Where Are We Headed on Global Food Prices?  

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 Current Forecast

Recent forecasts by the International Monetary Fund (IMF) (World Economic Outlook, October 2022) and others (Bloomberg News, November 15, 2022) suggest the rate of food price inflation will continue to decline as we head into 2023.  As already well-documented, global food commodity prices surged after Russia’s invasion of Ukraine, reaching a record high in March, prices then correcting to their pre-war levels in June and July.  This correction has been driven by improved supply conditions, partly due to the UN-Turkish brokered agreement to allow Ukrainian grain exports from the Black Sea, as well as macroeconomic factors, including rising interest rates and expectations of a global recession.

The IMF estimates food commodity prices added 5 percentage points to the average country’s food price inflation in 2021 and are forecast to add 6 percentage points in 2022, declining to 2 percentage points in 2023.  The upward trajectory in food prices between April 2020 and May 2022 was driven by a combination of supply-side factors:  the 2020-22 La Nińa weather event, food trade restrictions, grain demand by China, low interest rates, and of course the Russian invasion of Ukraine.

Despite the more positive outlook on food prices, there are still upside risks, including continued use of commodity export restrictions, weather events, higher fertilizer prices, and uncertainty due to the war in Ukraine.  Worldwide, consumers have been affected by higher food and energy prices, but the impact has been particularly acute in emerging economies.  For example, the average household in Ghana is paying two-thirds more than it did last year for diesel, flour, and other necessities, with other countries such as Sri Lanka, Pakistan, and Egypt seeing comparable increases (New York Times, October 5, 2002).  To put this in context, food prices facing US consumers are currently 11 percent higher than they were a year ago (USDA, Economic Research Service, Food Price Outlook, October 2022), although this increase has been driven more by increased food spending at home and supply chain costs than rising commodity prices (Federal Reserve Bank of Kansas City, Economic Bulletin, September 23, 2022).

These price increases have been exacerbated by appreciation of the US dollar, which is the strongest it has been for two decades, globally traded commodities such as wheat and oil being priced in dollars (New York Times, October 5, 2022).  In addition, with a large proportion of emerging economy debt being denominated in dollars, there is real concern about the possibility of a sovereign debt crisis, countries such as Egypt and Kenya being pushed closer to default, while others such as Sri Lanka have already defaulted (New York Times, September 26, 2022).

The Black Sea Grain Export Deal

Key to reducing pressure on food prices is continuation of the grain export deal signed by Ukraine, Turkey, Russia, and the United Nations (UN) on July 22 (USDA, Foreign Agricultural Service, Grain: World Markets and Trade, August 2022).  The deal, due to expire on November 19, has been extended for an additional four months, with Turkey and the UN remaining as guarantors of the initiative (Reuters, November 17, 2022) (see figure).

Announcement of the deal provoked immediate 2.75 and 1.3 percent price declines in wheat and corn futures prices respectively on the Chicago Board of Trade (Reuters, November 17, 2022).  However, Russia’s temporary withdrawal from and subsequent rejoining of the agreement in late-October/early-November led to sharp changes in wheat prices, underlying the ongoing potential for price volatility in grain markets.  Russia initially stated it was abandoning the deal on October 29 (Financial Times, October 29, 2022), but then rejoined on November 2 (Financial Times, November 2), wheat futures prices rising to $9.00 per bushel, and then reversing to $8.53 per bushel (Bloomberg, November 2, 2022).

The possibility of Russia leaving the agreement was being discussed throughout October, official statements indicating that extension of the deal was dependent on the West easing constraints on Russian exports of grain and fertilizers (Reuters, October 17, 2022).  While extension of the deal is a positive move, it is less than the one-year sought by Ukraine, plus they had also requested the deal be expanded to include additional ports in the Mykolayiv region (Financial Times, November 17, 2022).  It should be noted that, even with the deal in place, Ukrainian grain exports remain below their 2021 levels (see figure).

Looking Forward

Looking forward, the IMF argues it will be important for appropriate policies to be targeted at minimizing food price volatility, including targeted food aid to vulnerable consumers, and incentives for building up global grain stocks (World Economic Outlook, October 2022).  USDA reports global ending wheat stocks for 2022/23 will be their tightest since 2016/17 but given China accounts for more than 50 percent of these stocks, and their stocks are typically unavailable to the world market, global stocks are currently the lowest since 2007/08 (USDA/Economic Research Service, Wheat Outlook, November 14, 2022).  With stocks at such low levels, there will be continuing pressure on global supplies and prices (Bloomberg, November 15, 2022).

With the grain and oilseed harvest in the United States being close to completion, much will depend on the extent of planting and harvests in Argentina and Brazil (Bloomberg, November 15, 2022).   However, there is a growing need to solve an increasing gap between growth in global consumption and grain and oilseed yields (Zulauf, farmdocdaily, November 16, 2022).  There are two possible responses to this gap: either more land in production or increased yield growth.  Global harvested land has increased by only 0.9 percent since 2002, 22 million acres being currently needed per year, while stability of yield growth since 1980 suggests a significant increase is very unlikely (Fuglie, Applied Economic Perspectives and Policy, 2018).  Economic logic suggests only higher food prices can curb consumption growth and ration existing food supply, with obvious implications for low-income consumers.

The situations described above reinforce the fact that agriculture functions in a global market, with many factors influencing income and expenses.  Ohio farmers must remain aware of global forces impacting markets, analyze their financial position, and develop plans and alternatives to those plans to be positioned to act accordingly.

Farmers are encouraged to meet with their lender, input suppliers, Extension professional, and other trusted advisors to analyze and plan.  The following OSU Extension resources can assist in the process:

Farm Office:  https://farmoffice.osu.edu/

Ohio Farm Business Analysis & Benchmarking Program: https://farmprofitability.osu.edu/

Ohio Farm Enterprise Budgets:  https://farmoffice.osu.edu/farm-management/enterprise-budgets

Ohio Ag Manager: https://u.osu.edu/ohioagmanager/


Farm Service Agency Microloan Program: An Opportunity for New, Niche, & Small Farmers

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

Housed in the U.S. Department of Agriculture (USDA), the Farm Service Agency (FSA) provides loan opportunities for agricultural producers.  Microloans were developed for and are available to better serve the unique financial needs of new, niche, and small to mid-sized farm operations.

Microloan Types

There are two types of microloans available through FSA: Farm Operating Loans and Farm Ownership Loans.  Specifics about each are provided below.

Operating microloans can be used for all approved operating expenses, including but not limited to: start-up expenses; annual expenses such as seed, fertilizer, utilities, land rent, marketing costs, family living expenses, purchase of livestock or equipment, minor improvement costs, hoop houses, tools, irrigation, and delivery vehicles.

Ownership microloans can be used for FSA Farm Ownership Loan approved expenses, such as the purchase of land or a farm, construction of new buildings, improvements to existing buildings, pay closing costs, and implement conservation practices.

Application Process

FSA has simplified the application process.  Requirements for management experience and loan security have been made to accommodate veterans, smaller farms, and beginning farmers.  Details about the operating loans and ownership loans include the following.

Those applying for a microloan operating loan will need to have some farm experience; however, FSA will consider small business experience or self-guided apprenticeships.  The apprenticeships will provide an opportunity to gain farm management experience while working with a mentor.

For the farm ownership microloan, applicants need to have farm experience three of the last 10 years prior to the application being submitted.  One of the years can be substituted with any of the following experience:

  • At least 16 semester hours of post-secondary education in ag-business, horticulture, animal science, agronomy, or agriculture-related fields.
  • At least one year of management experience in a non-ag-related field.
  • Military leadership and management.
  • Successful repayment of an FSA youth loan may partially satisfy the experience requirement.

Security Requirements

A first lien on farm property or agricultural products having a security value of at least 100 percent of the microloan amount is required for operating microloans for annual operating expenses.  Ownership microloans are secured by the real estate being purchased or improved.  The value of the real estate must be at least 100 percent of the loan amount.

Rates and Terms

Farm ownership loans and farm operating loans are available up to $50,000 for each, with a maximum loan amount of $100,000.  Repayment terms for operating microloans vary and will not exceed seven years.  Annual operating loans are repaid within 12 months or when products are sold.  Interest rates are based on regular FSA operating loan rates.

Repayment terms for farm ownership loans vary, but do not exceed 25 years.  Interest rates are based on regular FSA operating loan rates.

Who is Eligible?

An applicant must not be larger than a family-sized farmer, have satisfactory credit history, be unable to credit elsewhere at a reasonable rate, and meet all other eligibility requirements.

What Happened After the Loan Application is Submitted?

FSA will review the application to determine whether the applicant meets the qualifications and is eligible for the loan.  Applicants receive written notification during each step of the process.  Upon approval, FSA will make the loan funds available as needed.  If denied, applicants are notified in writing of the specific reasons for the denial and provided reconsideration and appeal rights.

How to Apply

Microloan applications are available from the local FSA office or can be printed from the USDA website at: https://www.farmers.gov/loans.  Not sure where your local FSA office is located?  Click this website: https://www.farmers.gov/working-with-us/service-center-locator.

AEDE Outlook and Policy Conference 2022/23 Recap

 The Department of Agricultural, Environmental, and Development Economics (AEDE), held its first in-person Outlook and Policy Conference since 2019 on November 15, 2022, at the 4-H Center on Ohio State Campus.  Below are brief summaries of what each speaker presented, along with copies of their presentations.

Energy Market Outlook (Brent Sohngen):

This presentation examined current trends in energy markets, focusing on factors affecting the supply and demand of oil, natural gas, and renewable energy. These factors include global supply considerations related to OPEC, the Russian invasion of Ukraine and resulting economic sanctions, and US energy policy.  Critical US and Ohio energy policies and their effects on market outcomes in energy markets were examined, with respect to recent legislation related to renewable energy sources. The global demand situation also plays a critical role in energy markets and were examined. Finally, the presentation also considered how widespread net zero commitments by many private companies could influence the future evolution of energy markets domestically and internationally. Energy Market Presentation

Ohio Farm Income Outlook (Ani Katchova):

 The presentation showed how the financial outlook for Ohio farms relative to the US and the Midwest region is based on three main aspects of the agricultural economy: farm income, farm assets and financial stress, and agricultural loans and delinquencies. Farm incomes are expected to increase in 2022 attributable to higher cash receipts despite lower expected government payments and higher production expenses.  The rise in inflation and interest rates makes land a rather attractive investment and farmland prices and cash rents are both anticipated to increase this year. In the long run, farm incomes are expected to experience decreases for the next 2-3 years and then remain relatively stable. Despite the current challenges farmers are facing, farm balance sheets are expected to be stronger with a potential decrease in inflation adjusted farm debt in 2022, which, if realized, would be the first decrease since 2012. Therefore, solvency for both US and Ohio farms are expected to improve this year while Ohio farmers are still struggling with profitability, whereas the US and the Midwest farms outperform Ohio farms with higher returns. Finally, agricultural loan demand was higher for the US last year, while it fell for Ohio. Rising interest rates are expected to decrease the agricultural loan volume this year. Loan delinquency rates have remained consistently lower for Ohio farms compared to the national average in the recent past, and this year is no exception.  Farm Income Presentation

 Labor Market Outlook (Margaret Jodlowski):

 The labor market has experienced significant disruption since the start of the Covid-19 pandemic. While some industries moved toward recovery, the workers in agriculture and agriculture-adjacent subsectors remain difficult to find and retain. This presentation covered the current state of the labor market, both in Ohio and nationally, with a specific focus on the agricultural value chain. Projections will also be provided for the employment situation for the next year, targeting wages as well as availability of employees for firms in various subsectors of the economy. Ohio, along with many neighboring states, has experienced a dramatic increase in the number of H-2A visa workers; the presentation also discussed these trends in terms of what they imply about the future availability of on-farm workers. There was also a short update on the status and implications of labor-related policies that are currently on the horizon.

Labor Market Presentation

International Economic Outlook (Ian Sheldon):

This presentation outlined how the international economic outlook can be characterized by four key factors:  inflation is at a multidecade high, Russia’s invasion of Ukraine, the ongoing effects of the pandemic, and weather events in Europe and elsewhere.  In this environment, the presentation laid out current forecasts for lower global growth, reduced inflation, and trade, and how key downside risks such as macroeconomic policy divergence and mistakes, appreciation of the dollar, and the ongoing war in Ukraine, might negatively influence the global economic outlook.  Global Economic Presentation

 Inflation and Macroeconomic Outlook (Mark Partridge):

 Inflation, recession, high interest rates, war, elections, the economy’s recovery from COVID-19 has been a bumpy ride. The Outlook for 2023 is unsurprisingly uncertain. Particularly the commitment of the Federal Reserve to eliminating inflation at any cost is unknown and the course of geopolitical events has been especially unpredictable. The presentation discussed what the tea leaves say about the economy and provided guidance about the risks facing the economy. Macroeconomic Presentation

Grain Market Outlook (Seungki Lee):

 The grain market outlook focused on corn and soybeans, reflecting the significance of these commodities in Ohio agriculture. The presentation covered supply updates and demand forecasts for the 2022-2023 season, based on the November WASDE report. At the beginning, price indices were presented to provide an overview of market circumstances. As harvest season is almost over, USDA’s prospects on demand shifters such as corn feed, ethanol use, exports were highlighted and discussed in detail. Additionally, several potential wild cards – e.g., fertilizer prices, crop progress in Brazil, etc. – that could shake up the market and change the forecasts were discussed.  Grain Market Presentation




Farm Service Agency Loans for Beginning & Established Farmers: An Overview

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

The Farm Service Agency (FSA) is housed within the U.S. Department of Agriculture (USDA) and offers a variety of loan programs.  The goal of FSA loans is to help farmers obtain credit from commercial lenders.  The various FSA loan options are discussed in this article.

Direct Farm Loans

Designed to help farmers start, purchase, or expand a farming operation.  This includes beginning farmers who have limited financial history to obtain commercial credit and those who experience a financial hurdle because of natural disasters.

Guaranteed Farm Loans

These loans are serviced by commercial lenders (banks, Farm Credit System, or credit unions) and are available to farmers who wouldn’t qualify for financing directly from a commercial lender.  FSA guarantees between 90 percent and 95 percent of the loan against loss.  The loan is serviced by a commercial lender.

Farm Ownership Loans

These can be used to purchase a farm, expand an existing farm, construct new buildings or improve existing structures, pay closing costs, and implement soil and water conservation practices.  A maximum of $600,000 is available as a direct loan.  FSA guarantees farm ownership loans to a maximum of $1,825,000, with a maximum repayment period of 40 years.

Farm Operating Loans

These direct loans are available to a maximum of $400,000 and can be used for operating expenses, machinery and equipment, minor real estate repairs or improvements, and to refinance debt.  FSA will guarantee these loans up to a maximum of $1,825,000 with repayments terms up to seven years.

As the name implies, annual operating loans are generally paid within 12 months or upon the sale of the commodities produced.  Direct operating loans require applicants to have sufficient education, training, or at least one year of farm management experience in the last five years.

Down Payment Program

This program is designed to assist socially disadvantaged and beginning farmers purchase a farm and includes the following requirements:

  • Cash down payment of at least five percent of the purchase price.
  • Maximum loan amount does not exceed 45 percent of the far, the appraised value of the farm to be acquired or $667,000. This equals a maximum loan amount of $300,150.
  • Repayment term is a maximum of 20 years.
  • Interest rate is four percent below the direct farm ownership rate, but no less than 1.5 percent.
  • Remaining balance from commercial lender or private party. FSA can provide up to a 95 percent guarantee.
  • Lenders participating must have an amortization period of no less than 30 years and cannot require a balloon payment in the first 20 years of the loan.

Youth Loans 

Young people involved in 4-H, FFA, or similar agricultural organizations may apply for direct loans with a maximum amount of $5,000.  The loan must provide an opportunity for the applicant to acquire education and experience in agriculture-related skills.  Youth loans are available to anyone between the ages of 10 and 20 at the time of loan closing.

Emergency Loans

Farmers who experience loss as the result of a natural disaster may apply for these loans.  The county or counties where the farm is located must be declared a disaster area by the President or Secretary of Agriculture.  For production loss loans, applicants must document a 30 percent loss in a single enterprise.  Emergency loans are available only as direct loans from FSA with a maximum loan amount of $500,000.

Conservation Loans

These loans are designed to assist farmers with the implementation of conservation practices included in a USDA approved conservation plan or Forestry Management Plan.  The maximum loan amount is $1,825,000 with a maximum repayment term of 30 years.  Conservation loans are available only as guaranteed loans.

 Beginning & Socially Disadvantaged Farmers

Congress provides a percentage of money each year specifically for beginning and socially disadvantaged farmers to assist with farm ownership and farm operating loans.  The maximum loan amount is $300,150.

Land Contract Guarantees

Beginning or socially disadvantaged farmers have an opportunity to apply for financial guarantees for land sale contracts.  The seller may request either of the following:

  • Prompt Payment Guarantee – a guarantee up to the amount of three amortized annual installments plus the cost of related real estate taxes and insurance.
  • Standard Guarantee – a guarantee up to 90 percent of the outstanding principal balance under the land contract.

The purchase price may not exceed the lesser of $500,000 or the market value and the borrower must provide a minimum down payment of five percent of the purchase price.  The interest rate is fixed at a rate not to exceed the direct farm ownership interest rate in effect at the time of guarantee, plus three percentage points.  The guarantee period is 10 years and contract payments must be amortized over a minimum of 20 years.  Balloon payments are not allowed during the first 10 years of the guarantee.

Locating Your FSA Office

If you are interested in additional information about FSA loan programs, contact your local FSA office.  Contact information is available here:  https://www.farmers.gov/working-with-us/service-center-locator.


Dairy Margin Coverage- A 2023 Risk Management Tool

by Jason Hartschuh, Field Specialist. Dairy Management and Precision Livestock

Originally written for Farm & Dairy Newsletter

The Dairy margin coverage, DMC, program through the Farm Service Agency sign up is ongoing through December 9, 2023. DMC has payouts when the margin between the all-milk price and the DMC feed cost falls below the selected protection level of $4-9.50/cwt.

Now is the time to consider if this program will improve your risk management in 2023. For the current year, 2022, 73.17 percent of Ohio dairy farms signed up for some level of coverage. While the first half of 2022 had strong margins well above $9.50/cwt, margins but fell below the $9.50/cwt level in August to $8.08/cwt and in September was $8.62/cwt. Current forecast, are for DMC to have possible payouts for the rest of 2022. These lower margins are predicted to continue into 2023.

With margin payouts currently forecast for all of 2023 reviewing the DMC program could be beneficial for your operations bottom line. Table one shows the current forecasted all milk price, feed price, and the forecasted DMC margin for each month of 2023 from the Dairy margin decision tool. The forecasted all milk price has a high of $22.13/cwt in January and bottoms out at $21.52/cwt in July with a yearly average of $21.80/cwt. At the same time forecasted average yearly feed cost is $13.68/cwt reaching its highest in January at $14.57/cwt and its lowest really depends on next year’s crop but is currently seen in December at $12.97/cwt. After reviewing these milk and feed cost forecast the margin forecast between the two ranges from $7.56-8.98/cwt. After reviewing table 1 you can start to make informed decisions about what level of margin coverage to utilize.

Table 1

Jan $22.13 $6.47 $329 $424.44 $14.57 $7.56
Feb $22.06 $6.42 $329 $417.91 $14.47 $7.59
Mar $21.98 $6.40 $306 $412.49 $14.09 $7.89
Apr $21.79 $6.38 $293 $410.08 $13.87 $7.92
May $21.58 $6.36 $293 $407.18 $13.83 $7.75
Jun $21.56 $6.32 $287 $405.77 $13.69 $7.87
Jul $21.52 $6.29 $284 $405.36 $13.62 $7.90
Aug $21.62 $6.18 $284 $404.01 $13.49 $8.13
Sep $21.69 $6.04 $282 $400.28 $13.28 $8.41
Oct $21.74 $5.93 $281 $394.60 $13.10 $8.64
Nov $21.93 $5.86 $291 $390.70 $13.14 $8.79
Dec $21.95 $5.77 $285 $391.33 $12.97 $8.98
2023 $21.80 $6.20 $295.22 $405.35 $13.68 $8.12

October 25, 2022 margin forecast from dmc.dairymarkets.org

DMC, is a two tiered program with you needing to make decision on your production history below 5 million pounds, separate from your production above 5 million pounds. The premium cost for the first 5 million pounds is much more reasonable with the $9.50/cwt coverage level costing $0.15 per cwt. With the current forecast on 5 million pounds of coverage the producer premium is about $7,481 but the net total payout is about $68,884. The premium cost is covered by the first two months’ payout.

For production over 5 million pounds the maximum coverage is $8.00/cwt but the premium is $1.813/cwt. This coverage needs thought about carefully. While there are multiple months below the $8.00 margin level, the margin does not currently appear to fall low enough to cover the cost of the premium for production over 5 million pounds. Meaning you may only want to use the $4.00 margin coverage that does not have a premium or maybe the $5.00 margin which has a premium of $0.005 per cwt in case the margin gets even worse for production history over 5 million pounds. Remember this is only a forecast hopefully milk price improves and so does income over feed cost margins so that the program doesn’t have payouts for all of 2023.

DMC, program does allow producers to participate in the other subsidized risk management program that are administered through USDA-RMA. Those programs include the Dairy Revenue Protection program which allows producers to use a Class III, Class IV or Component blend futures-based program to set a floor under their milk price by quarter. Another program more like DMC is Livestock Gross Margin-Dairy that allows producers to use class III milk, corn, and soybean meal futures to lock in a margin above feed cost. These programs are available to all producer regardless of pounds of milk shipped per month but could be a much better option for production over 5 million pounds.

Join OSU Extension for Annie’s Project series this fall in Chillicothe, OH in Ross County.

Annie’s Project is an educational program dedicated to strengthening women’s roles in modern farm enterprises.

This 6-week workshop focuses on five key areas of risk management: human, financial, marketing, production, and legal. Women learn about argi-business practices from experts in their fields. They also form valuable networks with others in the class.

Registration http://go.osu.edu/rossannies2022
Cost is $75.00 per person
Registration deadline is October 24, 2022


Session 1: October 27, Rm D

  • Welcome and Introductions
    •Real Colors Personality Test
    •Intro to Risk Management

Session 2: October 31, Rm C

  • Identifying & Managing Legal Liability on the Farm

Session 3: November 3, Rm D

  • Direct Marketing
    •Social Media Presence
    •Overview of Rules & Regs
    •Commodity Marketing
    •Knowing Your Production Costs
    •Different Marketing Tools

Session 4 November 7, Rm D

  • Record Keeping
    •Financial Statements
    •Budgeting & Benchmarking

Session 5: November 10, Rm D

  • Communication and Stress
    •Grandma’s Yellow Pie Plate
    •Estate Planning Strategies

Session 6: November 17, Rm D

  • Farm Services Agency
    •Natural Resources Conservation Service
    •Soil and Water Conservation District
    •Crop Insurance

Event Sponsors

Kingston National Bank
Farm Credit Services of Mid America
Atomic Credit Union
LCNB National Bank



Social Security Announces 8.7 Percent Benefit Increase for 2023

Source: Social Security Administration.

News Release: October 13, 2022

Social Security and Supplemental Security Income (SSI) benefits for approximately 70 million Americans will increase 8.7 percent in 2023, the Social Security Administration announced today. On average, Social Security benefits will increase by more than $140 per month starting in January.

The 8.7 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 65 million Social Security beneficiaries in January 2023. Increased payments to more than 7 million SSI beneficiaries will begin on December 30, 2022. (Note: some people receive both Social Security and SSI benefits). The Social Security Act ties the annual COLA to the increase in the Consumer Price Index as determined by the Department of Labor’s Bureau of Labor Statistics.

“Medicare premiums are going down and Social Security benefits are going up in 2023, which will give seniors more peace of mind and breathing room. This year’s substantial Social Security cost-of-living adjustment is the first time in over a decade that Medicare premiums are not rising and shows that we can provide more support to older Americans who count on the benefits they have earned,” Acting Commissioner Kilolo Kijakazi said.

To view a COLA message from Acting Commissioner Kijakazi, please visit www.youtube.com/watch?v=Vgm5q4YT1AM.

Some other adjustments that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $160,200 from $147,000.

Social Security and SSI beneficiaries are normally notified by mail starting in early December about their new benefit amount. The fastest way to find out their new benefit amount is to access their personal my Social Security account to view the COLA notice online. It’s secure, easy, and people find out before the mail arrives. People can also opt to receive a text or email alert when there is a new message from Social Security–such as their COLA notice–waiting for them, rather than receiving a letter in the mail. People may create or access their my Social Security account online at www.ssa.gov/myaccount.

Information about Medicare changes for 2023 is available at www.medicare.gov. For Social Security beneficiaries enrolled in Medicare, their new higher 2023 benefit amount will be available in December through the mailed COLA notice and my Social Security’s Message Center.

Cost-of-Living Adjustment (COLA) Information for 2023

Social Security and Supplemental Security Income (SSI) benefits for approximately 70 million Americans will increase 8.7 percent in 2023.

The 8.7 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 65 million Social Security beneficiaries in January 2023. Increased payments to more than 7 million SSI beneficiaries will begin on December 30, 2022. (Note: some people receive both Social Security and SSI benefits)

Read more about the Social Security Cost-of-Living adjustment for 2023.

The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $160,200.

The earnings limit for workers who are younger than “full” retirement age (see Full Retirement Age Chart) will increase to $21,240. (We deduct $1 from benefits for each $2 earned over $21,240.)

The earnings limit for people reaching their “full” retirement age in 2023 will increase to $56,520. (We deduct $1 from benefits for each $3 earned over $56,520 until the month the worker turns “full” retirement age.)

There is no limit on earnings for workers who are “full” retirement age or older for the entire year.

Read more about the COLA, tax, benefit and earning amounts for 2023.


Financial Analysis and Performance of Ohio Farms

By: Professor Ani Katchova, Farm Income Enhancement Chair, and PhD students Rabail Chandio, Kexin Ding, Xiaoyi Fang, Zhining Sun, and Haotian Wu, Department of Agricultural, Environmental, and Development Economics (AEDE), The Ohio State University

The Farm Income Enhancement Program in the Department of Agricultural, Environmental, and Development Economics, at the Ohio State University led by Ani Katchova (Professor and Farm Income Enhancement Chair) evaluated the financial performance of Ohio farms with regard to crop production, farm operation benchmarking, and financial management. Included here are the statistics, trends, and expectations about crop production, profitability, liquidity, solvency, and capacity to repay the debt of farms. Ohio farms’ financial performance is also compared to that of farms in the Midwest and the entire U.S.

Ohio Crop Production and Farm Operation Benchmarking

A farmer growing corn in Ohio had on average 213 acres of land while a farmer growing soybeans had over 263 acres in 2020, according to data collected by the Ohio Farm Business Analysis and Benchmarking Program. Despite slightly smaller farm sizes for corn producers, they had a higher average gross return than soybean producers. However, corn producers had higher direct expenses per acre and higher total overhead expenses per acre, especially with corn fertilizer expenses being three times higher than those for soybean producers, which resulted in higher total expenses per acre for corn production. In the end, though corn producers had higher government payments per acre in 2020, they received a much lower net return on labor and management than soybean producers. When comparing the crop production and farm operation statistics between 2020 and 2019, corn and soybean farmers had higher profits in 2020 compared to 2019. The higher income may be attributed to increased government payments in 2020 and a greater average farm production value per hour. On average, most farm operators in Ohio are experienced in farming and middle-aged.

Link to the report: https://aede.osu.edu/sites/aede/files/publication_files/OhioFarmBenchmarking2020.pdf

Ohio Farm Finances

Ohio farms had better financial performance in 2020 in terms of profitability and liquidity, though farm profitability for Ohio farms was generally lower than the national average, according to data collected by the Ohio Farm Business Analysis and Benchmarking Program.  The median net farm income for Ohio farms increased by 121% in 2020 compared to 2019. In addition, short-term farm assets covered 2.60 times short-term farm liabilities at the end of 2020, up from 1.70 times in 2019, indicating improved liquidity for Ohio farms. Considering solvency and debt repayment capacity, Ohio farms also had improved performance in 2020 and better performance than US farms. The average net worth of Ohio farms at market values also increased significantly in 2020. Overall, there was an improvement in Ohio farm profitability from 2018-2020, but farmers should take this positive signal cautiously. Liquidity and solvency for Ohio farms remained at good levels, indicating a strong overall position in terms of their farm financial performance.

Link to the report: https://aede.osu.edu/sites/aede/files/publication_files/OhioFarmFinances2020.pdf

Benchmarking Ohio Farms’ Financial Health

Comparing the performance of Ohio farms to that of farms in the Midwest and the US allows us to consider another dimension of performance evaluation and benchmarking, according to the USDA’s Agricultural Resource Management Survey (ARMS). Using the measure of liquidity, denoted by the current ratio, Ohio farms performed better than farms in the Midwest and the US before the pandemic, but their performance somewhat worsened from 2019 to 2020. However, Ohio farms had still performed above the values categorized as problematic by the Farm Financial Standards Council (FFSC) guidelines. When it comes to solvency, measured by the debt-to-asset ratio, Ohio farms have had historically lower ratios than Midwest farms and slightly higher ratios than all US farms. In 2020, the debt-to-asset ratio for Ohio farms increased but was still within the recommended ranges by the FFSC.   With the overall US farm debt decreasing in 2022, Ohio farms’ performance is expected to be even stronger is terms of solvency in future years.  Lastly, Ohio farms have always struggled in the category of profitability. The measures of rate of return on equity and operating profit margin had been negative for Ohio farms consistently since 2016 because of net losses on the farm. Compared to Ohio, the profitability for US and Midwest farms were only slightly negative in 2019 and have remained positive in other years. Despite that, Ohio, Midwest, and US farms have had profitability in the critical zones according to the FFSC guidelines.

Link to the report: https://aede.osu.edu/sites/aede/files/publication_files/OhioFarmsFinancialsARMS.pdf

Ag Lender Seminars Offered in October

By Wm. Bruce Clevenger, Ken Ford, Grant Davis, Shelby Tedrow, and Frank Becker

Ohio State University Extension has scheduled four seminars in Ohio for Agricultural Lenders. The dates are Tuesday, October 18th in Ottawa, Ohio; Thursday, October 20 in Urbana, Ohio; Thursday, October 20 in Washington Court House, OH, and Friday, October 21st in Wooster, OH.

These seminars are excellent professional development opportunities for Lenders, Farm Service Agency personnel, county Extension Educators and others to learn about OSU Extension research, outreach programs and current agricultural topics of interest across the state.

2022 Topics and Speakers by Location

Ottawa, OH – October 18th, Putnam Co. Educational Service Center, 124 Putman Parkway, Ottawa, OH  45875

  • Farm Service Agency Loan Program Update – Kurt Leber, Northwest Ohio FSA, District Director – Farm Loan and Farm Program
  • Long Term Care Impacts on Farming Operations – Robert Moore, J.D., Ohio State University Extension, Attorney, OSU Agricultural & Resource Law Program
  • Beef and Small Ruminant Enterprise Opportunities – Garth Ruff, Ohio State University Extension, Field Specialist, Beef Cattle
  • Farm Business Analysis with FINPACK and OSUE Farm Office – Clint Schroeder, Ohio State University Extension, Program Coordinator, Farm Business Analysis
  • Examining Land Values, Rents, Crop Input Costs & Margins & New Tax Policy- Barry Ward, Ohio State University Extension, Leader – Production Business Management & Director – OSU Income Tax Schools
  • Ag Commodity Grain Markets: Trends and Prospects – Seungki Lee, PhD, Ohio State University, Dept of Agricultural, Environmental, & Development Economics

Urbana, OH – October 20th, Champaign Co. Community Center Auditorium, 1512 South US Highway 68, Urbana, OH  43078

  • Farm Service Agency Update – Shari Deao, Champaign County Director, FSA
  • Examining Land Values, Rents, Crop Input Costs & Margins in 2023 – Barry Ward, Ohio State University Extension, Leader – Production Business Management & Director – OSU Income Tax Schools
  • Mental Health and the Agriculture Community – Bridget Britton, Behavioral Health Field Specialist, Ag & Natural Resources, Ohio State University Extension
  • Update on Alternative Energy in Ohio – Eric Romich, Energy Development Field Specialist, Ohio State University Extension
  • Long Term Care Impacts on Farming Operations – Robert Moore, J.D., Ohio State University Extension, Attorney, OSU Agricultural & Resource Law Program

Washington Court House, OH – October 20th, Fayette County Agricultural Center, 1415 US Hwy 22 SW, Washington Court House, OH  43160

  • Farm Service Agency Update – Katie Maust, Fayette County Director, FSA
  • Update on Alternative Energy in Ohio – Eric Romich, Ohio State University Extension, Field Specialist Energy Development
  • Long Term Care Impacts on Farming Operations – Robert Moore, J.D., Ohio State University Extension, Attorney, OSU Agricultural & Resource Law Program
  • Examining Land Values, Rents, Crop Input Costs & Margins & New Tax Policy- Barry Ward, Ohio State University Extension, Leader – Production Business Management & Director – OSU Income Tax Schools
  • Mental Health and the Agriculture Community – Bridget Britton, Behavioral Health Field Specialist, Ag & Natural Resources, Ohio State University Extension

Wooster, OH – October 21st, – Buckeye Agricultural Museum, 877 West Old Lincoln Way, Wooster, OH  44691

  • Timber Management – John Kehn, State Service Forester, Ohio Dept of Natural Resources – Division of Forestry
  • Dairy Economics – Jason Hartschuh, Ohio State University Extension, Extension Educator Crawford County
  • Beef and Small Ruminant Enterprise Opportunities – Garth Ruff, Ohio State University Extension, Field Specialist, Beef Cattle
  • Examining Land Values, Rents, Crop Input Costs & Margins & New Tax Policy- Barry Ward, Ohio State University Extension, Leader – Production Business Management & Director – OSU Income Tax Schools
  • Farm Succession Planning – David Marrison, Ohio State University Extension, Extension Educator Coshocton County

The registration cost to attend one of the Ag Lender Seminars is $75.00 and the registration deadline is one week prior to the seminar you are attending. Payments can be made by check by mail or by credit card (by phone only to 419-782-4771). Registration forms are available online at: https://u.osu.edu/aglenderseminars/

Registration questions can be directed to OSU Extension Defiance County 419-782-4771 or email clevenger.10@osu.edu

OSU Extension conducts the seminars from input from Ag Lenders, County Extension Educators and Extension Specialists.  The seminars are designed to provide information that Ag Lenders will use directly with their customers, indirectly within the lending industry, and as professional development for current issues and trends in production agriculture.  OSU Extension has been offering Ag Lenders seminars for nearly 30 years.

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.