Recent Blog Posts

The costs of long-term care (LTC) continue to rise, creating potential financial risks for farmers who want to protect their farm assets for future generations. In the last two years alone, the cost of in-home care has increased by more than 20%, while nursing home costs have risen by 10% to 15%. According to the 2023 Genworth Cost of Care Survey, the following are the most recent costs of long-term care services:

• U.S., Home Health Aide: $75,552/year
• Ohio, Home Health Aide: $73,212/year
• U.S., Nursing Home – Semi-private room: $104,016/year
• Ohio, Nursing Home – Semi-private room: $100,380/year

These figures make it clear why long-term care costs are a significant risk to the continuity of the family farm.  Even a short stay in a nursing home can incur substantial costs.

According to data from the Administration for Community Living, individuals turning 65 have a 69% chance of needing some form of LTC, with an average of three years of care required. Typically, one of these three years is spent receiving at-home care provided by spouses or family members, one year in paid at-home care, and one year in a nursing facility. For farmers needing LTC, this equates to an average of approximately $180,000 in costs per person, and double that for a married couple. However, some individuals will require more than three years of care, which can cause LTC costs to increase significantly.

Medicaid can help cover LTC costs, but it has stringent eligibility requirements. One major condition is that Medicaid limits the amount of assets an individual can own and still qualify for benefits. In Ohio, an unmarried person cannot own more than $2,000 of countable assets.  Most farmers will not qualify for Medicaid without aggressive planning. Another critical factor is the five-year look-back period, during which Medicaid reviews any asset transfers made within five years of applying for coverage. If assets were gifted or transferred below market value during this period, Medicaid may impose penalties, delaying eligibility for benefits.

Given these costs, statistics, and Medicaid rules, it is crucial for farmers to explore strategies that can minimize the risk of LTC expenses depleting their farm assets. Here are some common strategies farmers can consider:

1. Gifting Assets: Transferring farm assets to family members while retaining enough to cover immediate needs can help reduce exposure to LTC costs. However, this strategy should be approached with caution, as it is subject to Medicaid’s five-year look-back period.
2. Irrevocable Trusts: Placing farm assets in an irrevocable trust can protect them from being considered in LTC cost calculations, ensuring that the farm remains intact for future generations. However, this plan is also subject to Medicaid’s five-year look-back period.
3. Self-Insurance: Farmers with significant savings or assets may choose to self-insure by setting aside funds specifically for potential LTC expenses, thereby reducing the need to sell farm assets.
4. LTC Insurance: Purchasing long-term care insurance can provide coverage for LTC costs, offering a buffer against the high expenses associated with nursing home or in-home care. However, LTC insurance can be expensive, and not everyone will qualify for coverage.
5. Wait and See: This strategy involves holding back enough assets to pay for five years of LTC while awaiting Medicaid eligibility.
6. Do Nothing: Some individuals with adequate income to cover LTC costs may not need to take action to protect assets.
7. Combining Strategies: Often, a combination of these approaches can provide the most robust protection, balancing immediate needs with the long-term preservation of farm assets.

By understanding the risks and costs of LTC and carefully considering these strategies, farmers can take proactive steps to help ensure their farm's legacy remains intact, even in the face of unforeseen health care costs. Always consult with legal and financial advisors to tailor the best approach for your specific situation.

For more information and a detailed discussion on LTC, see The Long-Term Care and the Farm publication available at farmoffice.osu.edu.

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.

Featured Discussion on the Downward Trend in Global Profitability of Crop Farming and a Bearish Outlook for 2024

During its annual conference from June 10^th to 14^th, 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)

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.