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11-07-2012 07:41 AM
Does anyone see any likely correlation between sequestration discussions in Washington and any probably results and how you would market your crops next year?
Should one be wary of forward contracting because of anything you expect out of the sequestration debate? How about the role of crop insurance - any reasonable chance that crop insurance will take such a hit in the Farm Bill as a way to pay for reduction in defense sequestration that it would affect how you would decide on crop rotation and marketing plans?
For us making marketing decisions this and next year at the farm level, is sequestration going to be like the mating of elephants - carried on at a high level with lots of noise and dust and with no results for a long time - or will it be like getting in the way of a steamroller that crushes all before it?
I guess, to answer my own question, I will take it as it comes and not get too worried ahead of time, but then maybe I'm happy down here in the dust while the roaring and thrashing around goes on above me.
11-07-2012 07:57 AM
If they "dumb down" crop insurance the non-irrigated farmers west of hwy 81 in Ks & Ne will all change their crops and rotation back to something like their fathers did. Maybe a little more substainable and less costly to produce.
The trickle down will be less crop acres planted many of the farmed pastures will go back. Most marginal acres every where will cease to be a factor in maximum production.
If these acres had to stand on their own they can't stand up. Might be a wake up call?
11-07-2012 08:26 AM
USDA as an agriculture agency was probably in trouble regardless of election result. The elephant immage may divert our attention from the quick steamroller of administrative rewrite. I hope we save crop insurance for a little while. But there is no political reason to support agriculture.
We gotta realize the call for tax increases and paying a fair share are based on net worth not income. Agriculture is a small % of the population, but is a much larger % of the ONE PeRCENTers. We should expect to be shoved out of the usda budget------- even crop insurance will be hard to hold on too.
11-07-2012 08:37 AM
As I market grain this next year I will do one thing I do not normally do.
Most of our corn goes to Locally owned end users. I will personally try to encourage them and thank them for staying in the game. The feedlots and alcohol plants we sell to are owned locally------ those folks are investing and operating on personal and family wealth------------and could do just fine cashing out. They have been dealing with a constantly changing playing field for several years.
I will be even more cautious than I normally am when it comes to forward contracting. The bird in the hand senerio will continue to dominate my thoughts as economic uncertainty continues.
11-07-2012 11:47 AM
I believe crop insurance as it stands is taken care of by seperate legislation as per the last farm bill. It will undoubtedly continue for this next year. And I'll bet on a continuation of the farm bill for one year. After that is up in the air. Frankly, I don't care for the subsidized insurance as a replacement as it will promote unprecedented farm consolidation. It can all go away as far as I'm concerned.
The farm bill definitely seperates the men from the boys. If one is truly concerned about deficit spending then the Farm Bill supports for ag need to end. We aren't fighting the global subsidy wars among exporters like we were when ag subsidies kept us going in the bad times.
11-08-2012 05:58 AM
This is an excellent website that details how things actually work under the existing budget sequest laws.
For 2013 cutting $109 Bil out of a $2Tril or so budget isn't much of a cut, hardly would be noticed. This is just more BS designed to frighten people into doing more big time spending. So, the short version. It is NOT a $1Tril cut, it is a $109 Bil cut for 2013. The media is great at fear-mongoring. Ignore it.
BTW, before krafty whines, EVERY program for anyone who is event remotely in need, is exempted from the sequestration. Food stamps, welfare, WIC, etc. Read the articles at the above website. Very informative.
Palouser and I seem find more and more ways to totally agree with each other. His above post is excellent. Susidized crop insurance is a nice luxury, but it is extremely slanted against good conservative farm management.
11-08-2012 06:33 AM
But the 3% increease in income taxes on the job creators making over $250 K will surely cause it all to crumble.
Being more serious, the sharp increases in middle class taxes would be in fact be a bad idea in the face of punky aggregate demand.
Back to the first topic, though, I see this AM where Boenher says he won't compromise on anything that includes an increase in taxes on "small business".
If you think about the flow chart of what happens here, I have to assume that he's willing to risk triggering a tax increase on tens of millions of middle class households in order to protect what is, at very mostt, a few hundred thousand small business owners making over $250K AGI.
And anyway, I just hate it when people assume I'm dumb even though it certainly appears that the majority of my pale homeboys buy this baloney. If you're in business you don't make a decision on expansion based on the level of marginal taxation, you make it based on a best guess of future demand at a price above cost.
If we've reached a point where our "job creators" are all so stupid that they just sit around the country club whining about how nobody loves them and they're all going to take their balls (lol) and go home, then we really are screwed.
11-08-2012 06:56 AM
Seems to me we should change the fed tax code to make it more "Fair".
So, the tax rates should be adjusted to account for federal funds spent in any given state. So, for example, if you work in California which receives a disproportionate share of federal outlays, your income would be taxed at a higher rate to help compensate for the expenditures your state receives. It would be a state multiplier number, increase or decrease, relative to all states. If you live in Alaska, your rates would be cut to about zero.
If the wealthy in the blue states think they should pay higher taxes this would "fairly" allocate the burder. Great development incentives for the rust belt in this as well. Let's just see if those blue new yorkers would relocate to Cleveland :-)
11-08-2012 07:01 AM
As to the original topic-
never mind the particular artifically created mechanics of how it works- yes- the potential for financial turbulence dead ahead is most definitely a marketing concern.
Like the debt ceiling fiasco, really more a test of just how dysfunctional our political system remains than of anything specific. If the VSPs (very smart people, i.e., the chattering classes) are telling us that this is a remarkable example of cooperation then all is good for the moment, liewise the converse.
That is a problem, greater real problem is Europe where even the core countries are now in recession. Hard telling what inducements were offered to keep them kicking the can down the road until after the election but that was clearly the case. My thoughts are
1) there probably is some secret plan that has been cooked up between central banks and governments, which may create the illusion of effectiveness when it snaps the necks of overaggressive shorts
2) it won't work