Taxes and Finance

Top Producer of the Year Award

Mon, 07 Apr 2025 16:53:49 GMT

You’ve taken the risks and built a successful business.

You give back to your industry and your local community.

Your story would help others push themselves to achieve success.

The Top Producer of the Year Award identifies and honors agricultural producers from whom our readers can learn business concepts, ranging from value-added ventures to succession plans to overcoming adversity. If these characteristics can be used to describe you, then you should apply to be the 2027 Top Producer of the Year.

Entrants will be judged on:

entrepreneurial originality (50%)
financial and business progress (30%)
industry or community leadership (20%)

Any farmer or rancher who derives at least half of his/her income from farming and farm-related ventures may apply.

Prizes: The 2027 Top Producer of the Year finalists will receive a trip for two and be recognized at Top Producer Summit, Feb. 15 to 17, 2027, in Nashville, Tenn. Additional prizes will be awarded depending on sponsors.

For details, email: meckelkamp@farmjournal.com.

Click here to download the 2027 application

Profiles of Past Winners

2026 Top Producer of the Year
Winner: Alsum Farms and Produce , Friesland, Wis.
Finalists: Dalton Farms , Wakeman, Ohio and Splitter Farms , Sterling, Kan.

2025 Top Producer of the Year

Winner: Marc Arnusch , Prospect Valley, Colo.
Finalists: Mark Hanna , Joice, Iowa, and Chase Larson , Belleville, Kan.

2024 Top Producer of the Year

Winner: Christiansen Land and Cattle , Kimball, S.D.
Finalists: Garrett Land & Cattle , Arion, Iowa, and PJ Haynie , Reedville, Va.

2023 Top Producer of the Year

Winner: Silent Shade Planting Company , Belzoni, Miss.
Finalists: MoDak Dairy , Goodwin, S.D., and Engel Family Farms , Hanover, Va.

2022 Top Producer of the Year

Winner: Malecha Enterprises , Villard, Minn.
Finalists: Clearwater Farms , Nezperce, Idaho, and Seven Springs Farms , Joe Nichols, Cadiz, Ky.

2021 Top Producer of the Year

Winner: LongView Farms , Nevada, Iowa
Finalists: DX Ranch , Gettysburg, S.D., and Came Farms , Salina, Kan.

2020 Top Producer of the Year

Winner: Kristjan Hebert , Moosomin, Saskatchewan
Finalists: Sam Ross , Pioneer, La., and Becky Berger , Hillsboro, Ore.

2019 Top Producer of the Year

Winner: Jimmy Tosh , Henry, Tenn.
Finalists: Chris Adams , Grand Forks, N.D., and Ron Rabou , Albin, Wyo.

2018 Top Producer of the Year

Winner: Frank Howey , Monroe, N.C.
Finalists: Bailey Family Farms , Iola, Ill., and Jeremie Pavelski, Heartland Farms , Hancock, Wis.

2017 Top Producer of the Year

Winner: Chalmers and Lori Anne Carr , Ridge Spring, S.C.
Finalists: Richard and Roderick Gumz , Endeavor, Wis., and John Pagel , Kewaunee, Wis.

2016 Top Producer of the Year

Winner: Donald and Cheri De Jong, Hartley, Texas
Finalists: Ron and Zoey Brooks and Brooks Farms, Waupaca, Wis., and Annie Dee and Dee River Ranch, Aliceville, Ala.

2015 Top Producer of the Year

Winner: Bill, Albert, Bernard and David Peterson and Peterson Farms, Loretto, Ky.
Finalists: Stan Boshart and SJB Farms, Tangent, Ore., and Roric Paulman and Paulman Farms, Sutherland, Neb.

2014 Top Producer of the Year

Winner: Lee Lubbers, Gregory, S.D.
Finalists: Jay and Cara Myers, Colfax, N.D., and Joe Zumwalt, Warsaw, Ill.

2013

Luke Brubaker; Mount Joy, Pa.
John Carroll; Illinois and Brazil
Dave Nelson; Fort Dodge, Iowa

2012

Gregg Halverson; Grand Forks, N.D.
Tim Richter; Lime Springs, Iowa
Mike Stamp; Decatur, Mich.

2011

Jim Kline; Hartford City, Ind.
Jake Clark; Grand Ledge, Mich.
Justin Crownover; Sunray, Texas

2010

Donny DeLine; Charleston, Mo.
Schmidt Farms; Sudlersville, Md.
Hudye Farms; Burlington, Colo.

2009

Lon Frahm; Colby, Kan.
Andy & Beth Snider; Hart, Mich.
Duncanson Growers; Mapleton, Minn.

2008

Dave Minich, Logansport, Ind.
Star Rock Farms, Conestoga, Penn.
Leroy Shatto,Osborn, Mo.

2007

Kip Tom, Leesburg, Ind.
Joe Nichols, Wallonia, Ky.
Randy Hughes, Janesville, Wis.

2006

Chad Olsen, Hendricks, Minn.
Dean Walker, Orofino, Ida.
Rick Rosentreter, Carlinville, Ill.

2005

Steve Irsik, Ingalls, Kan.
Bill Kubecka, Palacios, Tex.
Craig Yunker, Elba, N.Y.

2004

Brian Mitchell, Elkhart, Kan.
Kevin Green, DeWitt, Iowa
Jay Garetson, Copeland, Kan.

2003

Dean Folkvord, Three Forks, Mont.
Keith Masser, Sacramento, Pa.
Tim Dewey, Cimarron, Kan.

2002

Melvin Winger, Johnson, Kan.
Jerry Hostetter, Ephrata, Pa.
Jay Clasing, Ruthven, Iowa

2001

Ben Riensche, Jesup, Iowa
John Moser, Greeley, Colo.
Gene Veliquette, Williamsburg, Mich.

2000

Marty Klinker, Fairfield, Mont.
Donnie Young, Ulysses, Kan.
Steve and Lola Raska, Great Falls, Mont.

Feeling the Price Pinch: Young Adults are Eating Out Less

Wed, 19 Nov 2025 21:39:53 GMT

Rising costs are making life feel tighter for many Americans. Inflation, higher food prices and growing debt burdens have all eaten into budgets, and young adults especially are feeling the squeeze. To stretch their dollars, many in this age group are cutting back on dining out.

A recent report from Ever.Ag, published by the International Dairy Foods Association, shows that when young adults do spend money at restaurants, they are looking for ways to save. They split appetizers, order from kids menus, choose lower cost items, skip premium add-ons or avoid the meal entirely. And major restaurant chains like McDonald’s and Chipotle are seeing the effects.

Customers aged 25 to 35 once made up roughly a quarter of Chipotle’s sales, but traffic from this group has fallen for three straight quarters, including a 0.8% decline in the third quarter, according to Scott Boatwright, CEO of Chipotle.

“We believe that this trend is not unique to Chipotle and is occurring across all restaurants as well as many discretionary categories,” Boatwright says. “We’re losing them to grocery [store] and food at home. They feel the pinch, and we feel the pullback from them as well.”

Is McDonalds too Expensive?
Many consumers are also wondering if McDonald’s has priced itself out of the affordable category. The Times reports that a Big Mac sold for $2.24 in 2000 now averages $6. Adjusted for inflation, it should cost about $4.22, which means today’s price is roughly 40% higher than its inflation adjusted equivalent.

Other menu staples have climbed just as sharply. FinanceBuzz found that the price of a Quarter Pounder with Cheese meal more than doubled between 2014 and 2024. And a 10-piece McNuggets meal rose from $7.19 in 2019 to $9.19 in 2024.

The Times notes McDonald’s is not the only offender. The same FinanceBuzz study found that Popeyes prices have climbed an average of 86% and Taco Bell’s about 81% over the past decade, with Chipotle close behind, up about 75%. Wendy’s briefly held the title of most expensive major fast-food chain in 2022, with the average menu item at $6.63 after a 35% jump in just over a year.

Job Market Pressures
Labor market challenges in this age category are adding to the strain.

A recent PYMNTS Intelligence report shows an increase in joblessness among young adults and notes wage gains for workers ages 25 to 29 are currently among the weakest since 2011. Bloomberg reports recent college graduates are struggling to find entry level work in what executives describe as a low hire labor market.

This financial pressure is showing up in spending patterns. PYMNTS Intelligence notes the share of Gen Z consumers living paycheck to paycheck jumped from 57% in January 2023 to 69% in January 2025, a higher share than the general population. Another PYMNTS analysis found that purchases by 18-to-24-year-olds dropped 13% year over year as student loan repayments resumed and credit card delinquencies increased.

Eating Out No Longer ‘Worth It’
For many young adults, eating out has become a luxury rather than a routine. Rising menu prices, coupled with stagnant wages and a tougher job market, are forcing this group to rethink small everyday purchases. What used to be an easy stop for a quick meal now feels like a splurge, and at-home meals often come out ahead.

These financial pressures are reshaping spending habits in a big way. Younger consumers are not choosing new restaurants; they are choosing to skip eating out altogether, and until their budgets have more breathing room, home-cooked meals are set to rise as the more affordable option.

How to Get a Loan Approval: A Banker's Point of View

Tue, 18 Nov 2025 20:28:26 GMT

For most farmers, the next big project on the operation starts with a conversation with your banke, and being fully prepared before you walk into that meeting can significantly increase your chances of getting a loan approval.

Curtis Gerrits, senior lending specialist at Compeer Financial, has spent years helping producers get the financing they need. During a recent Professional Dairy Producers webinar, he shares what truly makes a loan application stand out and how farmers can set themselves up for a smoother approval process.

Get Your Financial House in Order
When preparing for a loan, Gerrits emphasizes lenders look first at clear and complete financial documentation. The process begins with the fundamentals.

“Some of the documents that are top of mind are your profit and loss statement,” he says. “Don’t just stick with the current year. Try to have access to the last three years.”

A profit and loss statement not only establishes whether a business is profitable but also helps lenders understand how the farm manages revenue and expenses over time. Gerrits encourages farmers to follow this with a current balance sheet that breaks down assets and liabilities in detail.

This balance sheet should include livestock numbers, acres owned and leased and a complete equipment list with updated values. Together, these documents paint a picture of financial health and management discipline.

For long-term planning, Gerrits stresses the importance of forward-looking projections.

“Probably one of the last things is to have a detailed projection,” he adds. “What is the business plan, and how is this going to impact your business?”

These projections help both the producer and the lender understand how an expansion, land purchase or capital improvement will affect cash flow and operational stability in the years ahead.

Details Matter
Gerrits says one of the most common pitfalls he sees is overlooking the finer points of financial reporting. Accurate and transparent records build trust and demonstrate professionalism, giving lenders greater confidence in the producer’s decision-making capacity.

“The attention to detail is probably a key thing that maybe gets overlooked from time to time,” he explains.

A lender needs to see exactly what makes up the operation’s income. This could include crop sales, livestock sales, custom work, direct-to-consumer revenue or any other streams that support the business. Clear categorization helps verify performance and gives lenders a better understanding of how the farm is managed.

Build a Strong Relationship
Beyond the numbers, Gerrits stresses the importance of working with a lender who understands the realities of farming. A loan officer familiar with agriculture can better interpret financial statements, spot trends and anticipate challenges.

“Working with a loan officer that understands your day-to-day is really important,” he says. “Having that good relationship where you can bounce ideas off of one another is a really great thing.

Gerrits also encourages producers to bring their lender onto the farm. Sometimes a walk-through can communicate more than a financial packet ever could.

“Put your boots on and take a walk through the barns and show them what you are doing and why the loan application that you are requesting is important,” he says.

Seeing the animals, the facilities and the workflow helps lenders fully understand the operation’s strengths and opportunities, and it gives them greater clarity when evaluating a loan request.

Be Honest About Tough Years
Producers should not shy away from acknowledging difficult financial periods or reporting losses on taxes. Gerrits reassures farmers that losses do not automatically disqualify them from financing.

“Do not get too hung up on the losses out there,” he explains.

A balance sheet can often show how those losses are supported or offset by strong assets, such as land, livestock or equipment equity. What matters most is transparency and context. And demonstrating that you have a plan to manage challenges and leverage your assets can build confidence with your lender.

Plan for the Future
Constant communication with your loan officer can make a big difference in the approval process. Gerrits says checking in periodically, even with a quick touch base, helps avoid surprises.

“Maybe you’ve already talked about: ‘Hey, in a couple of months we might have something come in, and I’m going to have a request for an operating line of credit,’” he says. “That way it’s already in the back of the loan officer’s mind, and they can start preparing or gathering the right information.”

A little preparation can also greatly speed up the loan process. Gerrits recommends giving your loan officer about one month of lead time before funds are needed, along with complete financial documents.

“At the end of the year, we’ll see some borrowers who need to borrow money to do some prepaids to help their tax situation,” he says. “It’s hard to turn things around because a lot of folks are coming in at the last hour. If you give them a month’s lead time with all of the information pertinent, all the financials and balance sheets, that will just help expedite it.”

Looking further ahead, Gerrits encourages producers to think generationally and begin planning for succession well before retirement becomes imminent.

“It is never too early to start a succession plan,” he says.

Early planning gives the next generation clarity about future roles and expectations, helping them prepare financially and personally for the responsibilities that lie ahead.

Own Your Numbers
Ultimately, Gerrits believes successful borrowers take responsibility for knowing and understanding every aspect of their financial position.

“Know your numbers first,” he says. “Don’t just rely on your loan officer to tell you how you are doing.”

Throughout the loan process, preparation and transparency go a long way. Clear financials, attention to detail and regular communication help your lender understand your goals, while on-farm conversations and honest discussions build trust. Being organized, consistent and informed does more than streamline an application, it helps you make better decisions, catch issues early and keep the operation moving in the right direction.

Tax Acts and Estate Plans: What You Need to Know About the Changes for 2026

Mon, 20 Oct 2025 14:00:40 GMT

Taxes don’t destroy family farms – people do, says Polly Dobbs, an estate planning and wealth transfer specialist.

“It’s not Uncle Sam – it’s your third wife and your kids from your first two wives, it’s your kids in the city versus your kids on the farm, and it’s ultimately your failure to plan for all that because you don’t want to hurt somebody’s feelings,” she explains. “It’s very lazy to say that taxes ruin the farm. That’s rarely the case.”

All the details matter, says Dobbs with Dobbs Legal Group LLC. She doesn’t believe in sugarcoating the hard truth. That’s why she’s devoted her career to helping farm families navigate estate planning and wealth transfer.

A “Permanent” Estate Tax

On July 4, President Donald Trump signed into effect the One Big Beautiful Bill, which has a significant effect on federal taxes, credits and deductions.

When it comes to gift and estate taxes, Dobbs points out a big change under the Internal Revenue Services (IRS) section.

“The new exemption as of Jan. 1, 2026, will be $15 million per person, or $30 million for a married couple,” she said at the Keystone Cooperatives Co-op Classic in Valparaiso, Ind. “It is one exemption. You either use it during your lifetime to make gifts, or you have it available at death to shield inheritances. You don’t get two.”

This is an increase from $13,990,000 per person in 2025, and a welcome relief from the anticipated “drop off the cliff to around $7 million per person that was looming,” Dobbs adds.

Unlike the Tax Cuts and Jobs Act from 2017, she says the exemption is considered permanent in that it doesn’t have a “self-destruct, sunset date.” However, she warns farmers not to get too excited about the “permanent tax act” because any future Congress and President can change any law on the books.

The new exemption will be indexed to inflation, she adds, and with adjustments made Jan. 1 every year beginning in 2027. IRS recently announced the tax year 2026 annual inflation adjustments for more than 60 tax provisions, including the income tax rate schedules and other tax changes. The annual gift tax exclusion will remain $19,000 in 2026, unchanged from 2025, which is the amount each donor can give to each recipient, without tapping into his or her big exemption.

“During the fourth quarter of every year, we’ll get inflation numbers, and we will know what the new exemption is going to be the following January,” Dobbs says. “It is nice to know there’s no ticking clock on this tax act. We can stop worrying about this dreaded sunset that was to happen at the end of 2025. The fact they got ahead of this and did it in July of 2025 is a gift.”

Dobbs has been working in gift and estate tax laws for 25 years and says there has never once been a permanent tax act.

“This is important information,” she says. “But that’s the caboose. It is not the engine that should be driving the decision making about the farm’s succession and estate planning. Family goals come first.”

Make the Most of Your Midyear Money Decisions

Tue, 01 Jul 2025 13:50:51 GMT

As the calendar flips to July, it is the perfect time to take a hard look at your operation’s financial health. A midyear financial check-in can be one of the most valuable tools in your management toolbox, offering a clear-eyed view of where your business stands and how to pivot if needed before the year wraps up.

“Performing a midyear checkup can help you stay on track for achieving your financial goals,” says Samantha Gehrett, Senior Extension Educator with Penn State Extension. “It is an excellent opportunity to evaluate how your operation is doing and make adjustments for the remainder of the year.”

Here are five key areas Gehrett recommends reviewing to strengthen your financial footing in the second half of 2025.

1. Update Your Books
Accurate records are the foundation of sound financial decisions. Gehrett encourages producers to review and update their books regularly, not just once a year at tax time.

“Experienced business owners know that accounting and financial reviews should take place monthly,” she says. “If you do not yet have a system in place or find that you continue to fall behind on monthly reporting, consider scheduling some additional time with your accountant.”

Midyear is a smart time to catch up on tracking income, expenses, assets and liabilities. Whether you use software like QuickBooks or a simple paper ledger, keeping current ensures you are working from real numbers, not guesses. This will also make year-end reporting and tax prep significantly easier.

2. Reconnect with Your Business Goals
The goals you set in January might not match the realities you are facing in July. That is why Gehrett encourages producers to revisit their goals and ask:

Are my initial goals still appropriate
What have I achieved so far
Are there any achievements I have missed and why
Are there any new needs that require setting new goals

Whether it is related to increasing cash flow, expanding acreage or investing in equipment, now is the time to shift your targets or reallocate resources as needed. Staying flexible helps ensure your goals evolve with your operation, not against it.

3. Organize Your Financial Documents
Organization is more than just tidiness. It is a financial strategy that saves time, reduces stress and prevents mistakes. Gehrett advises producers to make sure receipts, invoices, loan documents and financial statements are easy to access and up to date.

“Having your income, expense, asset and liability information organized makes conversations with your accountant or lender much more effective,” she explains.

It can also help you avoid missing important deductions or payment deadlines that may affect cash flow and credit relationships. Set aside time to clean up digital or paper files, double-check entries and review outstanding bills or receivables.

4. Check Cash Flow and Budgets
Now is the time to examine how money has moved through your business so far and whether it aligns with your expectations.
Gehrett suggests starting with key questions:

Are there outstanding bills that need immediate attention?
Are you on track to meet your projected income goals?
Are your expenses being managed effectively?
Do you need to consider adjusting your pricing or service rates?

If cash flow is tight or trending in the wrong direction, consider trimming unnecessary expenses, renegotiating terms or identifying areas for additional revenue generation. Small changes now can make a big difference by year-end.

5. Review Your Key Financial Statements
To understand your operation’s financial position, you need to analyze three core financial documents. According to Gehrett, these documents include:

Income Statement — This shows your revenue, expenses and net profit or loss over a specific time frame. Think of it as your farm’s financial report card.
Balance Sheet — This snapshot reflects your assets, liabilities and equity at a particular point in time.
Cash Flow Statement — This document tracks when money is coming in and going out, helping you anticipate shortfalls or surpluses.

Gehrett notes these reports work together to give a complete picture of financial health. They help you answer important questions such as:

Are you profitable?
Is your equity improving?
Do you have enough liquidity to support upcoming decisions?

Why This Check-In Matters
By summer, planting is behind you and harvest is still ahead. It is the perfect window to regroup, reassess and reinforce your financial footing.

With updated records, refreshed goals and a clear understanding of your cash flow and net worth, you will be better positioned to catch and correct issues early, adjust plans proactively instead of reactively, strengthen lender and vendor relationships and capitalize on opportunities like equipment upgrades or land purchases.

Don’t wait until December to find out how your year really went. Take charge now and finish financially strong.

Commodity Brokers Call CFTC's Proposal to Expand Ag Futures Trading to 24/7 a 'Nightmare'

Fri, 23 May 2025 16:23:05 GMT

The Commodity Futures Trading Commission (CFTC) is proposing to expand agricultural futures trading hours to a 24/7 schedule. CFTC says the change would make the market more vibrant, while brokers and commercial hedgers say it would lead to more volatility and more costs.

CFTC says the proposal is one that better reflects the changing dynamics of the markets.

“As I have long said, the CFTC must take a forward-looking approach to shifts in market structure to ensure our markets remain vibrant and resilient while protecting all participants,” says acting Chairman Caroline D. Pham. “One evolving trend is the move to 24/7, 24/6 or 24/5 trading hours. I look forward to the public comments on this market innovation.”

According to the National Grain and Feed Association (NGFA), who opposes the change, the move to expand trading hours would increase costs and spur more volatility.

“Our members have been clear — expanding trading hours to 24/7 would disrupt current risk management practices, increase operational costs, and create unnecessary exposure,” says Mike Seyfert, president and CEO of NGFA, an organization with commercial hedgers as part of its membership base. “We hope the CFTC will recognize that longer trading hours do not equal stronger markets.”

The proposal is currently in a comment period. In NGFA’s feedback and formal letter, the organization listed five reasons why it is against the proposal, including:

Spreading liquidity across a wider trading time frame would create unnecessary volatility, potentially widen bid/ask spreads and expand potential for market manipulation.
The underlying cash market does not trade 24/7, thus having futures markets open for more hours while cash markets are closed would create additional exposure and risk for our members.
Its members perform their daily reconciliation functions when markets are closed. This function is critical in managing risk and exposure in cash markets.
A pause in trading in futures markets is essential for physical deliveries. This pause allows those involved in physical deliveries to assess what is changing in cash markets as well as in futures markets and ultimately their delivery economics. NGFA says that actions in the delivery market are what lead to convergence, and convergence is a critical function of the agricultural futures contracts that benefits it members.
Staffing costs for its members would unnecessarily increase to add monitoring of futures markets during the expanded weekday hours and weekends.

Market Analysts Weigh In

Brian Splitt of AgMarket.net agrees with NGFA’s analysis, saying expanded trading hours has been tested before in livestock, and it led to more volatility.

“It sounds like a nightmare to me,” Splitt said on U.S. Farm Report. “There’s a reason that the exchange tightened the trading hours for livestock. We used to trade livestock overnight, similar to what we do with the grains, and the volatility was just ridiculous. It didn’t take a lot of contracts to make the market move quite a bit. And so, I think the market just needs a rest period. I don’t see a reason why the market needs to trade 24 hours a day.”

Splitt argues the markets need some type of pause, especially with fewer traders who participate in the overnight markets. And with fewer traders, it takes fewer individuals to influence the market, which Splitt argues is dangerous.

“I agree with Brian, I think it’d be horrible,” says DuWayne Bosse, a farmer who also is the founder of Bolt Marketing. “I think the trading hours are actually too long right now. We have this kind of long pauses in between market news that the market just gets pushed and shoved by algos and volume traders, and that makes what I would call kind of wrong technical pictures on the chart. So, I think it would be a mistake.”

Comments on the proposal, which could be submitted electronically through the CFTC Comments online process , were accepted through May 21.

How Your Income Taxes Will Change This Year

Mon, 24 Mar 2025 17:41:02 GMT

The Trump tax cuts, officially known as the Tax Cuts and Jobs Act (TCJA) of 2017, have been a topic of significant debate since their inception. It appears the Republicans might have enough political capital to both extend the TCJA and enact additional tax cuts that could help farmers.

The major tax cuts that have helped farmers since 2017 include (but not limited to):

Reduction in most tax rates
100% bonus depreciation through 2022
Section 199A 20% net deduction on farm income
Doubling the estate tax exemption (currently $13.99 million)
Increasing the child tax credit to $2,000

However, there were also some provisions that penalized many farmers:

Limiting the state and local tax (SALT) deduction to $10,000
Eliminating the tax-free treatment of equipment trades
Reducing 100% bonus depreciation (there will be none starting in 2027)
Dropping the corporate tax rate to 21% (most farmers paid 15%, so this was a 40% tax increase)

The House Republicans passed a budget bill to allow income taxes to rise by $4.5 trillion over 10 years. The Senate is proposing to ignore the budget effect of making the Trump tax cuts permanent, and the House could go along with this proposal.

This effectively allows Congress to make the Trump tax cuts permanent and allows for an additional $4.5 trillion of reduced taxes in other areas such as:

Eliminating taxes on tip income
Eliminating taxes on social security income
Eliminating taxes on overtime
Eliminating estate taxes
Reducing the corporate income tax rate to 15% for domestic production

However, there are many provisions of the Trump tax cuts that some Republicans are not in favor of, such as the $10,000 cap on the SALT deduction. Eliminating this cap would cost about a trillion over 10 years. Most republicans are also not in favor of the Inflation Reduction Act “green” provisions and many of them will be repealed or reduced, that could include the Section 45Z fuel tax credit.

The bottom line is income tax law will change this year, and it will be dramatic. Our crystal ball right now is fairly cloudy as to the final provisions, but for most farmers the changes will likely be beneficial.

The Tax Man Cometh To The Farm

Wed, 19 Feb 2025 15:47:09 GMT

Everyone can benefit from a practical reminder from time-to-time. In this case, Paul Neiffer wants to remind farmers that the 2017 Tax Cuts and Jobs Act is set to expire at the end of 2025.

“We’ve had these tax cuts for eight years now, but farmers may not be thinking about this and what it could mean for them,” said Neiffer, principal of FarmCPAReport.com and a Top Producer columnist.

Neiffer addressed the topic of what farmers need to know now and address from a tax standpoint during the 2025 Top Producer Summit in Kansas City.

“Certainly, farmers are aware of the lifetime estate tax exemption dropping in half after this year. But I think a lot of these other provisions that would hit them, they’re probably not quite as aware of them,” he said.

Neiffer highlighted three provisions he believes U.S. farmers are likely most interested in seeing extended or made permanent. They include:

1. The 100% Bonus Depreciation. Neiffer said he believes the 100% provision will be made permanent, though it’s currently only 40%.

“We think that will come back to farmers,” he said. “The practical benefit is when they purchase equipment or farm buildings they’ll be able to deduct 100% of that item in the year of purchase. Also, there is a chance that trade-in of farm equipment will be similar to the old rules and non-taxable in most situations.”

2. The increase in the lifetime exemption for estates. If the current law is left unchanged, as of Jan 1, 2026, the present lifetime estate and gift tax exemption will be cut approximately in half. It currently is almost $14 million.

Neiffer is optimistic about the exemption. “I think the likelihood on the estate exemption is very good. I think that’ll stay at least at the current level,” he said.

3. The Section 199A Cap. This provision allows individuals, trusts and estates with pass-through business income to deduct up to 20% of qualified business income (QBI) from taxable ordinary income. Schedule F farmers are also granted the 20% deduction.

While Neiffer said there is some bipartisan support in Congress for extending the Section 199A deduction beyond 2025, he is ambivalent about that happening. “With that 20%, it would be a lot more costly to enact,” he noted.

Practical Next Steps Farmers Can Take
Looking ahead, Neiffer said he believes the likelihood of having a major tax bill before the end of 2025 is slim. At best, the bill would be ready by November or December.

For that reason, Neiffer’s recommendation to farmers is for them to plan on pushing income into 2026 but to have the flexibility to bring that income back into 2025.

“The reason is if the tax cuts don’t get extended that means 2026 tax brackets are going to be a lot higher,” Neiffer explained. “So, we would want to bring income into 2025. Now, farmers have the ability to do that using deferred payment contracts and some other elections that they can make – but only if they plan ahead accordingly. They definitely want to make sure they do that,” he added.

Your next read: It’s Tax Time: Your Guide To Calculate Farm Income

How To Budget For Your Farm's Transition

Tue, 28 Jan 2025 13:00:00 GMT

In 2023, I said the most important thing for your farm business is build your transition plan. Recently, we’ve focused on knowing your numbers, and now it’s time for cost of living and budgeting for retirement.

When I work on transition planning with family farms and businesses, I often start by asking whether or not the senior or junior partners have met with a certified financial planner. Usually, but not always, the answer is no. But almost every time, the senior partner needs a clearer picture of their needs in the next chapter of transition or retirement. They think they will be OK, but until it is put on paper, there is still this massive fear about the unknown. Thankfully, it’s easy to navigate.

Anticipate Your Lifestyle
The first step is understanding what your cost of living looks like in retirement. Yes, this means budgeting and anticipating expenses.

I put together a one-page, farm-centric worksheet so you can easily calculate your budgetary outlook. This includes expenses such as healthcare, vacation, groceries, basic needs, and even that new fishing boat you want to buy. I don’t care what your budget is, but you should. You need to have an excellent idea of what that number is. In fact, it is one of the most respectful things you can take the time to calculate for you, your spouse and your transitioning partner.

Put It On Paper
The next and final step (I’m a simple man) is mapping out the long-term business needs and other specifics for your long-term income and expenses. For most of you, the income will include farming for a while, including grain sales, equipment sales and then cash rent and other income such as social security, investments and diversified income from other sources or businesses you work in. The expenses include land, equipment and housing notes, primarily.

The important part is physically putting the numbers in to see what the next 10, 20 and 30 years look like on paper. The worksheet calculates the income and expenses you input and allows you to select your ‘crystal ball’ inflation rate, investment return and anticipated tax implications.

I want peace of mind in your retirement and transition planning. I want you to know where you stand and what your needs are. I want you to feel comfortable with the hardest thing you have to do once in your life. And I’d like your transitioning partner, whether family or not, to know your needs and expectations as you navigate these next steps.

Do yourself a favor and take an hour or two to put on paper what you might have been putting off for too long or have yet to take the time to think about.

Shay Foulk
shay@agviewsolutions.com

It's Tax Time: Your Guide To Calculate Farm Income This Year

Mon, 27 Jan 2025 14:41:42 GMT

Various farm programs as established by the Farm Service Agency have various limits based on the farmer’s adjusted gross income (AGI). However, some of these programs also allow for either a double payment amount or an increase in the payment limit.

For example, the Emergency Relief Programs allowed for an increased payment limit if more than 75% of your AGI is from farming. Remember, AGI is income after expenses. Most farms now have a fair number of farm equipment trades, and they usually show net gains on Form 4797 and a net loss on Schedule F.

Are farmers allowed to net those two items and show net income from farming? The answer is it depends.

If other farm AGI is greater than two-thirds of total AGI, the farmer is allowed to include those equipment gains as part of farm income. Most farmers are not able to meet that definition.

USDA Versus IRS Farm Income Definitions
Our understanding is that USDA has this rule because the IRS does not consider equipment gains to be farm income. However, the IRS changed the rule a few years ago as a result of the Tax Cuts and Jobs Act and now automatically considers equipment gains to be farm income. We hope USDA will update their AGI rules to reflect this.

There are many sources of income that USDA considers to be farm income that the IRS does not. Some of them are:

Cash rent income
Gains on selling farmland
Processing, storing and transporting farm goods
Income from renewable energy

These items are not farm income for IRS purposes, but they are according to USDA.

One good change is the new economic aid package that was passed at the end of 2024 allows for a higher payment limit if 75% of your gross income is from farming and not based on AGI. Gross income is primarily your sales of ag products without any reduction for farm expenses. However, if you purchase ag products to resell, you likely will need to reduce your income by those costs.

Because it is based on sales and not AGI, it is going to be much easier for a farmer to be a “farmer” under this requirement. Even having equipment gains not treated as farm income might not hurt the farmer.

An Example
Roxanne has an average sale of farm products of $2 million. She has equipment gains of $400,000 and other non-farm income of $50,000. Her farm gross revenue is 81.6% of total revenue. She qualifies as a farmer. If equipment gains are treated as farm income, her farm percentage would increase to 98%.

Gross income is an average of 2020 to 2022 items on your income tax return. However, we must wait on USDA for regulations to determine what they consider to be farm income. Either way, gross revenue is much easier for the farmer to be a “farmer” than AGI.

One Company's Unique Way To Defer Capital Gains Tax

Tue, 07 Jan 2025 14:03:15 GMT

As many farmers know, there isn’t always a next generation to pass the farm down to.

Your kids may live out of state, happily pursuing careers as doctors, lawyers and professors. They have fond memories from their childhood on the farm fondly but won’t be taking over ownership, and you’re ready to slow down and retire. So, you collectively decide selling the farm is the best option for everyone.

The problem here is that in most cases, the sale will generate a significant amount of capital gains tax, which is where Farmers First Trust can help. The company’s principal, Mike Gustafson, recently joined the Top Producer podcast with Farm CPA Paul Neiffer to explain the process.

“What we tell the farm family is to go ahead and get a farm sale in place, but what you need to have in the purchase contract is an approval that a Section 453 transaction can be done at the request of the buyer and seller,” Gustafson says.

Here’s how Farmers First Trust uses the Section 453 tax code to defer capital gains tax on a farm sale:

The title of the sale goes directly from the seller to the buyer.
The funds of the sale go to Farmers First Trust.
The family takes out a loan with an investment bank, and a loan is initiated to them four to six days after closing for up to 99% of the net sale.
After a period of time chosen by the seller with the advice of their CPA (most commonly 30 years), the final 1% of the sale is released and then the capital gains tax will be due.

“In 30 years, $1 today at 3% inflation, is going to be worth about 44 cents,” Gustafson says. “They’ve had the opportunity to maybe double or triple that money over the course of those 30 years.”

Why Use This Method
If this seems complicated, you’d be right. Neiffer cautions this method isn’t right for every family, but it does have its advantages.

“This is something that you have to be in the right situation in order to take advantage of it,” Neiffer says. “It can be a little bit more difficult than a 1031 but again, a 1031 also has its drawbacks. You only have up to 45 days to identify, typically up to only three properties, and then you only have 135 days after that, or 180 days total, to actually close on that property. This allows you to defer that maybe three years down the road, and when you’ve identified property you can just go buy it with the cash that you got from this 453 transaction.”

Gustafson adds, “They can make their own decisions on what they do with the cash before they would make that purchase. That gives them a lot of flexibility, but also a lot of responsibility. So, it’s not for everybody, but in those cases where it does work for them, it’s extremely powerful.”

Tax Turbulence: How Sunsetting Provisions Could Change Your Bottom Line

Thu, 19 Dec 2024 14:31:58 GMT

With 30 tax provisions set to expire at the end of 2025, the tax liabilities for family farms could increase at a time America’s farm families can ill afford any additional hits to the budget. Uncertainty surrounds the 2017 Tax Cuts and Jobs Act (TCJA) and American Rescue Plan Act (ARPA)–especially as a new administration is in route to the White House.

“The cost of the TCJA is significantly higher than was originally estimated in 2017. The newest estimate we’ve seen is that a full extension of the TCJA is going to cost $7.75 trillion through 2035,” says Pinion’s Beth Swanson. “With the budget reconciliation process and the expected cost, we’re worried that Congress is going to have to pick and choose which provisions of the TCJA are going to get extended next.”

According to research from USDA ERS, the impact of these expiring federal income tax provisions would increase tax liabilities for farm households by almost 9 billion. That’s a $2,200, or 12%, average increase per farm.

Increase in tax liabilities resulting from expiring Tax Cuts and Jobs Act (TCJA) provisions that would increase tax rates, decrease deductions, and restore personal exemptions.

(USDA, Economic Research Service and USDA, National Agricultural Statistics Service, 2018–2021 Agricultural Resource Management Survey)

Broken down by farm size, that looks like:

Low sales farms: Tax increase of about $700
Moderate sales farms: Tax increase of about $2,300
Very large farms: Tax increase of nearly $28,000

“Interestingly, in percentage terms, moderate sales farms are expected to have the greatest increase in tax liabilities at about 16%,” says Tia McDonald, USDA ERS. “They’re in an in-between area where they’re not quite getting some of the exemptions that higher income folks can take advantage of like bonus depreciation and even 179.

Farm CPA and Top Producer columnist Paul Neiffer adds, “Another part of it is the percentage increase of going from a 12% tax bracket to a 15% tax bracket. A lot of those moderate-income farmers also have 2, 3 or 4 kids that, under the current rules, qualify for the $2,000 tax credit, which is going to drop down to a $1,000 tax credit.”

As far as which provisions are the most important for farmers and ranchers, McDonald says the biggest impact will come from be provisions providing reduced individual income tax rates, an increased standard deduction, a cap on state and local tax deductions, and the elimination of the personal exemption, which would create an increase in total tax liability of $4.5 billion for all farm households.

“The reason for that is that it touches almost every farm household. So, the reach is quite broad,” she explains.

The Qualified Business Income Deduction
The second most important provision set to expire that McDonald lists is the qualified business income deduction, which provides farm households with positive business income a deduction equal to 20% of their qualified business income.

“Approximately 40% of low sales farms to almost 80% of very large farms receive that qualified business income deduction,” McDonald says.

Estimated Impact of Expiring QBI Deduction

(USDA, Economic Research Service and USDA, National Agricultural Statistics Service, 2018–2021 Agricultural Resource Management Survey)

Referring to the results of a recent survey, Kent Bacus of National Cattlemen’s Beef Association (NCBA) says even though this deduction hasn’t been around long, it’s been valuable to producers.

“As far as the 199A qualified business income deduction, with that being relatively new, we still had over half of the [1,200] respondents who have used it, and they’ve considered a very important tool,” Bacus says. “I think that’s something that we want to see continue in the next package.”

Child Tax Credit and Bonus Depreciation
McDonald says additional provisions, such as the child tax credit, the estate tax exemption, alternative minimum tax provisions and bonus depreciation, will likely have less of an impact on tax liabilities overall.

“Those are really targeted toward higher income farm households, so they don’t have quite the reach,” she explains.

Swanson, however, says the loss of bonus depreciation would still be notable for many.

“For bonus depreciation, sunsetting is a concern – especially because Section 179 isn’t really a one-for-one trade. With commodities that are heavier on equipment, producers tend to use bonus depreciation year after year,” Swanson says. “It’s more than just a timing difference. The loss of bonus depreciation will be a significant annual effect to many of the farmers that we work with [at Pinion].”

This is echoed by the results of NCBA’s survey as well.

“When you look at Section 179 and bonus depreciation, one of the key things we ask is, ‘If these tools weren’t available, how would that impact you?’,” Bacus says. “What we found is without access to these tools, about 25% to 30% of the respondents would have had to pay an additional $20,000 in taxes.”

The Timeline
Once the new administration is in place, Bacus believes we can expect Congress to act quickly.

“We have new leadership in the Senate and new leadership in the administration. They’re going to try to prioritize a couple of key things that will be important to the new administration, and a couple of those are going to be border security and taxes.” Bacus explains. “We’re looking for a lot of movement in those first 100 days.”

But Swanson says it’s possible that movement may not be focused on extending these provisions in the beginning.

“We are worried about President-elect Trump’s varied tax commitments and the distraction those might provide to getting the TCJA extended,” Swanson says. “I think the best thing we can do is wait and see. We will hope that the legislative process goes fairly quickly and Congress is able to avoid all of those distractions that may prevent us from getting TCJA expansion done.

Once these provisions are in focus, Bacus believes there are a few avenues it could take.

“With those tight margins in the House and the Senate, you are going to have to have some kind of bipartisan package that comes together. The big question is, are they going to update the tax code? Are they just going to extend it? Or will we potentially see a default if all these efforts fail,” Bacus says. “I think it’s unlikely that the efforts have failed, but the aggressive timeline that’s been proposed is always subject to the minutia and the swamp nature of Washington. That tends to slow things down.”

Neiffer expects an extension with a few key changes.

“I don’t think we’re going to see a permanent TCJA,” Neiffer says. “We’re going to see another three to five or five to seven years. Some of the provisions may become permanent and some will disappear. And you’re going to see some new ones come into effect.”

Your Next Read: Will the Tax Cuts and Jobs Act Get a Second Life?

Will the Tax Cuts and Jobs Act Get a Second Life?

Mon, 09 Dec 2024 14:00:00 GMT

It’s been the question hanging over CPAs, tax professionals and business owners: Will Congress extend the Tax Cuts and Jobs Act (TCJA)?

“This is potentially one the most important things we’ll see in the next couple of years,” says Avery Frank, manager at CLA.

The TCJA significantly increased an individual’s lifetime exclusion amount for gift and estate taxes, and it needs extended to continue its provisions.

“Currently, the figure we’re talking about as the double amount is $13,610,000 that any person may transfer during their lifetime or after to individuals or trusts for the benefit of the folks they care about,” Frank says. “For a married couple, that means they have presently to transfer about $27 million of wealth.”

With the unknown of if and when Congress will act, CLA provides this guidance based on estate size. The viability of certain plans will depend on types of assets you own, their tax attributes and your wealth transfer time horizon, which is why CLA encourages clients to develop a team of advisers to help them.

Two spouses with less than $14 million in net worth estate:
• Fund 529 plans

• Annual giving

• Charitable giving

• Fund a grantor trust

“With these estates, they probably have enough lifetime exclusions to shelter from the estate tax,” he says.

Two spouses with $14 million to $28 million in net worth estate:
“This is definitely an estate size that I would say we need to have a plan in place,” he says. “We need to know what we’re going to do, if certain outcomes come to pass. An estate of this size would realistically have to give up all their assets to be able to shelter their entire estate.”

Some ideas include:

• Gifting without gift splitting

• Life insurance trusts

• Use discountable assets

Two spouses with more than $28 million in net worth estate:
“Once we’ve gone through and done some really good planning using lifetime exemptions to the greatest extent possible, we’re going to turn up the heat,” Frank says. “There’s interesting things that happen for taxpayers of this estate size, and some opportunities they may not normally be comfortable with.”

He gives three tools as examples:

1. Prepaying gift tax, instead of paying estate tax, typically results in a lower amount of tax being paid. Frank gives the perspective that it represents a significant opportunity to reduce future estate tax.

2. For clients with existing grantor trusts, get the trustee of those trusts to generate taxable income. The taxable income created in the grantor trust is taxed back to the grantor.

3. Sell assets to grantor or non-grantor trusts.

“Today is the day. Yesterday would have been better,” Frank says. “Form the team, define the plan. You’re on the clock.”

Sort Out The Biofuels Provisions Of The Inflation Reduction Act

Sun, 01 Dec 2024 14:00:00 GMT

Enacted in August 2022, the Inflation Reduction Act (IRA) restructured biofuels tax credits in three ways: extend the Biodiesel Blenders Tax Credit (40A), create a sustainable aviation fuel (SAF) tax credit (40B) and transition future biofuel tax credits to a carbon intensity (CI) (45Z).

“Both 40A and 40B become part of 45Z, transitioning blending to a production credit,” says Susan Stroud with No Bull Ag. “As the end of 2024 draws near, which is the end of 40B providing a $1 per gallon subsidy in the form of a blender tax credit for every gallon of biodiesel and renewable diesel blended into U.S. fuel supplies, oil share has somewhat been buoyed, as mandates are increasing at the same time we are disincentivizing fuel imports. This should spell more demand for soybean oil.”

As the hand off to 45Z nears, there’s a lack of clarity for the opportunity for farmers.

“USDA is trying to put guidance together to help the Department of Treasury with the 45Z rules,” explains Mitchell Hora, founder of Continuum Ag. “But climate smart commodities and low carbon feed stocks for biofuels are not the same thing.”

Whereas bundles were used with 40B and other previous programs are an all or nothing approach, Hora contends 45Z needs to use the Department of Energy’s GREET model.

“If bundles are used, it stifles farmer innovation — it waters down the impact,” he says. “We have to get this done right. The weight of this decision is massive. The ripple effect 45Z could have is tremendous.”

Legislation has been introduced to extend the biofuels tax credit through 2025 as we are still waiting on the Treasury to issue 45Z guidance.

How To Leverage The 0% Tax Bracket

Wed, 27 Nov 2024 12:00:00 GMT

There are many situations where farmers can sell assets they have held for over a year and owe no federal income taxes on the gain.

Capital gains that are taxed in the old 15% tax bracket are actually taxed at a zero rate. For 2025, single taxpayers hit the top of this tax bracket at $48,350 of taxable income. Married couples top out at twice that amount, or $96,700.

Remember, these taxable income numbers are after itemized deductions or your standard deduction. The standard deduction for 2025 increases to $30,000 for a married couple, which means a farm couple could have long-term capital gains of $126,700 and owe no federal income tax (assuming they have no other income).

This can have great planning opportunities.

First, if a farmer has a C corporation and a personal income that is low for the current year, then paying a dividend from the corporation makes sense because the divided will be tax free. Plus, the corporation does not even need to pay out any cash. It can instead elect to distribute a “deemed” dividend, which is simply a paper entry to debit dividend and credit paid in capital. This also has the result of increasing the tax basis in the corporate stock, which can be helpful if the corporation is liquidated or converts into an S corporation.

Capital Gains Planning Example
Jim and Sara estimate their taxable income for the year will be about $50,000. Their corporation issues a deemed dividend to them of $75,000 because they would like to keep the cash in the corporation for operating purposes. They can also elect to pay a cash dividend to themselves and then loan the proceeds back to the corporation. This income added to their personal return will be taxed at zero for federal income tax purposes. They will pay state income if their state has such taxes.

Another option involves selling stock investments at a gain if you know the gain will be tax-free. There is a rule against repurchasing stocks within 30 days if you have sold the stock at a loss, but in this case, you are actually locking in long-term capital gains to be taxed at zero. The worst that can happen is you might be out a little bit of a bid/ask spread on repurchasing the stock if you use an online no-commission company.

Selling Assets Example
Andy and Gretchen estimate their taxable income at zero. They were early investors in Tesla and elect to sell Tesla stock that generates a long-term capital gain of about $125,000. They decide to not repurchase Tesla but will elect to use it as working capital for their farm operation. This gain will be tax-free at the federal level.

The bottom line as you do your tax planning at year-end is to review any assets you have held for at least a year to determine if your taxable income remains in the 15% tax bracket. If so, you might want to consider selling all or part of that asset to lock in tax-free money (at least at the federal level). Or, if you have a C corporation, always review that each year to determine how much of a tax-free dividend you can pay out.

American Farm Bureau Terminates Illinois Farm Bureau's Membership, Illinois is Taking Filing a Lawsuit

Thu, 14 Nov 2024 15:23:50 GMT

The Illinois Farm Bureau (IFB) is no longer a member of the American Farm Bureau Federation (AFBF). The American Farm Bureau Federation has decided to terminate the Illinois Farm Bureau’s membership, effective Dec. 20, 2024. AFBF President Zippy Duvall announced the termination, which is expected to have a significant impact on farmers in Illinois.

The IFB has filed a lawsuit against the American Farm Bureau Federation (AFBF). The lawsuit was filed in McLean County, Illinois. It claims this termination violates a 1990 settlement agreement between the two organizations, which allegedly allowed IFB to continue using the name “Illinois Farm Bureau.”

Duvall stated that the decision to vote out the Illinois Farm Bureau is related to maintaining “farmer control” of organizational decisions. The IFB argues that AFBF’s action threatens to deprive them of important membership rights and benefits, including a voice in national farm policy issues.

IFB President Brian Duncan expressed that they have “no desire to leave AFBF” and believes that AFBF is choosing to abandon more than 70,000 Illinois-based farmer members. The lawsuit seeks to halt AFBF’s decision to expel the Illinois Farm Bureau.

A letter from AFBF President Zippy Duvall to state farm bureau presidents said the action comes after a failed mediation session on Monday. The move is in retaliation for a decision by the Illinois Farm Bureau’s affiliate, Country Financial, to drop a Farm Bureau membership eligibility requirement for non-farm insurance policy holders in Illinois.

“The membership decision is expected to cause the loss of hundreds of thousands of farm bureau members, to the detriment of Illinois Farmers, Illinois County Farm Bureau organizations, IFB [Illinois Farm Bureau] and the entire Farm Bureau organization,” wrote Duvall, a third-generation dairy farmer from Georgia who has headed the AFBF since 2016.

Country Financial told customers in September it would no longer require Farm Bureau membership for nonfarm policies. Membership costs about $20 per year. AFBF receives $5 of those dues. Country Financial operates in 19 states. It is the largest farm insurer in Illinois.

The expulsion of the Illinois Farm Bureau from the national federation marks a significant change in the relationship between these agricultural organizations. The IFB has about 400,000 members. More than 70,000 are farmers, farmland owners, and agriculture industry professionals, according to the IFB website. Its farm membership comprises about 75% of all Illinois farmers.

The IFB has been operating for over 100 years. It will no longer be part of the larger national network. This separation could potentially affect various aspects of support and representation for Illinois farmers, including:

Legislative advocacy at the federal level
Access to national resources and programs
Participation in national policymaking for agriculture

Of note:

While the Illinois Farm Bureau will no longer be part of the American Farm Bureau Federation, it will continue to operate as a state-level organization.

Bayer's Shares Sink to 20-Year Low on 2025 Earnings Fall Forecast

Wed, 13 Nov 2024 21:39:22 GMT

By Ludwig Burger and Patricia Weiss

Bayer said on Tuesday that weak agricultural markets mean its earnings are likely to fall further next year, sparking a sharp fall in the German company’s shares and piling pressure on its CEO to deliver on his turnaround efforts.

Chief executive Bill Anderson has started cutting jobs, speeding up decision-making and slashing red tape in a bid to turn around the embattled industrial group, while putting plans to break up its diversified businesses on hold.

Shares in Bayer were down 11.6% to 21.57 euros at 1004 GMT, their lowest level in 20 years following its update.

“We’re in the midst of a big agriculture downturn. And that’s very frustrating for people ... We understand the investor sentiment, but we remain very optimistic that we’ve got a strong future,” Anderson said in the statement.

He also pointed to strong launches for Bayer’s new drugs Nubeqa for prostate cancer and Kerendia for kidney disease.

However, Markus Manns, a portfolio manager at Bayer shareholder Union Investment in Germany, criticized the CEO for not having publishing medium-term financial targets, which need to be addressed to win back trust.

“Bayer’s transformation needs to be urgently accelerated and management needs to finally communicate a sustainable growth strategy with specific mid-term targets for sales, earnings and debt reduction,” said Manns.

Chief financial officer Wolfgang Nickl said in Bayer’s quarterly earnings statement it expected “a muted outlook on top and bottom line next year with likely declining earnings”.

Based on earnings before interest, tax, depreciation and amortisation (EBITDA), and adjusted for special items, the 2025 forecast would mean a third consecutive annual decline, after the group on Tuesday also lowered its projection for 2024.

Bayer said that the earnings measure, when adjusted for currency impacts, would likely be between 10.4 billion euros ($11.1 billion) and 10.7 billion euros, down from a previous 10.7-11.3 billion euro forecast and last year’s 11.7 billion.

Its July-to-September EBITDA, adjusted for one-offs, fell almost 26% to 1.25 billion euros, missing the average analyst estimate of 1.31 billion euros posted on Bayer’s website, with Bayer citing weak Latin American agricultural markets.

Regulation
Bayer’s $63 billion purchase in 2018 of seeds and pesticides maker Monsanto under Anderson’s predecessor was a long-term bet on robust growth in farming supplies which has so far misfired.

Debt and costly U.S. product liability litigation over disputed claims that Monsanto weedkiller Roundup causes cancer are further burdens which Anderson is struggling to shake off.

Bayer shares have lost close to 80% since the Monsanto deal was closed in 2018 and about 70% since it was agreed in 2016.

U.S. agrichemicals competitor Corteva and the agriculture unit of Germany’s BASF have also been hit by lower prices as weak produce prices weighed on demand.

Bayer’s shares trade at 4.6 times forward earnings over the next 12 months, well below BASF at 12 and 18.8 for Corteva. The ratio is widely used to gauge the relative value of stocks.

Bayer said its business is set to suffer more because U.S. approval for new soy seeds to be used with weedkiller dicamba will not be in time for the 2025 sowing season and EU regulators will pull insecticide Movento from the market under the bloc’s environmental agenda known as the Green Deal.

In addition, cost-conscious U.S. farmers are turning to cheap generic copies of Bayer’s pesticides, it said.

Bayer said that special charges of 4.1 billion euros, mainly from write-downs on intangible assets in its Crop Science division, resulted in a quarterly net loss of 4.18 billion euros, compared with a 4.57 billion euro loss a year earlier.

It confirmed its previous currency-adjusted guidance for 2024 sales and earnings per share before certain items.

(Reporting by Ludwig Burger, Editing by Rachel More, Kirsten Donovan and Alexander Smith)

Could 100% Bonus Depreciation Make a Return Under a Trump 2.0 Administration?

Fri, 08 Nov 2024 19:59:55 GMT

President-elect Donald Trump is preparing for his second term as president. While it’s not two consecutive terms, his history during the first term could serve as a possible playbook on how the next four years could impact agriculture.

“You have to remember, Trump is a populist,” says Jim Wiesemeyer, Farm Journal Washington correspondent. “He learned a lot from his first four years. So, he’s better prepared now. He won’t choose a lot of cabinet people who will eventually write books negative about him. He learned that lesson.”

The parlor game of whom will be named to key cabinet positions, including the U.S. Secretary of Agriculture , will continue during the next few months. One of the biggest anticipated changes that could impact farms across the U.S. is the possible change to the tax policy.

“You can up the odds that you’re going to have many, if not most, of the expiring Trump 2017 tax cuts that expire at the end of 2025 renewed. That’s good for the U.S. sector because of the estate tax exemptions will probably remain as they currently are,” says Wiesemeyer.

While anticipated changes continued to be weighed by political analysts, one agricultural tax expert thinks farmers can count on one major thing.

“I think we’re definitely going to see no tax increases. That’s for sure,” says Paul Neiffer, Farm CPA and contributor to AgWeb.

Neiffer says even though Trump campaigned on no tax on tips and no taxes on social security, Neiffer doesn’t see those proposals passing, as it would leave too big of a hole in the federal budget deficit.

“But certainly, the lifetime exemption that next year will be almost $14 million, I think that’s going to be made permanent. And that’s great news for our farmers that possibly are facing some estate taxes,” Neiffer says.

Neiffer also thinks the Section 2032A deduction, which permits an alternative method for valuing certain real property used either as a farm for a farming purpose or in a trade or business other than farming, is something that could get bumped up to $14 million per taxpayer. He believes it would be a “good deal” for farmers.

The other benefit, according to Neiffer, is the extension of the Section 199A Deduction and additional changes he expects to occur with the corporate tax rate.

“The lower rates for 199A capital will likely to be extended,” Neiffer says. “We could even see a reduction in the corporate tax rate down to maybe 15% for farmers. And if that happens, you could see a lot of farmers switching from being an individual farmer to being a corporate farmer.”

According to Neiffer, 100% bonus depreciation could also make a comeback under Trump.

“We think, perhaps, 100% bonus depreciation might be coming back for farmers,” says Neiffer. “When they buy equipment or buildings, farm buildings, etc., they’ll be able to deduct 100% of that in the year of purchase.”

Neiffer points out farmers need to be careful and make sure they optimize their depreciation related to their debt, but the idea of 100% bonus depreciation would be a welcome change for farmers.

Wiesemeyer also says the relief for farmers is there will be no major changes to capital gains taxes, which is something the democratic nominee Kamala Harris had proposed during her campaign.

Your Next Read: Washington Insiders Weigh in on What the Election Means for Agriculture

Harvest Prices for Crop Insurance Plunge: What Does It Mean for Farmers?

Wed, 06 Nov 2024 16:01:51 GMT

The Risk Management Agency just released official harvest prices for federal crop insurance, and it’s not good news for farmers.

Harvest price is based on the average price during October. This year, those numbers are well below 2023 and the base prices set in February:

Corn — $4.16 harvest price versus $4.66 base price, a 50¢ drop
Soybeans — $10.03 harvest price versus $11.55 base price, a sharp $1.52 drop
Grain sorghum — $4.17 harvest price versus $4.67 base price, down 50¢
Confectionary sunflowers — down $1.50
Oil sunflowers — dropped $1.20

The drop comes as no surprise to Tony Jesina, senior vice president of insurance, Farm Credit Services of America.

“We’ve seen the trend in play for quite a while, but in October, we did get a little bit of a bump. It could have been a lot worse,” he says. “It’s still bad enough when you think about the price of corn being down 11% from spring and beans roughly 13%. The trend has not been our friend, that’s for sure.”

Lower harvest price levels will trigger some insurance payouts for the 2024 crop, according to Randy Martinson, Martinson Ag Risk Management in Fargo, N.D.

“There’s likely going to be revenue losses in some areas on soybeans. Corn, it’s just going to depend on if you had a lot of rain and drowned out corn,” he says.

With these prices, margins will be even tighter in 2025 and, for some, maybe in the red.

Jesina says farmers need to closely manage their cost of production and safety net.

“You look at the most common policy in place and that policy will not cover your cost of production for 2025,” he says.

Most producers will need to increase their coverage under their underlying policy or add a supplement.

“A lot of producers will look at the Supplemental Coverage Option known, SCO, or the Enhanced Coverage Option, ECO. When you layer ECO and SCO on top of your underlying policy, for most producers that will be enough coverage to provide a safety net that gets close or can actually go above covering their cost of production for 2025,” he explains.

Crop insurance is not an expense to scrimp on, and Jesina recommends paying for higher coverage to help guarantee revenue. In addition, he says crop insurance products are subsidized, and the ECO subsidy went up for the 2025 crop year.

Your Next Read: A Possible Recession Still Hangs Over the Ag Economy, But Positive Shifts Are Starting to Surface

How Drought's Grip on the Mississippi River is Already Costing Farmers

Fri, 25 Oct 2024 14:40:26 GMT

For the third consecutive year, historically low water levels on the lower Mississippi River are impacting the supply chain. While it isn’t translating into lost export business for the U.S., it’s having a negative impact on basis levels as higher transportation costs are passed on to farmers in the form of lower cash prices.

According to Pro Farmer , a lack of rain has led to reduced barge draft and tow sizes along the Mississippi river system, causing delays and groundings near Hickman, Ky., according to USDA’s Grain Transportation Report.

Pro Farmer reports grain transport along the river has fallen below last year’s levels and the seasonal average.

The Drought Picture Plaguing the Corn Belt

The latest U.S. Drought Monitor shows just under 50% of the country is experiencing moderate to exceptional drought.

(U.S. Drought Monitor )

The latest U.S. Drought Monitor shows just under 50% of the country is experiencing moderate to exceptional drought. Sixteen states are seeing extreme drought and five states are experiencing exceptional drought.

Most of the increases in drought over the past week took place in the Eastern Plains, Midwest and South.

Precip amounts

(National Weather Service )

Impact of Lower Mississippi River on Soybeans

At St. Louis, water levels rebounded with ample rain during spring and early summer, but both declined significantly past mid-July. The same pattern followed at Memphis with the exception of a short-lived uptick in water levels due to Hurricane Helene.

“It did result in a pretty dramatic 15-foot-plus spike in a short period of time. But now we’re basically back where we were prior to the hurricane with low water levels resuming. The concern is that it impacts barge transportation,” says Mike Steenhoek, executive director, Soy Transportation Coalition.

Mississippi River Levels

(AgDay)

How Farmers Bear the Cost

Steenhoek says barge restrictions are once again lowering the number of barges in tow and how heavy barges can be loaded.

“Every foot of reduced water depth or draft is the equivalent of loading 7,000 fewer bushels of soybeans on an individual barge,” he adds. “You can see an overall reduction of 10% to 15% on the modest end of the spectrum all the way up to 30% to 40% reduction, which is really considerable.”

In turn, that raises barge freight rates and cash basis takes the hit.

“The shippers tend to not absorb that themselves. What typically happens is those costs are passed on to the farmer in the form of a lower price at that point of delivery or a more negative or wide basis,” Steenhoek says.

The timing couldn’t be worse for soybeans as it’s coming during harvest season and the peak export window.

“You’ve got to move the volume because South America is going to be a viable supply option come the first of the year or certainly not long after that,” says Alan Brugler of Brugler Marketing. “This is not ideal. Fortunately, the Panama Canal is in better condition than it was a year ago, so that’s one thing that’s different.”

However, more soybean exports will shift to the rail system to move through the Pacific Northwest, thus raising rail costs, which are also passed onto the farmer.

Improve Your Farm's Profits With Financial Planning

Fri, 18 Oct 2024 20:59:54 GMT

By Heather Gieseke

When harvest winds down, it’s tempting to look forward to a few weeks of rest. Not so fast.

Your next step should be financially planning next year’s crop to get a jump-start on profitability estimates. Many farmers are quick to look back at what the markets have done or the sales they made and use that as a strategy for the year ahead, which is exactly what you shouldn’t do.

A healthy strategy starts with understanding your break-even costs and budgeting your inputs. Getting specific about your seed and crop health plans, and budgeting those in advance of making purchase and crop sales decisions, can elevate your negotiating skills and save you more than you realize in the months to come.

Put Pen to Paper

Transportation, drying, storage costs or opportunities, tillage passes and hired help are often the most overlooked factors in a break-even analysis, not to mention expanding your markets. Whether it’s with pen and paper, an Excel sheet or another software tool, having a detailed financial plan aligned with your storage and delivery capabilities ahead of input purchases just might be the single most important task you do for your farm operation.

Get down to the field level. To start, analyze what’s happening on each individual field. What’s the reality of pest control, fertility, seed, labor and fuel expenses?
Think about your transportation costs. Where do you typically deliver that field’s grain? Are you selling enough bushels prior to harvest to manage your storage capabilities, or are you still in the trap of selling grain over the scale or storing it at the elevator?
Project profits. Determine what profit you realistically hope to achieve. Then narrow your budgets for purchasing decisions and establish marketing targets aligned with your break-even costs and projected income numbers.

For grain sales, are you paying attention to cash prices only? Strategic basis and futures decisions can be a big opportunity to improve revenue, so set targets for each. Are you exploring all your markets or just the most logistically convenient?

For inputs purchases, if you come to the negotiating table equipped with 2024’s numbers and a budget for 2025, you will be far more impactful than haggling a few dollars here and there.

Be Diligent

This kind of discipline on your break-even and profitability goals will make purchase decisions and marketing your grain less emotional and overall less stressful. Remember, the most important decision you make for next year might depend on the calculations you make before you sit down to Thanksgiving dinner.

Your Next Read: Making Purchases for 2025: All You Can Do Is Your Best!

How To Take Advantage Of Section 1031 Exchange

Fri, 11 Oct 2024 12:00:00 GMT

In times of tight margins, every purchase must have a purpose with ROI top of mind. As you optimize your equipment, crop inputs, farmland and business intellect for the year ahead, take the time to plan your work, and then you work your plan.

We continue to receive questions regarding how tax-deferred exchanges of farm real estate are taxed. The Tax Cuts and Jobs Act of 2017 eliminated the ability to defer tax on personal property but retained it for real property.

However, farm real property is not comprised of just one type of tax property but rather three types. Land is taxed at capital gains rates if it has been owned for more than a year. Land can be exchanged for any other real property including the following two types of properties.

To fully defer the gain on land, you must reinvest the net sales price and all of the cash.

Section 1250 Property
This property is farm buildings such as a machine shed, barn, or corporate provided housing. It does not include livestock-specific structures or buildings used for storage of farm commodities.

If this property has been subject to accelerated depreciation in excess of straight-line, then that portion must be reinvested in Section 1250 property. The portion related to straight-line depreciation can be reinvested in any real estate.

Section 1245 Real Property
A farm can have many types of Section 1245 real property. To fully defer the gain on this, you must fully reinvest the gain in Section 1245 real property. Again, it does not need to be exactly the same type of property but must be Section 1245 real property.

A Few Examples
A farmer who sells land with improvements must be careful of how tax might be deferred under Section 1031. For example, Jane sells a quarter section of land for $1 million. Her basis is $100,000. The only real restriction is that she must reinvest the $1 million into real estate. It could be additional farmland, an apartment building, land with a shop or grain bins.

Variation 1 - On the land is a machine shed with a value of $250,000. She deducted the original cost of $200,000 using bonus depreciation and this is $150,000 greater than straight-line depreciation. She must reinvest at least $150,000 into 1250 property to fully defer that portion. The remainder can be reinvested in any real estate.

Variation 2 - On the land is a grain system which is valued at $300,000. To fully defer the gain, she must buy Section 1245 property worth at least $300,000. This could be land with trees, tiling, or other types of Section 1245 real property. Some common types are listed below. Again, the remainder needs to be invested into real estate.

Variation 3 - Jane sells land with a machine shed worth $250,000 but buys land with a grain system worth $250,000. A grain system is not Section 1250 property, therefore, the $150,000 gain (in our previous example) on the machine shed is taxed, however, the grain system can now be fully deducted using Section 179. Or she can deduct about 65% using bonus depreciation. The gain is not subject to self employment (SE) tax while depreciation reduces SE income. When bonus depreciation was 100%, we often preferred the gain being taxed since 100% bonus depreciation would offset the gain and reduce self-employment taxes.

Whenever a farmer sells land that includes improvements, it requires careful review of how a Section 1031 exchange could potentially defer the gain.

Your Next Read: Market With Purpose: Set Achievable ROI Goals

How One Farmer Turned the 1980s Disaster Into Enduring Success

Mon, 07 Oct 2024 11:54:48 GMT

Fall’s sun drapes across the sky in Nokomis, Ill., as Skip Klinefelter admires another season’s crop. Through four and a half decades of turbulence and tribulation, he continues to pursue his purpose at the helm of his ever-evolving operation.

“I started off at the top and worked my way to the bottom,” Klinefelter smirks. “Then I started farming.”

With plans to build race cars that later found him running a tire shop, in 1977 he returned home to farm with his father. A 50/50 split on 456 original acres, the Klinefelters went to work.

“I always hated hogs and loved cattle, but I couldn’t afford to get into cattle,” Klinefelter explains. “So, we built a 250-sow specific pathogen free seedstock operation and grew the farm to 3,200 acres along with doing custom work.”

Then the 1980s hit, hard.

“There was no light at the end of the tunnel, and nobody had any reason to believe it was going to get better,” Klinefelter recalls.

In 1983 his crops were wiped out by serious drought. By 1988, another drought arrived, but he had insurance and hogs to help with cash flow.

“We were robbing Peter to pay Paul to get through it,” Klinefelter explains. “I guess we could have gone broke and out of business, and some people said that’s what we should do because it would be less painful, but I refused to take that route.”

Klinefelter’s wife, Barbara, had off-farm jobs that provided health insurance, which was a big help. She first worked at the local ASCS office (known as the Farm Service Agency today) then went back to school for her masters while teaching English and dual credit college courses at the local high school.

It took Klinefelter 10 years to overcome the 80s. Then the late 90s came knocking. Another short crop and hog prices falling to 7¢ per cwt forced him to rethink his future.

“I thought in four to five years the hog market was going to see serious consolidation,” Klinefelter explains. “I was wrong. It took 18 months.”

Not willing to take on a mountain of new debt after spending the last two decades paying off loans, Klinefelter made the decision to exit the hog business and focus on precision farming.

“I watched a local equipment dealer service our seed meters, and I didn’t think they did a very good job,” Klinefelter laughs.

That moment kicked-started a passion for ag equipment and 20 years of investment. He now owns and runs the largest independent precision ag business in Illinois. While he knows the current ag market is in a downturn, he’ll take today over the 1980s every time.

“I’ve definitely made mistakes and decisions that were expensive,” Klinefelter says. “So far, I’ve been able to get through to the other side of them.”

State of the Economy

Following record highs in 2022, the latest projections from USDA-Economic Research Service (ERS) shows overall farm sector income is forecast to fall once again in 2024 but at a slower rate than it did a year ago. Economists now project a drop of $6.5 billion. That’s down 4.4% from 2023 but much better than the February projections that suggested a decline of 26%.

Essentially, better livestock margins are helping improve the overall picture of the ag economy with cash receipts expected to end the year close to $267 billion. That’s up more than 7% year over year.

The major grains, however, continue to struggle. USDA-ERS economist Carrie Litkowski says the value of crop production is forecast to decrease $25.6 billion versus 2023 with the largest decline from corn and soybeans.

USDA–ERS stresses the importance of looking at the numbers with the past 20 years in mind.

“The farm sector balance sheet is projected to remain strong,” Litkowski says. “Net farm income fell 22% from 2022 to 2023, and in 2024 net farm income is forecast to fall nearly 7% [when adjusted for inflation]. Even with these expected declines, both sectors in 2024 are forecast to remain above their 20-year-average.”

The Food and Agriculture Policy Research Institute (FAPRI) at the University of Missouri updated its baseline projections in mid-August. It stretched $4 corn through the end of the decade along with $9 to $10 soybeans and sub-$6 wheat.

“In the absence of new shocks to the weather, the macroeconomy or policy, projected prices generally remain near current levels over the next five years,” according to FAPRI’s report.

The biggest challenge remains the cost of production. Without some sort of adjustment to either side of the balance sheet, the finance community says breakevens could turn negative in 2025.

“If you look at input prices, they’re about 40% higher than they were in 2014,” says Tony Jesina, senior vice president of insurance and consumer lending at Farm Credit Services of America. “That’s a lot more pressure on margins, and producers really, in effect, have more dollars at risk than they’ve ever had before.”

Lending in the ’80s

The farm crisis of the ‘80s left a mark on all those who experienced and lived through the inferno of scorched balance sheets and farmstead graveyards — the angst and anguish coloring their outlook for every season henceforth.

Retired Indiana ag lender Joe Kessie was one of them. He graduated from Purdue University in 1983 with a degree in ag finance — during the height of the 1980s farm crisis.

Thrown in the fire but without a lifetime of professional baggage, Kessie says his biggest challenge was balance sheet visibility.

“The problem was balance sheet lending, and lenders did not have a system to calculate earnings from operations,” Kessie explains. “By using accrual earnings and earned net worth calculations, I was able to grow with the operations actually making money.”

That window helped him build relationships and find ways to help customers survive or even thrive.

“In the late ‘80s, early ‘90s, there were tremendous opportunities to take advantage of,” Kessie says. “Ground was $1,000 an acre or less in our area.”

Despite the pressure from falling prices and high input inflation, Kessie doesn’t expect a repeat of the 1980s for three reasons.

“Back in the ‘70s or early ‘80s, all the farm rates were variable. When rates skyrocketed, basically all the debt on the balance sheet went up,” he says. “Today, about any kind of term debt is fixed at pretty attractive rates. These higher interest rates do affect operating loans or if a farmer makes a new equipment purchase, but the other debt on the balance sheet is not affected.”

He also believes overall farm finances and management prowess is much improved.

“The farm balance sheet was pretty leveraged back then versus now,” Kessie says. “Plus, the management of farms is definitely better today than it would have been in the ‘70s and ‘80s. A lot of the inefficient operations, unfortunately, didn’t make it.”

Additionally, new investment funds are helping to support land values by providing demand.

“There are plenty of farmers still holding cash, and there’s a strong interest from investors and investor funds,” Kessie says. “None of that was there in the ‘80s to support the market.”

From weathered brow, cracked hands and faded caps, the hard-learned lessons of thin margins and financial potholes are worth heeding. Klinefelter has absorbed years of uninvited turbulence and kept moving forward. He offers these six tips for surviving tough times.

1. Communicate, Communicate

If your farm is facing financial hardship, be honest with your lender, landlords and family. Klinefelter believes that’s one of the reasons he survived the 1980s.

“We had a negative net worth in 1987, and I think the only reason they let us survive is because of our communication,” Klinefelter says. “They knew where I was, what was happening, what our plans were, and they even helped to design some of our plans.”

2. Pay Your People

Sometimes how the money gets spent requires a choice. Klinefelter says making payroll the first option is a good investment.

“I’ve heard stories of people not being able to pay their help or not paying employees to instead pay someone else,” he says. “We’ve always been open about what we’re doing.”

3. Rethink or Redefine Success

Take a hard look at career and business goals.

“I spend more time thinking about unwinding my businesses and what is going to survive after me,” Klinefelter says. “My kids are successful and not coming back to the farm. My biggest success is three good kids and eight good grandkids.”

4. Focus on the Bottom, Not the Top

Farmers tend to focus on the best yielding genetics or selling at the highest point in the market. Instead, they should put more emphasis on cutting off the bottom.

“Raise your average by cutting off the worst performers or bottom 20%,” Klinefelter suggests. “People spend so much time trying to hit a home run, they forget about the singles and doubles.”

5. Chase Real ROI

Farmers are known to slam the checkbook shut when markets head south. You don’t have to adopt every new technology, but pay attention to what works and make decisions that fit a need and have a good ROI.

“Take the Keeton seed firmer,” Klinefelter says. “At $5 corn, there’s a 1,200% return on that product in the first year, and it lasts for three to four years. Getting a finger meter checked can cost $35, but it provides the same return. Don’t be blind to a real opportunity.”

6. Know Your Plan, Adjust Your Plan

Making a plan is important for your business, but it doesn’t mean it shouldn’t be flexible.

“Every plan ought to be a living plan, no matter what it is,” Klinefelter suggests. “You can’t lock in and just go tunnel vision. Some things you need to see to the end, but there are other times you need to step back and say: Okay, is this working or not?”

Your Next Read: Courage And Confidence Lead The Way For This Iowa Farmer

East and Gulf Coast Dockworkers Now on Strike Over Wage Demands, Halting Key U.S. Cargo Shipments

Tue, 01 Oct 2024 12:53:50 GMT

A disruptive strike at ports along the East and Gulf Coasts began today as the International Longshoremen’s Association (ILA) walked out, affecting 14 port authorities and key cargo shipments. The first strike since 1977, it halts the flow of goods ranging from bananas to beef, pork and poultry, to industrial materials, leading to potential shortages and price hikes.

The ILA is demanding a significant 77% wage increase over six years, while the United States Maritime Alliance (USMX) late Monday offered last-ditch effort of a nearly 50% raise over six years, triple employer contributions to employee retirement plans, strengthen health care options, and retain the current contract language around automation and semi-automation. It hoped that offer would lead to resumption of collective bargaining.

The ILA rejected the offer and stated that its wage demands were still not being met. The union said in a statement sent on Monday morning that USMX “continues to block the path toward a settlement on a new Master Contract by refusing ILA’s demands for a fair and decent contract and seems intent on causing a strike at all ports from Maine to Texas.”

The Biden administration is urging both sides to reach an agreement, but federal intervention under the Taft-Hartley Act is unlikely. The Taft-Hartley Act grants a U.S. president the power to suspend a strike for an 80-day “cooling off period” in cases where “national health or safety” are at risk. ILA President Harold Daggett threatened an intentional worker slowdown in moving containers if the Biden administration forces the union workers back to the docks using the Taft-Hartley Act. “You’re better off sitting down and let’s get a contract and let’s move on with this,” he said.

Bargaining for a new six-year contract between dockworkers, represented by the ILA, and shipping companies and operators are represented USMX, started in February 2023. According to a 2020 report by the Waterfront Commission, the regulator that oversees New York Harbor, more than half of the longshoremen based there made $150,000 or more. The ILA is asking for a $5-an-hour raise for each of the six years of the new contract, which means the hourly rate could reach $69 by 2030, a 77% pay increase. The union is also asking for better benefits and opposing the use of automated technologies at ports.

Murky member figure. While the union says there are about 45,000 members covered by the contract, the USMX puts the number of port jobs closer to 25,000, with not enough jobs for all the workers in the union to work every day.

Impacts: For the week ended last Friday, nearly $14 billion in trade arrived at these ports, including New York/New Jersey, Baltimore, Norfolk, Virginia, Savannah, Georgia, Miami, New Orleans and Houston, with $2.7 billion in trade arriving on Friday alone. On average, it takes one week to clear out one day of a port closure. As much as 43% to 49% of total containerized goods entering the U.S are processed through ports on the East Coast and Gulf Coast.

A one-week strike would cost the U.S. economy about $2.1 billion according to an estimate Monday from the Anderson Economic Group (AEG), a Michigan research firm with expertise in estimating the cost of strikes and other disruptions. Most of that would be a $1.5 billion loss in value of some of the goods that wouldn’t be delivered on time, such as perishable goods. Transportation companies, including ship lines and ports, would lose $400 million, while striking workers and those who might be temporarily laid off, would lose $200 million in wages. Losses would start to accelerate the longer the strike continued, said Patrick Anderson, the president of AEG. “A strike lasting longer than a week will begin to impact retailers and manufacturers as supply chain movement grinds to a halt.” But he said estimates of $1 billion a day in losses are exaggerated, especially considering the preparations many shippers had made in advance of the strike deadline. To hit those numbers “you’d have to sink the ships… A strike at the port delays trade, but does not destroy it,” he said.

____________________________________________________________

Your Next Read: Expect Significant Impact on Pork and Beef Industries if East and Gulf Ports Strike

Port Employers Exchange New Contract Offers with Longshore Union in Bid to Avert Strike

Challenges and Strategies for Continuity in Iowa's Agricultural Landscape

Tue, 01 Oct 2024 13:00:01 GMT

The recent Bank Iowa 2024 Ag Index reveals an intriguing dichotomy in the state’s agricultural sector. Despite significant interest from potential buyers driven by soaring land values, Iowa farmers show a strong inclination to retain ownership of their operation. An overwhelming 99 percent of surveyed farmers indicated they have no intention of selling their land within the next couple of years. This sentiment underlines a deep-seated commitment to preserving the agricultural heritage of the state and a preference for continuity over immediate financial gain.

This data, however, presents a stark contrast when considering the future of these farms. While 79 percent of producers plan to keep their farms within the family, half of these operations don’t currently involve family members in farming operations nor have these producers identified a clear successor. This disconnect raises several critical questions about the future of farming in Iowa and underscores the necessity of establishing a more robust continuity strategy.

The Current Landscape

Iowa’s farmland is not just an economic asset but a legacy, entwined with the identities of the families that work the land. The current scenario in which 40 percent of farmers are solicited by buyers annually yet choose to retain ownership exemplifies the inherit value placed on this heritage. However, the value of land and the complexities of modern agriculture demand a strategic approach to farm succession.

The Continuity Conundrum

Farm succession planning is a multifaceted process that involves financial, legal, and emotional considerations. The stark statistic that half of the farmers lack a successor or family involvement in the farm operation signals potential risks. These risks not only threaten the continuity of the family farm but also the economic stability and cultural landscape of Iowa’s agricultural community.

The Emotional Dimension

Succession is not merely a business transition; it’s an emotional journey. For many farmers, the land represents generations of hard work and dedication. The hesitance to employ family members may stem from a desire to shield them from the hardships of farm life or the aspiration for them to pursue other professional opportunities. Nevertheless, this protective instinct can inadvertently complicate the succession process.

Financial and Legal Implications

From a financial perspective, not having a clear succession plan can lead to significant tax burdens, potential legal disputes, and the risk of the farm being sold off in smaller parcels, and possibly to non-farming interests. The complexities of estate planning, coupled with the diverse interests of heirs, can lead to prolonged disputes that undermine the very legacy that farmers seek to preserve.

Building a Continuity Strategy

Developing a continuity strategy is essential. This strategy should be multifaceted:

Engagement of the Next Generation: Introducing family members to farming operations early can instill a sense of ownership and commitment. Educational programs, mentorship, and progressive involvement in decision-making processes are vital steps.
Estate Planning: Legal tools such as trusts, wills, and ownership structures can provide a framework for the transition of assets, minimizing tax impacts, and ensuring the land remains in agriculture.
Financial Planning: Given the capital-intensive nature of farming, financial planning should encompass liquidity considerations for retirement and tax obligations, while ensuring the farm’s operational continuity.
Communication and Mediation: Open family discussions, facilitated by professional mediators, if necessary, can help families align expectations and develop a shared vision for the farm’s future.
Education and Resources: Utilizing resources from not only your bank and lender, but also agricultural extension services, wealth advisors, and succession planning workshops can provide farmers with the knowledge and tools needed for effective transition planning.
Diversification and Innovation: Encouraging innovation and diversification in farming practices can increase the viability of the farm for future generations, making it a more attractive prospect for succession.
Flexible Transition Plans: Succession plans should be flexible, accommodating changing circumstances, and include timelines that provide clarity and direction for all involved parties.

Navigating the Future: The Imperative of Succession Planning in Iowa Agriculture

The data from Bank Iowa’s 2024 Ag Index paints a picture of a sector at a crossroads. Iowa’s farmers demonstrate a commendable commitment to their land and heritage. However, the sustainability of this legacy hinges on the effective execution of continuity strategies. With careful planning and open dialogue, the iconic family farm can continue to be the backbone of Iowa’s agricultural prowess for generations to come.

Ready to take your operation to the next level? Bank Iowa can help. Connect with a lender near you today!

How To Win In Turbulent Times

Mon, 30 Sep 2024 16:00:00 GMT

In today’s challenging economic environment for farmers, consultant and coach Mark Faust sees opportunities for business growth.

“With commodity prices being very low at break-even levels or below, how can farmers continue to move forward?” Faust asks. “Strategic thinking and exploring resource management are keys to improving profits and preparing for growth.”

Identify Your Opportunity
Faust is facilitating a one-day business strategy boot camp on Feb. 17 to kick off the 2025 Top Producer Summit.

This workshop titled, “How to Win in Turbulent Times,” requires a separate registration that can be added during your Top Producer Summit registration online.

“In addition to multiple worksheets and interactive tools, attendees will be able to take away three of their highest profit improving opportunities,” Faust says.

Faust encourages any farm operation to send its management team to this workshop to take their strategic thinking up a level. This in-person session will help attendees think around the curveballs of today’s economic challenges.

The agenda will cover:

Enhancing leadership, team performance and bottom-line results.
Identifying what to delegate, eliminate and automate.
Examples of how to cut costs not people.
Discover where to find and capture improved margins and implement with tools and strategies.
A farmer panel on how to drive performance.

For more information, or to register, visit www.tpsummit.com .

Top Biden Admin. Officials Urge 'Good Faith' Negotiations as Port Strikes Set to Start Next Week

Fri, 27 Sep 2024 19:26:12 GMT

Top Biden administration officials are meeting with the United States Maritime Alliance (USMX) to urge good faith negotiations in the ongoing labor dispute with the International Longshoremen’s Association (ILA).

The meeting includes:
• Transportation Secretary Pete Buttigieg
• Acting Labor Secretary Julie Su
• White House senior economic advisor Lael Brainard

The officials are conveying directly to USMX “that they need to be at the table and negotiating in good faith fairly and quickly.” This message was previously delivered to the ILA earlier in the week.

A potential strike looms at East Coast and Gulf of Mexico ports starting Oct. 1 if no deal is reached. The ILA represents 45,000 dockworkers at 36 ports along the U.S. East Coast and Gulf of Mexico. Negotiations have stalled over wage issues and concerns about automation. The current contract expires on September 30.

The White House is pressing both sides to engage in sincere negotiations promptly.

A strike could significantly disrupt shipping, potentially leading to shortages and increased prices for consumers. By meeting with both parties, the administration is attempting to facilitate a resolution before the deadline to avoid a potentially damaging work stoppage at major U.S. ports.

How a Shutdown Would Impact Agriculture and Energy

The majority of soybean and grain exports from the Gulf or East Coast would not be impacted by the negotiations between the ILA and the USMX.

While bulk grain exports would be largely unaffected, the strike would impact containerized agricultural exports: Soybeans, soybean meal, and other agricultural products exported via containers would be affected.

Specific containerized soybean exports that could be impacted include:

• Norfolk: 1,616,854 metric tons

• New York/New Jersey: 372,110 metric tons

• Baltimore: 324,500 metric tons

• Charleston: 217,892 metric tons

• Other ports with smaller volumes

Indirect effects on grain producers. While grain export facilities may not be directly impacted, there could be indirect effects on grain producers: The strike would significantly impact exports of chilled or frozen meat, eggs, and other livestock products, which are primarily shipped in containers. Any harm to the U.S. livestock industry would indirectly affect soybean and grain farmers, as these industries are interconnected. East and Gulf Coast ports accounted for 44% of U.S. waterborne pork exports and 29% of waterborne beef exports in the first half of this year. New York/New Jersey, Wilmington and Charleston were the largest East/Gulf ports for pork exports and Houston was largest for beef.

Of note: The energy industry could also be affected: Gulf Coast ports are crucial for energy exports, particularly liquefied natural gas (LNG). Any disruptions could impact the flow of energy resources. These industries are particularly vulnerable due to their reliance on timely shipments, just-in-time inventory systems, and the critical nature of their products.

Your Next Read: Farm Bureau Warns of Severe Impact on Agriculture From Potential East Coast, Gulf Port Strike