Financial Management

Northeast Ohio Small Farm Financial College Registration Now Open!

By: Andrew Holden, Extension Educator – Ag & Natural Resources in Ashtabula County

 Link: https://go.osu.edu/NEOSFFC

 Small and beginning farmers in NE Ohio are encouraged to participate in the new in-depth farm management educational program! The college will consist of two Saturday courses to be held on the Saturday of October 28 and the Saturday of November 4, 2023. Both days will run from 9:00 AM – 3:00 PM with lunch included. Both days will be held at 4-H Camp Whitewood at 7983 S Wiswell Rd, Windsor, OH 44099. The cost for the college is $100 per participant, with the option to bring an additional family/farm member for $50. This program also qualifies attendees for the Ohio Department of Agriculture’s Beginning Farmer Tax Credit Program. Those interested in receiving this credit would be subject to additional requirements and fees (More information is available later in this release and online). Those interested in participating in this college or those seeking more information are encouraged to check out our website at: https://go.osu.edu/NEOSFFC

This course will offer 10 hours of farm management education that will help start your farm on the path to financial success. The college is designed to help landowners examine potential ways to increase profits on their small acreage properties. The program is open to all new or aspiring farmers, new rural landowners, small farmers, and farm families looking for new ideas.  During this college, participants will be challenged to develop realistic expectations for their new farm business. They will receive information on getting started, identifying the strengths and weaknesses of their property, and developing a farm business plan. Information on farm finances, insurance, liability, labor and marketing will be covered during the college. Instructors include OSU Extension Educators Andrew Holden from Ashtabula County and Lee Beers from Trumbull County, and David Marrison, Professor and Field Specialist in Farm Management, Interim Director for the Farm Financial Management & Policy Institute.

The two days will consist of four sessions:

Session I – Getting Started on Your New Farm Business

  • Developing real-life expectations for your farm.
  • Assessing your property and resources.
  • Developing a farm business plan, including setting your family and farm mission, goals and objectives.
  • Understanding farm business structures.

Session II– You Can’t Measure What You Don’t Track. Farm Recordkeeping, Budgets and Taxes.

  • Recordkeeping for farm businesses.
  • Using enterprise budgets to project farm income.
  • Developing cost of production projections.
  • Introduction to farm taxes.

Session III – Money, Money, Money! Managing your Small Farm’s Finances

  • Developing a family and farm balance sheet.
  • Developing financial statements including cash flow and income statements.
  • Managing family and farm income and expenses.

Session I – The Legal Side of Farm Financial Management

  • Legal instruments for farm financing.
  • Loan options for small farms.
  • Farm leases and contracts.
  • Overview of risks on the farm.
  • Liability insurance needs for small farms.

This two Saturday course will feature both live, in-person lectures, recordings from other state specialist, hands-on activities, take home assignments, and the ability to apply what is taught directly to your new or current farming operation.

Thank you to our Sponsors:

OSU Extension-Ashtabula & Trumbull Counties

OSU Beginner and Small Farms Program

Farm Financial Management and Policy Institute (FFMPI)

Risser Farm Management Fund

Bruns Insurance Services

 Beginner Farmer Tax Credit Program

Created through House Bill 95 and signed into law on April 21, 2022, the Beginner Farmer Tax Credit Program offers two income tax credits beginning in tax year 2023 in following two categories:

Beginning Farmers

Beginning farmers who attend a financial management program will receive a tax credit for the cost of attending an approved farm financial management program. This college is an approved program.

Asset Owners

Individuals/business that sell or rent farmland, livestock, buildings, or equipment to beginning farmers will receive a tax credit of 3.99% for one of the following:

  • In the case of a sale, the sale price.
  • In the case of a rental, the gross rental income that the individual or business received during the first three years of the rental agreement.
  • In the case of a rental through a share-rent agreement, the gross rental income received during the first three years of the share-rent agreement. A share-rent agreement is an arrangement by which, in exchange for the rented assets, the beginning farmer provides the owner of the assets with a specified portion of the farm products produced from the assets.

For more information on the Beginning Farmer Tax Credit Program, including eligibility criteria and how to apply, go to https://agri.ohio.gov/programs/farmland-preservation-office/Beginning-Farmer-Tax-Credit-Program/Beginning-Farmer-Tax-Credit

Those who would like to be eligible for this credit must complete some additional work and pay an additional $200 to receive the certificate. More information on this or the course in general, is available online at https://go.osu.edu/NEOSFFC or by contacting Andrew Holden at Holden.155@osu.edu or calling 440-576-9008.

 

Ag Lender Seminars Offered in October

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

Ag lenders are keeping farm businesses moving forward.  Agriculture is a capital intense industry.  Land, buildings, livestock, and equipment are the largest assets on the balance sheet.  Additionally, the cash flow needs of seed, chemicals, fertilizers, feed, and supplies are cumulative to the number of dollars needed to operate the business.

Ohio State University Extension has scheduled four seminars in Ohio for Agricultural Lenders. The dates are Tuesday, October 17th in Ottawa, Ohio; Wednesday, October 18th in Wooster, Ohio; Thursday, October 19th in both Washington Court House, OH, and Urbana, 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.

Featured topic and speaker at all locations in 2023…

Farm Bill 2023 Update: Direct from Washington D.C. by: John Newton, Ph.D., Chief Economist to Senator John Boozman, Ranking Member of the U.S. Senate Committee on Agriculture, Nutrition & Forestry.  Newton: Ohio State University Graduate: Ph.D 2013, M.S. 2012, B.S. 2010.

2023 Topics and Speakers by Location

Ottawa, OH – October 17, 2023

  • Economics of Farm Drainage: Calculating a Payback Period & Lease Terms When Installing Drainage Improvements. – Wm. Bruce Clevenger, OSU Extension Field Specialist, Farm Management
  • Farm Bill 2023 Update: Direct from Washington D.C. – John Newton, Ph.D., Chief Economist to Senator John Boozman
  • Farm Insurance Policy: “I think I’m covered if that happens” – Robert Moore, J.D., OSU Extension Attorney, OSU Ag & Natural Resources Law Program
  • USDA – Farm Service Agency Loan Program Update – Kurt Leber, Northwest Ohio FSA, District Director – Farm Loan and Farm Program
  • Commodity Grain Markets: Trends and Prospects – Seungki Lee, Ph.D., Ohio State University, Dept of Ag, Environ, & Development Economics.
  • Farm Business Analysis and Benchmarking Program – Clint Schroeder, OSU Extension, Program Manager
  • Economic View from the Farmgate: Land, Inputs, Margins & Tax Policy – Barry Ward, OSU Extension, Leader, Production Business Management

Wooster, OH – October 18, 2023

  • Tools for Farmland Preservation – Tate Emerson, Killbuck Watershed Land Trust
  • Financing Food and Agriculture – Shoshana Inwood, OSU Community, Food, and Economics Development & Jessica Eikleberry, Farmland Preservation Specialist – Wayne County Planning Office
  • Farm Bill 2023 Update: Direct from Washington D.C. – John Newton, Ph.D., Chief Economist to Senator John Boozman
  • Dairy Market Outlook and Industry Updates – Jason Hartschuh, OSU Extension Field Specialist, Dairy
  • Economic View from the Farmgate: Land, Inputs, Margins & Tax Policy – Barry Ward, OSU Extension, Leader, Production Business Management
  • Farm Insurance Policy: “I think I’m covered if that happens” – Robert Moore, J.D., OSU Extension Attorney, OSU Ag & Natural Resources Law Program

Urbana, OH – October 19, 2023

  • Economic View from the Farmgate: Land, Inputs, Margins & Tax Policy – Barry Ward, OSU Extension, Leader, Production Business Management
  • Farm Bill 2023 Update: Direct from Washington D.C. – John Newton, Ph.D., Chief Economist to Senator John Boozman
  • FarmOn and On Farm Records – Bruce Clevenger, OSU Extension, Field Specialist – Farm Management
  • Livestock Outlook and Update – Garth Ruff, OSU Extension, Field Specialist – Beef Cattle
  • Commodity Grain Markets: Trends and Prospects – Seungki Lee, Ph.D., Ohio State University, Dept of Ag, Environ, & Development Economics

Washington Court House, OH – October 19, 2023

  • Livestock Outlook and Update – Garth Ruff, OSU Extension, Field Specialist – Beef Cattle
  • Farm Bill 2023 Update: Direct from Washington D.C. – John Newton, Ph.D., Chief Economist to Senator John Boozman
  • Commodity Grain Markets: Trends and Prospects – Seungki Lee, Ph.D., Ohio State University, Dept of Ag, Environ, & Development Economics.
  • Economic View from the Farmgate: Land, Inputs, Margins & Tax Policy – Barry Ward, OSU Extension, Leader, Production Business Management
  • FarmOn and On Farm Records – Bruce Clevenger, OSU Extension, Field Specialist – Farm Management

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 credit card online or mail a check. Registration is open online at: https://u.osu.edu/aglenderseminars/

Registration questions can be directed to Wm. Bruce Clevenger, OSU Extension Field Specialist, Farm Management, at 419-770-6137 or 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 over 40 years.

 

Grain Market Update Updated Slated for September 15 at 7:30 a.m.

OSU Extension invites Ohio corn and soybean producers to grab a cup of coffee this friday morning, September 15,  and tune in for Coffee and Grain Marketing with Dr. Seungki Lee from 7:30 to 8:00 via Zoom

The latest World Agricultural Supply and Demand Estimates (WASDE) crop reports was released this week. Tune in to see what this month’s report might mean for producers and their marketing strategies as we enter in to harvest season.

Learn more about the factors impacting the corn, soybean, and wheat markets. Producers are encouraged to bring their questions to this early morning conversation.

There is no fee to attend any of these webinar sessions.

Pre-register at: go.osu.edu/coffeewithDrLee

Click here for registration flyer

The sponsors of this event include: OSU Extension, the  Ohio Soybean Council, Farm Financial Management & Policy Institute (FFMPI), and the Department of Agricultural, Environmental and Development Economics (AEDE)

Ohio Grape Producers Eligible for Newly Announced Grapevine Insurance Program

By: David Marrison, Field Specialist- Farm Management, OSU Extension

On August 29, 2023, the U.S. Department of Agriculture (USDA) announced that it is expanding crop insurance options for grape producers through a new Grapevine Insurance Program. This program will provide coverage for the loss of grafted vines from natural perils such as freeze, hail, flood, and fire. Producers in select counties from the states of: Ohio, California, Idaho, Michigan, New York, Oregon, Pennsylvania, Texas, and Washington are eligible to purchase coverage for the 2024 crop year. The deadline for signing up for insurance is November 1, 2023.

Details on New Grapevine Insurance

On August 18, 2022, the Federal Crop Insurance Corporation Board of Directors approved the Grapevine Crop Insurance Program under section 508(h) of the Federal Crop Insurance Act. This program was established to complement the existing Grape Crop Insurance Program which provides insurance coverage for fruit growing on the vine.

Click here for USDA Risk Management Factsheet on Grapevine Insurance Program

Click here for USDA Risk Management Factsheet on Grape Crop Insurance Program

Marcia Bunger, Administrator for the USDA’s Risk Management Agency (RMA) stated, “A program like this is especially critical when you realize the loss of fruit can affect a grower for a season, but the loss of a grapevine is a much more costly situation, both in money and the time it takes to reestablish a productive vine. This is one of the strongest reasons producers were requesting coverage possibilities like this Grapevine insurance program.”

The Grapevine insurance program is based on the Tree Based Dollar Amount of Insurance (TDO) Plan. Coverage will be offered for grafted vines only with coverage levels between 50 and 75 percent. No partial damage losses will be considered. Additional optional catastrophic (CAT) coverage or occurrence loss option (OLO) are available for producers to purchase to cover smaller losses.

Some specifics of the grapevine insurance program include:

  • Insurance is classified as a “mortality policy” which pays losses when the vine is dead or so badly damaged it will not recover in the following 12 months.
  • Vines are grouped into one of three growth stages to determine vine reference price (VRP).
  • The dollar amount of protection is based on number of insurable vines in each growth stage block multiplied by the vine reference price and price percentage elected.
  • Producers will select one coverage level, ranging from 50 to 75 percent and one percentage of price election up to 100 percent of the vine reference price for each type insured. Higher coverage levels are subsidized at lower rates and the premium subsidy is at least 55 percent of the premium. Premium and administrative fees are due annually.
  • Insurance must be purchased on or before November 1. Coverage will begin on December 1 of each crop year and continue to November 30 of the following year.
  • Insurance coverage will automatically renew for the subsequent crop year unless you cancel coverage by the November 1 cancellation date.
  • Producers using Freeze Protection practices in their operation that are recognized by industry experts can benefit from lower premium costs.

 Where to Purchase Insurance

Crop insurance is sold and delivered solely through private crop insurance agents. A list of crop insurance agents is available at all USDA Service Centers and online using the RMA Agent Locator at: www.rma.usda.gov/information-tools/agent-locator

For More Information:

Complete details about the program can be obtained on the Risk Management Agence (RMA) website at www.rma.usda.gov. Resource materials of interest include the Grapevine Crop Provisions (24-0270), grapevine Insurance Standards Handbook (20680U) and the Grapevine Loss Adjustment Standards Handbook (20680L)

More information about this new insurance program can be accessed at: https://www.rma.usda.gov/Fact-Sheets/National-Fact-Sheets/Grapevine

References

https://www.rma.usda.gov/en/News-Room/Press/Press-Releases/2023-News/USDA-Announces-NewGrapevine-Insurance-Program-to-Protect-Against-Natural-Hazards

https://www.rma.usda.gov/en/Fact-Sheets/National-Fact-Sheets/Grapevine

https://www.rma.usda.gov/Fact-Sheets/National-Fact-Sheets/Grapes

 

 

 

 

Western Ohio Cropland Values and Cash Rents 2022-23

By: Barry Ward, Leader, Production Business Management, Director, OSU Income Tax Schools, College of Food, Agricultural and Environmental Sciences, OSU Extension, Agriculture & Natural Resources

Continued high crop prices, reasonable crop margins and relatively healthy farm balance sheets over the last 2 years have given strength to farmland markets. Higher input costs over the last two years together with rising interest rates have offset some of this support but farmland values continue to increase. Many of these same factors have given support to the farmland rental markets which have also seen increases last year and are expected to see additional increases in 2023.

Results from the Western Ohio Cropland Values and Cash Rents Survey show cropland values in western Ohio are expected to increase in 2023 by 6.1 to 10.7 percent depending on the region and land class. This follows increases ranging from 6.9 to 13.8 percent from ’21 to ’22.

Cash rents are expected to increase from 5.0 to 6.7 percent in 2023 depending on the region and land class. This is on top of rental increases of 1.3 to 3.8 percent from 2021 to 2022.

Ohio Cropland Values and Cash Rent

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

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

Study Results 

The Western Ohio Cropland Values and Cash Rents study was conducted from January through April in 2023. This opinion-based study surveyed professionals with a knowledge of Ohio’s cropland values and rental rates. Professionals surveyed were rural appraisers, agricultural lenders, professional farm managers, ag business professionals, OSU Extension educators, farmers, landowners, and Farm Service Agency personnel.

The study results are based on 190 surveys. Respondents were asked to group their estimates based on three land quality classes: average, top, and bottom. Within each land-quality class, respondents were asked to estimate average corn and soybean yields for a five-year period based on typical farming practices. Survey respondents were also asked to estimate current bare cropland values and cash rents negotiated in the current or recent year for each land-quality class. Survey results are summarized below for western Ohio with regional summaries (subsets of western Ohio) for northwest Ohio and southwest Ohio.

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

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

 

Ask The Experts take the stage at FSR

By: Wm. Bruce Clevenger, OSU Extension Field Specialist, Farm Management

Agriculture is information driven and growers and industry always have great questions.  Who should you ask for trusted answers?  Ask The Experts at Farm Science Review!  Three days of Experts have been scheduled to take center stage again this year at the 2023 Farm Science Review.  This conversational dive explores hot/current topics between the moderator, Experts, and the audience.  The 30-minute sessions give 15-20 minutes of information from the Experts and 5-10 minutes of Q&A with the audience.  It is the best place to stop and take a sit-down break at FSR.  Grab some food and enjoy.  Experts include ag economists, weather scientists, Women in Ag leaders, veterinarians, agricultural attorneys, agronomists.

Topics include: weather whiplash, empowering Women in Agriculture, USDA Farm Bill, farm property insurance gaps, grain markets, beginning farmer education course, ticks on pasture effecting people and livestock, mold and feed, mental health, carbon markets, an average farm may not be profitable, farm labor, death’s impact on the family business, financial health of Ohio farms, and agronomy vs. economics.

Plan you day(s) at Farm Science Review at:

https://fsr.osu.edu/ , click Visitor Information, click Mobile App/Digital Directory.

 

2023 Ask The Expert Schedule

Date Time Speaker Topic
9/19/2023 10:00 Aaron Wilson Weather Whiplash – Dealing with Weather Extremes
10:30 Gigi Neal & Linda Vernon Celebrating 20 Years of Empowering Women in Agriculture – Annie’s Project
11:00 AEDE Dept The Farm Bill and Beyond
12:00 Barry Ward Economic View From The Farmgate
12:30 Robert Moore & Jeff Lewis Farm Insurance – Covering Your Assets
1:00 Seungki Lee How Is The Market Doing?
1:30 Eric Richer What is OSU’s Farm On Course?
2:00 Tim McDermott Managing Asian Longhorned Ticks on Pasture
2:30 Scott Kenney Is Hepatitis E Virus a Risk to Ohioans?
9/20/2023 10:00 Gustavo Schuenemann Molds and Mycotoxins in Cattle
10:30 Mike Estadt How Smart Are Your Commodities?  Carbon Intensity Scores and More
11:00 Clint Schroeder Utilizing Benchmarking Data: It Doesn’t Pay to be Average
11:30 Aaron Wilson Weather Whiplash – Dealing with Weather Extremes
12:00 Barry Ward Economic View From The Farmgate
12:30 Robert Moore & Jeff Lewis Farm Insurance – Covering Your Assets
1:00 Seungki Lee How Is The Market Doing?
1:30 Margaret Jodlowski Who is Working (or Will Work) Ohio’s Farms?
2:00 David Marrison Is Your Farm Business Ready for Your Death?
2:30 Margaret Jodlowski The Farm Bill and Beyond
9/21/2023 10:00 Luciana da Costa One Health and Livestock Farming
10:30 Ani Katchova How Are Ohio Farms Doing Financially?
11:00 Bridget Britton Sit down, Take a load off, and Let’s have a Chat. Life can be Stressful.
11:30 Aaron Wilson Weather Whiplash – Dealing with Weather Extremes
12:00 Barry Ward Economic View From The Farmgate
12:30 Robert Moore & Jeff Lewis Farm Insurance – Covering Your Assets
1:00 David Marrison Is Your Farm Business Ready for Your Death?
1:30 Lindsey, Ortez, Ward Agronomy + Economics = Agronomics. What Comes First in the Equation?

 

Ask The Experts is located at the corner of Kottman and Friday Avenues, Exhibit Area 425, across from the Firebaugh building.  Seating is available under the tent.

In addition to the Ask The Expert sessions, Review goers can explore OSU Extension Farm Management Resources in the Firebaugh building across from Ask The Expert area all-day, each day of the Review.  OSU Extension Farm Management resources can also be found online at: https://farmoffice.osu.edu/

 

Small Farm Education Planned at 2023 Farm Science Review

Are you a producer on a large or small farm looking to diversify your operation or a niche market looking for ways to expand and improve? The Center for Small Farms located at the corner of Equipment Avenue and Beef Street invites review attendees to stop in to listen to 30-minute sessions in the Small Farm Tent. Sessions are designed to improve small farm operations in Ohio.

Featured sessions in 2023 include: raising meat rabbits, ducks and chickens, hay production, mushroom production, crop insurance and cut flower tips. Each day the Small Farm Team will be holding curbside conversations for attendees to get more specific questions answered about your operations.

In addition to the educational sessions, producers can meet with OSU Extension professionals at the Small Farm help Desk to have their individual management questions answered. While visiting the Center for Small Farms be sure to check out the upcoming 2023 and 2024 Small Farm Financial Colleges occur throughout the state. Don’t forget to get a registration packet for the 2024 Small Farm Conference too!

 

Characteristics of Beginning Farmers in Ohio and Potential Impact of the Ohio Beginning Farmer Tax Credit Program

By: PhD students Xiaoyi Fang and Zhining Sun and Professor Ani Katchova, Farm Income Enhancement Chair, in the Department of Agricultural, Environmental, and Development Economics (AEDE), and Chris Zoller, Associate Professor and Extension Educator, Agriculture & Natural Resources, Ohio State University Extension – Tuscarawas County

 

Click here to access the PDF version of this article that includes figures

 

Highlights

  • Ohio’s new and beginning farmers are individuals who intend to enter the farming industry or have less than ten years of experience as a farm owner/operator in Ohio.
  • Ohio’s new and beginning farmers compared to established farmers, tend to be younger, operate smaller farms, and less likely to state farming as their primary occupation.
  • The Ohio Beginning Farmer Tax Credit Program supports new and beginning farmers by providing income tax credits to: 1) beginning farmers who attend a financial management program, and 2) landowners that sell or rent farmland to beginning farmers.

Profile of Ohio Beginning Farmers

According to the definition provided by the Ohio Department of Agriculture, a beginning farmer in Ohio must meet several specific criteria. An individual must be a resident of Ohio who intends to enter the farming industry or has less than ten years of experience as a farm owner/operator in Ohio. In addition, the individual must not hold any partnership, membership, shareholder, or trustee positions related to the assets they intend to acquire or lease.  The individual must have net worth of less than $800,000, among other requirements.

Analysis of the 2017 Census of Agriculture offers valuable insights on Ohio’s new and beginning farmers.  About a quarter of all farm and principal farm producers in Ohio are new and beginning farmers while the rest are established farmers. Contrary to a common assumption that new and beginning farmers are young, the age distribution of new and beginning farmers in Ohio spans a wide range of age groups (Katchova and Ahearn, 2016). While 32% of new and beginning farmers are 34 years of age or younger, a significant portion of them (9%) are 65 or older.  On average, new and beginning farmers are younger than established farmers but there are also older new and beginning farmers in Ohio.

Although males still dominate both groups, the proportion of males among new and beginning farmers is smaller (61%) than among established farmers (68%). Only 24% of new and beginning farmers in Ohio report their primary occupation as farming, indicating diverse income sources. Over half of new and beginning farmers in Ohio engage in off-farm work for more than 200 days, unlike established farmers who are less involved in off-farm work. New and beginning farmers in Ohio typically operate smaller farms in terms of operated acres.  Over half of new and beginning farmers operate less than 50 acres of farmland. New and beginning farmers in Ohio have a comparable percentage of owned or leased acres as do established farmers.

According to a USDA definition, economic class of farmers is defined as the market value of agricultural products sold and government payments.  There is a higher number of established farms in every economic class especially in the largest value economic classes, compared to new and beginning farmers.

The Census of Agriculture reveals that oilseed and grain farming is the most common specialty for new and beginning and for established farmers.   Most new and beginning farmers tend to specialize in oilseeds and grain farming (25%), other crops (21%), beef cattle (18%) and other livestock (17%).  Compared to established farmers, new and beginning farmers in Ohio tend to specialize more in specialty crops, other crops, beef cattle, and other livestock farms.

Potential Impact of the Beginning Farmers Tax Credit Program

In 2022, Ohio implemented a Beginning Farmer Tax Credit Program to support new and beginning farmers in the state. This program aims to address the financial challenges faced by new entrants in the agricultural industry by offering two support mechanisms. The first mechanism provides a tax credit to new and beginning farmers who participate in a state-approved financial management program. By offering this tax credit, the program seeks to alleviate the financial stress of starting and managing a farm business. This incentive encourages beginning farmers to actively engage in financial planning and management, which can contribute to their long-term success.

Qualifying financial management programs provide information on a variety of topics including farm business planning, farm financial statements, cost of production, farm record keeping, farm taxes, farm financing, risk management, and farm business analysis. Beginning farmers who complete a qualifying financial management program pay the cost of the program but are eligible for a non-refundable tax credit upon completion of the program.

The second support mechanism focuses on providing tax credits to qualified farmland owners in Ohio. These tax credits are offered to landowners who sell or rent their farmland to beginning farmers. By incentivizing landowners to work with new and beginning farmers, the program aims to address the aging farmer population trend and promote farmland transition to the next generation. This provision helps to transition operated acres from established to beginning farmers, creating more opportunities for new farmers to start their farm businesses and grow.

The Beginning Farmer Tax Credit Program benefits new and beginning farmers in Ohio. By providing opportunities for financial management program training, the program reduces the barriers to entry. It equips farmers with the necessary skills to navigate the financial aspects of running a farm business. By offering incentives for farmland owners to collaborate with beginning farmers, the program helps to increase access to land and resources for new entrants. The program addresses financial challenges associated with starting a farm business. Continued investment and expansion of such initiatives are crucial for ensuring the future sustainability of Ohio agriculture.

The implementation of the Ohio Beginning Farmer Tax Credit Program holds promise in supporting new and beginning farmers’ entry in agriculture and addressing their specific needs. Continued support and resources are essential to foster the success of these beginning farmers and contribute to the success of Ohio’s agricultural sector.

References

  1. Ahearn, Mary. Beginning Farmers and Ranchers at a Glance. 2013. Economic Research Service (ERS), United States Department of Agriculture (USDA).
  2. Katchova, A. L., & Ahearn, M. C. (2016). Dynamics of farmland ownership and leasing: Implications for young and beginning farmers. Applied Economic Perspectives and Policy, 38(2), 334-350.
  3. Ohio Beginning Farmer Tax Credit Program, Ohio Department of Agriculture: https://agri.ohio.gov/programs/farmland-preservation-office/Beginning-Farmer-Tax-Credit-Program/Beginning-Farmer-Tax-Credit
  4. United States. (2007) U.S. Census of Agriculture. United States. Retrieved from the Library of Congress, https://www.loc.gov/item/lcwaN0022771/

 

What are the Implications of the Black Sea Grain Deal Breaking Down?  

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

Click Here to Access a PDF Version of Article

The Black Sea Grain Deal So Far

The Black Sea grain export deal signed by Ukraine, Turkey, Russia, and the United Nations (UN) on July 22, 2022 (USDA, Foreign Agricultural Service, Grain: World Markets and Trade, August 2022), was originally extended for four additional months in November 2022, followed by further extensions in March and May 2023 respectively, the most recent being for only two months up to July 17, 2023.  During that time-period, 32.7 million metric tons of grains and oilseeds have been shipped to 45 countries from the Ukrainian ports of Chornomorsk, Odesa and Pivdennyi (Yuzhny), the percentage breakdown of the cargo totals being corn (51%), wheat (27%), sunflower meal (6%) and sunflower oil (5%), and other (11%) (Black Sea Grain Initiative Joint Coordination Center, July 2023).

Resumption of Ukrainian sea exports over this time-period has helped in reversing the spike in global food prices that occurred after the Russian invasion of Ukraine, the FAO Food Price Index dropping by almost 39% since March 2022 (World Food Situation, FAO/UN, July 7, 2023).  However, as of July 17, 2023, Russia has ended its participation in the deal, which brings with it increased uncertainty about available global grain and oilseed supplies as well as the potential for greater price volatility and/or increased food prices (New York Times, July 17, 2023).

Even before Russia pulled out of the grain deal, the rate of exports from the three Ukrainian ports was already declining (see Figure 1), the latest export tonnage being just over 0.2 million metric tons as of July 7, 2023 (UN Black Sea Grain Initiative Joint Coordination Center).  This slowdown in exports also shows up in the average number of ships being cleared under the deal falling from a peak of 11 in October 2022 to 3 in May 2023 UN Black Sea Grain Initiative Joint Coordination Center).  At this point, the Black Sea Corridor is no longer the dominant route for exports, with more crops being shipped through ports on the Danube, as well as by rail and road (Bloomberg News, July 6, 2023).  Essentially, the deal allowed Ukraine to export the grain stockpiles that it had accumulated with the closing of its ports post-invasion, but in the view of some observers, the deal was already essentially “defunct” (Bloomberg News, July 6, 2023).

  Figure 1:

What are Russia’s Concerns with the Deal?

Russia’s unwillingness to renew the grain deal has been brewing for some time, Ukraine previously accusing it of trying to undermine the deal by dragging out and even preventing the required restrictions of Black Sea shipments before two previous renewals of the deal (Financial Times, March 19, 2023; New York Times, May 18, 2023).  Even though U.S. and European Union (EU) economic sanctions against Russia exclude trade in agricultural commodities such as grain fertilizers (Congressional Research Service, December 13, 2022), Russia has repeatedly complained about the Black Sea grain export deal since its inception (New York Times, July 17, 2023).  Even though the UN struck a deal with Russia in July 2022 to help it overcome obstacles to grain and fertilizer shipments, Moscow claims that restrictions on payments, logistics and insurance have been a major barrier to its agricultural exports (Reuters, June 16, 2023).

However, since the grain deal was last renewed in May, Russia’s concerns seem to have intensified, Moscow expressing two main demands as a pre-condition for renewing the grain deal (Reuters, June 16, 2023).  The first relates to reconnection of the Russian agricultural bank Rosselkhozbank to the SWIFT international payment network (Reuters, July 12, 2023).  Following the Russian invasion of Ukraine, the EU cut off Russia from the SWIFT network in June 2022, placing a major constraint on the processing of grain export payments to Russia (Reuters, July 13, 2023).  It has been reported that the EU has been considering allowing a subsidiary of Rosselkhozbank to connect to SWIFT, UN Secretary-General Antonio Guterres asking President Putin to extend the grain deal, thereby giving the EU time to make the connection (Reuters, July 12, 2023).

The other Russian demand relates to the ammonia pipeline from Tolyatti to the Ukrainian port of Pivdennyi (Yuzhny) (IFPRI, June 13, 2023).  The pipeline has been closed since the Russian invasion and has reportedly suffered war damage.  Given the significant impact of the closure on Russia’s exports of anhydrous ammonia, it is perhaps not surprising Russia has tied recent restrictions on the registration of grain shipping at Pivdennyi to reopening of the pipeline (IFPRI, June 13, 2023).

Breakdown of the Deal

Despite the best efforts of the UN Secretary-General Guterres and Turkey’s President Erdogan, Russia has not renewed the grain deal, its Foreign Ministry issuing a statement that, “…Only upon receipt of concrete results, and not promises and assurances, will Russia be ready to consider restoring the deal…” (New York Times, July 17, 2023).  Not surprisingly, the markets reacted to the deal not being extended, wheat futures rising 4.2% on the Chicago Board of Trade (Bloomberg News, July 17, 2023), but what are the longer-term implications of the breakdown?

Even though the grain deal has been critical to relieving pressure in the world market over the past year, Ukrainian grain and oilseed production are expected to decline in 2023/24 due to the ongoing impact of the war, with disruption of ongoing planting and harvest of multiple crops including wheat, barleycorn, rapeseed and sunflowers.  The latest estimates for Ukraine’s major crops indicate significant reductions are expected in harvested acreage in 2023 compared to 2021 – wheat (-42%), sunflower seeds (-20%), corn (-38%), and barley (-33%) (USDA, Foreign Agricultural Service, June 2023). It should be noted these data do not include those parts of Ukraine either in the war zone or occupied by Russian Forces (UC-Davis ARE Update, May/June, 2023).  In terms of the potential impact on world food prices, Ukrainian grain shipments are forecast to decline by about 36% in the 2023/24 marketing year (Bloomberg News, July 6, 2023).

With expected declines in Ukrainian grain production, and the closing of the Black Sea Corridor, two price effects can be expected: world grain prices will increase with the reduction in Ukrainian exports, but at the same time Ukrainian domestic grain prices will likely fall.  This is precisely what happened after the Russian invasion:  in the case of wheat, when Ukrainian ports were blockaded, a wedge was driven between other comparable and Ukrainian prices, the wedge declining after the grain deal was struck in July 2022 (see Figure 2).  Since then, Ukrainian wheat prices have tracked other wheat prices, although a gap was starting to open-up again recently, and it can be expected to widen, reducing Ukrainian farmers’ incentives.

Figure 2:

It is also likely grain price volatility will be exacerbated, markets already being very sensitive to regional shocks even before the deal ended.  When the Nova Kakhova dam in southern Ukraine was destroyed in early June, wheat futures prices immediately rose 2%, raising concerns of an escalation in the war between Russia and Ukraine (Reuters, June 6, 2023), which was followed by a second market shock in late-June after the armed uprising in Russia, wheat futures prices increasing by 3% (Bloomberg, June 23, 2023). (For a detailed discussion of price volatility see the companion article to this one on Ohio Ag Manager: “What factors are driving the current grain market volatility?” by Seungki Lee).

There is a sense that it may be very difficult to revive the Black Sea deal at this point, with the likelihood grain and oilseed prices will rise, which will then impact the number of undernourished people globally (The Guardian, July 17, 2023).  At the same time, even though grain continues to be exported westwards from Ukraine through Poland, Hungary, Bulgaria, Romania, and Slovakia, this has created political tensions in those countries, farmers facing lower prices and reduced revenues. (Bloomberg News, April 1, 2023).  Even though the EU suspended its tariffs and quotas on imports from Ukraine after the Russian invasion, Poland and Hungary blocked imports from Ukraine in April in a response to farmer protests (New York Times, April 20, 2023).  This was followed on May 2 by the EU introducing a temporary ban on grain imports by these countries from Ukraine until June 5, while maintaining transit routes into the rest of the EU, the restrictions being subsequently extended until September 15 of this year (Reuters, June 5, 2023).

 

What Factors are Driving the Current Grain Market Volatility?

By: Seungki Lee, Assistant Professor, Agricultural, Environmental, and Development Economics, The Ohio State University

Click here to access PDF version of the articles

During the last few weeks, grain futures markets have showed significant swings in response to several events: the expanding drought, USDA’s June Acreage Report, and the looming Black Sea Grain deal. The heightened uncertainty in the commodity market is causing concern among US growers about market prospects. Given the current influence of multiple variables on prices, relying solely on price indices may lead to a misinterpretation of the market outlook. Therefore, in this article, we will look into three primary factors individually that have the potential to impact the market in the upcoming months.

  1. Expanding Drought Conditions and USDA’s July WASDE Report

The first and very perceivable force that raises uncertainty is the domestic growing condition – the expanding drought in the Midwest. A striking example is that 98% of Minnesota’s crop land are currently experiencing drought (Brown, 2023). USDA’s July WASDE report adjusted down corn yield to 177.5 bushels per acre, 4 bushels down from last month, whereas soybean yield forecast was not changed. However, a substantial change in the acreage projection (corn up and soybean down) in the June USDA’s Acreage Report mainly determined the overall production estimates. This indicates that the market has not fully accounted for the potential yield reduction caused by the drought. Despite the undeniable impact of the drought, the exact extent of harvest reduction remains uncertain, further contributing to market unpredictability. Even though commodity prices hold steady, growers can be largely worse off (Probert et al., 2023). Table 1 provides a quick summary of July WASDE updates for new crop corn, soybean, and wheat.

Table 1. Summary of July WASDE Estimates

  Corn Soybean Wheat
Marketing Year 23/24F ∆Jun ∆22/23 23/24F ∆Jun ∆22/23 23/24F ∆Jun ∆22/23
Yield (bu/acre) 177.5 -4.0 +4.1 52.0 ** +2.5 46.1 +1.2 -0.4
Production 15,320 +55 +1,590 4,300 -210 +24 1,739 +74 89
Total Supply 16,747 +5 +1,615 4,575 -185 0 2,449 +51 -21
Feed & Residual 5,650 — +225            
Ethanol 5,300 — +75            
Crush       2,300 -10 +80      
Domestic Use 12,385 — +305 2,426 -10 +85 1,132 +20 +1
Exports 2,100 — +450 1,850 -125 -130 725 — -34
Total Use 14,485 — +755 4,276 -135 -45 1,857 +20 -33
Ending Stocks 2,262 +5 +860 300 -50 +44 592 +31 +12
Price ($/bu) 4.80 — -1.80 12.40 +0.30 -1.80 7.50 -0.20 +1.33

Note: The default unit is a million bushels if not specified.

  1. An Official Termination of Black Sea Grain Deal

On July 17, Kremlin spokesman Dmitry Peskov announced that Russia is pulling out of the Black Sea Grain Deal agreement, yet leaving the door open for resuming the deal if Russia’s demands were fulfilled. Since the agreement was established in July last year, this is the first time that we have seen an official stop of the deal. As we have witnessed the international connectivity in the commodity market, what’s happening in Black Sea will likely fluctuate US grain markets.

Due to the war situation and Russia’s political instability, the new deal is likely to fall into a labyrinth. Even putting the recent political turmoil in Russia aside, both sides have been complaining about the deal for months. Russia claimed that its own agricultural products and fertilizers also should be allowed to be shipped to the global market through the Black Seas (i.e., lifting the sanction on Russian crops). Ukraine claimed that Russia is using the inspection for sabotage (Malsin, 2023). The current situation is a sort of “Chicken Games,” because the negotiation time will be costly to both countries. The Black Sea Grain Initiative can possibly resume in months, but, Ukraine has already been attempting to mitigate risks by exploring alternative export channels. This development has created political tensions within the European Union, resulting in a temporary ban on grain imports from Ukraine (Sheldon and Zoller, 2023). All of these factors contribute to increased market uncertainty. As illustrated in Figure 1, China and EU countries have been major recipients of Ukraine crops through the Black Sea. The partnership and friendship of these countries will potentially play a key role in reviving the Black Sea Corridor.

Figure 1. Black Sea Grain Initiative exports to Top 5 partners and ROW

Note: the numbers in brackets indicate the rank of each country based on the total crop delivered.
Source: United Nations, as of July 17, 2023

 

  1. El Niño and Uneven Impacts Worldwide

El Niño is having an increasingly pronounced influence on global crop production (Witze, 2023), and this impact is being actively reflected in commodity markets (Currie, 2023). It is noteworthy that the effects of El Niño are expected to vary significantly across different regions. For example, Australia is currently experiencing drier weather patterns attributed to El Niño, leading to anticipated reductions in wheat production (Jackson, 2023). On the other hand, Argentina is likely to benefit from El Niño as it brings increased rainfall, replenishing soil moisture during the current growing season. This divergence in the impact of El Niño on crop production among countries will further contribute to market fluctuations. Over the past three years, Latin American countries have suffered from agricultural production setbacks caused by La Niña-induced droughts. This suggests that the transition to El Niño conditions can work favorably for countries such as Brazil and Argentina, posing an additional challenge to US exports in the future.

 

 

References

Brown, K. (2023, July 13). All of Minnesota now in some stage of drought. KSTP.com 5 Eyewitness News. https://kstp.com/kstp-news/top-news/all-of-minnesota-now-in-some-stage-of-drought/

Currie, A. (2023, July 3). Breakingviews: El Nino will brew up potent new economic storm. REUTERS. https://www.reuters.com/breakingviews/el-nino-will-brew-up-potent-new-economic-storm-2023-07-04/

Jackson, L. (2023, July 5). El Nino threshold not yet passed, Australia weather bureau says. REUTERS. https://www.reuters.com/business/environment/el-nino-threshold-not-yet-passed-australia-weather-bureau-2023-07-05/

Malsin, J. (2023, July 17). Russia Says It Is Pulling Out of Ukraine Grain Deal. The Wall Street Journal. https://www.wsj.com/articles/russia-says-it-is-pulling-out-of-ukraine-grain-deal-68190d1

Probert, A., McCorvey, J.J., and Bush, E. (2023, July 13). Drought and extreme heat burn through farmers’ margin for error – and it’s only July. NBC News. https://www.nbcnews.com/business/drought-extreme-heat-burn-farmers-margin-error-only-july-rcna93862

Sheldon, I. and Zoller, C. (2023, July 18). What are the Implications of the Black Sea Grain Deal Breaking Down?. Ohio Ag Manager.

Witze, A. (2023, June 29). El Niño is here-how bad will it be?. Nature. https://www.nature.com/articles/d41586-023-02122-6