Pella Tulips

Our Reply: One of our readers snapped these pictures in Pella on 4-6-12 and wanted to share the beauty. Note the ISU colors in the top picture!

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Freeze Warning

Freeze warning notice for the area tonight from Friday April 6th at 1 am to Friday April 6th at 8am. Low of 31 possible. -- ECI COOP (@ECI_COOP)

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Planting in Southern Iowa?

Contrary to what you have heard, SE IA does not have a lot of corn in the ground. Through 5 counties today and not one planter. #patience -- Nathan Wells (@wellsnw)

Twitter Feed- True 'dat!

I will not be impressed with technology until I can download food from the internet. -- Men's Humor (@MensHumor)

Our Reply: This is good for those of us in the business of producing food and fiber!

Does $500 Rent Pay?

HADDONFIELD, N.J. (DTN) --

By Marcia Taylor, she can be contacted at marcia.taylor@telventdtn.com

A new crop of Midwest cash rent auctions resulted in many $500-an-acre deals for 2012, leaving bystanders wondering how their neighbors can make top-dollar rent pay.

It was definitely easier for an above-average corn grower to shoulder extreme rent in 2011 than 2012, according to financial adviser Sam Bachman with AgriSolutions, a Brighton, Ill., financial consulting firm. That's especially true if USDA's projected 2012 average cash price plunges to $5 this season and input costs stay steady or higher, squeezing growers' margins.

Take a real 1,252-acre corn grower from northern Illinois who paid an average of $237 an acre for rent last year, boasted an average corn yield of 171 bushels and who averaged sales of $6.23 a bushel, based on AgriSolutions' field-level managerial accounting records. His production margin before rent ran $512 an acre in 2011. (Production margin is the profit margin before family living, taxes and interest on debt.)

In theory, that $512 was the maximum aggressive rent the grower could have afforded to pay on any extra acres he rented and still cover all his variable expenses in 2011, Bachman says. "At your most aggressive, you could let your existing fields cover your overhead (they would have had to anyway). Then let your new field cover variable costs including seed, chemical, fertilizer, crop insurance, equipment operating costs, storage and drying costs and other general crop expenses." You'd also have to determine if you had capacity for one more field (time, energy, management ability, and equipment).

"Other businesses do that all the time to penetrate a new market and get their foot in the door with a new customer," but it can be a risky strategy in farming, adds Bachman. "You have to hope that by the time the lease is up, you've built a relationship with the landowner that isn't solely based on dollars." Over time, you'd need rents to adjust closer to your average to cover all your costs.

One risk is that a sudden drop in commodity prices could derail the best intentions. All other things being equal, the real Illinois grower's "maximum" affordable rent on expansion acres would slide to $316 an acre if his average corn price is $5 in 2012 instead of $6.23, Bachman says. Unlike 2011, that more conservative corn price leaves renters little margin for error.

Bachman's bottom line: "With the price and yield risk, $500 rents are extremely aggressive and likely not sustainable even for those operators with excess capacity."

If a real Illinois farmer's season average corn price slips from $6.23 in 2011 to only $5 a bushel in 2012, what he could afford to pay for "maximum" cash rent bids would slide almost $200 an acre, from $512 to $316.

Crop Professionals on Early Planting- Day 5

News From The Coffee Shop asked several Crop Professionals across Northeast Iowa to shed some light on the unusually early Spring weather and  discuss the risks and rewards associated with getting seed in the ground early.

Thanks for tuning in over the past week to read what the local pros are saying about early planting! 

Call, text or email News From The Coffee Shop and let us know what topic you'd like covered next, 319-327-0806 or prburmeister@gmail.com

By Marcus Norman, Sales Supervisor/ Sales Agronomist
      Innovative Ag Services- Independence, IA

      marcus.norman@ias.coop
      319-939-0357

Hey Pete Sorry for the delay in getting info passed on… was out of the office some last week.  Things are getting busy with much of the NH3 applications completed or underway and some dry fertilizer applications being made.  The favorable weather has given us a good jump start and have had a chance to read some of the other local agronomy advisors comments. 

I would agree that all signs point to an early planting season… however, the old saying of “plant early, plant often” could be a good mantra to live by this year.  One concern (other than the crop insurance date) would be the tight supply of good high yielding genetics.  If for some reason we would experience a catastrophic loss in a large geographic area, getting quality genetics to replant could be a valid concern.  I have attached a Monsanto tech bulletin and a link from Dow regarding the topics. 

Hope everyone has a Safe Spring Season!!

Monsanto Tech Bulletin  (You may need to have a google account to view this one)

Dow Agri Sciences

From Harry Stimson- Buchanan County Realtor

Iowa land values. $10,500/acre is the highest I've seen filed in Buchanan County. -- Harry Stimson (@HarryStimson)

Twitter Feed- Buchanan County, IA

Following a motorcycle with a dog in a sidecar #awesomesauce -- Jon Blin (@jjbcattleco)

Crop Professionals on Early Planting- Day 4

News From The Coffee Shop asked several Crop Professionals across Northeast Iowa to shed some light on the unusually early Spring weather and  discuss the risks and rewards associated with getting seed in the ground early.

Thanks for tuning in over the past week to read what the local pros are saying about early planting! 

Call, text or email News From The Coffee Shop and let us know what topic you'd like covered next, 319-327-0806 or prburmeister@gmail.com

By Brett Vogel, Vogel Crop Services
      Pioneer Seed Professional - Independence, IA

      brett.vogel@plantpioneer.com
      319-240-8979


Frost Damage risk
Although the growing point on corn is below the soil surface until the five leaf collar stage (V5), new growth often has trouble emerging through frost-damaged tissue, resulting in buggy-whipped plants. Frost damage to plants that are 6 in. or shorter can reduce yield by 9-15%, and is likely related to the subsequent unevenness in the stand and completion among plants.  

When a corn plant was one leaf stage behind neighboring plants early in the season, its yield was reduced by 20%. In comparison, when a corn plant was two leaf stages behind neighboring plants early in the season, its yield was reduced by 51%.


Crop Insurance Dates

Early planting before April 11 for corn and April 21 for soybeans will cost you prevented planting dollars.

Early April planting has been a topic of discussion.  Is it a good or bad idea?  The past few years early planting has been very popular due to warm soil conditions.  According to University of Illinois agronomist Emerson Nafziger. "Once soil conditions are good for planting in April, there probably should be little hesitation in getting started."  Soil temperature is not a consideration.  
If conditions are favorable and the 7 – 10 day forecast is good there is no reason not to get started on planting.  Your biggest factors are a May frost (latest frost date for Waterloo IA is May 1 50% and May 12 10% chance according to ISU Extentions Office) and pest control.  Consider all factors and do what fits your operation.  Be aware as the temperatures increase and we gain GDU’s corn growth becomes rapid.  My biggest concern with the warm weather is growing to fast and catching that late May early June wind storm and getting green snap.  

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From Ben Donnelly- Benton County, IA

Three big rigs working dirt in the same field between Brandon & Mt. Auburn!

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NCAA CHAMPIONSHIP PREDICTION

I'm taking KU tonight, love Coach Cal but the #Big12 is built off toughness, it wins championships #NationalChamps -- Royce White (@Highway_30)

Ask the Tax Man

Andy Biebl DTN Tax Columnist

Question:

Our family formed two LLCs last year. The first LLC holds the farm land, and is owned by all family members (brothers and their spouses, nephews, and non-farming siblings). The second LLC is the active farming entity, and is owned by those who are actively involved in production. The operating LLC pays rent to the real estate LLC under a straight cash rent arrangement. Our attorney thinks that perhaps the wives do not have to pay self-employment Social Security tax on their share of the rent income from the real estate LLC, but that those who are active in the operation should pay Social Security tax on their share of the rent. Is that correct?

Answer:

First, congratulations on your structure. You've recognized that all in the family can share in the return on the land investment (the rent), but only those involved in production participate in that income. As to your question, your attorney might be confusing the passive loss restrictions in the income tax part of the code with the self-employment Social Security tax (SE tax) rules. As a starting point, real estate rentals are exempted in the tax code from SE tax. A landlord, including an entity, collecting cash rent and providing no other services to the tenant entity, even a related party, would meet that exemption from SE tax for all partners/members of the LLC. That matter was cleared up in the Eighth Circuit McNamara decision 12 years ago.

Your attorney is probably thinking of the "self-rental" regulations built into the passive loss restrictions. Passive losses are generally only deductible to the extent of passive income. To prevent taxpayers from too easily creating passive income on self-rentals, the regulations say that leasing land to a business in which you materially participate does not create passive rental income that can offset other passive losses. Those rules are generally unimportant to farm landlords, as most do not have other passive loss activities. But the SE tax exemption is important, and all of the LLC land entity owners will receive that exemption on their share of the rent.

From Tyler Krug- Benton County, IA

#Spring has sprung at #KrugFarms, oats are up, calving, and planter preparation -- Tyler Krug (@TylerKrug)

Grinder/Mixer Sells for record high

Gehl 125 grinder/mixer sold for $13,000 on northeast Iowa farm retirement auction yesterday...new record auction... -- Greg Peterson (@MachineryPete)