Farm Operations
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Dynamic Live Budgeting – Use it to Prosper!
I see way too many farmers and other business people who treat their annual budget as the necessary evil that the banker requires at year-end to get the loan. A very successful farmer will, rather, treat a budget as a dynamic live tool that will help guide their operation to maximize profits. First, lets review […]
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Watch Your State Disconnect on Tax Depreciation
As we have previously noted in a couple of posts, the Section 179 deduction has been substantially increased for this year and next year to $500,000 and the 50% bonus depreciation has been re-enacted for 2010. However, most if not almost all states do not follow this rule. I know that Oregon does not follow the federal […]
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What’s Your Contribution Margin?
The University of Purdue and other universities do a good job of providing estimated crop costs and return guides for each major crop grown in their area. I decided to take their 2010 Crop Cost and Return Guide and update with three ranges of prices for the five different crop rotations shown. I am using a low, […]
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Remember Your 3 To 1 Ratio!
Now that the USDA has really surprised us with an US corn crop of about 156 bushels per acre, as farmers you need to remember how this will correlate to your planting intentions for this year and next. Since we can assume at current prices, corn, bean and wheat will be profitable next year, the […]
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A Battle for Acres
It will be interesting to see which crop wins the battle for acres in 2011. Right now, wheat, corn, beans and cotton are all enjoying much higher prices than last year. The University of Purdue has calculated that the following returns above variable costs on high quality land are as follows: Corn – $447, Beans […]
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New Tax Goodies
The Small Business Jobs Act of 2010 was just recently passed by both the House and Senate and President Obama will sign it when he gets back from China. This Act has several tax “goodies” for farmers and it also has some not so good “goodies”. A recap is as follows: Section 179 Expensing – […]
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Begin to Lock in 2011 and 2012 profits?
As corn starts to exceed $5 in price and pricing can be locked in 2011 or even 2012 crops, have you checked your budgets for those years. If you have and are able to lock in your major input prices such as fertilizer and diesel, you should be looking at making $250 per acre or […]
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Verasun Bankruptcy – Check Your Preference Payments
Whenever a farmer sells a crop to a purchaser of their product, they always need to be aware of what happens if that purchaser goes bankrupt. Any payments that the farmer receives within 90 days of bankruptcy can be considered preference payments and the farmer may have to pay some or all of these payments […]
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Wheat Basis Has Widened by up to 44%
Kansas State University provides a very good map of basis for most of the major crops over most of a five state region comprising all of Kansas, Nebraska, Oklahoma and parts of Texas and Colorado. These maps on a weekly basis show what the current basis is and how it compares to the three year […]
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Hedge is Good – Speculation is Bad
Many more farmers are using futures contracts to hedge their crops these days than 20 or 30 years ago. Hedging income and losses are treated as ordinary income or loss as part of the farming operation. What many farmers do not know is that if they are using futures to speculate in other commodities or […]