Recent Blog Posts
The OSU Agricultural & Resource Law team just returned from Cincinnati after hosting the Second Annual Cultivating Connections Conference. What a thrill to bring together 121 professionals from across the country who work in farm transition planning! The group consisted of attorneys, tax professionals, educators, farm legacy counselors, financial planners, and law students. The commonality among our attendees: the desire to help farms transition their assets and operations to the next generation.
The old saying, “it takes a team,” rings true for farm transition planning. The conference illustrated the myriad of topics and expertise required to assemble a farm transition plan and the hurdles a farm family faces. Like the long line of hurdles that awaited our Olympic athletes in their races this week. But the difference is that farm families aren’t always trained to overcome those hurdles, let alone at a high speed. That’s where the professional team comes in—to help move a family over the hurdles it faces.
Here are a few takeaways on the “hurdle” topics we focused on at Cultivating Connections.
- Don’t jump right to the plan--talk first. An important first step to building a plan: get the family talking and thinking. David Marrison of OSU Extension recommended strategies for working with farm families, including understanding the legacy; encouraging the family to assess its strengths, weaknesses, opportunities and threats; and helping the family deal with the elephants in the room.
- Organize, organize, organize. A huge amount of information goes into a farm transition plan and organizing that information is a challenge. Kelly Moore of Make Hay Consulting demonstrated a new tool that can help, the FARMS spreadsheet, currently under development by OSU Extension.
- Know what’s in an appraisal. We use appraisals regularly in farm transition planning and estate administration, but do we understand what goes into an appraisal and what limitations it has? Tim Harpster, an appraiser with Consolidated Appraisal Services Company, answered those questions.
- Divorce is a threat to reckon with. But a well drafted pre-nuptial agreement can help reduce the impact a divorce can have on a farming operation, as Susan Montgomery of Gottlieb, Johnston, Beam, Dal Ponte PLL explained. Farm transition planners also need to understand the process of divorce and parenting plans, and how they can affect a farm family.
- Be careful with business entity discounting. Whether for “lack of marketability” or “lack of control,” business entity discounts can reduce the value of an estate and limit federal income tax exposure—but they need to survive IRS scrutiny. Peter Woodlock of Youngstown State highlighted issues with discounting.
- It’s time to think about the 2025 estate tax sunset. There are strategies to employ now to prepare high-wealth farms for the possible reduction of the federal estate tax exemption in 2025. David Malson of Barnes and Thornburg LLP walked us through a few of those strategies.
- We need to encourage and mentor more rural professionals. There's an alarming shortage of legal and tax experts who can advise farm owners and operators in rural areas. Beth Rumley of the National Agricultural Law Center led a panel of young attorneys--Johnny Cottingum of Wright & Moore, Eli Earich of Barrett, Easterday, Cunningham and Eselgroth, and Jennifer Harrington of Iowa State University--to discuss issues and solutions for reducing these "rural deserts."
- Know the ethics rules. When an attorney represents a farm couple, farm family, and/or farm operation, lack of awareness about potential issues with confidentiality and conflicts of interest can get an attorney in trouble. Jesse Richardson of West Virginia College of Law laid out the rules of professional responsibility that can affect farm transition planning.
- Plans can differ. The conference ended with a case study that challenged all to assess a family’s situation, its farm transition plan, and the administration of its estate and federal tax return. A range of ideas and analysis by conference attendees emerged. What we learned: there can be different paths to the same goal—different ways to jump the hurdles. But in all cases, it takes a team of professionals to get the family through those hurdles.
Learn more about the Cultivating Connections Conference on the Farm Office website. Consider joining us next year for the third annual conference, hosted by Iowa State University’s Center for Agricultural Law and Taxation, on August 4 and 5, 2025 in Ankeny, Iowa. And to stay involved with professionals involved in farm transition planning, consider joining the Association of Farm Transition Planners by signing up for the list serve.
Tags: Cultivating Connections, farm transition, Estate Planning, business planning farm succession
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Recently, the Supreme Court of Ohio ruled on a unique and highly publicized case involving a bone found in a "boneless" wing. This case has drawn significant attention due to its peculiar subject matter and the broader implications it holds for consumer protection and food labeling practices. It exemplifies the delicate balance the law must strike between protecting business interests and ensuring consumer safety.
Case Background
In April 2016, Michael Berkheimer ordered boneless wings at Wings on Brookwood, a restaurant in Butler County. Berkheimer cut each boneless wing into smaller pieces before eating. After consuming one piece, he experienced discomfort in his throat. In the following days, he developed a fever and nausea, prompting a visit to the emergency room. Doctors discovered a 1 1/2-inch chicken bone lodged in his throat, resulting in heart and lung damage and a partially paralyzed diaphragm. In 2017, Berkheimer sued the restaurant owners, as well as the chicken supplier and processor. The case was eventually appealed to the Supreme Court of Ohio.
Legal Concepts at Issue
The Court of Appeals previously determined that the bone was a natural part of chicken and thus the restaurant did not breach its duty of care to its customer. The Appeals Court essentially decided that consumers should recognize the inherent risk of bones in chicken, regardless of how the product is labeled.
Conversely, Berkheimer argued that a reasonable person would not expect a bone in a boneless wing and, therefore, would not think to inspect the meat for bones. He contended that the restaurant and supplier were negligent by offering a food product labeled as boneless while knowing it could contain bones or bone fragments. Mr. Berkheimer appealed the matter to the Ohio Supreme Court.
The Court's Decision
In a 4-3 decision, the Ohio Supreme Court ruled in favor of the restaurant. The court concluded that while the term "boneless wings" might not be entirely accurate, it did not constitute negligence under Ohio law. The court noted that "boneless wings" is a commonly accepted descriptor for a specific type of chicken product, and reasonable consumers are unlikely to be misled by this term.
The court also emphasized the importance of context in labeling disputes. They found that the restaurant's menu and advertising provided sufficient context for consumers to understand what they were purchasing. However, the court suggested that businesses should strive for greater clarity in their labeling practices to avoid potential confusion.
Implications and Future Considerations
The ruling in this case has significant implications for the food industry and consumer protection efforts. It highlights the ongoing tension between industry practices and consumer expectations, particularly in the realm of food labeling.
For businesses, the case underscores the importance of transparency and clarity in product descriptions. While the court ruled in favor of the restaurant chain, it also suggested that more accurate labeling could help prevent similar disputes in the future.
For consumers, the case serves as a reminder to scrutinize product labels and ask questions when in doubt. As food labeling practices continue to evolve, consumer awareness and vigilance will be crucial in ensuring that businesses maintain honest and transparent practices.
This case sets a precedent for how courts might handle similar disputes in the future, emphasizing the need for clear communication between businesses and consumers to avoid misunderstandings and ensure consumer safety.
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Featured Discussion on the Downward Trend in Global Profitability of Crop Farming and a Bearish Outlook for 2024
During its annual conference from June 10th to 14th, the agri benchmark Cash Crop Network discussed recent developments in global crop production. I was fortunate to recently attend the agri benchmark conference in Valladolid, Spain. The conference was hosted by the Spanish Ministry of Agriculture who together with its operating company Tragsa, established and manages a network of 37 typical crop farms. Approximately 55 international experts from all over the world discussed recent results and topical issues of global crop production.
The Ohio State University College of Food, Agricultural and Environmental Sciences is a member of the agri benchmark network and I serve as the network representative for the College. The following are a few selected highlights from the conference.
Last year (2023) was difficult for most typical agri benchmark farms when compared with previous, more profitable, years. Increasing machinery cost and lower output prices many farms experienced a massive downturn in return to land.
The projections for 2024 for the agri benchmark network, which is coordinated by the German Thünen Institute, are even more bearish. The likely relief provided by lower fertilizer prices will not fully compensate for the increase in machinery costs. In addition, based on global price projections, farm-gate production prices are likely to be lower in 2024 than in 2023. Many typical farms are likely to struggle with returns in 2024.
US renewable diesel boom – how US soybean production may increase
A number of U.S. states have implemented blending targets for renewable fuels. As a result, renewable diesel production has increased substantially. By 2029 this will lead to an annual demand of 8 million tons of soybean oil renewable diesel production (FAPRI-MU, 2024), a 3-million-ton increase in demand relative to 2020. The respective supply can be generated through more domestic crushing or an increase of soybean acreage; most likely, a combination of both options will be used. To satisfy this increased demand for soybean oil via expansion of soybean acreage, about 5.1 million ha (+15% of current soybean acreage) of additional farmland would be required. An increase in soybean acreage may come from either (a) shifting away from continuous corn rotations to corn-soy and (b) shifting corn-soy rotations toward corn-soy-soy. Based on agri benchmark data, Margaret Lippsmeyer from Purdue University showed that option (a) would require an increase in soybean prices of 6% and option (b) of 8% to make these rotations preferable over existing ones.
Ukraine grain exports: No specific effects on Central & Eastern European farm-gate prices
At the national level, agri benchmark farm-gate data did not yield an indication that growers in Central and Eastern Europe have been suffering from the inflow of Ukrainian grain. As the graph attached indicates, respective wheat margins between Western Europe and Central and Eastern Europe actually narrowed. However, agri benchmark partners mentioned that in regions close to the Ukrainian border lower than usual prices have been observed.
EU sugar production: Expanding and rather profitable in 2023
Due to high EU sugar prices in 2022, EU production increased by 7% in 2023. Therefore, the EU became a net exporter again. Since global sugar prices were still rather high, the negative impact on domestic prices was low. Thomas de Witte from Thünen Institute stated that profitability of sugar beet production was extraordinarily high – an advantage of 1.000 to even 2.000 €/ha over other crops could be observed. A possible future cut of 15 to 30 €/t in beet prices (or 20% to 40%) would still make beets competitive at wheat prices of 230 €/t.
Regenerative agriculture – a promising option to reduce environmental footprint?
The members of the agri benchmark Network discussed the concept and the environmental claims of regenerative agriculture. Many industry leaders and politicians are promoting this idea to address public concerns regarding agriculture; influential global consulting companies try to educate growers regarding the profitability of suggested measures such as cover crops and no-till. One discussion focused on the notion that proponents of regenerative agriculture oversell the potentials, in particular regarding greenhouse gas savings and economics. Furthermore, the two major sources for GHG emissions – nitrogen use and land use change – are not addressed. Considering these shortcomings, the network will be publishing a thesis paper on this topic and will suggest more meaningful indicators to define goals that effectively reduce GHG emissions and reduce pressure on biodiversity.
agri benchmark, a nonprofit, politically independent organization, provides comprehensive information and advice on crop production systems. With its proven and unique farm level data and a global network of on-the-ground experts, agri benchmark enables economic and environmentally sustainable decision-making by agricultural stakeholders worldwide.
Let’s grow together – Your strategic partner for tomorrow’s agriculture
For more information visit: agribenchmark.org
Evolution of average return to land* across all crops (USD/ha)
* Total revenue (incl. decoupled payments) minus total cost (excluding land cost);
weighted average per farm, simple average across all farms per region
Evolution of farm-gate wheat prices – regional agri benchmark averages (USD/t)
Source: agri benchmark Cash Crop (2024)
Group picture from the conference
Source: agri benchmark Cash Crop (2024)
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The Internal Revenue Service (IRS) has specific guidelines for determining whether a farming activity is considered a business or a hobby. This distinction is crucial because it affects how expenses and losses are treated for tax purposes. Farmers who engage in agricultural activities must understand these guidelines to ensure they comply with tax laws and maximize their deductions.
Defining Hobby Farms vs. Business Farms
The IRS considers several factors to determine if a farming operation is a for-profit business or merely a hobby. A farm classified as a hobby cannot deduct losses against other income, whereas a business farm can. The primary difference lies in the intent to make a profit.
The 3-out-of-5-Years Rule
One of the key benchmarks used by the IRS is the "3-out-of-5-years" rule. According to this rule, a farming activity is presumed to be for-profit if it has made a profit in at least three of the last five tax years. For horse breeding, training, showing, or racing, this period extends to two out of seven years. If the farm meets this criterion, the IRS assumes the activity is profit-oriented unless there is evidence to the contrary.
Factors Considered by the IRS
Even if a farm does not meet the 3-out-of-5-years rule, it can still be considered a business based on other factors. The IRS evaluates the following criteria to assess the profit motive:
- Manner of Operation: Is the farm run in a businesslike manner? This includes maintaining accurate books and records, having a separate bank account, and implementing strategies to improve profitability.
- Expertise: Does the taxpayer have expertise or consult with experts to make the farming operation profitable? This factor looks at the knowledge and experience of the farmer or their reliance on professional advice.
- Time and Effort: How much time and effort does the taxpayer put into the farming activity? Significant personal involvement can indicate a profit motive.
- Asset Appreciation: Does the value of the farming assets (such as land and equipment) increase over time? Appreciation can suggest a profit intent, even if the farm incurs losses.
- History of Income or Losses: What is the history of income and losses in the farming activity? Occasional profits or a trend towards profitability can support the profit motive.
- Financial Status: Does the taxpayer have substantial income from other sources? If the taxpayer relies on farming as their primary income, it is more likely to be seen as a business.
- Elements of Personal Pleasure: Does the taxpayer derive personal pleasure or recreation from the farming activity? While enjoyment does not automatically classify an activity as a hobby, it can be a contributing factor.
Tax Deductions and Hobby Farms
If the IRS deems a farm a hobby, the taxpayer can only deduct expenses up to the amount of income generated by the hobby. This means that hobby farms cannot use losses to offset other income. Conversely, a business farm can deduct all ordinary and necessary expenses related to the farming activity, even if they exceed income, potentially reducing overall taxable income.
Record Keeping and Documentation
Maintaining meticulous records is essential for farmers to substantiate their profit motive. This includes keeping receipts, invoices, and detailed logs of farming activities. Proper documentation helps demonstrate the businesslike operation of the farm and supports the claim of profitability.
Conclusion
Understanding how the IRS views hobby farms versus business farms is critical for farmers to manage their tax obligations effectively. The 3-out-of-5-years rule provides a clear benchmark, but other factors also play a significant role in determining the nature of the farming activity. By operating in a businesslike manner and keeping thorough records, farmers can maximize their tax deductions and ensure compliance with IRS regulations.
The Occupational Safety and Health Administration (OSHA) couldn’t have timed the weather for its proposal for a federal rule to reduce heat injury and illness better—in the midst of July heat waves across the U.S. But timing isn’t everything and certainly isn’t a guarantee that the proposal will become a final, effective rule. The proposal already faces opposition from many Republicans and employers who would be subject to the proposed standards.
OSHA’s proposed rule on “Heat Injury and Illness Prevention in Outdoor and Indoor Work Settings” would establish a federal heat standard to protect employees in indoor and outdoor working conditions. OSHA states that there was an average of 40 heat-related fatalities per year across the U.S. from 2011-2022 and an average of 3,389 work-related heat injuries and illnesses per year in that same period. The agency believes that those numbers are likely significantly underestimated.
The proposed rule would apply to “all employers conducting outdoor and indoor work in all general industry, construction, maritime, and agriculture sectors where OSHA has jurisdiction.” OSHA does not have jurisdiction over agricultural employers with 10 or fewer employees, so smaller-scale farms and agribusinesses would be exempt from the rule. Generally, employers subject to the rule would have to assess their working conditions and develop and implement a “heat injury and illness prevention plan” that assesses and manages heat hazards in their workplaces.
Specifically, the proposed standard would require employers to:
- Identify heat hazards in outdoor and indoor work sites;
- For outdoor work sites, employers would have to monitor the heat at the site by tracking local heat index forecasts or measuring the heat index and temperature;
- For indoor work sites, employers would have to identify work areas with the potential for hazardous heat exposure and implement a monitoring plan
- Implement control measures at or above an Initial Heat Trigger (heat index of 80°F) that includes providing employees with effective two-way communication, cool drinking water, break areas with cooling measures, indoor work area controls, acclimatization protocols for new and returning unacclimatized employees, and paid rest breaks if needed to prevent overheating.
- Implement additional control measures at the High Heat Trigger level (heat index of 90°F) that include providing employees with a hazard alert and mandatory rest breaks of 15 minutes every two hours and observing employees for signs and symptoms of heat-related illness.
- Provide training, have procedures to respond if a worker is experiencing signs and symptoms of a heat-related illness, and take immediate action to help a worker experiencing signs and symptoms of a heat emergency.
OSHA’s announcement on the Heat Injury and Illness Prevention rule is on the agency’s website at https://www.osha.gov/heat-exposure/rulemaking. Comments to the proposal can begin after the official proposed rule is published in the Federal Register, which should be soon. To understand the rulemaking process and how to submit comments on a proposed rule, visit this OSHA site.
Tags: OSHA, employment law, heat injury, heat illness, hiipp, employment, labor
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Join us for another "Planning for the Future of Your Farm" workshop on August 22, 2024 from 9:00 am to 4:00 pm in northeast Ohio. This popular workshop aims to help farm families have difficult conversations and learn strategies and tools to transfer farm ownership, management, and assets to the next generation. Extension Farm Management Field Specialist David Marrison will join Robert Moore of the OSU Agricultural & Resource Law Program to present the workshop.
Workshop topics include: Developing Goals for Estate and Succession; Planning for the Transition of Control; Planning for the Unexpected; Communication and Conflict Management; Legal Tools and Strategies; Developing Your Team; Getting Your Affairs in Order; and Selecting an Attorney.
The registration fee is $25 per person and includes lunch, refreshments, and course materials. Registration deadline is August 16, 2024. This program is made possible at a discounted rate due to the generous support from the Hertzer Family Trust.
Extension Educator Lee Beers at the Trumbull County Extension office is the local host for the workshop. Contact Lee with questions at 330-638-6738 or via email at beers.66@osu.edu. For more information about the workshop, visit go.osu.edu/farmsuccession.
Tags: planning for the future, Estate Planning, transition planning
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Ohio’s Wild, Scenic, and Recreational Rivers Program will soon see some changes under Senate Bill 156, recently passed by the Ohio General Assembly. The legislature forwarded those changes to the governor on July 16. Governor DeWine is expected to sign the bill, which had unusually high non-partisan support with only one legislator voting against the measure.
The legislature’s focus on the Wild, Scenic, and Recreational Rivers Program began with concerns from owners of private land that abuts watercourses designated under the program as wild, scenic, or recreational. Ohio currently has 15 designated watercourses comprising 27 stream segments and just over 830 river miles. Many of the designated watercourses are along agricultural lands.
Those landowner concerns initiated a program review and led to the revisions enacted by the legislature in S.B. 156, which makes the following changes.
- Transfers the authority to administer the program from the Division of Parks and Watercraft to the Division of Natural Areas and Preserves (DNAP) in the Ohio Department of Natural Resources (ODNR).
- Narrows DNAP’s scope of authority to the watercourses that are designated as wild, scenic, and recreational rivers, rather than to wild, scenic, and recreational river “areas” as under the current law.
- States that a watercourse designation does not affect private property rights or authorize the Director of Natural Resources, DNAP Chief, or any governmental agency or political subdivision to restrict the use of private land adjacent to a designated river.
- States that the law does not give any right to the above parties to enter upon private land.
- Expands the types of watercourses subject to designation as a wild, scenic, or recreational river to include the headwaters of those rivers.
- Requires DNAP to perform certain duties regarding publicly owned land along a designated river, including both of the following:
- To adopt rules governing the use, visitation, and protection of scenic river lands and other specified publicly owned lands administered by DNAP within the watersheds of wild, scenic, and recreational rivers; and
- To establish facilities and improvements within the system of wild, scenic, and recreational rivers, scenic river lands, and other specified publicly owned lands that are necessary for their visitation, use, restoration, and protection and that do not impair their natural character.
- Requires the DNAP Chief to adopt rules establishing fees and charges for the use of facilities in nature preserves, scenic river lands, and on publicly owned lands.
- Clarifies that certain public entities must obtain approval from the ODNR Director if specified construction activities are performed within 1,000 feet of a wild, scenic, or recreational river.
- Requires the ODNR Director to post the intention to declare a watercourse as a wild, scenic, or recreational river on DNAP’s website.
- Allows the DNAP Chief to accept, receive, and expend gifts, devises, or bequests of money, land, or other properties for purposes of the wild, scenic, and recreational river program.
Learn more about S.B. 156 on the Ohio legislature’s website. Information on Ohio’s Scenic Rivers Program is on ODNR’s website.
Tags: water law, scenic rivers, ODNR, Property Rights
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As the 2026 deadline for the significant reduction in the federal estate tax exemption approaches, high net worth individuals and estate planning professionals are seeking effective strategies to mitigate potential tax burdens. One possible strategy is the Spousal Lifetime Access Trust (SLAT), a tool that can offer substantial tax advantages while providing financial security for spouses. Our latest bulletin, "Using Spousal Lifetime Access Trusts in Estate Plans", delves into SLATs, offering an explanation of their benefits, mechanisms, and considerations.
Understanding SLATs
A SLAT is an irrevocable trust designed to provide income to a beneficiary spouse while removing the principal assets from the donor spouse’s taxable estate. This strategy can significantly reduce estate taxes and ensure financial stability for the beneficiary spouse during their lifetime. The following are some of the key components and characteristics of SLATs:
- Irrevocability: Once assets are transferred into a SLAT, the trust cannot be modified or revoked, and the assets cannot be returned to the donor spouse. This permanence is crucial for excluding the assets from the donor spouse's taxable estate.
- Trustee Management: A trustee, who can be the beneficiary spouse, another individual, or multiple co-trustees, manages the SLAT’s assets. The trustee’s role is to ensure that the assets are used according to the trust’s terms and in the best interests of the beneficiary spouse.
- Beneficiary Distributions: The beneficiary spouse receives income from the trust during their lifetime, providing ongoing financial support. Upon the beneficiary spouse’s death, the remaining trust assets are distributed to designated beneficiaries, such as the couple’s children, free of estate taxes.
Estate Tax Advantages of SLATs
SLATs offer two primary mechanisms for reducing estate taxes:
- Exclusion from Taxable Estates: Assets transferred to a SLAT are excluded from both the donor and beneficiary spouses’ taxable estates. This means that any future appreciation of these assets is not subject to estate taxes.
- Pre-Exemption Reduction Transfers: By transferring assets to a SLAT before the federal estate tax exemption is reduced, individuals can lock in the current higher exemption amount. Any value exceeding the new, lower exemption amount set for 2026 is not "clawed back" into the estate, providing significant tax benefits.
Practical Considerations
While SLATs offer substantial benefits, their effectiveness depends on careful planning and consideration of several factors:
- Appreciation of Transferred Assets: The strategy is most beneficial when the transferred assets are expected to appreciate in value, as the growth occurs outside the taxable estates.
- Exceeding the Exemption Amount: SLATs are particularly advantageous for individuals whose wealth exceeds the new estate tax exemption amount. Large transfers made before the reduction can result in significant tax savings.
Advantages and Disadvantages
Like most estate planning strategies, there are both advantages and disadvantages. The advantages include:
- Exclusion from Estate: Assets transferred into a SLAT are not included in either spouse’s estate, protecting any appreciation in value from estate taxes.
- Lifetime Benefits: The beneficiary spouse can receive income and, in some cases, principal from the trust, providing financial support during their lifetime.
- Asset Protection: SLATs offer a level of protection from creditors, safeguarding the assets from potential claims against either spouse.
Disadvantages to consider are:
- Irrevocable Nature: The donor spouse loses control over the assets once they are transferred into the SLAT, which can be a drawback for individuals who prefer flexibility.
- Dependency on Spousal Relationship: The effectiveness of a SLAT is tied to the stability of the marriage. Divorce or the death of the beneficiary spouse can impact the donor spouse’s ability to benefit indirectly from the trust income.
- No Step-Up in Basis: Heirs do not receive a step-up in tax basis upon inheriting assets from a SLAT, potentially resulting in significant capital gains taxes.
Conclusion
The Spousal Lifetime Access Trust (SLAT) is a valuable estate planning tool that can help reduce estate taxes, especially in anticipation of the potential reduction in the federal estate tax exemption in 2026. While a SLAT is not suitable for everyone, it can be effective in specific situations, particularly for individuals with highly appreciating assets or those who can gift assets near the current federal estate tax exemption limit. Implementing a SLAT requires careful planning and close collaboration with legal and tax advisors. As always, consult with an experienced attorney and tax advisor to ensure that a SLAT aligns with your estate planning goals and complies with all relevant laws and regulations.
For more detailed information and practical insights, see the new bulletin, "Using Spousal Lifetime Access Trusts in Estate Plans" available at farmoffice.osu.edu.
We're building a forum for professionals who meet a critical need: helping farm operations transition to the next generation. The second annual Cultivating Connections Conference is for attorneys, tax professionals, appraisers, financial planners, educators and others who work in farm transition planning. The conference is an opportunity to discuss laws, consider new tools, analyze planning strategies, work through a case study, and meet other professionals. If farm transition planning is what you do, we hope you'll join us for the conference in Cincinnati, Ohio on August 5 and 6. For those who want to attend but can't travel, we also provide a virtual attendance option.
Cultivating Connections Conference highlights include:
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Timely topics. Sessions include preparing for the 2025 tax sunset, utilizing business entity discounts, understanding rural appraisals, drafting prenuptial agreements, divorce impacts on transition planning, implementing the estate plan and estate tax return, communication strategies, organizing client information, and ethical issues in farm transition planning.
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Expert speakers. A faculty of experienced attorneys, accountants, academics, and appraisers will share their knowledge and insights.
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Problem solving. A real-life case study will provide an opportunity for collaborative in-depth analysis of practical farm transition planning techniques, estate planning considerations, and tax implications.
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Relationships. Attendees can meet new peers, share experiences, and build relationships with a network of other farm transition professionals.
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Continuing education credits. We offer Continuing Legal Education credits for Ohio and Iowa, IRS Continuing Education credits, and assistance applying for credits in other states.
The University of Cincinnati College of Law is the site of this year's conference, hosted by the Ohio State University Agricultural and Resource Law Program. Conference co-sponsors are Iowa State University's Center for Agricultural Law and Taxation and the National Agricultural Law Center. The three institutions partnered on the inaugural conference last year, and have since formed the Association of Farm Transition Planners to continue supporting the nation's farm transition planning professionals.
The Cultivating Connections Conference agenda, list of speakers and registration are at https://go.osu.edu/cultivatingconnections. The website also highlights attractions and events for conference attendees, such as the nearby Cincinnati Zoo, Kings Island, the Newport Aquarium, and the Great American Ballpark, where the Cincinnati Reds will host the San Francisco Giants on August 4. Cincinnati is a prime location for those who want to combine farm transition learning with a little summer fun. We hope to see you there!
Tags: farm transition planning, Cultivating Connections, Estate Planning, succession planning
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Ohio Farm Custom Rates 2024
Barry Ward, Eric Richer, John Barker and Amanda Bennett, OSU Extension
Farming is a complex business and many Ohio farmers utilize outside assistance for specific farm-related work. This option is appealing for tasks requiring specialized equipment or technical expertise. Often, having someone else with specialized tools perform tasks is more cost effective and saves time. Farm work completed by others is often referred to as “custom farm work” or more simply, “custom work”. A “custom rate” is the amount agreed upon by both parties to be paid by the custom work customer to the custom work provider.
Custom rates increased for the majority of field operations in 2024 as compared to surveyed rates in 2022 but the increases did vary by operation. Examples include an increase of 6% for Planting Corn (30 Inch Rows with Fertilizer Application), 5.6% for Harvesting Corn (Combine, Grain Cart, Haul Local to Farm), 21% for Spraying (Self-Propelled Sprayer, Crop Protection Chemicals) and 24% for Field Cultivator.
New field operations in this year’s survey and summary include drone/UAV application and cover crop seeding.
Ohio Farm Custom Rates
The “Ohio Farm Custom Rates 2024” publication reports custom rates based on a statewide survey of 333 farmers, custom operators, farm managers, and landowners conducted in 2024. These rates, except where noted, include the implement and tractor if required, all variable machinery costs such as fuel, oil, lube, twine, etc., and labor for the operation.
Some custom rates published in this study vary widely, possibly influenced by:
- Type or size of equipment used (e.g. 20-shank chisel plow versus a 9-shank)
- Size and shape of fields
- Condition of the crop (for harvesting operations)
- Skill level of labor
- Amount of labor needed in relation to the equipment capabilities
- Cost margin differences for full-time custom operators compared to farmers supplementing current income
Some custom rates reflect discounted rates as the parties involved have family or community relationships. Discounted rates may also occur when the custom work provider is attempting to strengthen a relationship to help secure the custom farmed land in a future purchase, cash rental or other rental agreement. Some providers charge differently because they are simply attempting to spread their fixed costs over more acreage to decrease fixed costs per acre and are willing to forgo complete cost recovery.
Charges may be added if the custom provider considers a job abnormal such as distance from the operator’s base location, difficulty of terrain, amount of product or labor involved with the operation, or other special requirements of the custom work customer.
The data from this survey are intended to show a representative farming industry cost for specified machines and operations in Ohio. As a custom farm work provider, the average rates reported in this publication may not cover your total costs for performing the custom service. As a customer, you may not be able to hire a custom service for the average rate published in this factsheet.
It is recommended that you calculate your own costs carefully before determining the custom rate to charge or pay. It may be helpful to compare the custom rates reported in this fact sheet with machinery costs calculated by economic engineering models available online. The following resources are available to help you calculate and consider the total costs of performing a given machinery operation.
- Farm Machinery Cost Estimates, available by searching University of Minnesota.
- Illinois Farm Management Handbook, available by searching University of Illinois farmdoc.
- Estimating Farm Machinery Costs, available by searching Iowa State University agriculture decision maker and machinery management.
Volatility in diesel price may sometimes cause concern for custom rate providers that seek to cover all or most of the costs associated with custom farm operations. The approximate price of diesel fuel during the survey period (January – April 2024) ranged from $3.20 - $3.50 per gallon for off-road (farm) usage. As a custom farm work provider, if you feel that your rate doesn’t capture your full costs due to fuel price increases you might consider a custom rate increase or fuel surcharge based on the increase in fuel costs.
The complete “Ohio Farm Custom Rates 2024” publication is available online at the Farm Office website:
https://farmoffice.osu.edu/farm-management/custom-rates-and-machinery-costs