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Volume 9, Number 12 - December 2003

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Taxation Tidbits: Excluding CRP Cost-Share Payments From Income

A new IRS Revenue Ruling (2003-59) paves the way for excluding a portion or all of the cost-share payments received for installing CRP conservation practices. This exclusion extends to CRP practices for soil, water, and wildlife conservation; wetland establishment and restoration; and reforestation. Code Section 126 defines qualifying expenditures and provides the formula for determining the dollar amount of cost-share payments qualifying for exclusion. This exclusion is only applicable to cost-share payments, annual rental payments are not excludable.

While the calculations of the Code Section 126 exclusion can seem somewhat complex upon casual reference, the possible tax savings warrant the extra study time required on your part. If you hire someone else to prepare your tax return - make sure they are aware of Revenue Ruling 2003-59. Additional information on Code Section 126 can be found in the IRS's "Farmers Tax Guide" Publication 225. The 2003 Farmers Tax Guide is a free publication and should be available at most University Extension Centers by the publication of this newsletter. This publication is also available online at: http://www.irs.ustreas.gov/pub/irs-pdf/p225.pdf.

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

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Employee Wage and Benefits Statement - 2003

Report

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.

Form is available at: http://agebb.missouri.edu/agtax/issues/tidbits/11-02.pdf .

(Author: Parman Green, Ag Business Management Specialist)

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Truman Wheat: A New Variety From MU Research

Wheat

Truman wheat was developed by the University of Missouri Agricultural Experiment Station and was released in July, 2003 to certified seed growers. It has been tested in the Missouri Winter Wheat Performance Tests since 2000 under its experimental number MO 980525.

Truman is a full season variety with a moderately long vernalization requirement. Although it heads later than most varieties, this difference is reduced by earlier maturity, comparable to Cardinal. It is a moderately tall variety, with good straw strength and stands well in most environments.

Truman is:

Over the last two years of testing in the Missouri Winter Wheat Performance Tests, Truman was the highest yielding variety across all Missouri locations with a two-year average yield of 70.4 bu/acre (Table 5). It was in the top yield group over the past three years averaging 68.3 bu/acre with a very good test weight. In 2003, its test weight (57.8 lb/bu) was approximately 1.5 lb/bu above the average test weight for the 64 entries tested. Truman is adapted throughout Missouri (Table 13).

From two years of testing in the Uniform Eastern Soft Red Winter Wheat Nursery, Truman appears to be well adapted throughout corn belt states. Foundation seed will be available for sale in the fall of 2003 to increase the supply to certified seed producers.

Information on Truman wheat can be found at the following web sites:

Source: Information on the new variety Truman comes from the 2003 MISSOURI WINTER WHEAT PERFORMANCE TESTS by A.L. McKendry, R. L. Wright, D. N. Tague, J. A. Tremain, and L. J. Shaw.

The report can be obtained from your local University Extension Center. It is Special Report 549, Winter Wheat 2003 Missouri.

(Author: Jim Jarman, Agronomy Specialist)

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Crop Performance Testing

The University of Missouri performs yield trials on corn, soybean, grain sorghum and wheat crops throughout the state. These results are published on the web at: http://agebb.missouri.edu/cropperf/index.htm. Printed reports are available at your local University Extension Center.

Reports for corn, grain sorghum, soybean, and soft red winter wheat are published. The preliminary results for grain sorghum and soybean are published. These reports are valuable tools as you select varieties of crops to plant in 2004. Results are published by areas of the state.

Forage trials are conducted in some locations. Results of the forage tests can be seen at: http://www.psu.missouri.edu/agronx/forage/variety_testing.htm

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

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Certified Seed Growers

Seeding

The release of Truman wheat stimulated several farmers to ask where could they buy seed. This years' supply was allotted to Certified Seed Growers through the Missouri Seed Improvement Association. Depending on yields next spring, growers other than certified growers may be able to purchase Truman for the 2004/2005 season.

So how do you become a Certified Seed Grower? Information can be found at: http://www.moseed.org/ under Documents. An idea of the requirements can be obtained from the membership application rules shown below.

  1. I understand that I must plant seed of an eligible class and variety on ground that did not produce a different variety of the same crop in the preceding year.
  2. I acknowledge that my production must be inspected in the field prior to harvest and must meet or exceed the published standards set forth in the Missouri Seed Certification handbook for that particular crop before it will be considered eligible for certification.
  3. Prior to planting, I will verify that all equipment used to handle, transport and plant the crop was adequately cleaned to prevent any contamination or varietal mixture.
  4. Prior to harvest, I will verify that all equipment used to handle, transport and harvest the crop was adequately cleaned to prevent contamination or varietal mixture
  5. If I condition the crop in my own facility, I agree to undergo an Approved Conditioner Inspection. Prior to conditioning, I will verify that all equipment used to handle, transport and condition the crop will be adequately cleaned to prevent contamination or varietal mixture.
  6. In the event that the crop will be conditioned by someone other than myself, I acknowledge that only MSIA Approved Conditioners are eligible to condition Missouri Certified Seed.
  7. I agree to identify all seed lots at the time of conditioning with either a stencil or official MSIA tag that identifies the seed lot with regard to kind, variety and lot number.
  8. I agree to take a representative sample from each seed lot (maximum 1500 bu.) eligible for certification and submit to the MSIA seed lab for complete analysis.
  9. I agree to properly label all production sold as seed with the appropriate MSIA official tag or label.
  10. I acknowledge that I have received a copy of the Missouri Seed Certification Handbook and understand the procedures involved in the production of Missouri Certified Seed.

By my signature below, I affirm that I understand and agree to the conditions listed above for the production of Missouri Certified Seed. I further agree to abide by all rules and regulations of the Missouri Seed Improvement Association, as well as any State and/or Federal laws that may apply.

(Author: Jim Jarman, Agronomy Specialist)

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Niche-Targeted Marketing, Is It Right For You??

The beef industry is continually evolving toward a value-based marketing system, especially for specialized beef products like: natural, organic, implant free, etc. Cattle producers might look at these markets as opportunities to capture market share and increase the bottom-line. This marketing scheme isn't for everyone and needs to be thought through. To be profitable, there has to be a market premium or value addition that exceeds the increased dollars it takes to produce beef this way.

Cattle

The objective of a study at New Mexico State University was to evaluate costs and returns in relation to using or not using growth promoting implants then determining a break-even premium for non-conventional production systems. Most cattle in this study were typical of Missouri cattle. While on pasture, implanted calves were given Revalor-G® . They gained an average of 27 pounds over those calves not receiving implants. In addition, the calves receiving Revalor-G® were implanted with Synovex-S® upon arrival at the feedlot and then again on day 63 of the finishing period with Revalor-S®.

Research has shown that implants decrease carcass quality; however, if there is a decrease in carcass quality it would have to be significant enough to offset the benefits implants actually give. For example, in this study there was not an implant influence on dressing percentage; however, there was a 10.6% increase in hot carcass weight for those cattle receiving the implants. USDA quality grades were similar for both treatments as most of the carcasses graded low choice or better. There was a small discount on the implanted calves having carcasses weighing over 733 pounds and there was a reduced quality grade on some carcasses, resulting in a slightly reduced carcass price ($1.14/lb verses $1.15/lb) for the implanted verses the non-implanted cattle. However, one has to figure that there was an advantage of hot carcass weight associated with the implanted cattle, which yielded a significantly greater gross carcass income ($908.90 verses $828.53) for implanted verses non-implanted cattle.

When all was said and done the researchers concluded that it would take a premium of $6.12/cwt on a carcass basis or $3.98/cwt of live body weight to offset the benefits that implants provide. However, the cattle market is much higher today and would probably require even more than the researchers anticipated during this study. Producers can look at the information and surmise that implanting is going to increase efficiency of the steer and decrease the cost of production, even with a charge of $4.65 per head for the implants. Whether you as a producer decide to direct market your beef or go through another entity to market your non-implanted beef, make sure it pencils out before deciding not to implant those calves. Also make sure if you are going through a third party market for your beef, they give you the appropriate premiums, enough to offset what you lose when you don't use an implant. This is an important decision to make and takes time and education to make sure you are getting for your cattle what they are actually worth.

(Author: Wendy Flatt, Livestock Specialist)

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AgrAbility

The goal of AgrAbility is to provide assistance and resources to farmers with disabilities that allow them to continue farming. 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:

Farm House Accessibility Surveys and Information Agricultural Worksite Accessibility Surveys Assistive Technology Resources Educational Materials Equipment Modification Information Independent Living Resources Technical Support

Disabilities that AgrAbility assists with are not limited to traumatic injuries. AgrAbility assists farmers with all types of disabilities and limitations including chronic health conditions or pain, such as arthritis, heart conditions, visual impairments, hearing impairments, respiratory diseases, and traumatic brain or spinal cord injuries. For more information see http://agrability.missouri.edu/.

(Author: Todd Lorenz, Horticulture/Agronomy Specialist)

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Worksheet

A farm and ranch income tax estimate and planning worksheet is available on the AgEBB website at: http://agebb.missouri.edu/agtax/2003est1.pdf.

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Publishing Information

Ag Connection is published monthly for Northeast and Central areas of Missouri producers and is supported by the University of Missouri Extension, the Missouri Agricultural Experiment Station, and the MU College of Agriculture, Food and Natural Resources. Managing Editor: Mary Sobba.

Send comments and suggestions to:
Mary Sobba, Agriculture Business Specialist
101 N. Jefferson St., Rm 304
Mexico, MO 65265
(573) 581-3231
sobbam@missouri.edu

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