Agricultural Advisory Committee for the TY 2011 Current Agricultural Use Values Public Hearing Agricultural Advisory Committee February 25, 2011 Tax Equalization Division Ohio Department of Taxation

Introduction This is a hearing before the Ohio Department of Taxation, February 25, We will be presenting data on the proposed tax year 2011 Current Agricultural Use Values.

Agenda Use Value Calculation Crop yields Crop rotation – Minimum values Factors – Crop prices – Cost of inputs – Capitalization rate Calculation of Soil Values Sample calculations, 2008 & 2011 Comparative Charts – Cropland Data

Crop Yield Updates for 2011 Annual update of crop yields; began in TY 2006 Crop yields reported by the Ohio Agricultural Statistics Service for the past 10 years are averaged – That average is divided by the original yields published in 1984 The resulting factor is applied to the yields of record for each soil type

Yield Updates for TY 2011 For 2011, the factor is based upon yield data from Soil yields from 1984 were increased by the following percentages – Corn: 22.80% – Soybeans:16.44% – Wheat: 52.95%

Yield Updates for 2011 The yield update increases the corn yield for Miami Silt Loam, a soil with average productivity, from 108 to 133 bushels per acre. By contrast, the average corn yield for all soil types in 2009 was 174 bushels per acre.

Cropping Pattern Single crop pattern Based on most recent five year average of acres harvested – Corn 38.6% – Soybeans 50.9% – Wheat 10.5% Maintain 50% corn and 50% soybeans for organic and frequently flooded soils

Acres Harvested,

Minimum Use Values

CROP PRICES ____________________

Crop Prices 2008, 2010 & 2011 Difference Corn $2.02$2.66$2.89$0.87$0.23 Beans $5.19$6.41$7.22$2.03$0.81 Wheat $2.89$3.41$3.64$0.75$0.23

COST of INPUTS ____________________

Non-Land Production Costs Base Unit, TY 2008, 2010 & 2011 Difference Corn$242.39$286.65$300.98$58.59$14.33 Beans$174.44$189.10$204.60$30.16$15.50 Wheat$156.68$170.16$192.94$36.26$22.78

Non-Land Production Costs Added Unit, 2008, 2010 & 2011 Difference Corn $0.90$0.83$0.84($0.06)$0.01 Beans $0.50$0.66$0.77$0.27$0.11 Wheat $0.84$1.14$1.19$0.35$0.05

CAPITALIZATION RATE _____________________________

Capitalization Rate TY Mortgage/Equity Ratio60/4060/40 Years1515 Interest Rate Equity Rate Tax Additur Capitalization Rate8.3%7.6%

Capitalization Rate TY Mortgage/Equity Ratio60/4060/40 Years1515 Interest Rate Equity Rate Tax Additur Capitalization Rate7.8%7.6%

Calculation of Soil Values Comparison of Values

2011 Sample Calculation

2008 Sample Calculation

2011 Sample Calculation

2008 Sample Calculation

Average CAUV Values

Average CAUV Dollars per Acre

Ohio Cropland Average Value Dollars per Acre, USDA

Ohio Cropland Average Value and Average CAUV Dollars per Acre,

Conclusion Comments or questions. CAUV information is available on the Department of Taxations web site -- Tax.ohio.gov, under Government, Real Property Tax. Contact information: Tax Equalization Division