parker, Wayne County Extension office assistant at: parker.1269@osu.edu.   A farm financial management school flyer with a registration form is available on the Wayne County Extension web site at: http://go.osu.edu/agwayne.

Ohio Farm Custom Rate Survey 2016

by: Barry Ward, Leader, Production Business Management, Department of Agricultural, Environmental and Development Economics

A large number of Ohio farmers hire machinery operations and other farm related work to be completed by others. This is often due to lack of proper equipment, lack of time or lack of expertise for a particular operation. Many farm business owners do not own equipment for every possible job that they may encounter in the course of operating a farm and may, instead of purchasing the equipment needed, seek out someone with the proper tools necessary to complete the job. This 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 State University Extension collects surveys and publishes survey results from the Ohio Farm Custom Survey every other year and we need your assistance in securing up-to-date information about farm custom work rates, machinery and building rental rates and hired labor costs in Ohio.

This year we are updating our published custom farm rates for Ohio. Extension Educators in Ohio will be disseminating surveys at select educational activities throughout the winter. There is also an online survey option that anyone can access. The online survey is available at: http://aede.osu.edu/customrate2016

 

We would ask that you respond even if you know only a few rates. We want information on actual rates, either what you paid to hire custom work or what you charged if you perform custom work. Custom Rates should include all ownership costs of implement & tractor (if needed), operator labor, fuel and lube. If fuel is not included in your custom rate charge there is a place on the survey to indicate this.

 

You may access the survey at: http://aede.osu.edu/customrate2016

The deadline to complete the survey is March 31st.

 

 

 

 

Farmland Leasing Workshops Offered Throughout Ohio

Source: Barry Ward, Assistant Professor, OSU Extension Leader, Production Business Management, Department of Agricultural, Environmental and Development Economics and Peggy Hall, Assistant Professor, OSU Extension Director, Agricultural & Resource Law Program

Ohio State University Extension will offer four Farmland Leasing Workshops throughout Ohio this upcoming February, 2016. The three hour workshops will include topics of interest to both landowners and farm operators, such as factors affecting leasing options and rental rates, analyzing rent survey data and legal requirements and provisions for farm leases. The speakers will help attendees consider how to use data in negotiations and to apply legal information to leasing practices. Workshop presenters include Barry Ward, Assistant Professor, OSU Extension and Leader, Production Business Management and Peggy Hall, Assistant Professor, OSU Extension and Director of OSU’s Agricultural & Resource Law Program.

Topics included in the workshop are:

Factors affecting leasing options and rates

Evaluating cash rent survey data

Farmland leasing options: fixed and flexible cash leases

Creating a legally enforceable lease

Legal provisions in farmland leases

Analyzing good and bad leasing practices

Dates and Locations of Farmland Leasing Workshops:

February 3, 2016, 1:00 pm—4:00 pm

Location: Kent State University Tuscarawas, New Philadelphia, Science and Advanced Technology Center

Registration:http://coshocton.osu.edu/program-areas/agriculture-and-natural-resources/news-and-upcoming-events

Questions: Contact Chris Zoller at 330-339-2337 or Emily Adams at 740-622-2265.

 

February 10, 2016, 6:00–9:00 pm

Location: OSUE Clermont County

Registration:  Contact OSU Extension at 513-732-7070

 

February 17, 1:00–4:00 pm

Location: OSUE Defiance County

Registration: Contact OSU Extension Defiance County at 419-782-4771; clevenger.10@osu.edu

 

February 17, 6:00 p.m.—9:00 pm

Location: OSUE Putnam County

Registration and questions: Contact Beth Scheckelhoff at 419-592-0806; Scheckelhoff.11@osu.edu

 

Check the events calendar at http://aglaw.osu.edu for workshop details.

Examining Land Values, Rents, Crop Input Costs & Margins in 2016

by: Barry Ward, Leader, Production Business Management, Department of Agricultural, Environmental, and Development Economics

Low crop margins and uncertain land value and cash rental markets will continue to be important themes as we look ahead to 2016 as producers grapple with high costs relative to crop prices received.

According to data from the Ohio Ag Statistics Service, bare cropland value increased 3.5% in Ohio in 2015. According to this data, bare cropland averaged $5850/acre, up from $5,650/acre the previous year. The Western Ohio Cropland Values and Cash Rents Survey (AEDE) was conducted in January 2015. The projected value for Average cropland in western Ohio was $7,315 per acre. Top cropland in western Ohio was projected to average $9,190 per acre while Poor cropland in western Ohio was expected to average $5,673 per acre. These values reflect projected decreases of 5.5 to 9.5%.

The Chicago Federal Reserve Bank October 1 survey of bankers found land values of “good” farmland were unchanged from last year however the 3rd quarter showed an increase in farmland values of 1% across the district. Purdue University conducted their annual land value survey in June 2015 and found decreases in farmland value that ranged from 3.8 to 5.1% depending on land productivity class.

Strong equity positions together with continued low interest rates continue to lend positive support to land values. Low projected profit margins in 2016 will likely restrict further land value increases and possibly cause values to decrease. These competing fundamentals create a continued uncertain picture for land values in 2016 although continued low margins together with the potential for higher interest rates suggest lower farmland values in 2016.

Enterprise budget projections for Ohio’s primary row crops for 2016 indicate the potential for low margins. Returns to Variable Costs (gross revenue minus variable costs) are projected to be $185-$345 per acre for Ohio corn in 2016 depending on land production capabilities. Budget projections for 2016 soybeans show Returns to Variable Costs to be $179-$331 per acre. Wheat budget projections for 2016 show Returns to Variable Costs to be between $125 and $218 per acre. This is assuming current prices of inputs and current December, November and September 2016 futures prices, respectively. These projections are based on OSU Extension Ohio Crop Enterprise Budgets available online at: http://aede.osu.edu/research/osu-farm-management/enterprise-budgets

Strong equity positions together with higher property taxes will continue to lend support to cash rental rates however low profit margins in 2016 will put downward pressure on rents. These competing fundamentals suggest a flat to slightly lower cash rental market outlook for 2016.

Variable costs for Ohio corn for 2016 will be 8.5% to 10.6% lower compared to 2015. Variable costs for corn for 2015 are projected to be $336 to $421 per acre. Variable costs for 2016 Ohio soybeans are projected to be 6.2% to 6.6% lower and range from $196 to $214 per acre. Wheat variable expenses for 2016 are projected to range from $169 to $211 per acre. Lower fuel and fertilizer prices will be the primary fundamental drivers of lower variable costs in 2016.

Outlook information presented here was developed with data from AEDE research, the Energy Information Administration, USDA, other Land Grant research, futures markets and retail sector surveys. While gauged to the best of this author’s capabilities, forward looking statements contained in this document may prove to be incorrect due to changes in supply and demand and other political and economic related events.

 

 

Farm Management School Teaches Small, Beginning Producers Farm Finances

 

GREENVILLE, Ohio – Producers new to farming or those who operate small farms and ranches can learn how to create a business plan and develop a balance sheet from farm management experts with the College of Food, Agricultural, and Environmental Sciences at The Ohio State University.

The 2016 Farm Management School, a five-session workshop series, will focus on the financial education that goes along with operating a successful farming operation, said Sam Custer, an Ohio State University Extension educator who is organizing the the program.

OSU Extension is CFAES’s outreach arm.

Although the farm management school targets those who are new to agricultural fields, any farmer, producer or agriculture-related industry person is welcome to attend, Custer said.

The goal of the program, he said, is to help young and beginning farmers learn how to become financially savvy and how to make their agricultural operations successful.

“The future of agriculture depends on the financial success of young and beginning producers, and the diversity of the agricultural products we enjoy depends in part on the financial success of small producers,” Custer said. “As baby boomers retire from farming, this is a good opportunity for the next generation to begin talking with their families.”

With lower commodity prices and rising input costs, many young or beginning farmers along with some small farmers find it very difficult to budget a profit, he said.

“We’ll work with producers to help them with their balance sheets and enterprise financial planning to help them determine which parts of their enterprise is profitable to expand in their business plan and which isn’t profitable,” Custer said. “Based on that, they can decide if the enterprise is something they want to continue to do or if they’d need to reduce or end the enterprise that isn’t profitable.”

The farm management school, which runs Jan. 7, 14, 21, 28 and Feb. 4 for two hours each night, is taught by OSU Extension educators and specialists. The workshop will be held at Andersons Marathon Ethanol, 5728 Sebring Warner Road in Greenville, Ohio.

Topics will include:

Jan. 7:

  • What Is the Mission of Your Farming Operation?
  • Making Record Keeping Do More Than the Tax Return

Jan. 14:·

  • Developing Your Balance Sheet
  • Basics of Finance

Jan. 21

  • Developing Your Business Plan

Jan. 28

  • Farm Transition Planning

Feb. 4

  • Ag Law 101

The farm management school is sponsored by Farm Credit Mid-America.

Registration for the workshop series is $50 and includes the program, handouts and refreshments. Contact Custer at 937-548-5215 for more information or a registration form. The deadline to register is Dec. 21. Payment can be sent to OSU Extension, Darke County, 603 Wagner Ave., Greenville, Ohio 45331.

 

Writer(s):

Tracy Turner
614-688-1067
turner.490@osu.edu

Source(s):

Sam Custer
937-548-5215
custer.2@osu.edu

Develop Written Farmland Lease Agreements

by Rory Lewandowski, Extension Educator Wayne County

One piece of business that can be taken care of in the fall after harvest is completed is securing a cropland lease or rental agreement for the 2016 season. The purpose of this article is not to talk about what that rental price is, but rather the format of that agreement and lease/rental conditions included in that agreement.

A surprising number of cropland rental or lease agreements are nothing more than a verbal agreement. If you ask any agricultural law attorney they will tell you that lease agreements should be put in writing. According to Ohio’s “Statute of Frauds” a lease needs to be in writing and signed to be enforceable in a court of law. Of course very few, if any, persons enter a lease agreement intending to end up in court and many verbal agreements do work to the satisfaction of both parties. There are good reasons to put lease agreements in writing beyond the question of legal enforceability.

A written agreement reduces risk and supplies certainty. The rental price per acre is just one part of a lease agreement. A written agreement should also lay out other important provisions such as the duration of the lease, when and how a lease is renewed, termination notice, payment provisions, conservation practices, can the tenant apply fall inputs, property maintenance, and dealing with improvements such as tiling. Some other questions that can be considered in a written lease include:

  • Does property transfer terminate the lease?
  • Does the death of either party terminate the lease?
  • Can a tenant recoup expenses for tillage, nutrients, seed, cover crops or even a portion of a hay crop if those expenses were incurred before the landowner terminates the lease?

Some of these questions are not easy questions to ask or to consider, but they are questions developed from real life examples that caused disputes, and in some cases, legal action. It is easier to ask these questions and work through terms in a written agreement beforehand than relying upon good will and cooler heads to prevail when these situations arise.

The basic components of a legal, written lease agreement include a legal description, address and acreage of the land parcel, signature of all landowners and the tenant, any lease over 3 years must be acknowledged, preferably with a notary or official to certify signatures, and finally, the lease must be recorded in the county where the land exists. Ohio law does allow lease parties to file a shortened, “memorandum of lease” that only requires the names and addresses of the agreement parties, a legal description of the land, lease period and rights of renewal without having to reveal any other details or provisions of the lease.

Written lease agreements protect both the landowner and the tenant, remove the burden of trusting our memories, clarify terms and conditions and may prevent legal and relationship problems from arising. Resources and examples of written farm leases can be found on the North Central Farm Management Extension web site at: http://aglease101.org/ . For more information about cropland leases contact a member of the OSU Extension Ag Manager team; a team directory can be found on the web site at: http://ohioagmanager.osu.edu/ .

 

References used in this article:

Protecting Interests in a Verbal Farm Lease Situation, Peggy Hall, OSU Extension Agricultural and Resource Law, Law Bulletin January 2014 (http://aglaw.osu.edu/our-library/farm-leasing-law)

Creating an Enforceable Farm Lease, Peggy Hall, OSU Extension Agricultural and Resource Law, Law Bulletin January 2014 (http://aglaw.osu.edu/our-library/farm-leasing-law)

Western Ohio Cropland Values and Cash Rents 2014-15

By: Barry Ward, Leader, Production Business Management, Department of Agricultural, Environmental and Development Economics (AEDE)

Ohio cropland varies significantly in its production capabilities and cropland values and cash rents vary widely throughout the state. Generally speaking, western Ohio cropland values and cash rents differ from much of southern and eastern Ohio cropland values and cash rents. This is due to a number of factors including land productivity and potential crop return, the variability of those crop returns, field size and shape, drainage, population density, ease of access, market access, local market prices, potential for wildlife damage, field perimeter characteristics and competition for rented cropland in a region.

Western Ohio cropland values and cash rental rates are projected to decrease in 2015 due in large part to continued low to negative profit margin prospects for Ohio’s three major row crops (corn, soybeans and wheat). According to the Western Ohio Cropland Values and Cash Rents Survey, bare cropland values are expected to decrease from 5.2% to 11.9% in 2015 depending on the region and land class. Cash rents are expected to decrease from 6.2% to 8.5% depending on the region and land class.

The “Western Ohio Cropland Values and Cash Rents” study was conducted from February through May in 2015. The study is an opinion based survey surveying professionals with a knowledge of Ohio’s cropland values and rental rates. Surveyed groups include farm managers, rural appraisers, agricultural lenders, OSU Extension educators, farmers, landowners, and Farm Service Agency personnel.

When interpreting this summary of survey results please be aware that results will differ widely within a region and it will be useful to consider the ranges that are listed in the tables as you consider how your parcels may compare. It is also important to stress that land in a given region does not fall neatly into thirds of each land quality class (average, top and poor). There will likely be very little acreage in a given county or region that will fall into the “top” land category. Top land will typically be large tracts of land with highly productive soils. “Average” land will typically make up the majority of land in a given region or county while “poor” land will tend to be land with lower productivity soils, steep slopes, poor drainage, or come in smaller tracts (or a combination of these).

To access the complete summary go to:

http://aede.osu.edu/about-us/publications/western-ohio-cropland-values-and-cash-rents-2014-15

 

 

Ohio Corn and Soybean Enterprise Budgets Project Slightly Lower Costs But Low to Negative Returns

By:  Barry Ward, Leader, Production Business Management, Department of Agricultural, Environmental, and Development Economics

Production costs for Ohio field crops may be flat to slightly lower in 2015 but the profit picture looks poor, much the same as it did 2014. Variable costs for trend line Ohio corn and soybean production for 2015 will be slightly lower than 2014. Variable costs for corn (163 bushels per acre) for 2015 are projected to be $412 per acre. Variable costs for 2015 Ohio soybeans (48 bushels per acre) are projected to be $210 per acre. Lower energy and crop insurance costs and zero to slight increases for many other inputs have led to the slightly lower production cost projections for Ohio’s two major commodity crops.

With continued lower crop prices expected for 2015 returns will likely be low to negative for many producers. Projected returns above variable costs (contribution margin) range from $138 to $272 per acre for corn and $236 to $439 per acre for soybeans. (This is assuming fall cash prices of $3.65 per bushel for corn and $9 per bushel for soybeans which are both higher than present prices.)

Returns to land for Ohio corn (Gross Revenue minus all costs except land cost) are projected to range from -$86 to $35/acre in 2015 depending on land production capabilities. Returns to land for Ohio soybeans are expected to range from -$10 to $132 per acre depending on land production capabilities.

Total costs projected for trend line corn production in Ohio are estimated to be $847 per acre. This includes all variable costs as well as fixed machinery, labor, management and land costs. Fixed machinery costs of $130 per acre include depreciation, interest, insurance and housing. A land charge of $205 per acre is based on data from the Western Ohio Cropland Values and Cash Rents Survey Summary. Labor and management costs combined are calculated at $76 per acre. Returns Above Total Costs for trend line corn production are negative at -$230 per acre.

Total costs projected for trend line soybean production in Ohio are estimated to be $592 per acre. (Fixed machinery costs – $108 per acre, land charge – $205 per acre, labor and management costs combined – $57 per acre.) Returns Above Total Costs for trend line soybean production are also negative at -$143 per acre.

These projections are based on OSU Extension Ohio Crop Enterprise Budgets. Newly updated Enterprise Budgets for 2015 have been completed and posted to the Farm Management Website of the Department of Agricultural, Environmental and Development Economics. Updated Enterprise Budgets can be viewed and downloaded from the following website:

http://aede.osu.edu/research/osu-farm-management/enterprise-budgets