According to Barry Ward, Leader, Production Business Management for OSU Extension programs, farm production costs for Ohio should remain about level or even a little below 2019. "We don't see much change going forward in energy costs, including crude oil, gasoline, diesel and propane. Fertilizer prices should be lower and nitrogen costs are 12-16% lower than last year. Potash remains about the same too. However seed costs are trending upward."
"We're not anticipating many ARC/PLC payments or a continuation of the MFP program in 2020," states Ward. So farmers really need to manage to their projected yields and actual input costs. "In considering projected yields, we're estimating 175 bu/acre for corn, 54 bu/acre for soybeans and a 75 bu/acre average for wheat in Ohio," Ward explains, of course noting weather is always an unknown factor.
In regards to land value, high owner equity, low interest rates, the injection of cash from the MFP program and solid 2019 yields are all factors in contributing to an increase in values of 1-2% in Ohio this year. "The amount of land supply moving into the market remains low and with there now being no estate tax up to $10 million per person, estates aren't as likely to feel pressured to sell farmland," notes Ward. He feels rental rates are stable, or there may even be a little room to lower them due to decreased property taxes and increased input costs over the past few years.
As farmers complete their 2019 taxes, there are a few things they should consider. "If someone took prevent plant and they can prove they normally sold at least 50% of their gain, they can defer that indemnity payment to 2020's income." MFP payments however must be claimed in the year they were received Ward notes. If you sold equipment you must claim the income from the sale price, but you can expense the purchase price of new equipment. "You can depreciate 100% of the purchase price up to $1 million using the 179 Form," explains Ward. "And remember, for full-time farmers, in Ohio there is a $250,000 business tax exclusion before you have to pay personal tax." Check with your tax advisor to determine if these options come into play for you.
Looking to expand your farm acreage?
We have diverse lending options for your family business.Apply Today