Category: Farm Management

Steven Klose, Tiffany Lashmet, and Jordan Shockley

Managing a farm or ranch is hard to say the very least.  Running your own business of any kind is difficult, but the nature of production agriculture is particularly challenging.  Long production cycles seem to magnify every decision, while the feedback loop between decision and outcome is delayed and unclear.  Operating in a competitive environment with little-to-no market power or influence, ag producers are price takers when it comes to purchasing inputs and price takers when it comes to selling commodities.  When it comes to the production process, you could say… weather takers.  Layer on top of this the pressure many producers feel of maintaining the family’s legacy, and it’s easy to get to the point of questioning “how much more can I take?”

It is not lost on us and our team of Southern Ag Today authors that offering management advice on Monday mornings is a little like a football fan offering quarterback advice from the comfort of the recliner.  We try to keep the tips, data, tools, and other information as relevant as possible, and one of our measuring sticks for topics is whether or not our producer audience actually has the time to do anything with the information.  Because we know your job is busy and overwhelming, we can confidently say you have no choice but to make time for today’s management topic.

Stress. It can weigh heavy, affecting your emotional, physical, and mental health. 

Among the endless list of things to manage, the stress of it all feels like another not-so-manageable thing you have to deal with. Too often, your physical and mental well-being take a back seat to everything else that must be done.  Remember, this is very much like the oxygen mask on the airplane.  Your health, both physical and mental, must be priority number one.  You take good care of your equipment and livestock.  Don’t ignore yourself. You are the most important asset on the farm/ranch.

Recently, I had a small leak in the seam on the side of my water heater. It was small. The problem wasn’t urgent. The drain pan & drain line were working as they should. And, of course I was busy.  For longer than I care to admit, each day/week held more important tasks than finding a plumber.  I’m sure you know how this ends.  There came a day when the water heater burst.  In that moment, I was managing the consequences of not managing my priorities.  Overwhelming stress and your health can be like that.  

We want to encourage you. Don’t ignore your health, especially if you have been putting off some nagging mental or physical issue.  There’s no better time than now to address it.  Of course, with the extra pressures of this time of year, if the mental stress has already pushed you too far, please check out some of the immediate mental health resources available.  Farm Hope and AgriStress Helpline are two programs available in Texas.  The 988 Suicide & Crisis Lifeline is available nationwide. To find local help in your state, check out the National Agricultural Law Center’s compilation of Stress & Mental Health resources here:  https://nationalaglawcenter.org/center-publications/family/mentalhealth/

As 2025 comes to a close, we wish you a Happy Holiday Season and the best of Health and Prosperity in 2026. 

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Klose, Steven, Tiffany Lashemt, and Jordan Shockley. “Management Priority #1.” Southern Ag Today 5(51.1). December 15, 2025. Permalink

Authors: Susmitha Kalli, Graduate Student, Department of Agricultural and Applied Economics, University of Georgia; Yangxuan Liu, Associate Professor, Department of Agricultural and Applied Economics, University of Georgia; Hunter D. Biram, Assistant Professor, Department of Agricultural Economics and Agribusiness, University of Arkansas; Fayu Chong, Graduate Student, Department of Forest Resources and Environmental Conservation, Virginia Tech University

Federal crop insurance remains a vital risk management tool for peanut producers across the United States. In our previous Southern Ag Today article, we discussed the various crop insurance policies available for peanuts. As with other crops, securing and maintaining insurance coverage for peanuts requires close attention to key administrative deadlines set by the U.S. Department of Agriculture’s Risk Management Agency (USDA RMA). Two of the most important are the sales closing date and the cancellation date, which determine eligibility and the continuation of coverage for each crop year.

The sales closing date is the final day producers can apply for insurance or make changes to an existing policy. This includes selecting the type and coverage level. The cancellation date is the deadline for producers to notify their insurance provider in writing if they choose not to renew their policy. Policies not canceled by this date are automatically renewed under existing terms. For peanuts, the sales closing date and the cancellation date are the same for a given location and are uniform across all available crop insurance policies.

While these dates remain consistent year to year, their timing varies by state and county. Notably, USDA RMA divides Texas into three distinct regions, each with different deadline dates, whereas other peanut-producing states follow a uniform date statewide, as shown in Table 1 and Figure 1.

These deadlines are especially important for producers who contract with a sheller. Although insurance coverage is available for all insurable peanut acreage, regardless of whether the crop is grown under contract, the valuation of indemnities may differ depending on contract status. Specifically:

• Contracted peanuts: When the crop is grown under a qualifying sheller contract, the contract’s base price may be used to calculate coverage, subject to USDA RMA guidelines.
• Non-contracted peanuts: When the crop is not contracted, indemnities are based on a price election determined by USDA RMA.
• Mixed production: For producers growing both contracted and non-contracted peanuts, coverage can be divided accordingly, provided that all sheller contracts are submitted by the acreage reporting date.

To avoid missing critical deadlines or encountering coverage limitations, producers are strongly encouraged to verify their county-specific requirements using the USDA RMA Actuarial Information Browser. A certified crop insurance agent can also assist in clarifying enrollment options, contract documentation requirements, and eligibility based on production practices. The  USDA RMA Agent Locator Tool provides a searchable database that helps producers connect with authorized crop insurance representatives in their state. 

Table 1. Peanut Crop Insurance Policies’ Sales Closing Dates and Cancellation Dates by State and County

Region	States and Counties Covered	Dates
South Texas Counties	Includes Jackson, Victoria, Goliad, Bee, Live Oak, McMullen, La Salle, Dimmit, and all Texas counties lying south of this line	Jan 31
Central/Eastern Texas and Most Other States	Covers Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, and parts of Texas including El Paso, Hudspeth, Culberson, Reeves, Loving, Winkler, Ector, Upton, Reagan, Sterling, Coke, Tom Green, Concho, McCulloch, San Saba, Mills, Hamilton, Bosque, Johnson, Tarrant, Wise, and Cooke, as well as all Texas counties lying south and east of this boundary	Feb 28
Remaining Areas	Includes all other Texas counties not listed above, along with New Mexico, Oklahoma, and Virginia	Mar 15

Figure 1. Regional Differences in Sales Closing Dates and Cancelation and Termination Dates Runner-Type Peanut Crop Insurance*

References

USDA Risk Management Agency (USDA RMA). Peanut Crop Provisions 20-PT-075. Available at: https://www.rma.usda.gov/policy-procedure/crop-policies/peanut-crop-provisions-20-pt-075

USDA Risk Management Agency. Actuarial Information Browser. Accessed April 2025. https://webapp.rma.usda.gov/apps/ActuarialInformationBrowser/

USDA Risk Management Agency. Agent Locator Tool. Accessed April 2025. https://public-rma.fpac.usda.gov/apps/AgentLocator/#!/

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Kalli, Susmitha, Yangxuan Liu, Hunter D. Biram, Fayu Chong. “Peanut Crop Insurance: Differences in Sales Closing Dates and Cancellation Dates Across Regions.” Southern Ag Today 5(50.1). December 8, 2025. Permalink

The term ‘fair market value’ or (FMV) is often used in conversation or as part of a calculation. The term itself conveys some meaning, but what is the true definition? Fair market value is the price any asset (land, machinery, equipment, etc.) would sell for in an open market where the buyer and seller are knowledgeable about the facts and reach an agreed-upon price. It is also assumed that the seller is not under a strong compulsion to sell (i.e., that the seller is experiencing liquidity problems and is selling an asset quickly to get cash), which could lead to adverse outcomes. In those instances, it may be that the seller advertises the asset at a price to quickly attract a buyer that does not reflect the full value of the property. The same is true of the buyer, that they are not under an unnecessary compulsion to buy.  

Fair market value appears in numerous contexts. It can arise in estate planning, tax preparation, contracts, or other legal situations. It can play an important role in all of these. Not always does a sale have to occur for FMV determination to be necessary. One example would be when a farm passes through an estate to heirs. The heirs can receive the farm assets at FMV (with what is known as a step-up in basis) without paying tax, but that means the FMV of the assets passing through must be determined. 

Buyers and sellers often conduct some due diligence before engaging in the marketplace. They may check public records of sale, online listings, databases, or local markets to get an idea of what an assets value may be. These can all be examples of fair market value. In certain situations, it may be necessary for the fair market value to be a more ‘official’ number, which can be obtained through a qualified appraisal. Depending on the assets involved, specific appraisals may be required. For instance, an appraiser with experience in antiquities would not be the right person for valuing rural land. An appraiser will consider factors such as comparable assets or sales, the ability of the asset to generate income, and its current replacement cost. It is not an exact science, so results may vary, or the process may provide a range of values. 

During such discussions, other terms such as original cost or basis may appear. At the time of purchase, the 1) original cost, 2) FMV, and 3) basis are all essentially the same. Usually, this is the only time that happens. That is because after acquiring the asset, the cost will stay the same, but the FMV of the asset in the marketplace can change (either higher or lower), and the asset (except for land) will be depreciated or expensed. An example would be a farmer purchases a field implement for $10,000, which on that day is the cost, the FMV, and the basis in the asset. After 5 years, they are planning to sell the implement. The original cost is still $10,000, but let’s assume the FMV of the asset has declined to $7,000 (what it would currently sell for in the marketplace between a willing buyer and seller), and they have fully depreciated the item, giving them a basis of $0. This shows that while sometimes these terms are connected, they are different and used for different purposes. 

For farms, it is important to be able to understand and determine fair market values in the case of sales, purchases, transitions, negotiations, and planning. Farms can request help on these issues through trusted advisors such as lawyers, accountants, tax professionals, appraisers, and consultants. 

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Burkett, Kevin. “No lowballs, I know what I’ve got…” Southern Ag Today 5(49.1). December 1, 2025. Permalink

Cash leases have grown in favor relative to crop share leases in the Mid-South. Eastern Arkansas still has a high proportion of cropland rented under crop share leases (ASFMRA, 2024). In contrast, other regions in the Mid-South have a higher proportion of cropland rented under cash leases (Paulson and Schnitkey, 2016). Much of the impetus for choosing cash leases stems from their simplicity. Crop share arrangements are perceived by some landowners, particularly absentee landlords or non-farm operators, as more difficult to monitor or manage, while tenants may find it easier to bid for additional tracts of land using cash bids. (Bigelow et al., 2016). 

The amount of cash rent paid for cropland is affected by many factors, including: land productivity, the presence of land improvements (in particular, precision leveling and field typography that allow for greater ease of water flow and drainage for Mid-South crop production), access to groundwater for irrigation, and the ability to grow several different cash crops (or crop diversification). Higher commodity prices and inflation also tend to push cash rents upward, as these have an upward impact on cropland value. 

This article compares cash rents for irrigated cropland across the Mid-South region, as most Mid-South crops (rice, soybeans, corn, and cotton) are grown with irrigation. County-level irrigated cropland cash rents are obtained for seven Mid-South subregions for the period 2019 – 2025 from the USDA, National Agricultural Statistics Service (USDA, NASS, 2025). Cash rents are averaged across counties within each subregion by year. Figure 1 illustrates the average 2025 irrigated cropland cash rent by subregion.

Cash rents vary greatly by subregion, largely due to differences in land productivity, irrigation infrastructure, and groundwater availability observed throughout the Mid-South. Average irrigated cropland cash rents in 2025 ranged from $146/acre in East Central Arkansas to $228/acre in Southeast Missouri. The lower average irrigated cropland cash rent in East Central Arkansas reflects a greater proportion of unimproved irrigated cropland in this region relative to Southeast Missouri. Unimproved irrigated cropland is land not conducive to precision leveling because of undulating or rolling terrain with varying slopes (ASFMRA, 2024).

Nominal annual average irrigated cropland cash rents are presented by Mid-South subregion from 2019 through 2025 in Figure 2. Nominal cash rents significantly increased for all seven subregions during this period (+9% for Southeast Arkansas, +17% for the Mississippi Lower Delta, + 20% for East Central Arkansas, +21% for Northeast Arkansas, +24% for the Mississippi Upper Delta, +25% for Southeast Missouri, and +27% for Northeast Louisiana). Sorting out the cause of rising rental rates is challenging with the combination of increasing crop prices and increasing input costs resulting from market disruptions (the COVID-19 pandemic and the Russian invasion of Ukraine during 2021 and 2022) followed by general inflation across the economy after 2022. 

Real annual average irrigated cropland cash rents are presented by Mid-South subregion from 2019 through 2025 in Figure 3. Cash rents are adjusted to 2025 dollars using the Gross Domestic Product Price Index (U.S. Bureau of Economic Analysis, 2025). Figure 3 reveals that when adjusting for inflation, cash rents have remained relatively steady since 2019. Thus, the escalation in nominal cash rents observed since 2019 is mostly explained by inflation.

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References and Resources

ASFMRA (2024). 2024 Mid-South Land Values and Lease Trends Report. American Society of Farm Managers and Rural Appraisers, Mid-South Chapter. https://nationalaglawcenter.org/wp-content/uploads//assets/Conferences/2024-Mid-South-ASFMRA-Land-Values-and-Lease-Trends-Report.pdf

Bigelow, D., A. Borchers, and T. Hubbs. U.S. Farmland Ownership, Tenure, and Transfer (2016). U.S. Department of Agriculture, Economic Research Service, Economic Information Bulletin No. 161. https://ers.usda.gov/sites/default/files/_laserfiche/publications/74672/EIB-161.pdf?v=75942

Paulson, N., G. Schnitkey (2016). Farmland Leasing: Where are We Going? Farmland in Perspective. Volume 34, No. 3 https://www.glaubfm.com/sites/default/files/u5/Farmland%20in%20Perspective%20Vol.37%2C%20No.3.pdf

USDA-NASS (2025). United States Department of Agriculture, Quick-Stats. https://quickstats.nass.usda.gov/

U.S. Bureau of Economic Analysis (2025). Gross Domestic Product: Chain-type Price Index [GDPCTPI], retrieved from FRED, Federal Reserve Bank of St. Louis. https://fred.stlouisfed.org/series/GDPCTPI

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Watkins, Brad. “Cash Rents for Irrigated Cropland Across the Mid-South.” Southern Ag Today 5(48.1). November 24, 2025. Permalink

Consider the Risks When Taking a Residual Fertility Deduction

There’s been much recent discussion about a “residual fertility” deduction for farm and ranchland. It’s been common practice among farmers for many years to take a tax deduction for the value of unexhausted fertilizer remaining in soil purchased with land. In recent years, however, this practice has expanded to include large deductions for the value of all soil nutrients, not necessarily those linked to prior fertilization. Questions about the legal basis for these deductions have increased as the value of these deductions have risen. 

Fertilizer Expenditures and Section 180

To understand this issue, it is important to understand the basis for deducting fertilizer in the first place. Years ago, the IRS required farmers to capitalize and deduct fertilizer costs over the useful life of the fertilizer. Because the fertilizer would not be used up in one year, the deductions had to be spread out. In 1960, Congress changed course, recognizing that farmers would benefit from deducting fertilizer expenses in the year paid. Section 180 thus allows farmers to elect to deduct in the year of application the cost of fertilizer, lime, and similar materials applied to land used in farming. 

Residual Fertilizer Supply

When farmland is purchased, a buyer may allocate part of the price to depreciable assets such as fencing or tile. Many farmers have also assigned a portion of the purchase price to the value of unexhausted fertilizer and deducted that expense accordingly. Although there is no statute, court case, or regulation specifically endorsing this practice, a 1991 IRS memorandum suggests this deduction is appropriate if properly proved. 

In TAM 9211067, the IRS denied a claimed deduction for unexhausted fertilizer purchased with the land, but outlined requirements to support a possible deduction. The taxpayer must: (1) prove the presence and extent of fertilizer attributable to the prior owner, (2) show that the fertilizer is being exhausted, and (3) be the beneficial owner of the fertilizer, meaning it is inseparable from land the taxpayer owns. 

If a farmer who purchases land can meet these three conditions, it appears they can elect under §180 to expense the value of the unexhausted fertilizer in the year of purchase, much like other purchased fertilizer, provided the land is used in farming and the taxpayer is engaged in the business of farming.

A Caution

In recent years, land purchasers have ventured beyond these parameters to take very large deductions based on the total nutrient content of the soil, not based upon the value of unexhausted fertilizer. These deductions are risky. Courts have stated that land alone, including the nutrients that comprise that soil, are not depreciable. Likewise, courts have not allowed depletion deductions for the decline of soil nutrients. Section 180 applies only to fertilizer applied to enrich the soil, and by extension, to unexhausted fertilizer in the soil. 

Expansive claims based on general soil nutrients or inflated valuations may invite IRS scrutiny and penalties. Taxpayers bear the burden of proving they are entitled to any deductions they take. Deductions tied to land purchased many years ago or to unfertilized pastureland are especially vulnerable. Until Congress, the courts, or the IRS provide clear guidance, farmers and land purchasers should seek trusted counsel and weigh the risks of asserting a deduction for residual fertility.

Additional Resources

There are a number of additional resources related to the Section 180 tax deduction.

• Ag Law in the Field Podcast episode
• Considering the Residual Fertility Deduction
• Deducting Residual Fertility Presentation
• What is IRS Section 180 and How Does It Work?

Many of your local Land Grant institutions offer annual tax workshops for tax professionals.  For locations around the country:  Land Grant Tax Workshops

And specifically for workshops in our two states: Texas and Iowa

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Tidgren, Kristine, and Tiffany Lashmet. “Consider the Risks When Taking a Residual Fertility Deduction.” Southern Ag Today 5(47.1). November 17, 2025. Permalink