The Associated Press reported yesterday that, “Massachusetts is being sued by 13 other states that claim a voter-approved law to ban the sale of eggs and other food products from farm animals that are confined in overly restrictive cages is unconstitutional.

“The states, led by Indiana, filed the lawsuit with the U.S. Supreme Court last week. It follows another action filed by more than a dozen states earlier in the month against California, which has a similar law.

“The 2016 ballot question in Massachusetts was backed by more than 77 percent of voters. It requires, among other things, that only cage-free eggs be sold in the state by 2022, regardless of where the eggs were produced.”

The AP article stated that, “In their compliant, the states claim that Massachusetts is attempting to impose its own regulatory standards on farmers in other states, in violation of the commerce clause of the U.S. Constitution.

A news release on Friday from  K·Coe Isom indicated that, “The national ag accounting and business advisory firm K·Coe Isom said the House-Senate tax bill released today provides near-term benefits to many ag producers, but rate reductions and estate tax changes beneficial to ag are temporary.

“‘The core of this bill is a 21% flat rate for C corporations,’ said Doug Claussen, Principal and CPA with K·Coe Isom.  ‘Most farm businesses are not structured as C corps and won’t benefit from this rate unless they restructure.  For farms that are structured as C corps, those in the 15% tax bracket would actually see a tax increase from this flat rate.  The majority of farmers, however, are sole proprietors or structured as pass-through entities.  These farmers should see some benefits from the deduction for business and pass-through income, immediate expensing of capital purchases, and to some degree from reductions in individual rates.'”

The release noted that, “The bill also includes a 20% deduction on business and pass-through income and flattens and reduces individual rates — though by a much smaller amount.  Finally, the bill effectively repeals the alternative minimum tax for many farmers and will allow for immediate expensing of most capital purchases.

“In addition to positive changes for agriculture, the tax bill also repeals or limits a number of provisions important for farmers:

• The bill limits the ability of farmers to carry back losses only two years rather than the current 5 years.
• The bill limits the ability of larger farmers to deduct business interest expense.
• The bill repeals the Domestic Production Activities Deduction (DPAD/Sec. 199) deduction used by many farmers and cooperatives.
• The bill eliminates the use of like-kind exchanges for personal property.”

Fridays update added that, “‘One key concern among agriculture is that the benefits of this bill – lower rates, bonus depreciation for immediate expensing, increased limits for estate taxes – these are all temporary.  The individual rates and estate tax changes expire at the end of 2025 while the bonus depreciation begins phasing out in 2022 and fully expires in 2027.  The loss and limitations on deductions currently used by farmers, however, are permanent,’ said Claussen.  ‘Farmers could see their taxes increase in the future if rate reductions or enhanced expensing provisions are allowed to expire.'”

Richard Rubin and Siobhan Hughes reported on Friday at The Wall Street Journal Online that, “Republicans stood on the verge of delivering the most significant changes to the U.S. tax code in more than three decades, after a series of last-minute deals appeared to remove the last big obstacles to passage next week.

“The plan would deliver $1.5 trillion in tax cuts over a decade and reorder large chunks of the U.S. economy. The GOP, ending a year in full control of the Congress and White House, is delivering lower tax rates for individuals, business owners and corporations. However, those individual cuts would expire after 2025, the end of some deductions will sting residents of high-tax states and independent analysts say the plan will increase budget deficits.

Reuters writer Tom Polansek reported yesterday that, “Missouri has issued its first fines over the misuse of a farm chemical in 2016 that went on to be linked in different formulations to widespread U.S. crop damage this year, the state said on Thursday.

“Authorities fined eight people a total of $145,125 for improperly spraying the chemical known as dicamba, used to kill weeds, in what Missouri called ‘the first wave of civil penalties issued to applicators,’ according to a statement.”

The Reuters article noted that, “The delay between sprayings last year and the state’s action shows how a long process of investigating many complaints about dicamba use is straining resources in farm states.”

Mr. Polansek added that, “This year, damage related to dicamba herbicides covered 3.6 million acres in 25 states, according to University of Missouri data. Several states have imposed new restrictions on dicamba use for 2018 to avoid a repeat of the damage.”

Associated Press writer Steve Karnowski reported this week that, “Minnesota announced restrictions Tuesday on how farmers can use the herbicide dicamba in 2018, responding to complaints by soybean growers across the country that it harmed their crops this year.

“The Minnesota Department of Agriculture set a June 20 cutoff date for applying the herbicide and prohibited applications when the temperature or forecast high for the day is above 85 degrees. The rules are meant to reduce instances of the herbicide drifting and damaging neighboring fields, which has been a problem in soybean- and cotton-growing states nationwide this year.

“‘We will be closely monitoring the herbicide’s performance with these restrictions in 2018,’ Agriculture Commissioner Dave Frederickson said in a statement.”

The AP article stated that, “The Minnesota Department of Agriculture says it received 253 complaints from soybean growers in 49 Minnesota counties, including 55 requests for formal inspections. University of Minnesota researchers estimate that 265,000 acres across the state were affected.

“The Minnesota Soybean Growers Association welcomed the new rules.”

Jacob Bunge reported yesterday at The Wall Street Journal Online that, “Farmers and ranchers are pushing back on an aspect of the proposed U.S. tax overhaul that could eliminate a widely used deduction when much of the U.S. agriculture sector is struggling.

“The tax bills passed by the Senate and the House of Representatives both eliminated a provision in the U.S. tax code that allows members of agricultural cooperatives to reduce their taxable income by deducting some co-op costs.

An update last week from Michigan State University indicated that, “The first complete bee census, led by Michigan State University scientists, confirmed a new species and revealed that the actual number of bee species in Michigan exceeded earlier estimates.

“Identifying potential pollinators, including the 38 new bees recorded in the state, is crucial, especially in the face of declining honey bee populations. All pollinators make an estimated $14 billion annual contribution to U.S. agriculture, so it’s imperative to understand wild bee populations and their benefits to crops and the environment.”

The update noted that, “Balancing the joy of the new discovery is the fact that a number of bees once found in Michigan are now absent. One example is the rusty patched bumble bee, which has not been seen here since 2000. This is now listed as an endangered species, even though there are active populations in some nearby states.”

An update last month from Iowa State University (ISU) Extension stated that, “Cash flow management is becoming even more critical in row crop agriculture. While most lenders like to emphasize strong balance sheets, it’s the ability to generate cash that pays the bills. Some farmers did a good job of forward contracting 2017 new crop bushels, hedging or buying put options and will avoid many cash flow concerns this late fall and winter. However, those farms holding large quantities of unpriced crops could see cash flow challenges and may want to focus on understanding other marketing strategies and tools rather than storing bushels unpriced.”

The article, which was written by Steven D. Johnson, also pointed out that, “If you know your cash flow is already going to be a problem, communicate early with your lender. Many lenders spent the past couple of winters restructuring existing farm debt to stretch out principal payments and free up depleted working capital. These same lenders could be reluctant to restructure loans anytime soon without commitment from the borrower to improve their cash flow management to meet existing debt obligations.”

The ISU update also pointed out that, “Most cash flow problems will appear by late December and January. Expect some lenders to require the use of the USDA Farm Service Agency’s (FSA) guaranteed loan program before advancing additional funds. Completing paperwork and getting necessary loan guarantee approval could take several months. Farms without access to typical farm operating loans should use caution before advancing family living and farm expenses on credit cards or higher interest-bearing debt.

“FSA offers a low-interest, nine-month non-recourse marketing loan on harvested grain, but requires that the on-farm stored bushels be measured or the commercially-stored grain is under warehouse receipt. This marketing loan is limited to the county loan rates, which in Iowa are below the national loan rates of $1.95 per bushel for corn and $5 per bushel for soybeans. Thus, the marketing loan program is not a marketing strategy – just access to cheaper interest for up to nine months.”