Farm Income Expected to Rise

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COLUMBUS, Ohio — Even amid lagging profits from corn and soybeans, Ohio farmers have a reason to be optimistic, according to an agricultural economist from the College of Food, Agricultural, and Environmental Sciences (CFAES).

Farm incomes are forecasted to increase this year nationally for the first time in four years, said Ani Katchova, an associate professor and Farm Income Enhancement chair in the Department of Agricultural, Environmental, and Development Economics at The Ohio State University.

Prices for corn, soybeans wheat and other agricultural commodities started to decline after their peak in 2012, triggering an agricultural economic downturn beginning in 2014.

Part of the expected increase in farm income this year stems from national gains in sales of cattle, hogs, poultry, eggs, and dairy, and the sale of stored crops harvested in a prior year, Katchova said.

Farm assets and equity are also forecasted to rise, Katchova said.

“Financial conditions seem to be improving, albeit slowly. When I say improving, we’re coming from a low point in farm income,” Katchova said. “Hopefully, the worst is over.”

Katchova spoke at the Agricultural Policy and Outlook Conference on Nov. 9, an annual event organized by Ohio State’s Department of Agricultural, Environmental, and Development Economics. The event at the university’s main Columbus campus kicked off a series of meetings that will be held statewide from Jan. 22 to March 23 to provide the 2018 financial outlook for farmers and agri-businesses.

While the income for farmers may be on the upsweep, challenges remain.

Expenses for farmers are expected to continue to increase due to higher costs for hired labor, interest and fuel, with some declines in expenses for feed and fertilizer, Katchova said.

Also, cash rent Ohio farmers pay on farmland keeps rising and is higher than the national average, Katchova pointed out. Cash rent is a fixed amount a farmer pays to a landlord per acre of land rented.

“In Ohio, cash rent did not come down during the agricultural economic downturn as much as it did nationally,” Katchova said.

However, farmland values in Ohio have remained high, which is a boon for the state’s landowners who are farmers.

“I have a hard time saying we’re in a farm financial crisis with land values where they are, but I would be naive to say there aren’t farmers hurting,” said Ben Brown, who manages CFAES’ farm management program, which provides farm policy and market information to Ohio farmers and others.

In the last couple of years, Ohio’s agricultural land prices have been stable while land prices in some neighboring states have fluctuated more significantly, Brown said.

Nationally, the downturn in farm income in recent years was not as severe as the dip experienced in the 1980s when grain prices dropped, farm debt soared and numerous farms went bankrupt, Katchova said. The 1980s was when the last agricultural economic slump occurred nationwide.

“We are in a very different situation than we were in the 1980s,” Katchova said.

Farm mortgage interest rates now are only 4 to 5 percent compared to the 17 percent interest rates in the 1980s. Also, the rate of farm bankruptcies during the last quarter was two out of 10,000 farms while during the farm crisis in the 1980s, the bankruptcy rate was tenfold, at 20 farms going bankrupt out of every 10,000 farms.

The recent agricultural downturn and increased financial stress have led to only small upticks in agricultural loan delinquency rates and farm bankruptcies, which are still at historic low levels, Katchova said.

Compared to farmers in other states, Ohio farmers have been better able to fend off bankruptcy. For a little over a decade, farm bankruptcy rates in Ohio have been less than one bankruptcy per 10,000 farms, about half of the national bankruptcy rate, Katchova said. The delinquency rates on agricultural loans have been at 1.3% since last year, which are also very low, Katchova pointed out.

The low bankruptcy and loan delinquency rates are despite the fact that farmers in Ohio and nationally continue to see their available cash eroding to only a third to half of their high levels in 2010.

“Despite farmers having lower profit margins, they’re still in strong equity positions,” she said. “They’re still able to pay their debts.”

The upcoming statewide series of meetings will update Ohio communities on policy changes, key issues, and market behavior relating to farm, food, energy resources and the environment. Each meeting is hosted by an Ohio State University Extension office or a local business. OSU Extension is the outreach arm of CFAES.

The meeting schedule is as follows:

Pickaway County
Date: Jan. 22
Time: 7:30 a.m. – 10:30 a.m.
Speakers: Barry Ward, Matt Roberts, Ian Sheldon
Location: Emmett Chapel, 318 Tarlton Rd, Circleville
Cost: $10.00
RSVP: Call OSU Extension Pickaway County 740-474-7534
Registration deadline: Jan. 15

Crawford County
Date: Jan. 22
Time: 5:30 p.m. – 8:30 p.m.
Speakers: Barry Ward, Matt Roberts, Ian Sheldon
Location: The Loft at Pickwick Place, 1875 N Sandusky Ave., Bucyrus
Cost: $15.00
RSVP: Call OSU Extension, Crawford County 419-562-8731 or email hartschuh.11@osu.edu
Registration deadline: Jan. 15

Union County
Date: Jan. 26
Time: 7:30 a.m. – 10:30 a.m.
Speakers: Barry Ward, Matt Roberts, Ian Sheldon
Location: Der Dutchman, 445 S Jefferson Ave, Plain City
Cost: $15.00
RSVP: Call OSU Extension, Union County 937-644-8117
Registration deadline: Jan. 22

Defiance County
Date: Jan. 29
Time: 6:00 p.m. – 9:00 p.m.
Speakers: Barry Ward, Matt Roberts, Ian Sheldon
Location: Jewell Community Center, 7900 Independence Road, (one third of a mile south of U.S. 24 in Jewell)
Cost: $10:00 (after deadline, $20.00)
RSVP: OSU Extension, Defiance County or online at http://defiance.osu.edu
Registration deadline: Jan. 22

Wayne County
Date: Jan. 31
Time: 9:30 am – 3:30 pm
Speakers: Ian Sheldon, Matt Roberts, Ben Brown, Barry Ward, Dianne Shoemaker, David Marrison
Location: Fisher Auditorium,1680 Madison Ave, Wooster
Cost: $15.00
RSVP: Call OSU Extension, Wayne County 330-264-8722
Registration Deadline: Jan. 24

Darke County
Date: March 23
Time: 11:00 am – 4:00 p.m.
Speakers: Barry Ward, Matt Roberts, Chris Hurt, Chris Bruynis
Location: Romer's Catering, 118 East Main St., Greenville
Cost: $20
RSVP: Darke County Extension office at 937-548-5215
Registration deadline: March 16

 

For more information contact: 
Alayna DeMartini
614-292-9833
Source(s): 

Ani Katchova
katchova.1@osu.edu
614-292-6229

Ben Brown
brown.6888@osu.edu
614-688-8686