December 2, 2016

Accelerated Depreciation and Machinery Purchases

It is a common tax management strategy to use accelerated depreciation, which includes bonus depreciation and section 179 depreciation, to reduce taxable income on crop farms. For 2016, up to $500,000 of section 179 depreciation and 50 percent bonus depreciation can be used when purchasing assets. Relatively low expected net returns make these accelerated depreciation methods less attractive than they were a few years ago. However, above trend yields and stronger than expected soybean prices, increase the likelihood that some farms will be examining the use of accelerated depreciation as a tax management strategy in 2016. It is important to note that in addition to tax management there are several factors that need to be examined when evaluating machinery and equipment purchases. This article discusses the factors that need to be considered when making machinery and equipment purchase decisions.

November 30, 2016

The EPA's Renewable Fuel Standard Rulemaking for 2017 Was More Aggressive than Expected

The U.S. Environmental Protection Agency (EPA) announced the final rulemaking for the Renewable Fuels Standard (RFS) for 2017 and the biomass-based diesel volume requirement for 2018 on November 23rd. In this article, we analyze the expected outcome of implementing the newly announced mandates. These standards surprised the market by upping the 2017 conventional ethanol mandate to the statutory maximum and increasing the mandate for total advanced biofuels more than expected. That is, the advanced biofuels mandate was reduced from the statutory mandate by much less than the maximum allowable reduction that is equal to the reduction in the cellulosic mandate.

  • Authors: Scott Irwin and Darrel Good
  • Permalink

November 29, 2016

2016 Gross Revenue and Income Projections for Corn and Soybeans in Central Illinois

With harvest at a close, fairly accurate estimates of yields can be made, leading to more accurate estimates of 2016 gross revenues. Gross revenues and returns for corn and soybeans grown in central Illinois are presented in this article. Compared to 2015, 2016 gross revenue is projected to be lower for corn even though yields are much higher in 2016. Gross revenue for soybeans is projected higher in 2016 than in 2015 because of higher yields and prices. Overall, returns will average positive across corn and soybeans, but will still be at very low levels. Incomes in central Illinois will be higher on most farms in 2016 than in 2015.

November 28, 2016

Weekly Outlook: EPA Renewable Fuel Standard Rallies Soybean Oil Prices

From October 13 through November 25, the price of January 2017 soybean futures increased by 8.4 percent. The higher prices were led by soybean oil prices, with the January 2017 futures price up 9.4 percent during the same time period.

November 23, 2016

NASS Surveys Have Direct Impact on Critical Farm Programs

The NASS mission is to provide timely, accurate, and useful statistics in service to U. S. Agriculture. Crop yield forecasts tend to be our most well-known publications, but NASS measures agriculture in many different ways, ensuring that the full scope of agriculture is accounted for. NASS surveys the hog and pig industry, the total cattle herd and cattle on feed, fruit and vegetable production, and the vast overall economic impact of agriculture across Illinois and the rest of the United States. We even measure maple syrup!