Thursday, September 30, 2010
This bill would not have prevented the massive egg recall or one child getting ill from peanut butter. That is in the hands of the producer and the processor and there will never be enough laws, lawyers or inspectors to make it happen.
" Tom Coburn, M.D., United States Senator from Oklahoma
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Sep 15 2010
Detailed Concerns with S.510, the FDA Food Safety Modernization Act of 2010
Growing an Already Disjointed and Duplicative Federal Government
In 2008, GAO testified before a House subcommittee that “FDA is one of 15 agencies that collectively administer at least 30 laws related to food safety. This fragmentation is the key reason GAO added the federal oversight of food safety to its High-Risk Series in January 2007 and called for a government wide reexamination of the food safety system. We have reported on problems with this system—including inconsistent oversight, ineffective coordination, and inefficient use of resources.”
Specifically, GAO found that in 2003, FDA and USDA activities included overlapping and duplicative inspections of 1,451 domestic food-processing facilities that produce foods regulated by both agencies. This GAO testimony came on the heels of a 2005 GAO report that identified significant overlap in food safety activities conducted by USDA and the FDA, and to some extent the EPA and National Marine Fisheries Service (NMFS), including “71 interagency agreements [to coordinate overlapping activities] that the agencies entered into… However, the agencies have weak mechanisms for tracking these agreements that…lead to ineffective implementation.”
This overlap was evident in the egg salmonella scare. The Wall Street Journal reported (USDA Graders Saw Bugs and Trash at Egg Producer; Didn’t Tell FDA) that U.S. Department of Agriculture experts knew about sanitary problems at one of the two Iowa farms at the center of a massive nationwide egg recall, but did not notify health authorities.) USDA inspects farms and gives eggs their “Grade A” label, while the FDA technically is tasked with the safety of the final egg product.
This discrepancy was the impetus behind an egg safety rule originally promulgated 10 years ago by the FDA. Unfortunately, three administrations sat on the proposed rule without finalizing and implementing it. FDA Commissioner Dr. Hamburg stated, “We believe that had these rules been in place at an earlier time, it would have very likely enabled us to identify the problems on this farm before this kind of outbreak occurred.” A lack of regulatory bill isn’t the problem.
Charging the Bill to our Children and Grandchildren
The legislation will cost $1.4 billion over 5 years. This cost does not include an additional $230 million in expenditures that are directly offset by fees collected for those activities (re-inspections, mandatory recalls, etc.). The total cost of the bill is over $1.6 billion over 5 years. Of these costs, $335 million are for non-FDA programs – the food allergy grant program, implementation grants to assist producers, assistance grants to states and Indian Tribes.
Many argue that this spending is just “discretionary.” It is important to realize that the CBO score reflects the cost of the increase in FDA’s scope. It is true that this bill only authorizes funding (though problematically, for the first time ever provides an authorization line for just food activities at FDA).
If future appropriations do not add up to the amount CBO is estimating, the likely result is that none of these provisions can be fully implemented, or worse, the FDA is forced to cut corners in other areas it regulates (drugs/devices/etc.) to fund this added regulatory burden on foods.
Without paying for this bill, at best we are just passing it for a press release, and at worst, we shackle the FDA with unfunded mandates.
New and Unnecessary Non-FDA Spending
CBO estimates that implementing other provisions of S. 510 would increase non-FDA discretionary spending by $335 million over the 2011-2015 period. The bill would authorize three grant programs outside the purview of the FDA:
• School-based allergy and anaphylaxis management grants. Authorized at $30 million annually, CBO estimates that this program would cost $107 million over the 2011-2015 period. This program creates new federal standards for how local schools deal with food allergies and ties the “voluntary” standards to eligibility for federal grant funds. This is not a federal role, the standards are overly prescriptive, and it duplicates existing efforts. The CDC has already published extensive best practices for how local schools can implement sounder strategies for dealing with food allergens. The word “food” is the only relationship between legislation to dictate the food allergy policies of local schools and legislation to modernize how the FDA regulates the food industry.
• Food safety training, education, extension, outreach and technical assistance grants. Enacting the bill would require the Secretary of HHS to enter into cooperative agreements with the Secretary of Agriculture to provide grants for food safety training, education, extension, outreach, and technical assistance to owners and operators of farms, small food processors, and small fruit and vegetable merchant wholesalers. Based on spending patterns of similar programs, CBO estimates that implementing this provision would cost $21 million over the next five years
• Food safety participation grants for states and Indian tribes. S. 510 would authorize the appropriation of $19.5 million for fiscal year 2010 and such sums in subsequent years to award grants to states and Indian tribes to expand participation in food safety efforts. CBO estimates that implementing this provision would cost $83 million over the 2011-2015 period.
Along with the grant programs, S. 510 also would require the Environmental Protection Agency (EPA) to participate in food safety activities and would require the Centers for Disease Control and Prevention (CDC) to enhance its participation in food safety activities. CBO estimates that EPA will incur costs of about $2 million annually. CDC is required to significantly increase its surveillance activities, which CBO estimates will cost $100 million over 5 years. CDC is also required to set up “Centers of Excellence” at selected state health departments to prepare for food outbreaks at a cost of $4 million annually.
Burdensome New Regulations
There are 225 pages of new regulations, many of which are problematic. While some regulations are potentially onerous, but perhaps reasonable – such as requiring every facility to have a scientifically-based, but very flexible, food safety plan—others give FDA sweeping authority with potentially significant consequences.
While it is hard to pull out just 1 or 2 regulations in the bill that make the entire thing unpalatable, on the whole this bill represents a weighty new regulatory structure on the food industry that will be particularly difficult for small producers and farms to comply with (with little evidence it will make food safer). The following regulations are perhaps the most troubling:
• Performance standards. The bill gives the Secretary the authority to “issue contaminant-specific and science-based guidance documents, action levels, or regulations.” The way the bill is written the authority is extremely broad and could be used by FDA to issue very specific and onerous regulations on food facilities, without even the normal rule-making and guidance process FDA food regulations normally go through.
• Traceability. FDA is required to establish a “product tracing system within the FDA” based and develop additional recordkeeping requirements for foods determined to be “high risk.” The House legislation includes “full pedigree” traceback which puts FDA in charge of tracing the entire supply chain. The final bill requires the FDA to do this for high-risk foods, and while there are some limitations on FDA, anything further than the “one-up-one-back” requirement in the bioterrorism law will be very onerous on industry.
• Standards for produce safety. For produce, this bill gives FDA the authority to create commodity-specific safety standards for produce. Instead of trusting industry and the free-market, this provision implies that complying with government standards is the best way to keep consumers safe. A lot of the produce industry lobbied for these standards to provide “consumer confidence” after the jalapeno and tomato scare, but federal regulations could particularly adversely impact small providers.
Other regulations in this bill are overly punitive and could set up an adverse relationship with industry. They include:
• Administrative Detention of Food. The bill lowers the threshold for detaining articles of food to “adulterated or misbranded.” The threshold is currently higher for a reason—administrative detention is an authority that should only be used when there is clear, imminent danger.
• Suspension of Registration. Facility registration may be suspended if there is a reasonable probability that food from the responsible facility will cause serious adverse health consequences or death to humans or animals. “Reasonable probability” isn’t a difficult enough burden for FDA to prove when the consequence is closing down a private business.
• Fees. Allows FDA to assess fees for compliance failures (recalls and re-inspections). These fees give FDA incentive to find reasons to re-inspect a facility or order a mandatory recall—the only ways they can collect money for their efforts. Furthermore, assessing industry to pay for a new regulatory structure will increase food costs for consumers during a recession.
• Mandatory Recall Authority. Provides FDA with the authority to force a recall (and collect fees to pay for it). It is unclear why this authority is necessary – even in the worst food safety outbreaks, there do not appear to be any instances in which tainted products were on the shelves or with distributors that the company at fault did not work with FDA to conduct a voluntary recall. Allowing FDA to collect fees for forcing a mandatory recall could also push FDA to pull the trigger early on a mandatory recall – putting them at odds with the company responsible. "
Dr. Coburn Cuts Wasteful Spending in the Farm Bill
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November 2 should be exciting.
Wednesday, September 29, 2010
Tuesday, September 28, 2010
The 100th Brown County Fair was held in 1951.
in 1951 Gooding Amusement Co. from Hillard, Ohio provided rides and payed the fair board $50 for use of electricity.
In 1952 School Day was established with County Superintendent H.D. West, allowing school buses to bring students to the fair.
Celebrity mule races of local people were held in 1954 and had 3 heats daily.
In 1955 it rained three of the four days and the fair board had to borrow $15,000 to pay bills.
Championship wrestling both men and women was held in front of the grandstand in 1955.
In 1956 the Republicans and Democrats requested that each party rent space to pass out literature.
In 1956 the Georgetown Business and Professional Club was given permission to hold a Beauty Queen Contest. Wrist-watches were given to the winners.
In 1957 the fair board purchased $10,000 of liability insurance for $211. Today, $1,000,000 of liability insurance is over $20,000 for the fair.
In 1957 is was determined that Brown County Teachers who did not travel on the buses to the fair with the students would be charged the regular gate admission of $0.75.
In 1958 the fair board paid $1.00 per hour for unskilled labor and $1.50 for skilled labor before and during the fair.
In 1959 was the first year the fair board bought rain insurance.
In 1960 general admission prices were raised to $1.00.1961-1970
In 1961skydivers from Williamsburg, Ohio were hired to make nine jumps onto the fairgrounds for $125.
In 1962 rain again affected fair receipts and the board had to borrow $8000 to pay premiums.
In 1963 the organist was paid $75.00 per day to play during horse shows.
In 1964 a week before the fair opened, the small grandstand built in 1937 burned to the ground.
In 1965 a rule was set into place that no pop was to be sold in cans because of the danger of people slipping on them.
In 1965 the first two days of the fair were completely rained out and was extended to Sunday to help make up for the loss.
In 1966 the fair board included a rain date of Sunday, October 2. A first in fair history and it was used because Friday was a rain out.
In 1966 was the first Speed Tractor Pull. The sled nothing more than a boiler plate. A small tractor was added for weight. Chairs were placed every 20 feet along each side of the track. Volunteers from the audience sat on the chairs. As the tractor began to pull and the sled passed, a person from each side would step on, adding weight.
In 1967 was the first year the fair book cover contest was sponsored by the fair board.
In 1968 the Lawn and Garden Tractor Pull was approved.
In 1968 the Brown County Historical Society asked permission to move the Dixon-Washburn Log House next to the Old Timers Building.
In 1969 the Brown County Fair became a 5-day event lasting Tuesday through Saturday.
In 1970 another Friday was rained out and the schedule was held over for Sunday.
The retirement of the debt and the burning of the mortgage in 1970 was mainly due to the income generated by the tractor pulls.
Monday, September 27, 2010
I went over the soil test results, tissue test results and harvest yields and conditions to try and determine what to invest for next year's crop.
The first bid came in at $116.30 per acre. I guess that is not too bad considering the increasing fertilizer prices and not putting down more than I need. I need to help the corn residue breakdown to release more nutrients by springtime.
We also got our seed wheat in and stacked and ready for planting which should happen in the next week or two. All I need is my SabrEx seed treatment to put on the seed as it made 14 bushels more per acre this year. It controls root diseases that well.
This would be the tenth crop in eight growing years on that field. The best thing about wheat is I can hold the soil in place and build a crop I can take to the market or kill and plant back to corn or soybeans. The market is so strong, every market is asking for more acres.
Cotton even hit a 15 year high so every commodity is getting the farmer's attention for acres. I guess you go what you are best suited for that keeps in you rotation and keeps the pests at bay.
This corn market could hit $6 and it hasn't done that in a long time, either. Soybeans were $15 not too many years ago so it has a ways to go. I don't think the wheat will get back to $10 like it did a few years ago, though. That demand quickly slowled down when it got to $7 but corn and soybeans have not.It's a nice pickle to be in.
Sunday, September 26, 2010
Saturday, September 25, 2010
Farmers tinker around with biology more than they understand. They modify the soil structure, they modify the soil chemistry, they affect the soil biology. Then they plant modified seeds into and spray it with modified chemicals and suddenly you have so many variables going you don't know what causes what.
Some hybrids really responded to this year's weird weather and some didn't so much. Was it the hybrid or the conditions they were provided to grow in? You really cannot answer that. Then you look at a test plot and Brand A wins. You plant it on a lot more acres and it doesn't win so much. Was it a one time wonder?
I really enjoy tinkering with the biology involved in farming. I am down to a certain way of fertilizing, a certain way to plant, and a certain seed to drop. Many farmers do better but I still enjoy it. I see the science and the wonder of it all.
I haven't even mentioned the livestock industry or the animal kingdom. They depend on plants for feed. Healthy soil makes healthy crops which feed healthy livestock and provide us with healthy food. Any mistake or contamination and it all goes wrong for a bit.
A good friend asked me where I learned these things.
Soils? Started as a child and soil test kit and just kept learning. Always wanted to help dad grow the best products he could. Soils classes at OSU helped a lot. Took over the school farm in 71 and worked with a good farmer who was a NaChurs rep. Never used much of that fertilizer though, too expensive. Masters classes in soils. Brookside training which did not fully agree with mine. OARDC Labs which did a good job. Picked the brains of the best, tried it, modified it. Always wanted to know what was under my feet and how to improve. Curiosity hasn't killed me yet.
I did use more liquid fertilizer this year than I ever did because I needed a little boost in cold wet soil. I used it again to give my double crop a boost. It did both.
There is so much to learn!
Friday, September 24, 2010
Dim the lights an hour before bedtime. This mimics sunset. Smack in the middle of your brain is something called the pineal gland. It releases melatonin, the hormone that readies the mind and body for sleep in response to lowered light levels.
If you've got things on your mind -- tomorrow's meetings, errands, that kind of thing -- write them down fifteen minutes before bed. This sweeps them out of your mind.
If you're still awake after fifteen minutes, get up and do something quiet, like reading a book. No Internet, no TV, no exercise. You have to let your body and mind slow down to be able to slip into sleep. If you just lie there thinking about how you're not sleeping, you'll never sleep.
Wake up at the same time every day. An hour extra on weekends is fine, but if you wake up at seven every morning during the week, then sleep until ten on weekends, you're effectively giving yourself jet lag. Monday morning, you'll feel like you just got off the red-eye from three time zones away.
A little chemical help once in a while is fine. Not alcohol -- it actually interferes with the normal sleep cycle. But Benadryl or one of the combination OTC painkillers or sleep drugs can give you that little nudge into natural sleep. Just describe your symptoms in detail: From a pharmaceutical perspective, "can't fall asleep" isn't the same as "wake up in the middle of the night."
Sex. Read more: http://www.esquire.com/features/sleep-hygiene-0408#ixzz10TFOKhN2
Thursday, September 23, 2010
Wednesday, September 22, 2010
Tuesday, September 21, 2010
Monday, September 20, 2010
I figured mine would make 170 but and it's pretty close. Plot results in the I states are better than I thought but still poor for others.
A new conventional hybrid is winning some of the GMO plots. It is 115 day, big and healthy and took the summer heat well. It looked good in my fields but earlier corn did almost as well. You rarely see the really dry corn coming out of the of the trucks like this year but it did. Last year it was closer to 20% moisture and this year 17% which is a nice surprise where the yields hold up.
The best thing is dry soil and fodder to allow harvest to progress quickly. It will be hard to get it all in before there is loss from the crop being too dry.
It sure has been a dry spell! But out west some are having record rains. Southeast Iowa holds the record for excess moisture this year.
Did you see how large hurricane Igor is? It would cover half of America's land mass. But it is still dry here so far.
Sunday, September 19, 2010
This wider machinery makes you want to just drive straight but there aren't many straight fields around here.
When electricity came to this area, they used the old rule of shortest distance between two points. Future expansion and farming was not at the top of the list. Low cost and convenience was.
I called the power company when we bought this farm and they wanted $11,000 to put them where I wanted them. I guess we just have to live with them.
This is one advantage you folks in the newer settled country has over us. Your lines were laid out straight or even better, buried underground. That is even more expensive to do correctly.
There is one picture sent around the Internet of a combine tangled up with a tower that is pretty scary. I don't know how the guy got into it like yesterday's picture but it happens so quickly. Ground potential is important too, there is so much voltage passing through the lines at all times.
We don't want to live without electricity but we sure could live without the poles.
Saturday, September 18, 2010
Corn hides a lot of flaws when it is 12 feet tall.
This reminds me of 1968 when I drove home from college and there was dad's tractor, about like the nose of this Deere in a sink hole. Immediate thought was he didn't survive. I got home and he was a little bruised but really embarrassed he drove into one.
Can you imagine your body being thrown off a tractor? All he wanted was a pull to get the tractor out because everyone who drives by could see the tractor with the radiator flush to the ground.
It happens so easily. If we use tile to drain these fields for maximum yield, any flaw shows up as a blowout. We call it a tile blowout, the water sucks the soil right through the open drain instead of sinking in like it should.
We have some on the new farm, they have to be repaired or we could end up like this. I stepped into one tonight and about broke my leg. I have the ones on this farm repaired but they could blow out at any time.
Tile is expensive to put in and expensive to repair but you can't farm without it. Untiled land yields less, brings less money and less rent for the landowner.
Mother Nature does a real good job moving water. We just try to direct it a bit. It has made our country so productive and it is a sound practice.
Some farmers put in their own tile which is a huge money making part time job if you can do it.
Crops over tile lines almost always out yields the crop the farther away you get from the tile. Most land in the United States require tile 30 to a few hundred feet away and 60 feet is pretty common. That will remove the excess water economically.
Lime and tile will make the farmer more money than anything else and we all do it.
Most do but some don't.
You could wind up in a hole.
Friday, September 17, 2010
This is an old hybrid on a new farm. We planted earlier corn early so we could harvest early. I doubted myself if was the right thing to do but I think it was. I don't know what hybrid would make any better corn any earlier. It looks like everything is ripening at the same time so it will be race from one field to the next.
I turned the corner at Doak Road this evening and the 4.1 soybeans had turned golden brown today. The leaves are off and it is ready to harvest, too. When you make that turn, the farm lays uphill to the left and I can see what everything looks like. It looked good. That is very early for a full season soybean variety. Everything is 2 weeks ahead, I wonder what the winter will be like?
It is so dry we will have to watch for field and combine fires. It wouldn't take much to start one and the threshing components work hard.
We are very blessed to have all of this, yet it is challenging to keep it in place. It just doesn't happen by itself, timing is everything.
What were you up to today?
Thursday, September 16, 2010
I must send bad vibes to some of my closest friends because she doesn't trust them. That is the least of my intentions but I must do it as she picks up on every habit I have.
She can walk fields faster than I can. She is a good scout in the field and I know she wouldn't let me get into harm. Her smell is so strong she smells another animal before I do.
I know this is an old picture but she is so hard to catch on camera. She is watching me as I type this but pick up the camera and she is gone. Many of my crop pictures caught her on camera though, just ahead of me.
She will be two years old October first and reminds me of me at age 14. I just wanted to play. She wants to play all the time. She hates to get scolded, just like I and every other creature does.
She is a pickle, no doubt. We took on a big undertaking when we picked her up January 09. She crapped her cage on the way home moving from her home to a new home. I probably would do that, too.
The Germans must have been insecure when they bred these dogs because they are so devoted. Like marriage, you can't divorce them.
Wednesday, September 15, 2010
"We have been in a Demand Market Era Since the Seventies, I have written many editorials about Demand Driven Markets. I thought it might be of value to once again describe this type of market environment and the stages that typically occur as bullish forces unfold.
We all know there are two sides to the price equation... supply and demand. However, economists and market analysts traditionally concentrate on only one side... the supply side. The reason for one-sided analysis is the fact that supply is easily seen and counted. The supply side is relatively easy to solve. We can see the acres planted and count bushels in storage. We can read about droughts in Russia and calculate the supply that will be lost. However, demand is invisible and elusive. It is hard to measure and even more difficult to forecast.
Demand is fickle... It can be spread out over the course of a season or it can come in compressed bursts of panic buying. When grain supplies are excessive, as they have been the past two years, users pare inventories and pipeline supplies are reduced to avoid even lower prices in months to come. After all, in the new global marketplace, shortages in one nation can be offset by imports from another. The process of contracting inventories and pipeline supplies makes demand appear worse than it actually is. Conversely, when supplies tighten and prices rise, users want to buy ahead before prices trade even higher in coming months. The process of buying ahead creates inventory building and refilling of pipelines, making demand appear better than it actually is. Demand driven markets have the following characteristics...
They begin when supplies are burdensome.
Users have not bought ahead, expecting lower prices in the future.
Indications of expanding demand are ignored due to complacency toward supply.
Trade sentiment remains negative, even as prices initially advance.
Supply and demand estimates tighten only gradually because demand is based on recent experience, not future prospects.
As supply and demand estimates tighten, top picking becomes a favored pastime, adding fuel to the eventual bullish fire.
New sources of demand are uncovered as those waiting for a price setback finally succumb to the fact that prices are not going to fall substantially.
As prices reach altitudes unimagined just a few months ago, demand continues from hoarders and those buying hand-to-mouth. This stimulates even more speculative buying and the market enters a “blow off” phase.
Following the final accelerated advance and initial price collapse, supply becomes available from hoarders and the demand driven market cycle is completed for that commodity. I began my commodity career during the Sixties when grain surpluses were chronic and a seasonal move from low to high in corn was ten cents per bushel. Nobody was prepared for, or anticipated, the demand driven markets that were to follow in the Seventies. Demand markets of the Seventies came without warning, without precedent...
Fundamental supply/demand balances were based on past experience and became of little value.
Old standards of value no longer applied.
Market perceptions changed. Commercial users were forced to buy ahead as risk exposure to higher prices was greater than benefits received when prices retreated.
Exports became controlled and were not encouraged.
Governments could print money, but they could not print food and other commodities. For nearly ten years, demand driven markets shifted from one commodity market to another. Some economists explain that developed nations contain about 15% of the world's population, but consume about 65% of the world's commodities. As incomes in China, India, Brazil and other densely populated nations grow in years ahead, demand for commodities, especially food, will grow by unprecedented margins.
The era of cheap food commodities is ending . A new “demand driven” era is unfolding. This year's wheat crop failure in Russia demonstrated just how fast perceptions of surplus can shift to shortage. Demand markets offer traders the greatest profit potential because they hold the largest element of surprise and are the least understood. To successfully trade this type of market requires... Courage to go against conventional wisdom... Confidence in your market belief... And, Concentration on an individual market.
Bill Gary President/EditorCIS, Inc.
To my non farmer readers, this means your food costs will go up. Farm prices are pennies on the dollar to what your grocery bill is but they will use any excuse to make your net price seem like it is our fault. There are so many jobs involved from grain to dinner plate, every one of them will get a hike, too.
It also means farmer costs go up too. Every fertilizer I have priced has risen right with the corn market.
It's the dog chasing his tail routine. I told you the other day That the day of $2 corn was simpler for us.
It's easy to get left in the dust.
Tuesday, September 14, 2010
Tuesday, 14 September 2010
P. O. Box 4581531 Eber-Lea Vista Grove City, Ohio 43123
Phone: (614) 871-0114Fax: (614) 871-1157
Our office hours are weekdays 8 a.m. to 4:30 p.m. (EST)
Should I Die Now... or Live For Another Year?
May 20, 2010
By George E. Zola
CARLILE PATCHEN & MURPHY LLP
366 EAST BROAD STREET
COLUMBUS, OHIO 43215
If you could time your death, did you miss an opportunity by not dying in 2009 or will it be better to die in 2010? Should your death be postponed until 2011 and beyond? The answer to this question will depend upon your assets, the built-in capital gains in your assets, and your outlook on life.
I happen to think that a later death is always better than an earlier death and that death is a drastic step to take solely to save tax dollars. However, from a pure financial analysis, you may have been better off dying in 2009 if you had highly appreciated assets with huge built in capital gains. Death in 2010 may be preferred if you have an extremely large estate consisting of assets which have not appreciated greatly during the time you held them.
There’s an old saying that goes “there are only two certainties in life; death and taxes”. If you are talking about estate taxes, that saying couldn’t be farther from the truth. It seems like only yesterday (actually eight years ago) we were celebrating the repeal of the Federal Estate Tax only to discover upon reading the Bill that the repeal only applied to individuals dying in the year 2010. If Congress did not act to address the issue, there would be no estate tax in 2010 and the estate tax would be resurrected in 2011 at its original levels. This one gets me!
We were all assured by the talking heads (so called “experts”) that this would never happen. Long time readers of Dream Weaving may remember an article in Spring 2002 discussing the Federal Estate Tax which stated:
“What is the likelihood that the federal estate tax will be repealed? Nobody knows for sure, but with Congress looking for funds to reduce the size of the projected deficit and with states also looking for funds to meet their deficits, it may be doubtful that Congress will act to provide a tax reduction for the 1% of the estates which are required to file an estate tax return.”
Well, my calendar reads 2010 and is it really surprising that Congress has taken no action to address the uncertainty? So as of right now, there is no federal estate tax but do not be surprised to see Congress act during 2010 making the effective date for reinstating the estate tax retroactive to January 1, 2010.
The following table will compare the major changes in the federal estate tax provisions for the years 2009, 2010 and 2011:
2009 2010 2011 Federal exemption-1 $3,500,000.00 unlimited $1,000,000.00
Highest estate tax rate 45% none 55%
Gift tax exemption-2 $1,000,000.00 $1,000,000.00 $1,000,000.00
Gift tax rate 45% 35% 45%
Generation skip exemption-3 $3,500,000.00 unlimited $1,000,000.00
Generation skipping rate 45% None 55%
Basis adjustment-4 Non-spouse beneficiaries unlimited $1,300,000.00 unlimited
Spouse beneficiary unlimited $3,000,000.00 unlimited 1 The amount which can pass to a beneficiary other than spouse without imposition of tax. 2 Cumulative lifetime gifts exceeding annual exclusion amount $13,000.00 in 2010. 3 Assets passing to grandchildren’s generation or beyond. 4 Amount basis in assets is increased at the time of death.
Even if Congress does not address the estate tax uncertainty in 2010 and there is no tax, your heirs will still be facing a monster known as carryover basis. In prior years, the basis of the assets passing to your heirs was stepped up to the asset’s fair market value as of the date of death. Therefore, all of the built-in capital gains were eliminated at death.
In 2010, the stepped up basis adjustment will no longer be unlimited but will be limited to $1.3 million on assets going to a non-spouse and $3,000,000.00 for assets passing to a spouse. For example, if you have a piece of property which was originally purchased for $100,000.00 passing to your children at death having a $2,000,000.00 fair market value, the children’s basis in that property in 2009 would have been $2,000,000.00 and if the property was then sold for the fair market value of $2,000,000 there would have been no capital gains on the transaction.
If the same property passes in 2010, the children’s basis in the property will be $1,400,000.00 ($100,000 + $1,300,000) and if it’s sold for the fair market value, the $600,000 difference will be subject to capital gains tax. Your executor will need to allocate the basis adjustment between your assets on a newly-to-be-created form and he will need to know what your original basis was in the property at the time of death. Unless you have very good financial records, this is likely to create additional complexity to estate administration resulting in additional cost.
Carryover basis was attempted in the 1970’s and was a complete disaster. Carryover basis will disappear in 2011. This alone is reason to keep the life support plugged in for another year.
The clock is ticking on the likelihood for a fix to the estate tax to occur during 2010. There is considerable discussion about the possibility of the fix being made retroactive to the beginning of the year.
There is some precedent in history and some case law indicating that a retroactive application of the estate tax change would be held to be constitutional; however, the later we get into the year, the less likely it is that a change will occur and that the change will be made retroactive to the beginning of the year. The year 2010 is an election year and the closer we get to Election Day the less likely that any member of Congress will act on a bill that could be construed as a tax increase.
Given the uncertainty, what action should be taken now? One legal scholar, Jeffrey Pennell, stated in a recent article as follows:“Is there a clear avenue for action today? In many respects the answer is no, making the old adage wise. ‘If you don’t know what to do, then do nothing.’ Rather than seeming weak or defeatist, that advice could avoid action that might make a client’s situation worse than doing nothing.”
Right now the repeal will only apply to individuals dying in 2010 and then only if Congress does not make the change retroactive to the beginning of the year.
While I do not recommend doing nothing as an approach, I do recommend that you take small steps and do not do anything that cannot be undone if the rules all change.
You should review your estate planning documents because certain items can create an absolute disaster. The best example would be if you have a will or trust which leaves an amount equal to the maximum federal estate tax exemption to someone other than a spouse and the amount above the exemption to the spouse.
Since there is no federal estate tax in the year 2010, this plan will in effect disinherit your spouse and create hardships. Additionally, given the fact that we may be facing the carryover basis issue, it may be prudent to begin reviewing your financial information attempting to retrieve historical basis information on your current assets. This will assist your executor in the event that they are forced to complete the allocation form to determine your beneficiaries’’ basis in the assets they inherit.
Given the uncertainty over which direction Congress may go, this is not the time to panic and overreact by making a bad situation worse. Our primary goal in developing an estate plan is to be sure that the assets you have benefit the individuals you choose to and a secondary goal is to minimize the transfer tax related to those assets passing to the designated individuals.
Unfortunately, given the uncertainty of times, it is impossible to minimize the estate tax with any degree of comfort. Your estate plan can be redrafted to contemplate no federal estate tax only to have the work made useless by Congress reimposing the estate tax retroactive to the beginning of the year or by allowing it to reappear on its own in 2011. Even if you were to die prior to Congress re-imposing the federal estate tax, if the tax is made retroactive to the beginning of the year the tax would still apply.
Whatever actions you take you need to be sure that they can be undone once the level of uncertainty is reduced. Review your documents, ask questions of your advisors if you have concerns but don’t hire a hit man to take advantage of the current absence of a federal estate tax. I am reminded of a famous Doris Day song which went “que sera sera, whatever will be will be”. It is always better to die later rather than sooner, even if dying later may cost you some additional tax.
I am reminded of a famous Doris Day song which went "Que sera sera. whatever will be will be."
It is always better to die later rather than sooner, even if dying later may cost you some additional tax. - gez
Monday, September 13, 2010
The corn market has gone crazy. Chris, your New Zealand corn might be worth $10 a bushel but there is a little obstacle. You are thousands of miles away.
Still, it has to be good for both of us, no matter the distance. The world needs corn, no matter where it is grown. They are bidding a mighty price again for ours, something like that short lived, high priced market in 95-96.
Local markets are paying over $4.30 US currency. That is a bit above the corn I sold for $4 in January. An Asian buyer contacted me and will pay another quarter on top of that for my non genetically modified corn. I sent him all the paper work today but that quarter eats up the transportation cost to his location on the river.
I will have to deliver wherever it is best for the combine and the guys hauling the corn to market.
Most farmers don't sell more than half their expected production upfront in case of a failure. Some do not forward contract at all but it is a good tool if you can use it.
That tool seems to be more profitable in soybeans where the market has dropped since the US report came out expecting one billion bushels carryout to next year's marketing season. It may be more so in wheat which has tested the $7 cash wheat price a couple of times.
It is a crazy market place for sure. Fertilizer dealers have already upped their price and I need a bunch of it. Gas is up to almost $3 dollars again, I hope this isn't a sign of inflation.
Farming was so easy and so predictable at $2 corn.
Did I say that?
Sunday, September 12, 2010
Why can't the president use his $50 billion infrastructure/jobs proposal to rebuild the locks and dams on the Illinois and Mississippi rivers?
A 15 barge river tow hauls the freight of 218 rail cars pushed by 6 locomotives.
That is 1050 semi trailers worth of commodity, whether it be fertilizer or fuel we need or grain we market around the world.
Yes we need railcars and semi trucks to move our goods for our needs but some of the only exports other countries need is our grain. We are the breadbasket of the world, right?
The big point is, it is so efficient to move goods over water.
Consider this, too:
That river tow gets 576 MPG per ton.
The railroad gets about 413 MPG per ton.
The semi tractors only get about 155 MPG per ton.
Don't even think about the air freight we use. Is that about one MPG per ton? I don't know the figure but you know it is very inefficient although all of us has used air freight to move goods quickly.
I would like to see those locks and dams and our railroads rebuilt or at least upgraded. We have let this go on too long. I sit in traffic while the one lane traffic moves over a bridge repair. We need that too but we need our infrastructure first and foremost.
I can drive less, can you? Everyone needs to eat and the more stable the food transportation system is the better off we all will be.
This has been neglected for a long time.
It's time to improve our most valuable infrastructure.
We need to rebuild our locks and dams and railroads.
Saturday, September 11, 2010
I scouted soybeans all day and got up to Catawba Ohio. That's right, they are famous for Cawtaba trees and that is about it. It's Buckeye Country too and I listened to Ohio State beating the University of Miami, Florida at the end of the day.
I saw some corn rows gone but no one was running from here to Catawba, almost 100 miles away. I did a quick search for information about little Catawba, Ohio.
As of the census of 2000, there were 312 people, 106 households, and 85 families residing in the village. The population density was 1,221.2 people per square mile (463.3/km²). There were 112 housing units at an average density of 438.4/sq mi (166.3/km²). The racial makeup of the village was 96.47% White, 0.32% African American, 0.64% Native American, and 2.56% from two or more races.
There were 106 households out of which 41.5% had children under the age of 18 living with them, 61.3% were married couples living together, 8.5% had a female householder with no husband present, and 19.8% were non-families. 12.3% of all households were made up of individuals and 3.8% had someone living alone who was 65 years of age or older. The average household size was 2.94 and the average family size was 3.21.
In the village the population was spread out with 30.4% under the age of 18, 8.0% from 18 to 24, 31.7% from 25 to 44, 22.1% from 45 to 64, and 7.7% who were 65 years of age or older. The median age was 32 years. For every 100 females there were 106.6 males. For every 100 females age 18 and over, there were 102.8 males.
The median income for a household in the village was $39,659, and the median income for a family was $40,833. Males had a median income of $34,167 versus $31,250 for females. The per capita income for the village was $16,261. None of the population or families were below the poverty line.
Dad always pronounced it Catawbie tree. No matter it's origin or pronounciation, its a pretty typical rural Ohio village except for the poverty line part. Sable wasn't that enthralled about it. I can't blame her unless you like crop fields like I do.
I hope you are enjoying this weather as much as we are.
Friday, September 10, 2010
Even with cloning there will never be another you or another bean like the ones on these plants. Hard to imagine, isn't it? But is is true and undeniable.
Tonight we went to the Clinton County Corn Festival and you could see it from the littlest baby to the oldest person there. One former student was selling his beautiful art work, others were working at one of the 30 concession stands, tractor pulling or just enjoying the evening. A beautiful evening it is, too, with just a sliver of the moon showing. It looks like rain maybe tomorrow night and it is slowly rolling in.
More farmers are starting harvest each day, running pretty hard on the eastern side of the county and even a few cutting the early beans. Harvest has come as slow as those clouds rolling in tonight. One of dad's saying was you know what the monkey said when he caught his tail in a lawnmower? It won't be long now!
It was nine years ago tomorrow when we had the most beautiful day one can imagine. Everything stood still after the second tower fell.
That day was unique in a way we will never forget in this country, the lives were precious and we pray it won't be repeated.
Thursday, September 9, 2010
That storm cleared the air and the dust off the plants and the air is clear and crisp like fall. I was surprised to see there were trees down just a few miles north of us.
We can't believe we made our fourth trip to the Highland County Fair or watched the junior fair pig sale for an hour. It's just been that kind of a week.
I can't believe I missed the Ohio NoTill Field Day yesterday, either. Once I had made my doctor appointment I wasn't going to miss it but I really didn't learn a thing I didn't already know. I could have been in West Manchester and saw this.
My arm still hurts and I still have to use the ice bag to deaden pain. These old joints and connectors are worn after 60 years. And yes I am thankful to have them for 60 years. How about another 20?
I would like to raise another 20 crops if I have it left in me. I live for the seasons, the cropping seasons. It is almost time to collect checks and headaches faster than you can count them. I just hope the checks total more than the bills and the satisfaction overrides the pain. That's life and that's business.
Tonight is my good friends Pioneer Field Day. Great food and fellowship is guaranteed. We will have to do our walking there. First, I need to walk more fields of soybeans for shipment to Japan today and make sure they are suitable.
That grain cart and wagon would really help collect the grain we are expecting this fall but it isn't in the budget. Hopefully the headaches won't come from breakdowns.
I got a nice email from one of our readers who backpacks with another reader. They went to Colorado last week. I never knew that. What a small world and we share ideas right here.
Here is a toast with a fuel sipping hybrid for all of you.
Wednesday, September 8, 2010
I went to the Adena bone and joint clinic and just like I thought, I am bad to the bone. Really. Not so much though because they really couldn't find anything but a little bit of damage from my fingers to that verterbrae in the neck where the nerves connect.
My finger not bending is just like a tennis elbow. It was overextended and overworked and now the tendons are so swollen they won't bend.
I guess I have to sleep with the ice bag and she is not my wife. The med pack should take down the swelling but just as I knew, I need to excercise those muscles and keep them hot and cold for pain. Some people just understand this stuff, I don't.
If it don't work, I take it to the shop. The shop man says you need to put more hours on it. Huh? I mean it hurts already!
Farmers and doctors generally get along real well, it's just like a family reunion, it never happens. Oh Gee Ed, I see here I haven't seen you for ten long years! You bet! That last place a farmer wants to go is the doctors office.
So back to the prednisone and the ice packs and the work out room.
Didn't some baseball player get a big award for this?
I guess I am just a whiner.
Tuesday, September 7, 2010
Markets are just not the same as they used to be. It really started before Katrina but that one storm changed markets for ever as it damaged the major grain shipping channel from the midwest to the world. Barge rates skyrocketed overnight and the resulting higher fuel and transportation prices affected all business and boy do we ever depend on transportation!
Back in the day, the German farmers brought spelt, shown in the picture, to the states. I took this picture at the Highland County Fair this weekend. These are all youth project entries. Spelt is good livestock feed and easy to grow on any soil. Now it is mainly used for celiac food for those who can't eat anything with wheat flour in it.
Still, they had huge market swings between harvests like we do now. The price between trading months have changed because of economy and demand and about everything that affects it. The Chicago Board of Trade was founded to help buyers absorb those market swings by hedging contracts for price and delivery.
Farmers study and curse the markets and the grain traders who trade them but at least we have a market floor unlike spelt or hay or most food crops. Without this trading floor, American Agriculture wouldn't be where it is today. Today it is the backbone and source of economy for our country. This is so important in hard times when there are no jobs like we suffer from today.
The key to my profit is what I sell my product for. I have bare bones, cost efficient production pretty well mastered. When the grain price varies 30-60% in one year, there is the difference between success and failure and so-so to great.
Tonight is a meeting on grain marketing I really need to attend. Do you think I really want to go? I say I want to make more money but do I have the tenacity to do what it takes?
Success in anything is mastering what you don't like to do.
Monday, September 6, 2010
If it weren't for government checks, many of my neighbors would have nothing. Unemployment has been extended past 99 months and is near 20% here and underemployment about the same. So half the people don't have a job. How long can we continue?
You could tell when you are near farmers, all they are talking about is getting the combine ready, what is your moisture content, and those types of comments. Harvest is upon us and agriculture is one of the few profitable enterprises out there though I think we took more lumps with the weather this last month than many realize. Fertilizer for next year is already higher than this year.
The Tea Party was the busiest booth at the fair. LuAnn said she felt sorry for the lady in the Democratic Party booth. People were walking in an arc pattern around and away from that booth. The Republicans were quite busy but the Tea Party was busier.
I gave permission for a four by eight sign on our farm for a fellow running for the Ohio House. He is running for the seat for the guy who left his stupid signs on our farm. His name is Cliff Rosenberger. Click on his name and see what you think of him. Do you see any reason you wouldn't vote for him? I never heard of him but a lot of my friends recommend him.
We need jobs, people. You have to employ your people first and having a career that you enjoy is one of the two keys to life. The other is having the right spouse.
This country has done a poor job helping children accomplish either one.
Have a great Laborless Day.
Sunday, September 5, 2010
The weather was perfect for a county fair or our church festival today. It is 50 degrees and it hasn't been that cool in months.
There were lots of impressive things. They had hundreds and hundreds of youth entries and more crops and vegetables than the senior division of some fairs we judge. They had more tobacco projects than most counties have in corn projects. I was really impressed with the quality and some of those soybeans were heavily podded. Some 4-H families are going to harvest a good crop.
The midway has millions of dollars of farm machinery from four dealers. I haven't seen that anywhere else. They had the best fire department display I have ever seen with 9 departments participating. Each department had many pictures of their work.
The disability school had a good display on their soy diesel fuel project and how many less tons of carbon their buses had emitted into the atmosphere.
The crowd wasn't very large but lots of projects were not in place yet. This is the county where I pulled my first tractor in the early 70's. I beat a Super Stock tractor with a friend's stock Oliver 77 we had tinkered with.
All of this in a county where Extension and Soil and Water is on the outs. The county is broke and cut everything to the bone so they had to put on a tax levy and it failed. Also when we walked in we saw a sign that the Confederate Railroad, demolition derby and Vandell's shows were cancelled. I wonder if they didn't have enough money for the liability insurance?
Saturday, September 4, 2010
You can see why I can't wait to harvest this First Choice corn. It is ready. Les is trading trailers and Brad is putting the final touches on the combine so we can start next week. It won't be too soon for me. I am ready to get on with it.
We will have to watch for field and combine fires. It is tinder dry out there and wouldn't take much to catch a field or machine on fire. What year was it that so many local combines burned? I think it was 08, even Ralph lost his combine and Hugh and many others.
Lots of fun things are going on, the church festival tomorrow, the Highland County Fair starts today and Sabina has their Labor Day Parade Monday. Then, next weekend you have the Corn Festival which is well attended here.
Our email got bought out by Frontier so our Verizon.net became Frontier.com Thursday. I don't care how prepared you are, it is always a pain. Do you realize how many things you have to change to your new address? All the stuff I read and comment on has to be changed, it is going to be awhile for that to happen. So I figure this is a cooling off period Internet wise, I have too many other things to focus on anyhow.
Some of you have been sending out tons of email and one did catch my eye. The new email powerpoint of pictures before and after nine eleven make you think how much the world has changed in one decade. They aren't high quality but they are very poignant. The empty pair of shoes pictures make you realize, poof, one minute and you aren't here anymore.
Where will you be?
Friday, September 3, 2010
We also got to see a farmer harvesting corn and another harvesting beans next to the plot fields. It is really dry in Eastern Indiana, drier than it is here and the crops are all pretty much ready to start harvest.
There is nothing better than good seed sold by honest people. That is why I plant First Choice. This wasn't meant to be an advertizement for their seed but I guess it is.
First Choice is the company formed by Leon Bird and Mark Denzler. They both got big enough it was easier to pool resources than operate as they had. There is power in mergers if it is for the right reason and this one is. As Mark said they have not sold out to be multi national conglomerate though they were both offered good buyouts. They are fiercely independent as Mark said.
I got to thinking about that statement and thought that is what I am, fiercely independent. That could make me hard to work with but I am really soft and an open book until it comes to opening my checkbook. That better be done for real good reasons.
First Choice is a good reason for me. I ordered all my corn seed from them and all my wheat seed. I still like what I have in soybeans but I will definitely try some. I would like to have one good vendor to meet my needs and buy enough from competitors to make sure I am getting the best deal for me.
The meeting was about corn mostly and that is enough to fill a book. Leon brought a big radish planted in July so there were lots of questions on radish as cover crops. That company can fill that niche, too. I like companies that can fill a lot of niches. Mark on the corn and bean side, Leon on the radish and inoculant side. That should work out well.
The wind was pretty strong today off that hurricane. I got home and tested the corn I want to shell and it lost another point in moisture. It is about ready to harvest.
Good trip, great field day.
Thursday, September 2, 2010
Driving around today to my appointed stops make me feel like the picture. I wish I had more arms spread out taking in a different location.
The scenery here is much different. The soybeans outside my window are more yellow than green. The countdown to harvest is here in southwest Ohio.
How dry is this corn? We have taken a few samples and it is all above 20% moisture. We could shell a few fields right now and the market does want our corn but we want to decrease the dockage and maximize that grain check. At some point you have to bite the bullet and just start harvesting.
Like I said before, when the first combine hits the field in earnest we will all be in there. I stopped at the mechanic's shop and he said one neighbor stuck his header inside some corn and found 25% moisture, still a little high for us conservatives.
You don't want to start so late you can't get your whole crop in at a loss, combine and grain wise. We have a lot of acres to cover so I want to start a little earlier if it is ready. The crop is getting more ready day by day.
I saw some beans below Fayetteville that are pretty much bare of leaves. It won't be long before they combine those. My own corn at Charlie's on US 68 is dead brown and I think we could shell it any day.
I am planting wheat and cover crops to all my acreage, so it makes harvest all that more importan.
Starting harvest is kind of a staggered start. Someone is always first to harvest and others are first to finish, others are last to start and others are last to finish.
The clock is ticking...