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Farmers identify regulations as biggest threat to long-term profitability

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[December 07, 2012]  CHICAGO -- Delegates and others who attended the annual meeting of the Illinois Farm Bureau rated government over-regulation as the biggest threat to the profitability of Illinois agriculture in the next 10 years. The answer was in response to a survey of 399 delegates, alternates and other Farm Bureau members attending the meeting Dec. 1-4 in Chicago.

"As a member-driven organization, it's extremely important for us to reach out to our members and find out what concerns them, both for the upcoming year and years to come," said Illinois Farm Bureau President Philip Nelson. "Keeping our finger on the pulse of our organization, and the members that make it up, helps to ensure that we're pursuing issues that are most important to our members and will benefit them the most."

In all, 58 percent of respondents who answered the open-ended question named regulations, governmental entities or the U.S. Environmental Protection Agency as the biggest threat to profitability. This was the second consecutive year that regulations were the most-often cited response to the open-ended question. In addition, respondents indicated concerns with taxes, an answer given by 16 percent; input costs, a response from 14 percent; high cash rents and land prices, mentioned by 7 percent; and grain prices, mentioned by 7 percent.

In response to an open-ended question about the 2012 drought and what changes they will make to their farming operations in 2013 as a result, 48 percent of respondents who answered the question said they had no significant changes planned. Eleven percent said they will make different planting decisions, including less corn-on-corn, switching from corn to soybeans, planting more wheat in the fall or devoting more acres to hay. Seven percent said they would irrigate more land. Four percent said they would increase the use of minimal tillage. Two percent said they would pray for rain. Respondents were allowed to list multiple answers.

When asked about their corn planting intentions for next year, 66 percent who answered the question indicated their corn acreage would remain the same. Eighteen percent said they plan to plant more corn; 16 percent said they would plant fewer corn acres.

Forty-nine percent of respondents self-identified as livestock producers. Of those, 64 percent said they do not plan on expanding herd size in the next five years. The most commonly cited reasons were no room to expand, a reason given by 29 percent; retirement or advancing age, a response by 26 percent; difficulty in finding qualified workers, mentioned by 10 percent; and high input costs, mentioned by 9 percent.

Sixty-six percent of corn growers indicated they plan to increase their corn acreage over the next five years. Among those not planning to expand, the most common reasons given were lack of available land and farm size, a response by 28 percent, while 14 percent cited high cash rents and land purchase costs. The open-ended question allowed respondents to list multiple factors.

Those surveyed were asked whether they purchased crop insurance in 2012. Eighty-four percent indicated that they had. Eighty-seven percent said they plan to purchase it for 2013. When asked if they had filed a claim, 84 percent who answered the questions said they did. A large number of claims are expected to be filed in regions throughout the country as a result of the drought.

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The survey also gauged Farm Bureau members' opinions on two tax-related questions. When asked whether they had used the Section 179 small business expensing option in the past 10 years, 71 percent of those who answered said that they had.

Section 179 of the Internal Revenue Code allows taxpayers to expense, or deduct as a current expense rather than a capital expense, up to $125,000 of the total cost of a new or used qualified depreciable item they buy and place in service in the current year. Each year, farmers make large capital purchases in the form of equipment and are often able to use Section 179 in their operations.

A second tax-related question was asked of the 70 percent of respondents who self-identified as landowners. Those respondents were asked, considering the value of their farmland and other assets, whether a change from the current $5 million personal exemption to a $1 million personal exemption would create a liability for their heirs that would require the sale of assets. Eighty-one percent of respondents answered "yes."

For farmers, estate planning is critical. Currently, if a farmer retires or dies and passes the farm on to other family members, and their farming operation is valued at less than $5 million, their heirs would owe no federal estate taxes. However, the current estate tax rates are set to expire, reverting to a $1 million threshold. Because farming is capital- and land-intensive, most operations are valued at far more than $1 million, meaning that any heirs would almost certainly have to sell land and assets to pay federal taxes, rather than continue farming.

"Clearly, our members have concerns about their ability to continue to farm efficiently and, certainly, their concerns are not unfounded," Nelson said. "It's no surprise that government regulations topped their list of biggest concerns. As a farmer, I find burdensome regulations concerning myself. Still, these results are beneficial as we look to the future and try to ensure that we're addressing the issues that are most important to our members."


See survey results.


The Illinois Farm Bureau is a member of the American Farm Bureau Federation, a national organization of farmers and ranchers. Founded in 1916, IFB is a nonprofit membership organization controlled by farmers who join through their county Farm Bureau. IFB has a total membership of 412,177, a voting membership of 82,550 and represents 2 out of 3 Illinois farmers.

[Text from file received from Illinois Farm Bureau]

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