Farm Bill Has Been Passed! Now, What's In It?

The new farm bill that has been going back and forth for so many months has finally passed.  Now what's in the thing?  I have attached the bill it's self below and a summary written by Senator Debbie Stabenow.  So get comfortable by the fireplace with a glass of wine and enjoy.

Senator Debbie Stabenow's Summary

Full Farm Bill

Types of Property Ownership

Most Common is Joint Tenancy

The number one form of land ownership we see is called joint tenancy.  Joint tenancy is where all co-owners are equal.  There is a right to survivorship which means one of the co-owners passes away his or her share would then be passed on to the remaining co-owners.  This is common with married couples.  This does not go through probate when one owner dies.  And it does not pass according to a will.

Possible Issues

When the co-owners both die the descendant's ownership disappears.  It passes free of unsecured creditors.  There can be a problem if there are marriage difficulties or there are children for a previous marriage.  Also, it will not be included in the descendant's estate, therefore it cannot have an exemption made against it.

Fitting Future Farm Owners Into Your Plans

Succession Planning

This question almost always comes up at some point when people talk about buying farmland.  How do I make sure this is passed on to my children or grandchildren properly.  There are many different ways but they all fall under the umbrella of succession planning.  

Succession planning is a continuous process to transfer knowledge, skills, management, control and ownership between generations.

Decisions Affecting Succession Planning

There are three main things that affect succession planning.  First is ownership.  How is that defined or going to be defined.  The second is what type of business entity is it going to be.  Is it a corporation, a LLC etc.  Finally you have to think about estate planning.  Is it part of your retirement?  How will it affect you tax planning?

How To Get Started On Succession Planning

You want to know your basis and how your property is owned.  Depending on that is how you would get started.  I will go over the different forms of ownership in the next handful of posts.

Crop Exports

USDA has reported that corn exports have come in much higher than expected.  Soybeans remained about the same and wheat came in below expectations.

Wheat came in about 10 million bushels lower than last week.  However, with how good wheat came in the week before so I wouldn't worry too much about these numbers.

Corn is up over 8 million higher than the week before of around 19 million.  Right now the total is almost double what is what last year.

Soybeans came about 2 million less than a week ago.  But it's up almost 9 million than the year before.

While this had varied from week to week, what we've been seeing is a very strong year in crop production.  None of this is a shock but is much welcomed news after the last couple years.  And with what appears to be a good wet winter we may be looking at another strong year in crop production.

Wheat Exports

Wheat needed a little help to meet what the USDA estimated it would make.  That help came from abroad.  According to Brownfield Ag News for America Egypt bought 60,000 tons of US soft red winter out of 300,000 tons.  Japan bought 29,000 tons of US dark northern spring and 20,800 tons of US hard red winter wheat.  South Korea's Nonghyup Feed Inc. bought 65,000 tons of optional origin feed wheat and Jordan purchased 50,000 tons of optional origin wheat.

Also, according to Reuters, Strategie Grains lowered its 2014 European Union soft wheat production estimate to 137.7 million tons.  Up 2% from 2013, but down from the 138 million tons estimated in December stemming from concerns about the crops in Great Britain and Bulgaria.

Fundamental Puzzle Pieces In The Market

What Are The Fundamental Players In The Commodity Market?

There are three things to think about when look at the commodity prices when it comes to farmland.  US supply, US demand and the US economy.

US Supply

This is production and potential production.  Both have an affect on the market.

US Demand

A good example of this is ethanol.  That has become a very popular source of fuel recently and has really driven then corn demand in this country.

US Economy

As long as the U.S. dollar is strong so will the marketplace for US crops abroad.

Corn is the Market Leader!

With the strong push for ethanol corn has exploded on the US market recently.  It should continue to do so for the foreseeable future.

Weather Will Always Trump!

With all these things that go into what affects commodities, nothing affects it more than the weather.  Keep an eye on the forecasts in the area of your farm.  If you truly want to know what the future of commodity prices are just look to the sky.

Piecing Together a Commodity Marketing Plan

What Affects The Market?

A handful of things really affect the commodity market.  

USDA Reports

USDA reports can really dictate what the next year or so could look like for the farming business.

Foreign Economies

For example, what happens in say Greece with all their economic woes can affect commodities we export out.  Also, China is a big exporter for us.  If that economy falls apart we would feel it as well.

Managed Commodity Funds

The market will react to these as well.  These are really where we see the numbers and how the prices in the market will be adjusted.

World Events

To really truly hurt the farming market a global event has to take place.  Such as an embargo or a third world war.  But little ones like economic woes of Europe can be felt here.

Weather

A few years ago we went through a pretty long drought.  It was actually getting scary.  But like most things the weather came back to the median.  However, that drought really affected prices.  Drove them through the roof.  So weather is something to keep an eye on when thinking about the market.

Farmland Pollution Problem in China

If you've been paying attention to news in farming recently you've heard about what's been going on in China.  According to the Huffington Post More than 8 million acres of Chinese farmland is now too polluted to farm.  

Recently there have been problems with tainted rice and crops in China.  The Chinese government tried to hide this but it was too obvious they had an issue.  

It's unclear how much farmland exactly is polluted.  The estimates vary from only 2% of the 337 million acres of farmland, which is what the government says, to as high as 60 million acres.  The truth is probably somewhere in the middle but the gap is massive so who knows what issues China is really facing.

What's caused this?  It's a number of things.  The growth of the Chinese industry, overuse of chemicals and little to no oversight on environmental issues.

To get more information on this click on the link below to go to the Huffington Post article on the issue.

Millions of Acres of Chinese Farmland Too Polluted To Grow Food