April 2005

Nominations now being accepted for All-American’s Obie Snider Award. For an application and more information, visit http://www.agriculture.state.pa.us/aads/. Completed nomination forms should be mailed to the All-American Dairy Show, Obie Snider Award, 2300 North Cameron Street, Harrisburg, PA 17110-9443. All nominations must received by June 24, 2005.

USDA Extends Comment Period For Animal Identification Strategic Plan. Secretary of Agriculture Mike Johanns has unveiled a strategic plan and timeline for the National
Animal Identification System (NAIS) and called on all interested stakeholders to provide feedback. The draft documents currently available lay out in more detail projected timelines and potential avenues to achieve system milestones. For example, the draft documents propose requiring stakeholders to identify premises and animals according to NAIS standards by January 2008. Requiring full recording of defined animal movements is proposed by January 2009. The complete draft document is available at http://animalid.aphis.usda.gov/nais/about/pdf/NAIS_Draft_Strategic_Plan_42505.pdf. Consideration will be given to comments received on or before July 6, 2005. Send an original and three copies of postal or commercial delivery comments to Docket No. 05-015-1, Regulatory Analysis and Development, PPD, APHIS, Station 3C71, 4700 River Road, Unit 118, Riverdale, MD 20737-1238. If you wish to submit a comment using the Internet, an easy link to the NAIS docket and comment form is available on the NAIS home page at http://www.usda.gov/nais.

What’s Really Driving Our Economy? asks Dr. Mike Walden, North Carolina Cooperative Extension Service, in Country Folks Grower (Apr. ’05). Dr. Walden notes, “world trends economists call ‘structural forces’ ultimately lie behind the economic changes we see. . . . The trends are strong winds sweeping across the economic landscape, winds that will sweep us away if we don’t try to harness them.” He identifies “four big structural forces affecting today’s economy: reduced transportation and communication costs. . . ; increased payoff to higher education; . . . greater competition;. . . and shift to services. Read the complete article at http://www.cals.ncsu.edu/agcomm/writing/newsrls/3-11-05a.htm/.

How Do U.S. Farmers Plan for Retirement? asks Amber Waves online (USDA, April ’05). “In addition to working longer past traditional retirement age, farm operator households tend to have several income sources and different forms of wealth, as compared with the general population. Furthermore, because of the nature of the farm business, farm households have different savings habits and more diverse financial portfolios than most other U.S. households. Farm households’ financial portfolios include more personal savings than those of the typical U.S. household and, in general, farm households are also less dependent on social security income during retirement. . . . While fewer farm operators are covered by employer-sponsored pensions than are nonfarmers, a majority of farm operators save from current income on a regular basis and have accumulated diversified financial portfolios, including individual retirement savings.” Read the complete article at http://www.ers.usda.gov/Amberwaves/April05/Features/FarmRetirement.htm.

A big shift in farm policy lies ahead predicts The Kiplinger Agriculture Letter (Apr. 15, ’05). “Congress will cut farm payments by 2008 as it wrestles with drafting a new farm bill. . . . Growing federal deficits will drive the push to lower payments. The last farm bill was drafted while the budget clung to a small surplus. Soon Congress will make choices between farm benefits and other demands, such as funding for food safety and food stamps. Farm aid will lose out.” Read the complete edition at http://www.kiplinger.com/letters/asample.htm.

USDA Diary Outlook is recapped in Cream O’ the News (PA Assn. of Milk Dealers, Apr. ’05). “USDA predicts U.S. milk production will be 2 percent higher this year than in 2004. The number of heifers is increasing despite the ban on Canadian livestock imports and BST availability is increasing. Milk prices are expected to be lower this year. Although prices the first few months were higher this year, spring prices will be much lower this year and remain below last year’s prices for the second half.”

Market psychology holding prices up is the Market Watch feature in Dairy Herd Management (Apr. ’05). “The milk production trend has turned positive, but a few months of solid showings cannot trump two years’ worth of shortfalls,” says author Phil Plourd, vice president of research with Blimling and Associates, Cottage Grove, Wis. “While it has taken longer than expected for prices to unwind from 2004 highs, we are not certain that dairy’s tendency toward boom-bust cycles has changed.”

Let’s look at the Chicago Merc’s price-setting role says Hoard’s Dairyman (Apr. ’05). “Milk prices forecasting is not a very exact science. . . . The only thing we know for sure is that what happens to cheese and butter prices at the Chicago Mercantile Exchange (CME) is the greatest factor in determining farm milk prices. . . . Since the CME plays such a dominant role in setting their milk price, it is crucial that farmers understand how cash prices come about at the CME as well as what the CME is and, just as importantly, what it is not. . . . The reality is that most sales of butter and cheese do not occur at the CME but in the day-to-day marketplace between buyers and seller who have a long-standing relationship. . . . Some buyers need product immediately or wish to build up inventory to cover future needs but cannot find a general market seller at the existing price. They can go to the CME and obtain product by offering a higher price. . . . Sellers sometimes get nervous about their inventories growing faster than they planned due to increased milk supplies or else they are concerned about future price drops . . . they can go to the CME and offer a lower price. That offer moves the CME price down.”

Transferring to the next generation. Dairy Herd Management (Apr. ’05) indicates a number of articles available at their website “that give you a step-by-step approach to transferring a business from one generation to the next.” Find links to a four-part series on farm transfer at http://dairyherd.com/directories.asp?pgID=724&ed_id=2542&component_id=871 and, “3 ways to cut the tax bite’ at http://dairyherd.com/directories.asp?pgID=724&ed_id=3752&component_id=871.

Rent, Own or Lease: What’s best for your business? (TurfNorth, Apr. ’05). “Leasing instead of purchasing can be a cost-effective option, especially for those companies that don’t have cash on hand but need the equipment. In fact, many operations with cash to invest have found that, by leasing, they can regulate their cash flow more effectively. . . . Obviously, each equipment acquisition option—buying, renting and leasing—have balance sheet and tax considerations. An operation that owns a piece of equipment has the right to take depreciation deductions, for example. If the operation leases, it takes an expense deduction. . . . The Internal Revenue Service frequently challenges leases as disguised purchases, which means you would not be able to deduct your monthly payments. Back taxes, interest and penalties can add considerably to the cost of any equipment acquired in a disguised purchase.”

Conservation Easements Changes in the Wind (Farming, Apr. ’05). “. . . creating and transferring an easement is one of the most mysterious concepts among those who own farm and forestland. . . . Easements come in two forms: private and public. A private easement, usually, but not necessarily, between abutting owners, is a fairly common method to allow others access rights to land. . . . A public easement is one that largely benefits society. . . . Why would anyone knowingly dump half or more of the fair market value of their land by granting an easement that transfers development rights to a local land trust? Love of the land and ensuring that one’s family maintains its connections to the land can only account for some of what inspires those who transfer development rights. Lucrative tax savings on the ‘charitable contribution’ of such easements simply sweeten the deal. . . . Tax advantages of conservation easements . . . are now in jeopardy thanks to a recent report of a Congressional Joint Committee on Taxation. (The Committee) has taken the position that most conservation easements are nothing more than tax loopholes for the wealthy. So, legislators are contemplating limitations on gifts for conservation purposes so that only easements that ‘benefit a specific government conservation program’ will allow donors to deduct 100 percent of the gift’s value. . . . Such changes will most likely have little or no impact on farm and forest owning families whose intentions are to keep productive land intact.”

Make the Numbers Make Sense: How to calculate labor burden (TurfNorth, Apr. ’05). The article stresses the importance of understanding all components of labor burden (FICA, FUTA, SUTA, WCI, GLI, sick pay, paid holidays, vacation, etc.) “The usual range for labor burden in the United States is between 12 to 15 percent for office personnel and 20 to 35 percent for field personnel. . . . Labor burden calculations should be reviewed every four to six months . . . .” A sidebar gives an example of the importance of staying on top of labor burden figures: “A contractor in the Southwest thought he had extra money to spend in the last month of his fiscal year, which was also the last month of the calendar year. . . . . A few months later, he received two bills, for a combined total of over $40,000, for workers' compensation insurance and general liability insurance premiums that were due for the previous year. Although he had charged the correct amount for labor burden on his jobs, he didn't collect and accumulate it throughout the year. Once his insurance company did its annual audit, it determined that his business had almost doubled in the previous 12 months, as had his payroll. Because his insurance premiums were based on a much lower projected payroll amount for the year, he only paid half of what he should have paid. . . . . he spent the money on non-labor burden items, thinking the extra money was additional net profit.” Read the complete article at: http://www.turfmagazine.com/articles/makethenumbers.html

Divorce and the family farm (Dairy Herd Management, Apr. ’05) offers four things to consider once a couple has decided to divorce: Putting the farm property into a trust to protect your children’s inheritance; changing the beneficiaries on all insurance policies to a trust if you don’t want your surviving ex-spouse to have control of the children’s money; taking time to gather all records relating to fair value of the farm assets and each spouse’s share of any retirement accounts; and agreement on monthly living expenses including childcare, healthcare, and education expenses. The article concludes, “As with any financial planning and marital changes, it is imperative to get help from legal and tax professionals who are familiar with the unique circumstances that can arise from the division of marital assets.” Read the article at http://dairyherd.com/directories.asp?pgID=726&ed_id=4314&component_id=873.

New America’s Heartland Public TV Series to Celebrate Agriculture (Voice of Agriculture Newsroom, American Farm Bureau, Apr. 21, ’05) America’s Heartland is a weekly television program that celebrates the miracle of American agriculture and the farm and ranch families that help make it possible. The series, which will premiere the first week of September 2005, will help viewers better understand the nation’s farm and ranch families and the challenges and opportunities they face as they produce food and fiber for Americans and people in other countries. The program is made possible through major underwriting by Monsanto Company in collaboration with the American Farm Bureau Federation. The series will be distributed to each of more than 300 public television stations in America by America’s Public Television, the single largest provider of programming to public television stations. Read the complete news release at http://www.fb.org/news/nr/nr2005/nr0421a.html.

Will a new beverage policy change what Philadelphia high school students drink? Asks an article in Food for Thought (PA Nutrition Education Network, Spring ’05). “The School District of Philadelphia recently implemented one of the most restrictive beverage policies in the nation. This policy offers guidelines for healthful beverages to be sold in schools. Beverage options include 100% fruit juice, low-fat milk (1%) and water. Guidelines for portion size have been established as follows: water portion size is not limited. In grades K-8, all other beverages must be 12 oz. or smaller and in grades 9-12, beverages must be 16 oz. or smaller. Additionally, electrolyte replacement drinks are sold only in high school areas of intense physical activity. . . . Student questionnaire results show that even though a majority of the 468 students responding dislike the new policy, they believe it could affect their beverage choices.”

Marketers must grow before they can grow the farm, by Jane Eckert of Eckert AgriMarketing, appears in Fruit Growers News (April ’05). “Successful farms are realizing that tourism connections can help them grow their businesses. . . . Working together, a group of farms and tourism folks can really make a significant impact on the regional economy. . . . Direct farm marketers now recognize that their real competition is not necessarily their farm neighbors. The competitors are the large retail operations, the amusement parks, and even the video games . . . . As we realize whom we are competing with, we can learn to use some of their tricks – expanding our offerings, setting up unique product displays, offering special activities and coupons and so forth.. . . Your farm visitors no longer look in the newspaper or the phone book to find out when you are open, when the season starts, or how to find the farm. . . . If you haven’t got a Web site, you have customers that are turning to other farms that do.”

Lost a PTO shield? asks Northeast Dairy Business (Apr. ’05). “One-third of tractor-related fatalities are caused by unguarded PTO shafts. . . . The PTO Shield Retrofit Center, through the Northeast Center for Agricultural and Occupational Health in Cooperstown, NY, has replacement kits for a variety of PTO shields. The cost is $50.” More information and ordering instructions are available in a back issue of Penn State’s “Agricultural Safety and Health News” at http://www.age.psu.edu/extension/newsletters/ASHMarchApril99.pdf.

Recession proof your dairy recommends Hoard’s Dairyman (April ’05). Gary Sipiorski, a bank president and agricultural loan officer, writes, “On many dairy operations, the average expense rate is running over 80 percent of gross income. Twenty-five years ago, the expense rate was 50 percent. . . . Today, margins are much tighter, even in good years. You have to be very good at what you do to stay out of a recession on your farm when prices move lower. . . . To have a healthy long-term future in this industry, you must make sure that you remain in the upper 50 percent of the dairy producers in the country. You and your family have to decide how you define a comfortable lifestyle. It is not so much a matter of cow numbers as it is generating a reasonable income for labor, management skills, and a return on your investment. Have a family meeting, and decide what the family needs are for the short-term and long-term. You will then have to estimate the gross income that you will need to achieve this lifestyle. Then you will have to work out a cash flow that allows you a profit margin after the personal draw. . . . Avoid cyclical dairy recessions by knowing your numbers and making business decisions based on them.”

Are PI Counts Back in Fashion? asks Jim Howie, MD&VA Milk Producers Coop. Assn. in Pipeline (April ’05). “Preliminary Incubation (PI) counts . . . has in recent months made a strong comeback and become a priority for both processors and producers. A PI count determines milk’s long-term quality potential which translates into a longer shelf-life. . . . As recently as ten years ago, processors used PI counts to determine milk quality but the practice slowly faded in popularity to other tests like standard plate counts and lab pasteurized counts. Today the industry has renewed focus on improving milk quality and extending shelf-life. . . . Many plants now request PI counts and in some cases require a PI count history before accepting milk.”

New America’s Heartland Public TV Series to Celebrate Agriculture (Voice of Agriculture Newsroom, American Farm Bureau, Apr. 21, ’05) America’s Heartland is a weekly television program that celebrates the miracle of American agriculture and the farm and ranch families that help make it possible. The series, which will premiere the first week of September 2005, will help viewers better understand the nation’s farm and ranch families and the challenges and opportunities they face as they produce food and fiber for Americans and people in other countries. The program is made possible through major underwriting by Monsanto Company in collaboration with the American Farm Bureau Federation. The series will be distributed to each of more than 300 public television stations in America by America’s Public Television, the single largest provider of programming to public television stations. Read the complete news release at http://www.fb.org/news/nr/nr2005/nr0421a.html.

USDA Releases New Food Pyramid. Secretary of Agriculture Mike Johanns has unveiled MyPyramid, a re-vamped food pyramid symbol and an interactive food pyramid system. This web-based system is designed to carry the message of dietary guidelines and promote the health benefits of good nutrition and physical activity. The new MyPyramid site can be found at http://www.mypyramid.gov/.

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