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Volume 8, Number 12 - Decemeber 2002

This Month in Ag Connection

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Intellicoat Technology

One new technology available for 2003 is the Intellicoat Early Plant Coating. In 2002, Intellicoat was used on over 500 farms (nearly 15,000 acres) across the country. With the weather problems that are commonly experienced in the spring, this technology offers increased planting flexibility. This technology promises to expand the planting window two to four weeks for corn.

Intellicoat is a polymer made from natural fatty acids that restricts water absorption in cool temperatures. The Intellimer polymers, used in Intellicoat, undergo a drastic change in properties at the switch temperature (55 degrees F for corn) by going from impermeable to highly permeable. At temperatures below the switch temperature, the polymer structure is "closely packed" and impermeable. Above the switch temperature the polymer is flexible, its structure "loosely packed" and highly permeable. The coating can change an infinite number of times between impermeable and permeable as the temperature moves up and down across the pre-set temperature.

Intellicoat lets seed start germinating when soil temperatures reach 55 degrees F. If the soil cools down, the coating reverses and germination halts until temperatures warm up again. The coating also protects the seed from damage that occurs when the seed is left setting for days in cold, wet soils. In side-by-side tests with early planted seed corn, the Intellicoat seeds have resulted in more uniform emergence and higher stand counts according to Tom Crowley of Landec, developer of Intellicoat. The estimated cost of this technology is $11 per acre. While this article is geared toward corn, the polymer treatments will be available for other crops and applications like chemicals.

(Author: Wayne Crook, Agronomy Specialist)

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Crop Performance Trials

The 2002 Crop Performance Trial information for wheat, corn, soybean, and grain sorghum can be obtained by clicking here.

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Farmland Rental to a Related-Party Entity

Barn and contract

Until the mid-1990's, cash rent from farmland was always considered passive income, even if rented to an entity owned or controlled by the landlord/taxpayer. As long as there was not material participation by the landlord, the rental income was not subject to self-employment tax.

Since the mid-1990's, the IRS has been challenging the "passive characteristic" of farmland rental when the land is rented to a related entity or an entity in which the landowner materially participates in the operation of the farm. The IRS argues that an "arrangement" exists between the landowner and the related entity. Given an "arrangement" between the related entities, the IRS is attempting to impose self-employment tax on the rental income.

In 2000, the Eighth Circuit Court (Missouri is in this Circuit) stated its position that lessor-lessee arrangements should stand on their own, apart from any employment relationship or "arrangement". It further indicated that if the rentals were consistent with going rental rates for agricultural land, the rents were not derived under an "arrangement" and, therefore, self-employment tax was not due. The Eighth Circuit remanded the McNamara case, the case in question, back to the Tax Court and gave the IRS the opportunity to show a connection between rents and the "arrangement".

The IRS did not make a connection and on July 15, 2002, the Tax Court rendered its remand opinion holding the rental arrangements reflected fair market rental and that no self-employment tax would be imposed.

(Author: Parman R. Green, Ag. Business Mgmt. Specialist)

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Conservation Security Program


The new Conservation Security Program (CSP) could give farmers an additional incentive for operating with resource conservation in mind. CSP offers alternate strategies to complement the Environmental Quality Incentives Program and set-aside Conservation Reserve Program (CRP). A total of $17 million is earmarked for conservation incentives through 2007. Details are not finalized at this time.

The proposed program would offer financial incentives for adopting and or maintaining a wide range of management, vegetative and land-based structural practices that addresses one or more "resources of concern". The resources included would be soil, water, air and wildlife habitat. The contracts would be from five to 10 years, with maximum payments of up to $45,000 annually. It is expected there will be more applications filed than dollars available.

Contact your local Natural Resources Conservation Service (NRCS) for details on the program, specific conservation practices and developing your plan. Addressing multiple resource concerns within your plan will increase your chances of having an application accepted and may increase the level of payments. High on the list of acceptable programs will be systems and practices like contour buffers, terraces, waterways, strip-till/no-till, cover crops/grazing management, nutrient management plans and use of Round-Up Ready crops that encourage no-till. Each state will have somewhat different rules. Some states will give counties further discretion in administration of the program.

The CSP shows the greatest potential where farmers want to keep land in production while addressing resource conservation. It appears that CSP will be an excellent incentive for promoting conservation tillage and soil nutrient management. The government payments may help justify certain equipment purchases if the equipment will help achieve the obligations of the contract. For example, CSP might provide added financial incentive to invest in a strip-tillage implement and a GPS guidance system.

(Author: Wayne Crook, Agronomy Specialist)

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Taxation Tidbits: Employee Wage Statement

Man with coin purse

The end of the calendar year provides an excellent opportunity for employers to analyze the costs of hired labor and to communicate this information to their employees. Too many employees and employers fail to recognize the total benefits/costs of hired labor. Substantial labor costs are in the form of fringe benefits and other non-taxable benefits. Since a W-2 must be provided to each employee each January, take this opportunity to complete and include an "Employee Wage and Benefits Statement" with your employee's W-2.

Employee Wage and Benefits Statement - 2002

Employee: __________________ SSN: __________________
Base Wage or Salary $ ____________    
Vacation Pay   ____________    
Bonus or Incentive Pay   ____________    
Total Direct Cash Compensation     $ ____________
Commodities or Produce   ____________    
Personal Use of Farm Equip. (including vehicles)   ____________    
House   ____________    
Utilities   ____________    
Meals   ____________    
Life Insurance   ____________    
Health Insurance   ____________    
Retirement Plan   ____________    
Employer's Share of Social Security Taxes   ____________    
Total Fringe & Non-Cash Benefits     $ ____________
Total Compensation - 2002     $ ____________

(Author: Parman R. Green, Ag Business Management Specialist)

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Decisive Marketing Newsletter

Are you looking for information on marketing? Melvin Brees continues to write the Decisive Marketing Newsletter. Click here to view it on the web.

Melvin is in the Missouri Value-Added Development Center. In addition to the Decisive Marketing Newsletter, other information related to increasing the returns from your operation can be found by clicking here to view their main web site.

In addition, Ag Business Counselors are available within our region to assist you with your needs.

(Author: Don Day, Natural Resource Engineer/Information Technology Spec.)

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Missouri AgrAbility Program

If you have some type of medical problem that prevents you from comfortably and safely performing your work on the farm, the Missouri AgrAbility Program may have information to help you. AgrAbility provides individualized services, both on and off the farm, to help create a comprehensive, individualized plan to allow the disabled farmer to continue farming. AgrAbility involves not only the farmer, but the family, community, agricultural professionals, medical professions and farm implement manufacturers.

Statewide in Missouri, the following services are available:

For more information contact your local University of Missouri Extension Center or click here to see AgrAbility's web site.

(Author: Don Day, Natural Resource Engineer/Information Technology Spec.)

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Publishing Information

Ag Connection is published monthly for Central Missouri Region producers and is supported by University of Missouri Extension, the Commercial Agriculture program, the Missouri Agricultural Experiment Station and the MU College of Agriculture, Food and Natural Resources. Managing Editor: Kent Shannon.