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Developing a grain marketing plan is an important part of risk management for your farm business. There are many farmers who spend a great deal of time and effort on developing a well thought out marketing plan and are very successful at utilizing this risk management tool. However, getting the best price at market for your crop can be a confusing and intimidating process if you don't have a good understanding of basic marketing tools.

If you would like to learn more about grain marketing, brush up on your skills, or develop a marketing plan, you might want to explore the “Grain Marketing Boot Camp” website. This University of Illinois Extension website is easy to navigate and provides a basic explanation of how marketing tools such as basis contracts, options, minimum price contracts, and hedge-to-arrive contracts work. It also provides some education for utilizing the futures market. These tools and a few others are each explained in the section entitled, “Marketing Tools.”

The “Marketing Plans Forms” section offers the user a long and short marketing plan outline. These are downloadable Microsoft Word documents that you can use by simply inputting your information into each of the sections. The forms will provide a list of the elements needed for a complete marketing plan, but you will need to make a few decisions about what tools you plan to utilize, the current financial condition of the business, your marketing style and probably one the most important parts, your marketing goals.

To help you determine your marketing style and set price goals, there is a section included describing both of these topics found under the heading “Understanding Marketing.” Also included in this section is a glossary of basic marketing terms, an assessment of your risk tolerance, and some tips on how to evaluate your broker.

The website is very complete and will provide basic information to help you develop a marketing plan and better understand the marketing tools available for your use. There are also many additional resources embedded within the pages of this website that are not listed here. To visit the website, use this address http://web.extension.uiuc.edu/grainmarketing/ .

Spring has officially returned in Ohio which means that Ohio farmers will be returning to the fields this month. Many Ohio farmers hire a custom operator to perform agricultural field work for them or may perform custom work for others. Others may wish to rent their farm equipment to other farmers. Questions often arise for what a fair charge should be for such practices. Farmers can obtain good estimates by reviewing a variety of custom rate sheets. Below are the custom rate sheets published for the states of Ohio , Iowa , Missouri and Pennsylvania .

Farmers may be eligible to claim a credit on the federal income tax return for the federal excise tax on certain fuels. Also may be eligible to claim a quarterly refund of the fuel taxes during the year, instead of waiting to claim a credit on the annual income tax return.

Whether a person can claim a credit or refund depends on whether the fuel was taxed and the purpose (nontaxable use) for which the fuel was used. The nontaxable uses of fuel for which a farmer may claim a credit or refund are generally the following.

See Publication 510 for information about credits and refunds for fuels used for nontaxable uses. Form 4136, Credit for Federal Tax Paid on Fuels, is to be used to claim the credit, which is $.183 for gasoline and $.243 for undyed diesel fuel or undyed kerosene. There is no refund or credit for dyed diesel fuel. The Leaking Underground Storage Tank (LUST) tax, that is included on sales of dyed diesel fuel and dyed kerosene, is $.001 and cannot be refunded.

The following link was recently shared by OSU Extension's Leader, Diversity Develpment and it provides very interesting information on the Latino population in Ohio. Essentially, there is not one of our counties that have not experienced an increase in the Latino population. This information was compiled by LaVerdad Hispanic Marketing Solutions in Cincinnati www.laverdadmarketing.com and comes by way of the Toledo Diocese. Permission to link or otherwise reference the material is from Mike Robinson, President & CEO LaVERDAD Marketing & Media.

Many farm tenants and landlords have begun to use flexible cash rent leases as a means of sharing the windfall of high grain prices. The flexible cash lease sets a base rental price with an adjustment based on crop prices, yields, or some other factor. While this type of lease allows the tenant and landlord to share the benefits of high prices and risks of low prices, it has significant implications with FSA programs.

In Ohio, most farm leases are either cash rent or crop share. In a cash rent situation, the tenant receives all direct and counter-cyclical payments while in a crop share arrangement the tenant and landlord split the program payments proportionally. The issue becomes, does FSA consider a flexible cash lease a cash lease or a crop share lease? Because the landlord shares in the risk of the lease, FSA considers a flexible cash lease to be a crop share lease. Therefore, the landlord must receive his/her portion of program payments.

Two issues arise when the landlord changes from a cash rent landlord to a crop share landlord. First, the landlord will be required to file all program eligibility forms which include names, social security numbers, and addresses of any and all owners of the land or entity owning the land. The filings will be an additional burden on the landlord in both time and effort as well as causing more private information to be revealed to FSA than the landlord is accustomed to. Second, the landlord's rent and program payments may be subject to self-employment tax depending on the landlord's level of participation in the operation.

Another reason a flexible cash lease is not suitable to FSA regulation is the timing of the payments. The tenant must file a Form 502 with FSA in the early part of the year stating any land that will be rented and also requires the tenant to provide the cash rent amount if the landowner is a related party . FSA also should know the cash rent to be sure the tenant is providing enough land contribution to be eligible for payments. However, in a flexible cash lease arrangement, the final rent amount is not known until after harvest when the adjustment is made to the base rent. Therefore, it is likely that the rent amount on Form 502 will not match the adjusted rent that was actually paid for the year. Such a discrepancy is a violation of FSA regulations.

The timing of the payments is also an issue with “tipping” landlords. If a tenant tips the landlord an additional amount at the end of the year, the actual rent paid will not be the same as the rent on Form 502.

A possible solution to the flexible cash lease dilemma is to incorporate the concept of flexible cash leases into year to year cash leases. For example, a cash rent lease is entered into for the 2007 crop year at $100/acre. The landlord will receive and the tenant will pay $100/acre, no more and no less. The landlord and tenant, sometime after the 2007 harvest, can negotiate a new rental rate for 2008. If prices and yields were high in 2007, perhaps the tenant will be able to pay a higher rent to the landlord. The higher 2008 rental rate is not a bonus for the 2007 year but instead a reflection of a stronger financial position of crop farmers and more competition for farm ground for the 2008 crop year.

Regardless of whether a producer is in a cash rent, crop share, or flexible cash rent arrangement, he/she should be sure that all required FSA forms have been properly competed and filed. Errors on the FSA forms or violations of FSA regulations can cause the producer to be ineligible for program payments and repayment of past payments. Producers should seek assistance from their local FSA office, attorney, or other knowledgeable advisor. It may be a good idea to provide a copy of the lease to FSA so that they are fully aware of the arrangement and can advise the producer of any problems or concerns.

Computerized Farm Record Keeping with Quicken 2007 Self Study Manual Now Available as an On-line PDF Bulletin

Barry Ward - Leader, Production Business Management, OSU Extension Department of Agricultural, Environmental and Development Economics

The newly updated Computerized Farm Record Keeping with Quicken 2007 Self-Study Manual is now available as on online OSU Extension Bulletin in pdf format at: http://ohioline.osu.edu/b931/

As farmers look to become more efficient in all aspects of business, financial record keeping is an area that can be made more efficient with computer record keeping software. Computerizing farm financial records can help a farmer gain efficiencies and enhance their financial analysis. With a computerized farm record keeping system, the record keeper can use software to store information, summarize data, generate and print reports and sort transactions into categories and subcategories. Storage of data is a very valuable component to a computerized system. The data entry process may take you as long as in a hand written system, but the time saver is the summarization and report generation of monthly and year end data. As in any system, good records and reports result from the data entered. The record keeping system can only summarize and report what you have entered. The record keeper also must carefully consider the way that they organize their data to optimize output and reports.

There are many components to a farm record keeping system including transactions and the end results you generate for your management team. Your receipts and expenditures should be entered in a timely manner complete with detail appropriate for the results you want to generate. For example, you should include detail on bushels of grain sold with your grain receipts if you want to know average price per bushel received at the end of the year. Some of the various types of information you can develop from a record keeping system are: Schedule F information (Cash Income Basis), data for tax reports, enterprise records, credit accounts, financial statements (net worth, income statements, cash flow), depreciation records and farm business analysis.

Quicken is an easy to use computerized record keeping software package that enables the user to keep detailed farm financial records. You can think of Quicken as your checkbook. It can also be used to track a total of ten different account types including asset, liability, and all bank accounts.

Quicken enables the user to keep basic cash receipts and expense records and provide financial data to you, your tax preparer and other members of your farm management team. Other Quicken features include easy account reconciliation and income and expense budgeting. Quicken reports that may be generated include income statements, cash flow reports, enterprise summaries, personal and business income tax reports and others. Although Quicken does not easily track inventories and does not allow you to keep depreciation records, inventories may be kept on a separate spreadsheet and depreciation records can (and probably should) be kept current by a tax professional.

The newly updated Computerized Farm Record Keeping with Quicken 2007 Self-Study Manual is now available as on online OSU Extension Bulletin in pdf format at: http://ohioline.osu.edu/b931/

This Quicken self-study manual has been developed due to the demand of Ohio producers seeking assistance on using an inexpensive, easy to use program for farm record keeping. The objective of the authors is for Quicken users to begin keeping farm records on their home computer by following the step by step procedures outlined in each chapter of this manual. The manual will also be useful to experienced Quicken users as they upgrade to a newer version and continue to improve their record keeping skills.

A commonly asked question is, “Which version of Quicken should I purchase for my farm records?” Quicken offers five different versions for 2007, Quicken Basic 2007, Quicken Deluxe 2007, Quicken Premier 2007, Quicken Home & Business 2007 and Quicken Mac 2007. While each product has different features, our experience is that the basic program, Quicken Basic 2007, will perform most farm record keeping tasks adequately.

This manual is written for Quicken 2007 Basic. Future manuals and updates will be available on the OSU Extension Ohioline web site http://ohioline.osu.edu or at the OSU Agricultural, Environmental and Development Economics Farm Management website http://aede.osu.edu/Programs/FarmManagement/ In most cases the basics needed to begin your farm record keeping will not change with a newer version.

We also receive questions about the use of the Quicken Home & Business version versus the use of Quicken Basic for farm record keeping. If your farm business requires you to create customer invoices and statements and to have accounts for payables and receivables, you need to be using the Home & Business version of Quicken. The Home & Business version can also generate accrual-based profit and loss statements if the program is set up and used properly throughout the year. However, for the majority of cash-basis farm record keepers, Quicken Basic will provide more than enough information for management decisions and income tax planning.

OSU Extension & OSU Agricultural, Environmental and Development Economics (AEDE)

Abstract: Cropland value and cash rent data is valuable to farmers, landowners, ag lenders, agribusiness persons and investors seeking baseline data to formulate their business and investment plans. This survey found that Ohio cropland averaged $4001.79 per acre for top land, $3371.17 for average land and $2759.81 for poor land. Top land averages 177.75 bushels of corn per acre, 58.85 bushels of soybeans per acre and rents for $131.88 per acre. Average land yields on average 145.70 bushels of corn per acre, 46.47 bushels of soybeans per acre and rents for $104.19 per acre. Poor cropland averages 116.96 bushels of corn per acre, 35.72 bushels of soybeans per acre and rents for $80.98 per acre. The survey found that cash rents are expected to increase 6.27% in 2007.

Landowners, prospective buyers, lenders and others involved in agriculture often seek baseline data and trend data with which to base their buy/sell decisions upon. Survey data can have it's limitations based on bias from those surveyed. Landowners have an interest in seeing this range of data at the high end of the range whereas prospective buyers or renters would like to see lower baseline numbers. This survey draws on the expertise of numerous professional groups that are knowledgeable of Ohio 's cropland markets. Surveyed groups include farm managers, rural appraisers, agricultural lenders, OSU Extension Educators, farmers and Farm Service Agency personnel.

Surveying these agricultural professionals is an attempt to capture unbiased data for evaluating cropland value and cash rents. One hundred twenty-four surveys were completed, analyzed and summarized. Thirty-five percent of the surveys (44 total) were collected from professionals in northwestern Ohio while 47% of the respondents (58 total) were from southwest Ohio . Fourteen percent of the surveys (17 total) were returned from professionals in northeast Ohio and the remainder were from southeastern Ohio . Respondents were asked to give responses based on 3 classes of land in their area; “Top” producing land, “average” producing land and “poor” producing land. The survey results are summarized in Tables 1 and 2.

This survey found that in 2006, Ohio cropland averaged $4001.79 per acre for top land, $3371.17 for average land and $2759.81 for poor land. Top land averages 177.75 bushels of corn per acre, 58.85 bushels of soybeans per acre and rents for $131.88 per acre. Average land yields on average 145.70 bushels of corn per acre, 46.47 bushels of soybeans per acre and rents for $104.19 per acre. Poor cropland averages 116.96 bushels of corn per acre, 35.72 bushels of soybeans per acre and rents for $80.98 per acre. The survey found that cash rents are expected to increase 6.27% in 2007.

Survey results indicate that “top” performing cropland in Ohio averages 177.75 bushels of corn per acre. Results also show that average value of “top” cropland is $4001.79 per acre. According to this survey “top” producing cropland in Ohio is expected to be valued at $4167.71 in 2007. This is a projected increase of 4.15%. “Top” crop land in Ohio rents for an average of $131.88 per acre according to survey results. This equates to a cash rent of $0.74 per bushel of corn produced or $2.24 per bushel of soybean production. Rents in the “top” cropland category equal 3.30% of land value.

Yields for “average” production cropland equal 145.7 bushels of corn per acre. Results show that the value of “average” cropland in Ohio is $3371.17 per acre. According to survey data this “average” producing cropland is expected to be valued at $3532.22 per acre in 2007. This is a projected increase of 4.78%. “Average” cropland rents for an average of $104.19 per acre according to survey results. This equates to a cash rent of $0.72 per bushel of corn produced or $2.24 per bushel of soybean production. Rents in the “average” cropland category equal 3.09% of land value.

The survey summary shows the average yield for “poor” performing cropland equals 116.96 bushels of corn per acre. Results also show that the average value of “poor” cropland is $2759.81 per acre. According to survey data this “poor” producing cropland is expected to be valued at $2891.46 by July of 2007. This is an increase of 4.77%. "Poor” cropland rents for an average of $80.98 per acre according to survey results. This equates to a cash rent of $0.69 per bushel of corn produced or $2.27 per bushel of soybean production. Rents in the “poor” cropland category equal 2.93% of land value.

Measures such as “Rent as a % of Land Value” and “Cash Rent per Bushel of Corn Production” are valuable in many rental negotiations as many use these measures as “rules of thumb” when negotiating cash rental rates. In this study, rent as a percent of land value ranges from 3.30% for top cropland to 2.93% for poor cropland. Rent per bushel of corn production is $0.74 for top cropland, $0.72 for average cropland and $0.69 for poor cropland. Comparing rent per bushel to other North Central states such as Indiana and Iowa show Ohio values to be lower per bushel than these comparable states. For example, the Purdue Land Value Survey, June 2006 finds rent per bushel on “Average” land to be $0.91 per bushel of corn production. Rent per bushel of soybean production is $2.24 for “top” cropland, $2.24 for “average” cropland and $2.27 for “poor” cropland. According to survey results cash rents are expected to increase 6.27% from 2006 to 2007. Surveyed professionals see cropland values increasing 11.18% the next 5 years. Survey responses varied greatly for cropland value change over a 5 year time horizon ranging from +50% to -35%. Pasture rents average $42.13 per acre according to the survey results. Pasture quality farmland has an average value of $2430.19 per acre.

Survey results indicate that “top” performing cropland in northwest Ohio averages 177.98 bushels of corn per acre or 57.56 bushels of soybeans per acre. Results also show that average value of “top” cropland is $3494.19 per acre. According to this survey “top” producing cropland in northwest Ohio is expected to be valued at $3589.53 in 2007. This is a projected increase of 2.73%.

“Top” crop land in northwest Ohio rents for an average of $128.53 per acre according to survey results which equals $0.72 per bushel of corn produced or $2.23 per bushel of soybean production. Rents in the “top” cropland category equal 3.68% of land value.

Yields for “average” production cropland are 147.51 bushels of corn per acre or 45.76 bushels of soybeans per acre. Results show that the value of “average” cropland in northwest Ohio is $2984.19 per acre. According to survey data this “average” producing cropland is expected to be valued at $3105.81 per acre in 2007. This is a projected increase of 4.05%. “Average” cropland rents for an average of $104.53 per acre according to survey results which equals $0.71 per bushel of corn produced or $2.28 per bushel of soybean production. Rents in the “average” cropland category equal 3.50 % of land value.

The survey summary shows the average yield for “poor” performing cropland in northwestern Ohio equals 119.42 bushels of corn per acre or 35.36 bushels of soybeans per acre. Results also show that the average value of “poor” cropland is $2469.77 per acre. According to survey data this “poor” producing cropland is expected to be valued at $2564.53 by 2007. This is an increase of 3.38%.

“Poor” cropland rents for an average of $83.49 per acre according to survey results which equals $0.70 per bushel of corn produced. Rents in the “poor” cropland category equal 3.38% of land value.

In northwest Ohio , rent as a percent of land value is 3.68% for top cropland, 3.50% for average cropland and 3.38% for poor cropland. Rent per bushel of corn is $0.72 for top cropland, $0.71 for average cropland and $0.70 for poor cropland. Rent per bushel of soybean production is $2.23 for top cropland, $2.28 for average cropland, $2.35 for poor cropland.

The northwest region for the purposes of this survey includes: Williams, Fulton , Lucas, Ottawa , Defiance , Henry, Wood, Sandusky , Paulding, Putnam, Hancock, Seneca, Van Wert, Allen, Hardin, Wyandot, Crawford, Marion and Morrow Counties .

Survey results indicate that “top” performing cropland in southwest Ohio averages 179.93 bushels of corn per acre. Results also show that average value of “top” cropland is $4372.55 per acre. According to this survey “top” producing cropland in southwest Ohio is expected to be valued at $4616.35 in 2007. This is a projected increase of 5.58%. “Top” crop land in southwest Ohio rents for an average of $145.21 per acre according to survey results which equals $0.81 per bushel of corn produced or $2.47 per bushel of soybean production. Rents in the “top” cropland category are 3.32% of land value.

Yields for “average” production cropland equal 148.45 bushels of corn per acre. Results show that the value of “average” cropland in southwest Ohio is $3652.00 per acre. According to survey data this “average” producing cropland is expected to be valued at $3845.52 per acre in 2007. This is a projected increase of 5.30%. “Average” cropland rents for an average of $117.53 per acre according to survey results which equals $0.79 per bushel of corn produced. Rents in the “average” cropland category are 3.22 % of land value.

The survey summary shows the average yield for “poor” performing cropland in southwestern Ohio equals 120.89 bushels of corn per acre. Results also show that the average value of “poor” cropland is $2953.19 per acre. According to survey data this “poor” producing cropland is expected to be valued at $3120.45 by 2007. This is an increase of 5.66%. “Poor” cropland rents for an average of $91.52 per acre according to survey results which equals $0.76 per bushel of corn produced. Rents in the “poor” cropland category equal 3.10% of land value.

In southwest Ohio , rent as a percent of land value is 3.32% for top cropland, 3.22% for average cropland and 3.10% for poor cropland. Rent per bushel of corn is $0.81 for top cropland, $0.79 for average cropland and $0.76 for poor cropland. Rent per bushel of soybean production is $2.47 for top cropland, $2.46 for average cropland, $2.43 for poor cropland.

The southwest region for the purposes of this survey includes: Mercer, Auglaize, Shelby , Logan , Union , Delaware , Darke, Miami , Champaign , Clark, Madison , Franklin , Preble, Montgomery , Greene, Butler , Warren , Hamilton , Clermont, Clinton , Fayette and Pickaway Counties .

Survey results indicate that “top” performing cropland in northeast Ohio averages 170 bushels of corn per acre. Results also show that average value of “top” cropland is $4630.77 per acre. According to this survey “top” producing cropland in northeast Ohio is expected to be valued at $4761.54 in 2007. This is a projected increase of 2.82%. “Top” crop land in northeast Ohio rents for an average of $95.33 per acre according to survey results which equals $0.56 per bushel of corn produced or $1.56 per bushel of soybean production. Rents in the “top” cropland category equal 2.06% of land value.

Yields for “average” production cropland equal 134.33 bushels of corn per acre. Results show that the value of “average” cropland in northeast Ohio is $3753.85 per acre. According to survey data this “average” producing cropland is expected to be valued at $3961.54 per acre in 2007. This is a projected increase of 5.53%. “Average” cropland rents for an average of $68.00 per acre according to survey results which equals $0.51 per bushel of corn produced. Rents in the “average” cropland category equal 1.81 % of land value.

The survey summary shows the average yield for “poor” performing cropland in northeast Ohio equals 103 bushels of corn per acre. Results also show that the average value of “poor” cropland is $3100.00 per acre. According to survey data this “poor” producing cropland is expected to be valued at $3250.00 by 2007. This is an increase of 4.84%. “Poor” cropland rents for an average of $48.71 per acre according to survey results which equals $0.47 per bushel of corn produced. Rents in the “poor” cropland category equal 1.57% of land value.

In northeast Ohio , rent as a percent of land value is 2.06% for top cropland, 1.81% for average cropland and 1.57% for poor cropland. Rent per bushel of corn is $0.56 for top cropland, $0.51 for average cropland and $0.47 for poor cropland. Rent per bushel of soybean production is $1.56 for top cropland, $1.54 for average cropland, $1.56 for poor cropland.

The northeast region for the purposes of this survey includes: Erie , Lorain , Cuyahoga, Lake, Ashtabula , Huron, Richland , Ashland , Medina , Summit , Portage , Geauga, Trumball, Wayne , Stark, Mahoning and Columbiana Counties.

This study will add to existing research on Ohio farmland values and cash rents that can assist producers and landowners with purchase and rental decisions. Existing research includes:

Also, check with your local OSU Extension Office for local land value/rental survey summaries. For additional information on farmland lease issues see the Department of Agricultural, Environmental and Development Economics (AEDE) Farm Management webpage at: http://aede.osu.edu/Programs/FarmManagement/MgtPublications.htm

Integrated Farm Revenue Program: Overview with a Focus on Corn, Soybean and Wheat

Carl Zulauf, Professor, Agricultural, Environmental, and Development Economics, Ohio State University

Farming is inherently risky. Variations in prices and yields can cause changes in revenue that are difficult for farmers to manage. The desire by the general public to help farmers manage this risk is underscored by the growth in spending for the Federal crop insurance program from almost nothing 30 years ago to over $2billion annually during Fiscal Years 2001-2005. However, over these same five years, the Federal Government also spent on average an additional $1.8 billion/year on ad hoc disaster assistance. The existence and magnitude of this spending suggests the current farm safety net is not effective at helping farmers manage risk. Effectiveness of the farm safety net can be improved by recognizing that farmers face two kinds of revenue risk. One occurs at the market level, such as widespread drought and drops in prices. The other occurs at the individual farmer level, for example localized flooding and localized frost. These two types of risks require different programs. Click here to learn more about these two programs as a PDF document.

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Information presented above and where trade names are used, they are supplied with the understanding that no discrimination is intended and no endorsement by Ohio State University Extension is implied.

All educational programs conducted by Ohio State University Extension are available to clientele on a nondiscriminatory basis without regard to race, color, creed, religion, sexual orientation, national origin, gender, age, disability or Vietnam-era veteran status.

Issued in furtherance of Cooperative Extension work, Acts of May 8 and June 30, 1914, in cooperation with the U.S. Department of Agriculture, Keith L. Smith, Director, Ohio State University Extension.