ASFMRA AgNews - Vol. 12 Issue XLVIII [ November 28, 2017]

By ASFMRA Press posted 19 days ago


Farmers Who Gain From Tax Bill Wary of Losing Subsidies Later

(Bloomberg) -- Farm lobbyists are warily watching the tax-overhaul legislation moving through Congress, which comes with some favorable terms for them now but may have a big catch later: Less money for farm programs crucial to producers dealing with lower commodity prices.

The farm groups are looking beyond the tax debate to a new farm law due in 2018 that could get squeezed if a bigger deficit caused by tax cuts makes less money available for farmers.

Multiple independent analyses of the Republican tax plan anticipate it would boost the federal budget deficit by as much as $1.5 trillion over 10 years. A Congressional Budget Office report released last week concluded that it would trigger automatic spending cuts of as much as $136 billion in the current fiscal year. One of the programs at risk in that scenario is $9.5 billion in farm subsidies, according to the National Farmers Union, the second-biggest U.S. farmer group.

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Three USDA Reports This Week Will Frame the Ag Sector Outlook

In back-to-back-to-back reports, USDA economists will paint a numerical picture of the U.S. farm sector this week, with estimates of farm income, ag exports, and the output, demand, and prices for 2018 crops. Most likely, they will add up to large crops, comparatively low grain prices, and constrained income heading into the fifth year since the collapse of the commodity boom.

Farmers are expected to plant more corn and wheat while trimming back on soybeans and cotton in 2018, with little overall change in total plantings of the four major U.S. crops despite lackluster prices, according to analysts and an early survey of grower intentions. Farmers sowed a record 90.2 million acres of soybeans this year, nearly matching corn’s 90.4 million acres, and resulting in the largest soybean supply in a decade. Corn, wheat, and soybeans have myriad food, feed, and industrial uses, are the foundation of the U.S. food supply and carry an attenuated impact on food prices.

On Tuesday, the USDA is scheduled to release its projections of production, consumption, and prices for major U.S. crops and livestock from 2018 through 2027. The projections assume normal weather and yields with no change in U.S. farm policy. The USDA says they are “a conditional long-run scenario” and are not estimates. All the same, traders regard the material as an early look into USDA’s thinking about 2018 crops, even if the medium- or long-term outlook is conjectural.

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Opinion: How The Tax Code Can Help Farmers & Ranchers Transition Land to the Next Generation

American agriculture is speeding toward a crisis of continuity—much of our nation’s farmland will soon need a new farmer. Farmers and non-operating landowners aged 65 and older own 41 percent of farmland and ranchland in the U.S. Over the next two decades, these aging landowners will face tough choices over how and to whom to transfer the 370 million acres of agricultural land they own. Federal tax policy can make these choices easier by easing the tax burden on landowners who want to sell their land to a young or beginning farmer.

While Congress remains focused on repealing the estate tax or increasing its exemption, we believe a more impactful tax code change would be to reduce the 20 percent capital gains tax on the sale of farmland.

Capital gains taxes discourage landowners from selling agricultural land during their lifetimes, especially land that has appreciated over several decades. Those who can find a way to hold on to their land until death do so, since it allows both them and their heirs (through stepped-up basis) to avoid capital gains. For those with little choice but to sell—landowners with no heirs, or whose land represents their primary retirement asset—the 20 percent federal capital gains tax takes a significant bite out of their sales proceeds, leaving less for family and retirement needs.

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House and Senate Tax Bills Far From Enacted, but Ag Operators Should be Aware of Ramifications

As tax reform bills move through both houses of Congress, farmers and ranchers would be wise to pay attention to proposals that could affect their tax obligations as early as next year.

That’s assuming that either a Republican House bill or a Republican Senate bill can garner enough votes from entrenched Democrats or even hardline budget hawks in their own party to get to a conference committee.

The House and Senate bills are “more similar than I expected,” says Tiffany Lashmet, Texas AgriLife Extension law specialist at Amarillo. But no one expects either to move through various committees without tweaks, at least, or possibly even major overhauls.

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Fifth Round of NAFTA Talks Opens Without Primary Trade Ministers in Attendance

The fifth round of NAFTA talks between the United States, Mexico and Canada unofficially opened on Wednesday, two days before today’s official opening (Friday, Nov. 17), to give negotiators a chance to discuss technical issues prior to opening discussions over trade issues to be covered during the five day meeting.

Missing from the fifth round of talks are the primary trade ministers from all three members of the trilateral agreement. According to a news release last week, Canadian Foreign Affairs Minister Chrystia Freeland, U.S. Trade Representative Robert Lighthizer, and Mexican Secretary of the Economy Ildefonso Guajardo Villarreal indicated they do not see the need to meet in person for this round of talks since they held bilateral discussions on the sidelines of the APEC summit last week in Vietnam.

According to Canada's CBC News, "chief negotiators from Mexico, the United States and Canada will be in constant communication with their respective ministers and will report on the progress reached in Round 5."

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Generation Z Expresses Different Attitudes Toward Ag, Farm Succession

Members of Generation Z (young men and women aged 18 to 22) with strong ties to agriculture exhibit significantly different attitudes toward government involvement in agriculture, farm succession, ag technology, and brand loyalty than do previous generations, including Baby Boomers and Generations X and Y (representing an age range of 28 to 74).

Generation Z members, for instance, have a more positive attitude toward government involvement, less brand loyalty, and more interest in technology, but are much less likely to choose farming as an occupation.

These findings come from an Osborn Barr study, “Farmers of Tomorrow: Generation Z’s Future in Agriculture,” that included a survey to assess attitudes expressed by the four representative demographics.

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U.S. Ag Exports soar to 3rd Highest Level on Record

U.S. agricultural exports reached the third-highest level on record in 2017, according to information released Nov. 16, 2017, by Agriculture Secretary Sonny Perdue.

U.S. agricultural exports totaled $140.5 billion in fiscal year 2017, climbing nearly $10.9 billion from the previous year, Perdue said. The U.S. agricultural sector posted an annual trade surplus, which reached $21.3 billion, up almost 30% from last year’s $16.6 billion. U.S. agriculture has had a trade surplus for more than 50 years.

“U.S. agriculture depends on trade. It is great to see an increase in exports and we hope to open additional markets to build on this success,” Perdue said. “I’m a grow-it-and-sell-it kind of guy. If American agricultural producers keep growing it, USDA will keep helping to sell it around the world.”

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Bankers Gearing Up for Difficult Conversations

MILWAUKEE (DTN) — The general mood at the National Agricultural Bankers Conference was still upbeat, thanks to stable farm land values, low interest rates and better livestock prices. But the more than 700 bankers from 37 states and Canada at last week’s meeting conceded that three to four years of low crop and dairy prices have some producers skating on thin ice.

Dave Kohl, professor emeritus of ag economics at Virginia Tech, estimates bankers will be scrutinizing the bottom 30% of producers who are barely making a profit. At the same time, Kohl advised bankers not to forget about the top 40% of producers who are still making money and are positioned for opportunities. The middle 30% will be looking for bridge loans to get them through this continuing downturn.

Kohl, who has been advising agricultural bankers for more than 40 years, admonished the bankers to not bridge farmers and ranchers who would be better off getting out of the business now while they still have equity. “If you keep walking them further to the end of the pier, the water is getting deeper. You’re not doing them any favors,” said Kohl.

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Ag-at-Large: California Wine Production Exceeds Records

Researchers have found that California’s dynamic wine production industry has likely been underreported by as much as 14-20 percent for years, and they suggest an improved method to calculate crush prices.

They report that the discrepancy has occurred because the state’s 17 crush districts use different reporting methods, especially in the share of grapes crushed for in-house wine making. It’s probably larger than most expect.

The findings, which can have a significant impact on the economic aspects of the state’s wine industry, were reported by Olena Sambucci and Julian Alston in the September-October issue of ARE Update, published by the Giannini Foundation of Agricultural Economics at the University of California (UC).

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Congratulations to Student Member Grant Suddarth for winning the University of Nebraska's New Venture Competition

Student Entrepreneurs Win $67,500 in New Venture Competition

Student entrepreneurs from across the University of Nebraska–Lincoln faced-off in the Center for Entrepreneurship New Venture Competition March 27-28 at the Nebraska Union. Students earned $67,500 in prize money, including a $50,000 grand prize. Reminiscent of the NCAA basketball March Madness tournament, teams competed in a bracket format and advanced through two preliminary rounds. After elimination rounds, four teams competed head-to-head in the finals.

Dr. Sam Nelson, director of the Center for Entrepreneurship and assistant professor of practice in management, stressed student improvement occurred this year by increasing the number of smaller competitions leading up to the New Venture Competition. He believes the prep time groups undertook consulting with Center for Entrepreneurship staff also showed.

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AARO Call for Presentations

Call For Presentations on Proposals:

We are looking for skilled presenters who can address issues and topics of interest to the appraiser
regulatory officials that gather at AARO conferences. All proposed topics will be considered, but
attendees at our most recent conferences expressed an interest in the following topics:

  • Public Records Keeping & Ethics
  • Education Providers– What I Wish Regulators Knew
  • A Day in the Life of… (Board Attorney, Executive Director, AMC Compliance Officer, etc.)
  • Legislative Language– what has held up to scrutiny, what has created enforcement issues
  • Actual Board Cases– unusual violations, actual disciplinary results
  • Best Practices for State Agencies, Administrators, Staff, Attorneys or Board Members
  • USPAP for non‐appraisers– how to get up to speed quickly
  • Cyber Security and Data Analytics
  • Possible Effects on Regulators– increased de minimis level & Trend towards fastest turn time/lowest fee
  • ASC Audits—Top 10 List of Concerns/Findings at Recent Audits
  • Other Topics That You Feel Would Interest Appraiser Regulators
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