Financial Management

May

17

2013

2013 Ohio Field Crop and Livestock Enterprise Budgets

Barry Ward, OSU Extension, Leader, Production Business Management, Department of Agricultural, Environmental, and Development Economics & Greg Reinhart, Undergraduate Student Intern, OSU Department of Agricultural, Environmental and Development Economics Budgeting helps guide you through your decision making process as you attempt to commit resources to the most profitable enterprises on the farm. Crops or Livestock? Corn, Soybeans, Wheat, Hay? We can begin to answer these questions with well thought out budgets that include all revenue and costs. Without some form of budgeting and some method to track your enterprises’ progress you’ll have difficulty determining your most profitable enterprise(s) and if you’ve met your goals for the farm. Budgeting is often described as “penciling it out” before committing resources to a plan. Ohio State University Extension has had a long history of developing “Enterprise Budgets” that can be used as a starting point for producers in their budgeting process. Newly updated Enterprise Budgets for 2013 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 Enterprise Budget projections updated for 2013 include: Corn-Conservation Tillage; Soybeans-No-Till (Roundup Ready); Wheat-Conservat...
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Farm Rents, Financial Management, May 2012

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Apr

11

2013

2013 Ohio Enterprise Budgets

By: Barry Ward, OSU Extension, Leader, Production Business Management, Department of Agricultural, Environmental, and Development Economics Budgeting helps guide you through your decision making process as you attempt to commit resources to the most profitable enterprises on the farm. Crops or Livestock? Corn, Soybeans, Wheat, Hay? We can begin to answer these questions with well thought out budgets that include all revenue and costs. Without some form of budgeting and some method to track your enterprises’ progress you’ll have difficulty determining your most profitable enterprise(s) and if you’ve met your goals for the farm. Budgeting is often described as “penciling it out” before committing resources to a plan. Ohio State University Extension has had a long history of developing “Enterprise Budgets” that can be used as a starting point for producers in their budgeting process. Newly updated Enterprise Budgets for 2013 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/programs/farmmanagement/budgets Enterprise Budget projections updated for 2013 include: Corn-Conservation Tillage; Soybeans-No-Till (Roundup Ready); Wheat-Conservation Tillage, (Grain & Straw); Alfalfa Hay; Alfalfa Haylage; Grass Hay, Swine-Farrow to Wean; Swine- Wean to Finish. Our enter...
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Tags: breakeven, crop budgets

April 2013, Financial Management, Newsletters

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Feb

04

2013

New Micro-Loan Program for New & Beginning Farmers from USDA

by: David Marrison, OSU Extension Educator New and beginning farmers, returning veterans and disadvantaged producers may qualify for a new micro-loan program being offered by the USDA Farm Service Agency. This program will offer applicants a micro-loan designed to help farmers with credit needs of $35,000 or less. Farms seeking a smaller loan for start-up or operational now have a new source of revenue. The loan features a streamlined application process built to fit the needs of new and smaller producers. The new micro-loan program is aimed at bolstering the progress of producers through their start-up years by providing needed resources and helping to increase equity so that farmers may eventually graduate to more traditional commercial loans. Producers can apply for a maximum of $35,000. Microloans can be used for all approved operating expenses as authorized by the FSA Operating Loan Program, including but not limited to: Initial start-up expenses; Annual expenses such as seed, fertilizer, utilities, land rents; Marketing and distribution expenses; Family living expenses; Purchase of livestock, equipment, and other materials essential to farm operations; Minor farm improvements such as wells and coolers; Hoop houses to extend the growing season; Essential tools; Irrigation; and Delivery vehicles. As their financing needs increase, applicants can apply for a regular operating loan up to the maximum amount of $300,000 or obtain financing from a commercial lender un...
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Financial Management, March 2013

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Dec

20

2012

ACRE Payments not Probable in Ohio for 2012

By: Chris Bruynis, PhD, Assistant Professor & Extension Educator, OSU Extension. Recently I read an article that suggested that an Average Crop Revenue Election (ACRE) payment might be possible for the corn crop in Illinois. So, I thought maybe it might be possible here in Ohio. We have relatively good estimates from the National Agricultural Statistical Service (NASS) on the 2012 yield for Ohio. Corn yield is estimated at 123 bushels per acre and soybeans at 43 bushels per acre. Corn represents a decline of approximately 22% and soybeans are down 10% from the five year Ohio Olympic average. The ACRE revenue guarantee for corn in Ohio is $627. To calculate the actual crop revenue for the state, simply multiply the state average yield times the market average price for the year. The market year starts in September of 2012 and goes through August 2013. Since the market average price is not known, one can determine what the market price needs to be less than by dividing the ACRE revenue guaranty by the average yield. For corn this would be $5.10 per bushel. For September through November the Market year average is $6.76 and the USDA is projecting it to be $7.60 for the year. Unless something drastic happens in the grain markets, it is highly unlikely there will be an ACRE payment in Ohio for the 2012 corn crop. The same calculation can be made for the soybean crop. By dividing the Ohio soybean revenue guarantee of $493 by the average yield of 43 bushels per acre you ...
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Farm Policy, Financial Management, January 2012

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Oct

10

2012

2013 Ohio Field Crop Enterprise Budgets

By: Barry Ward, OSU Extension, Leader, Production Business Management, Department of Agricultural, Environmental, and Development Economics and Greg Reinhart, Undergraduate Student Intern, OSU Department of Agricultural, Environmental and Development Economics Budgeting helps guide you through your decision making process as you attempt to commit resources to the most profitable enterprises on the farm. Crops or Livestock? Corn, Soybeans, Wheat, Hay? We can begin to answer these questions with well thought out budgets that include all revenue and costs. Without some form of budgeting and some method to track your enterprises’ progress you’ll have difficulty determining your most profitable enterprise(s) and if you’ve met your goals for the farm. Budgeting is often described as “penciling it out” before committing resources to a plan. Ohio State University Extension has had a long history of developing “Enterprise Budgets” that can be used as a starting point for producers in their budgeting process. Newly updated Enterprise Budgets for 2013 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/programs/farmmanagement/budgets Enterprise Budget projections updated so far for 2013 include: Corn-Conservation Tillage; Soybeans-No-Till (Roundup Ready); Wheat-Conservati...
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Financial Management, Newsletters, October 2012

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Sep

11

2012

2012 Drought: Yield Loss, Revenue Loss, and Harvest Price Option

By: Carl Zulauf, Professor, Department of Agricultural, Environmental, and Developmental Economics, The Ohio State University

This article examines the impact of the 2012 drought on per acre revenue for corn and soybeans compared with the revenue expected in February. The article also examines the impact of crop insurance and, more specifically, the harvest price option, on per acre revenue. The harvest price option permits the insurance guarantee to be calculated using the higher of the insurance plant price determined in February for corn and soybeans or the price determined at harvest. Despite the reduction in yield caused by the drought, per acre revenue is higher in August than in February for the average U.S. acre of corn and soybeans. To emphasis, the previous statement is for the average acre of corn and soybeans; many farms will have yield declines greater than the average decline. However, the harvest price option may result in some of these farms also having August revenue greater than the February revenue. To read the article click here http://aede.osu.edu/sites/drupal-aede.web/files/publications/Zulauf%20-%202012%20Drought%20-%20Yield%20Loss,%20Revenue%20Loss,%20and%20HPO.pdf.

August 2012, Farm Policy, Financial Management, Newsletters

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Sep

11

2012

2012 Farm Bill Debate: Multiple-Year Risk Assistance Programs

By: Carl Zulauf, Professor, Department of Agricultural, Environmental, and Developmental Economics, The Ohio State University

Most farm safety net provisions in the Farm Bills passed by the full Senate and the House of Representative’s Committee on Agriculture can be classified into 3 categories: (1) enhancements to crop insurance, (2) assistance against shallow losses, and (3) assistance against losses that extend across multiple crop years. This paper focuses on the alternative proposals for multiple-year risk assistance. To read the paper go to http://aede.osu.edu/sites/drupal-aede.web/files/publications/Zulauf%20-%202012%20Farm%20Bill%20-%20Mutiple-Year%20Risk%20Programs.pdf.

August 2012, Farm Policy, Financial Management, Newsletters

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Aug

27

2012

Machinery Custom Rates for Silage Operations

by: Barry Ward, Leader, Production Business Management Significant drought conditions in many parts of Ohio have led to an increased interest in harvesting corn as silage. With very few farmers owning silage-making equipment, many are looking to neighbors that do own silage harvesting-equipment or professional custom farming providers to help them meet their needs. Questions arise about custom farming rates and the data that you might use to answer your questions about “what should I pay to have my corn harvested as silage?” Online resources are available that may help in calculating your total costs of performing a given custom operation. Some of the online resources available that may be of assistance include: Farm Machinery Cost Estimates available at: http://faculty.apec.umn.edu/wlazarus/documents/machdata.pdf Machinery Economics at farmdoc: http://www.farmdoc.illinois.edu/manage/index.asp Estimating Farm Machinery Costs http://www.extension.iastate.edu/agdm/crops/html/a3-29.html To access up-to-date custom farming rates for silage harvesting we can access the Pennsylvania 2012 Machinery Custom Rates (http://pss.uvm.edu/vtcrops/articles/PA_CustomRates_2012.pdf) or the 2012 Iowa Farm Custom Rates (http://www.extension.iastate.edu/agdm/crops/pdf/a3-10.pdf). Michigan State University and the University of Kentucky publish Custom Farming Rate Guides as well. Their guides are based on averages of custom rate summaries from other states and do not util...
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August 2012, Financial Management, Newsletters

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Jul

11

2012

2012 Ohio Backgrounding and Stocker Cattle Enterprise Budgets

By: Barry Ward, Leader, Production Business Management, Ohio State University Extension, Department of Agricultural, Environmental, and Development Economics

Newly updated OSU Extension Backgrounding and Stocker Cattle Enterprise Budgets for 2012 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/programs/farmmanagement/budgets

Our enterprise budgets are compiled on downloadable Excel Spreadsheets that contain macros for ease of use. Users can input their own production and price levels to calculate their own numbers. Detailed footnotes are included to help explain methodologies used to obtain the budget numbers.

Authors of these swine budgets include: Steve Boyles, Extension Beef Specialist, OSU Extension; John Grimes, Extension Beef Coordinator, Piketon South Centers, Barry Ward, Leader, Production Business Management, OSU Extension and OSU Department of Agricultural, Environmental and Development Economics ; and Seth Wilkerson, Undergraduate Student, Agribusiness and Applied Economics, OSU Department of Agricultural, Environmental and Development Economics.

Financial Management, July 2012, Newsletters

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Jun

06

2012

Depreciation of Farm Drainage Tile

By Wm. Bruce Clevenger, OSU Extension Educator, Assistant Professor Introduction Agriculture is Ohio's largest industry. Because much of the state is characterized by fertile, flat soils and adequate rainfall, crop production occurs on 45 percent of Ohio's land area. About 55 percent of Ohio's agricultural soils need drainage improvement to minimize soil erosion, excess soil-water conditions in the plant root zone, and unfavorable field conditions for farm equipment in the spring and fall. Improved drainage has been found to reduce water runoff, peak outflow rates, and sediment losses while increasing crop production yields. This increase in productivity increases the value of the land and land rents, but comes at a cost. It frequently will cost $600-$800 per acre to install systematic subsurface drainage tile and this expense must be written off over time as depreciation. Depreciation Depreciation is a term used in accounting to spread the cost of an asset over the span of the assets expected life. Depreciation reduces the value of the asset over time due to its use, wear and tear, or uselessness. Depreciation is a farm business expense deducted on a taxpayer’s Federal tax return. Economic vs. Tax Depreciation Economic depreciation relates to the asset’s declining ability to produce revenue as the asset wears out and ages. Farm managers need to plan for asset repairs and eventual replacement. Tax depreciation is the allowable business expense for IRS pu...
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Financial Management, June 2012, Tax Management

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May

30

2012

2012 Ohio Swine Enterprise Budgets

By: Barry Ward, Leader, Production Business Management, Ohio State University Extension Department of Agricultural, Environmental, and Development Economics Newly updated OSU Extension Swine Enterprise Budgets for 2012 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/programs/farmmanagement/budgets Updated Swine Enterprise Budgets include: Farrow to Wean – Sow Producing 1 Litter Wean to Finish – 1 Hog These enterprise budgets are constructed differently from our other enterprise budgets. They include variable costs only in the budget analysis and offer the user the ability to calculate “Returns Above Variable Costs” and “Returns Above Feed Costs”. Our enterprise budgets are compiled on downloadable Excel Spreadsheets that contain macros for ease of use. Users can input their own production and price levels to calculate their own numbers. Detailed footnotes are included to help explain methodologies used to obtain the budget numbers. Authors of these swine budgets include: Dale Ricker, Extension Swine Specialist, OSU Extension; Barry Ward, Leader, Production Business Management, OSU Extension and OSU Department of Agricultural, Environmental and Development Economics ; and Seth Wilkerson, Undergraduate Student, Agribusiness and Applied Economics, OSU Depart...
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Financial Management, June 2012

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May

29

2012

Should You Consider Growing Wheat?

By: Chris Zoller, Extension Educator (ANR in Tuscarawas County); Brian Roe, AEDE Extension Specialist; & Bruce Clevenger, Extension Educator (ANR, Defiance County) Wheat straw is in high demand across all of Ohio for a variety of reasons, including fewer acres devoted to wheat production, its use in reclamation of gas and oil well drilling sites, and fields being planted to soybeans following wheat harvest without the straw being baled. Reports of higher than normal prices per bale are found across the state. The Farmerstown, Ohio, Auction on May 15 reported large square bales of straw selling for $165 per ton and small square bales bringing $180 per ton, while per-ton prices over the past two months have averaged $167 in central Pennsylvania and $140 in central Illinois. Further analysis of the central Pennsylvania auction prices reveals that these strong prices for straw have persisted for the past two years and are significantly higher than 2010 prices. Obviously, supply and demand will continue to drive the price of straw, and prices per bale will probably decline at some point, but there may be an opportunity for farmers to plant more acres to wheat to meet the demand. If you have wheat this year and had not planned to bale the straw, this may be the year to do so. It’s important to do some homework before jumping into this venture and we encourage farmers to evaluate the pros and cons of growing wheat, baling the straw, and completing an assessment of the ...
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Financial Management, June 2012

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May

01

2012

2012 Ohio Beef Enterprise Budgets

By: Barry Ward, Leader, Production Business Management Department of Agricultural, Environmental, and Development Economics Newly updated OSU Extension Beef Enterprise Budgets for 2012 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/programs/farmmanagement/budgets Beef Enterprise Budgets posted for 2012 include: Market Steer Budget – Days on Feed – 232 (Corn/Soybean Meal Ration)Market Steer Budget – Days on Feed – 250 (Corn/DDG Ration)Yearling Market Steer Budget – Days on Feed – 182 (Corn/Soybean Meal Ration)Yearling Market Steer Budget – Days on Feed – 190 (Corn/DDG Ration)Market Heifer Budget – Days on Feed – 220 (Corn/Soybean Meal Ration)Cow-Calf Budget – Spring Calving Our enterprise budgets are compiled on downloadable Excel Spreadsheets that contain macros for ease of use. Users can input their own production and price levels to calculate their own numbers. Detailed footnotes are included to help explain methodologies used to obtain the budget numbers. Authors of these beef budgets include Dr. Steve Boyles, Extension Beef Specialist; John Grimes, OSU Extension Beef Coordinator; David Dugan, Extension Educator, Agriculture and Natural Resources, Brown, Adams and Highland Counties; Mike Estadt, Extension Educator, Agriculture and Natu...
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Financial Management, May 2012

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Apr

26

2012

Farm Accounting Systems: Ledger vs. Computerized

By: Bruce Clevenger, Assistant Professor & Extension Educator Farm financial records are necessary for accurate, end-of-year tax reporting. While tax reporting is a necessity, farm financial records should do more for the farm manager. A record system needs to be designed to meet the needs of the farm manager and every effort should be made to keep it simple, yet complete enough to include details needed for analysis and tax purposes. Before selecting a farm accounting system, farm managers should ask, “what do I need to know about the farm business to make good economic decisions?” If realistic trigger market prices are difficult to select, maybe a cost of production per unit report is needed. If cash is short at times when bills are due, maybe a cash flow analysis is needed. If the income is realized months or a year after the expenses are incurred, maybe an accrual income statement or enterprise analysis is needed. Changes in inventories of crop and livestock, depreciation and capital gains or losses may comprise a significant part of annual earnings. These must be accounted for to gain a true picture of the financial status and growth. Paper ledgers serve as the standard for many farm operations to track financial records. Ledgers are published by universities and some financial institutions to help farm managers track income and expenses by month on sheets that are manually totaled and subtotaled by category (Schedule F line). The led...
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Financial Management, May 2012, Newsletters

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Apr

06

2012

Income Tax Management of Oil and Gas Lease Payments

by: Chris Zoller, Extension Educator, ANR, Tuscarawas County; Peggy Kirk Hall, Director, OSU Agricultural & Resource Law Program & David Marrison, Extension Educator, ANR, Ashtabula County

A renewed interest in oil and gas leasing in Ohio has the potential to provide landowners with substantial new revenue. Landowners who receive income from oil and gas lease bonus payments and royalty payments must understand the tax implications. Oil and gas income is subject to both federal and state income tax and must be reported appropriately. While a landowner can’t avoid paying taxes on oil and gas revenues, the landowner can use strategies to manage income taxes. This fact sheet reviews how to report oil and gas revenues and summarizes examples of tax management strategies for landowners.

Click here to access the Oil & Gas Tax Fact Sheet

April 2012, Financial Management, Tax Management

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Information presented above and where trade names are used, they are supplied with the understanding that no discrimination is intended and no endorsement by Ohio State University Extension is implied.

Ohio State University Extension embraces human diversity and is committed to ensuring that all research and related educational programs are available to clientele on a nondiscriminatory basis without regard to race, color, religion, sex, age, national origin, sexual orientation, gender identity or expression, disability, or veteran status. This statement is in accordance with United States Civil Rights Laws and the USDA.

Keith L. Smith, Ph.D., Associate Vice President for Agricultural Administration and Director, Ohio State University Extension TDD No. 800-589-8292 ( Ohio only) or 614-292-1868