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We're excited to announce that our new farm financial management online course is now available.  Named "Farm On," the self-paced, on-demand farm financial management course was created by our Farm Office team under the leadership of new Farm Management Field Specialist Eric Richer.  It is offered through OSU Extension’s new Farm Financial Management and Policy Institute.

We created the Farm On course to address the needs of Ohio’s new and beginning farmers who want to better prepare themselves to operate a commercial farm in Ohio and do that with a high level of economic stability while remaining profitable and responsible along the way.  What’s unique about the Farm On course is that, not only does it comply with the regulations of the new Ohio House Bill 95 Beginning Farmer Tax Credit program, it also meets the borrower training requirements for the U.S. Department of Agriculture Farm Service Agency’s Beginning Farmer and Rancher Loan Program.

The 10-module Farm On course includes video lessons, quizzes, and opportunities to apply knowledge gained through graded course exercises. Students can engage with the lead course instructor  through virtual office hours and scheduled appointments. The course covers the following topics:

• Farm Business Planning
• Balance Sheets
• Income Statements
• Cash Flow Projections
• Calculating Cost of Production
• Farm Record Keeping
• Farm Taxes
• Farm Financing
• Risk Management
• Farm Business Analysis

The Farm On course allows CFAES to serve the needs of all farmers through OSU Extension and our Farm Financial Management and Policy Institute, said Cathann A. Kress, Ohio State vice president for agricultural administration and dean of CFAES. 

“We are excited to partner with ODA and USDA-FSA to address the farm financial training that is required for running a farm business,” Kress said. “Currently, we are the only educational institution in Ohio with a course like ‘Farm On’ that qualifies for ODA’s Beginning Farmer Tax Credit Program and FSA’s Borrower Training Requirements.

“As part of our Land-Grant mission, CFAES educates not just college students but over two million individuals across the lifespan.”

The Ohio House Bill 95 Beginning Farmer Tax Credit program went into effect in July 2022 and grants a 3.99% tax credit to landowners who sell or lease assets to a certified Ohio beginning farmer. The new law also allows an Ohio tax credit to the certified beginning farmer equal to the cost of the financial management course completed. The Farm On course costs $300 per person.

“OSU’s Farm On course is a great way to help Ohio farmers qualify for Ohio Department of Agriculture’s (ODA) new Beginning Farmer Tax Credit program, which is an important tool to help current beginning farmers and potential future farmers do what they do best,” said ODA Director Brian Baldridge. “We are thankful for this partnership that is helping to keep Ohio’s hard-working farmers at the forefront.”

According to Darren Metzger, Ohio Farm Service Agency Loan Chief, “The course is in-depth financial management training that can assist our borrowers to obtain and/or improve their knowledge in this critical area of farm management. OSU’s Farm On course is now 1 of 5 approved vendors for our borrowers in Ohio.”

CFAES’ new Farm Financial Management and Policy Institute was created last year with the goal of sharing resource-based knowledge and best practices to help Ohio farmers manage their businesses as the agricultural industry changes and evolves. Housed within OSU Extension, the goal of FFMPI is for the integration, translation, and communication of CFAES’ farm management and ag policy presence that addresses critical farm management and policy issues affecting Ohioans.

“Farm On is meeting a need of today’s modern crop farmers and it’s packaged in a way that respects the busy schedules of family farmers.  It’s this type of tangible benefit that earns the support of Ohio’s corn and small grains checkoff funds.  We are proud to partner with OSU Extension on this important new institute,” said Tadd Nicholson, executive Director of Ohio Corn and Wheat.

Farm On isn’t just for new and beginning farmers. The course provides an opportunity for any farmer in Ohio, whether you’re a new farmer, a seasoned farmer, a small farmer, or a large farmer.  For a long time, we’ve needed to have this course in Ohio because farm management is so critical to ensuring the future of our farms.

To learn more, view our video and to sign up for Farm On, go to go.osu.edu/farmon. 

An eminent domain revisions bill appears to be on hold after its removal from the committee agenda that would have provided the bill a third hearing. House Bill 64 was introduced by sponsors Rep. Darrell Kick (R-Loudonville) and Rep. Rodney Creech (R-W. Alexandria) on February 21.  The bill had two hearings before the House Civil Justice Committee on March 7 and 14, but was removed from the committee’s March 21 meeting agenda. 

House Bill 64 proposes quite a few major changes to Ohio eminent domain law:

• Voids an appropriation of property if the agency does not follow statutory procedures for the appropriation, such as procedures for appraisal of value, good faith offers of compensation, and negotiation with the landowner.  Under the proposal, a landowner could bring a claim against the agency for violating any of these procedures and the appropriation would be invalid. The proposal is the opposite of current law, which states that procedural violations do not affect the validity of an appropriation of property.
• Increases an agency’s burden of proof in showing that a taking is for a public use and is necessary, that the agency has authority to appropriate the property, and that the parties are unable to agree on a voluntary purchase of the property. The agency would have to meet the “clear and convincing evidence” burden of proof rather than the “preponderance of evidence” standard stated in current law.
• Removes two presumptions the law currently makes in favor of an agency.  The first is that an appropriation is necessary if the agency adopts a resolution or ordinance declaring its necessity and the second is that an appropriation for a public utility or common carrier is necessary upon the offering of evidence supporting the necessity.  Removing these presumptions also affects the burden of proof the agency must meet regarding the necessity of a taking.
• Revises an irrebuttable presumption in current law that an appropriation is necessary if the agency is a common carrier or public utility and a state or federal regulatory authority has approved the appropriation.   The proposal would allow a landowner to rebut this presumption and would limit the presumption only to the specific interests reviewed by the regulatory authority.
• Prohibits an agency from reducing or revoking the compensation made in an initial offer to a landowner or from later arguing or presenting evidence for a lower amount.  Current law allows an agency to revise an offer if they discover new conditions after making an initial offer.
• Expands attorney fee, cost, and expense awards for landowners. Current law allows attorney fee and cost awards if an agency challenges a landowner’s appraisal and the final compensation awarded is less than 125% of the agency’s first offer.  The bill would require reasonable attorney fees, expenses, and costs if an agency appeals and does not prevail, in whole or in part.  It also removes a provision requiring a landowner to pay court costs if the landowner denies an agency’s offer and is later awarded less than the offer amount.
• Awards “coercive damages” to landowners who prove by a preponderance of evidence that an agency used coercive actions during the appropriation process.  Coercive actions include, but are not limited to, advancing the time of a taking, deferring negotiations, deferring the deposit of funds with the court, and attempting to force an agreement on the compensation award.
• Provides landowners the right to an “inverse condemnation” action, which is a claim that an agency has taken property without filing a court proceeding.  In that case, a landowner may file an inverse condemnation lawsuit in the court of common pleas.  If the landowner proves by a preponderance of evidence that the agency has taken the property, the court can award the landowner compensation and damages for the taking as well as attorney fees, costs, and expenses.  Currently, a landowner must file a “mandamus” action asking the court to order the agency to initiate an eminent domain proceeding and must offer clear and convincing evidence to the court that the agency has taken the property.
• Extends case timelines.  The bill increases the minimum number of days for the court to set hearing dates.  If a landowner files an answer denying an agency’s authority, the necessity of the taking, or that the parties were unable to agree, the hearing date on those issues would extend from 15 to 30 days after the answer was filed and the compensation hearing date, if the court settles in favor of the agency, would change from at least 60 to at least 90 days after the court settles the issue.  If a landowner could have but failed to file an answer to an eminent domain action, the compensation hearing date would be at least 90 days rather than 20 days from the date the answer was due.  If an owner appeals a court’s determination on authority, necessity, or inability to agree on an appropriation, the bill prohibits the court from setting a compensation hearing until the appeal is final.
• Removes recreational trails from eminent domain authority.  The proposal states that the use of property for a recreational trail is not a valid “public use” for eminent domain purposes.  Recreational trails, according to the proposal, are trails used for hiking, bicycling, horseback riding, ski touring, canoeing, or other nonmotorized forms of recreational travel. The proposal also excludes the making or repairing of or access management to shared-use paths, bike paths, or recreational trails from the use of eminent domain for making and repairing roads.

In the March 14 committee hearing, the Ohio Farm Bureau Federation testified in support of the bill. Committee members raised questions about the bill’s recreational trail prohibition, initial offer minimum, coercive action awards, and attorney fee awards.  Although the committee chair suggested that a third hearing for opponent testimony would take place in the following week, the bill was later removed from that committee hearing agenda.

Read and follow House Bill 64 on the Ohio General Assembly’s webpage for the bill.

In the final installment of the farm insurance series, we look at unique activities and/or assets that may not be covered by a typical farm policy.  Most farm policies will automatically cover traditional farming activities and assets related to crop and livestock production.  However, many farming operations include assets or activities that may be non-traditional and thus not covered by the farm policy.

Below is a list of farm activities and farm assets that may not be covered by standard farm policies. Each of these activities and assets are a source of liability exposure. Farmers can review this list and identify any asset or activity that may apply to their farming operation.  Then, the list can be provided to their insurance agent to ensure that the farm has full liability protection.  Almost any asset or activity can be covered with the addition of an endorsement to the farm policy. 

• Agritourism
• Aircraft application of pesticide/fertilizer (own or custom)
• Aircraft for personal use
• ATV/side x side/recreational vehicle
• Barns and structures that are not currently being used
• Confined animals
• Custom application of pesticides or fertilizer
• Custom farm operations such as planting or harvesting
• Drones – scouting
• Drones – application of pesticides/seed
• Embryos stored or in recipient animal
• Exotic or non-domesticated animals
• Farm Markets
• FFA/4-H Projects
• Hauling crops, goods or cargo for others
• Holding products for customers after payment (seed, hay, inputs)
• Horse boarding, riding or training services
• Hunting leases or other paid recreational uses
• Leasing buildings or structures to others
• Non-owned livestock
• Off-premises use of ATV/recreational vehicles
• Oil/gas wells
• Ponds with docks, diving boards
• Pick-Your-Own
• Portable buildings or structures
• Pulling tractor/truck
• Purchased feed/seed/inputs purchased but not picked up/delivered
• Radio or TV Antennas
• Rental property
• Rental of grain bins
• Sale or production of food or other consumable goods
• Solar panels
• Swimming pool
• Tractor shows/parades
• Tours (paid or unpaid)
• Using borrowed equipment
• Using rented equipment
• Unoccupied houses
• Valuable refrigerated or frozen products
• Valuable or important information on computers
• Watercraft
• Wind turbines
• Website or online presence that collects money or stores customer information.
• Other____________________
• Other____________________
• Other____________________

The need for good farm insurance is well known and obvious to everyone in the farm community.  However, understanding how farm insurance works is not as universal.  Farmers know they need insurance and that the premiums must be paid but they may not be familiar with some of the key concepts of an insurance policy.  One such concept is co-insurance.

A farm insurance policy is a contract between the insured and the insurance carrier.  For the policy to be fair to both parties, the insured must provide an accurate inventory of the assets to be covered, including values.  The insurance carrier then uses the inventory of assets and values to calculate the premiums it must charge to carry the insurance. 

A policyholder may be tempted to suppress the values of the assets in an attempt to keep the premiums lower or, perhaps more likely, may not keep up with the replacement value of property.  In either case, whether intentional or not, the insurance carrier is put into an unfair arrangement as it calculates premiums based on undervalued assets.  Consider the following example:

Farmer bought a tractor five years ago for $80,000.  Farmer believes the tractor has declined in value and includes a $60,000 value on his insurance policy.  a similar tractor today would cost $100,000. Farmer’s insurance policy pays replacement value in the event of damage or loss.  The tractor is lost in a fire.  Farmer expects to be paid the replacement value of $100,000. 

In this scenario, Farmer may expect to be paid $100,000 to replace the tractor but he paid premiums based on a $60,000 value.  It would be unfair to make the insurance carrier pay $100,000 in replacement costs when it based its premiums on a $60,000 tractor.

To avoid the scenario in the above example, farm insurance policies include a co-insurance provision.  This concept is an agreement between the insured and the insurance carrier that a minimum amount of insurance must be purchased to replace property in the event of a loss.  If the policyholder purchases less than the specified percentage, the insurance carrier is not required to payout the full replacement value – making the policy holder a “co-insurer”.  The insurance policy usually requires the insured to purchase insurance on 80% - 100% of the value of property.  Co-insurance generally applies to outbuildings, dwellings, and blanket farm personal property.  Consider the following example:

Using the same example as above, Farmer’s co-insurance provision requires 80% coverage.  The tractor was only valued at 60% of the replacement value so the co-insurance provision in Farmer’s insurance policy is triggered.

The payout calculation for this loss is as follows:

                        Tractor Replacement Value =                        $100,000

                        Co-insurance requirement =                           80%

                        Required amount of insurance =                    $80,000 ($100,000 x 80%)

                        Actual amount of insurance purchased =       $60,000

                        Actual insurance/ required insurance =          75% ($60,000/$80,000)

                        Required payout¹ =                                        $75,000 (75% x $100,000)

As this example illustrates, Farmer did not meet his obligation to buy insurance on at least 80% of the value of the tractor.  Farmer reported a value of $60,000 or 75% of the value of the tractor.  By not meeting the 80% co-insurance requirement, Farmer triggered the co-insurance provision and is therefore partly responsible for the replacement cost.   Farmer becomes the co-insured for 25% of the replacement value, the proportion that Farmer undervalued the combine.  If Farmer had valued the tractor at $80,000 or higher, the insurance carrier would have been required to payout the full $100,000 for the loss.  By inadvertently undervaluing the combine, Farmer forfeited $25,000 of insurance payout.

Co-insurance is an important part of a farm policy insurance that most people have never heard of. The co-insurance provision should be reviewed with the insurance agent along with the value of assets to ensure that full payouts will occur in the event of a loss.  It does no good to discover that assets are valued too low after a claim is submitted, any adjustments in value to comply with the co-insurance requirement must be done before there is a loss.