Farm Doc Provides Look at PLC and ARC-CO Decision for 2024

OSU Extension appreciates permission to cross post this article written by Farm Doc and published on January 16, 2024.
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First Look at PLC and ARC-CO for 2024

by: Nick PaulsonGary Schnitkey, and Ryan Batts Department of Agricultural and Consumer Economics, University of Illinois and Dr. Carl Zulauf, Department of Agricultural, Environmental and Development Economics, Ohio State University

Because the 2018 Farm Bill was extended, farmers will have the same commodity title choices in 2024 as they have since 2019.  These include the Price Loss Coverage (PLC), Agricultural Risk Coverage at the county level (ARC-CO), and ARC at the individual level (ARC-IC) programs. For the first time, the effective reference prices in 2024 for corn ($4.01) and soybeans ($9.26) will be above statutory references prices ($3.70 for corn, $8.40 soybeans). Wheat’s effective reference price will remain at the statutory level of $5.50.  Those effective reference prices are well below 2024 ARC benchmark prices: $4.85 for corn, $11.12 for soybeans, $6.21 for wheat.  As illustrated in the recently updated for 2024 Farm Bill What-If Tool — a Microsoft Excel spreadsheet — ARC-CO will trigger larger payments when county revenues are driven by low yields, while PLC payments may be larger with moderately low prices and higher yields, as well as in scenarios with extremely low prices.

Payments from either PLC and ARC-CO remain relatively unlikely for corn, soybeans, and wheat, even with lower prices expected for 2024.  There is a higher likelihood of ARC-CO triggering payments on corn and soybean base acres given the higher benchmark prices compared with PLC’s effective reference prices. However, PLC may be attractive if an individual is concerned about corn and soybean prices falling below $3.75 and $9.00 per bushel, respectively.  In addition, producers interested in using the Supplemental Coverage Option (SCO) insurance program will want to enroll in PLC.

2024 ARC/PLC Decisions

The recent 1-year extension of the 2018 Farm Bill means that farmers will once again face the March 15th deadline to make a decision between the PLC and county and individual versions of ARC programs offered through the Commodity Title.

  • Price Loss Coverage (PLC) is a crop-specific fixed price support program that triggers payments if the marketing year average (MYA) price falls below the commodity’s effective reference price. Payments are made on 85% of historical base acres (see farmdoc dailySeptember 24, 2019)
  • Agricultural Risk Coverage at the county level (ARC-CO) is a crop-specific county revenue program. ARC-CO triggers payments if actual revenue (MYA price times county yield) falls below 86% of the benchmark revenue (product of benchmark price and trend-adjusted historical yield for the county). Payments are made on 85% of historical base acres (see farmdoc dailySeptember 17, 2019)
  • Agricultural Risk Coverage at the individual level (ARC-IC) is a farm-level revenue support program. Like ARC-CO, payments are triggered if actual revenue falls below 86% of the benchmark. If an FSA farm unit is enrolled in ARC-IC, information for all commodities planted in the current year is combined together in a weighted average to determine benchmark and actual revenues. If a farmer enrolls multiple FSA farms in the same state, all farm units are combined in determining the averages for actual and benchmark revenues. Payments are made on 65% of historical base acres (see farmdoc dailyOctober 29, 2019).

Decisions are made for each Farm Service Agency (FSA) farm unit. PLC and ARC-CO are commodity-specific and can be mixed and matched on the same FSA farm or across different FSA farms (i.e., PLC for one commodity, ARC-CO for another on the same FSA farm or using different programs for the same crop on different FSA farms). High commodity prices in recent years have implied low likelihoods of payments (see farmdoc dailyJanuary 24, 2023). The likelihood of payments being triggered remain low for 2024. However, lower projected prices for corn, soybeans, and wheat in 2024 combined with higher prices now impacting effective reference and benchmark price calculations increase the likelihood of payments and introduce additional uncertainty into the program decision for 2024.

Effective Reference Prices for 2024

The effective reference price levels for 2024 are set at the higher of: 1) a crop’s statutory reference price, or 2) 85% of the Olympic average of prices over the 5 marketing years from 2018 to 2022. The Olympic average is computed as the simple average of the 3 remaining prices after eliminating the low and high price over the 5 years considered. If applicable, the effective reference price is capped at 115% of a crop’s statutory reference price.  Effective reference price calculations for corn, soybeans, and wheat in 2024 are summarized in Table 1.

The 2024 effective reference prices for both corn and soybeans are above the minimum statutory levels due to multiple years of prices sufficiently larger than the statutory reference prices for both crops from 2018 through 2022.

For corn, 85% of the average of the MYA prices for 2018, 2020, and 2021 are used in computing the $4.01 effective reference price.  For soybeans, 85% of the average for the MYA prices for 2019, 2020, and 2021 are used to set the $9.26 effective reference price.

National MYA prices for wheat have also been higher in recent marketing years, but not enough to result in an increase in the effective reference price for 2024. For wheat, 85% of the average of MYA prices in 2018, 2020, and 2021 is $5.05 resulting in the effective reference price being set at the statutory level of $5.50 for wheat in 2024.

ARC Benchmark Price Calculations

ARC program benchmark prices for each commodity are based on the Olympic average of the 5 prices used in the benchmark calculation.  Prices used are the larger of the crop’s effective reference price for the current year (2024 in this case) and the actual MYA prices over the 5 preceding marketing years with a single year lag (i.e. 2018 to 2022 for the 2024 program year).  Higher prices in recent marketing years, along with the use of the effective reference prices as minimums for each year used in the calculation for corn, soybeans, and wheat results in an increase in the ARC benchmark prices for 2024 compared with 2023 and earlier years. Table 2 summarizes the ARC benchmark price calculation for corn, soybeans, and wheat.

For corn, the actual marketing year average prices in 2018 and 2019 are replaced by the 2024 effective reference price of $4.01, while the actual MYA prices for 2020, 2021, and 2022 are used.  Taking the Olympic average of the 5 prices used for corn results in an ARC benchmark price of $4.85 per bushel. The ARC benchmark calculation for soybeans also replaces the actual MYA prices in 2018 and 2019 with the $9.26 effective reference price to arrive at an ARC benchmark price of $11.12 per bushel for soybeans in 2024.  Wheat’s benchmark calculation involves replacing the actual MYA prices with the $5.50 reference price in 3 of the 5 years (2018, 2019, and 2020) and results in an ARC benchmark price of $6.21 per bushel for wheat in 2024.

Notably, the ARC benchmark prices are all above the effective reference prices for each of the three crops. ARC-CO guarantees 86% of a county’s benchmark revenue, which implies that payments would be triggered when prices fall below 86% of the benchmark price assuming normal yields at the trend benchmark level for the county.  These trigger price levels are $4.17 for corn (0.86 x $4.85), $9.56 for soybeans (0.86 x $11.12), and $5.34 for wheat (0.86 x $6.21).  These trigger prices for corn and soybeans also exceed their respective effective reference prices, suggesting ARC-CO is more likely to trigger payments than PLC.  For wheat the trigger price is below the $5.50 reference price, meaning a larger price decline will be needed to trigger ARC-CO payments than for PLC payments on wheat assuming yields at benchmark levels in 2024.

ARC-CO Benchmark Yield Calculations

The ARC-CO program uses a county specific benchmark yield based on the higher of actual county yields and 80% of the county T-yields used for crop insurance over the 5 preceding crop years with a year lag (2018 to 2022 is used for the 2024 program year).  A county-specific trend adjustment is then added to each year’s ARC-CO yield, resulting in a 5-year history of trend-adjusted ARC-CO yields.

The 2024 benchmark yield calculation for corn in Champaign County, Illinois is provided in Table 3. Actual yields for Champaign County are used for all 5 years.  The trend adjustment factor for Champaign County is 1.97 bushels per acre per year.  Each of the historic yields is adjusted up to a 2024 trend-adjusted yield.  For example, the 2018 actual yield of 235.6 bu/acre is adjusted up by 11.8 bu/acre (6 years x 1.97 bu/acre/year) to a 2024 trend-adjusted yield of 247.5 bu/acre.  The Olympic average of the trend-adjusted yields gives the 2024 ARC-CO benchmark yield of 224.8 bu/acre for Champaign County, Illinois.

PLC and ARC-CO Payments in 2024

We briefly summarize payment calculations for the PLC and ARC-CO programs here.  More detailed explanations are provided in the farmdoc daily articles from September 17, 2019 and September 24, 2019.

PLC payments will be triggered if the 2024 MYA price is below the effective reference price.  Payments for corn would be triggered at prices below $4.01 per bushel. Payments for soybeans would occur at prices below $9.26 per bushel. Payments for wheat would occur at prices below $5.50 per bushel.  PLC payments cover the price gap between the higher of the crop’s actual MYA price and its loan rate and the commodity’s effective reference price multiplied by the PLC payment yield for the farm and paid on 85% of the farm’s base acres.

For example, if the 2024 MYA price for corn is $3.81 the PLC program would trigger payments at a rate of $0.20 per bushel ($4.01 – $3.81 = $0.20).  A farm with a PLC payment yield of 180 bushels per acre would receive a payment of $30.60 per base acre (0.85 x $0.20 x 180 = $30.60).

ARC-CO payments are triggered if actual county revenue falls below the ARC-CO guarantee.  Payments equal the revenue shortfall, capped at 10% of benchmark revenue, paid on 85% of the farm’s base acres.  Actual revenue is the county’s actual yield times the national MYA price. The ARC-CO guarantee is 86% of the product of the ARC-CO price and yield benchmarks. Using corn in Champaign County, Illinois as an example, actual revenue for 2024 would need to fall below $937.81 per acre (0.86 x 224.8 x $4.85).

A 2024 MYA price of $3.81 and a Champaign County corn yield of 225 bu/acre would trigger an ARC-CO payment of $69 per base acre ($937.81-$856.64 = $81.17 x 0.85 = $68.99). A $4.50 MYA price and a Champaign County yield of 205 bu/acre in 2024 would trigger a $13 ARC-CO payment ($937.81 – $922.50 = $15.31 x 0.85 = $13.01).

2024 ARC/PLC What-If Tool

An updated 2024 version of the Excel-based Farm Bill What-If Tool is now available, and can be directly downloaded here. The calculator can be used to compare payment scenarios for the PLC and ARC-CO programs for individual farm scenarios.  The tool provides a tabular comparison of PLC and ARC-CO payments across a range of MYA price and county yield levels.  An example for corn in Champaign County, Illinois is provided below in Figure 1.

The prices across the columns are centered at $4.50 per bushel, the current price projected for the 2024 marketing year used in the January revision to the farmdoc Crop Budgets and consistent with USDA’s current forecast. Yields in the rows are centered at 225 bu/acre, the 2024 ARC-CO benchmark yield for Champaign County.

PLC payments would begin to be triggered at a MYA price for corn of $4.01.  ARC-CO payments would be triggered at any combination of an MYA price and county yield for corn that resulted in revenue below Champaign County’s ARC-CO guarantee of $937.81.

The zero values in the table in Figure 1 are for MYA prices which exceed $4.01, and price and yield combinations which exceed a revenue of $937.81 resulting in no payments from PLC or ARC-CO.  Positive values in green in the table in Figure 1 indicate that the size of PLC payments at that price level would exceed the ARC-CO payment, if applicable, for that price and yield combination.

For example, with a MYA price level of $3.75 and Champaign County corn yield of 250 bu/acre, the PLC payment would be $40 per base acre and no ARC-CO payment would be triggered, resulting in a $40 per base acre payment advantage for PLC. At a MYA price of $4.00 and county yield of 215 bu/acre, PLC would trigger a payment of less than $2 per base acre while ARC-CO would trigger a $66 payment resulting in an ARC-CO advantage of nearly $65 per base acre.

PLC will tend to result in larger payments when prices are sufficiently low to trigger PLC payments and county yields are sufficiently high to trigger low or zero ARC-CO payments. PLC also results in larger payments when prices are extremely low, regardless of yield outcomes, as ARC-CO payments begin to be capped at 10% of benchmark revenue.  Examples of these scenarios can be seen in the first column of the table in Figure 1 where the MYA price is $3.25. Even at the 250 bu/acre county yield level shown in the first row, ARC-CO payments would hit the cap of $93 per base acre for Champaign County (0.85 x 0.10 x 224.8 x $4.85 = $93).  At a $3.25 MYA price and 180 bu/acre PLC payment yield the PLC payment would be $116 per base acre, resulting in the $24 per base acre payment advantage for PLC shown in the first column for all reported yields.

ARC-CO payments exceed those for PLC when county yields are sufficiently low and when prices are moderately low relative to the benchmark and effective reference prices.  These scenarios can be seen by the negative values shaded in red in the table in Figure 1. For example, at an MYA price of $4.25 PLC payments would not be triggered, but ARC-CO would begin to trigger payments at a county yield level of around 220 bushels per acre. At prices of $4.00 or lower, there are price and yield combinations where both programs would trigger payments but ARC-CO payments would be larger than those from PLC.  For example, at an MYA price of $3.75 and a county yield level of 225 bu/acre the PLC payment would be $40 per base acre while the ARC-CO payment would be $80 per acre, a $40 per base acre payment advantage for ARC-CO.

Conclusions

Higher prices in recent years have resulted in higher PLC effective reference prices for corn and soybeans in 2024 as well as higher ARC program benchmark prices.  While wheat’s reference price will remain at the statutory level of $5.50 for 2024, higher MYA prices are now also factoring into the ARC benchmark price calculation for wheat.  With lower prices projected for 2024, the likelihood of triggering ARC and PLC payments is higher than in the past few years but remains relatively low.

The updated Farm Bill What-If Tool can be used to compare payment scenarios for the PLC and ARC-CO programs for 2024, aiding in the commodity program decisions producers must make by March 15th.

ARC-CO will trigger larger payments when sufficiently large yield losses occur and/or prices are not sufficiently below the effective reference price. Given the ARC benchmark prices for 2024, ARC-CO payments have a higher likelihood of being triggered than PLC for corn and soybean base acres.

PLC will trigger larger payments when prices fall below a commodity’s effective reference price.  PLC payments would exceed ARC-CO payments in scenarios where yields are not sufficiently low to trigger large ARC-CO payments.  PLC also has an advantage in very low price scenarios where ARC-CO payments hit the 10% of benchmark revenue cap.

Beyond direct payment comparisons, other considerations may enter a producer’s commodity title decision.  One example is the interaction between commodity program choice and eligibility to use the Supplemental Coverage Option (SCO) insurance program. Producers wanting to use SCO will need to make sure those acres are enrolled in PLC.  ARC-IC should also be considered as an option.  The farmdoc daily article from October 29, 2019 lays out situations where producers may consider ARC-IC.

Future articles leading up to the March 15th commodity program and crop insurance deadlines will further analyze factors that may influence producers’ decisions for 2024.

References

Paulson, N. and G. Schnitkey. “Revised 2024 Crop Budgets.” farmdoc daily (14):6, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, January 9, 2024.

Schnitkey, G., J. Coppess, N. Paulson, C. Zulauf and K. Swanson. “The Agricultural Risk Coverage — County Level (ARC-CO) Option in the 2018 Farm Bill.” farmdoc daily (9):173, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, September 17, 2019.

Schnitkey, G., C. Zulauf, K. Swanson, J. Coppess and N. Paulson. “The Price Loss Coverage (PLC) Option in the 2018 Farm Bill.” farmdoc daily (9):178, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, September 24, 2019.

Schnitkey, G., R. Batts, C. Zulauf and N. Paulson. “2023 Commodity Title Choices: ARC-CO and PLC.” farmdoc daily (13):13, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, January 24, 2023.

Zulauf, C., B. Brown, G. Schnitkey, K. Swanson, J. Coppess and N. Paulson. “The Case for Looking at the ARC-IC (ARC-Individual) Program Option.” farmdoc daily (9):203, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, October 29, 2019.

Disclaimer: We request all readers, electronic media and others follow our citation guidelines when re-posting articles from farmdoc daily. Guidelines are available here. The farmdoc daily website falls under University of Illinois copyright and intellectual property rights. For a detailed statement, please see the University of Illinois Copyright Information and Policies here.

Recommended citation format:
Paulson, N., G. Schnitkey, R. Batts and C. Zulauf. “First Look at PLC and ARC-CO for 2024.” farmdoc daily (14):11, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, January 16, 2024.

First Quarter 2024 Fertilizer Prices Across Ohio

Authors: Amanda Bennett, Eric Richer, Clint Schroeder

Click here for PDF Version of this Article

In December 2023, OSU Extension launched a quarterly survey of fertilizer retailers in the state of Ohio to better understand local fertilizer prices. The survey was completed by 23 retailers across the state of Ohio from 18 different counties. Respondents were asked to quote spot prices as of the first day of the quarter (January 1st) with payment made by January 15th. Sale types included pickup (ie. freight on board or FOB) at the plant (any quantity), direct-to-farm delivery (truckloads), or delivered and applied (poultry litter only). No blending or application charges were to be included in the spot price.

In general survey participants reported the average price of all fertilizers was lower in Ohio compared to the national prices (Quinn, 2024). In our survey, the fertilizer with the most movement in price was anhydrous ammonia with an average price ranging from $700-$900 per ton with an average of $786 per ton. This is slightly lower than some news outlets were reporting in December 2023 at $792 per ton.

Other fertilizers also saw a downward trend including MAP ($797 per ton); potash ($490 per ton); urea ($502 per ton); and UAN-28% ($327 per ton).

The chart below (Table 1.) is the summary of the survey responses. The responses (n) are the number of survey responses for each product. The minimum and maximum values reflect the minimum and maximum values reported. The last column is the simple average of all survey responses for each product. We recognize that many factors influence a company’s spot price for fertilizer including but not limited to availability, geography, volume, cost of freight, competition, regulation, etc.

Table 1. First Quarter 2024 Ohio Fertilizer Prices 

Product

Responses

(n)

Sale Type Min

$/ton

Max

$/ton

Average

$/ton

Anhydrous ammonia 82-0-0 8 FOB Plant $700 $900

$786

UAN 28-0-0 20 Direct to Farm $280 $510

$327

Urea 46-0-0 17 FOB Plant $458 $530

$502

MAP 11-52-0 16 FOB Plant $710 $1136

$797

DAP 18-46-0 13 FOB Plant $699 $785

$735

APP 10-34-0 15 Direct to Farm $495 $605

$569

Potash 0-0-60 20 FOB Plant $445 $510

$490

Ammonium Sulfate 21-0-0-24 14 FOB Plant $395 $606

$449

Ammonium Thio-Sulfate 12-0-0-26 14 FOB Plant $325 $448

$385

 

Another part of the survey focused on organic nutrients. Retailers were asked to report on organic nutrients they sold including poultry litter, sodium nitrate/Chilean nitrate, pelletized feather meal and sulfate of potash. Just four sites reported having organic nutrients for sale. Those data were not analyzed due to low response rate.  If you are a retailer, farmer or crop consultant interested in participating in this study, please contact Eric Richer at richer.5@osu.edu.

Reference:

Quinn, R. 2024. DTN Retail Fertilizer Trends. Accessed online January 10, 2024 at https://www.dtnpf.com/agriculture/web/ag/crops/article/2024/01/03/retail-fertilizer-prices-end-2023.

Farm Office Live Webinar to be held on January 19 from 10:00 to 11:30 a.m.

The OSU Extension Farm Office Team is pleased to be offering a “Farm Office Live” Zoom webinar on Friday, January 19 from 10:00 to 11:30 a.m.

This month’s webinar will feature the following topics:

  • Production and Accounting Goals
  • Ohio Farm Business Analysis and Benchmarking Program
  • Grain Marketing Update
  • Ohio Farm Resolution Services
  • Upcoming Programs
  • Solar Development in Ohio Panel Discussion

To register for this program (or to access replays of previous programs):

go.osu.edu/farmofficelive

More information about this program can be accessed at farmoffice.osu.edu

 

Deadline Approaching: Basics of Grain Marketing Workshop February 8 & 9

By: Wm. Bruce Clevenger, Field Specialist, Farm Management

The registration deadline is approaching for the Basics of Grain Marketing Workshop, February 8 & 9, 2024 at the OSU Extension Union County Office in Marysville, Ohio.  Registration deadline is January 20th.  No grain marketing experience is required.  This in-person workshop offers education and farm ready strategies on topics such as: basis, market carry, margins, cash markets, forward and futures contracts, hedge to arrive and basis contracts, differed price, hedging, storage, and overviews on options, spreads, and crop insurance.  It’s “more than a 2-day workshop”, featuring pre-workshop virtual lesson on calculating grain cost of production and measure of risk comfort. Workshop content will include workshop content and activities, plus a panel of industry professionals.  A post-workshop grain marketing peer group will be offered to strengthen learning into action.  The workshop has 35 limited seats.

Expert instructors: Seungki Lee, The Ohio State University, Grant Gardner, University of Kentucky, and Ben Brown, University of Missouri.  For more information and registration, visit https://go.osu.edu/grainmarketing

Registration is $100 and includes two full days of training and materials, lunches, refreshments, and a networking reception/dinner on the evening of February 8th.  Lodging is own your own, however a block of rooms at a discounted rate are being held up until the registration deadline at a local hotel.  More information can be found at the online registration.

This workshop is possible by the support of grower checkoff dollars via the Ohio Soybean Council and Ohio Corn & Wheat.  This workshop is led by Ohio State University Extension and the Ohio State University Farm Financial Management & Policy Institute.

Are Better Farm Records on Your Resolution List? If so, check out OSU Extension’s Regional Quicken Workshops

Does a new year inspire a re-evaluation of how the farm keeps financial records? If so, OSU Extension is pleased to be offering five Farm Accounting Workshops with Quicken  across Ohio this winter.  These workshops will be held at:

Knox County, February 26 & 27, 2024 – 6:00 pm to 8:30 pm

Madison County, March 5, 2024 – 9:30 am to 3:30 pm

Clinton County, March 6 & 7, 2024 – 6:00 pm to 8:30 pm

Putnam County, March 13 & 14, 2024 – 6:00 pm to 8:30 pm

Jackson County, March 20 & 21, 2024 – 6:00 pm to 8:30 pm

Quicken® is a simple cash accounting system. This single-entry system allows users to record all income and expenses of both the farm and family. It is popular with farmers due to the ease of data entry and its annual subscription price of $60 to $120.  Maybe Quicken® has been thought about but you think it won’t work for a home and a farm business or you would like to see how it works before making the commitment of purchasing. Maybe Quicken® has been thought about but you think it won’t work for a home and a farm business or you would like to see how it works before making the commitment of purchasing.

Workshop participants will use example farm data to learn how to set up accounts, categorize income and expenses, run tax reports, explore recording farm production data, track income/expenses across tax years, and cash flows by enterprise. Hands-on workshop uses an OSU Computer Lab with Quicken® Classic Deluxe software installed. Participants receive workshop manual/home reference with each registration. Participants must be familiar with keyboarding and using a computer mouse. This medium-paced workshop will use a variety of farming examples to maximize the learning experience.

Registration is $60.00 per farm business (2 people per computer). Space is limited to 10 farm businesses at each location. Registration deadline is one week prior to each workshop.  Register and pay at the hosting OSU Extension Office or register online at: https://go.osu.edu/quicken and pay by credit card or pay at the hosting OSU Extension Office.

Join OSU Extension for the “Planning for the Future of Your Farm” Workshop

If you and your family are grappling with the critical issue of how to transition the farm operation and farm assets to the next generation, OSU Extension is here to help.  Attend one of our “Planning for the Future of Your Farm” workshops this winter to learn about the communication and legal strategies that provide solutions for dealing with farm transition needs and decision making.  A webinar version and several in-person options for the workshop are being offered.

This workshop challenges farm families to actively plan for the future of the farm business.  Learn how to have crucial conversations about the future of your farm and gain a better understanding of the strategies and tools that can help you transfer your farm’s ownership, management, and assets to the next generation. We encourage parents, children, and grandchildren to attend together to develop a plan for the future of the family and farm.

Teaching faculty for the workshop are David Marrison, OSU Extension Farm Management Field Specialist, and Robert Moore, Attorney with the OSU Agricultural & Resource Law Program. Topics which will be covered in the workshop include:

  • Developing goals for estate and transition planning
  • Planning for the transition of control
  • Planning for the unexpected
  • Communication and conflict management during farm transfer
  • Federal estate tax challenges
  • Tools for transferring assets
  • Tools for avoiding probate
  • The role of wills and trusts
  • Using LLCs
  • Strategies for on-farm and off-farm heirs
  • Strategies for protecting the farmland
  • Developing your team
  • Getting your affairs in order
  • Selecting an attorney

Webinar version.  You and your family members can attend the workshop individually from the comfort of your homes.  The four-part webinar series will be February 5, 12, 19, and 26, 2024, from 6:30 to 8:30 p.m. via Zoom. Pre-registration is required so that a packet of program materials can be mailed in advance to participating families. Electronic copies of the course materials will also be available to all participants. The registration fee is $75 per farm family.  Register by January 22, 2024 in order to receive course materials in time. Click here to register

In-person workshops.  Our local Extension Educators are hosting in-person workshops at five regional locations across Ohio. Registration costs vary by location due to local sponsorships. Click on the links below to access the individual registration information for each location:

Registration is required.  Find registration information for all workshops at go.osu.edu/farmsuccession

We hope you’ll join us to move forward on planning for the future of your farm!  For questions about the workshop, please contact David Marrison at marrison.2@osu.edu or 740-722-6073.

Farmer and Farmland Owner Income Tax Webinar

Farmer and Farmland Owner Income Tax Webinar
Barry Ward & Jeff Lewis, OSU Income Tax Schools

Are you a farmer or farmland owner wanting to learn more about the recent tax law issues? If so, join us for this webinar on Friday, December 15th, 2023 from 10am to noon. This webinar is a part of our Farm Office Live Series and serves as our Farm Office Live! Webinar for December. To register for this webinar go to: https://go.osu.edu/register4fol

This webinar will focus on issues related to farmer and farmland owner income tax returns as well as the latest news on CAUV and property taxes in Ohio and the big changes to the Ohio Commercial Activity Tax (CAT). This two-hour program will be presented in a live webinar format via Zoom by OSU Extension Educators Barry Ward, David Marrison and Jeff Lewis along with Purdue faculty member Dr. Michael Langemeier. Individuals who operate farms, own property, or are involved with renting farmland should participate.

Topics to be discussed during this webinar include (subject to change based on tax law change):

  • Economic Outlook
  • Depreciation Update
  • Employee vs. Independent Contractor
  • Corporate Transparency Act/Beneficial Owners Information Reporting
  • 1099-K Changes
  • Charitable Remainder Trusts
  • Basis Allocation Land Acquisition – Allocating Basis to Residual Fertility for Future Deductions
  • Defining Farm Income to Avoid Paying Estimated Tax
  • Keeping an Eye Forward on Estate/Gift Tax Limitation
  • Reminder – Keeping an Eye on Tax Cuts and Jobs Act Provisions Sunsetting After 2025 Tax Year
  • Ohio Tax Update (CAUV/Property Tax Update, CAT Changes, Beginning Farmer Tax Credit, Ohio Tax Law Interpretation – Ohio Supreme Court Issues New Ruling)
  • Indiana Tax Update

To register: https://go.osu.edu/register4fol

For more information, contact Barry Ward at ward.8@osu.edu or Jeff Lewis at lewis.1459@osu.edu

Announcing our “Planning for the Future of Your Farm” Winter Workshops

By: Peggy Hall, David Marrison and Robert Moore, OSU Extension

If you and your family are grappling with the critical issue of how to transition the farm operation and farm assets to the next generation, OSU Extension is here to help.  Attend one of our “Planning for the Future of Your Farm” workshops this winter to learn about the communication and legal strategies that provide solutions for dealing with farm transition needs and decision making.  We’ve scheduled both a webinar version and several in-person options for the workshop, with the first in-person workshops coming up soon on December 7 in Celina, Ohio.

This workshop challenges farm families to actively plan for the future of the farm business.  Learn how to have crucial conversations about the future of your farm and gain a better understanding of the strategies and tools that can help you transfer your farm’s ownership, management, and assets to the next generation. We encourage parents, children, and grandchildren to attend together to develop a plan for the future of the family and farm.

Teaching faculty for the workshop are David Marrison, OSU Extension Farm Management Field Specialist, and Robert Moore, Attorney with the OSU Agricultural & Resource Law Program. Topics which will be covered in the workshop include:

  • Developing goals for estate and transition planning
  • Planning for the transition of control
  • Planning for the unexpected
  • Communication and conflict management during farm transfer
  • Federal estate tax challenges
  • Tools for transferring assets
  • Tools for avoiding probate
  • The role of wills and trusts
  • Using LLCs
  • Strategies for on-farm and off-farm heirs
  • Strategies for protecting the farmland
  • Developing your team
  • Getting your affairs in order
  • Selecting an attorney

Webinar version.  You and your family members can attend the workshop individually from the comfort of your homes.  The four-part webinar series will be February 5, 12, 19, and 26, 2024, from 6:30 to 8:30 p.m. via Zoom. Pre-registration is required so that a packet of program materials can be mailed in advance to participating families. Electronic copies of the course materials will also be available to all participants. The registration fee is $75 per farm family.  Register by January 22, 2024 in order to receive course materials in time. Click here to register

In-person workshops.  Our local Extension Educators are hosting in-person workshops at five regional locations across Ohio. Registration costs vary by location due to local sponsorships. Click on the links below to access the individual registration information for each location:

Registration is required.  Find registration information for all workshops at go.osu.edu/farmsuccession

We hope you’ll join us to move forward on planning for the future of your farm!  For questions about the workshop, please contact David Marrison at marrison.2@osu.edu or 740-722-6073.

Summary Paper of the November Coffee and Grain Marketing Webinar Available

By: Seungki Lee, Assistant Professor, Department of Agricultural, Environmental and Development Economics

A summary paper of the “Coffee and Grain” Marketing update which was held on Friday, November 17 has been released by OSUE.  This summary paper shares the market analysis of the November USDA WASDE Report.

Click here to access PDF of the report

The recording of the “Coffee and Grain” Market Update can be viewed at: https://youtu.be/grhtQTADDFs?si=AgEvVYVA3-ot3d1S

This program is sponsored by the Ohio Soybean Council

More information can be obtained by contacting Dr. Lee at:

Seungki Lee Assistant Professor,
lee.10168@osu.edu

Pasture, Rangeland and Forage (PRF) Insurance Enrollment Closes December 1.

by: Eric Richer, Mike Estadt, Aaron Wilson (OSU Extension)

Those producers who have grazing and/or forage production as a part of your operation may consider Pasture, Rangeland and Forage (PRF) insurance as part of a production risk management strategy.  Our colleague, Mike Estadt, Extension Educator, Pickaway County, introduced our readers to the product in this article in November 2021. Extension Livestock Marketing Specialists Dr. Kenny Burdine (Unv. of Kentucky) and James Mitchell (Unv. of Arkansas) have since discussed PRF insurance here: Burdine and Mitchell.

This article shall serve as a quick review of the insurance product.  PRF is a single-peril (rainfall only) and area-based insurance product. It covers less than average rainfall levels in a particular grid up to the level of coverage that a farmer selects. Normal rainfall and deviations from normal rainfall are measured through the National Oceanic and Atmospheric Administration Climate Prediction Center (NOAA CPC). Area-based means that indemnity payments will not be based upon individual producer’s experience, rather, payments will be based upon a grid’s deviation from historically normal rainfall.  A producer will have to make several choices including the coverage level of forage production they wish to insure, the rainfall index (months of precipitation), the productivity level of the field or fields they wish to enroll and the number of acres they wish to insure.

To sign up or find out more about this product, we encourage you to first meet with your crop insurance agent (we are not insurance agents).  If you do not already have an insurance agent, the United State Department of Agriculture-Risk Management Association (USDA-RMA) has an agent locator which may be helpful.

Second, you will want to make sure your pastures, rangelands, or forage (hay) fields have a farm serial number (FSN) at the local Farm Service Agency office (ie. you have reported your crop acres by the required deadlines). Those reported acres will allow you to identify the grid in which your FSN is located. Furthermore, and unlike many other crop insurance policies, you only need enroll a portion of your reported acres. For example, if you only want to enroll 10 acres out of 100 total alfalfa acres, you can. Total reported PRF acres will limit your maximum enrollment.

The third step would be to identify your grid where coverage is sought. A grid in PRF insurance is approximately 17 square miles. Here is RMA’s grid locator tool.

The product then requires you to select at least two but no more than five, 2-month periods in which you want covered.  No one month can be selected in more than one period (ex. you must select June-July or July-August; July cannot be selected twice). Finally, these 2-month periods do not need to coincide with normal forage or pasture production months.

The fifth step is to customize their policy based upon each crop in each grid with a productivity index (PI) ranging from 60% to 150% of the county-based value of production.  For example, a pasture may get a lower PI than a highly productive forage alfalfa crop. Lower PI’s translate into lower premiums and higher PI’s to higher premiums, relatively speaking. Selecting a PI of 100% would assume that you want to insure “normal” production.

Finally, a producer will need to select a coverage level from 70%-90% in 5% increments, like other crop insurance products.  Coverage levels can vary by crop (ex. Alfalfa for forage can have different coverage than red clover for forage).

Indemnities are triggered when the NOAA CPC rainfall falls below the average for the specific 2-month at the level of coverage identified in the policy.  The productivity index (PI) is factored into the indemnity payment at the index level selected. Future articles will address indemnity scenarios.

Overall, the PRF insurance product allows for significant customization by crop, grid, productivity index, and coverage level. It is important to remember that it only protects against low rainfall periods, not periods of excess precipitation. RMA does provide a decision support tool to evaluate historic weather data by grid and month and potential premiums and indemnities. Decision Support Tool.

A 2024 Weather Outlook from a 10,000-foot view.

NOTE: The following is intended to highlight national climate outlook products. The information in this article is NOT A FORECAST and should not be considered as such when deciding on an individual’s participation in the PRF insurance product.

Predicting the weather more than a few days out comes with a high degree of risk, and using historical observations under certain conditions in the past does not guarantee the same outcomes under similar conditions in the future. However, meteorologists analyze long-term weather patterns to get a sense of what might be expected when similar conditions are present.

Currently, the globe is experiencing a strong ‘El Nino’ – an oceanic-atmospheric phenomenon where the sea surface temperatures in the tropical Pacific Ocean are warmer than usual. This often leads to changes in the weather including weakening trade winds in the tropical Pacific region, an extended Pacific jet stream causing wetter than unusual conditions to spread across the southern United States, and warmer, drier conditions across the northern U.S. during the winter season. [For more information, please visit NOAA: National Ocean Service].

The National Oceanic and Atmospheric Administration recently released its 2023-2024 U.S. Winter Outlook, and updated seasonal outlooks throughout 2024 are available at the Climate Prediction Center. 

References:

Burdine, Kenny. “Consider Pasture, Rangeland, and Forage Insurance as a Risk Management Tool.” Ohio BEEF Cattle Letter. Department of Extension, College of Food, Agricultural, and Environmental Sciences, Ohio State University, November 2, 2022.

Estadt, Mike. “Pasture, Rangeland, Forage (PRF) Enrollment Open; A Risk Management Tool Cattlemen Should Consider.” Ohio BEEF Cattle Letter. Department of Extension, College of Food, Agricultural, and Environmental Sciences, Ohio State University, November 3, 2021. https://u.osu.edu/beef/2021/11/03/pasture-rangeland-forage-prf-enrollment-open-a-risk-management-tool-that-cattlemen-should-consider/

Mitchell, James. “Introduction to Pasture, Rangeland, and Forage Insurance for Forage Risk Management.” Cattle Market Notes Weekly. Departments of Extension; University of Arkansas, University of Kentucky, Mississippi State University. https://mailchi.mp/433935e5e695/cattle-market-notes-weekly-20235990?e=97693da52e

“Pasture, Rangeland, Forage Frequently Asked Questions. United States Department of Agriculture-Risk Management Agency. October 14, 2022. https://www.rma.usda.gov/en/News-Room/Frequently-Asked-Questions/Pasture-Rangeland-Forage

“What are El Nino and La Nina?” National Oceanic and Atmospheric Administration. https://oceanservice.noaa.gov/facts/ninonina.html