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February 6, 2009

Shorter depreciation period

As part of the stimulus package, farm equipment placed in service during 2009 will qualify for a five-year depreciation schedule. Grain bins, cotton gins, fences and other land improvements are excluded and must follow their former schedule. The Association of Equipment Manufacturers vows to work to make the change permanent. —Linda H. Smith


Look up, General!

As a business manager, you need to develop strategy like an army general, says Purdue University economist Allan Gray.

"Now more than ever in this marketplace, it's an important place for a general," he says. "There are so many battles coming at us. If we keep our eyes only on the battle, when we look up, we're probably somewhere we don't want to be."


Positive peer pressure

Speaking at the annual TEPAP (The Executive Program for Agricultural Producers) conference in Austin, Texas, Danny Klinefelter, Texas A&M economist, pointed out several instances where peer groups and business networks can benefit farmers.

• Land investment companies. The idea is for a farmer to team up with local investors who would like to own farmland. For the investors, it is a way to diversify retirement funds and avoid overdependence on 401K or IRA investments, a situation many near-retirees regret today. Typically set up as an LLC or S corporation, it may call for an upfront investment with yearly additions. The farmer is guaranteed rental of the property for a given time—perhaps 10 years—and gains the ability to grow his land base without assuming the risk of land ownership and tying up working capital in land purchases. Rents may be adjusted annually based on land value indexes.

Health insurance. With rising health care costs a concern, a group of growers in the Texas Panhandle have joined together to form their own insurance group. "They have an underwriter for any really big insurance needs, but for basic health care, they have funded this group and they are insuring themselves," Klinefelter explained.

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