Farm Horizons, December 2014
What do I need to do this winter?
By Myron Oftedahl, Farm Business Management Instructor, South Central College
Harvest is done, fall tillage is done; what do I do now?
A number of you were probably scrambling to get machinery put away, and all of those things that needed to be done in order to be ready for winter, except that winter came a lot sooner than in the past few years, and came in a hurry. So, what needs to be done?
You are more than likely getting calls or visits from the seed sales people now. Take advantage of the early discounts, but really think your seed order through.
Do I need to buy all of my seed from the new varieties? Can I expect good yields with many of the same varieties as this last year or two? Do I really need all of the traits that are available?
Add to this mix the possibility of being able to add different chemistry to your herbicide program in order to fight the resistance issues, and it may become the toughest decision this year.
It is always important to have a tax estimate done. In order to do an estimate, you will need to have your accounting up to date, and this makes it much easier in December/January to finish your records. This way, you know what to expect in January/February, when you file. Do it early enough, so that you can do some tax management if needed before the year- end.
Many of you still sold grain at fairly high prices in 2014, so expect to defer some income, do pre-payments for 2015, etc. I can’t encourage you enough to do this.
You also need to be aware of a recent Internal Revenue Service ruling which may limit what you can expense for repairs that are over $500. You may need to use your Section 179 exemption, or else depreciate them.
We have a new Farm Bill to deal with. By the time this is printed, the dairy producers will have to have made their decision about the Dairy Margin Protection program the deadline was extended to Friday, Dec. 5.
You will have the opportunity to reallocate the base acres on a farm. So far, this comes into play if you have oat or wheat base acres, or if you have planted any continuous corn.
The other opportunity that we have with this new Farm Bill is to update the base yields. Many of you are still operating under the yields that were set for the 1981 to 1985 Farm Bill. We can update those yields to an average yield for the years 2008 to 2012.
There are some good resources to help make these decisions. It will be important for you to attend one of the information sessions being offered. This Farm Bill gets complex when you start looking at the decisions concerning PLC, ARC-CO, and ARC-IN, and the possibility of Supplemental Crop Insurance Coverage under the PLC program. Are you confused yet? You need to understand this Farm Bill and use the decision aids that are being developed to determine what is best for your operation.
Meetings for the Farm Bill are scheduled in the area:
• Hutchinson Event Center Tuesday, Dec. 16 at 9:30 a.m.
• Arlington Community Center Tuesday, Jan. 6, 2015 at 8:30 p.m.
• Cologne Community Center Tuesday, Jan. 6, 2015 at 9 a.m.
• Litchfield Eagles Club Wednesday, Jan. 14, 2015 at 1 p.m.
I talked earlier about your accounting, and the need to be up-to-date for a tax estimate, but this is also a good time to evaluate your record-keeping. Could you organize it better? Is there some accounting software that would make it easier?
Record-keeping on a computer has a huge advantage at year-end. If you need totals for income and expense categories, just walk over to the computer and print the year-end report. Check it for items that may have gotten entered incorrectly, but otherwise, you are ready to go. Most of the computerized software allows you to print the checks from your data entry, so that you have your accounting done and the check printed in one step. How many checks do you write at home versus at the place of business?
This is a good time to review the year. What repairs need to be done before next spring? Should I update my equipment replacement five-year plan, or do I need to prioritize it differently? It is not always the best management practice to replace machinery in order to avoid taxes. Are the assets in my business being utilized to their full potential?
What are the possibilities for my herbicide program? Look at all of the options before you choose. You may need to use a couple of programs to properly deal with the weed and insect controls that are necessary.
Can I fine tune my fertility program? I just read an article that showed that the data suggests not going over 5 gallons of 10-34-0 when you are placing it with the seed. What are you using? Am I being efficient in my operation? Do I need to make multiple tillage passes?
Another issue that has been making some news in the farming ranks is, who owns the data concerning my farm? The guidelines that have been agreed to by farm groups and ag data technology companies are:
• Farmers own the information that has been generated by their farming operations.
• Farmers should be told how their data will be used, and who has access to it.
• Farmers should be able to opt out of services and have their data returned to them if they choose.
This has been an issue behind the scenes for a few years already, but this is the first time that I have seen any kind of agreement as to how to handle it.
The more data that we generate, the more important this becomes, especially the part of who has access to the data.
Could this become another version of the Department of Transportation checking scale tickets at the elevator, and fining for being overweight? You may want to have this discussion with whomever has access to your yield data, planting dates, refuge acres, acres planted, etc.
So, there is a lot to be done this winter, but even more important is to take some time to enjoy family and friends through all of the holidays. Merry Christmas and have a happy New Year! May 2015 be more enjoyable than 2014 was!
Have a profitable day.