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

Congress passed the Consolidated Appropriations Act (CAA), 2021 on Monday, December 21, 2020 which was signed by the President on December 27th. The CAA funds the government through September 30, 2021, implements COVID-19 relief provisions, and extends a number of expiring tax provisions. The $2.3 trillion bill provides $900 billion in COVID-19 relief. This article highlights key provisions for farm related issues from several Acts within the CAA’s 5,593 pages.  

Additional 2020 Recovery Rebates

“Economic Impact Payments”

The Act provides for “additional 2020 recovery rebates for individuals.” The additional recovery rebate credit is $600 for “eligible individuals” or $1,200 for “eligible individuals” filing a joint return. “Eligible individuals” are entitled to a $600 credit for each “qualifying child”. (Generally includes dependent children under the age of 17.) Phaseouts apply for higher income taxpayers.

Paycheck Protection Program Loans – Covered Expenses Now Deductible

Previously, the IRS and Treasury indicated that the expenses covered by PPP loans that were forgiven (or would be forgiven) would not be deductible. This new legislation now allows for these expenses to be deducted. This provision overrides IRS Notice 2020-32 and Rev. Rul. 2020-27. The CARES Act indicated that the loan proceeds from PPP loans are not to be included as taxable income. This tax treatment would apply to original PPP loans, as well as any subsequent loans made possible by the Act.

Paycheck Protection Program – Other New Guidelines

Qualified self-employed farmers who did not have employees and had less than $100,000 of net income in 2019 were not originally eligible for the maximum forgivable PPP loan. The new legislation now allows for the PPP loan forgiveness based on gross income rather than net income. Farmers are now able to receive a PPP loan of up to $20,833 (reduced by any loan already received) based on gross receipts of at least $100,000. 

The legislation amends the Paycheck Protection Program (PPP) to extend the covered period from December 31, 2020, through March 31, 2021. An allocation of $284 billion is included to provide first and second PPP loans to small businesses. Details of the expanded program will not be known until SBA releases required guidance.

The PPP allows borrowers to spend proceeds on payroll costs and non-payroll costs of business mortgage interest, business rent payments, and business utility payments. This new legislation expands the allowable use of PPP loan proceeds.

The legislation allows borrowers to choose a covered period anywhere between an eight-week and 24-week covered period for purposes of loan forgiveness. The covered period must begin on the date the proceeds are disbursed.

The legislation provides a simplified forgiveness procedure for PPP loans up to $150,000. The new procedure provides that such loans “shall be forgiven” if the borrower signs a certification that shall not be more than one page in length and shall require minimal supporting information.

The legislation repeals the provision in the CARES Act requiring the SBA to reduce a borrower’s PPP forgiveness by the amount of an EIDL advance.

PPP Second Draw Loans

The new legislation establishes a PPP Second Draw Loan program that generally applies to businesses with 300 or fewer employees if the business had gross receipts during any quarter in 2020 that were reduced by at least 25 percent from the gross receipts of the business during the same quarter in 2019.

To be eligible for a second draw loan, the borrower must have received a PPP loan in 2020 and used all of the proceeds of that loan for permitted purposes.

The Act allows borrowers who have not yet received forgiveness to request an increase in their loan amount if they returned all or part of a PPP loan or did not take the full amount of a PPP loan to which they were entitled. This provision allows borrowers who received loans before more favorable regulations were enacted to take advantage of those new provisions.

Employee Retention Credit (ERC)

The legislation extends and expands the employee retention credit, allowing employers to remain eligible up until July 1, 2021. Previously, employers who received a PPP loan were ineligible to claim the ERC. The new legislation retroactively allows employers who receive PPP loans to claim the ERC and to treat payroll costs paid during the loan-covered period as qualified wages to the extent the wages are not paid for with forgiven PPP loan proceeds.

For the period from January 1, 2021 and prior to July 1, 2021 the ERC percentage increases from 50 percent of qualified wages to 70 percent. Employers can count qualified wages up to $10,000 per employee per quarter (instead of for all quarters) in calculating the credit. Employers qualify for the credit if their gross receipts for a calendar quarter are less than 80 percent of the gross receipts of the corresponding calendar quarter in calendar year 2019.

Economic Injury Disaster Assistance (EIDL) Loans and Advances

The Act allows Economic Injury Disaster Assistance (EIDL) Advances provided as emergency grants under the CARES Act to be excluded from gross income while the corresponding expenses would remain deductible. Additionally, loan forgiveness granted to an EIDL loan recipient under discretionary powers provided by the CARES Act does not result in gross income or a denial of deductions for allocable expenses.

New Net Operating Loss (NOL) Options

The new legislation provides farmers new net operating loss options not otherwise available in the wake of the CARES Act. Farmers have the option to temporarily carry back Net Operating Losses 2 or 5 years with some caveats.

Extension of Credits for Paid Sick and Family Leave

The Act extends the tax credits made available to employers by the Families First Coronavirus Response Act through March 31, 2021 (They were set to expire on December 31, 2020). This includes the sick and family leave credits for self-employed individuals. The new legislation does not provide additional credits for employees but allows for a larger window to utilize them if the employer chooses.

Emergency EIDL Grants

The Act appropriates an additional $20 billion for emergency EIDL grants. The Act extends the covered period for this program through December 31, 2021, and extends the period to approve the applications from three days to 21 days.

Temporary Allowance of 100% Deduction for Business Meals

The new legislation allows for a 100 percent deduction for business meals where food or beverages is provided by a restaurant, for the 2021 and 2022 tax years.

Charitable Contributions Deduction by Non-Itemizers

For tax years beginning in 2021, the Act extends and increases the above-the-line deduction for cash contributions by non-itemizers to $300 for individuals and $600 for married filers.

Extension of Deferred Employee Portion of Payroll Taxes

The Act delays the repayment requirement for the employee portion of the payroll taxes that were deferred in response to the President’s August 8 Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster.  Instead of requiring full repayment of these deferred taxes by April 30, 2021, the new legislation delays this deadline to December 31, 2021.

 

References:

Tidgren, Kristine A. “What COVID Relief Provisions are in the Spending Bill?” Ag Docket Perspective on Agricultural Law & Taxation, Center for Agricultural Law and Taxation, December 23, 2020

Neiffer, Paul “Deeper Dive into PPP” Agribusiness Blog Farm CPA Today, CliftonLarsenAllen Wealth Advisors, December 22, 2020

H.R. 133 Consolidated Appropriations Act, 2021 https://www.congress.gov/116/bills/hr133/BILLS-116hr133enr.pdf December 27, 2020

Ernst & Young LLP, Consolidated Appropriations Act, 2021 extends many credits and other COVID-19 relief, Tax News Update, December 23, 2020

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Last Will and Testament
By: Jeffrey K. Lewis, Friday, January 08th, 2021

Do you have a will? Was your will executed formally? Do your parents have a will? Was their will executed in accordance with Ohio’s laws? What happens if your parent’s friend claims they are entitled to a portion of your parent’s estate because they have a handwritten note saying as much? Recently, the Ohio Supreme Court decided a case to help clarify Ohio’s laws regarding will execution.

In re Estate of Shaffer

Dr. Joseph Shaffer – a psychologist and part owner of successful sleep clinics – executed a formal will in 1967. Dr. Shaffer’s formal will instructed that if his wife were to pass away before him, his estate would pass through trust to his two sons. Dr. Shaffer’s wife, unfortunately, did pass away before him. On July 20, 2015, Dr. Shaffer also passed away. Dr. Shaffer’s formally executed will was admitted into probate in 2015. 

In January 2016, Juley Norman – a friend and caretaker of Dr. Shaffer – filed a creditor’s claim against Dr. Shaffer’s estate claiming that she was entitled to a portion of his estate because of the care and services she provided to Dr. Shaffer before the end of his life. Ms. Norman attached a copy of a handwritten 3x5 notecard signed by Dr. Shaffer in 2006.  No signatures other than Dr. Shaffer’s were present on the notecard, which read: 

Dec 22, 2006
My estate is not 
completely settled 
all of my sleep network
stock is to go to 
Terry Shaffer
Juley Norman for 
her care of me is to
receive 1/4 of my estate
Terry is to be the
executor. 
This is my will. 
[signed by Dr. Shaffer]

 

Zachary Norman, Juley’s son, filed an application asking the probate court to treat the notecard as a will and recognize his mother as a will beneficiary. At an evidentiary hearing to determine whether the notecard should be admitted as Shaffer’s will, Norman testified about her close relationship with Shaffer and the circumstances surrounding the notecard.  She stated that only she and her son witnessed Shaffer write and sign the notecard and that Shaffer directed her son to keep it in a safe place.  The probate court held, however, that there was not clear and convincing evidence that the notecard was intended to be Shaffer’s will.

Ohio's Sixth District Court of Appeals disagreed, overruling the probate court and allowing Juley to be added to the list of beneficiaries of Dr. Shaffer’s Estate.  Dr. Shaffer’s son sought the Ohio Supreme Court’s discretionary review of the matter after the appellate court’s reversal. 

In reaching its unanimous decision to reverse the court of appeals, the Ohio Supreme Court analyzed the relationships between three Ohio laws, as follows:

ORC § 2107.03 – Formal Will Making Requirements

Ohio law states that a document admitted to probate as a formal will must meet be:

  1. In writing; 
  2. Signed at the end by the testator (or in some circumstances someone else at the testator’s direction); and
  3. Attested to and subscribed to by two or more competent witnesses who saw the testator sign the will. 

The Ohio Supreme Court confirmed both lower courts’ decisions that Dr. Shaffer’s notecard cannot be considered a formal will. No witness signatures were present on the notecard and thus the only way to admit Dr. Shaffer’s will is through an exception in Ohio’s laws regarding will making formalities.  

ORC § 2107.24 – Exception to the Formal Will Making Requirements

R.C. § 2107.24 provides a narrow exception to the formalities required in R.C. § 2107.03 and recognizes a will even though no witness has signed the purported will. A probate court must hold a hearing to examine whether an advocate of the nonconforming document establishes by clear and convincing evidence that: 

  1. The decedent prepared the document or caused the document to be prepared; 
  2. The decedent signed the document and intended the document to constitute the decedent’s will; and 
  3. The decedent signed the document in the conscious presence of two or more witnesses. 

This statute is central to the issue between the Normans and the Shaffers. The Ohio Supreme Court found that under this law, the court’s role is to determine whether a document should be admitted to probate, not to determine the validity of the will’s contents. Therefore, the Ohio Supreme Court found that the probate court should have admitted the will into probate based on the above requirements. Even though the specific bequests contained within the will may be stricken once the will is admitted, the 2107.24 evidentiary hearing is not the proper mechanism to determine the validity of the contents of the will. 

However, the Ohio Supreme Court also analyzed Ohio’s “Voiding Statute” which eliminates any specific bequests to an interested witness to the will. 

ORC § 2107.15 the “Voiding Statute”

Ohio’s “voiding statute” states that if a devise or bequest is made to a person who is one of only two witnesses to a will, the devise or bequest is void automatically. The witness, however, will be able to testify to the execution of the will, as if the specific devise or bequest to that witness had not been made. 

Essentially, if a witness stands to take a portion of a testator’s estate under a will and if the validity of that will hinges on that witness acting as one of the two essential witnesses necessary to create a valid will, then that person’s interest under the will is void as a matter of law. This law does not control whether someone is competent to be a witness in order to establish a valid will, it only governs whether a devise or bequest in an already admitted will is valid. Therefore, this law comes into effect only after a will is determined to be valid and is admitted to probate. 

The Ohio Supreme Court found that the voiding statute applies to witnesses under both R.C. § 2107.03 and § 2107.24. The Court held that Juley Norman could not take ¼ of Dr. Shaffer’s estate because she is one of the two witnesses required to establish a valid will, and thus Dr. Shaffer’s devise to her is void. 

Conclusion 

Sadly, Dr. Shaffer is no longer with us to tell the Ohio Supreme Court what his wishes were. The only people who can testify to the validity of the notecard stand to gain something from that notecard being admitted to probate. Dr. Shaffer may have intended to provide Juley with 1/4 of his estate, but he did not take the legal steps necessary to ensure that Juley would be a beneficiary of the will.   Historically, others in Juley’s position have not been honest when it comes to claiming an interest in someone’s estate, which is why the law prohibits witnesses from also being beneficiaries of the will.

The Shaffer case illustrates why it is important to consult with an attorney to ensure that your wishes will be carried out as you intend and your estate plan is in order.  If you want to change your will, an attorney will ensure that the new provisions are in accordance with Ohio law.  Doing so can keep your family and friends out of court.

Useful links: The Ohio Supreme Court's slip opinion In re Estate of Shaffer

Ohio waterway
By: Peggy Kirk Hall, Wednesday, January 06th, 2021

Written by Jeffrey Lewis, Attorney and Research Specialist, OSU Agricultural & Resource Law Program

Ohio is thirsty for some quality H2O, but the legislature has recently struggled with how to get it.  After debating two separate water quality bills for over a year, the Ohio House of Representatives and the Ohio Senate finally passed H.B. 7 in December.  The bi-partisan bill aims to improve water quality in Ohio’s lakes and rivers but doesn’t establish a permanent H2Ohio Trust Fund as the House had first proposed. 

Even so, H.B. 7 will help fund and implement Governor Mike DeWine’s H2Ohio program.  DeWine unveiled his water quality plan in 2019 to help reduce phosphorus runoff, prevent algal blooms, and prevent lead contamination in Ohio’s waterways. In July 2019, the Ohio General Assembly invested $172 million to fund the H2Ohio initiative.  H.B. 7 continues those efforts by creating a statewide Watershed Planning and Management Program and directing the Ohio Department of Agriculture to implement a pilot program to assist farmers and others in phosphorus reduction efforts.

Here’s a summary of the specifics included in H.B. 7, delivered to Governor DeWine on December 30 and awaiting his signature.

Watershed planning and management program

The new Watershed Planning and Management Program established by the bill aims to improve and protect Ohio’s lakes and rivers. The Director of Agriculture will be responsible for appointing watershed planning and management coordinators throughout the seven watershed districts in Ohio.  The coordinators will be responsible for identifying sources and areas of water with quality impairment, engaging in watershed planning, restoration, protection, and management activities, collaborating with other state agencies involved in water quality activities, and providing an annual report to the Director of Agriculture regarding their region’s watershed planning and management.

Certification program for farmers

A certification program for farmers in northwestern Ohio is already up and running at ODA.  Even so, H.B. 7 confirms that the legislature intends to collaborate with organizations representing agriculture, conservation, and the environment and institutions of higher education engaged in water quality research to establish a certification program for farmers who utilize practices designed to minimize impacts to water quality.  H.B. 7 requires the Director of Agriculture to undertake all necessary actions to ensure that assistance and funding are provided to farmers who participate in the certification program.

Watershed pilot program to reduce phosphorus in Ohio’s water

H.B. 7 authorizes but does not require the Department of Agriculture, in conjunction with the Lake Erie Commission, the Ohio Soil and Water Conservation Commission, and the Ohio State University Extension, to establish a pilot program that assists farmers, agricultural retailers, and soil and water conservation districts in reducing phosphorous and dissolved reactive phosphorous in a watershed.  The program, if established, would be funded from the Ohio Department of Agriculture’s budget for water quality initiatives.  Funding must be used for purchases of equipment, soil testing, implementation of variable rate technology, tributary monitoring, drainage management strategies, and implementation of nutrient best management practices.

Public record exemption for voluntary Nutrient Management Plans

Currently, a person who owns or operates agricultural land may develop and implement a voluntary nutrient management plan. A voluntary nutrient management plan provides for the proper application of fertilizer. An individual that implements a proper voluntary nutrient management plan receives an affirmative defense in any civil lawsuit involving the application of the fertilizer. In addition to the affirmative defense offered by using a voluntary nutrient management plan, H.B. 7 specifies that the information, data, and associated records used in the development and execution of a voluntary nutrient management plan is not a public record and is not subject to Ohio’s laws governing public records.

Regional water and sewer districts expanded authority

In addition to political subdivisions, regional water and sewer districts will have the authority to make loans, grants, and enter into cooperative agreements with any person, which includes a natural person, a firm, a partnership, an association, or a corporation, for water resource projects.

Also, regional water and sewer districts will be able to expand to whom they can offer discounts to for water and sewer services. Currently, districts can only offer discounts to persons who are 65 or older and who are of low or moderate income or qualify for the homestead exemption. H.B. 7 allows those discounts to be offered to any person who is considered of low or moderate income or that qualifies for the homestead exemption.

CAUV eligibility of land used for biofuel production

Unrelated to water quality, H.B. 7 also modifies the requirements that land used in biofuel production must meet in order to be valued for property taxes at its current agricultural use value (CAUV). Currently, land used for biofuel production qualifies for the CAUV program if:

  1. The production facility is located on, or on property adjoining, farmland under common ownership; and
  2. At least 50% of the feedstock used in the production comes from land under common ownership or leasehold.

H.B. 7 makes three changes:

  1. Instead of the 50% feedstock requirement, House Bill 7 requires that, of the feedstock used in biofuel production, at least 50% must be “agricultural feedstock” (manure or food waste) and at least 20% of the “agricultural feedstock” must come from land under common ownership or leasehold.
  2. None of the feedstock used in biofuel production can include human waste.
  3. The biofuel production facility may be part of, or adjacent to, farmland that is under common leasehold or common ownership.

 

Useful links:   Ohio General Assembly web page for H.B. 7.

USDA National Agricultural Library and National Agricultural Law Center

By: Peggy Kirk Hall, Monday, January 04th, 2021

The 2020 elections will likely be historically significant for U.S. agriculture, but what can we expect?  Our partner, the National Agricultural Law Center, will try to answer that question with a webinar on January 13 at noon.  The webinar will feature Hunt Shipman, principal and director at Cornerstone Government Affairs in Washington, DC.   Mr. Shipman will share his predictions on what's in store for agriculture, including:

  • Key appointments at USDA
  • Congressional committees positions
  • Implications for the next Farm Bill
  • International trade impacts
  • Changes in the federal and state regulatory environments

With nearly three decades of experience in Washington, Hunt Shipman has held a variety of positions in government and the private sector. Prior to joining Cornerstone, Hunt was a senior executive for the largest trade association serving the food and beverage industry, where he led the association’s government affairs and communications programs. From 2001 to 2003, Hunt was Deputy Under Secretary for Farm and Foreign Agricultural Services and served as the acting Deputy Under Secretary for Marketing and Regulatory Programs at the United States Department of Agriculture.  In this capacity, he led three agencies with over 18,000 employees stationed around the world, and administered over $31 billion in programs. Hunt was the Department of Agriculture’s principal negotiator with the Congress for the 2002 Farm Bill. Hunt also served as the staff director of the Senate Agriculture Committee, Professional Staff Member at the Senate Appropriations Committee, and on the personal staff of Senator Thad Cochran.

The webinar is free, but limited to the first 500 registrants.  To register, visit here.

National Agricultural Law Center and USDA National Agriculture Library

Barry Ward, David Marrison, Peggy Hall, Dianne Shoemaker – Ohio State University Extension

“Farm Office Live” returns virtually this winter as an opportunity for you to get the latest outlook and updates on ag law, farm management, ag economics, farm business analysis and other related issues from faculty and educators with the College of Food, Agriculture and Environmental Sciences at The Ohio State University.

Each Farm Office Live will start off with presentations on select ag law and farm management topics from our experts and then we'll open it up for questions from attendees on other topics of interest.  Viewers can attend “Farm Office Live” online each month on Wednesday evening or Friday morning, or can catch a recording of each program. The full slate of offerings for this winter:

January 13th 7:00 – 8:30 p

January 15th 10:00 – 11:30 am

February 10th 7:00 – 8:30 pm

February 12th 10:00 – 11:30 am

March 10th 7:00 – 8:30 pm

March 12th 10:00 – 11:30 am

April 7th 7:00 – 8:30 pm

April 9th 10:00 – 11:30 am

 

Topics to be addressed this winter include:

Outlook on Crop Input Costs and Profit Margins

Outlook on Cropland Values and Cash Rents

Outlook on Interest Rates

Tax Issues That May Impact Farm Businesses

Legal trends for 2021

Legislative updates

Farm business management and analysis updates

Farm succession & estate planning updates

 

Who's on the Farm Office Team?  Our team features OSU experts ready to help you manage your farm office:

Peggy Kirk Hall -- agricultural law

Dianne Shoemaker -- farm business analysis and dairy production

David Marrison -- farm management

Barry Ward – farm management and tax

 

Register at  https://go.osu.edu/farmofficelive

We look forward to you joining us this winter!

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Fair rides
By: Peggy Kirk Hall, Monday, December 28th, 2020

Written by Jeffrey Lewis, Attorney, Agricultural & Resource Law Program

Ohio’s past fair season was mayhem thanks to the COVID-19 pandemic, but some help is on the way.  The Ohio General Assembly passed legislation on December 22 aimed at updating laws and regulations governing agricultural societies and local county fairs.  Major highlights of the bill include increasing the amount that a county or independent agricultural society receives for operation expenses from a county, removing the cap on the amounts that a county may transfer to an agricultural society for junior club expenses associated with operating fairgrounds, and increasing the total amount of debt that a society may incur. Here’s a more detailed summary of the provisions contained within House Bill 665.

County payments to county or independent agricultural societies

For county and independent agricultural societies, H.B. 665 increases, from $800 to $1,600, the max amount that a county treasurer must annually transfer to a society operating within the county. The County Auditor is required to request that the County Treasurer make the transfer if: (1) the society held an annual fair; (2) the society has made an annual report to the Director of Agriculture concerning the fair; and (3) the Director presents a certificate to the County Auditor indicating that the society has complied with the applicable laws of Ohio.

H.B. 665 also removes the $500 cap on the annual amount that a Board of County Commissioners must reimburse an agricultural society for junior club expenses. Additionally, the $2,000 cap on the amount that a Board of Commissioners must annually appropriate to a county agricultural society has been removed, but only if the society: (1) owns or leases real estate used as a fairground; (2) has control and management of the lands and buildings on the fairground; and (3) requests an appropriation from the Board.

Debt authorization

H.B. 665 expands the total amount of debt that an agricultural society may incur. Under the new law, county and independent agricultural societies’ annual payments for debt obligations cannot exceed 25% of the prior three-year average of its annual revenue. However, a county agricultural society must obtain approval from the Board of County Commissioners prior to incurring any debt if the Board pays or has paid money out of the county treasury to purchase the society’s fairgrounds. 

Other notable provisions

  • H.B. 665 removes restrictions on how proceeds for beer/liquor sales are to be used.
  • Any county or independent agricultural society member can sell seasonal tickets or passes for the society’s annual fair and the sale need not be conducted on the premises of the fairgrounds.
  • Any property owned by an agricultural society is now tax exempt, so long as that property is “used in furtherance” of the society’s purposes.
  • Modernizes the manner in which a county agricultural society must publish its annual financial information.
  • If the Board of County Commissioners wish to sell or exchange the fairgrounds, the Board must notify the applicable agricultural society 14 days prior to the sale or exchange.

H.B. 665 modernizes Ohio fair laws and agricultural society laws, some of which have not been updated since the 1950s. Many of the provisions contained within H.B. 665 were set to help out local agricultural societies for the 2020 fair season, and thus many provisions expired on December 1, 2020. However, the modernization and updates to Ohio’s laws will hopefully make next year’s fair season that much better. H.B. 665 now awaits Governor DeWine’s signature.

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Tags: county fairs, agricultural societies, 4-H
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By: Peggy Kirk Hall, Tuesday, December 22nd, 2020

Just in time for Christmas, Congress delivered quite a package this morning by passing new COVID-19 relief legislation.  President Trump is expected to sign the bill soon.  Buried in the 5,593 pages of the legislation is an allocation of nearly $11.2 billion dollars to the USDA.   A large portion of the USDA funds will provide additional payments for agricultural producers under the Coronavirus Food Assistance Program (CFAP).   Benefits for food processors, energy producers and timber harvesters are also in the bill, as well as funding for several other USDA programs and studies.  We’ve categorized, compiled and summarized where the USDA funds are to go below.

Crops

  • Supplemental CFAP payments of $20 per eligible acre for the 2020 crop year, for eligible “price trigger crops,” which includes barley, corn, sorghum, soybeans, sunflowers, upland cotton and wheat, and eligible “flat rate crops,” which includes alfalfa, amaranth grain, buckwheat, canola, cotton, crambe, einkorn, emmer, flax, guar, hemp, indigo, industrial rice, kenaf, khorasan, millet, mustard, oats, peanuts, quinoa, rapeseed, rice, rice, sweet, rice, wild, rye, safflower, sesame, speltz, sugar beets, sugarcane, teff, and triticale but excludes hay, except alfalfa, and crops intended for grazing, green manure, or left standing.
  • $100 million in additional funding for the Specialty Crop Block Grant Program.

Livestock, poultry and dairy

  • Supplemental CFAP payments to livestock or poultry producers (excluding packers and live poultry dealers) for losses from depopulation that occurred due to insufficient processing access, based on 80% of the fair market value of depopulated livestock and poultry and including depopulation costs not already compensated under EQIP or state programs.
  • Supplemental CFAP payments to cattle producers for cattle in inventory from April 16 to May 14, 2020 according to different payment formulas for slaughter cattle, feeder cattle and all other cattle.
  • Supplemental Dairy Margin Coverage payments for eligible operations with a production history of less than 5 million pounds whenever the average actual dairy production margin for a month is less than the selected coverage level threshold, according to a specified formula.
  • $1 billion for payments to contract growers of livestock and poultry to cover not more than 80% of revenue losses from January 1 to December 22, 2020.
  • $20 million for the USDA to improve animal disease prevention and response capacity.
  • Establishment of a statutory trust via the Packers and Stockyards Act that requires a dealer with average annual purchases above $100,000 to hold cash purchases of livestock by the dealer in trust until full payment has been received by the cash seller of the livestock.

General payment provisions

  • In determining the amount of eligible sales for CFAP, USDA must include a producer’s crop insurance indemnities, non-insured crop disaster assistance payment and WHIP payments, and may allow a producer to substitute 2018 sales for 2019 sales.
  • USDA shall make additional payments under CFAP 1 and CFAP 2 to ensure that payments closely align with the calculated gross payment or revenue loses, but not to exceed the calculated gross payment or 80% of the loss.  For income determination, USDA shall consider income from agricultural sales, including gains, agricultural services, the sale of agricultural real estate, and prior year net operating loss carryforward.
  • USDA may take into account when making direct support payments price differentiation factors based on specialized varieties, local markets and farm practices such as certified organic production.

Marketing and processing

  • $100 million for grants under the Local Agriculture Market Program for COVID-19 impacts on local agriculture markets.  USDA may reduce and allow in-kind contributions for grant matching requirements.USDA may provide support to processors for losses of crops due to insufficient processing access.
  • $60 million for a grant program for meat and poultry slaughter and processing facilities seeking federal inspection status or eligibility for the Cooperative Interstate Shipment program to modernize facilities or equipment, comply with packaging, labeling, and safety requirements and develop food safety processes.
  • USDA must deliver a report on possible improvements to the Cooperative Interstate Shipment program that allows interstate shipments of meat and poultry products and on the availability and effectiveness of federal loan and grant programs for meat and poultry processing facilities and support for increasing processing capacity.
  • USDA may make recourse loans available to dairy product processors, packagers or merchandisers impacted by COVID-19.
  • Until September 30, 2021, USDA may extend the term of marketing assistance loans to 12 months.

Food purchases

  • $1.5 billion to purchase and distribute food and agricultural products to individuals in need, and for grants and loans to small and midsized food processors or distributors, seafood processing facilities, farmers’ markets, producers or other organizations for the purpose of responding to COVID, including for worker protections.  USDA must conduct a preliminary review to improve COVID-19 food purchasing, including the fairness of purchases and distribution.
  • $400 million for a Dairy Donation Program to reimburse dairy processors for purchasing and processing milk and partnering with non-profit organizations to develop donation and distribution plans for the processed dairy products. 

Timber and energy

  • $200 million for relief to timber harvesting and hauling businesses that experienced a loss of 10 percent or more in gross revenue from January 1 to December 1, 2020, as compared to the same period in 2019.
  • USDA may make payments for producers of advanced biofuel, biomass-based diesel, cellulosic biofuel, conventional biofuel or renewable fuel produced in the U.S. for unexpected market losses resulting from COVID-19.

Training and outreach

  • $75 million for the Farming Opportunities Training and Outreach Program for grants for beginning, socially disadvantaged and veteran farmers and ranchers impacted by COVID-19.  USDA may reduce and allow in-kind contributions for grant matching requirements and waive maximum grant amounts.

Farm stress

  • $28 million for grants to State departments of agriculture to expand or support stress assistance programs for agriculture-related occupations, not to exceed $500,000 per state.

Nutrition

  • $75 million for the Gus Schumacher Nutrition Incentive Program, and USDA may reduce matching grant requirements.

We’ll keep digging through the legislation to report on other agricultural provisions. Or readers may take a look at H.R. 133 here.  The USDA allocations we summarized are in Subtitle B, beginning on page 2,352. 

USDA NAL 

By: Peggy Kirk Hall, Monday, December 21st, 2020

The Farm Office team spends a good deal of time helping farmers with planning, and right now we’re practicing what we teach.  The past few months have brought transitions to the Farm Office, with two team members leaving and a new member coming on board.  The changes forced us to survey our strengths, weaknesses and opportunities, to review and revise goals, and to identify the skills and talent that we need for the future.

That planning process brought us Jeffrey Lewis, an attorney who joined the Agricultural & Resource Law Program this month.  Jeff was in private Jeffrey Lewispractice for several years with Rolfes Henry Co, LPA in Columbus and was a legal intern with Wright & Moore Law Co, LPA in Delaware.  He followed his degree from OSU in Business Administration with a law degree from Capital University Law School, where he was a law review member and graduated with honors.  We’re excited that Jeff’s interests and expertise in business planning, non-profits, employment, and tax law align with the needs we identified in our planning process.

Ellen EssmanJeff’s position was possible by a renewed partnership opportunity with the National Agricultural Law Center and funding from the USDA’s National Agriculture Library.  That same grant allowed us to have Ellen Essman on staff for three years.  Ellen recently moved to a new role with the college’s Government Affairs unit.  As a law fellow with the Agricultural & Resource Law Program, Ellen authored many publications and led a national project surveying and assessing state efforts to address water quality impacts from agricultural nutrients.  Ellen’s ability to explain current litigation and legislation on the Ohio Ag Law Blog with a touch of clever humor will be missed, but she will serve Government Affairs well.

The FaBen Brownrm Office is also planning for the departure of Ben Brown, Asst. Professor in Ag Risk Management, who recently left OSU to return home to the University of Missouri.  OSU hired Ben several years ago and charged him with building a Farm Management Program in the Dept. of Agricultural, Environmental and Development Economics.  He tackled that goal with astonishing energy, a mind built for marketing and policy analysis, and genuine interest in Ohio’s agricultural community.  The Farm Office team will miss Ben’s passion and insight, but we look forward to continued collaboration with Ben in the future and hope to coax Ben onto Farm Office Live every now and then. 

The past few months have reminded us that transitions are difficult, both in a farm operation and an institutional program.   Our recent experience made us examine the impact of losing people, a reality that farm families face as generations move in and out of the farm operation.  That's a topic we'll be able to teach more about this winter, now that we've done our planning.

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By: Peggy Kirk Hall, Thursday, December 17th, 2020

Whether from trespassers, thieves, vandals, disgruntled employees, drug makers, activists, or extremists, farm security threats are a risk farmers face.  Unfortunately, current social and political conditions have added new dimensions to that risk.  Intruders can harm property in many ways:  releasing or injuring livestock, stealing anhydrous or chemicals, destroying crops, contaminating water, introducing disease, setting fires, or committing other acts of theft, vandalism or destruction.   

Recent suspicious activities on Ohio farms have reminded us of the need for constant awareness of farm security and the threat of intentional harm to farm property.  Our newest publication, Intentional Harm to Farm Property:  Legal Options and Strategies for Farm Owners aims to meet this need by addressing:

What to do when a farm security issue occurs.  Three immediate actions can be helpful to ensuring a clear-headed reaction to an incident:

  • Call local law enforcement.
  • Secure the property and preserve the evidence.
  • Contact insurance provider.

Options for legal action.  How can a farmer address a security incident through the legal system?  Local law enforcement might pursue a criminal action, a farm owner might choose to file a civil action, or both criminal and civil actions could take place.  Conferring with law enforcement and an attorney will help determine an appropriate course of action.  The bulletin explains common criminal actions that might apply to a farm security episode, such as:

  • Agricultural product or equipment terrorism
  • Animal or ecological terrorism based on corrupt activity
  • Arson
  • Aggravated arson
  • Breaking and entering
  • Criminal damaging or endangering
  • Criminal mischief
  • Criminal trespass
  • Injuring animals
  • Poisoning animals
  • Reckless destruction of crops or timber
  • Theft
  • Vandalism
  • Attempt, complicity and conspiracy regarding any of the above crimes

We also review laws that provide for civil actions against someone who intentionally harms farm property, such as:

  • Civil action for damages for criminal act
  • Civil theft and willful damage
  • Civil trespass to personal property, such as animals and equipment
  • Civil trespass to real property
  • Civil vandalism
  • Civil action for animal or ecological terrorism
  • Destruction of crops or timber

Preventing the risk of farm security occurrences.   Farmers can adopt practices that reduce the possibility of intruders and incidents of intentional harm to farm property.  We list a dozen strategies in the bulletin that may be helpful, such as marking, posting and security property boundaries, maintaining a record of suspicious activities, vetting employees, and conferring with a security professional.

Read more about Intentional Harm to Farm Property:  Legal Options and Strategies for Farm Owners, which is available in the agricultural law library, here. 

Barry Ward

Production costs for Ohio field crops are forecast to be slightly lower than last year with lower expenses for fertilizer, fuel and interest. Variable costs for corn in Ohio for 2021 are projected to range from $359 to $433 per acre depending on land productivity. Variable costs for 2021 Ohio soybeans are projected to range from $199 to $220 per acre. Wheat variable expenses for 2021 are projected to range from $162 to $191 per acre.

Grain prices currently used as assumptions in the 2021 crop enterprise budgets are $3.70/bushel for corn, $9.40/bushel for soybeans and $5.70/bushel for wheat. Projected returns above variable costs (contribution margin) range from $172 to $357 per acre for corn and $222 to $404 per acre for soybeans. Projected returns above variable costs for wheat range from $179 to $314 per acre.

Return to Land is a measure calculated to sometime 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 $11 to $184 per acre in 2021 depending on land production capabilities. Returns to land for Ohio soybeans are expected to range from $109 to $282 per acre depending on land production capabilities. Returns to land for wheat (not including straw or double-crop returns) are projected to range from $95 per acre to $222 per acre.

Total costs projected for trend line corn production in Ohio are estimated to be $761 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 $75 per acre include depreciation, interest, insurance and housing. A land charge of $195 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 $71 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 $522 per acre. (Fixed machinery costs: $59 per acre, land charge: $195 per acre, labor and management costs combined: $45 per acre.)

Total costs projected for trend line wheat production in Ohio are estimated to be $459 per acre. (Fixed machinery costs: $34 per acre, land charge: $195 per acre, labor and management costs combined: $43 per acre.)

Budget projections for commodity crops for 2021 have been completed and posted to the Farm Office website: https://farmoffice.osu.edu/farm-mgt-tools/farm-budgets

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