The Ohio Department of Agriculture has thus far spent $3.3 million to preserve 1,850 acres of farmland on six Ohio farms.
These first six farms include two farms near Hiram and other farms near Springfield, Shreve, Jacksonburg (southwest Ohio) and Baltimore (20 miles southeast of Columbus).
Voluntary. These farmers have voluntarily sold an agricultural easement to the Ohio Department of Agriculture. The farmer was paid the difference in price between the agricultural value and the development value.
Due to a deed restriction, no present or future owner can ever sell this farmland for development.
Those farms are the first six of an anticipated 24 farms that will be preserved from applications submitted to Ohio Department of Agriculture last year.
The 24 farms were selected from 442 applicants from 49 counties offering 63,193 acres for protection under the program’s first funding round.
That means last year only 6 percent of the farms that applied will be offered money for their development rights.
Ohio Department of Agriculture is currently taking applications for the second round, due no later than April 30.
Same this year? Remaining the same as last year is that the maximum payment from the state program will be 75 percent of the easement value.
The farm value must be determined by the current agricultural use value method by the county auditor.
Differences. What are the differences this year? You guessed it: Less funding!
For the second round, less state money ($3.125 million now) is available but twice the federal money ($3.2 million now) has been allocated.
Even with the federal increase, less total dollars will be available this year.
Also this year, only one purchase per landowner will be allowed and the maximum amount paid per acre is restricted to $3,000.
In addition, unless farmland has been preserved on an adjoining property, farms less than 50 acres will not be considered.
Easement value. Another change for this year is how the easement value is determined.
Last year, the easement value was determined by appraisal.
This year, the more points a farm gets on the rating system the higher the payment for the easement.
This can be good or bad. It is good for the farm owner if the farm fits the profile preferred by Ohio Department of Agriculture.
It is good since as soon as the application is completed; the farm owner will know how much will be paid if selected.
It will be bad for a farm owner with high development value because the Ohio Department of Agriculture point system will likely assign a lower easement value.
Rewards. The “big” categories that each get 20 points out of a total of 100 in the Tier 1 ranking system are:
* agricultural productivity of the soils,
* proximity to development (with lower points awarded to farms too far or too close to development), and
* if there is a current land use plan and if the plan is being followed.
Proximity to other protected areas gets 15 points and the remaining 25 points are awarded according to amounts in the following parenthesis:
* amount of local or landowner match money (10),
* breath and existence of a management plan for natural resources (5),
* historical or archeological site on farm (5),
* farm enrolled as ag district (3), and
* farm in a suburban county (2).
Should you sell? Selling development rights will keep land as farmland. One gets paid today for preserving farmland.
There are potential tax benefits (partially offset by increased tax liability).
Once development rights are sold, kiss good-bye even your heirs being able to sell the farm land for development.
When and if the farm is ever sold by an heir, the sale price will likely be significantly reduced.
Present land owners who sell development rights need to realize they are taking away much of their heir’s ability to “cash in.”
Therefore, the senior generation considering selling development rights needs to consult with junior generation(s) before doing so.
Money, money. Don’t do it for the money!
Cash now instead of later is always attractive.
Farm families, however, should not sell development rights in order to be able to farm longer!
Further, in my opinion, development rights should not be sold if getting the money now is the major reason.
Unprofitable farm businesses will likely continue to be unprofitable even after receiving the cash payment for the development rights.
Farming in the future will become increasingly competitive so cash now will not assure that a future generation will be able to continue to farm.
To really make my point, think long and hard before selling development rights if both senior and junior generations wouldn’t be willing to give the development rights away for free.
It seems to me that those farm families who will be most happy with their decision to sell development rights are those with a strong desire to preserve their land as farm land, even if their heirs are not the ones farming it.
(The author, an OSU Extension ag agent in Lorain County, is a member of OSU’s Dairy Excel team. Questions or comments can be sent in care of Farm and Dairy, P.O. Box 38, Salem, OH 44460.)