Strangeness in New Tax Law for Farmers

The interesting thing about the new tax law that got rammed through is that no one really seems to have known what was in it, not even the people who wrote it. This law was literally written in secret, behind closed doors, with only a very few people being allowed to know what was actually in it. Special clauses were inserted for no other reason than to get support from members of congress who threatened to vote against it. And often the people writing it had no idea what they were actually putting into the law. Except for a few high profile items and talking points, none of it was allowed to be made public until it came to the floor for a vote. And finally it was passed in such a rush that the people voting on it didn’t know what they were actually voting for or against.

Apparently even the people who actually had specific items inserted into the law didn’t know what the clauses that they themselves had put in would actually do. Part of the new law, IRC Section 199A that applies to earned income from pass through business activities is one of the items that even it’s authors didn’t really understand.  And one section of the 199A deduction could have a huge impact on farmers and how they sell the commodities they produce. I ran across this over at WallacesFarmer and it gives a brief rundown on how it works. But if you don’t have time to go read it yourself, here is how it would work.

The law includes a deduction for income from cooperatives for members of co-ops that is calculated differently from other sources of income. Basically income derived from selling your crops to a co-op you belong to is treated entirely differently from income from selling your products to a non-co-op.

The whole thing is a bit complex. What it essentially does for farmers is that in certain situations it carves out a huge deduction for selling your commodities to your co-op instead of to a commercial grain dealer. In the example they give in the article over at Wallaces, a farmer who sells his grain to a non-co-op business like an ethanol facility and ends up with a $50K profit, will end up owing about $4K in taxes on the profits from the sale.

If he sells it to a co-op, however, the farmer will end up owing zero taxes on the net income from the sale.

The really scary part is that the senators who inserted this into the tax bill, apparently had absolutely no idea this would be the result of the clauses they put into it. Two senators, Hoeven of ND and Thune of SD seem to have been largely responsible for shoving this into the bill just hours before it passed, and both claim that they did not intend to favor co-ops over any other business, despite the fact that is exactly what this does.

And this is just one clause in a law that is hundreds of pages long. No one knows yet what kind of traps, loopholes, give aways or other little surprises are lurking in this thing, and it could be months before we really know. And you can be sure that a lot of this is going to end up going through the courts before it all gets settled.

 

Farm Catch Up

I haven’t done one of these in a while, so let’s take a look at what’s been going on in agriculture. And since this is January 2018, maybe take a peek at the crystal ball (I actually use an old tennis ball because, well, have you seen what a good crystal ball costs these days?) and see what might be going on in the upcoming year.


Dicamba has been in the news again. This time the Arkansas state legislature has weighed in on the issue. It’s legislative council has approved the Arkansas plant board’s ban on the use of Dicamba from April 16 to Oct. 31. The board put the ban in place after receiving almost 1,000 complaints of Monsanto’s new “no-drift” blend of the herbicide doing exactly that, drifting, and damaging thousands of acres of crops in the state. The company has released the hounds lawyers, is filing for court orders, is threatening to sue everyone in sight, has launched attacks against at least one individual member of the plant board, and it’s getting nasty real fast.

Meanwhile other big soybean growing states have instituted new, much stricter controls on the use of the new herbicide after hundreds of thousands of acres of crops were allegedly damaged by the new blends. Even the feds have gotten into the act, instituting stricter rules and usage regulations about using the stuff.

Monsanto and it’s partners that are selling these blends claim that the drifting isn’t their fault, and that it’s the farmers and people performing the applications that are to blame. The clam is that they’re using the wrong equipment, spraying at the wrong time, at the wrong temperature, and even using not Monsanto’s patented product, but straight dicamba that they’re purchasing elsewhere that volatilizes much more easily. But in order for this much damage to be caused that way, a huge number of farmers and applicators would have to be breaking the law, and I don’t believe that. Commercial applicators won’t risk it. They could lose their licenses, get huge fines, be sued, basically be put out of business if they didn’t apply these products in the proper way. And farmers who apply these products themselves would face similar penalties.


A2 Milk – I don’t recall now if I’ve talked about so-called “A2” milk before, but if you haven’t heard of it yet, you will in the near future. I suggest you go read the Wikipedia article on it which goes into extreme detail, and which has a plot like a soap opera, complete with bankruptcies, threats, untimely deaths, utterly ridiculous health claims including that it cured diabetes, cancer, etc., bogus marketing scams and I don’t know what all else before it finally became “legit”. I just re-read it and– oh brother, it’s a mess. The thing you want to remember about A2 milk is that it is, well, milk. The only difference is that the casein in the milk has a slightly different chemical makeup than A1 type milk. Nor is A2 milk entirely free of the A1 type of casein. Despite all of the hype, it is still just milk, and there seems to be no real basis in fact for any of the health claims being made for it. If you want to drink it, fine. But for heaven’s sake, don’t pay more for it than you’d pay for regular milk because it doesn’t cost any more to produce the stuff than it costs to produce A1 milk.


Dairy – There doesn’t seem to be much good news for the dairy industry for 2018. Thanks to continued overproduction and a projected increase in production during 2018 of 3% or more, milk prices look like they’re going to be heading down, with some people predicting the price could drop to $13/CWT or even lower. A dairy economist over at UW Madison thinks prices could climb as high as $16 in the second half of the year, but he seems to believe that production and demand are going to start to balance out, and frankly there doesn’t seem to be any real reason to believe that.

Some people think China is going to dramatically increase imports of milk products, but there’s no real reason to believe that, either. China has had a moderate increase in imports, but not to the point where it is having much effect on milk prices.

Don’t look to NAFTA for any help, either. If anything, the NAFTA negotiations are doing little more than making Mexico and Canada increasingly irritated. But more about that lower down on the page.

About the only good thing that’s happened in the dairy industry is that cattle feed prices have remained fairly low. But while that’s good news for dairy, it’s bad news for grain farmers.


Corn – Corn prices don’t look like they’re going to get much better either. Despite predictions that farmers are going to be planting less acreage in corn in 2018, the amount of grain actually produced isn’t going to be shrinking much because of improvements in yield, and as a result the price of corn on the commodities market has remained at or near the $3.50 level, where it’s been for months now. Demand for corn appears to be relatively flat.

As is the case with milk, there is hope that China will start to ramp up imports of corn, but there seems to be no real proof that is going to happen any time soon. The biggest buyer of US corn used to be Mexico. In 2017 Mexico curtailed it’s purchases of US corn, and has been talking to sellers in Brazil and Argentina. Increased sales to Japan has made up for some of that loss, but the way things are going in the political arena, don’t look for any improvement in grain exports any time soon.


NAFTA – The trade agreement that administration officials were claiming would be done in just two or three weeks back in mid summer of ’17, wasn’t, of course. Negotiations are still going on, and despite public statements by the administration indicating things are going just fine, they aren’t. Behind the scenes reports from the proverbial “unnamed source” indicate that things are definitely not going well. And when one considers that the ruling party in DC can’t even negotiate with it’s own members to keep the government funded and has to depend on the opposition to get enough votes to keep government offices open, that shouldn’t be surprising.

The question isn’t when a new NAFTA will be negotiated, the question should be is there going to be any kind of NAFTA at all. Right now I’d say that the chances of NAFTA being successfully renegotiated are around 50/50.

Amaryllis

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I keep mine in a south facing window with a lot of other plants, and it’s been doing quite well there as you can see.

You have to love amaryllis. Those huge, brilliantly colored flowers are amazing. And the fact that this is the time of year when you most often see them in homes and shops when it’s so cold and bleak looking outside makes them all the more spectacular. MrsGF got me this one one for Christmas and it’s just come into full flower and it is spectacular. And they aren’t expensive, either. I saw them at Walmart selling for about $7.

A lot of people throw them away when they’re done blooming because they’re usually fairly inexpensive to buy and people think they’re hard to get to bloom again, but they aren’t difficult to get to flower again. It does take a bit of work but it isn’t hard to do. So if someone gave you one of these or you bought one yourself, here’s how to care for it so it will bloom again next year.

Once the flowers have wilted, cut the flowers from the flower stalk. When the flower stalk wilts, cut it off at the top of the bulb but leave the leaves alone.

The leaves will continue to be green and growing for about another six months. Then they will begin to yellow and die back naturally, usually in the fall of the year. When this happens, cut the leaves off about 2 inches above the top of the bulb. Remove the bulb from the potting soil.

Clean loose dirt from the bulb, but be careful not to scar or scratch the bulb itself if possible. It now needs to be kept in a cool, dark place. Like a lot of bulbs, it needs to go through a lengthy dormant period before it will regrow. Don’t wrap it in plastic or put it in something like a ziplock bag or a sealed plastic container or trapped moisture could cause it to mold. You can wrap it loosely in something like parchment paper or newspaper. The ideal temperature for storing the bulbs is around 40 – 50 degrees (F), so if you have an older house with a cool basement like we do, that’s a good place to put it. I’ve heard of people keeping them in the vegetable crisper in their refrigerators with good results as well.

Oh, I should add that you should never store the bulbs near apples. I’ve been told that apples give off a gas that can sterilize the bulbs.

The bulb needs to be kept in in storage for at least 6 weeks. You can keep them like this for longer. When you take the bulb out of storage depends on when you want it to flower. You want to plant it about 8 weeks before you want it to flower.

When you’re ready to plant it, get out a pot at least two or three inches larger in diameter than the bulb, and several inches taller. Use a good quality potting compost soil mix. You can make your own but the commercial versions work quite well and have the advantage of being pre-sterilized and have nutrients added so you may not have to fertilize. Put an inch or two of soil in the bottom of the pot. Exactly how much depends on the height of your pot. You want the neck of the bulb to be just above the level of the soil. Push the soil down around the bulb just tightly enough so there aren’t any air pockets, but not so tightly that the soil can’t absorb water.

Put the bulb in a window where it will get direct sunlight. Mine is sitting in front of a south facing window. Ideally it should be a fairly warm location. They like temperatures around 65 – 75 degrees, but will still grow fairly well if it’s a bit cooler than that.

Water lightly until the leaves begin to form. Once the flower stalk begins to emerge, increase the amount of water a bit. Some growers will tell you to fertilize as well, but I’ve never done that. If you use a fresh, commercial potting compost mix when you plant it, it should have enough nutrients. But if it looks like it’s not growing as quickly as you think it should, you can add a bit of something like Miracle Grow to the water once a week or so.

The bulb should start to flower about eight or nine weeks after planting. Exactly when depends on temperature, sunlight, etc.

So if someone gave you one of these or you bought one and the flowers are beginning to wilt, yes, you can keep them and get them to flower again next year with a little patience and very little work.

It’s Gardening Time! Sort Of

Screen Shot 2018-01-13 at 7.02.24 AMOkay, so it’s the middle of January and it’s 12 degrees out so it isn’t really time to go out gardening, but this time of year I start to get that ache that every gardener gets in the middle of winter, that need to go grub around in the dirt and mess around with plants. The handful of house plants we have is better than nothing, but it just isn’t the same.

But this is, believe it or not, a good time of year to start the garden season. It’s never too DSCF1860early to start planning, making lists of things that need to be done, and beginning to get things you may need when the weather finally does cooperate.

It could be an interesting season here. We’re thinking of adding a new raised bed back in the low part of the backyard by building a stone retaining wall. The iris bed is way too low, the irises need to be dug out and broken up anyway, and that area is so low I’m amazed that anything grows back there anyway. We’re also thinking of adding another bed, this one not raised, on the south side of the house/garage. If we do all of this, and that’s still up in the air at this point, it will be a fairly ambitious project and could be a lot of fun.

We were thinking of doing this anyway, but what really lit a fire under us was that Eldest Son showed up at Christmas with an entire grocery bag full of seed packets. Seriously. He works at the corporate offices of a large discount retailer, and they occasionally run special deals for employees where they can get merchandise that is being dropped, out of season, etc. for literally pennies on the dollar. And they were getting rid of all of their seeds from the previous summer. So he got one or two packets of everything. Literally. He got one or two packets of every single type of seed they sold in their garden centers. We have something like 120+ different varieties of seed to play with this spring.

So Mrs. GF and I are looking forward to  having a lot of fun this spring, needless to say. Oh, there’s going to be a lot we aren’t going to be able to use. At least not right away. And probably we’ll never use quite a bit of it, but we’re going to have a lot of fun figuring out what we want to plant because no matter what we want to put in this coming spring, we probably have it already.

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Strange Weather and Stuff

Screen Shot 2018-01-12 at 4.48.41 AMThe weather has been a bit odd of late. Over the holiday season and for a few days after, it was bitterly cold, with temperatures down in the -20 range. Then we got a warming trend and it was up to 57 here yesterday. This morning at 4:30 when I got up it was 15 degrees. So yeah, the weather has been strange.

We’ve had wild temperature swings like this before, but it’s pretty rare. It usually doesn’t get that cold, that early in the season. We generally don’t see long stretches of frigid temperatures like that until mid-January, not before Christmas. And we usually don’t see a mid-winter thaw like this until, well, mid-winter.

It will be interesting to see what the rest of the season is like. As of right now the predictions are we’re going back to more typical temperatures in the low teens, with a chance for heavy snow on Monday.

So, why am I up at 4:30 in the morning… Can’t sleep again. It’s more than a little frustrating. I don’t know if it’s age, the medication I’m on or what, but for some time now I’ve been going through bouts of insomnia. I’ll sleep for about four hours, then wake up and can’t get back to sleep again.

There doesn’t seem to be any kind of relationship between the insomnia and any kind of specific behavior or medication or food or anything like that. And it doesn’t happen every night. But it happens often enough that it is very, very annoying, maybe twice a week. It isn’t like I have to worry about going to a job or driving when I’m tired. Being retired does have it’s advantages. But even so, trying to run on about 4 or 5 hours of sleep is a pain in the neck.

Agrimoney – Commodities – Will corn prices rise in 2018 – for the first time in six years?

… or will production again exceed expectations, extending the run of price declines? In the first of a series of ag price outlooks, leading commentators give their views

Source: Agrimoney – Commodities – Will corn prices rise in 2018 – for the first time in six years?

As is common this time of year, the experts are trotting out their opinions about what’s going to happen in the upcoming year in the agriculture sector. And as for that question up there in the headline, the answer is no.

The only analyst who seems at all optimistic is McGlone from Bloomberg, and his comments are a bit, well, odd, frankly. McGlone’s comments seem to be made by someone who hasn’t read a market report recently. He thinks ethanol demand is going to hugely increase, China is going to import US ethanol at a high level, and that is going to drive prices up. And none of that is really true. There is no huge increase in demand for US ethanol from China, ethanol use in the US has flatlined. And the “robust” global demand for corn he talks about? If that “robust demand” actually existed we wouldn’t be seeing record levels of corn sitting in storage.

As for the rest of the sources quoted in the summery, none of them are very optimistic about corn prices. Rabobank seems to think corn will reach $4 or better, but it’s basing that on are, I think, some pretty sloppy speculations about decreases in corn acreage.

Most of the others don’t see corn prices going up any time soon. Unless some kind of major disruption occurs like a severe weather event like a widespread drought, corn prices aren’t going to be moving up and may even move down a bit.

I was tempted to add in a bit about the whole ethanol industry here at the end, but I think I’ll leave that for an upcoming article. I’ll leave you with this thought, though. The entire ethanol industry is going to utterly crash and burn within the next twenty years or so, so I wouldn’t invest your 401(K) funds in it if I were you.

 

Thousands of heart patients get stents that may do more harm than good – Vox

Stents are commonly used for stable chest pain — but the devices may not be helping.

Source: Thousands of heart patients get stents that may do more harm than good – Vox

Placing stents in arteries has become one of the most common treatments for chest pain in use today. I must know a dozen or more people who’ve had it done in the last few years. And it seems they don’t actually work.

We’ve known for about ten years now that stents do not reduce the risk of death from heart disease. Patients treated with stents have the same mortality rate and risk of heart attack as did patients treated with more conservative and less invasive treatments. So stents do little or nothing to prevent heart attacks or extending the life expectancy of the patient.

Stents are still in use to treat stable angina patients as a method of reducing pain. And this Lancet study indicates that they don’t work for that either. By the end of the study they found that there were no clinically important differences between those treated with stents, and those treated with a sham procedure that actually did nothing.

Putting a stent in someone is not a risk free procedure, either. About one out of fifty will have serious complications such as stroke, heart attack, and even death.

Stents aren’t the only treatment in widespread use that seems to do little or nothing to actually help the patient. The Milwaukee Journal ran a series a while back looking at drugs used to treat cancer that were approved in the last ten or twenty years, and found a very troubling trend. While some of the drugs did slow the growth of tumors, in the long run they did nothing to extend the life of the patient, did nothing to improve the patient’s quality of life, and in many cases caused very serious side effects.