Key Findings

The purpose of this report is to provide projections of property tax for agricultural land in Ohio for tax years 2019 and 2020. The projections apply for all soil types in Ohio enrolled in the Current Agricultural Use Value Program (CAUV). Further, the CAUV formula that is used to calculate CAUV values based on soil types is explained, along with the components of the formula and the assumptions that are used to make expected, high, and low CAUV value projections for 2019 and 2020. Legislation passed in 2017 altered CAUV calculations, which are detailed in this report. We explain the current methodology for calculating CAUV values and how these projections were made. We used Ohio Department of Taxation (ODT) descriptions of calculations, the Ohio Code of legislation on CAUV, and the phase-in legislation for the new calculations.

Key Findings

CAUV Value Projections for 2019 and 2020

In 2018, the average CAUV value across all soil types was $1,015 per Ohio Department of Taxation (ODT). Our projection for the average value of CAUV in the 2019 tax year is $873. Our projections are partially based on how the CAUV formula use Olympic averaging3 for certain components and it is possible for a potential high of $1,292 and a low of $788 for average CAUV values. However, eventual CAUV values are unlikely to have a substantial divergence from our expected projections based on the currently available data for components which use Olympic averaging.

Updates to CAUV values do not occur equally across Ohio as there is a rotating schedule for tax assessments in Ohio. Once every six years, a county receives a full reappraisal of their property with an adjustment in the third year in between. Each county receives an update to their CAUV values for the years a reappraisal or adjustment occurs. About a quarter of the state received a CAUV value update in 2018, another quarter in 2019, and about half of the state will see updates in 2020. Figure provides a reference for when a county receives an update to their CAUV values:


CAUV values contain 5 major components used as inputs for projecting values: capitalization rate, commodity yields, commodity prices, commodity acreage/rotation, and non-land input costs. The commodities used in CAUV are corn, soybeans, and wheat. Each of these components are projected into the future to obtain the projections for 2019 and 2020 CAUV values.

Our projections for the CAUV values in the 2019 tax year are for the components of commodity yields, commodity rotation, and capitalization rate to remain largely unchanged from 2018. Input costs are expected to decline, although this is counteracted with commodity prices similarly expected to decline. Under the expected scenario, the average CAUV value will continue to decline by a similar proportion as the fall in the CAUV values from 2016 to 2017 and then to 2018. Grouping soil types based on a productivity index can help display how similarly productive soils are expected to decline in our 2019 projections:


The projected CAUV values are partially offset by the current provision in the CAUV calculations that phases in the new formula for CAUV, smoothing the adjustment to lower CAUV values the one cycle of property reassessment rather than these declines occurring immediately. The 2018 values had an adjustment factor where only half of the difference was included between the 2017 CAUV value and what the pre-adjusted 2018 CAUV would have been. This also occurs for 2019, where if the calculated CAUV value in 2019 is lower than the 2018 CAUV value for a soil type then only half of the difference is factored into the actual 2019 CAUV value. While the projected average CAUV value for 2019 is $873, the value would have been $730 without the phase-in. Figure shows how much this adjustment for phasing in of the new calculations differ by soil types:


This adjustment procedure will not be present in the 2020 tax year and beyond as the phase-in was only intended to affect one set of phased-in values based on the triennial update of property assessments. Because of this, we have further pushed our projections for the 2020 tax year by extending each component in the CAUV calculation an additional year with as much of the available data as possible.

Our preliminary results indicate stable values for commodity yields, commodity rotation, and capitalization to remain similar to our projections for 2019. Further, the input costs and commodity prices are anticipated to further decline with a more pronounced decline for prices than input costs. At this time, our expected projections for the 2020 tax year are:


Current Agricultural Use Value Program Overview

In 1974, Ohio enacted the Current Agricultural Use Value Program (CAUV) as a tax incentive for farmers to continue agricultural production on their land instead of selling it due to urbanization pressure. CAUV provides an appraisal method for valuing agricultural land by use of only agricultural inputs rather than the market value of land. Throughout the 1970s, other states adopted similar programs of differential appraisal methods of agricultural land and, as of 2014, all 50 states within the US provide some form of differential tax treatment of agricultural land. While each state has its own reason for enacting preferential tax treatment and its particular calculation, the intent behind differential taxation is generally understood as applying a net present valuation of agricultural production that is not tied to potential urbanization development pressures. Ohio is no different and has developed its own calculation method that depends on soil quality, commodity yields/prices/rotation, operational costs, and capitalization rate. The basic premise has been in place since the late 1970s although the program has become more sophisticated and received substantial updates in 2006, 2015, and most recently in 2017 that have affected the calculation of CAUV.

No matter what commodity a farmer produces, their CAUV value is determined solely based on their soil type and a formula from the Ohio Department of Taxation (ODT) which aims to represent the expected returns for an average farmer in Ohio. A simplified version of the calculation can be stated as:

The CAUV value is the expected net present value of an acre of land based on expected net income of the land used for agricultural purposes. To determine this, first a historical average of yields and prices for corn, soybeans, and wheat is used to determine gross income. Then historical non-land costs – provided by The Ohio State University Extension – 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 CAUV value will vary based upon the particular soil type(s) for a farm.

For agricultural land to be eligible for CAUV, it must either be at least 10 acres devoted exclusively to commercial agricultural use or be able to produce more than $2,500 in average gross income. The general trend for the state of Ohio since the 1980s has been a steady increase in the total acreage enrolled in CAUV, although there have been declines in enrolled CAUV acreage for areas under urbanization pressure as farmland is converted to residential or commercial purposes. When a land owner decides to unenroll from CAUV for this purpose, they must pay a recoupment penalty that is equal to the CAUV tax savings for the previous 3 tax years – i.e. the difference between the market value and CAUV value.

CAUV Value Formula

For each of the over 3,500 soil types (\(s\)) in Ohio, a particular year’s (\(t\)) CAUV value is calculated as the soil’s net income divided by the capitalization rate:

\[ CAUV_{s,t} = \frac{NOI_{s,t}}{CAP_t} \label{eq:cauv} \]

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

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. In other words, a net income for corn, soybeans, and wheat is calculated for each soil type and then these net incomes for a given soil type are averaged in proportion to the state-wide acreage of harvested corn, soybeans, and wheat. This can be defined as:

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

where \(c\) denotes the commodity type, which is either corn, soybeans, or wheat which represent the dominant commodities in Ohio and \(w_{c,t}\) is commodity’s share of state production. \(GOI_{s,c,t}\) is the gross operating income for a soil type and is calculated for each of the commodity types (corn, soybeans, and wheat) based on yields and prices. \({nonland}_{s,c,t}\) is the non-land costs associated with each commodity type. Both of these variables are further explained in the following sections.


Each commodity’s share of state production is based on a 5-year average of total acres harvested between the three commodities – with weights summing to 1. This is done by summing up the total harvested acreage for corn, for soybeans, and for wheat over the past six years ignoring the current – i.e. 2019 value for CAUV calculations uses 2014 to 2018 harvested acres. Once summed up, each commodity is then assigned their share of total harvested for the entire state based on those past six years ignoring the current.

These data are from the United States Department of Agriculture (USDA) Crop Production Reports. Typically there is an August, September, October, and November forecast for Ohio’s corn, soybeans, and wheat acreage with the finalized values occurring in January of the following year – i.e. 2018 harvested acreage was finalized in January 2019. The values calculated for CAUV are lagged one year – i.e. the tax year of 2019 CAUV values for commodity rotation percentages are based on the 2014 through 2018 harvested acreage.

The values for rotation used in ODT calculations since 2010 are displayed in the following tables along with the values used in our 2019 and 2020 CAUV value projections.

Historical Corn Rotation
Year ODT Value USDA Acres Harvested AVG Acres Harvested Projected
2010 39.0% 3,270,000 3,210,000 37.7%
2011 38.6% 3,200,000 3,216,000 37.7%
2012 38.6% 3,650,000 3,220,000 37.7%
2013 38.7% 3,740,000 3,268,000 38.1%
2014 38.6% 3,480,000 3,276,000 38.1%
2015 40.0% 3,260,000 3,468,000 40.2%
2016 40.2% 3,300,000 3,466,000 40.1%
2017 40.0% 3,150,000 3,486,000 40.3%
2018 39.0% 3,300,000 3,386,000 39.0%
2019 NA% NA 3,298,000 38.0%
2020 NA% NA 3,264,639 37.6%
Historical Soy Rotation
Year ODT Value USDA Acres Harvested AVG Acres Harvested Projected
2010 51.0% 4,590,000 4,448,000 52.2%
2011 50.9% 4,540,000 4,470,000 52.4%
2012 51.1% 4,590,000 4,492,000 52.6%
2013 51.2% 4,490,000 4,476,000 52.2%
2014 52.0% 4,690,000 4,546,000 52.9%
2015 52.6% 4,740,000 4,580,000 53.1%
2016 53.0% 4,840,000 4,610,000 53.4%
2017 54.0% 5,090,000 4,670,000 53.9%
2018 55.0% 4,980,000 4,770,000 55.0%
2019 NA% NA 4,868,000 56.1%
2020 NA% NA 4,919,894 56.7%
Historical Wheat Rotation
Year ODT Value USDA Acres Harvested AVG Acres Harvested Projected
2010 10.0% 700,000 900,000 10.6%
2011 10.5% 850,000 912,000 10.7%
2012 10.3% 450,000 886,000 10.4%
2013 10.1% 640,000 864,000 10.1%
2014 9.4% 545,000 808,000 9.4%
2015 7.4% 480,000 637,000 7.4%
2016 6.8% 560,000 593,000 6.9%
2017 6.0% 460,000 535,000 6.2%
2018 6.0% 450,000 537,000 6.2%
2019 NA% 420,000 499,000 5.7%
2020 NA% NA 474,000 5.5%

Non-Land Cost

The non-land costs are calculated as 7-year Olympic averages for typical costs of producing each commodity (corn, soybeans, and wheat). The Farm Office at The Ohio State University Extension conducts annual surveys for costs of production which serve as the yearly estimates that are used in the 7-year Olympic average. Budgets for a commodity marketing year are generally released in October of the prior year and then finalized in May of the marketing year – i.e. the 2019 marketing year was initially released in October 2018 and will likely be finalized sometime after May 2019. These budgets will include both fixed (machinery, equipment, labor, etc.) and variable (seeds, fertilizer, chemicals, hauling, etc.) costs involved in producing corn, wheat, or soybeans and each of these individual components are averaged for use in CAUV calculation.

Prior to 2015, the non-land costs were lagged one year – i.e. tax year 2014 used the values from budgets in 2007 to 2013. From 2015 onward, the current year values are included in the non-land cost calculations. Because of the nature of an Olympic average, the non-land costs used in 2019 CAUV is bounded between a “high” and a “low” value by averaging the previous 6-years after dropping only the highest or lowest value respectively. In the event that the “high” value of our projected non-land costs occur, then this is where the 2019 non-land costs are all the lowest values in the previous 7-years which causes the CAUV to be a higher value. The opposite is true for the “low” value in that the non-land costs are all 7-year highs.

Our projection of non-land base costs for corn is $519; for soybeans is $339; and for wheat is $319 per acre for 2019. For 2020, our projections are $501 for corn; $330 for soybeans; and $308 for wheat. The historical and projected values for each commodity are displayed in figure :