Specialty Crops Available for CFAP Funding

by:  Chris Zoller, Extension Educator, ANR Tuscarawas County

The United States Department of Agriculture (USDA) announced earlier this year the Coronavirus Food Assistance Program (CFAP).  Developed earlier this year, CFAP is intended to assist farmers who suffered economic losses as a result of the COVID-19 pandemic. Initial payments were made available to growers of certain non-specialty and specialty crops, dairy, livestock, and wool producers.  On July 9, 2020 USDA announced additional specialty crops eligible for economic assistance.  The list of specialty crops includes:

  • alfalfa sprouts, anise, arugula, basil, bean sprouts, beets, blackberries, Brussels sprouts, celeriac (celery root), chives, cilantro, coconuts, collard greens, dandelion greens, greens (others not listed separately), guava, kale greens, lettuce – including Boston, green leaf, Lolla Rossa, oak leaf green, oak leaf red and red leaf – marjoram, mint, mustard, okra, oregano, parsnips, passion fruit, peas (green), pineapple, pistachios, radicchio, rosemary, sage, savory, sorrel, fresh sugarcane, Swiss chard, thyme and turnip top greens.

The USDA also expanded CARES Act funding for sales losses for seven currently eligible commodities – apples, blueberries, garlic, potatoes, raspberries, tangerines and taro – because USDA found these commodities had a five percent or greater price decline between mid-January and mid-April as a result of the COVID-19 pandemic. Originally, these commodities were only eligible for marketing adjustments.

How to Apply for CFAP

Producers have several options available to apply for CFAP funding:

  • The online portal, accessible at farmers.gov/cfap, allows producers with secure USDA login credentials—known as eAuthentication—to certify eligible commodities online, digitally sign applications and submit directly to the local USDA Service Center.
  • Complete the application form using the Farm Service Agency CFAP Application Generator and Payment Calculator found at farmers.gov/cfap. This Excel workbook allows customers to input operation specific to populate the printable application form. The application form needs to be signed and submitted to a USDA Service Center.
  • Download the AD-3114 application form from farmers.gov/cfap and manually complete the form to submit to a USDA Service Center by mail, electronically or by hand delivery to an office drop box. In some limited cases, the office may be open for in-person business by appointment.

Where to Apply for CFAP Funding

Eligible growers need to contact their local Farm Service Agency (FSA) office.  Visit farmers.gov/coronavirus/service-center-status  to check the status of your local FSA office.   New customers seeking one-on-one support with the CFAP application process can call 877-508-8364 to speak directly with a USDA employee ready to offer general assistance. This is a recommended first step before a producer engages the team at the FSA county office at their local USDA Service Center.  If you have been enrolled in previous FSA programs, you may contact your local FSA office to discuss CFAP program eligibility and begin the enrollment process.

Additional Information

If you are interested in learning more about CFAP for specialty crops, please visit https://www.farmers.gov/cfap/specialty.

OSU Income Tax Schools Summer Update Federal Income Tax & Financial Update Webinar

by: Barry Ward, Director, OSU income Tax Schools

 Significant tax related changes as a result of the new legislation passed in response COVID-19 have created some questions and perhaps consternation over the past few months as taxpayers and tax professionals wrestle with how these many changes may affect tax returns this year and beyond. OSU Income Tax Schools is offering a Summer Update to address these issues and other important information for tax professionals and taxpayers.

The OSU Income Tax Schools Summer Update: Federal Income Tax & Financial Update Webinar is scheduled for August 13th and will be presented as a webinar using the Zoom platform.

John Lawrence, CPA, will teach the course that offers continuing education credits for tax professionals and attorneys. Mr. Lawrence has taught at OSU Extension tax schools for over 20 years and developed this curriculum. He retired from the IRS in 2006 and has since run his own firm in Lawrence, Indiana and Wooster, Ohio.

Webinar Content:

New tax provisions implemented by the CARES Act and Families First Coronavirus Response Act and how to account for them such as the new net operating loss rules, the payroll tax credit, etc. Paycheck Protection Program Loan Issues: loan applications, forgiveness issues and the IRS ruling on loan expenditures that are forgiven under PPP are not tax deductible and how to account for them in preparing a return, etc.

Dealing with the IRS in these difficult times.  Also, what it means to the practitioner as to “dos” and don’ts” regarding the announcement that beginning this summer the IRS will allow the electronic filing of amended returns.

The “Hot IRS Audit Issues – Pitfalls for S Corporations and Partnerships”.  Basis of entities as to the rules and related rulings, how to track basis in these entities, creation of basis where none had been computed in prior tax years, losses in excess of basis and when they are not allowed, definition of an excess distribution, taxation of excess distributions, distribution of appreciated property,  conversion of C corporations to S corporations – do and don’ts, computation of the Built-In Gains Tax, inference and imputation of a reasonable wage for purposes of the computation of the qualified business income deduction, etc.

Other rulings, developments, and cases.

Webinar personnel:

John Lawrence, CPA, John M. Lawrence & Associates: Instructor

Barry Ward, Director, OSU Income Tax Schools: Co-Host & Question Wrangler

Julie Strawser, Program Assistant, OSU Income Tax Schools: Co-Host and Webinar Manager

Details:

OSU Income Tax Schools Summer Update

Federal Income Tax & Financial Update Webinar

(Zoom Webinar)

August 13th, 2020: 10am – 3:30 (Lunch Break: Noon – 12:50pm)

Cost: $150

Registration information and link to the registration page can be found at:

https://farmoffice.osu.edu/osu-income-tax-schools

This workshop is designed to be interactive with questions from the audience encouraged.

Continuing education offered:

Accountancy Board of Ohio (5 hours)

IRS Office of Professional Responsibility (5 hours)

Continuing Legal Education, Ohio Supreme Court (4.5 hours)

 

U.S. Farm Liquidity Measures Projected to Decline in 2020

by: Chris Zoller, Extension Educator, ANR

Click here for Article (access the figures)

Liquidity is a measure of the ability of a farm to use cash or ability to convert assets to cash quickly to meet short-term (less than 12 months) liabilities when due.  Data from the United States Department of Agriculture Economic Research Service (USDA-ERS) forecast a continued decline in 2020 of liquidity on U.S. farms.  This article discusses two metrics, the current ratio and working capital, to evaluate liquidity.

Working Capital

USDA-ERS projects farm working capital to decline from the 2012 level of more than $160 billion to $52 billion in 2020 (see Chart 1).  Working capital is the value of cash and short-term assets that can easily be converted to cash minus amounts due to creditors within 12 months.  These are considered “short-term” assets and liabilities.  Having adequate working capital is important for a farm to meet obligations as they come due, take advantage of pre-pay discounts, and manage through price declines or unexpected expenses.

Like many things in agriculture, knowing how much working capital a farm needs varies based on several factors.  These include farm size, farm type, and market volatility.  The working capital to gross revenue ratio is a measurement of the working capital divided by the gross sales of the business. This ratio measures the amount of working capital compared to the size of the business.  Lenders prefer a working capital to gross revenues ratio of 40 percent or better. This means that if the business has $1 million in gross sales, working capital would need to be $400,000 or 40 percent of $1M.  When the working capital ratio falls below .20, a farm may have difficulty meeting cash obligations .in a timely manner.

Chart 1. (Source: USDA-ERS, February 5, 2020) (see PDF version to access charts)

Current Ratio

The current ratio is calculated as total current assets divided by total current debt (or liabilities).  Current is defined as less than 12 months.  Current assets include: cash, accounts receivable, fertilizer and supplies, investment in growing crops, crops held for storage and feed, and market livestock.  Current liabilities include: accounts payable/accrued expenses, income and social security taxes payable, current portion of deferred taxes, current loans due within one year, current portion of term debt, and accrued interest.

USDA-ERS expects the value of current assets to decline 3.5% and current liabilities to increase 2.3% in 2020.  The current ratio of U.S. agriculture was 2.87 in 2012 and is projected by USDA-ERS to fall to 1.42 in 2020 (see Chart 2).  If a farm has $100,000 in current assets and $70,000 in current liabilities, the current ratio equals 1.42.  A current ratio of 2:1 or greater is desirable and indicates a farm has $2 in short-term assets for every $1 in short-term debt.

Chart 2.  (Source: USDA-ERS, February 5, 2020)  (see PDF version to access charts)

Management Tips

Farm financial management is critical in today’s volatile environment.  Consider the following management tips:

  • Complete an annual balance sheet. Using your numbers, calculate trends.
  • Compare your numbers with recommended benchmark values.
  • Discuss your numbers with your lender.
  • Contact your local Extension educator or enroll in the Ohio State University Extension Farm Business Analysis and Benchmarking Program (https://farmprofitability.osu.edu/).

References

Assets, Debt, and Wealth, United States Department of Agriculture Economic Research Service, https://www.ers.usda.gov/topics/farm-economy/farm-sector-income-finances/assets-debt-and-wealth/

Deterioration of Working Capital, University of Illinois Farmdoc, https://farmdocdaily.illinois.edu/2020/03/deterioration-of-working-capital.html

Improve Understanding of Your Farm’s Working Capital, Michigan State University Extension, https://www.canr.msu.edu/news/improving_understanding_of_your_farms_working_capital

Minding Your Balance Sheet and Working Your Working Capital, University of Illinois Farmdoc, https://farmdocdaily.illinois.edu/2019/01/minding-your-balance-sheet-working-your-working-capital.html

The Basics of a Farm Balance Sheet, Ohio State University Extension, https://ohioline.osu.edu/factsheet/anr-64#:~:text=The%20farm%20balance%20sheet%20is,information%20about%20a%20farm%20business.&text=The%20balance%20sheet%20is%20also,solvency%2C%20and%20risk%20bearing%20capacity.

 

 

Economic Assistance Available for Dairy Farms

by: Dianne Shoemaker, OSU Extension, shoemaker.3@osu.edu

Click here for PDF version of article

One hundred and fifty days.  In only 150 days we have gone from anticipating a solid year of recovery for the dairy industry to seeing an April Class III price of $13.07 per cwt, the lowest Class III milk price in 10 years, with May announced at $12.14 on June 8th.  In that same time period major market disruptions occurred for nearly every commodity with impacts all along the food chain.  The response to the anticipated economic impact at the farm level has been swift, with a variety of options available to assist dairy farms.   We will touch on a few of them here, including links for additional information.  Every farm should review these options and see if there are opportunities to assist with cash flow shortfalls.

PPP– Paycheck Protection Program

At the end of May, there were still funds available for the PPP.  This low-interest loan program, authorized by the CARES Act (Coronavirus Aid, Relief and Economic Assistance Act) is administered through the SBA (Small Business Administration) to assist small businesses, including farms.  The maximum loan amount is calculated as up to 2.5 months of qualifying payroll expenses as well as sole proprietor income.    While loan proceeds can be used for any business expense, if it is used for specific expenses including payroll, utilities, mortgage interest or some rental payments within a specified time period, some portion or all of the loan may be forgiven.  Farms must apply through an SBA approved lender.  Find approved lenders and more information at http://sba.gov.   Recipients must apply for loan forgiveness.  Applications for forgiveness are now available, but specific guidance on eligible items and time periods continues to be announced.

EIDL – Economic Injury Disaster Loan

This is another CARES-authorized SBA program which is currently open only for farm applications at the sba.gov website.  Farm businesses and agricultural cooperatives with no more than 500 employees may apply for EIDL, which gives loans up to $2 million for businesses that suffer economic injuries due to COVID-19.  An “emergency advance” component provides an advance of up to $10,000 even if the loan is not approved.  The advance may be forgiven if the farm does not also have a PPP loan that is forgiven.  Clarification is pending.  Approved loans will incur 3.75% interest for terms up to 30 years.  Collateral will be required for larger loans.  Applications taken on-line only.  Find more information at http://sba.gov.

CFAP – Coronavirus Food Assistance Program

The intent of this program is to directly assist farms impacted by the effects of the COVID-19 outbreak.  Sign-up began at your local FSA (Farm Service Agency) office on Tuesday, May 26th and continues through August 28th.  FSA offices currently work with clients via email, fax, and phone by appointment.

Two funding sources are being used for this program, CFAP ($9.5 billion), and CCC, the Commodity Credit Corporation, ($6.5 billion).  The sources and uses are being tracked separately by FSA, but the payments will be combined and distributed to farms as a single payment.  Payment limits have been raised for this program only, to $250,000 per farm or up to $750,000 for farms that are set up as corporations, limited liability companies, or limited partnerships (corporate entities).  If these entities have up to three shareholders who meet eligibility requirements, they may be eligible for up $750,000 of assistance.  Eligibility requirements include gross farm income levels, wetland, and conservation compliance, and for individuals involved in multiple-shareholder situations, time spent actively working or managing in the farm business.  Once a farm has been approved, they will receive a first payment of 80% of the total calculated payment up to $200,000 per entity (80% of the $250,000 payment limitation).  If there are still funds available, the remaining 20%, or a prorated amount based on remaining funds available, will be paid at a later time.

The CFAP program is based on the change in futures prices between the weeks of January 13 – 17, and April 6 – 9, 2020.  Commodities that experienced a decline of greater than 5% are included in this program.  For dairy, that decline was around 33%, or $5.88 per cwt., calculated by USDA as the weighted average of the Class III price (60%), and the Class IV price (40%) which was selected as a reasonable representation of the trend of the US all-milk price.

Dairy markets took a severe beating since January and only recently trended upward in June – and will only actually settle at decent price levels going forward if supply aligns with demand.  We cannot keep milking more and more cows.

The program’s dairy (milk) section will yield the greatest assistance to qualifying farmers.  Cull cows, bull calves and dairy steers are included in the cattle section.  Farms that sell qualifying grain crops which were subject to price risk in the first quarter of 2020 will also find assistance in that section.

CFAP Dairy Calculation

Milk produced in January, February, and March (first quarter 2020) that was not priced through a forward contract, is eligible for assistance.  The formula for dairy is:

1st quarter milk production (cwt.) x $4.71/cwt. (CARES act rate)

plus

(1st quarter milk production x 1.014) x $1.47/cwt. (CCC rate)

  • The CARES rate of $4.71/cwt represents the price loss in Jan, Feb, and March.
  • Part two of the equation applies a projected 1.4% production increase.
  • The CCC rate represents anticipated price losses in April, May, and June.

Example:

Background Information:

A herd with 100 milking cows ships an average of 80 pounds of milk per cow per day or a total

of 7,280 cwt. of milk for the period January – March 2020 (91 days):

Dairy formula

1st quarter milk production (cwt.) x $4.71/cwt. (CARES act rate)

7,280 cwt x $4.71 = $34,288.80

+

 (1st quarter milk production x 1.014) x $1.47/cwt. (CCC rate)

(7,280 cwt x 1.014) x $1.47 = $10,851.42

Equals

$34,288.80 + $10,851.42 = $45,140.22 Total

80% or $36,112.18 will be paid shortly after the application is approved

These program payments are not subject to sequestration deductions.

The increase in payment limitations for this program has increased the assistance available to larger farms.  Using the simple example above, a herd with 500 milking cows shipping 80 pounds per cow per day would have a calculated total payment of $227,050, leaving an opportunity to apply for some assistance based on cull cows and bull calves sold between January 15 and April 15, 2020 before reaching the $250,000 payment limit.

Cull Cows

Dairy cull cows qualify for assistance in the “Slaughter Cattle – Mature Cattle” category.  The definition for these animals is “culled cattle raised or maintained for breeding purposes, but which were removed from inventory and are intended for slaughter.”  For animals sold between January 15 and April 15, the payment rate is $92 per head.  The dairy breeding stock herd is not eligible for a per-head payment.

Bull Calves, Dairy Steers

These animals, because they are going into beef production channels, qualify as either “Feeder Cattle less than 600 pounds” or “Feeder Cattle more than 600 pounds”.  Cull heifers sold for beef production would also be included in these categories depending on weight.  Animals less than 600 pounds are eligible for $102 per head (CARES Act rate) if they were sold between January 15 and April 15.  Animals greater than 600 pounds sold in the same time period are eligible for assistance at $139 per head (CARES).  For farms that finish steers (or heifers for beef) that meet weight requirements of 1,400 pounds liveweight or more with an average carcass weight greater than 800 pounds intended for slaughter are eligible for $214 per head (CARES rate).  The CCC rate applied to these animals is based on the highest inventory between 4/16/2020 and 5/14/2020.  If the farm keeps an inventory of animals for beef production, the highest inventory of animals between 4/16/2020 and 5/14/2020 is eligible for a $33 per head payment.  For cull cows, it appears that the highest inventory will be the total number of cows culled between 4/16 and 5/14.  For bull calves, the highest inventory between 4/16 and 5/14 would be equal to the largest group of calves sold in that time period.

Feed and Grain

Clarifications issued by FSA indicate that corn silage converted to bushels of grain is eligible for the CFAP program as well.  Farms that also sell grain and other eligible commodities can make application for those commodities.

Applying for CFAP

Farm Service Agency offices are working with farms via phone, fax, US mail, and internet.  Most FSA offices will ask for supporting documentation for milk and livestock sales at the time of application.  Participating farms should also keep records of those sales for at least three years.

At the FSA office, information is collected via a user-friendly spreadsheet found along with additional program information at  https://www.farmers.gov/cfap.  Farmers who have not previously applied for FSA programs can find information for first-time applicants at this web site or call 877-508-8364 for additional assistance.  While documentation is not collected at time of application, it may be requested for verification or spot checking during the next three years.

Dairy prices have taken tremendous hits, which were painfully obvious in the April final milk checks.  The Class III milk price of $13.07 is the lowest since April 2010 and even with a positive producer price differential of $1.15, well below cost of production. May will be more of the same.

These programs will help with some of the resulting cash shortfall.  Find more information about all these programs and others that may assist with COVID-19 related employee-related leave and unemployment issues at http://dairy.osu.edu and http://farmoffice.osu.edu.

Dairy farms are facing huge challenges this spring and have to make many unanticipated decisions.  Our OSU Dairy Working Group is responding with DIBS (Dairy Issue Briefs) to help inform those decisions.  These “breaking news” DIBS are posted regularly at http://dairy.osu.edu

 

 

CFAP Program for Beef Producers

By David Marrison, OSU Extension, marrison.2@osu.edu

Click here to access a PDF version of the article

Since the beginning of January, market prices for major commodities have fallen sharply since COVID-19 reached the United States.  There have been many efforts through federal and state legislation to offset the impact of COVID-19.

Enrollment is currently being taken by the USDA Farm Service Agency (FSA) for one such program targeted to help agricultural producers.  This program called the Coronavirus Food Assistance Program (CFAP) is providing financial assistance for losses experienced as a result of lost demand, short-term oversupply and shipping pattern disruptions caused by COVID-19.

The general details about the CFAP program can be found in a previous article written by the OSU Farm Office team.  This article can be accessed at:  https://go.osu.edu/CFAP-2020

Purpose:

The purpose of this article is to describe how CFAP can provide assistance to beef producers and to answer questions posed on the classification of animals.  Complete details about the livestock portion of CFAP can be found on the Farm Service Agency’s website at farmers.gov/cfap/livestock

Eligibility:

To be eligible for CFAP, a producer must have shared in the risk of producing an agricultural commodity which suffered a five percent or greater price decline or who had losses due to market chain disruptions due to COVID-19.  The decline for the beef industry over this time period was over 25% thus making it an eligible commodity.

Producers do not have to have prior program participation in a federal farm program in order to participate in CFAP.  However, new applicants must complete a farm operating plan and complete additional eligibility paperwork such as citizen status, farm operating structure, adjusted gross income verification, and highly erodible land and wetland certification.  Producers who have previously participated in FSA programs will have most of these forms on record at their local FSA office.

CFAP payments are subject to payment limitations of $250,000 per person.  This limit is the sum of all eligible commodity payments paid to a person or entity. Special payment limitations (maximum of $750,000) will be applied to participants that are corporations, LLCs, and limited partnerships classified as corporate entities. As applications are approved, 80% of the payment will be released with the remaining 20% held and paid at a later date if adequate funds remain.

Livestock Program:

Funding for CFAP originates from both the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Commodity Credit Corporation (CCC).  Because of this, payment rates are split in two parts for the livestock (and non-specialty crops) program.  Eligible livestock include cattle, sheep (yearlings and lambs only), pigs, and hogs.

The CARES portion is intended to provide producers with financial assistance to “help offset sales losses and increased marketing expenses associated with the COVID-19 pandemic.”  Meanwhile, the CCC funding “is based on projected costs that are likely to be incurred by cattle producers for marketing their 2020 inventory due to unexpected surplus and disrupted markets”.  The support from CFAP is to assist producers with losses, but not intended to cover total losses.

Cattle producers can participate in either or both components of the program. All sales and inventory of livestock must have been subject to price risk as of January 15, 2020. A contract grower who does not own the livestock is eligible if the contract allows the grower to have price risk in the livestock. Any livestock subject to an agreed upon price in the future through a forward contract, agreement, or similar binding document as of January 15, 2020 is ineligible.

A single payment will be calculated using the sum of two parts:

Part 1: Livestock sales (number of head) between January 15, 2020 and April 15, 2020 multiplied by the corresponding animal species CFAP Act payment rate per head. See CARES Act payment rate in Table 1.

Part 2: The highest amount of livestock inventory (number of head) on any day between April 16, 2020 and May 14, 2020 multiplied by the corresponding species CCC payment rate per head. See CCC payment rate in Table 1.

Separate payment rates exist for cattle of different size and age classifications: slaughter cattle-mature cattle, slaughter cattle-fed cattle, feeder cattle less than 600 pounds, feeder cattle 600 pounds or more; and all other cattle.

Table 1: Payment rates for non-specialty crops, dairy, and livestock
Commodity Unit CARES Act Payment Rate ($/unit) CCC Payment Rate ($/unit)
Slaughter Cattle- Mature cattle head $92 $33
Slaughter Cattle-Fed cattle head $214 $33
Feeder cattle less than 600 pounds head $102 $33
Feeder cattle 600 pounds or more head $139 $33
All other cattle head $102 $33

Example:

An example of the payment which a beef producer may receive is as follows:

Background Information:

A cattle producer sold 50 head of feeder cattle on 3/20/2020 which weighed more than 600 pounds

The highest number of cattle on-hand was 100 head of “other cattle” on 5/1/20

Livestock formula

Animals (head) sold 1/15/20-4/15/20 * CARES Rate

(50 head * CFAP Payment Rate of $139) = $6,950

+

(Head of unpriced animals 4/16/20-5/14/20 * CCC Rate)  

(100 head  * CCC Payment Rate of $33) = $3,300

Equals

Total Payment of $10,250 (80% or $8,200 will be paid initially)

 

Classification of Cattle:

In the initial days of CFAP enrollment, questions have arisen regarding how to classify different beef animals and how to track sales and inventory.  This is especially important when classifying animals marketed between January 15 and April 15, 2020 as the CARES Act part 1 payment rate is different between cattle classifications (range of $92 to $215).  To help producers, the FSA has published a classification of cattle table (see Table 2).

Table 2: Classification of Cattle
Cattle Common Name Description CFAP Category
Newborn Calf Calves from birth to days old Feeder Cattle: < 600 lbs
Calf Calves still nursing the cow, animals that generally weigh less than 500 pounds Feeder Cattle: < 600 lbs
Bucket Calf Orphan or newborn calf normally purchased when they are 1 to 10 days old Feeder Cattle: < 600 lbs
Heiferette A female bovine animal that has not calved and weighs more than 500 pounds; OR a heifer placed on feed following the loss of a calf or an open heifer placed on feed following the breeding season Feeder Cattle: < or > 600 lbs, as applicable
Steer A castrated male bovine animal that generally weighs more than 500 pounds Feeder Cattle: < or > 600 lbs, as applicable
Weaner or Weaned Calf Animal between 105 and 355 days coming from cow-calf Feeder Cattle: < or > 600 lbs, as applicable
Backgrounded Cattle Steers and heifers that are fed a warm up or conditioning ration are normally fed to approximately 700 pounds, and then sold as feeders or shipped to another feedlot to be finished for the slaughter market Feeder Cattle: < or > 600 lbs, as applicable
Stockers/Feeders/Feeder Calves Young weaned steers or heifers, weighing approximately 400-800 pounds usually grazing on pasture and/or feed ration to prepare for shipment to feeders intended for slaughter or selected for replacement stock Feeder Cattle: < or > 600 lbs, as applicable
Yearlings Calves between 1 and 2 years of age Feeder Cattle > 600 lbs
Open Heifer Non-pregnant female bovine Feeder Cattle: < or > 600 lbs, as applicable
Replacement Heifers A heifer that has been selected to be bred and placed in the beef herd All Other Cattle
Bred Heifers A female bovine that is pregnant with her first calf All Other Cattle
First Calf Heifers A young female that has had only one calf All Other Cattle
Bred Cows A female bovine animal that has borne at least one calf All Other Cattle
Open Cows – Retained in Herd (Non-pregnant) cows at the end of the breeding season All Other Cattle
Open Cows – Slaughter (Non-pregnant) cows at the end of the breeding season Slaughter Cattle: Mature
Cows-Culled (Beef and Dairy) A cow that is removed from the main breeding herd or dairy production for one or more reasons (i.e., age, poor production, physical ailment, poor disposition, genetic selection, etc.) and is generally sold for slaughter and not destined to be a replacement Slaughter Cattle: Mature
Herd Bulls-Culled (Beef and Dairy) A mature (approximately 24 months of age or older) uncastrated, male bovine removed from the main breeding herd sold for slaughter and not destined to be replacement Slaughter Cattle: Mature
Herd Bulls (Breeding-Beef only) A mature (approximately 24 months of age or older) uncastrated, male bovine used for breeding purposes All Other Cattle
Finished Cattle (1200 lbs or more) Cattle that have reached the optimal weight and conditions ready for slaughter Slaughter Cattle: Fed
Fat Steer/Heifer (1200 lbs or more) Cattle that have reached the optimal weight and conditions ready for slaughter Slaughter Cattle: Fed

Source: https://www.farmers.gov/cfap/livestock

Proof of Sales & Inventory:

Producers self-certify when they apply for CFAP. To complete the CFAP application, producers will need sales receipts and inventory records. However, since CFAP is a self-certification program, this documentation will not need to be submitted with the application.  Producers may be asked for additional documentation to support their certification.  Supporting documentation should be kept for a minimum of three years.  It is recommended producers contact their local FSA office to determine what types of records are acceptable for proof of livestock marketed (CARES Act part 1 payment) and for on-hand inventory (between April 16, 2020 and May 14, 2020).

CFAP Payment Calculator:

The Farm Service Agency has developed a CFAP Excel payment spreadsheet which allows producers to input information specific to their farm to determine estimated payments.  It can also be used to populate the application form to submit to your local FSA office. Producers can download the spreadsheet and other eligibility forms from farmers.gov/cfap

Enrolling in CFAP:

Eligible producers can sign up for assistance at their local Farm Service Agency office. Producers can find the local FSA Service Center contact information by visiting this link: https://offices.sc.egov.usda.gov/locator/app  Currently, due to COVID-19 restrictions, FSA Service Centers are open for business by phone appointment only. The FSA has streamlined the sign-up process and will be working with producers via phone and using e-mail, fax, mail, and online tools to accept applications.  Sign up concludes at close of business on August 28, 2020.

References:

Coronavirus Food Assistance Program, https://www.farmers.gov/cfap

Livestock and the Coronavirus Food Assistance Program, https://www.farmers.gov/cfap/livestock

Sign up for USDA-CFAP Direct Support to Begin May 26, 2020, OSU Extension, https://go.osu.edu/CFAP-2020

 

 

Ohio Soybean State of Soy Webinar

The Ohio Soybean Council will be sponsoring a Ohio Soybean State of Soy webinar on Tuesday, June 9 beginning at 10:00 a.m.  Ben Brown, Assistant Professor of Professional Practice in Agricultural Risk Management  in the Department of Agricultural, Environmental and Development Economics at The Ohio State University will be the featured speaker.

During this webinar, Ben Brown will speak on soybean market fundamentals, trade update and assistance programs. There is no cost to attend this program.  For more information, visit

Farm Office Live Webinar Slated for Thursday, June 11 at 9:00 a.m.

OSU Extension is pleased to be offering the a “Farm Office Live” session on Thursday morning, June 11 from 9:00 to 10:30 a.m.  Farmers, educators, and ag industry professionals are invited to log-on for the latest updates on the issues impact our farm economy.

The session will begin with the Farm Office Team answering questions asked over the two weeks.  Topics to be highlighted include:

  • Updates on the CARES Act Payroll Protection Program
  • Prevent Plant Update
  • Business & Industry CARES Act Program
  • EIDL Update
  • CFAP- update on beef classifications and commodity contract eligibility
  • Dicamba Court Decision Update
  • Other legal and economic issues

Plenty of time has been allotted for questions and answers from attendees. Each office session is limited to 500 people and if you miss the on-line office hours, the session recording can be accessed at farmoffice.osu.edu the following day.  Participants can pre-register or join in on Thursday morning at  https://go.osu.edu/farmofficelive 

 

Navigating Direct Support for Ohio’s Farmers and Ranchers Webinar on May 27 at 9:30 am

Join OSU Extension’s Ben Brown and Dianne Shoemaker for a webinar  on “Navigating Direct Support for Ohio’s Farmers and Ranchers” on Wednesday, May 27, 2020 at 9:30 am with special guest, Ohio Farm Service Agency Director Leonard Hubert.  This webinar is generously produced and distributed by Ohio Ag Net.

This webinar is produced and distributed by Ohio Ag Net.

The webinar will be available for viewing at https://farmoffice.osu.edu/, or through Ohio Ag Net’s Facebook Live Video.

Sign up for USDA-CFAP Direct Support to Begin May 26, 2020

Ben Brown, Peggy Kirk Hall, David Marrison, Dianne Shoemaker and Barry Ward
The Ohio State University

Since the enactment of the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, 2020 and the announcement of the Coronavirus Food Assistance Program (CFAP) on April 17, 2020, producers in Ohio and across the country have been anxiously awaiting additional details on how the Coronavirus Food Assistance Program (CFAP) will provide financial assistance for losses experienced as a result of lost demand, short-term oversupply and shipping pattern disruptions caused by COVID-19.

The additional details on CFAP eligibility, payment limitations, payment rates, and enrollment timeline arrived on May 19, 2020, when the USDA issued its Final Rule for CFAP.  In this article, we explain the Final Rule in this issue of News from the Farm Office.

Click here to read the complete article

Starting Tuesday, May 26, 2020, producers can contact their local FSA office and begin to sign up for CFAP.  This bulletin serves as the authors’ interpretations of the Final Rule released by USDA, and FSA interpretation may be different.

OSU Extension and Ohio FSA will conduct a webinar in the upcoming days to outline program materials and answer questions. For information about the webinar and additional information on CFAP, please visit farmoffice.osu.edu.

Information provided on the program by USDA along with a webinar for new FSA program participants is available at farmers.gov/CFAP.

Expect Higher Solvency Rates on Farms in 2020

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

The United States Department of Agriculture Economic Research Service (USDA-ERS) collects and summarizes an incredible amount of data about farm financial conditions.  This article will discuss solvency and solvency ratios of U.S. farms.

Solvency is a measure of the ability of a farm to satisfy its debt obligations when due and is measured using the debt-to-equity ratio and debt-to-asset ratios.  These ratios help determine whether, if your farm were sold, all debts would be paid.

The U.S. farm sector debt-to-equity (D/E) and debt-to-asset (D/A) ratios are expected to continue increasing. In 2020, ERS forecasts a debt-to-equity ratio of 15.7 percent, and a debt-to-asset ratio of 13.6 percent (Chart 1). These higher ratios indicate that more of the farm sector’s assets are financed by credit or debt relative to owner equity (D/E) and relative to total farm assets (D/A).  While not as high as the ratios experienced during the 1980s, the concern is that these ratios are rising. The impact of this year’s shelter-in-place restrictions due to COVID-19, and associated supply chain issues are not reflected in this ERS data.

Getting Started

The first step in determining the ratios for your farm is to complete an annual balance sheet.  The balance sheet lists all your assets and liabilities.  Subtracting total farm liabilities from total farm assets results in the equity (net worth) of your farm business.  See OSU Extension Fact Sheet ANR-64 (https://ohioline.osu.edu/factsheet/anr-64) for a detailed explanation of completing a balance sheet.

Calculating the Ratios

Debt to asset ratio – compares the amount of debt a farm has relative to total assets owned by the farm and is calculated by dividing total farm debt by total farm assets to arrive at a percentage. For example, a debt to asset ratio of 40 percent means that for every $1 in assets, the farm has 40 cents of debt.  The Farm Financial Standards have identified the following general ranges:

    • Less than 30% is strong
    • Between 30% and 60% is cautious
    • More than 60% indicates vulnerability

However, for many farms, a D/A ratio higher than 40% can be unmanageable if the farm business is not profitable on a long-term basis.

Debt to equity ratio – is simply total farm debt divided by total farm equity (net worth) and compares how much of a farm is owned by the lender vs. the owner. The higher the number, the less likely creditors are willing to lend money.  The desired number is less than 0.43 (43%).  Anything over 1.5 indicates the farm is highly leveraged.

Example Farm

Mitchell Family Farms completed their annual balance sheet on January 1, 2020.  The balance sheet lists the value of total farm assets at $2,475,000 and total farm liabilities of $600,000.  Net worth/equity (assets – liabilities) equals $1,875,000.

To calculate the debt to asset ratio for Mitchell Family Farms, divide $600,000 (total farm debt) by $2,475,000 (total farm assets).  This equals 24%, which is within the “strong” category identified by the Farm Financial Standards Council.

The debt to equity ratio is calculated by dividing $600,000 (total farm debt) by $1,875,000 (net worth or equity).  The debt to equity ratio for Mitchell Family Farms is 32%.  The is within the desired ratio of 43% suggested by the Farm Financial Standards Council.

Based solely on these two measures, Mitchell Family Farms is in a desirable financial position.  However, it is important to evaluate more ratios to determine the overall financial health of the farm business.

Next Steps

After completing a balance sheet and making calculations, refer to the Farm Financial Standards Council benchmarks to compare your numbers with industry accepted standards.  If the ratios are acceptable, continue managing to maintain the numbers and benchmark using these standards https://ffsc.org/wp-content/uploads/2012/06/FarmFinancialGuidelinesRatios1.pdf

If your ratios need improvement, focus on those that are in most need of change.  Here are a few recommendations:

  • Consult with your lender or Extension professional to analyze and discuss your ratios
  • Contact the Ohio State University Extension Farm Business Analysis and Benchmarking Program for a complete analysis of your farm finances (https://farmprofitability.osu.edu/)
  • Develop a plan to address shortcomings
  • Have written goals
  • Monitor progress

Summary

Financial management in agriculture is more critical today than it has been in many years.  Devote time to your farm finances and reach out to professionals who are available to help you be successful.

References

Farm Financial Guidelines and Ratios, Farm Financial Standards Council, https://ffsc.org/wp-content/uploads/2012/06/FarmFinancialGuidelinesRatios1.pdf

Ratios and Measurements in Farm Finances, University of Minnesota, https://extension.umn.edu/farm-finance/ratios-and-measurements#solvency-796061

The Basics of a Farm Balance Sheet, Ohio State University Extension Fact Sheet ANR-64, https://ohioline.osu.edu/factsheet/anr-64

USDA-ERS, Forecast for Higher Solvency Ratios in 2020 Indicates that More of the Farm Sector’s Assets are Financed by Credit or Debt, https://www.ers.usda.gov/data-products/chart-gallery/gallery/chart-detail/?chartId=98316