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August 2011 Archive for The Farm CPA

RSS By: Paul Neiffer, Top Producer

Paul is now part of the fourth generation in America that is involved in farming and hopes the next generation will be involved also. Through his blog he provides analysis and insight to farmer tax questions.

Depletion - The Greater of Cost or Percentage!

Aug 29, 2011

We had a reader ask the following question:

"Hi, I just inherited a Kansas wheat farm with an oil well on it. I assume that I still get the 15% percentage depletion on the oil royalty. My question is do you know if I can "value" the oil and then take a larger cost depletion deduction from the royalty income?"

Many farmers in the Midwest and other areas of the U.S. may have situations similar to this reader's. Many of our clients are now making more money from their oil and gas income than from farming. 

One method of reducing this income is the use of depletion. Cost depletion is similar to depreciation and is based upon the amount of units sold during the year compared to the estimated total units still available to be sold. For example, assume a farmer inherits a piece of farmland with an oil well on it. A qualified survey of the oil well is performed and it is estimated there are 30,000 barrels of oil still to be pumped from the ground. During 2011, the farmer pumps 1,000 barrels of oil. The value of the oil in the ground at the time of the inheritance was estimated at $300,000 or $10 per barrel, therefore the cost depletion deduction for 2011 is $10,000 (1,000 barrels times $10).

Another method of depletion is the use of percentage depletion. This method takes the gross income derived from oil sales and multiplies it by a percentage (in most cases, 15%). The farmer is allowed to use either percentage or cost depletion each year and is entitled to the greater of each. This can be cost one year and percentage the next. In our example, let's assume the farmer collects $50,000 from the sale of his oil for the year. Percentage depletion based upon 15% would equal a deduction of $7,500. Since cost depletion of $10,000 is higher than percentage depletion, the farmer would deduct cost depletion in this year. However, let's assume the farmer received $100,000 from the sale of his oil. In this case, percentage depletion of $15,000 would be higher than cost depletion and the farmer could use percentage depletion.

One drawback of depletion is that the farmer must reduce the basis in his oil and gas property by the amount of cost depletion taken. The excess of percentage depletion over cost is not used to reduce the basis.

As you can see, these calculations can get complicated, and there are various other rules on percentage depletion that can limit the amount of this deduction. If you have an oil and gas well on your farmland, you should review your situation with a tax adviser who understands this type of taxation.

But the bottom line is that you can take cost depletion based on the cost allocated to the oil reserves if cost depletion is greater than percentage depletion.

My Reflections on the Midwest Crop Tour

Aug 29, 2011

As most everybody knows, I spent most of last week on the Midwest Crop Tour. The weather this year was much better than last year, when we got rained on for one full day of the Tour. I do not remember getting even one sprinkle this year. My thoughts are as follows:

  • Last year, I remember having multiple stops where the corn yield was over 200 bu. Also, I remember that at least 70% or more of the corn yields were 170 or higher. This year, each day, we would have only one or two fields over 200 and perhaps three other fields in the 170 range. All of the other fields were less than 150 each day. However, last year, our lowest yields were substantially lower than this year. We never had a yield under 100 bu. this year, and last year I remember having several under 100, primarily in South Dakota and north central Nebraska.  This year, we did not cover any of that area.
  • The soybeans on average looked very good this year; however, the heat and lack of rain may be getting to them. If the beans get a couple of inches of rain in the next couple of weeks, they should yield fairly well.
  • At all four of the evening stops, the farmers in attendance were not as bullish about their yields as last year. At the same time last year, all of the crops looked very good; however, the finish to the crop was poor. This year, most farmers expect a poor finish but hope for better.
  • There were more people on this year's Tour, and more of them were not farmers. It appears that the Tour is one of the best guides for industry groups such as traders, hedge funds, farm media groups, etc., to get a good handle on where the crop is headed.
  • Pro Farmer does an excellent job of putting on the Tour. From Chip Flory and Brian Grete leading each leg to the staff involved in making each day and night run smoothly, I just want to reinforce how good of a job they do.

 

All in all, this year's Midwest Crop Tour shows a lower crop than last year or the three-year trend, and I look forward to next year to see how it turns out.

Midwest Crop Tour - Final Day

Aug 25, 2011

Since I had a meeting in Austin, Minn., today at 3 p.m., I had to miss taking corn and bean counts for the day. After taking counts yesterday for almost 12 hours straight, I actually did not mind the rest.

Also, during yesterday's route, I ended up cutting two of my fingers with a cornstalk leaf and, to use a farm term, bled like a "stuck hog." The other scout in the corn field did not do well with the sight of human blood, so I was running out of the field dripping blood all the way.  We got it cleaned and bandaged, and, since I seem to get a tetanus shoot every five years or so (I have way too many scars on my body to keep track of), I am fairly sure I will be fine.

Tonight, we had the recap of the Crop Tour with the meet-up of the western and eastern legs of the Tour in Austin, Minn. A crowd of easily 400 farmers and more than 500 people total found out that the estimated corn crop for both Minnesota and Iowa will be down from last year. Remember that this is the estimated biological crop. The actual harvested crop per acre will be down probably even more due to all of the wind, hail and maturity issues involved with this year's crop.

The chance of this year's crop being higher than the Aug. 1 USDA estimate, in my opinion, is somewhere between slim and none. We shall see.

Tomorrow is a travel day home, and I will be posting again next week.

Midwest Crop Tour - Day 3

Aug 25, 2011

I am sorry I did not post about Day 3 of the Crop Tour sooner. I have had multiple issues with cell phone coverage and Internet service on this trip so far.

Yesterday, we had to go north about 25 miles from Nebraska City before taking the toll bridge over the Missouri River near Plattsmouth, Neb. Again, as we crossed the river, we noted multiple buildings, pivots and other structures under multiple feet of water. That area will still take many weeks or months to recover.

We then headed due south and got almost to the Missouri border and then turned east. For about 30-40 miles of driving in this area, we saw many areas of hail and wind devastation to the crops. In one 80-acre field, we saw maybe three ears of corn standing, with the remainder of the whole crop laying completely on the ground. I tweeted a couple of these photos to Twitter.

The average bushel count for corn in this district was barely 110. As we crossed over I-80, we came upon our largest yield of the day at about 205 bu. However, the land was very dry and this ended up being one of our worst soybean counts. The corn crop was set a few weeks ago; however, beans are still making pods, etc., and this heat and lack of rain is not helping.

We then traveled almost to the top of Iowa and turned west to get to Spencer, Iowa. The corn in this area was very steady, in the 160-200 range, and it appears that the two west districts in central and northern Iowa may be a little better than last year. However, southwest Iowa is expected to be 20% or more worse than last year.

I will post on the last day either tonight or in the morning.

Midwest Crop Tour - Day Two

Aug 23, 2011

Today was our lightest day of traveling. We left Grand Island, Neb., this morning at 7 a.m. and spent most of the day headed a little south, then east, then north, then east, then south and east to finish at Nebraska City, Neb., at the Lied Lodge at the Arbor Day Farm. If you have never been to this lodge, I highly suggest visiting it.

I would call the counts we had on our route nothing special either way. We had a couple around 200, a couple around 110 and the rest in the 120 to 175 range. We visited 10 counties and made a total of 10 counts. Our average bushels per acre for corn ended up at exactly 150.

In comparing our counts to the county averages for last year, two were higher, one was even and the other seven were lower, but you cannot tell anything from one route on the Tour. Pro Farmer will issue its calls for Nebraska and Indiana tonight, and I have no way of knowing which way they will go.

Tomorrow, we tour western Iowa and end up at Spencer, in the northwest corner of the state.

I will probably make a post after tonight with my thoughts on the numbers.

Midwest Crop Tour - Day One

Aug 23, 2011

We arrived late Sunday night in Sioux Falls, S.D., just in time for the meeting with all of the other Tour participants. With the flooding of the Missouri River near Omaha, we had to make several detours, which probably added an hour to our drive. The river looks like it has come down maybe a foot, but it is still very high.

We left Sioux Falls around 6:30 Monday morning and made a direct beeline to Sioux City, Iowa, and crossed over the Missouri River there. We took a sample in Dakota County which was in the 135 range and then moved into Dixon, where we saw extensive hail damage from the storm of last Thursday.  Talking to some folks at the local convenience store, we noted that the storm took out a swath of about 5 miles by 100 miles and I know we saw about 25 square miles of this. You would look at a bean field and all you saw was some light green stalks with no leaves or pods on them as far as you could see in the field.

We then motored another 30 miles or so west, turned south for about 15 miles and then came back due east for about 40 miles. In each county, we took at least one sample. In about the fourth county, we got our first irrigated field sample, and that ended up the best of the day, at 230 bu.

Bean samples were generally in the good range. However, there were several areas that we noted were extremely dry and if they do not get rain, the beans are in trouble.

We noted many areas where the stalks had been knocked over due to either wind or hail or both, and all the scouts noted hail damage in many of the fields.

Throwing out the high irrigated sample, our yield estimates ranged from a low of 102 to about 175, and, compared to last year, our yields were down. However, it appears that the call for South Dakota and Ohio is very much in line with the USDA estimates. Tomorrow, we will be finished with Nebraska and will have a better idea where we are at.

I tried to post during the drive, but the cell service in Nebraska on our route was spotty at best and I could not get enough service to get my IPad to post to the site, so I will have to write a nightly recap of the trip.

However, I am tweeting to Twitter (say that fast five times in a row) throughout the day at @farmcpa, so please follow me there.

Active Offsets Passive - Passive Does Not Offset Active

Aug 19, 2011

We had a reader ask the following question:

"I will have a sizable amount of income from a gas lease bonus in 2011. I also have a dairy farm. Can I use the 100% bonus depreciation or the 100% depreciation in section 179 depreciation this year on qualifying new or used equipment to offset that gas lease income even if the dairy farm shows a loss or a small profit this year? Thanks"

The short answer to this question is yes.  If the owner of the farm materially participates in the business of the farm (which is my assumption in this question), then whatever loss is created by the use of 100% bonus depreciation on new equipment is allowed to offset the income generated by the gas lease.  However, if the farmer is buying used equipment and wants to take Section 179 on the equipment, he would only be able to take enough Section 179 deduction to soak up the income from the dairy.  He would not be able to increase the dairy loss to offset the gas lease income.

Conversely, let's assume that the gas lease generated a loss during the year and the dairy generated income.  This gas lease loss would not be allowed to offset any of the dairy income during that year (this assumes the taxpayer has no other passive income and his income is greater than $150,000).

Remember the following chart:

  • Ordinary loss offsets Ordinary income
  • Ordinary loss offsets Passive income
  • Passive income offsets Ordinary loss
  • Passive loss offsets Passive income to the extent of Passive income
  • Passive loss does not offset Ordinary income

 

Passive income is generally any rental activity or an investment in a business where you have limited ownership or management roles.

IRS Required Interest Rates Nearing All Time Low!

Aug 19, 2011

The IRS publishes each month the Applicable Federal Rates (AFR).  They just published the rates for September in Revenue Ruling 2011-20.  These rates are broken down into three different terms:

  • Short-term (less than 3 years)
  • Mid-term (more than 3 and less than 9 years)
  • Long-term (more than 9 years)

 

These rates determine the minimum interest rate that must be charged on loans.  If the interest rate charged is less than these amounts, then the tax laws require us to "impute" interest based upon difference between the required AFR and the actual interest rate charged in the note.

For example, assume the AFR for a five year loan is 5% and the loan charges no interest.  If the balance on the loan for the current year if $100,000, then $5,000 of the payment would be considered interest and the remainder principal.

As most readers know, interest rates are nearing all time lows (at least for my lifetime) and the current AFR for short-term loans is .26%.  That is correct 1/4 of one percent.  On long-term loans, the required AFR is slightly more than 3.50%.

Therefore, any loans between family members should try to use these interest rates so you would not have to impute interest.

I expect to even see these rates go slightly lower next month and the month thereafter.

Where Did The Million Acres of Wheat Go?

Aug 18, 2011

There was an interesting article in the Wall Street Journal this morning about how the USDA issued information regarding the current wheat harvest that normally would required a Freedom of Information Act request to get.

Previous reports from the USDA had pegged the spring wheat crop at about 12.7 million acres.  The report just released reduced this acreage report down to 11.7 million acres.  As a direct result, the price of spring wheat has gone from a low of about $8 this month to slightly more than $9.

The 12.7 million number was reported as part of the National Agricultural Statistics Services (NASS) and the 11.7  million number came from the Farm Service Agency (FSA) which is constantly getting updates from farmers that are not always incorporated into the NASS system.

The primary cause for the decrease in acres relates to the more than 2.6 million acres that did not get planted in the northern U.S. Plains.  The excess rain and flooding in these areas prevented many farmers from planting any crops.

Hopefully, this release of data without a formal Freedom of Information Act request will lead to this data being reported more timely in the future.

Hillside Combining Part 2

Aug 17, 2011

We had a reader in Washington state suggest that we try to explain how steep some of these hills are that we harvest in this area.  Unless you have been on a combine harvesting a steep hill, it is hard to explain just how steep these hills are.

I know that as a child with my two siblings, we decided to go sledding down our "steep hill" by our house.  It took us about 15 minutes to walk up to the top of the hill.  We then put the sled down and all three of us got on it and away we went.  It only took about 100 feet for all three of us to get knock off the sled since it was so steep, we could not control it.

Another steep hill we had, the combine would start up the sidehill to get to the top.  At the bottom, we were cutting a full swath and by the time we got halfway up the hill, the combine had slid half way down the swath area and by the time we got to the top of the hill, we were lucky to be cutting a 5 foot section.

We had Caterpillar crawler tractors then and I remember riding with my dad around 10 years old and we would be coming up this same hill pulling the plow and as we got toward the top all you saw was blue sky and just as you crested the hill, the crawler tractor would continue to climb up into the air and then gravity would take over and the front end of the crawler would plunge back to earth.  Now, that was what I called a great amusement ride.

On a slightly more tragic note, we had purchased a brand new International 453 combine.  This was my second year of driving the combine during harvest and normally I would have been operating it this day, but had spent the night a friend's house and my dad said he would drive it that morning.  We were cutting a field with moderately steep hills, but not too bad.  My father was going up hill when the transmission gears blew up and back then you spent most of the time standing up while driving.   Once the gears went, the combine immediately started to go backwards down the hill.  This caused my dad to grab the steering wheel and turn the combine into the hill which caused it to tip over pinning my father inside of the cab.

He was pinned inside the cab for over three hours while the emergency people worked on getting him out.  The gruesome part was that the combine's throttle lever went through his leg pinning him inside of the cab.  He had use a hacksaw to cut himself out of the cab.

But being the tough German he was, he was back helping me combine the next summer.

There are many YouTube videos out there of combining on steep hills, but they do not really show you how steep these hills are.

Here is a sample of one of them.

Harvesting Good Wheat on Steep Hills

Aug 16, 2011

I spent Friday afternoon and all day Saturday harvesting wheat for my cousins near Dixie, Wash.  Dixie is the town I grew up in until we moved to the big city of Walla Walla when I was in high school. The fields we were harvesting on were about a mile away from the old homestead.

The crops down there this year are what I would call a bumper crop. There is lots of dryland wheat that will do around 135 to 155 bu. per acre.

I was driving a Case IH 2388 with rear wheel assist, which I needed several times. This country has lots of areas that are fairly steep. In one draw near the creek, I almost ended up going into the neighbor's field twice before I was able to get the combine turned around. I was always taught on steep hills to turn the combine down the hill when making a turn, not up the hill. Well, when I made these two turns, there was so much weight on the front end of the combine that the rear wheels were unable to dig into the ground enough to turn the combine, so I just went straight for about 50 feet before it finally got enough purchase to get the machine to turn.

Another sight that I had not seen for a while is a new Case IH 8010 trailing a large baler. It looked like it was going less than one mile per hour and putting out a large bale of straw about every 200 feet or so. It appears there is a good market for this as a feed product since there is some actual wheat mixed in with the straw, according to my cousin.

As I have said before, my idea of a vacation is to drive the combine, and I really enjoyed my day and a half on the machine.

Will The IRS Want Your Accounting Software File?!!!

Aug 14, 2011

In a recent Florida Federal District Court Case, the IRS was granted the right to summon the accounting software file of a small business.  This case did not involve a farm, however, the IRS has gotten very aggressive in demanding the actual accounting software file, especially Quickbooks and other common software accounting programs.  Before the advent of these software programs, providing a print out of the actual accounting data was usually sufficient for the IRS during an exam.

Now, with most agents being able to utilize these accounting software packages on their computers, they are demanding a backup of the whole accounting software, even if there are years in the accounting software that are not under exam.  Also, any comments in the comments, memo or notes section of your software would be available for review by the IRS.

This case decision is limited to this small district court jurisdiction, but you can be sure that the IRS will be very aggressive in taking this to the next level.

Just be careful what you write in your accounting software comments section.  Remember, an IRS agent may be reading it in the future.

The Dates for 100% Bonus Depreciation

Aug 11, 2011

We had a reader ask the following question:

"What is the date a farm building has to be built to be 100% tax deductible? Is this for one year (2011) or will it continue for more than the single year?"

 

We have done a couple other posts on this earlier this year and late last year, but it never hurts to communicate these very valuable dates to our readers.

If a farmer is constructing a new building and the construction commenced after September 8, 2010 and is finished before January 1, 2012, then the total cost is allowed to be 100% depreciated during 2011.  If the building construction commenced before September 9, 2010 and was finished in 2011, then only 50% bonus depreciation is allowed (unless you can segregate out some components that can be 100% bonus depreciated this year).

If the building is not finished by the end of 2011, but is completed in 2012, then the farmer can take 50% bonus depreciation on the building and depreciate the remaining 50% over its taxable life.

Currently, it is 100% bonus depreciation in 2011, 50% bonus depreciation in 2012 and zero bonus depreciation in 2013, but these rules can change at any time.

Corn Price is Now Higher Than Wheat!

Aug 10, 2011

Historically, wheat prices have generally been higher than corn prices and sometimes the difference can be major.  In many years, wheat could be $1 or $2 higher than corn.  This is due to two main reasons:

  • Corn was primarily used for feed
  • Wheat was more heavily used for bread and other products directly consumed as food
  • A bushel of wheat also provides slightly greater feed value than a bushel of corn

 

However, during many days in 2011, corn has now overtaken wheat in price.  This has been caused by these major factors:

  • The Ethanol mandate requires almost 5 billion bushels of corn to be used
  • China has rapidly increased their imports of corn
  • Wheat is in plentiful supply and corn may have its lowest carryover in many years

 

In a recent Wall Street Journal article, it mentioned that due to this flip-flop in prices, many consumers of corn for feed such as poultry and hog producers are now blending in more wheat into their feed rations.  Also, wheat can be used to make Ethanol and some Ethanol producers are now blending about 5% wheat into their mix. 

As long as wheat remains cheaper than corn, this trend may continue.

Motorcycle Trip Along the Minnesota River

Aug 08, 2011

On Saturday, I met up with a couple of my partners in the CPA firm in New Ulm, Minnesota to ride motorcycles.  We left about 9:30 in the morning and drove out of town up onto a nice flat area with very good looking crops.  We then dropped back down into the Minnesota River Vally and went along the river for about 10 miles.  Or in most cases, I should say we drove along the lake.  The river is still very high and in many areas, you could sell very productive farmland under water.

We continued onto toward Mankato and again the corn and beans looked to be in very good shape.  Although it is hard to note heat stress from the highway.  Also, smelled lots of money along the road, i.e. hog confinement facilities were everywhere.

At Lake Washington, a good size lake near Mankato, we stopped for lunch.  It was very nice out on the deck eating lunch and recovering from sitting on the motorcycle.  After lunch, we wandered up toward St. Peter, which at one point was either the state capital of Minnesota or had plans to be the state capital.  After there, we made a beeline back to New Ulm.

All in all, a very rewarding a relaxing way to check out the farm country in Southern Minnesota.

Also, in driving from Sioux Falls to Omaha on Sunday, I noted the heavy flood damage in the Sioux City area.  There appeared to be a fairly new Hilton Garden Inn that had become a island all to itself.  Sand bags were placed all around it and the river was right up to the bags.  Many parts of the city appeared to completely covered in water.

I crossed over on Highway 30 near Blair, Nebraska and on both sides of the road for about two miles was completely underwater.  The Missouri was extremely high there, but it looked like it had started to recede a little.

FFSC - Day Two (Session Six)

Aug 03, 2011

Phyllis Parks, a CPA with Daughhetee & Parks Management Consulting gave a presentation on understanding our competition south of the Equator.

Phyllis had taken a trip to South America in December.  The state income tax rate is 18%.  The employer rate for social security is 27% and the employee pays about 3%.  Brazil seems to have a much higher concentration of foreign investment funds acquring and managing farm land in that country than what we have in the US.

Brazil is still a country of the rich and poor in the rural areas.  The middle class still have not been developed in these areas.  Most cooking and eating done in rural areas are done outside and the flies are thick.  Most of the cooking is done using an open wood burning stove.  For every 1,000 hectares of scrub land developed into farmland, the farmer is required to leave 25 acres in its natural state.

Most of their soybean seed is treated by them manually before planting.  Machinery is very similar to US machinery.

Railroads are being built by private companies to help develop the infrastructure to get the beans to the ocean.  Many times the cost of getting the beans to the port is higher than the cost of production.

FFSC - Day 2 (Session Five)

Aug 03, 2011

On purpose, I skipped talking about session four since it was my discussion on income taxes which we have posted on many times already.

Session Five was presented by Tim Ohlde, President of Elk State Bank in Clyde, KS on the applications of the FFSC guidelines to Today's Ag Lending World.

He stated that what bankers are good at:

  • Desire to see customers/community succeed
  • Lenders who are bright/capable talent of all ages and stages
  • Role of collateral
  • Importance of a "Good" loan
  • Cash flow pays loans
  • Select Sweet 16 ratios (current ratio, solvency, ROA, ROE)
  • Understand debt
  • Using a tax return for profitability analysis and cash flow analysis
  • Bankers want to do a better job with financial analysis

 

Room for improvement is as follows:

  • Understanding double-columned balance statements
  • Classifying assets and liabilities correctly
  • Role of working capital in the lending process AND in the farm operation
  • Basis - Does anyone really know their true basis
  • Implications of Deferred Tax on (1) liquidation, (2) business transition, and (3) estate planning

 

It appears that less than 10% of Ag bankers understand the conversion of cash to farm accural accounting (not true accrual accounting).  Also, bankers sometimes do not understand that a schedule F is not a profit and loss statement.  The joke is that a schedule F is a "highly manipulated profit and loss statement".

Regulators are highly suggesting that bankers need improved, better financial loan analysis on an individual, global and portfolio basis which the Farm Financial Standards meet.

 

Day 2 of FFSC (Session 3)

Aug 03, 2011

Dr. Barry Dunn, Dean of AG/BIO, South Dakota State University in Brookings, SD gave a presentation on the untapped power of information systems in decision making.

Dr. Dunn shared several humorous examples of data overload.  He indicated the most powerful tool that he has seen for agriculture is the use of management dashboards for farmers.  A management dashboard takes all of the accounting, production and other data that a farm generates and places it into a simple a few page overview of the farm operation.

The performance dashboard serves like a magnifying device to spotlight the most important information in a readily readable format.

Content should:

  • Be Informative
  • Help improve performance
  • Possibly serve as a lever to change culture
  • Be based on causal links necessary to achieve objectives
  • Use metrics derived by scientific process

 

Dashboard Reporting should:

  • Refine and communicate strategy
  • Provide a consistent view of an organization
  • Deliver actionable information in a timely manner (instant feedback)
  • Promotes coordination between departments
  • Brings transparency to an organization
  • Motivate and empowers employees
  • Reduce costs and redundancy

 

Dashboard reports should streamline the process from data to action.

Day Two of FFSC (Session Two)

Aug 03, 2011

Danny Klinefelter from Texas A & M was the second speaker of the day and his discussion on Peer Advisory Groups and Continuous Management Improvements.  The studies from about 1,100 top producers around the US over the last several years attending the TEPAP conference show that only about 50% were using cash flow budgets and tracking profit and cost center.  Only about 25% were tracking key ratios and using a policy for dividing earnings and withdrawing capital.  After getting exposure to the use of these tools, after five years the percentage using these tools had increased substantially.

Douglas Adams, the author of The Breakthrough Company stated "Human beings, who are almost unique in the ability to learn from the experiences of other, but are also unique in their disinclination to do so".  The use of a Peer Group is designed to spark this ability to learn from others in your industry.

The Rule of 72 no longer just applies to compounding of interest, but the compounding of knowledge.  Therefore, if you increase your knowledge at 6% per year, your total knowledge will double in 12 years.  If you can increase it at 24%, you can double in 3 years.  The use of a Peer Group can increase this compounding dramatically.

Peer Groups are in the range of 5-12 producers, but the optimum range is probably 8-10.  Make sure the group is full of "Eagles", not "Turkeys".  Try to not to have groupthink.  You want many differences of opinion in the Peer Group.  Many have monthly, quarterly or annual meetings.   You may want to be a member of two Peer Groups.  One based on operations and may involve competitors in your area and the other would be on the more sensitive areas of finance and succession planning, etc. that would be comprised of producers outside of your immediate area.

Danny's goal is for 500 or more Farm Peer Groups to be in existance within the next five years.  Remember, nobody is smarter than everybody.

Some of the advantages of a Peer Group are:

  • Multiple vantage points and different perspectives
  • Sounding board for plans and ideas
  • Identifying alternatives and exploring what if scenarios
  • Increased insight and objectivity
  • Benchmarking (production, financial, compensation, etc.)
  • Identifying opportunities to capture economies of scale, reduce costs, improve asset utilization, gaining market access through collaborative efforts.
  • Overcoming isolation

 

Even if you are top producer, you will find areas that others are Top Top producers and you can learn how to improve your operation to become the Top Top producer.

Day 1 of the FFSC

Aug 03, 2011

As I indicated in my last post, this week I am attending the annual conference of the Farm Financial Standards Council. I got into Sioux Falls this afternoon. We had a reception get together tonight and I was able to meet many of the participants. There about 45 attendees and most of them were there tonight.

The meat of the annual conference is tomorrow and I will most likely post updates through out the day. My presentation is at 1. I hope nobody falls asleep listening to a tax talk after lunch.

Farm Financial Standards Council Annual Conference

Aug 01, 2011

I will be leaving bright and early Tuesday morning to attend the annual conference of the Farm Financial Standards Council (FFSC) in Sioux Falls, SD.  The FFSC is comprised of bankers, CPA's, farmers, and other ag leaders who are promoting standardized financial accounting for ag producers.  This will be my first time for attending the conference.

I will be presenting an approximate one hour seminar on "Hot Tax Topics for Producers"  and I look forward to the feedback from the attendees.  Here is a copy of the agenda for the conference.  I will be doing a couple of posts during the week on what I find out and look forward to attending other than the expected heat and humidity (so far in our neck of the woods, we have only had about two days above 90 which is very unusual for this time of year).

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