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December 2004
Factors that Drive Dairy Expansion is
a fact sheet from South Dakota Cooperative Extension Service
(Dec. ’04). The article notes, “consolidation
to fewer but larger dairies has been constant in the U.S.
during the last few decades. The average U.S. dairy herd
size was approximately 15 cows in 1965 and 70 in 2000.” The
fact sheet answers questions such as: What drives producers
to expand or relocate? What difference does size of dairy
make? What part does cost of milk production play? Do larger
dairies produce more milk? Read the complete fact sheet at http://agbiopubs.sdstate.edu/articles/FS925-F.pdf.
Paying Off Pays Off. “Can
your operation or business benefit from discounts?” asks
author Mark Battersby in Landscape Construction (Dec. ’04). “As
a general rule, every professional should always take advantage
of discounts of 1 percent or
more when offered by suppliers that require full payment
within 30 days. If the supplier offers payment terms extending
beyond
30 days, it may be more advantageous to skip the trade discount
and delay payment until the full amount is due. . . . A professional
taking advantage of a trade discount should consider the
early
payment a loan to the supplier. . . . When this supplier
is paid within 10 days instead of waiting the full 30 days,
this
supplier is actually borrowing money from you for 20 days.
The amount of the discount is the interest earned on that
loan to the supplier.”
Hispanic Workforce is “The
Manager” feature in Northeast Dairy Business (Dec.
’04). The section features six articles, including In-depth
look at Hispanics on dairies that details “one of the
largest and most complete surveys of full-time Hispanic employees
on New York dairies.” Another article, Empowered training
improves performance, reports, “Training programs that
show ‘why’ and ‘what if’ can move
Hispanic employees to positions that demand more expertise.”
All six articles are available on the Pro-Dairy website at
http://www.ansci.cornell.edu/prodairy/.
Dairying gets a big lift in more ways
than one thanks to this new barn (Farmshine,
Dec. 3, ’04) details the decision by Shippensburg dairy
farmers Jay and Jeff Grove to build a new free-stall barn
based on the advice of their accountant. “’The
cows didn’t like the old barn; they wouldn’t lay
in the stalls,’ Jay revealed. ‘We had to do something’.
. . . And now, after nearly a year’s worth of use .
. . Production per cow is up. Vet bills are down. Efficiency
is way up. Frustrations are way down. Simply summarized, the
benefits of the new barn outweigh the costs considerably.
But it should be noted that Jay and his brother, Jeff, did
not go ‘overboard’ in their investment. They did
not build a whole new dairy complex, just a new free-stall
barn. In doing so, they kept their 30-year old rotary parlor
and even their over 40-year old free-stall barn. . . . The
old free-stall barn has been remodeled to house dry cows and
springers very comfortably.”
Improve dairy management skills with
online course (Dairy Herd Management, Dec.
’04). “Internet Dairy Herd Management” is
a three-credit course, offered through Wisconsin Indianhead
Technical College- Rice Lake, “for individuals who wish
to pursuer a career in the dairy industry or enhance their
knowledge of dairy menagement. . . . Registration for the
spring semester calss runs through the end of Febraury 2005.
The class will be offred each fall and spring, depending on
demand.” For more information, contact the instructor,
Craig Hamernik, at 717-837-1669, chamerni@witc.edu,
or visit the registration website at
http://e-witc.com/coursesii/classinfo.asp?RID=3383
IRS Raises Rates for Business Mileage
Deductions (Lawn and Landscape online, Dec. 28, ’04).
“Beginning Jan. 1, 2005, the standard mileage rates
for the use of a car (including vans, pickups or panel trucks)
will be: 40.5 cents a mile for all business miles driven,
up from 37.5 cents a mile in 2004; 15 cents a mile when computing
deductible medical or moving expenses, up from 14 cents a
mile in 2004; and 14 cents a mile when giving services to
a charitable organization.” Read the article at http://www.lawnandlandscape.com/News/news.asp?Id=2954.
Tax Break for Farmers in JOBS Act reports
Country Focus (PA Farm Bureau, Dec. ’04). “Now
because of the JOBS Act, farmers who use income averaging
will not be subjected to the AMT (Alternative Minimum Tax).”
Mike Evanish, manager of PA Farm Bureau’s MSC Business
Services, says, “This is going to save some farmers
thousands of dollars in taxes, especially dairy farmers who
had a good year in 2004 compared to prior years.”
The importance of staying in the black!
is the “Business Management” feature in MNLA
News (Minnesota Nursery & Landscape Assn,
Dec. ’04). Author David Stougaard, AgStar Financial
Services, says, “A practical tip is to manage your tax
affairs to always try and report positive net earnings every
year. The objective that some business owners have of managing
their tax affairs to pay minimal Federal income taxes is usually
not a good idea, and in fact can cost you money in the long
run.” Stougaard points out that lenders look for “a
steady stream of positive net earnings” which indicate
the business “should have the ability to pay all their
obligations without dipping into working capital. This reduces
risk in the eyes of the lender. The lower the risk, the lower
the interest rate charged.” He advises, “Work
closely with your professional tax advisor to manage your
net earnings to remain in the black every year, if at all
possible.”
Consider claiming the retirement savers
credit recommends Hoard’s Dairyman
(Dec. ’05). “To calculate the credit, you must
first have contributed to either a traditional or a Roth IRA,
an elective deferral plan such as a SEP, SIMPLE, 401, or other
qualified plan. . . . If you make such a contribution, then
it’s time to fill out Form 8880 to see if you qualify.
Dairy farmers who are married filing jointly can take the
credit as long as their adjusted gross income is less than
$50,000. . . . The credit is a percentage of the qualifying
contribution amount (ranging from 10 to 50 percent) with the
highest rate for the taxpayers with the least income.”
Information is available at the IRS website by clicking
here.
So. . . you’re getting audited
by the IRS is featured in Hoard’s Dairyman
(Dec. ’05). The author interviews an IRS examination
group manager who specializes in audits involving small businesses
with assets less than $10 million. “There are three
basic audit types. Correspondence audits are for minor mistakes.
. . . Office audit requires that you appear on a specific
date and time at an IRS facility with your documentation.
The field audit means the auditor comes to your business or
home. The IRS usually does a field audit only with a complicated
return involving a business. Nearly every dairy farm would
be a field audit.” A sidebar to the article details
“Common mistakes made on tax returns.” Briefly,
for dairy farms these mistakes include: improperly allocating
expenses between the business and the home; not following
the record-keeping requirements to document commodity wage;
and documentation and timing of wages paid to children.
Preserving your wealth means accounting
for everything (The Vegetable Growers News,
Dec. ’04) offers ten strategies for preserving your
wealth. Briefly, the strategies are: prepare a will; use your
estate tax exclusion; title assets to avoid probate; monitor
retirement plan assets; gift away what you don’t need;
keep enough assets liquid to satisfy estate taxes; hold life
insurance in trust; know what you have and where you have
it; choose executors and trustees wisely; and, meet with your
financial consultant.”
Financial tips for farm mortgage loans,
refinancing are offered in on the American Bankers
Association website (http://www.aba.com/Press+Room/062404agtips.htm).
Author Heather McElrath notes, “for most farmers and
ranchers, real estate is their biggest balance sheet asset.”
She recommends, “finance like with like. Your real estate
is a long-term asset. If you use your farm or ranch to get
additional credit, the proceeds from the existing loan should
be used to finance like assets. This can include purchasing
additional real estate, refinancing existing real estate,
making improvements to the land and buildings, or building
a new house. . . . Long-term debt shouldn’t be used
to finance short-term assets such as new equipment.”
Read the complete article at http://www.aba.com/Press+Room/062404agtips.htm.
January 31 is AGR-Lite closing date
(PA Vegetable Growers News, Dec. ’04) Adjusted
Gross Revenue-Lite or AGR-Lite provides protection against
low revenue due to unavoidable causes. Covered farm revenues
include income from almost all crops and agricultural commodities
including animals and animal products such as milk, aquaculture
products grown in a controlled environment, and greenhouse
production. The program is based on the 5-year average of
selected revenue reported on IRS Schedule F 1040 or equivalent
tax forms, therefore minimal additional record keeping is
required. AGR-Lite is available in: Alaska (selected counties),
Connecticut, Delaware, Idaho, Maine, Maryland, Massachusetts,
New Hampshire, New Jersey, New York (selected counties), North
Carolina, Oregon, Pennsylvania (except Philadelphia County),
Rhode Island, Vermont, Washington, and West Virginia. AGR-Lite
insurance polices are available from private crop insurance
agents. Complete information is available at: http://www.rma.usda.gov/pubs/2003/PAN-1667-07.pdf
A listing of agents is at http://www3.rma.usda.gov/tools/agents/companies/
World Dairy Expo invites names for
recognition (Farmshine, Dec. 10, ’04).
Outstanding leasers from across the international dairy industry
are being sought for . . . Industry Person of the Year; Dairyman
of the Year; Dairy Woman of the Year; and International Person
of the Year. Nominations will be accepted through Feb. 1,
2005. Individuals will be honored at the World Dairy Expo,
October 4-8, in Madison, Wisconsin. Complete information available
at http://www.world-dairy-expo.com/nws.display.cfm?RecordID=224.
11 Ways to Reduce Your 2004 Tax
Bite is featured in the online edition of Entrepreneur
magazine (Dec. 2, ’04). Author Jeffrey S. Parker notes,
“It’s not too late to take advantage of some smart
strategies that will help you retain more of your hard-earned
profits.” Read Parker’s eleven tax-reduction strategies
for business owners at http://www.entrepreneur.com/article/0,4621,318867,00.html.
Iowa Producer convicted in water pollution
case reports Dairy Alert from Dairy Herd Management,
(Dec. 15, ’04). “A Farley, Iowa, dairy producer
was found guilty in U.S. District Court in Cedar Rapids of
polluting the Little Maquoketa River. He was convicted on
four counts of knowingly discharging a pollutant without a
permit. He faces a maximum sentence of up to three years in
prison for each of the counts. For more details from WHOTV.com,
follow
this link.”
New Jersey proposes strict manure rules
reports Dairy Alert from Dairy Herd Management,
(Dec. 15, ’04). “New Jersey ag officials have
proposed an incredibly strict three-tiered manure-management
system for livestock producers that should serve as a caution
for livestock producers in all other states. The most severe
criteria are reserved for farms with greater than 30 animal
units. For more details, go to dairyherd.com”
Pennsylvania First State to Export Live
Animals from U.S. Since Last December reports the
PA Department of Agriculture website (Dec. 9, ‘04).
“Agriculture Secretary Dennis Wolff today announced
that Pennsylvania will export the first live cattle shipment
made from the U.S. since bovine spongiform encephalopathy
(BSE), or mad cow disease, was found in a cow in Washington
state last December. In January 2005, some 200 Holstein and
Jersey cattle, predominately from Pennsylvania, will be exported
to Cuba as part of a recent trade agreement. . . . The cattle
will be shipped from the PHA Export Facility in Middletown.
It is estimated that Cuba would import more than $1 billion
in food, animal and other agricultural products in the future.”
Read the complete article at http://www.agriculture.state.pa.us/agriculture/cwp/view.asp?Q=132723&A=390.
USDA Forecasts Ag Imports to Equal Ag
Exports in 2005 (NCFC Updates, Dec 3, ’04).
“The USDA last week released a revised forecast of its
U.S. agricultural sales for FY 2005. Exports are forecast
at $56 billion in FY 2005, down from the record export sales
of $62.3 billion in FY 2004. Of particular note, the forecast
for agricultural imports in FY 2005 is forecast to be $56
billion as well, which would mark the first time in over 40
years that the U.S. has not enjoyed a agricultural trade surplus.
USDA’s full forecast of agricultural exports can be
found on the Economic Research Service’s web site at:
http://www.ers.usda.gov.
Army Corps of Engineers Announces Perchlorate
Study reports the NCFC Update (Dec. 10,
’04). “The Los Angeles Daily News has reported
that the Army Corps of Engineers will soon begin a $100,000
study on perchlorate in drinking water in California’s
Simi Valley. Perchlorate contamination has been linked to
the chemical’s use in rocket fuel, and some studies
indicate that, in very large quantities, perchlorate can affect
thyroid functions. The issue is of special interest to agriculture
because of a study, released last summer, conducted by an
environmental group that found trace amounts of perchlorate
in California milk. The Corps study will hopefully advance
understanding of how perchlorate spreads in groundwater.”
Everybody’s Workin’ for
the Weekend (Superintendent, Dec. ’04)
discusses the new overtime rules that went into effect in
late August. “Billed by the U.S. Department of Labor
as a substantial strengthening of the Fair Labor Standards
Act, the Overtime Security Rule has received mixed reviews
from workers and employers. . . . The U.S. Department of Labor
does have a fairly thorough Web site dedicated to bringing
employers up to speed on the new rules. Learing materials
indlucde online videos, as well as extremely detailed, ownloadable
manuarals. For information, check out www.dol.gov/esa/regs/compliance/whd/fairpay.
Deducting Convention
Expenses appears in TPI Turf News (Nov/Dec
’04) reprinted from Association Management Magazine
(July ’04). The article notes that unreimbursed
registration fees, transportation expenses and lodging are
100 percent deductible. It notes that travel outside the “North
America area” (U.S., Canada, Mexico, U.S. possessions,
and some Caribbean and Pacific islands) is generally not deductible,
and that “conventions held on cruise ships are subject
to their own special, quite restrictive limitations.”
Unreimbursed convention expenses “are deductible only
as miscellaneous itemized deductions and the deduction is
subject to a two percent of adjusted gross income floor.”
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