Western Ohio Cropland Values and Cash Rents 2015-16

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

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

Western Ohio cropland values and cash rental rates are projected to decrease in 2016 due in large part to continued low to negative profit margin prospects for Ohio’s three major row crops (corn, soybeans and wheat). According to the Western Ohio Cropland Values and Cash Rents Survey, bare cropland values are expected to decrease from 4.8% to 11.1% in 2016 depending on the region and land class. Cash rents are expected to decrease from 5.6% to 7.6% depending on the region and land class.

The “Western Ohio Cropland Values and Cash Rents” study was conducted from February through April in 2016. The study is an opinion based survey designed to poll professionals with a knowledge of Ohio’s cropland values and rental rates. Surveyed groups include professional farm managers, rural appraisers, agricultural lenders, OSU Extension educators, Farm Service Agency personnel, landowners and farmers.

One hundred twenty six surveys were completed, analyzed and summarized. Respondents were asked to give responses based on 3 quality classes of land in their area: “average” land, “top” land and “poor” land.  They were asked to estimate long term average (5 years) corn and soybean yields for each land class based on typical farming practices. Survey respondents were asked to estimate current bare cropland values and cash rents negotiated in the current or recent year for each land class. Survey results are summarized for western Ohio. Regional summaries (subsets of western Ohio) are presented for northwest Ohio and southwest Ohio.

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

 

To access the complete summary go to:

http://aede.osu.edu/about-us/publications/western-ohio-cropland-values-and-cash-rents-2015-16

Stress Management During Tough Financial Times

by: Rory Lewandowski, Extension Educator Wayne County

There is no doubt that the production agriculture sector is going through a tough financial period.  In particular, low crop prices and low milk prices are severely impacting row crop and dairy producers.  Financial stress in the farm business often equates to stress within the farm family and can extend to farm employees.  Harmful stress needs to be recognized and managed for personal health, family health and health of the farm business.

Some stress is a normal part of life.  Stress can motivate us to get things done or to make adjustments in our life that balance the stress or maybe remove the stress.  However when stress events begin to add up or stress events are added that don’t allow us to adjust or that are beyond our resources to adjust then stress begins to be harmful.  Symptoms of harmful stress as well as mechanisms and the ability to cope with stress will vary depending upon the individual.  It is important to recognize some common symptoms of stress and if these symptoms continue for prolonged periods of time, to devise a plan to manage stress.

Some common symptoms of stress include: feeling tired all the time, inability to relax, disrupted sleep pattern, irritability, anger, problems getting along with people, anxiousness, feelings of being overwhelmed, emotional outbursts, trouble concentrating, headaches, frequent illness, increased alcohol or tobacco use, and withdrawal.

Developing and maintaining avenues of communication can help farm families cope with stress during tough financial times.  Communication is vital to help relieve the burdens of financial stress and to help generate ideas for problem solving, how to cut production costs, and/or how to increase efficiency or productivity.  Regular communication during stressful financial times can help to reduce a negative environment and to prevent finger pointing and blaming.  It is natural to look for a source to blame, but in the current farm economy low prices are not the fault of any farm manager, family member or farm employee.  In addition, it is known that often just being able to talk about financial problems or feelings of frustration, helplessness and anxiety can be helpful to mental and emotional health.

In a family farm situation, it may take an extra effort to maintain communication during stressful financial times.  Try to put some “structures” in place that will help facilitate regular communication.  An example of this is regularly scheduled family or farm business meetings.  Meetings should have planned agenda items and a set starting and ending time.  Some ground rules should be in place that provide opportunity for everyone to speak and that prevent any kind of personal attacks or blaming.  The focus should be on the farm business.  One of the topics on the agenda might be an update of the current farm financial situation.   This update allows all family members and farm employees to understand the current farm situation, can squash any rumors that may have started, and can help family members and farm employees understand why repairs instead of new purchases are being made, why withdrawals for family living are being maintained or decreased, and why employee raises may be delayed or decreased.  Sharing financial information within this type of business meeting structure can empower family members and employees to feel valued as a team member and new ideas about how to meet financial challenges may be generated.

Communication is vital during times of financial stress and in addition to communicating with family members and farm employees, the farm owner or manager should have a support network that understands the farm’s financial situation.  Someone who can look at the farm situation from a non-personal perspective and that is not as emotionally invested in the farm operation can provide some clearer thinking and/or information that can be helpful in making decisions.  People in this support network may also provide a sympathetic ear that allows some of the financial stress burden to be shared.  These are people that want to see your farm succeed and be passed on to the next generation.  This support network can include your lender, equipment dealer, seed/fertilizer dealer, financial advisor, nutritionist, veterinarian, Extension educator, tax preparer, or other trusted advisors.

For more information about communication during stressful financial times go to the Dairy Issue Briefs section of the OSU Extension dairy web site at: http://dairy.osu.edu/DIBS/dibs.html .

2016 Ohio Corn and Soybean Enterprise Budgets Project Lower Costs But Low to Negative Returns

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

Production costs for Ohio field crops are forecast to be lower again in 2016 but the profit picture remains poor, much the same as in 2015. Variable costs for Ohio corn for 2016 will be 9.6% to 13% lower ($34 to $60 per acre lower) compared to 2015 depending on land productivity and target yield. Variable costs for corn for 2016 are projected to be $325 to $404 per acre depending on land productivity. Variable costs for 2016 Ohio soybeans are projected to be 6.7% to 8.7% lower ($14 to $19 per acre lower) and range from $188 to $203 per acre. Wheat variable expenses for 2016 are projected to range from $170 to $211 per acre, down $18 to $20 per acre (8.6% to 9% lower). Lower fuel and fertilizer prices will be the primary fundamental drivers of lower variable costs in 2016.

With continued lower crop prices expected for 2016, returns will likely be low to negative for many producers. Projected returns above variable costs (contribution margin) range from $194 to $359 per acre for corn and $244 to $429 per acre for soybeans. (This is assuming fall cash prices of $3.75 per bushel for corn and $10.25 per bushel for soybeans.)

Returns to land for Ohio corn (Gross Revenue minus all costs except land cost) are projected to range from -$31 to $122 peracre in 2016 depending on land production capabilities. Returns to land for Ohio soybeans are expected to range from $69 to $245 per acre depending on land production capabilities.

Total costs projected for trend line corn production in Ohio are estimated to be $787 per acre. This includes all variable costs as well as fixed machinery, labor, management and land costs. Fixed machinery costs of $130 per acre include depreciation, interest, insurance and housing. A land charge of $187 per acre is based on data from the Western Ohio Cropland Values and Cash Rents Survey Summary. Labor and management costs combined are calculated at $77 per acre. Returns Above Total Costs for trend line corn production are negative at -$146 per acre.

Total costs projected for trend line soybean production in Ohio are estimated to be $562 per acre. (Fixed machinery costs – $108 per acre, land charge – $187 per acre, labor and management costs combined – $57 per acre.) Returns Above Total Costs for trend line soybean production are also negative at -$30 per acre.

These projections are based on OSU Extension Ohio Crop Enterprise Budgets. Newly updated Enterprise Budgets for 2016 have been completed and posted to the Farm Management Website of the Department of Agricultural, Environmental and Development Economics. Updated Enterprise Budgets can be viewed and downloaded from the following website:

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