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 Policy38(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/

 

OSU Extension Podcast bolsters Farm Management with new Co-Hosts

By Wm. Bruce Clevenger, OSU Ext Field Specialist, Farm Management

OSU Extension has surpassed 100 Episodes on the Agronomy and Farm Management Podcast with the leadership of Amanda Douridas and Elizabeth Hawkins.  Amanda Douridas is the OSU Extension Agriculture and Natural Resources Extension Educator in Madison County and Elizabeth Hawkins is an OSU Extension Field Specialist, Agronomic Systems.

On Episode 118, two new co-hosts began to alternate episodes between Agronomy and Farm Management.  Your new farm management co-hosts are Bruce Clevenger, OSU Extension Field Specialist, Farm Management and Josh Winters, OSU Extension Agriculture and Natural Resources Extension Educator, Jackson County.

Bruce Clevenger and Josh Winters will host Farm Management and Amanda and Elizabeth will continue with Agronomy.  “Farm management is important to your farming operations and Elizabeth and I are excited to partner with Bruce and Josh to enhance the farm management piece of the podcast,” says Amanda.

Episode 118 investigates Farm Insurance Policies with guest Robert Moore, J.D., Attorney, OSU Extension Agricultural and Resource Law Program.  “I would challenge you to find a more important component of farm management, that receives less attention than the farm insurance policy,” Robert Moore.

OSU Extension has many ag law resources available at https://farmoffice.osu.edu click on Law Library and Farm Office Blog.  Robert and Peggy Hall author weekly posts and write law bulletins are a wide range of topics from Agritourism to Zoning.

Visit https://go.osu.edu/afm to listen, subscribe, and suggest a topic for future episodes.  Listeners can also search their smart device app for Agronomy and Farm Management to listen and subscribe.

Farm Office Live Webinar Slated for April 21 at 10:00 a.m.

In this month’s webinar, the Farm Office Team will present the following topics:

Legislative and Case Law Update​ (Peggy Hall)

  • Farm Insurance Issues​ (Robert Moore)
  • “What is a ‘Taxable Gross Receipt’ under Ohio’s Commercial Activity Tax?”​ (Jeff Lewis)
  • Inflation and Interest Rates: An Update Including a Closer ​Look at Agricultural Machinery and Equipment​ (Barry Ward)
  • Crop Budgets/Income Outlook for ‘23​ (Barry Ward)
  • Avoid Chance by making 2023 Record Keeping Goals (Bruce Clevenger)

There is no fee to attend this webinar.  However, registration is required at go.osu.edu/farmofficelive

Check out farmoffice.osu.edu for all your farm management and ag & resource law needs.

Don’t Miss the March Madness Edition of the Farm Office Live on March 17

The OSU Extension Farm Office team invites you to attend the March Madness Edition of the “Farm Office Live” Webinar on Friday, March 17 from 10:00 to 11:30 a.m. This monthly webinar allows Ohio farmers and agribusiness personnel to learn more about current farm management and agricultural law issues.

In this month’s webinar, the Farm Office Team will present the following topics:

  • Federal & State Legislative Update (Peggy Hall)
  • New Postnuptial Agreement Legislation (Robert Moore)
  • Marital and Non-Marital Assets (Robert Moore)
  • Selling Timber- Call Before You Cut (Dave Apsley)
  • Update on Crop Input Costs and Crop Budget Outlook for 2023 (Barry Ward)
  • Sales Tax Exemption Issues (Jeff Lewis)
  • 2023 Spring Crop Insurance Update (Eric Richer)
  • Emergency Relief Program (David Marrison)

There is no fee to attend this webinar.  However, registration is required at go.osu.edu/farmofficelive

Check out farmoffice.osu.edu for all your farm management and ag & resource law needs.

Farm Office Live Webinar to be Held on February 17 at 10:00 a.m.

Ohio’s farm and agribusiness industry are invited to attend OSU Extension’s  “Farm Office Live” webinar on Friday, February 17, 2023 from 10:00 to 11:30 a.m.  The Farm Office Team providing farm management and agricultural and resource law updates during this webinar.

This month’s session topics and featured speakers include:

Ohio Land Values and Cash Rents- Barry Ward

Making the 2023 Farm Bill Decision- Chris Bruynis

Legislative Update- Peggy Hall

Understanding Farm Insurance Policies – Robert Moore

Farm Accounting: Chart of Accounts with a Purpose- Bruce Clevenger

Pandemic Assistance Revenue Program (PARP) & USDA Disaster Declarations- David Marrison

There is no fee to attend this session. Register or watch replays at: go.osu.edu/farmofficelive

Thinking about selling home-based or farm-raised foods? Our webinar series offers help

By: Peggy Kirk Hall, Associate Professor, Agricultural & Resource Law

Direct food marketing in Ohio is hot. The latest USDA survey identified 7,107 Ohio farms with direct food sales–third highest in the nation.  That might be why our program receives more legal inquiries about food sales than any other area of law.  And that is also why we’re hosting a three-part webinar series on “Starting a Food Business,” providing an introduction to what a producer needs to know about selling home-based and farm-raised foods directly to consumers and retailers.

The free webinar series will be from 7—9 p.m. on January 24, February 28, and March 28 in 2023, with these different topics each night:

January 24:  Start-Up Basics.  What do you want to sell?  We’ll review initial considerations for selling your food product.  We’ll cover food safety, licensing, legal, and economic considerations for starting up a food business.

February 28:  Selling Home-Based Foods.  Learn about food product development, Ohio’s Cottage Food and Home Bakery laws, and requirements for selling canned foods.

March 28:  Selling Meat and Poultry.  A look at the economics, processing options, and labeling and licensing requirements for selling meat and poultry.

Our teaching team for the webinar series includes:

Nicole Arnold, Asst. Professor and Food Safety Field Specialist for OSU Extension.  Nicole supports food handlers, consumers, and educators with food safety education and risk communication efforts.

Peggy Kirk Hall, Assoc. Professor and Agricultural Law Field Specialist for OSU Extension.  Peggy directs OSU Extension’s Agricultural & Resource Law Program and regularly teaches and writes on food laws.

Emily Marrison, OSU Extension Educator in Family and Consumer Sciences.  Emily’s food science background provides expertise and insight on food safety, product development, and selling home-based foods.

Garth Ruff, Beef Cattle Field Specialist for OSU Extension.  Garth has a background in animal science and specializes in livestock production and marketing, farm management, and meat science.

The webinar series is free, but registration is necessary.  Find details and the registration link at go.osu.edu/foodbusiness.

USDA ERS America’s Farms and Ranches at a Glance – 2021 Financial Performance

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

The United States Department of Agriculture Economic Research Service (USDA ERS) released this report (https://www.ers.usda.gov/webdocs/publications/105388/eib-247.pdf?v=4061.7) in December 2022.  The United States Department of Agriculture Economic Research Service America’s Farms and Ranches at a Glance summarizes a number of metrics about U.S. agriculture.  This paper highlights two indicators (Operating Profit Margin and Current Ratio) of the financial performance of U.S. farms and ranches.

Two Definitions

Since the 1970’s, USDA ERS has defined a farm as any place where, each year, $1,000 of agricultural goods were produced and sold.  USDA ERS uses acres of crops and heads of livestock to determine whether the definition is met.  Farm size is measured by Gross Cash Farm Income (GCFI), a measure of revenue, including acres of crops or numbers of head of livestock produced and sold.

Types of Farms

USDA ERS classifies farms into several types.  The following definitions are taken from the report:

Small family farms (GCFI less than $350,000)

  • Retirement farms: Small farms whose principal operators report having retired from farming, though continuing to farm on a small scale.
  • Off-farm-occupation farms: Small farms whose principal operators report a primary occupation other than farming.
  • Farming-occupation farms: Small farms whose principal operators report farming as their primary occupation. Farming-occupation farms are further sorted into two classes:
  • Low-sales: Farms with a GCFI of less than $150,000.
  • Moderate-sales: Farms with a GCFI between $150,000 and $349,999.

Midsize family farms (GCFI between $350,000 and $999,999)

  • Farms with a GCFI between $350,000 and $999,999.

Large-scale family farms (GCFI of $1,000,000 or more)

  • Large farms: Farms with a GCFI between $1,000,000 and $4,999,999.
  • Very large farms: Farms with a GCFI of $5,000,000 or more.

Nonfamily farms

  • Any farm where any operator and any individuals related to them do not own a majority (50 percent) of the business.

The table below summarizes farms by type, number, acres, and value of farm production.

Financial Performance

The Operating Profit Margin (OPM) is one measure of farm financial performance.  The OPM is the share of gross income that is profit.  In 2021, between 50 and 81 percent of small family farms had an OPM in the danger zone (less than 10 percent).

Large family farms, in 2021, were more likely to have a positive OPM (of at least 25 percent).  Positive on-farm income was also more likely for this classification.

Farms in the medium-risk category had an OPM greater than 10 percent and less than 25 percent.  Between 5 percent and 32 percent of these farms were in this category in 2021.

 

The current ratio is another measure of financial performance.  This ratio is calculated by taking current assets divided by current liabilities and is a simple method to determine whether a farm has enough capital to pay current liabilities.  A ratio less than one indicates a farm is unable to pay its current liabilities if all current assets were liquidated.

In 2021, 57 percent of farms had a current ratio greater than one.

In 2021, 52 percent and 47 percent of retirement and off-farm occupation farms, respectively, had the highest percentage of farms with a current ratio of less than 1.  However, many of these farms rely on off-farm income to compensate for the lower current ratio.

Between 23 percent and 25 percent of moderate, mid-size, and large family farms were in danger of being unable to meet current obligations in 2021.

Assistance

If you are interested in learning more about your financial performance, talk to your lender or your local OSU Extension professional about the OSU Extension Farm Business Analysis and Benchmarking Program.  Additional information is available here: https://farmprofitability.osu.edu/.

Reference

America’s Farm and Ranches at a Glance, 2022, United States Department of Agriculture Economic Research Service, available at: https://www.ers.usda.gov/webdocs/publications/105388/eib-247.pdf?v=4061.7

Regional Ag Outlook and Policy Meetings Set for 2023

By: Mike Estadt, OSU Extension Educator, estadt.3@osu.edu

Ohio State University Extension will present its 2023 Regional Agricultural Outlook and Policy Meetings starting in late January and continuing into February. OSU Extension is the outreach arm of Ohio State’s College of Food, Agricultural, and Environmental Sciences, and the main sponsor of the meetings. Economists from the CFAES Department of Agricultural, Environmental, and Development Economics, Extension specialists in tax policy, ag law and meteorology,  along with other college specialists and invited guests, will serve as speakers.

Held throughout the state, the six outlook meetings will address agricultural topics of interest not only in Ohio, but across the Corn Belt as well. Programs will include presentations on grain market outlook; the dairy industry; agricultural law updates; long-term healthcare; Ohio’s changing climate; energy outlook, international economic outlook, farm real estate values and cash rent trends; farmland preservation outlook; agricultural input price projections; and federal tax updates.

The outlook meetings will be hosted jointly by Union, Madison, and Champaign counties; Pickaway and Ross counties; Clinton and Fayette and individually by Defiance County; Wayne County; and Darke County. Click here for program flyer for the entire series.

Jan 20th, Greenville, Ohio

Register at: go.osu.edu/darkeoutlook

January 26th, Wilmington, Ohio

Register at: go.osu.edu/clintonagoutlook

Jan 27th, Plain City, Ohio

Register at: go.osu.edu/TriCountyOutlook

2023 Outlook Breakfast Flyer

February 3rd, Wooster, Ohio

Register at: go.osu.edu/23wayneoutlook

February 14th, Jewell, Ohio

Register at: go.osu.edu/23defoutlook

February 23rd, Circleville, Ohio

Register at: go.osu.edu/pickawayoutlook

“Outlook meetings have useful take-aways that I have seen farm managers use directly for the upcoming season and planning for the future of the farm business.  Farmers are the CEOs of their farm and collecting unbiased information and putting it into action is essential for success”, according to Bruce Clevenger, Extension Farm Management Field specialist.

For more information regarding a program near you, visit the Ohio Ag Manager website at  https://u.osu.edu/ohioagmanager/

 

 

 

 

 

 

 

 

 

Farm Office Live Webinar Slated for December 16

The Farm Office Team of OSU Extension will be holding their December Farm Office Live Webinar on Friday, December 16 from 10:00 to 11:30 a.m. via Zoom. Farm Office Live is a monthly webinar of updates and outlooks of legal, economic, and farm management issues that affect Ohio agriculture.

In this webinar, the teaching team of Peggy Hall and Robert Moore (Attorneys from the OSU Agricultural and Resource Law Program) and Eric Richer and David Marrison (Field Specialists, Farm Management) will share the following topics:

  • Federal and State Legislative and Legal Updates
  • Time to Review Estate Plans
  • Year End Balance Sheet Strategies
  •  Federal Farm Program Updates
  • Food Safety Certification for Specialty Crops Program
  • Emergency Relief Programs
  • House Bill 95 Beginner Tax Credit Update
  • Upcoming Programs

The webinar is free.  Registration and more details can be made at go.osu.edu/farmofficelive

Starting a Food Business Webinar Series being offered by OSU Extension

Written by Peggy Kirk Hall, Associate Professor, Agricultural & Resource Law

Direct food marketing in Ohio is hot. The latest USDA survey identified 7,107 Ohio farms with direct food sales–third highest in the nation.  That might be why our program receives more legal inquiries about food sales than any other area of law.  And that is also why we’re hosting a three-part webinar series on “Starting a Food Business,” providing an introduction to what a producer needs to know about selling home-based and farm-raised foods directly to consumers and retailers.

The free webinar series will be from 7—9 p.m. on January 24, February 28, and March 28 in 2023, with these different topics each night:

  • January 24:  Start-Up Basics.  What do you want to sell?  We’ll review initial considerations for selling your food product.  We’ll cover food safety, licensing, legal, and economic considerations for starting up a food business.
  • February 28:  Selling Home-Based Foods.  Learn about food product development, Ohio’s Cottage Food and Home Bakery laws, and requirements for selling canned foods.
  • March 28:  Selling Meat and Poultry.  A look at the economics, processing options, and labeling and licensing requirements for selling meat and poultry.

Our teaching team for the webinar series includes:

  • Nicole Arnold, Asst. Professor and Food Safety Field Specialist for OSU Extension.  Nicole supports food handlers, consumers, and educators with food safety education and risk communication efforts.
  • Peggy Kirk Hall, Assoc. Professor and Agricultural Law Field Specialist for OSU Extension.  Peggy directs OSU Extension’s Agricultural & Resource Law Program and regularly teaches and writes on food laws.
  • Emily Marrison, OSU Extension Educator in Family and Consumer Sciences.  Emily’s food science background provides expertise and insight on food safety, product development, and selling home-based foods.
  • Garth Ruff, Beef Cattle Field Specialist for OSU Extension.  Garth has a background in animal science and specializes in livestock production and marketing, farm management, and meat science.

The webinar series is free, but registration is necessary.  Find details and the registration link at go.osu.edu/foodbusiness