Financial Management

Feb

15

2012

State Treasurer Josh Mandel Supporting Ohio Farmers Through Ag-LINK

The Agricultural Linked-Deposit program (Ag-LINK) is sponsored by State Treasurer Josh Mandel. In an effort to help Ohio farmers offset the high costs of operating funds, Ag-LINK provides an interest rate reduction on loans or lines of credit up to $100,000. This program applies to farmers, including but not limited to traditional farming, aquaculture, livestock orchards and hydroponics.

Ag-LINK has been increasing opportunities for Ohio farmers to operate and thrive for more than 25 years. As a result, Ag-LINK has helped more than 40,000 farmers receive reduced-rate financing on approximately $2.8 billion dollars. State Treasurer Josh Mandel is proud to support Ohio’s farmers through Ag-LINK.

How Do Farmers Qualify?

Eligible recipients must meet the following criteria: Be organized for profit Have headquarters and 51% of operations maintained in Ohio Obtain an operating loan or line of credit from an eligible bank or Farm Credit Lender Use loan exclusively for agriculture purposes Agree to comply with all program and bank regulations

Ag-LINK accepts applications on an annual basis from January to March. This year’s applications are due March 9, 2012.

Please contact State Treasurer Josh Mandel’s office by visiting www.ohiotreasurer.gov or calling 1-800-228-1102, option #3 for more information.

February 2012, Financial Management

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Jan

09

2012

2011 Farm Business Analysis – The time is now!

by: Dianne Shoemaker, Field Specialist, Dairy Production Economics shoemaker.3@osu.edu Grain prices rocked in 2011 (if you were selling!), and milk prices were pretty nice too, but net farm income will vary from outstanding to poor depending on a number of factors. Were you selling grain or buying feed being one of the major factors. How did your farm do? You surely have a general sense…you were either pre-paying to manage income tax liabilities or that wasn’t an issue…but how did it do by the numbers? Direct costs, total costs, and net returns per acre, per bushel, per ton of crops grown. Total cost of production per cwt, feed cost per cwt, net farm income per cow. These are important numbers for every farm as they monitor individual enterprise profitability, develop and monitor risk management plans, and look for opportunities. What was the return on assets? Return on equity? What were the Farm Financial Standards Council “Legal 21” financial measures? How did your farm do this year compared to last year? How does your farm stack up against all of your competition? Against all farms your size? Against the top 20% of both groups? Need help answering all of these questions? Completing your farm’s financial analysis for 2011 using the FINAN with enterprise analysis program is an organized and effective way of getting those answers done each year…with the added benefit of a growing state, regional and national da...
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Financial Management, January 2012

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Dec

30

2011

Farm Business New Year’s Resolutions

By: Mark Mechling, Extension Educator, OSU Extension, Muskingum County As we begin 2012, we look forward to new opportunities and challenges. Many of us develop resolutions (lose weight, stop smoking, spend more time with family) yet fail to achieve the impact we wanted. Why? Perhaps our resolutions are too vague or broad, not written down or too difficult to reach. Resolutions and goals are similar. They are definite statements of how you plan to achieve your vision of the future. In management education they are referred to as SMART goals. They should be Specific, Measurable, Attainable, Rewarding and Timed. Goals should focus your attention, energy and action on desired results. Consider the following when making your new year’s resolutions or goals- Write them down, start small, share them with others, keep them in front of you on a daily basis and reward yourself when successful. Here are a few management resolutions that you might want to consider adding to your list for the new year. In 2012, I resolve to: Participate in at least one OSU Extension management education program such as Annie’s Project or a landowner’s program on oil and gas leasing. Conduct at least two family business meetings to discuss conflict resolution, job descriptions, succession strategies and other long range plans. Read the OSU Extension Fact Sheet by Chris Zoller on family business meetings at : http://ohioline.osu.edu/bst-fact/pdf/3612.pdf for additional informat...
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Financial Management, January 2012, Labor Management

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Dec

07

2011

Insurability of Crops Following Cover Crops

SPRINGFIELD, Ill., December 1, 2011 – An announcement made by the Risk Management Agency (RMA) outlines changes that will provide producers more flexibility when insuring a crop that follows a cover crop in the states of Illinois, Indiana, Michigan, and Ohio. Heavy spring rains last year delayed planting in parts of the Midwest raising concerns about the impact a cover crop may have on the insurability of a subsequent spring crop. Restrictions limited insurance coverage on crops that followed a cover crop that was harvested or reached the budded stage in the same crop year. For 2012, crops planted following a cover crop are insurable as long as the cover crop is killed on or before June 5th. Whether the cover crop has headed, budded or has been harvested no longer effects insurability. These changes affect corn, popcorn, sweet corn, hybrid seed corn, pumpkins, soybeans, grain sorghum and processing beans. The cover crop practice is defined as a crop planted within twelve months of planting the insurable crop and is recognized as a sound agronomic conservation practice for the area. Brian D. Frieden, Director of the Springfield Regional Office, RMA, said that this change recognizes the importance of crop insurance in protecting a producer’s livelihood and conservation in protecting the soil. For more details on how cover crops may impact your crop insurance policy, contact a crop insurance agent. Winter is the perfect time to review your crop insurance needs fo...
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Farm Policy, Financial Management, January 2012

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Dec

02

2011

Get it on the calendar – taking year end inventories and creating or updating balance sheets!

By: Dianne Shoemaker, OSU Extension Educator Give your farm business a gift that will keep on giving and dedicate a few hours to updating – or creating, if you don’t already have one- your farm business’s balance sheet. Whether you consider it a “year end” or “beginning” balance sheet, it really doesn’t matter. It will be your 2011 year end and your 2012 beginning balance sheet. What is really important is that it be completely and accurately done. The balance sheet is a numerical snapshot of your business at a particular point in time. What was owned and what it was worth on that day balanced by how much was owed for what and to whom it was owed. While some of those whos, whoms and whats can be reconstructed fairly well months after January 1, others cannot. There is no substitute for going out during the first week of the year and inventorying animals, feed, seed, fertilizer, fuel, supplies, and any other inputs that are used in production at your farm operation. At the same time you are gathering all sorts of financial information for tax purposes, update checking, saving and hedging account balances. When all final 2011 loan statements arrive in the mailbox or via internet, update loan information on the balance sheet as well. Good, complete financial statements including balance sheets are important management tools for all farm businesses, large, small, beginning, and on-going. Once good balance sheets and other financial state...
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December 2011, Financial Management

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Nov

30

2011

Year End Farm Record Keeping Issues

By: Chris Bruynis, Assistant Professor & Extension Educator, OSU Extension. With the size and scope of many farm businesses today keeping accurate farm records are more critical than ever. The first reason to prepare accurate farm records is to allow management to make critical management decisions. Farm records are needed to determine resource use efficiency, which in turn indicates whether or not the farm business is profitable. Farm records, including enterprise analysis, are also essential for planning and decision making for the business. A second reason for keeping farm records is for income tax management. Good records are needed to accurately determine potential tax liability and allows for tax planning before the end of the fiscal or calendar year. Poor farm records will typically result in increased tax liability of the farm owner. Obtaining credit is the third reason for keeping farm records. Good financial information provides lenders the necessary information needed to make lending decisions. In addition to determine the amount of the loan, this information is helpful in determining the interest rate a farm business owner may pay. Characteristics of a Good Record Keeping System The characteristics of a good record keeping system include easy to use and records the necessary information detail. Depending on the complexity of the business, the amount of detail will vary. Some businesses will want to keep detailed records down to the enterprise or lo...
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December 2011, Financial Management, Tax Management

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Nov

30

2011

Farm Business Risk Management

Farming has its share of volatility and risk associated with production, marketing, and financing the business. Michael Boehlje and Brent Gloy from Purdue have written an excellent article on managing the risk and capturing the opportunity in crop farming. They offer nine risk management strategies that farmers should be considering in today’s volatile environment. To read the full article go to: http://www.agecon.purdue.edu/extension/pubs/paer/pdf/PAER11_2011.pdf.

December 2011, Financial Management

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Nov

07

2011

Crop Input Outlook 2012

By: Barry Ward, Leader, Production Business Management, OSU Extension, Department of Agricultural, Environmental and Development Economics Crop profitability prospects for 2012 are positive for the three major row crops in Ohio. Input costs have increased from last year but high futures prices for 2012 crops allow producers to plan for positive margins for next year. OSU Extension Enterprise Budget projections show positive returns for corn, soybeans and wheat in 2012. These budgets are available online at: http://aede.osu.edu/programs/farmmanagement OSU Extension Budgets show projected variable (cash) costs for corn, soybean, and wheat production to all be 10% higher in 2012 versus 2011. Higher commodity prices and higher costs lead us to a riskier production year as the cash investment in an acre of corn will top $400 (excluding land, machinery and labor costs) and in some production scenarios be closer to $450 per acre. The cash investment in an acre of soybeans or wheat will be in the $200-$250 range. Fuel The Energy Information Administration (EIA) estimates the average price for West Texas Intermediate Crude Oil at $88.00 per barrel for 2012 which is a 4.7% decrease from 2011. This is due to slightly lower oil consumption growth projections for 2012. The EIA projects natural gas prices to increase 4.3 percent in 2012. Expected tightness in the market is the reasoning, but this projection is harder to reconcile with the increased production capabilities ...
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Financial Management, November 2011

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Nov

07

2011

Move Over Brother; the Farmer’s Daughter is Coming Home to the Farm, Too!

By Julia Nolan Woodruff, former OSU Extension Educator Transition planning is as important as ever, as we bring a new generation, including both sons and daughters, into the farm business. It was once a given that the son, no matter where they fell in the birth order, would be the one or ones who would carry on the family farming business. That’s not to say that in years gone by there weren’t instances that the daughter became the farmer, but it certainly was more the norm that the son was presented with the opportunity. Today, that is becoming less and less the case as more daughters are stepping into farming roles that require more than just looking the part of the farmer’s daughter we hear about in country songs. Farming has seen many changes and advancements in technology that has allowed and even encouraged more daughters to think about returning to a business that was once thought of as a ‘man’s business.’ Technology has changed some of the physical aspects of the job, creating a chance for women who may not possess the same physical stature of men to be able to do the job just as well. There is also a strong business management side of farming that has been a very good fit for many women. Women have filled the role of bookkeeper and bill payer for many years, and are now branching out to include other management roles such as; marketing, accounting, tax planning, human resource management, etc. As farms become larger businesses, women have filled some...
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Financial Management, November 2011, Upcoming Events

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Sep

23

2011

2012 Ohio Corn, Soybean and Wheat Enterprise Budgets

By Barry Ward, Leader, Production Business Management, The Department of Agricultural, Environmental, and Development Economics

Newly updated corn, soybean and wheat enterprise budgets for 2012 have been released and were a hot item in the Farm Management Center at the farm Science Review. These 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. These Enterprise Budgets have a new look with color coded cells that will enable users to plug in numbers to easily calculate bottoms lines for different scenarios. Detailed footnotes are included to help explain methodologies used to obtain the budget numbers. Starting this year we will be updating these Enterprise Budgets periodically during the year is large changes occur in price or costs. Budgets will include a date in the upper right hand corner of the front page indicating when the last update occurred.

Click on the following links to download the corresponding budgets:

2012 Corn Budget

2012 Soybean Budget

2012 Wheat Budget

Financial Management, Newsletters, October 2011

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Sep

19

2011

Agricultural Lenders’ Seminars

By:Glen Arnold, Extension Educator, Agriculture and Natural Resources, Putnam County and Barry Ward, Leader, Production Business Management, OSU Extension The Ohio State University Extension has scheduled two seminars in western Ohio for Agricultural Lenders. The dates are Wednesday, November 2nd at the Champaign County Extension office in Urbana and Thursday, November 3rd at the Putnam County Extension office in Ottawa. These seminars are excellent 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. Topics and Speakers for 2011 Seminars: Assessment of Federal Farm and Energy Program Changes to Meet Budget Challenges Carl Zulauf Professor Department of Agricultural, Environmental and Development Economics The Ohio State University Livestock Economics and Outlook for Ohio Farmers Chris Hurt Professor Department of Agricultural Economics Purdue University Precision Farming – Implications for Ohio Farmers and Ag Lenders Scott A. Shearer Professor and Chair Department of Food, Agricultural and Biological Engineering The Ohio State University Crop Inputs Outlook, Enterprise Budgets and Flexible Cash Leases Barry Ward Leader, Production Business Management Department of Agricultural, Environmental and Development Economics The Ohio State University How Lenders Can Utilize FSA Loan Programs to Assist...
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Financial Management, Newsletters, October 2011, Upcoming Events

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Jul

19

2011

Farm Finance for Women Workshop to be offered in August

By Julia Nolan Woodruff, Extension Educator, Erie County After a successful winter workshop series, OSU Extension will be offering a summer version of the Farm Finance for Women workshops. This workshop is designed to address the area of financial risk management. There are a series of four classes; one held each week in the evening from 6:30 – 9:00 pm. The summer workshop will be held in Knox and Delaware Counties. The first two classes will be at the OSU Extension Office located at 1025 Harcourt Rd., Mount Vernon and the second two classes will be held at the OSU Extension office in Delaware County located at 149 N. Sandusky St., Delaware. The classes will be held on August 9, 16, 23, 30. Click for Brochure A more in-depth study of the components of financial risk related to agriculture is discussed by the educators teaching this workshop. Educators will provide tools for women to utilize in order to increase their current financial risk management skills. The program is inspired by the recent Annie’s Project Workshops and organized much like those workshops. However, there is only one area of risk management focus, unlike the past Annie’s Project Workshops. Specific topics that will be addressed include: cash flow, balance sheet and income statement development, Quicken basics for farm recordkeeping, and benchmarking. The workshops will include hands-on activities, computer entry for the Quicken workshop, and homework. Three workshops were piloted this ...
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August 2011, Financial Management, Upcoming Events

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Jul

12

2011

2011 Ohio Swine and Sheep Enterprise Budgets

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

Newly updated Swine and Sheep Enterprise Budgets for 2011 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 2011 include: Corn-Conservation Tillage; Soybeans-No-Till (Roundup Ready); Wheat-Conservation Tillage, (Grain & Straw), Alfalfa Hay and Grass Hay.

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.

August 2011, Financial Management, Newsletters

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Jul

02

2011

How Well Do Farmers Tolerate Risk? Part 2 – Comparisons to Non-farm Business Owners

Brian Roe
Department of Agricultural, Environmental and Development Economics

Last month I asked a simple question: does farmers’ constant exposure to risk and risky decisions make them better able to tolerate risk than other people? Or has it gone the other way and made farmers more likely to want to avoid future risks? Using surveys to get a representative sample of the general population and the population of farmers, I asked a simple question to assess a person’s willingness to take risks on a 1 to 11 scale, where higher numbers means more willingness to take risk. Click here to read the entire article.

Financial Management, July 2011

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Jun

10

2011

Cover Crops and Prevented Planting Update for Illinois, Indiana, Michigan and Ohio

SPRINGFIELD, Ill., June 10, 2011 – An announcement made by the Risk Management Agency (RMA) today states that producers are eligible for prevented planting on acreage where the cover crop was not timely terminated and the subsequent crop was prevented from planting due to an insurable cause of loss.

The statements in the Special Provisions of Insurance are relevant to insuring a spring crop (e.g. corn, soybeans, etc.) following a crop or small grain crop that has reached the headed stage. Producers who plant a crop after a cover crop that has headed, budded, or has been harvested in the same calendar year are required to request a written agreement through their crop insurance agent. Producers have until July 15th to request a written agreement request through their agent, but are encouraged to submit their request as early as possible because a crop inspection is required as part of the written agreement. The inspection must show a yield potential equal to 90 percent of the guarantee. Filing a request early will ensure producers are protected from losses during the growing season.

Producers are encouraged to talk to their insurance agent and ask questions related to their insurance policy, coverage, and prevented planting. Click here to Access the Cover Crops and Prevented Planting RMA News Release

Financial Management, June 2011

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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