CAUV Projections, 2020 and beyond

Robert Dinterman

2020-06-25

Key Findings

Highlights

  • Current projection for average CAUV value in 2020 is $665 which would represent a change of -24% from the previous tax year. This is the first year without the “phase-in”.
    • From 2017-2020 a -42% decrease in average CAUV values for counties receiving updates to their property taxes.
  • The projection for the average CAUV value in 2021 is $760. The average CAUV value projections could end up as low as $560 or as high as $900.
    • From 2018-2021 a -25% change from the previous triennial update.
  • The very early projection for the average CAUV value in 2022 is $880. The average CAUV value projections could end up as low as $665 or as high as $1,010.
    • From 2019-2022 a 1% change from the previous triennial update.

Projected CAUV Expectations

  • Non-land costs have trended downward since 2015 and since this component is based off of an Olympic Average of the past 7 years, high values for non-land costs will be dropping out and this component is expected to continue to decrease.
  • Prices for corn, soybeans, and wheat have stagnated and are projected at current levels. Component based off of an Olympic Average of the past 8 years (excludes current). High values from 2012 and 2013 are dropping out.
  • Yields are based off of the past 11 years (excludes current) and have mostly continued along the path of a 30-year trendline upward.
  • Capitalization rate is based on an Olympic Average of the past 7 years which has recently been trending downward. Current Federal Reserve policy is pushing downward pressure on capitalization rate into the future.

Expectations

\label{fig:cauv-expected}

Expectations

Expected CAUV Projections
Year avg_cauv indx_49 indx_59 indx_69 indx_79 indx_89 indx_99 indx_100
2007 $181 $100 $100 $123 $283 $521 $747 $970
2008 $249 $100 $100 $188 $431 $708 $973 $1,200
2009 $459 $176 $200 $435 $746 $1,059 $1,368 $1,620
2010 $505 $200 $214 $436 $845 $1,278 $1,601 $1,900
2011 $700 $300 $328 $632 $1,126 $1,641 $2,017 $2,380
2012 $719 $350 $363 $610 $1,147 $1,717 $2,128 $2,490
2013 $1,205 $350 $516 $1,218 $1,958 $2,743 $3,310 $3,780
2014 $1,668 $350 $700 $1,778 $2,728 $3,718 $4,428 $5,030
2015 $1,388 $350 $518 $1,371 $2,347 $3,354 $4,104 $4,770
2016 $1,310 $350 $466 $1,235 $2,255 $3,302 $4,074 $4,750
2017 $1,153 $350 $430 $1,061 $1,969 $2,909 $3,602 $4,205
2018 $1,015 $350 $400 $896 $1,723 $2,586 $3,226 $3,810
2019 $873 $350 $378 $725 $1,462 $2,263 $2,855 $3,410
2020 $666 $350 $351 $487 $1,069 $1,777 $2,294 $2,810
2021 $759 $350 $359 $599 $1,254 $1,974 $2,495 $3,000
2022 $882 $350 $380 $769 $1,468 $2,196 $2,724 $3,240

Updates

\label{fig:update-map}

CAUV Calculation

CAUV Calculation Overview

It is the expected net present value of an acre of land based. To determine this, first a historical average of yields and prices for corn, soybeans, and wheat to determine gross income. Then historical non-land costs – compliments of The Ohio State University Agricultural Extension Agency – are subtracted from gross income for a measure of net income. And finally, this net income is divided by a capitalization rate based upon historical values of farm interest and equity rates. This value will vary based upon the particular soil type(s) for a farm.

CAUV Calculation Overview

  • A CAUV value is assigned for each of the 3,514 soil types in Ohio
    • based on their expected yields of corn, soybeans, and wheat from the last state-wide soil survey in 1984
  • Value is the expected net present value based on the past 5 to 10 years worth of data for each component
    • Economics jargon, it is the net operating income divided by capitalization rate
  • Net operating income is based off of the expected revenue (price times yield) less the expected costs (only non-land costs). Calculated for corn, soybeans, and wheat.
  • Capitalization rate is a combination of the interest rate on a loan for purchasing farmland along with appreciation rate of farmland.

Generic Formula

  • CAUV is assigned for each soil type, although what really matters is the yields that soil type had for corn, soybeans, and wheat in 1984:

\[ CAUV_{s,t} = \frac{NOI_{s,t}}{CAP_t} \]

  • where \(CAP_t\) represents the capitalization rate and \(NOI_{s,t}\) represents the net operating income based on revenues less non-land costs for corn, soybeans, and wheat.
  • Net operating income, \({NOI_{s,t}}\), captures the average returns to an acre of land under normal management practices which is adjusted by the state-wide rotation pattern of commodities.

Generic Formula

  • \({NOI_{s,t}}\) can be defined as:

\[ NOI_{s,t} = \sum_{c} w_{c,t}\times(GOI_{s,c,t} - {nonland}_{s,c,t}) \]

  • where \(w_{c,t}\) represents a commodities share of total harvested acreage
  • \(GOI_{s,c,t}\) is the expected revenues for a soil type depending on the statewide price of a commodity and yield is a percentage adjustment to the soil’s yield in 1984 for each commodity:

\[ GOI_{s,c,t} = Price_{c,Ohio,t} \times \left( \frac{Yield_{c,Ohio,t}}{Yield_{c,Ohio,1984}} \times Yield_{c,s,1984} \right) \]

Non-Land Costs

\label{fig:viz-nonland}

Prices

\label{fig:prices}

Yields

\label{fig:yields}

Capitalization Rate

\label{fig:viz-cap}

Component Values

Rotations

Historical Corn Rotation
Year ODT Value USDA Acres Harvested AVG Acres Harvested Projected
2010 39.0% 3,270,000 3,210,000 37.5%
2011 38.6% 3,200,000 3,216,000 37.4%
2012 38.6% 3,650,000 3,220,000 37.5%
2013 38.7% 3,740,000 3,268,000 38.0%
2014 38.6% 3,480,000 3,276,000 38.0%
2015 40.0% 3,260,000 3,468,000 39.9%
2016 40.2% 3,300,000 3,466,000 40.0%
2017 40.0% 3,150,000 3,486,000 40.1%
2018 39.0% 3,300,000 3,386,000 39.0%
2019 38.0% 2,570,000 3,298,000 38.0%
2020 - - 3,116,000 37.2%
2021 - - 3,103,568 37.0%
2022 - - 3,082,338 36.9%
Historical Soybean Rotation
Year ODT Value USDA Acres Harvested AVG Acres Harvested Projected
2010 51.0% 4,590,000 4,448,000 52.0%
2011 50.9% 4,540,000 4,470,000 52.0%
2012 51.1% 4,590,000 4,492,000 52.2%
2013 51.2% 4,490,000 4,476,000 52.0%
2014 52.0% 4,690,000 4,546,000 52.7%
2015 52.6% 4,740,000 4,580,000 52.7%
2016 53.0% 4,840,000 4,610,000 53.2%
2017 54.0% 5,090,000 4,670,000 53.7%
2018 55.0% 5,020,000 4,770,000 54.9%
2019 56.0% 4,270,000 4,876,000 56.2%
2020 - - 4,792,000 57.2%
2021 - - 4,825,122 57.5%
2022 - - 4,844,583 58.0%
Historical Wheat Rotation
Year ODT Value USDA Acres Harvested AVG Acres Harvested Projected
2010 10.0% 700,000 900,000 10.5%
2011 10.5% 850,000 912,000 10.6%
2012 10.3% 450,000 886,000 10.3%
2013 10.1% 640,000 864,000 10.0%
2014 9.4% 545,000 808,000 9.4%
2015 7.4% 480,000 637,000 7.3%
2016 6.8% 560,000 593,000 6.8%
2017 6.0% 460,000 535,000 6.2%
2018 6.0% 450,000 537,000 6.2%
2019 6.0% 385,000 499,000 5.8%
2020 - - 467,000 5.6%
2021 - - 458,917 5.5%
2022 - - 429,210 5.1%

Non-Land Costs

Historical Corn Base Costs
Year ODT Base Cost Low Projection Expected Projection High Projection
2010 $286.65 - $291.55 -
2011 $300.98 - $313.59 -
2012 $350.71 $363.76 $350.02 $306.90
2013 $391.90 $402.66 $390.51 $346.77
2014 $437.85 $447.49 $435.82 $387.01
2015 $516.99 $534.55 $516.25 $482.29
2016 $524.47 $544.03 $524.36 $501.26
2017 $538.78 $558.62 $539.19 $520.37
2018 $529.28 $560.31 $531.44 $526.53
2019 $517.63 $551.90 $519.53 $508.91
2020 - $530.45 $503.44 $491.73
2021 - $510.53 $485.49 $475.64
2022 - $493.00 $473.14 $463.06
Historical Corn Additional Costs
Year ODT Add Cost Low Projection Expected Projection High Projection
2010 $0.83 - $0.86 -
2011 $0.84 - $0.89 -
2012 $0.90 $1.04 $0.97 $0.89
2013 $1.04 $1.15 $1.06 $0.94
2014 $1.18 $1.28 $1.20 $1.05
2015 $1.36 $1.45 $1.38 $1.24
2016 $1.38 $1.45 $1.36 $1.30
2017 $1.45 $1.55 $1.49 $1.41
2018 $1.44 $1.54 $1.45 $1.42
2019 $1.43 $1.54 $1.44 $1.35
2020 - $1.50 $1.38 $1.32
2021 - $1.45 $1.33 $1.27
2022 - $1.40 $1.34 $1.27
Historical Soybean Base Costs
Year ODT Base Cost Low Projection Expected Projection High Projection
2010 $189.10 - $200.60 -
2011 $204.60 - $212.78 -
2012 $227.51 $238.30 $226.51 $205.28
2013 $248.69 $254.03 $247.15 $222.20
2014 $275.21 $281.06 $273.38 $244.93
2015 $325.42 $336.37 $326.13 $303.99
2016 $336.33 $345.95 $336.36 $317.16
2017 $347.10 $357.99 $346.71 $332.70
2018 $346.26 $362.64 $346.52 $338.62
2019 $338.54 $360.34 $338.75 $329.80
2020 - $349.33 $331.51 $321.80
2021 - $336.63 $319.02 $310.20
2022 - $325.48 $309.54 $300.68
Historical Soybean Additional Costs
Year ODT Add Cost Low Projection Expected Projection High Projection
2010 $0.66 - $0.71 -
2011 $0.77 - $0.86 -
2012 $0.93 $1.13 $1.06 $0.80
2013 $1.12 $1.29 $1.15 $0.95
2014 $1.27 $1.45 $1.30 $1.10
2015 $1.24 $1.34 $1.10 $1.14
2016 $1.07 $1.14 $1.06 $1.06
2017 $1.05 $1.13 $1.00 $1.04
2018 $0.94 $1.03 $0.96 $0.93
2019 $0.90 $0.98 $0.91 $0.83
2020 - $0.96 $0.89 $0.80
2021 - $0.93 $0.82 $0.77
2022 - $0.90 $0.91 $0.79
Historical Wheat Base Costs
Year ODT Base Cost Low Projection Expected Projection High Projection
2010 $170.16 - $175.87 -
2011 $192.94 - $185.33 -
2012 $211.52 $217.51 $211.31 $187.49
2013 $230.62 $234.77 $229.55 $204.75
2014 $255.48 $268.00 $254.67 $226.00
2015 $296.98 $302.24 $295.82 $265.12
2016 $323.52 $329.83 $322.51 $296.39
2017 $336.21 $347.67 $335.87 $315.83
2018 $330.53 $349.23 $330.11 $325.75
2019 $319.08 $340.47 $317.76 $310.93
2020 - $328.17 $304.78 $299.57
2021 - $310.34 $288.72 $277.54
2022 - $293.47 $273.76 $262.96
Historical Wheat Additional Costs
Year ODT Add Cost Low Projection Expected Projection High Projection
2010 $1.14 - $1.12 -
2011 $1.19 - $1.25 -
2012 $1.41 $1.58 $1.47 $1.25
2013 $1.61 $1.78 $1.69 $1.47
2014 $1.80 $1.99 $1.91 $1.68
2015 $1.77 $1.94 $1.74 $1.77
2016 $1.64 $1.79 $1.61 $1.64
2017 $1.62 $1.78 $1.60 $1.66
2018 $1.49 $1.68 $1.57 $1.49
2019 $1.41 $1.56 $1.48 $1.31
2020 - $1.47 $1.41 $1.25
2021 - $1.40 $1.31 $1.21
2022 - $1.37 $1.31 $1.20

Prices

Historical Corn Price
Year ODT Price USDA Price Low Projection Expected Projection High Projection
2010 $2.66 $5.45 $2.28 $2.70 $2.79
2011 $2.89 $6.44 $2.57 $2.89 $3.05
2012 $3.19 $7.09 $2.80 $3.26 $3.26
2013 $3.91 $4.41 $3.26 $3.93 $3.93
2014 $4.48 $3.78 $3.93 $4.54 $4.54
2015 $4.55 $3.89 $4.55 $4.57 $5.18
2016 $4.49 $3.61 $4.42 $4.50 $5.00
2017 $4.51 $3.61 $4.50 $4.50 $5.09
2018 $4.18 $3.74 $4.17 $4.16 $4.73
2019 $3.68 $4.20 $3.68 $3.70 $4.22
2020 - - $3.54 $3.63 $3.70
2021 - - $3.54 $3.63 $3.63
2022 - - $3.60 $3.70 $3.70
Historical Soybean Price
Year ODT Price USDA Price Low Projection Expected Projection High Projection
2010 $6.41 $11.50 $5.83 $6.63 $6.63
2011 $7.22 $13.00 $6.63 $7.45 $7.42
2012 $7.74 $14.60 $7.16 $7.93 $7.93
2013 $8.98 $13.00 $7.94 $9.08 $9.08
2014 $10.13 $10.30 $9.08 $10.40 $10.40
2015 $11.09 $9.16 $11.00 $11.08 $11.95
2016 $10.91 $9.66 $10.91 $10.91 $11.78
2017 $10.83 $9.62 $10.77 $10.83 $11.78
2018 $10.43 $8.69 $10.38 $10.46 $11.35
2019 $9.78 $9.15 $9.78 $9.78 $10.70
2020 - - $9.00 $9.12 $9.78
2021 - - $8.79 $8.90 $9.12
2022 - - $8.69 $8.80 $8.90
Historical Wheat Price
Year ODT Price USDA Price Low Projection Expected Projection High Projection
2010 $3.41 $5.21 $3.05 $3.37 $3.37
2011 $3.64 $6.73 $3.37 $3.62 $3.95
2012 $3.98 $7.94 $3.64 $3.96 $4.20
2013 $4.54 $6.54 $3.96 $4.55 $4.55
2014 $5.16 $5.60 $4.55 $5.19 $5.19
2015 $5.67 $4.57 $5.38 $5.69 $5.99
2016 $5.53 $4.25 $5.32 $5.53 $6.02
2017 $5.53 $4.90 $5.53 $5.53 $6.02
2018 $5.52 $5.08 $5.33 $5.51 $5.97
2019 $5.15 $5.25 $4.96 $5.15 $5.62
2020 - - $4.63 $4.84 $5.15
2021 - - $4.51 $4.73 $4.84
2022 - - $4.51 $4.73 $4.73

Yields

Historical Corn Yield
Year ODT Yield USDA Yield Trend Yield Projected Yield
2010 140.1 160 154.4 139.7
2011 144.9 153 156.4 144.2
2012 146.5 120 158.4 145.5
2013 148.5 174 160.4 147
2014 151.9 176 162.3 150.1
2015 155.2 153 164.3 153.7
2016 156.2 159 166.3 154.7
2017 156.2 177 168.3 154.7
2018 158.9 187 170.2 157.4
2019 164.1 164 172.2 163
2020 - - 174.2 162.3
2021 - - 176.2 163.7
2022 - - 178.1 166
Historical Soybean Yield
Year ODT Yield USDA Yield Trend Yield Projected Yield
2010 41.2 48 47 41.1
2011 42.5 48 47.5 42.5
2012 43.1 45 48.1 43
2013 43.7 49.5 48.6 43.8
2014 45 52.5 49.1 45
2015 46.7 50 49.7 46.7
2016 47.2 54.5 50.2 47.2
2017 47.9 49.5 50.8 48
2018 48.2 56 51.3 48.2
2019 50.4 49 51.8 50.2
2020 - - 52.4 50.2
2021 - - 52.9 50.6
2022 - - 53.5 51.1
Historical Wheat Yield
Year ODT Yield USDA Yield Trend Yield Projected Yield
2010 67.1 61 67.2 66.8
2011 67.3 57 67.8 66.9
2012 66.2 68 68.3 65.8
2013 65.3 70 68.9 64.8
2014 66 74 69.5 65.4
2015 67.1 67 70.1 66.8
2016 66.7 80 70.6 66.4
2017 67.9 74 71.2 67.6
2018 69.2 75 71.8 68.9
2019 69.9 56 72.4 69.7
2020 - - 73 68.2
2021 - - 73.5 69.4
2022 - - 74.1 71

Capitalization Rate

Historical Capitalization Rate
Year ODT Value Expected Low High
2010 7.8% 7.8% 8.0% 7.7%
2011 7.6% 7.6% 7.8% 7.4%
2012 7.5% 7.5% 7.7% 7.2%
2013 6.7% 6.7% 7.0% 6.6%
2014 6.2% 6.2% 6.6% 6.2%
2015 6.6% 6.6% 6.9% 6.4%
2016 6.3% 6.3% 6.6% 6.2%
2017 8.0% 8.0% 8.2% 7.8%
2018 8.0% 8.0% 8.1% 7.8%
2019 8.0% 8.0% 8.2% 7.9%
2020 - 7.9% 8.1% 7.8%
2021 - 7.8% 8.0% 7.7%
2022 - 7.8% 8.0% 7.7%

CAUV Values

Expectation

\label{fig:cauv-expected2}

Expected CAUV Projections
Year avg_cauv indx_49 indx_59 indx_69 indx_79 indx_89 indx_99 indx_100
2007 $181 $100 $100 $123 $283 $521 $747 $970
2008 $249 $100 $100 $188 $431 $708 $973 $1,200
2009 $459 $176 $200 $435 $746 $1,059 $1,368 $1,620
2010 $505 $200 $214 $436 $845 $1,278 $1,601 $1,900
2011 $700 $300 $328 $632 $1,126 $1,641 $2,017 $2,380
2012 $719 $350 $363 $610 $1,147 $1,717 $2,128 $2,490
2013 $1,205 $350 $516 $1,218 $1,958 $2,743 $3,310 $3,780
2014 $1,668 $350 $700 $1,778 $2,728 $3,718 $4,428 $5,030
2015 $1,388 $350 $518 $1,371 $2,347 $3,354 $4,104 $4,770
2016 $1,310 $350 $466 $1,235 $2,255 $3,302 $4,074 $4,750
2017 $1,153 $350 $430 $1,061 $1,969 $2,909 $3,602 $4,205
2018 $1,015 $350 $400 $896 $1,723 $2,586 $3,226 $3,810
2019 $873 $350 $378 $725 $1,462 $2,263 $2,855 $3,410
2020 $666 $350 $351 $487 $1,069 $1,777 $2,294 $2,810
2021 $759 $350 $359 $599 $1,254 $1,974 $2,495 $3,000
2022 $882 $350 $380 $769 $1,468 $2,196 $2,724 $3,240

High Range

\label{fig:cauv-high}

High CAUV Projections
Year avg_cauv indx_49 indx_59 indx_69 indx_79 indx_89 indx_99 indx_100
2007 $181 $100 $100 $123 $283 $521 $747 $970
2008 $249 $100 $100 $188 $431 $708 $973 $1,200
2009 $459 $176 $200 $435 $746 $1,059 $1,368 $1,620
2010 $505 $200 $214 $436 $845 $1,278 $1,601 $1,900
2011 $700 $300 $328 $632 $1,126 $1,641 $2,017 $2,380
2012 $719 $350 $363 $610 $1,147 $1,717 $2,128 $2,490
2013 $1,205 $350 $516 $1,218 $1,958 $2,743 $3,310 $3,780
2014 $1,668 $350 $700 $1,778 $2,728 $3,718 $4,428 $5,030
2015 $1,388 $350 $518 $1,371 $2,347 $3,354 $4,104 $4,770
2016 $1,310 $350 $466 $1,235 $2,255 $3,302 $4,074 $4,750
2017 $1,153 $350 $430 $1,061 $1,969 $2,909 $3,602 $4,205
2018 $1,015 $350 $400 $896 $1,723 $2,586 $3,226 $3,810
2019 $873 $350 $378 $725 $1,462 $2,263 $2,855 $3,410
2020 $922 $350 $383 $801 $1,550 $2,322 $2,891 $3,460
2021 $900 $350 $382 $784 $1,505 $2,255 $2,802 $3,330
2022 $1,008 $350 $418 $937 $1,676 $2,435 $2,983 $3,520

Low Range

\label{fig:cauv-low}

Low CAUV Projections
Year avg_cauv indx_49 indx_59 indx_69 indx_79 indx_89 indx_99 indx_100
2007 $181 $100 $100 $123 $283 $521 $747 $970
2008 $249 $100 $100 $188 $431 $708 $973 $1,200
2009 $459 $176 $200 $435 $746 $1,059 $1,368 $1,620
2010 $505 $200 $214 $436 $845 $1,278 $1,601 $1,900
2011 $700 $300 $328 $632 $1,126 $1,641 $2,017 $2,380
2012 $719 $350 $363 $610 $1,147 $1,717 $2,128 $2,490
2013 $1,205 $350 $516 $1,218 $1,958 $2,743 $3,310 $3,780
2014 $1,668 $350 $700 $1,778 $2,728 $3,718 $4,428 $5,030
2015 $1,388 $350 $518 $1,371 $2,347 $3,354 $4,104 $4,770
2016 $1,310 $350 $466 $1,235 $2,255 $3,302 $4,074 $4,750
2017 $1,153 $350 $430 $1,061 $1,969 $2,909 $3,602 $4,205
2018 $1,015 $350 $400 $896 $1,723 $2,586 $3,226 $3,810
2019 $873 $350 $378 $725 $1,462 $2,263 $2,855 $3,410
2020 $497 $350 $350 $364 $656 $1,281 $1,761 $2,250
2021 $561 $350 $350 $399 $825 $1,483 $1,964 $2,440
2022 $667 $350 $352 $495 $1,067 $1,752 $2,249 $2,740

References