OSU Extension to offer Ag Lender Workshops

By: Wm. Bruce Clevenger, Extension Educator, Agriculture and Natural Resources, Defiance County

Ohio State University Extension has scheduled three seminars in Ohio for Agricultural Lenders. The dates are Tuesday, October 24th at the OSU Extension Champaign County Community Center Auditorium in Urbana, Ohio; Friday, October 27th at the OARDC Fisher Auditorium in Wooster, Ohio; and  Monday, October 30th at the Putnam County Educational Service Center in Ottawa, Ohio;  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.

2017 Featured Speakers

All three 2017 Ag Lender Seminar locations will feature…

  • Barry Ward, OSU Extension, Assistant Professor, Leader Production Business Management – Examining Land Values, Rents, Crop Input Costs & Margins – 2018
  • Carl Zulauf, Ph.D., OSU Emeritus – Outlook for the 2018 Farm Bill

Additional 2017 Speakers by location:

Urbana, OH – October 24th

  • Grain Market Outlook & Strategies the Farm CEO and Lender Should Know Together, Jim Byrne, Byrne Investment Services
  • Clemens Food Group Hog Processing, Coldwater MI., Dan Groff, Director of Hog Supply, Clemens Food Group
  • USDA Farm Service Agency Update, Darin Leach, FSA Champaign County
  • Fertilizer Applicator Cert Survey Results, Amanda Douridas, OSU Extension

Wooster, OH – October 27th

  • Grain Market Outlook & Strategies the Farm CEO and Lender Should Know Together, Jim Byrne, Byrne Investment Services
  • Looking for Profitability: Managing Dairy Production Costs, Diane Shoemaker, Field Specialist, Dairy Prod. Econ., OSU Extension
  • Clemens Food Group Hog Processing, Coldwater MI., Dewey Shaffer, Growth & Business Div. Coord. Country View Family Farms – Procurement Div. of the Clemens Food Group
  • Water Quality Regulations & Manure Management Considerations, Rory Lewandowski, OSU Extension Educator

Ottawa, OH – October 30th

  • Grain and Livestock Outlook, Chris Hurt, PhD, Purdue University, Professor of Ag Economics
  • Current Ag Law Topics, Peggy Hall, J.D. Ohio State University Extension Field Specialist, Assistant Professor and Director, Ag & Resource Law
  • Clemens Food Group Hog Processing, Coldwater MI., Dan Groff, Director of Hog Supply, Clemens Food Group
  • USDA Farm Service Agency Update, David Drake, Chief, USDA, FSA Ohio State Office

The registration cost to attend one of the Ag Lender Seminars is $65.00 and the registration deadline is one week prior to the seminar you are attending. Payments can be made by check by mail or by credit card (by phone only to 419-782-4771). Registration forms are available online at: https://u.osu.edu/aglenderseminars/

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

Ohio Corn, Soybean and Wheat Enterprise Budgets Project Low Returns for 2018

by: Barry Ward- Leader, Production Business Management, Ohio State University Extension

Production costs for Ohio field crops are forecast to be flat to slightly lower in 2018 depending on the crop and the profit picture remains poor, much the same as in 2017. Variable costs for corn for 2018 are projected to be $322 to $397 per acre depending on land productivity. Lower nitrogen fertilizer costs will likely be offset by somewhat higher fuel, chemical and interest costs.

Variable costs for 2018 Ohio soybeans are projected to range from $195 to $211 per acre. Wheat variable expenses for 2018 are projected to range from $161 to $189 per acre.

With continued low crop prices expected for 2018, returns will likely be low to negative for many producers. Projected returns above variable costs (contribution margin) range from $176 to $350 per acre for corn and $193 to $371 per acre for soybeans. (This is assuming fall cash prices of $3.75 per bushel for corn and $9.60 per bushel for soybeans.) Projected returns above variable costs for wheat range from $130 to $244 per acre (assuming $4.80 per bushel summer cash price).

Returns to land for Ohio corn (Gross Revenue minus all costs except land cost) are projected to range from -$46 to $116 per acre in 2018 depending on land production capabilities. Returns to land for Ohio soybeans are expected to range from $22 to $190 per acre depending on land production capabilities. Returns to land for wheat (not including straw or double-crop returns) are projected to range from -$46 to $61 per acre.

Total costs projected for trend line corn production in Ohio are estimated to be $778 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 $76 per acre. Returns Above Total Costs for trend line corn production are negative at -$155 per acre.

Total costs projected for trend line soybean production in Ohio are estimated to be $566 per acre. (Fixed machinery costs – $108 per acre, land charge – $187 per acre, labor and management costs combined – $54 per acre.) Returns Above Total Costs for trend line soybean production are also negative at -$81 per acre.

Total costs projected for trend line wheat production in Ohio are estimated to be $541 per acre. (Fixed machinery costs – $126 per acre, land charge – $187 per acre, labor and management costs combined – $40 per acre.) Returns Above Total Costs for trend line wheat production are also negative at -$179 per acre.

These projections are based on OSU Extension Ohio Crop Enterprise Budgets. Newly updated Enterprise Budgets for 2018 have been completed and posted to the Farmoffice website:

https://farmoffice.osu.edu/farm-management-tools/farm-budgets

 

 

 

 

 

 

 

 

 

Points to Consider Before Starting a Hops Operation

By: Brad Bergefurd, Horticulture Specialist, OSU South Centers

Hop farming requires a substantial investment in capital, time and management. A business and marketing plan is essential to developing a successful hops operation. A new factsheet has been released by OSU Extension to outline the pre-planning points that should be addressed to create a financially successful hops operation.

Economic considerations and site preparation are two important points for a successful hops operation and integral to a business and marketing plan. Planning in these two areas is essential, and the business and marketing plan should be developed at least one year prior to planting the first hop plants.

New hop growers are also encouraged to consider the details in this fact sheet before making an investment. Production budgets indicate at least $25,000 per acre may be needed to establish a high trellis hop planting and at least a $100,000 investment for a small-scale hop processing, drying, pelletizing, cooling, packaging and freezing facility built to federal and state food safety regulatory standards. This fact sheet looks at:

  • Market establishment
  • Labor needs and availability
  • Facilities for processing and storage
  • Insurance considerations
  • Financial and planning resources
Site preparation considerations including:
  • Site selection
  • Field preparation
  • Plant selection
  • Plant nutrition and fertilization
  • Pest management

The complete fact sheet can be accessed at: https://ohioline.osu.edu/factsheet/anr-58 or can be obtained by calling your County Extension office.

Management Implications from the Scientific Journals

by: Brian E. Roe, Van Buren Professor, AED Economics, Ohio State University Leader, Ohio State Food Waste Collaborative

Sometimes good management advice is difficult to parse from cutting edge academic research.  Below I share a few articles I’ve run across from my reading of the journals that might have some ready implications for managers across the state

Marketing your food locally, and looking for another angle to enhance that ‘local’ premium?

David Willis and colleagues found that consumers were willing to pay nearly twice the premium for local (versus non-local) produce and animal products if the farmer made a donation to a local food bank as part of the sale price. This created a win-win – for the farmer with the enhanced price premium and the local food bank with the donation

Ever wonder if those commercials telling you to drink milk or eat beef are worth the check-off dollars?

It’s tough to tell for sure unless the advertising totally stops, like it did for orange growers a few years ago. Oral Capps and colleague at Texas A&M found that when generic orange juice promotion essentially stopped for a few months during 2001, it resulted in more than a $50 million drop in sales.

 Better to shift to fall calving for beef cow herds?

According to Gavin Henry and colleagues from the University of Tennessee, fall calving was better in their simulations based on the last 20 years of data. Fall calving was more profitable than the spring calving for all feed rations and weaning months. Fall calving was also preferred because it was less risky in terms of profits than spring calving.

How often is it economically optimal to test your soil?

For cotton producers, when considering Potassium, it turns that about every other year makes the most sense, though not much is lost if an every third year schedule is followed instead. Check out these results from Xavier Harmon and colleagues from the University of Tennessee.

Western Ohio Cropland Values and Cash Rents 2016-17

by: Barry Ward, Leader, Production Business Management & Director, OSU Income Tax Schools OSU Extension

Ohio cropland values and cash rental rates are projected to decrease in 2017. According to the Western Ohio Cropland Values and Cash Rents Survey, bare cropland values in western Ohio are expected to decrease from 4.4 to 8.2 percent in 2017 depending on the region and land class. Cash rents are expected to decline from 1.4 percent to 4.2 percent depending on the region and land class.

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 speaking, 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 rates are land productivity and potential crop return and the variability of those crop returns. Soils and drainage capabilities are the two factors that most influence land productivity, crop return and variability of those crop returns.

Other factors impacting land values and cash rents are field size and shape, 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. This fact sheet summarizes data collected for western Ohio cropland values and cash rents.

2017 Study Results 

The Western Ohio Cropland Values and Cash Rents study was conducted from February through April in 2017. The opinion-based study surveyed professionals with a knowledge of Ohio’s cropland values and rental rates. Professionals surveyed were farm managers, rural appraisers, agricultural lenders, OSU Extension educators, farmers, landowners, and Farm Service Agency personnel.

The study results are based on 120 surveys returned, analyzed and summarized. Respondents were asked to group their estimates based on three land quality classes: average, top, and poor. 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 for western Ohio with regional summaries (subsets of western Ohio) for northwest Ohio and southwest Ohio.

Factors Affecting Cash Rental Rates

Ultimately, supply and demand of cropland for rent determines the cash rental rate for each parcel. The expected return from producing crops on a farm parcel and the variability of that return are the primary drivers in determining the rental rates. Many of the following factors contribute to the expected crop return and the variability of that return. Secondary factors may exist and could affect potential rental rates. These secondary factors are also listed.

Expected Crop Return

Rent will vary based on expected crop return. The higher the expected return, the higher the rent will tend to be.

Variability of Crop Return

Land that exhibits highly variable returns may have rents discounted for this factor. For example, land that is poorly drained may exhibit variability of returns due to late plantings during wet springs.

Factors Affecting Expected Crop Return and Variability of Crop Return:

Land (Soil) Quality: Higher quality soils translate into higher rents.

Fertility Levels: Higher fertility levels often result in higher cash rents.

Drainage/Irrigation Capabilities: Better surface and sub-surface drainage of a farm often results in better yields and higher potential cash rent. Likewise, irrigation equipment tied to the land will allow for higher yields, profits and rents.

Size of Farm/Fields: Large farms/fields typically command higher average cash rent per acre due to the efficiencies gained by operators.

Shape of Fields: Square fields with fewer “point rows” will generally translate into higher cash rents as operators gain efficiencies from farming fields that are square.

Previous Tillage Systems or Crops: Previous crops and tillage systems that allow for an easy transition for new operators may enhance the cash rent value.

Field Border Characteristics: Fields surrounded by tree-lined fencerows, woodlots or other borders affecting crop growth at the field edge will negatively impact yield and therefore should be considered in rental negotiations.

Wildlife Damage Potential: Fields adjacent to significant wildlife cover including woodlots, tree lined fencerows, creeks, streams, and such may limit production potential to border rows and should be considered in rental negotiations.

Secondary Factors Affecting Rental Rates:

Buildings and Grain Storage Availability: Access to machinery and grain storage may enhance the value of the cropland rental rate.

Location of Farm (Including Road Access): Proximity to prospective operators may determine how much operators are willing to bid for cash rents. Good road access will generally enhance cash rent amounts.

USDA Farm Program Measurables: Farms that participate in the USDA Farm Program and have higher “program yields” may command higher cash rents than non-program farms.

Services Provided by Operator: Operators that provide services such as clearing fence rows, snow removal and other services may be valued by the landowner. This may even be a partial substitute for cash rent compensation.

Conditions of Lease: Conditions placed on the lease by the landowner may result in fewer prospective operators and a lower average cash rent.

Payment Dates: Leases that require part or all of the rent to be paid early in the year (up-front) may result in lower rental rates due to higher borrowing or opportunity costs for the operator.

Reputation of Landowner/Operator: Reputations of the parties may play a part in the cash rental negotiations. A landowner with a reputation of being difficult to work with may see cash rents negatively affected by this reputation. Farmers with a similar negative reputation may have to pay higher rents.

Special Contracts: Farms with special contract commitments may restrict the operator from changing crops based on market conditions. This may negatively impact cash rents. There may also be contracts that positively affect cash rents such as high value crop contracts or contracts for receiving livestock manure.

 

To access the complete summary go to:

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

 

Farm Management Program Manager Career Opportunity at Ohio State University

Source: The Department of Agricultural, Environmental, and Development Economics

The Department of Agricultural, Environmental, and Development Economics (AEDE) at The Ohio State University (OSU) is searching for new position as Manager for our Farm Management Program. The incumbent will develop and implement a comprehensive and innovative farm management program that addresses critical farm management issues affecting Ohioans, including marketing and price analysis, farm financial management and investing, risk evaluation and management, agricultural processing, environmental issues, and farm entry among other issues, and integrates AEDE’s research, teaching and outreach in the area.  The Farm Management Program Manager acts as a liaison between faculty members in the AEDE Department who are conducting research on areas related to Farm Management, and with OSU Extension faculty and field specialists throughout the state.  The Manager will also lead and/or collaborate on externally funded research projects that integrate OSU faculty in the field with AEDE faculty.  In collaboration with the AEDE Outreach and Communications Manager, the Farm Management Program Manager will develop and manage communications and outreach strategies, and contributes communications content for AEDE’s farm management program and serves as an active member of the AEDE Outreach Committee.

Candidates for this position will have at least a Master’s Degree in economics, applied economics or agribusiness or equivalent educ/exp, and are also required to have experience in agribusiness/farm management.  Candidates will have the ability to lead integrated initiatives from inception to implementation, will have experience in program planning and administration, and must be collaborative and work well in a diverse team-oriented environment with superior verbal and written communications skills.

Applications will be accepted through the Careers at OSU website, https://www.jobsatosu.com/postings/79928, starting July 8 and running through August 6.  We will begin screening application on August 6.

For question on this position, please contact the AEDE Outreach Program Director, Professor Brent Sohgnen, at sohngen.1@osu.edu.

Proposal extends hunting and fishing license exemptions for grandchildren

By: Peggy Hall, Agricultural Law Specialist, OSUExtension

A bill in Ohio’s House of Representatives proposes amending Ohio’s hunting and fishing laws to expand exemptions from hunting, fishing and trapping licenses for grandchildren of landowners.

House Bill 272, sponsored by Rep. Householder (R—Glenford) and Rep. Kick (R—Loudonville) proposes a change to current law, which permits grandchildren to hunt, fish or trap on their grandparent’s land without a license only up to the age of 18.  The proposal revises the law to allow grandchildren “of any age” to be exempt from licensing requirements when hunting, fishing or trapping on their grandparent’s land.

The bill also extends hunting and fishing privileges to veterans. The proposed legislation would provide a partially disabled veteran the same free hunting and fishing license privilege currently afforded to a veteran with a total disability.

“Hunting and fishing are family activities,” said Rep. Householder upon introducing the bill. “They should be enjoyed without government intrusion.”

H.B. 272 is currently before the House Energy and Natural Resources Committee and is available for viewing here.

Ohio Will Soon Permit Certain Agricultural Utility Vehicles to Travel on Public Roads

Written by: Chris Hogan, Law Fellow, OSU Agricultural & Resource Law Program

A new Ohio law affects farmers that plan to use certain utility vehicles this planting season, including Gators, Mules and other utility vehicles with a bed designed to transport cargo. The new law is part of the 2018-2019 transportation budget, formally known as House Bill 26. HB 26, which goes into effect on June 30, 2017, permits vehicles to travel on any public road or right of way—other than a freeway, when travelling from one farm field to another for agricultural purposes.

Under HB 26, utility vehicles are now expressly required to display a triangular Slow-Moving Vehicle (SMV) emblem. Previously, it was up to local law enforcement to interpret the law and decide whether a utility vehicle should have a SMV. The new law also clearly allows utility vehicles to travel on public roads between farm fields, whereas the old law required farmers to know whether the county or township allowed utility vehicles on the road. Utility vehicle operators can read more about the old law in our previous blog post on APVs, ATVs, and four-wheelers here.

What Qualifies as a “Utility Vehicle?”

Farmers should be aware that this law only covers what it defines as “utility vehicles.” This means that the law only applies to vehicles designed with a bed, for transporting material or cargo related to agricultural activities. Not all ATVs and APVs will be included in this definition.

What to Know Before Driving a Utility Vehicle on the Road

The law is good news for farmers who plan to use utility vehicles this season. If farmers plan to use a utility vehicle on the farm, they should know the following before taking the vehicle out:

  • In order to use a utility vehicle on a public road, a driver must be traveling from one farm field to another farm field for agricultural purposes.
  • Utility vehicle drivers must display a SMV on any utility vehicle used on a public road as it travels between farm fields.
  • Ohio Revised Code Section 5589.10 prohibits the placement of earth, mud, manure, or other injurious materials on a public highway. Therefore, farmers should avoid leaving such debris in the roadway or clean up the roadway if a utility vehicle leaves mud behind.

More information on HB 26 is here, under Sec. 4511.216 on page 328 of the bill.

Farm Bankruptcies Could Rise

COLUMBUS, Ohio —Declining farm income and farmland values likely will lead to an increase in the number of farmers who are delinquent on their loans and eventually a rise in farm bankruptcies, predicted a pair of Ohio State University agricultural economists.

While the current farm bankruptcy rate is low, two per 10,000 farms nationally, that rate has gone up slightly in recent years and likely will continue to do so, said Ani Katchova and Robert Dinterman, both from the College of Food, Agricultural and Environmental Sciences.

Bankruptcy rates seem to be a lagging indicator of financial stress after debt levels rise and delinquencies on agricultural loans increase, Katchova, Ohio State’s Farm Income Enhancement Chair, pointed out.

“Currently, only a limited number of farmers are experiencing financial distress, but if we see another two to three years of flat or declining income levels, it will be much harder for farmers to service debts. It puts them in a more vulnerable position,” Katchova said. “Farm bankruptcy rates will probably continue to go up in 2017 and beyond if current conditions continue.”

One indicator of financial stress on farmers is the national increase in debt-to-asset ratio, which is projected to be 14 percent this year, a rate that has steadily risen since 2012.

Also, net farm income is expected to decline this year by 8.7 percent to $62.3 billion, the fourth consecutive year of declines after reaching a record high in 2013, according to the U.S. Department of Agriculture’s Economic Research Service.

Farmers financial wellbeing is also strongly tied to the value of agricultural land, Dinterman pointed out. For the past three decades, agricultural land values have been increasing, with the exception of 2009 and 2016, when there were declines, he said.

“When land values rise and then suddenly fall, that seems to trigger bankruptcies across the U.S,’’ Dinterman said.

Offsetting the current financial stress on farmers are low interest rates and farmers’ solid financial standing.

“A lot of farmers are in strong equity positions right now. They have been in a position where they could ride it out a few years, but how many more years can they sustain with farm incomes that seem to be stabilizing into low levels?’’ Katchova asked.

Farmers in financial trouble have a variety of options to pursue through bankruptcy chapters including Chapter 12, which was specifically designed for farmers and fishermen to reduce their financial burden while continuing operations.

Key highlights from Dinterman and Katchova’s research include:

  • While there is a considerable variation across the U.S., farm bankruptcy rates remain low and stable for several Midwest states.
  • Farm bankruptcy rates (Chapter 12 filings) have remained relatively low during the last decade, compared to the rates in the 1980s.
  • The agricultural downturn during the last three years has resulted in a small uptick in farm bankruptcy rates, much of this driven by a slow-down in farmland values.

Katchova presented the farm bankruptcies research at the Federal Reserve Bank of Chicago Ag Conference on Nov. 29, 2016, and at the USDA’s Agricultural Outlook Forum on Feb. 23, 2017.

View Katchova and Dinterman’s USDA Ag Outlook Forum presentation and read their April 2017 Farm Bankruptcies Policy Brief. Learn more about research conducted by Ohio State’s Farm Income Enhancement Program by visiting go.osu.edu/farmincome.

Selling Foods at the Farm: When Do You Need a License?

By: Peggy Hall, Leader, OSU Agricultural & Resource Law Program

With spring in full swing and summer just around the corner, many producers may be considering selling produce, meats, cottage foods and baked goods directly to consumers at the farm property. A question we often hear from farmers thinking about these types of farm food sales is, “do I need some type of license or inspection to sell food from the farm?” The answer to this question depends upon the type of food offered for sale:

  • Sales of foods such as fresh produce or cottage foods do not require a license.
  • Sales of certain types of baked goods require a home bakery license.
  • Sales of multiple types of foods or higher risk foods require a farm market registration or a retail food establishment (RFE) license.
  • The home bakery license, farm market registration, and RFE license involve inspections of the production or sales area.

It is important for a producer to carefully assess the food sales situation and comply with the appropriate licensing or registration requirements. To do so, a producer should identify the type and number of food products he or she will sell and whether the food poses low or high food safety risk.

Our new Law Bulletin, Selling Foods at the Farm: When Do You Need a License? will help producers assess their situations and determine their needs for appropriate licensing, registration, or inspections.  Read the bulletin on http://farmoffice.osu.edu, here.