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Moose standing in snowy environment.
By: Jeffrey K. Lewis, Esq., Friday, December 10th, 2021

Did you know that a male moose loses its antlers every year? Moose usually lose their antlers every winter and grow new ones in the spring.  Additionally, because of the lack of antlers during the winter months, a moose’s first line of defense is its sharp hooves, which can mortally wound a wolf or bear.  This edition of the Ag Law Harvest kicks around a few USDA announcements and FDA rule proposals and sheds some light on overtime compensation for California’s agricultural workers.      

USDA announces new micro-farm insurance policy.  The U.S. Department of Agriculture’s (“USDA”) Risk Management Agency (“RMA”) announced that the USDA has developed a new micro farm insurance policy for agricultural producers with small-scale farms who sell locally.  The new insurance policy seeks to simplify recordkeeping and introduces insurance coverage for post-production costs and value-added products.  Farm operations that earn an average allowable revenue of $100,000 or less, or for carryover insureds, that earn an average allowable revenue of $125,000 or less are eligible for the policy.  The new insurance policy will be available for the 2022 crop year.  Crop insurance is sold and delivered sole through private crop insurance agents, a list of which can be found at the RMA Agent Locator.

USDA accepting applications to help rural communities get access to internet.  The USDA announced that it has begun accepting applications for up to $1.15 billion in loans and grants to help rural communities gain access to high-speed internet.  The announcement follows the recently enacted infrastructure bill, which provides another $2 billion in additional funding for USDA’s ReConnect Program.  According to the USDA, the funding will be available for projects that serve rural areas where at least 90% of the households lack broadband service at speeds of 100 megabits per second (Mbps) (download) and 20 Mbps (upload).  The USDA will give funding priority to projects that will serve people in low-density rural areas and areas lacking internet service speeds of at least 25 Mbps (download) and 3 Mbps (upload).  In making the funding decisions, the USDA will consider the economic needs of the community to be served and the extent to which a provider will offer affordable service options to the community.  

FDA proposing changes to testing requirements of pre-harvest agricultural water.  The Food and Drug Administration (“FDA”) published a proposed rule that would change some provisions of the FDA’s Produce Safety Rule.  The proposed rule seeks to replace the microbial criteria and testing requirements for pre-harvest agricultural water for covered produce other than sprouts.  Some of the proposed changes include: 

  • Replacing the microbial quality criteria and testing requirements with new provisions for conducting pre-harvest agricultural water assessments for hazard identification and risk management purposes; 
  • A new testing option for certain covered farms that elect to test their pre-harvest agricultural water for generic Escherichia coli (“E. coli”);
  • Providing additional flexibility in responding to findings from pre-harvest agricultural water assessments; 
  • Expedited implementation of mitigation measures for known or reasonably foreseeable hazards related to certain adjacent and nearby land uses; and 
  • Required management review of pre-harvest agricultural water assessments. 

The FDA is accepting comments on the proposed rule until April 5, 2022.  

California’s overtime compensation for agricultural workers. In 2016, California passed Assembly Bill No. 1066 that slowly implemented overtime wages for California’s agricultural workers.  Beginning in 2022, agricultural employees are entitled to one-half times their regular rate of pay for all hours worked over eight hours in any workday or over 40 hours in any workweek.  However, the law only affects agricultural employers with 26 or more employees.  Agricultural employers with 25 or fewer employees will be required to follow the same overtime compensation structure beginning in 2025.  California will also begin to require that any work performed by an agricultural employee in excess of 12 hours in any workday be paid twice their regular rate of pay.  Again, this provision only effects agricultural employers with 26 or more employees but will go into effect for all agricultural employers in 2025.  

 

Yellow yield sign with text stating "Minimum Wage Increase Ahead."
By: Jeffrey K. Lewis, Esq., Friday, December 03rd, 2021

As 2021 winds down, it is always good to plan for the new year.  Part of that planning includes making sure, as an employer, you are compliant with any updates to current law as we turn the calendars to 2022.  One law that is changing next year, is Ohio’s minimum wage law.  Beginning January 1, 2022, the Ohio minimum wage will rise to $9.30, up from the current $8.80, for non-tipped employees.  However, as an agricultural employer, the law provides some exemptions to paying federal or state minimum wage. In this post, we review minimum wage requirements, agricultural exemptions to minimum wage, and who qualifies for the agricultural exemptions. 

Ohio versus federal minimum wage.  As discussed above, Ohio’s minimum wage will rise to $9.30 for non-tipped employees but federal minimum wage will remain at $7.25.  An agricultural employer is required to follow both state and federal laws, but when the two sets of laws differ, there may be some confusion about which one applies.  Normally, federal law reigns supreme and usually preempts, or overrides, state law.  But in this case, the federal law sets the floor for minimum wage.  This means that employers across the country that are subject to the Fair Labor Standards Act (“FLSA”) cannot pay less than $7.25 per hour to their employees.  However, if a state law requires that employers pay their employees more than the federal minimum wage, then the employer must meet the state’s minimum wage standard.  Thus, Ohio employers must pay the Ohio minimum wage, unless an exemption applies. 

Ohio’s “small employer” exemption. Starting in 2022, Ohio employers that grossed less than $342,000 in 2021 are not required to pay Ohio’s $9.30 minimum wage.  Instead, those employers are required to pay the $7.25 federal minimum wage to their employees, unless another exemption applies. 

Ohio and federal agricultural exemptions.  Under both Ohio and federal law, agricultural employers are exempt from paying the federal or Ohio minimum wage to their employees if any of following apply: 

  1. The employer did not use more than 500 man-days of agricultural labor during any calendar quarter during the preceding year. 
  2. The employee is the parent, spouse, child, or other member of the employer’s immediate family. 
  3. The employee: 
    1. is employed as a hand-harvest laborer; 
    2. is paid on a piece-rate basis; 
    3. commutes daily from their permanent residence to the farm; and 
    4. was employed in agriculture for less than 13 weeks during the previous calendar year. 
  4. The employee is: 
    1. 16 years of age or younger; 
    2. employed as a hand-harvest laborer; 
    3. paid on a piece-rate basis; 
    4. employed on the same farm as their parent or legal guardian; and 
    5. paid the same piece-rate wage as employees over the age of 16. 
  5. The employee is engaged in range production of livestock. 

500 man-days exemption.  The “man-days” exemption was intended to exempt small and family-sized farms.   A “man-day” is any day during which an employee performs at least one hour of agricultural labor.  To calculate a “man-day”, an agricultural employer needs to keep track of the number of people who worked each day and for how long.  500 “man-days” is roughly equal to having seven employees working for at least one hour each, five days a week during a calendar quarter.  It is also not just full-time employees that are counted towards the 500 “man-day” exemption, temporary and seasonal workers also count towards the “man-day” exemption.  

Family member exemption.  An agricultural employer is not required to pay family members the minimum wage.  This family member exemption applies to employees engaged in agriculture and are either the parent, spouse, child or other member of the employer’s immediate family.  However, not every blood relative is considered “other immediate family.”  According to the U.S. Department of Labor, the following will be considered as part of the employer’s “other immediate family”: stepchildren, foster children, stepparents, and foster parents.  Other family members, including siblings, cousins, nieces, nephews, uncles, and aunts do not count as immediate family members.  

Employed in agriculture.  Ohio law closely resembles, if not mirrors, FLSA requirements when it comes to agricultural exemptions to minimum wage and overtime requirements.  But, to qualify for the agricultural exemptions discussed above, an employer must have employees that are employed in “agriculture.”  Under the FLSA, “agriculture” has two distinct branches, primary agriculture and secondary agriculture.  Employees engaged in primary agriculture are considered to be employed in agriculture for that workweek.  Employees engaged in secondary agriculture are only considered to be employed in agriculture if the activities are performed by a farmer or on a farm in connection with the farming operations.  

What is considered primary agriculture?  Primary agriculture “includes farming in all its branches” and are those activities traditionally viewed as agricultural, including: 

  • Cultivating and tilling the soil; 
  • Dairying;    
  • Producing, cultivating, growing, and harvesting agricultural or horticultural commodities; and 
  • Raising livestock, bees, fur-bearing animals, or poultry. 

Activities that qualify as primary agriculture do not necessarily have to take place on a farm.  For example, someone employed in a hatchery that is located in an industrial complex is engaged in a primary agriculture activity (raising poultry) and is considered to be employed in agriculture.  On the other hand, even though an activity takes place on a farm, it does not necessarily mean it is considered to be a primary agriculture activity.  For example, courts have determined that employees of Dairy Farm A are not engaged in a primary agriculture activity when they process milk produced by Dairy Farm B.  

What is secondary agriculture?  Secondary agriculture includes all activities, including forestry or lumbering operations, that may not themselves be considered agricultural practices but are necessary to agriculture.  For an activity to be considered secondary agriculture it must meet two requirements: 

(1) the activity must either be performed by a farmer or on a farm; and 

(2) the activity must be incidental to or in conjunction with such farming operations. 

Secondary agriculture includes preparing an agricultural product for market, delivering agricultural products to storage, to market, or to carriers for transportation to market.  

Any activity that is performed by a farmer’s employees, is also considered to be “performed by a farmer.” Moreover, an activity is considered “incidental to or in conjunction with” farming activities if the work being performed is: 

(1) An established part of agriculture; 

(2) subordinate to the farming operations of the farm; and 

(3) not an independent business. 

Mixing it up.  After understanding what work is considered agricultural, it is important to understand the impact of an employee performing both exempt and non-exempt work.  If an employee does both exempt and non-exempt work in the same week, then the employee loses their exemption status and must be paid according to federal/Ohio minimum wage and overtime requirements.  However, if an employer can separate the employee’s exempt and non-exempt work into separate weeks, then the employer would only have to pay the employee federal/Ohio minimum wage and overtime for those weeks that the employee performed non-exempt work.  

This especially important to agricultural employers that also engage in agritourism activities.  Having a farm employee perform work related to an agritourism activity does not qualify for the agricultural exemptions under federal/Ohio law.  Agricultural employers should be careful when assigning their employees tasks.  Assigning tasks outside the realm of agriculture will subject the employer to the provisions of federal and state minimum wage and overtime laws.

Overtime.  Agricultural employers are exempt from paying their agricultural employees an overtime wage rate.  This exemption applies to all agricultural employees, not just small farm employees or immediate family members.  

Conclusion.  Determining whether your employees qualify for an agricultural exemption can be a complex issue, with multiple layers of analysis.  It is always best to ask an attorney to help clarify whether your employees are considered to be “employed in agriculture” and thus qualify for the agricultural exemptions to minimum wage and overtime laws.  Further, it is always a good idea to seek a lawyer’s counsel every so often to help make sure your operation is continuing to be compliant with labor and employment laws.  

References and Resources

29 U.S. Code Chapter 8 – Fair Labor Standardshttps://www.law.cornell.edu/uscode/text/29/chapter-8

29 U.S. Code §206 - Minimum wagehttps://www.law.cornell.edu/uscode/text/29/206

29 CFR Chapter 5 – Wage and Hour Division, Department of Labor https://www.ecfr.gov/cgi-bin/text-idx?SID=9215c26baf64464cdfbd4073e46247d3&mc=true&tpl=/ecfrbrowse/Title29/29chapterV.tpl

29 C.F.R. §§ 780 et seq. – Exemptions Applicable to Agriculturehttps://www.ecfr.gov/cgi-bin/text-idx?SID=09461535e9555139c7d6471d1b26598d&mc=true&node=pt29.3.780&rgn=div5#se29.3.780_1103

Ohio Constitution, Article II, Section 34 – Minimum Wagehttps://codes.ohio.gov/ohio-constitution/section-2.34a

Ohio Department of Commerce, 2022 Minimum Wage Poster, https://www.com.ohio.gov/documents/dico_2022MinimumWageposter.pdf

Ohio Revised Code Chapter4111 – Minimum Fair Wage Standards, https://codes.ohio.gov/ohio-revised-code/chapter-4111

U.S. Department of Labor Wage and Hour Division, Field Operations Handbook Chapter 20 – Agriculture: Related and Seasonal Exemptionshttps://www.dol.gov/sites/dolgov/files/WHD/legacy/files/FOH_Ch20.pdf

U.S. Department of Labor Wage and Hour Division, Fact Sheet #12: Agricultural Employers Under the Fair Labor Standards Act (FLSA)https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/whdfs12.pdf

Blue sturgeon swimming in river.
By: Jeffrey K. Lewis, Esq., Friday, November 12th, 2021

Did you know that white sturgeon are North America’s largest fish?  The largest white sturgeon on record was caught in 1898 and weighed approximately 1,500 pounds. Sturgeon is the common name for the species of fish that belong to the Acipenseridae family. The largest sturgeon on record was a Beluga sturgeon weighing in at 3,463 pounds and 24 feet long.  Talk about a river monster!  Swimming right along, this edition of the Ag Law Harvest brings you some intriguing election results from across the country, pandemic assistance for organic producers, and a lesson in signatures. 

Maine first state to have “right to food.”  Earlier this month, Maine voters passed the nation’s first “right to food” constitutional amendment.  The referendum asked voters if they favored an amendment to the Maine Constitution “to declare that all individuals have a natural, inherent and unalienable right to grow, raise, harvest, produce and consume the food of their own choosing their own nourishment, sustenance, bodily health and well-being.”  Supporters of the new amendment claim that the amendment will ensure the right of citizens to take back control of the food supply from large landowners and giant retailers.  Opponents claim that the new amendment is deceptively vague and is a threat to food safety and animal welfare by encouraging residents to try and raise their own products in their backyards without any knowledge or experience.  The scope and legality of Maine’s new constitutional amendment is surely to be tested and defined by the state’s courts, but until then, Maine citizens are the only ones the in the United States that can claim they have a constitutional right to food.  

New York voters approve constitutional environmental rights amendment.  New Yorkers voted on New York Proposal 2, also known as the “Environmental Rights Amendment.”  The proposal passed with overwhelming support.  The new amendment adds that “[e]ach person shall have a right to clean air and water, and a healthful environment” to the New York constitution.  New York is one of a handful of states to have enacted a “green amendment” in its state constitution.  Proponents of the amendment argue that such an amendment is long overdue while opponents argue that the amendment is too ambiguous and will do New York more harm than good. 

USDA announces pandemic support for certified organic and transitioning operations.  The U.S. Department of Agriculture (“USDA”) announced that it will be providing pandemic assistance to cover certification and education expenses to agricultural producers who are currently certified or to those seeking to become certified.  The USDA will make $20 million available through the Organic and Transitional Education and Certification Program (“OTECP”) as part of the USDA’s Pandemic Assistance for Producers initiative. OTECP funding is provided through the Coronavirus Aid Relief, and Economic Security Act (“CARES Act”).  Producers can apply for expenses paid during the 2020, 2021, and 2022 fiscal years.  For each fiscal year, OTECP will cover 25% of a certified operation’s eligible certification expenses, up to $250 per certification category.  Crop and livestock operations transitioning to organic production may be eligible for 75% of eligible expenses, up to $750 for each year.  Both certified organic operations and transitioning operations are eligible for 75% of eligible registration fees, up to $200, per year for educational events to help operations increase their knowledge of production and marketing practices.  Applications are now open and will be available until January 7, 2022.  Producers can apply through their local Farm Service Agency office.  For more information on OTECP visit https://www.farmers.gov/pandemic-assistance/otecp.    

A signature case.  In 2018 Margaret Byars died intestate survived by her 5 children.  After Byars’s death, one her sons, Keith, revealed that Margaret had allegedly executed a quitclaim deed in 2017 giving her Dayton home to Keith.  The other siblings brought this lawsuit claiming that the deed was invalid and unenforceable because the facts surrounding the execution of the deed seemed a little odd.  In 2017, Margaret was diagnosed with breast cancer and moved into a nursing facility.  Shortly after entering the nursing home, Sophia Johnson, a family friend and the notary on the deed, showed up to notarize the quitclaim deed.  Trial testimony revealed that the quitclaim deed was prepared and executed by a third party.  Margaret did not physically sign the deed herself.  In fact, the trial court noted that the signature looked like the handwriting of the person that prepared the deed and that no one saw Margaret authorize another to sign the deed for her.  Sophia testified that when she showed up to notarize the deed, the deed was already completed and signed.  Sophia also testified that Margaret seemed to intend to transfer the house to Keith and understood the nature and consequences of the deed.  After hearing all the testimony, the trial court concluded that the deed was enforceable, and the house belonged to Keith.  However, on appeal, the Second District Court of Appeals found the deed to be invalid.  The Second District stated that in Ohio a grantor need not actually sign a deed in order to be valid, however, the court concluded that the “signature requirement may be satisfied by another affixing a grantor’s signature on a deed so long as the evidence shows that the grantor comprehend the deed, wanted its execution, and authorized the other to sign it.”  The court concluded that the evidence showed that Margaret comprehended the deed and perhaps even wanted its execution.  But the evidence did not show that Margaret authorized anyone to sign the deed for her.  Because it could not be established that Margaret authorized the preparer or anyone else to sign the deed for her, the Second District court held that that deed was invalid under Ohio law.  This case demonstrates the importance of attorneys and the work they do to make sure all asset transfers and estate planning documents are in compliance with the law to help avoid unnecessary lawsuits and prevent any unintended outcomes.

Hippopotamus in water.
By: Jeffrey K. Lewis, Esq., Friday, October 29th, 2021

Did you know that Hippopotamuses cannot swim?  It’s true.  When hippos submerge themselves underwater, they don’t swim back up to the surface, instead they walk along the bottom until they reach shallow water.  That is unless the hippo decides to chase you out of its territory, then it will gladly run, jump, and charge right at you. 

Like the hippo, this week’s Ag Law Harvest is a little territorial.  We bring you recent Ohio court decisions, a federal order allowing Colombian hippos to take the testimony of Ohio residents, and the Ohio Department of Agriculture’s directives as it ramps up its fight against Ohio’s newest pest.

Well, well, well.  A recent Ohio case demonstrated the complex issues a landowner can run into when dealing with an oil and gas lease.  The Plaintiff in this case owns land in Hebron, Ohio and brought suit against his neighbors and the Ohio Department of Taxation claiming that he was not the owner of a gas well located on his property or that he was responsible for paying taxes and maintaining the well under Ohio law.  The Hebron, Ohio property at issue in this case passed through many hands before becoming the property of the Plaintiff.  One of the prior owners was a man named William Taggart (“Taggart”).  As mentioned earlier, the property also has a gas well which was subject to an oil and gas lease.  The oil and gas lease passed to multiple parties and ended up with Taggart while he owned the Hebron property.  After having both the property and the oil and gas lease, Taggart deeded the property to Plaintiff’s parents which eventually passed onto Plaintiff.  Plaintiff argued that he is not the rightful owner of the well because the last person that was assigned the oil and gas lease was Taggart, making him the owner of the well.  The Fifth District Court of Appeals disagreed.  The court found that Plaintiff’s parents registered as owners of the well under Ohio Revised Code § 1509.31 which requires a person to register a well before they can operate it.  Further, the court determined that when the oil and gas lease was assigned to Taggart the rights of the landowner and the lessee merged, essentially making Taggart the only individual with any property interest in the well.  Relying on § 1509.31, the court found that when the entire interest of an oil and gas lease is assigned to the landowner, the landowner then becomes responsible for compliance with Chapter 1509 of the Ohio Revised Code.   Therefore, when the property passed to Plaintiff’s parents, they became the owners of the well and were responsible for making sure the well was in compliance with Chapter 1509.  Because this responsibility passed onto Plaintiff, the court found Plaintiff to be liable for the taxes and ensuring that the well is compliant with Ohio law.  The court also denied Plaintiff’s attempt to argue that Taggart was the responsible party because the oil and gas lease was still in effect due to the fact that Plaintiff’s neighbors use the gas well for domestic purposes.  The court found that the oil and gas lease had expired by its own terms, pursuant to the habendum clause contained within the lease.  A habendum clause essentially defines the property interests and rights that a lessee has.  The specific habendum clause in this case stated that the lease would terminate either within three years or when the well no longer produced oil and gas for commercial purposes.  The lease at issue was well beyond the three-year term and, as the court found, the lease expired under Taggart because the well no longer produced oil or gas for commercial purposes.  The use of the well for domestic purposes did not matter.  The Fifth District ultimately held that because Plaintiff could not produce any evidence to show that another party had an interest in the well, Plaintiff is ultimately responsible for the well.   

Amending a contract doesn’t always erase the past.  Two companies (“Plaintiffs”) recently filed suit against a former managing member (“Defendant”) for allegedly using business funds and assets for personal use during his time as managing member.  The primary issue in this case was whether or not an arbitration clause in the original operating agreement is enforceable after the operating agreement was amended to remove the arbitration clause.  Defendant’s alleged misconduct occurred while the original operating agreement was in effect.  The original operating agreement would require the parties to settle any disputes through the arbitration process and not through the court system.  However, shortly before filing suit, the original operating agreement was amended to remove the arbitration provision.  Plaintiffs filed suit against the Defendant arguing that the arbitration provision no longer applied because the operating agreement had been amended.  Defendant, however, argued that his alleged misconduct occurred while the original operating agreement was in effect and that the amended operating agreement could not apply retroactively forcing him to settle the dispute in a court rather than through arbitration.  The trial court, however, sided with the Plaintiffs and allowed the case to move forward.  Defendant appealed the trial court’s decision and the Ninth District Court of Appeals agreed with him.  The District Court found that the amended operating agreement did not expressly state any intention for the terms and conditions of the amended operating agreement to apply retroactively.  Further, the court held that Ohio law favors enforcing arbitration provisions within contracts and any doubts as to whether an arbitration clause applies should be resolved in favor of enforcing the arbitration clause.  The Ninth District reversed the trial court and found that the dispute of Defendant’s alleged misconduct should be resolved through arbitration.  

Animal advocates claim victory in pursuit of recognizing animals as legal persons.  A recent order issued by a federal district court in Ohio allows an attorney for Colombian Hippopotamuses to take the testimony of two expert witnesses residing in Ohio.  According to U.S. law, a witness may be compelled to give testimony in a foreign lawsuit if an “interested person” applies to a U.S. court asking that the testimony be taken.  The Animal Legal Defense Fund (“ALDF”) applied to the federal court on behalf of the plaintiffs, roughly 100 hippopotamuses, from a lawsuit currently pending in Colombia.  According to the ALDF, the lawsuit seeks to prevent the Colombian government from killing the hippos.  The interesting thing about this case is that hippos are not native to Colombia and were illegally imported into the country by drug kingpin Pablo Escobar.  After Escobar’s death the hippos escaped his property and relocated to Colombia’s Magdalena River and have reproduced at a rate that some say is unsustainable.  In Colombia, animals are able to sue to protect their rights and because the plaintiffs in the Colombian lawsuit are the hippos themselves, the ALDF argued that the hippos qualify as an “interested person” under U.S. law.  After applying for the authorization, the federal court signed off on ALDF’s application and issued an order authorizing the attorney for the hippos to issue subpoenas for the testimony of the Ohio experts.  After the federal court’s order, the ALDF issued a press release titled “Animals Recognized as Legal Persons for the First Time in U.S. Court.”  The ALDF claims the federal court ruling is a “critical milestone in the broader animal status fight to recognize that animals have enforceable rights.”  However, critics of ALDF’s assertions point out that ALDF’s claims are a bit embellished.  According to critics, the order is a result of an ex parte application to the court, meaning only one side petitioned the court for the subpoenas and the other side was not present to argue against the subpoenas.  Further, critics claim that all the federal court did was sign an order allowing the attorney for the hippos to take expert testimony, the court did not hold that hippos are “legal persons” under the law.  

Ohio Department of Agriculture announces quarantine to combat the spread of the Spotted Lanternfly.  According to the Ohio Department of Agriculture (“ODA”) the Spotted Lanternfly (“SLF”) has taken hold in Jefferson and Cuyahoga counties.  The ODA announced that the SLF is now designated as a destructive plant pest under Ohio law and that the ODA was issuing quarantine procedures and restricting the movement of certain items from infested counties into non-infested areas of Ohio.  The ODA warns that the SLF can travel across county lines in items like tree branches, nursery stock, firewood, logs, and other outdoor items.  The ODA has created a checklist of things to look for before traveling within or out of infested counties.   Nurseries, arborists, loggers, and other businesses within those infested counties should contact the ODA to see what their obligations and rights are under the ODA's new quarantine instructions.  Under Ohio law, those individuals or businesses that fail to follow the ODA’s quarantine instructions could be found guilty of a misdemeanor of the third degree on their first offense and a misdemeanor of the second degree for each subsequent offense.  For more information visit the ODA’s website about the SLF.

By: Barry Ward, Friday, October 22nd, 2021

Farmland prices have strengthened in recent months and there are a number of key fundamentals that will likely continue to support land values in the near term. High crop prices and margins along with last year’s COVID-19 related government payments and continued low interest rates have all contributed to stronger land markets. Higher production costs and recent minor decreases in crop prices may decrease profit margins this next year and take some strength out of the market but farmland will likely continue to see increases in value through the end of this year and into the next year. Similar factors have impacted cash rental markets in Ohio and will likely continue to pressure rental rates higher in the near term.

Recent data from the United States Department of Agriculture National Ag Statistics Service (NASS) August Land Values 2021 Summary shows Ohio Farm Real Estate increasing 3.9% from 2020 to an average of $6,600 per acre in 2021. Ohio Cropland (bare cropland) showed an increase of 5.3% from 2020 to 2021. Average Cropland value is $6,800 per acre in 2021 according to this survey. Pastureland value in Ohio increased 2.1% to $3,440 per acre in 2021. Average cash rents in Ohio increased 2.6% in 2021 to $160 per acre according to this survey. The National Ag Statistics Service (NASS) also summarizes average cash rental rates by county available through Ohio NASS: www.nass.usda.gov/Statistics_by_State/Ohio/Publications/County_Estimates/2021/OH_2021_cashrent_CE.pdf

Each year, Ohio State University Extension (The Ohio State University College of Food, Agricultural, and Environmental Sciences) conducts an Ohio Cropland Values and Cash Rents Survey. The Ohio Cropland Values and Cash Rents study was conducted from January through April in 2021. The opinion-based study surveyed professionals with a knowledge of Ohio’s cropland values and rental rates. Professionals surveyed were rural appraisers, agricultural lenders, professional farm managers, ag business professionals, OSU Extension educators, farmers, landowners, and Farm Service Agency personnel.

Ohio cropland varies significantly in its production capabilities and, consequently, cropland values and cash rents vary widely throughout the state. Generally, western Ohio cropland values and cash rents differ from much of southern and eastern Ohio cropland values and cash rents. The primary factors affecting these values and rents are land productivity and potential crop return, and the variability of those crop returns. Soils, fertility, and drainage/irrigation capabilities are primary factors that most influence land productivity, crop return and variability of those crop returns.

Other factors impacting land values and cash rents may include field size and shape, field accessibility, market access, local market prices, field perimeter characteristics and potential for wildlife damage, buildings and grain storage, previous tillage system and crops, tolerant/resistant weed populations, USDA Program Yields, population density, and competition for cropland in a region. Factors specific to cash rental rates may include services provided by the operator and specific conditions of the lease.

According to the Western Ohio Cropland Values and Cash Rents Survey, cropland values in western Ohio are expected to increase in 2021 by 3.8 to 5.3 percent from 2020 to 2021 depending on the region and land class. Cash rents are expected to increase from 3.6 to 3.9 percent depending on the region and land class. For the complete survey research summary go to: https://farmoffice.osu.edu/farm-management-tools/farm-management-publications/cash-rents

This survey and the results are reflective of the thoughts of survey participants in early 2021. Recent farmland sales would lead us to believe that farmland value has likely increased more than the 3.8 to 5.3 percent that the summary indicates for 2021. Continued high crop prices along with relatively strong predicted yields throughout much of Ohio have lent more strength to farmland markets in Ohio.

Others survey results in the eastern Corn Belt may be useful in gauging the magnitude of Ohio farmland value change thus far in 2021. The Federal Reserve Bank of Chicago (7th Fed District) surveys ag lenders in their districts each quarter. (The 7th Fed District includes parts of Michigan, Indiana, Illinois, Wisconsin and all of Iowa.) Their survey in July showed the value of good farmland in their district had increased by 14 percent from July 1, 2020 to July 1, 2021. The mid-year survey conducted by the Illinois Society of Professional Farm Managers and Rural Appraisers of their members revealed an increase of 20% in farmland values from the beginning of 2021. While Ohio is not Illinois nor does Ohio sit in the 7th Fed District, these surveys may give some guidance on the level of change in farmland values in Ohio in 2021.

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By: Barry Ward, Friday, October 01st, 2021

Barry Ward & Julie Strawser, OSU Income Tax Schools

 

Dealing with the tax provisions of the COVID-related legislation for both individuals and businesses are among the topics to be discussed during the upcoming Tax School workshop series offered throughout Ohio in November and December.

The annual series is designed to help tax preparers learn about federal tax law changes and updates for this year as well as learn more about issues they may encounter when filing individual and small business 2021 tax returns.

 

OSU Income Tax Schools are intermediate-level courses that focus on interpreting tax regulations and changes in tax law to help tax preparers, accountants, financial planners and attorneys advise their clients. The schools offer continuing education credit for certified public accountants, enrolled agents, attorneys, annual filing season preparers and certified financial planners.

 

Attendees also receive a class workbook that alone is an extremely valuable reference as it offers over 600 pages of material including helpful tables and examples that will be valuable to practitioners. Summaries of the chapters in this year’s workbook can be viewed at this site:

https://farmoffice.osu.edu/tax/2021-tax-school-chapters

A sample chapter from a past workbook can be found at:

https://taxworkbook.com/about-the-tax-workbook/

 

This year, OSU Income Tax Schools will offer both in-person schools and an online virtual school presented over the course of four afternoons.

 

In-person schools:

 

November 1-2, Presidential Banquet Center, Kettering/Dayton

November 3-4, Ole Zim’s Wagon Shed, Gibsonburg/Fremont

November 17-18, Ashland University John C. Meyer Convocation Center, Ashland

November 22-23, Christopher Conference Center, Chillicothe

November 29-30, Zane State/Ohio University Zanesville Campus, Zanesville

December 2-3, Nationwide & Ohio Farm Bureau 4-H Center, OSU Campus, Columbus

December 6-7, Hartville Kitchen, Hartville

 

Virtual On-Line School presented via Zoom:

November 8, 12, 15 & 19, 12:30 – 4:45 p.m.

 

Register two weeks prior to the school date and receive the two-day tax school early-bird registration fee of $400.  This includes all materials, lunches and refreshments. The deadline to enroll is 10 business days prior to the date of each school. After the school deadline, the fee increases to $450.

 

Additionally, the 2022 RIA Federal Tax Handbook is available to purchase by participants for a discounted fee of $50 each. Registration information and the online registration portal can be found online at:

http://go.osu.edu/2021tax

 

In addition to the tax schools, the program offers a separate, two-hour ethics webinar that will broadcast Wednesday, Dec. 15 at 1 p.m. The webinar is $25 for school attendees and $50 for non-attendees and is approved by the IRS and the Ohio Accountancy Board for continuing education credit.

 

A webinar on Ag Tax Issues will be held Monday, Dec. 13 from 8:45 a.m. to 3:20 p.m.

If you are a tax practitioner that represents farmers or rural landowners or are a farmer or farmland owner that prepares your own taxes, this five-hour webinar is for you. It will focus on key topics and new legislation related specifically to those income tax returns.

 

Registration, which includes the Ag Tax Issues workbook, is $150 if registered at least two weeks prior to the webinar. After November 29, registration is $200. Register by mail or on-line at https://go.osu.edu/agissues2021.

 

Participants may contact Ward at 614-688-3959, ward.8@osu.edu or Julie Strawser 614-292-2433, strawser.35@osu.edu for more information.

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By: Barry Ward, Tuesday, September 28th, 2021

Each year, preliminary crop enterprise budgets are unveiled at the Farm Science Review which reveals our best estimates for costs and returns for the main row crops in Ohio for the upcoming year. With continued high crop prices projected for 2022 there is some optimism, however, higher costs will likely decrease profit margins to levels lower than 2021 margins.

Production costs for Ohio field crops are forecast to be higher compared to last year with higher fertilizer, seed, chemical, fuel, machinery and repair costs leading the way.

Variable costs for corn in Ohio for 2022 are projected to range from $477 to $583 per acre depending on land productivity. Variable costs for 2022 Ohio soybeans are projected to range from $266 to $302 per acre. Wheat variable expenses for 2022 are projected to range from $213 to $262 per acre. These are increases over last year of 19%, 18%, and 25% for corn, soybeans and wheat, respectively.

If the current grain prices and costs endure through next year, profit margins will likely be positive although higher costs may create losses for some producers. Grain prices currently used as assumptions in the 2022 crop enterprise budgets are $4.80/bushel for corn, $12.20/bushel for soybeans and $6.90/bushel for wheat. Projected returns above variable costs (contribution margin) range from $226 to $472 per acre for corn and $288 to $529 per acre for soybeans. Projected returns above variable costs for wheat range from $191 to $344 per acre.

Return to Land is a measure calculated to assist in land rental and purchase decision making. The measure is calculated by starting with total receipts or revenue from the crop and subtracting all expenses except the land expense. Returns to Land for Ohio corn (Total receipts minus total costs except land cost) are projected to range from $54 to $283 per acre in 2022 depending on land production capabilities. Returns to land for Ohio soybeans are expected to range from $166 to $393 per acre depending on land production capabilities. Returns to land for wheat (not including straw or double-crop returns) are projected to range from $99 per acre to $242 per acre.

Total costs projected for trend line corn production in Ohio are estimated to be $919 per acre. This includes all variable costs as well as fixed costs (or overhead if you prefer) including machinery, labor, management and land costs. Fixed machinery costs of $78 per acre include depreciation and other overhead. A land charge of $207 per acre is based on data from the Western Ohio Cropland Values and Cash Rents Survey Summary. Labor and management costs combined are calculated at $82 per acre. Details of budget assumptions and numbers can be found in footnotes included in each budget.

Total costs projected for trend line soybean production in Ohio are estimated to be $619 per acre. (Fixed machinery costs: $62 per acre, land charge: $207 per acre, labor and management costs combined: $53 per acre.)

Total costs projected for trend line wheat production in Ohio are estimated to be $541 per acre. (Fixed machinery costs: $36 per acre, land charge: $207 per acre, labor and management costs combined: $48 per acre.)

Current budget analyses indicates favorable returns for soybeans compared to corn or wheat but crop price change, harvest yields and other factors through fall and into summer of next year may change this outcome. These projections are based on OSU Extension Ohio Crop Enterprise Budgets. Newly updated Enterprise Budgets for 2022 have been completed and posted to the Farm Office website: https://farmoffice.osu.edu/farm-mgt-tools/farm-budgets

In addition to projected row crop budgets for 2022, there are newly updated forage budgets posted to our Farm Office site. These include Alfalfa Hay, Alfalfa Haylage and Corn Silage. Also recently updated are two Market Beef Budgets which include Market Beef Budget (Self-Fed) and Market Beef Budget (Bunk-Fed).

 

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Farm Office team of David Marrison, Dianne Shoemaker, Peggy Kirk Hall and Barry Ward at OSU's Farm Science Review 2021.
By: Peggy Kirk Hall, Friday, September 24th, 2021

As it often goes with farming, the weather interfered a bit with Farm Science Review this year.  We missed seeing farmers and students from across the state gather for the show on Wednesday.  But even wind and rain didn’t stop our Farm Office team, above, from presenting Farm Office Live from the Review on Thursday.   I gave an update on Ohio legislation, as Ohio’s legislature is back from its summer break.   Here’s a summary of the legislation I discussed at our Farm Science Review program.

Bills passed and soon effective

S.B. 52 – Solar and wind facilities.  S.B. 52 passed several months ago and will be effective on October 11, 2021.  The new law will allow counties to designate “restricted areas” in a county where wind and solar projects may not locate and creates a county referendum process for a public vote on restricted area designation.  The law will also require developers to hold a public meeting in the county where a facility is proposed at least 90 days before applying for project approval with the Ohio Power Siting Board.  After the meeting, the county commissioner may choose to prohibit or limit the proposed project.  Another provision of the new law appoints 2 local officials from the proposed location to serve on the OPSB board that reviews a project.  And importantly for landowners, the new law requires a developer to submit a decommissioning plan to OPSB for approval with the application and to post and regularly update a performance bond for the amount of decommissioning costs.  Watch for our new law bulletins on S.B. 52, which we’ll publish soon.

Bills on the move

H.B. 30 – Slow-moving vehicles.  The bill passed the House on June 23, 2021, and just received its second hearing before the Senate Transportation on September 22, 2021.  It proposes revisions to marking and lighting requirements for animal-drawn vehicles to make the vehicles more visible and reduce roadway accidents.

H.B. 95 – Beginning farmers.   We’ve been hoping this bill aiding beginning farmers would continue to receive attention.  It would allow individuals to be certified as beginning farmers and create income tax credits for owners who sell land and agricultural assets to certified beginning farmers and for beginning farmers who attend approved financial management programs.  The bill passed the House on June 28, 2021 and was referred to the Senate Ways and Means Committee on September 8, 2021.

S.B. 47 – Overtime payThe Senate passed S.B. 47 on September 22, soon after returning from break.  It would exempt an employer from paying overtime wages for certain activities, including traveling to the workplace, actions before or after beginning principal work activities, or “de minimus” acts requiring insignificant time.  The bill sponsors state that it will bring necessary clarity to overtime pay in the era of more employees working unsupervised from home.

Bills newly introduced

H.B. 397 – Termination of Agricultural LeaseA bill that aims to bring certainty to farmland leases was introduced in the House on August 24, 2021 and referred to the Agriculture and Conservation Committee.  The proposal states that where a farm lease agreement does not provide for a termination date or a method for giving notice of termination, a landlord who wants to terminate that agreement must do so in writing by September 1.   Unless otherwise agreed in writing, the termination date would be either the date harvest or removal of the crops is complete or December 31, whichever is earlier.

H.B. 385 – Municipal waste discharges to Lake Erie western basin  Municipalities would be prohibited from discharging waste from treatment plants into Lake Erie under a new bill proposed by Rep. Jon Cross (R-Kenton).  The bill would require the Ohio EPA to revoke all existing NPDES permits for municipal treatment works or sewerage systems to in the western basin and prohibit any additional permits for that purpose.  It would also fine municipalities up to $250,000 per day for knowingly discharging waste into Lake Erie on the first offense and $1,000 per day for subsequent offenses, or to fine $100 million if the discharge amount exceeds 100 million gallons in a 12-month period. Introduced on August 6, 2021, the bill has been referred to the House Agriculture and Conservation Committee.

Catch a replay Farm Office Live from Farm Science Review at https://farmoffice.osu.edu/farmofficelive.  Register at that site to join us for the next Farm Office Live on October 13 at 7 p.m. or a repeat on October 15 at 10 a.m., whern the Farm Office team will digest the latest news and information on agricultural law and farm management issues that affect Ohio’s farm offices.

OSU Farm Science Review
By: Peggy Kirk Hall, Wednesday, September 15th, 2021

Farm Science Review is back!  OSU's Farm Office Team will be there, and we'll broadcast the next Farm Office Live from our farm office at the Review.  We can't promise we'll be able to ignore biscuits and gravy, pork tenderloins, bahama mamas, or milkshakes during Farm Office Live, but we can promise you updates on recent developments in the world of farm management and agricultural law. 

The broadcast will be on Thursday, September 23 beginning at 10 a.m.  Here's what's on the agenda:

  • Carbon market programs and carbon agreements

  •  Legislative update

  • 2022 crop budgets

  • 2020 Farm Business Analysis program results from crop farms

  • Ohio cash rental rates

  • Dairy Market Volatility Assistance Program

  • Highlights of FSR and upcoming programs

Who's on the Farm Office Live Team? OSU experts ready to help farmers, landowners and agribusiness professionals navigate the issues we all deal with in the farm office.  Our team includes:

  • Peggy Kirk Hall - Agricultural Law

  • David Marrison - Farm Management 

  • Dianne Shoemaker - Farm Business Analysis and Dairy Production

  • Barry Ward - Farm Management and Tax 

To learn more and register for Farm Office Live, visit https://farmoffice.osu.edu/farmofficelive.  Recordings of our previous Farm Office Live webinars are also available at that site.

Posted In: Business and Financial
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By: Barry Ward, Thursday, August 26th, 2021

Barry Ward, Leader, Production Business Management, Director, OSU Income Tax Schools

Ohio cropland varies significantly in its production capabilities and, consequently, cropland values and cash rents vary widely throughout the state. Generally, western Ohio cropland values and cash rents differ from much of southern and eastern Ohio cropland values and cash rents. The primary factors affecting these values and rents are land productivity and potential crop return, and the variability of those crop returns. Soils, fertility and drainage/irrigation capabilities are primary factors that most influence land productivity, crop return and variability of those crop returns.

Other factors impacting land values and cash rents may include field size and shape, field accessibility, market access, local market prices, field perimeter characteristics and potential for wildlife damage, buildings and grain storage, previous tillage system and crops, tolerant/resistant weed populations, USDA Program Yields, population density, and competition for the cropland in a region. Factors specific to cash rental rates may include services provided by the operator and specific conditions of the lease.

The Western Ohio Cropland Values and Cash Rents study was conducted from January through April in 2021. The opinion-based study surveyed professionals with a knowledge of Ohio’s cropland values and rental rates. Professionals surveyed were rural appraisers, agricultural lenders, professional farm managers, ag business professionals, OSU Extension educators, farmers, landowners, and Farm Service Agency personnel.

The study results are based on 94 surveys. Respondents were asked to group their estimates based on three land quality classes: average, top, and poor. Within each land-quality class, respondents were asked to estimate average corn and soybean yields for a five-year period based on typical farming practices. Survey respondents were also asked to estimate current bare cropland values and cash rents negotiated in the current or recent year for each land-quality class. Survey results are summarized for western Ohio with regional summaries (subsets of western Ohio) for northwest Ohio and southwest Ohio.

According to the Western Ohio Cropland Values and Cash Rents Survey, cropland values in western Ohio are expected to increase in 2021 by 3.8 to 5.3 percent depending on the region and land class. Cash rents are expected to increase from 3.6 to 3.9 percent depending on the region and land class.

For the complete survey research summary go to:

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

 

 

 

 

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