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Methods to improve cash flow

By Brian E. Ravencraft

A method to address the reduction of unnecessary costs is to first establish which activity of the farm operation generates those costs.

Step 1: Identify activities which generate costs and provide no added value.

Step 2: Decide if changes to that activity will affect business turnover

Answer: NO? Then is the activity necessary or adding value?

Answer: YES? Cost reduction techniques may have adverse effect on business profitability.

Beware: cost cutting can have a long-term negative impact. For some farmers, failure to invest in people, marketing and technology can leave you falling behind your competitors. You are increasingly likely to provide a product and service of inferior quality. You will also be likely to experience above-average team turnover. And ultimately, your customers have a choice, and you will cease to be it.

Deferring payments to suppliers and service providers helps you keep the cash in your pocket longer.

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Ohio Farm Business Analysis Program can help set the stage for farm profitability

By Matt Reese

There is hope for better prices in 2019 for some agricultural sectors, but there is no doubt that there are still challenging times ahead for the farm economy. Understanding the details of farm profitability (or lack of) can make the difference between a vibrant future for individual farms and no future at all.

To help with this endeavor, Ohio State University Extension has created the Ohio Farm Business Analysis Program. The goal of the program is to help farms understand what all the numbers behind profits or losses mean, and learn how to improve farm businesses based on analysis of specifics. The program covers all aspects of the farming business, including crops, livestock and much more.

“This program is a way for farmers to take a very in depth look at where they are at business wise. We look at the whole farm and for the farms that want to put in the time, we can do enterprise analysis so they can drive it down to, ‘What is my cost of production for each of my enterprises,’” said Dianne Shoemaker, Ohio State University Extension field specialist who heads up the program.

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Farmers under fire from legal action

Agriculture is in the crosshairs as class-action lawsuits seek huge monetary awards against agricultural producers, said a panel of experts at a workshop at the American Farm Bureau Federation’s 100th Annual Convention.

Panelists Andy Curliss, CEO of the North Carolina Pork Council; Harrison Pittman, director of the National Agriculture Law Center and Blake Hurst, president of the Missouri Farm Bureau Federation, discussed the recent lawsuits targeting production agriculture and suggested actions that state Farm Bureaus can take to fight these targeted attacks.

AFB Women’s Leadership Committee member Lorenda Overman, moderator of the panel, summarized the law firms’ strategy in North Carolina and the effect of the verdicts on farmers.

“On paper it looks like they’re suing Smithfield Foods, but the farmer is the one on trial,” Overman said. “Once the trial is over and the verdict is read, the farms are depopulated, leaving the farmer with no income. The juries have awarded huge damages, even though all of these farms were in compliance with the law.”

Curliss said that four recent trials in North Carolina have resulted in more than $550 million in damages for 26 plaintiffs, with hundreds of other plaintiffs currently awaiting trials.

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2018 eFields Research Report available

By Elizabeth Hawkins, John Fulton, Jenna Lee

High quality, relevant information is key to making the right management decisions for your farm. The eFields program at The Ohio State University was created to provide local information about critical issues for Ohio agriculture. The 2018 eFields Research Report highlighting 95 on-farm, field scale trials conducted in 25 Ohio counties was released on Jan. 9. Research topics include nutrient management, precision seeding, crop management, soil compaction management, remote sensing, and data analysis and management. To help identify trial locations that are similar to your operation, each study includes information about weather, soil types, and management practices. Additionally, economic analysis was added to select trials this year. QR codes that link to videos featuring the researchers and partner farmers are available in the report.

The 2018 report is now available in both a print and e-version. To receive a printed copy, contact your local OSU Extension office or email digitalag@osu.edu.

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Ohio township bill could impact ag zoning

By Evin Bachelor, Law Fellow, Agricultural and Resource Law Program, Ohio State University

In December, the Ohio House of Representatives and Senate agreed to modifications to House Bill 500, which would make a number of changes to Ohio’s township laws. Some of the highlights of the most recent version include:

  • A board of township trustees must select a chairperson annually.
  • Petitions to change the name of township roads will result in an automatic name change if the county commissioners do not adopt a resolution regarding the petition within 60 days.
  • County commissioners will not be able to vacate township roads unless the applicable board of township trustees have adopted a resolution approving the vacation.
  • A board of township trustees will have the authority to charge a fee against a person who appeals a zoning decision to the board of zoning appeals in order to defray costs associated with advertising, mailing, and the like.
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Daily business records offer numerous benefits

By Leisa Boley Hellwarth, a dairy farmer and attorney near Celina

They say the older you are the faster time flies. Given that it is now 2019, I am not exactly feeling like a spring chicken. Where did 2018 go? And why are milk prices still so low?

Since we are starting a new year, it seems appropriate to discuss one practice that should be implemented by every farm or business, if they are not already doing it. Create a daily business record that includes basic information of what transpired that day. For instance, what vendors visited the farm? Were there any major purchases? What activities took place? What was the weather like? Did anything significant happen with the livestock or crops?

This record can be handwritten or on the computer; it makes no difference. Choose a method that is convenient and conducive to completing on a daily basis. The important aspect of this is that it becomes a daily business activity, every single day.

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Farm Succession Workshop in Celina Jan. 30

A workshop on farm transition and succession will be held 9:30 a.m.-4 p.m. Jan. 30, 2019, at Romer’s Catering at Westlake, 1100 S. Main St., Celina.

This event is designed to help families develop a succession plan for their farm business, learn ways to transfer management skills and the farm’s business assets from one generation to the next and learn how to have conversations about the future of one’s farm. Attendees are encouraged to bring members from each generation to the workshop.

Featured speakers will include David Marrison, OSU associate professor; extension educator, attorney Robert Moore with Wright & Moore Law Co., Peggy Hall, OSU assistant professor and an attorney in agricultural law; and Denny Riethman, Mercer County OSU Extension educator. Registration is limited to the first 60 people. The cost is $20 per person and $30 per couple. The registration deadline is Jan. 23. Contact the Mercer County OSU Extension Office at 419-586-2179 to register.

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Farm Bill could help farms battling low prices

Dairy farmers have a stronger safety net against low milk prices and high feed costs under the new federal farm bill, and more federal dollars will be spent to spur international trade of American agricultural products.

Both changes could help farmers at a time when revenues from selling milk, corn and soybeans have dipped and markets have shrunk.

Under the new farm bill, dairy farmers will pay lower premiums for a federal program that provides them payments when the margin between milk prices and feed costs dips below a certain level set by the government. The top level of coverage was raised from $8 to $9.50 per hundred pounds of milk, which will increase payments to dairy farmers.

“This is not a trivial change,” said Carl Zulauf, an agricultural economist and professor emeritus with the College of Food, Agricultural, and Environmental Sciences (CFAES) at The Ohio State University.

“It could mean a lot to dairy farmers.”

Ohio’s dairy farmers have recently been leaving the business at a higher than usual rate as a result of a drop in the price they’ve gotten for their milk for several years.

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Farm bankruptcies stabilizing

By Robert Dinterman and Ani L. Katchova, Farm Income Enhancement Program, Department of Agricultural, Environmental and Development Economics, The Ohio State University

Chapter 12 bankruptcy filings have been fairly stable over the past few quarters and have stabilized to around the same levels as when chapter 12 became a permanent fixture of the bankruptcy code in 2005. The US experienced elevated levels of chapter 12 filings towards the end of 2009 through mid-2012, but aside from the second quarter of 2017 there has not been a quarter with more than 150 chapter 12 bankruptcies filed and that is a good sign for the agricultural sector. In general, the second quarter, which consists of the period between April 1st and June 30th, is the quarter that typically has the highest number of bankruptcies in a year.

While nationally there has been a stabilization of farm bankruptcies, there is still substantial regional variation in farm bankruptcies and some areas are doing better than others across the U.S.

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2019 Farm Management School to be offered in Darke County

OSU Extension will be partnering with Farm Credit Mid-America to hold a Farm Management School this winter to address this need from the agriculture community. The series is for all those in farming or agriculture businesses interested in finances, business plans and how to make their operation successful.

January 3              Farm Mission and Business Plans

January 10           Record Keeping and Balance Sheets

January 17           Budgets and Enterprise Analysis

February 7           Ag Law and Farm Transition

 

Presenters for the series will include Bruce Clevenger, Dianne Shoemaker, Sharon Harris, Peggy Hall and Sam Custer from Ohio State University Extension. Farm Credit Mid-America team members will also be presenters.

 

OSU Extension, Darke County would like to thank our sponsor Farm Credit Mid-America for their support in holding this program.

Pre-registration and payment required. Download the full flyer and registration at http://go.osu.edu/2019farmmanagementschool . $40 per person. Registration deadline is December 26, 2018.   Registration includes snacks and materials.

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Ohio farm shop provides added space and efficiency

When Pickaway County farmers, Myron and Leo Metzger, outgrew their 3,000 square-foot farm shop, they decided to expand in a big way. Their new farm shop is nearly six times larger, providing not only the additional space they needed, but also greater efficiency.

“At the former shop, we were actually working on repairs outside, since it wasn’t big enough for the newer, larger equipment,” said Myron Metzger. “When the new shop was completed, everyone questioned the need for so much space, but we’re glad to have ample room.”

Metzger Brothers Farms, located near Circleville, was established in 1974 and the two brothers have continued to farm together since then. The recently added shop, designed and built by Morton Buildings, includes over 17,000 square feet of shop and equipment storage space, plus a 24- by 30-foot office with refrigerator and shower.

Metzger said the spacious shop allows a lot of flexibility. “It really gives us the ability to service one or multiple pieces of equipment at the same time,” he said.

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Farmers receive 11 cents of the Thanksgiving food dollar

Farmers and ranchers take home just 11.3 cents from every dollar that consumers spend on their Thanksgiving dinner meals, according to the annual Thanksgiving edition of the National Farmers Union (NFU) Farmer’s Share publication. The popular Thanksgiving Farmer’s Share compares the retail food price of traditional holiday dinner items to the amount the farmer receives for each item they grow or raise.

“As we gather around the Thanksgiving dinner table this year, we should take time to recognize and thank the family farmers and ranchers who provide our Thanksgiving meals,” said NFU President Roger Johnson. “While consumer holiday food costs continue to decline, incomes for American farm and ranch families are dropping precipitously. We’re in the midst of the worst farm economic downturn in generations, and we’re hopeful the Farmer’s Share can help illustrate that fact to the general public.”

On average, farmers receive 14.8 cents of every food dollar consumers spend throughout the year, while more than 85% of food costs cover marketing, processing, wholesaling, distribution and retailing.

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Gag order lifted in North Carolina nuisance lawsuit

The U.S. Court of Appeals for the Fourth District in late October struck down a gag order related to North Carolina hog farm nuisance lawsuits brought against Murphy-Brown, the hog production subsidiary of Smithfield Foods. The court said the gag order, which prohibited lawyers or anyone with knowledge of conditions of North Carolina hog operations from sharing information, violated the First Amendment.

Judge Earl Britt, of the U.S. District Court for the Eastern District of North Carolina, in late June imposed the gag order on the parties, lawyers and potential witnesses in the lawsuits. Britt said a “significant increase in trial publicity” and the “volume and scope of prejudicial publicity” about the first two cases — one decided in early May and the other two days after the gag order was implemented — could taint future jurors. (More than a dozen nuisance suits were filed.) The National Pork Producers Council and the North Carolina Pork Council (NCPC) in August filed a friend-of-the-court brief in support of lifting the gag order.

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Conference to address farm income and trade

Prices on goods sold in the United States are likely to increase as an extensive array of tariffs on foreign goods, particularly from China, remain in place, according to an agricultural economist with The Ohio State University.

“I don’t think we’ve seen the full effects of the trade war yet,” said Ian Sheldon, who serves as the Andersons Chair in Agricultural Marketing, Trade and Policy in the College of Food, Agricultural, and Environmental Sciences (CFAES).

The Trump administration first imposed a tariff on foreign steel and aluminum, then on a range of products from various countries including about 5,000 products made in China and sold in the United States. China and other countries have in turn raised tariffs on U.S. products sold in their countries, which has cut the demand for them.

“And the Chinese are showing no signs of backing down,” Sheldon said.

The tariffs the Trump administration imposed are intended to reduce the U.S.

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Lepley Farms finds balance in growing herd and compliance with new barn

By Ty Higgins, Ohio Ag Net

For a few years now, Dave Lepley has been contemplating expanding his Huron County cattle herd. He knew he wanted to grow the number of head on his farm, but if he was going to take a big step in that direction, he wanted to do it the right way.

“We had a bed-pack dry lot with about 300 head and as we did research for expansion we came across the idea for this new cattle barn,” Lepley said. “We wanted to comply with a lot of different things. We had to have cattle comfort, we had to have compliance with EPA rules because of our proximity to Lake Erie so we wanted to be sure that as we built our herd size we could house them all in one facility.”

The result is a 101-foot by 321-foot by16-foot indoor feedlot facility in Bellevue permitted to hold 1,000 head of cattle.

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Farm Bureau encourages “no” vote on State Issue 1

The Ohio Farm Bureau Federation board of trustees has announced the organization’s opposition to State Issue 1, misleadingly called the Neighborhood Safety, Drug Treatment and Rehabilitation Amendment.

Farm Bureau, Ohio’s largest organization for farm, food and rural interests, believes Issue 1 is not a viable approach to the state’s opioid crisis.

“Our state and county Farm Bureaus have been at the forefront of drug abuse prevention in rural Ohio,” said Frank Burkett III, a dairy farmer and president of Ohio Farm Bureau. “We’ve dug deeply into understanding Ohio’s massive drug problems. Issue 1 runs counter to much of what our members believe are effective steps to reducing the impact of drugs on our communities.”

The organization also believes that a constitutional amendment is not the best mechanism for addressing Ohio’s addiction and drug trafficking problems, especially when the initiative is funded by large out-of-state interests.

Farm Bureau trustees also were concerned that Issue 1 would harm the Ohio court system’s ability to effectively deal with illegal drugs.

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New Food and Farm Facts available

The new Food and Farm Facts Junior edition, produced by the American Farm Bureau Foundation for Agriculture, is now available.

“We’re pleased to announce this exciting addition to the popular Food and Farm Facts series,” said Christy Lilja, executive director of the Foundation. “Questions about agriculture are not always easy to answer. The new Food and Farm Facts Junior edition explains farming practices to young learners in an age-appropriate way.”

Questions explored in the 12-page full-color book, which was developed for kindergarten through third-grade students, include:

Who is a farmer?
What is agriculture?
How do farmers use the land and take care of it?
What is food safety?
Does chocolate milk come from brown cows?
What is the difference between wool and cotton?
What happens when I flip on a light switch?
Where does my pizza come from?
Who works on the weekends?
Who is driving the tractor?
Who will I be in agriculture?

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Building a trusted advisor relationship

By Brian E. Ravencraft, CPA, CGMA is a Principal with Holbrook & Manter, CPAs

Your farming business is constantly evolving; and with that comes changes to business practices, along with laws & regulations. Maybe it’s starting and budgeting for a new product or service, a change in ownership/succession, or an employee with an unusual payroll withholding item.

You are busy, and may decide to handle the situation the best you can to get by for now. “I’ll make a note and then ask my accountant about it at tax time. I don’t want to spend the time or money on it right now.”

Without realizing it, a year or more could pass between the time of the event in question, and meeting with us to prepare your return. In that time frame, you may have been consistently mis-handling the issue for quite a long period. Meanwhile, tax law may have changed or important deadlines may have passed which could cause penalties or prevent you from qualifying for certain opportunities.

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Ohio’s farm economy looking grim heading into 2018 harvest

By Matt Reese

This fall most farmers in Ohio will be grinning at the numbers they see on their yield monitors and scowling at the numbers they see in the markets as combines roll through crop fields.

The USDA’s September supply and demand estimates did not help matters. The September Crop Production Report had an Ohio corn yield of 188 bushels per acre and an Ohio soybean yield of 58 bushels per acre. Multiplied by expected harvested acreage, this would be Ohio’s second largest corn crop and largest soybean crop in terms of production. Total U.S. yields were 181.3 bushels per acre for corn and 52.8 bushels per acre for soybeans. The high yield estimates, compounded by demand concerns, did not improve the outlook for prices.

“As far as commodity prices received to producers, this was another WASDE to burn. However, producers will have to shake it off because while complaining about prices might make one feel better, it historically hasn’t changed the result,” said Ben Brown with the Ohio State University Department of Agricultural, Environmental, and Development Economics.

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Local innovation is filling the small farm implement gap

Over the past several years, small and mid-sized tractors have inundated the marketplace as more small-scale and organic farmers begin to update their equipment. As sales of lower horse powered machines climb, Bellevue farmer Jeff Sberna has noticed that the implement side of the farm manufacturing sector wasn’t following suit, so he designed a concept for a compact aeration tool.

“I have always has small equipment and never really had anything to break the sub dirt with,” said Sberna, who came up with the concept of the J & D Farm Built chisel ripper. “This unit is a hybrid and is designed to take the place of a chisel plow and a subsoiler. It will maintain a depth of 13 to 14 inches without re-compaction and is great on fuel efficiency.”

The six-foot chisel ripper was on display recently at Farm Science Review. Sberna recommends that unit for a small, niche and organic farms with 20 to 30 acres to cover.

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