Category: Farm Management

Choosing the best variety of seed has always been important for producers, but in 2025 this decision will likely carry more weight. With the squeeze of lower commodity prices and higher input prices, variety selection that is best suited for each producer’s growing conditions is a factor that affects the bottom line. Time spent evaluating the numerous varietal choices this time of year will be worth the time and effort.

There are numerous sources to gather information about the varieties for an individual grower’s situation. It’s worth pointing out that there isn’t a “one size fits all” strategy to select the best variety. Utilizing more than one source is recommended but be cautious not to seek too many sources as this may add to the confusion.  Here are some resources that can be utilized in making a varietal selection.

The variety selection process should start and end with your knowledge and experience with your fields and growing conditions.  Good records help to provide valuable information and fill in some details that may be forgotten over the growing season. It’s important to try to match varieties to your fields. For example, low lying fields may have more fertile soil but could have wet areas, and fields on hillsides may not have the yield potential of other fields.

Other sources of information for variety selection are neighbors that have similar growing conditions, seed company representatives, and farm supply stores. Keep in mind that some of these resources may focus heavily on the products they represent or profit from and, therefore, could be biased in their recommendations. Developing productive relationships with all of these individuals can lead to better and more confident variety decisions.

The most important source of information is from the variety testing programs at land grant university systems. Most land grant university research and extension programs have variety testing trials that provide unbiased results. These variety tests are usually in strategic locations across the state to provide growing conditions that are similar to growers in the area. While not all growing conditions can be represented in official trials, they could provide valuable information. Check with your state’s land grant research/extension programs to find out about variety trial information in your area.

There are two kinds of trials that universities may be involved with, as seen in Figure 1 Variety Tests. 

Figure 1. Variety Tests*	Official Variety Trial (OVT) Small Plots	On-Farm
Conducted by:	OVT Program	Extension
Located	Research Stations	Grower Fields and Research Stations
Plot Size	Small	Large
# of Varieties	More (up to 50+)	Fewer (less than 15)
Types	Released & Experimental	Mostly Released
Replication	Always	Not always
Statistical Analysis	Always	Not always
Equipment	Research	Commercial

There are advantages and disadvantages to both the Official Variety Trial (OVT) Small Plots and On-Farm trials. The replication and statistical analysis, along with more experimental varieties, are advantages of the OVT Small Plots. The On-Farm plots are larger and managed on a scale closer to commercial production practices.  It’s also important to consider multiple years of results and not base the decision on one year’s performance. Also, look at as many details of the trial as possible. What were the fertility levels of the plot, and how much fertilizer was applied? What other pesticides were used and at what rate? What were the growing conditions? Were the climatic conditions stressful, if so, how did that affect yields?

In summary, variety selection is crucial as we are looking at an economically challenging growing season in 2025. Match the varieties to your growing conditions as best as possible. Time and effort spent now in selecting varieties for your farm is one of the best investments that a producer can make. 

Resources: 

*Figure 1. Adopted from OVT Small Plots vs On-Farm FAQ https://aaes.auburn.edu/variety-tests/ovt-frequently-asked-questions/

Auburn University Official Variety Testing – https://aaes.auburn.edu/variety-tests/

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Runge, Max. “Variety Selection Resources.“ Southern Ag Today 5(4.1). January 20, 2025. Permalink

Hurricane Helene struck six southern states, from Florida to Virginia, in late September 2024. It made landfall in Florida’s Big Bend region as a Category 4 hurricane, weakened to a Category 2 across Georgia, and became a tropical storm as it moved through South Carolina, North Carolina, Tennessee, and Virginia. Over 250 counties have been declared federal disaster areas eligible for individual and/or public assistance (see Figure 1). Many timber owners in and near these areas have suffered significant timber losses. The hurricane caused around $1.86 billion in timber losses across 1.5 million acres, including some of the Southeast’s most productive timberland. While full recovery will take years, timber owners can take some immediate steps to mitigate losses, such as claiming timber casualty losses on federal income tax returns and conducting salvage timber sales.

There are a few key points for deducting timber casualty losses resulting from a federally declared disaster like Hurricane Helene and deferring taxes on salvage timber sales:

• Timber casualty loss deduction. You may be able to claim a deduction for timber casualty losses on your federal income tax return. 
• Choice of tax year to claim the loss. If your damaged or destroyed timber was in a federally declared disaster area (see Figure 1), you can choose to claim the casualty loss on either your 2023 or 2024 tax return. 
• Method for determining loss. Timber casualty losses should generally be determined using the timber depletion block approach, rather than simply adding up the value of the damaged or destroyed timber. 
• Deduction limit. The deductible amount for timber casualty losses cannot exceed the adjusted basis of the affected timber depletion block. This amount is often lower than the retail value of the affected timber block.
• Salvage timber sales. Claiming a casualty loss deduction and conducting a salvage timber sale are separate events. You do not have to wait until you complete a savage sale to claim your timber casualty loss. 
• Tax deferral on gains from salvage sales. You can defer taxes on profits from salvage timber sales if you use the proceeds to purchase qualifying replacement property.

For more information, please refer to this publication.  Although the publication focuses on Georgia timber owners affected by Hurricane Helene, the general principles apply to timber losses caused by other casualty events, such as fires, floods, hurricanes, and storms. Please visit FEMA for the list of federally declared disasters related to Hurricane Helene in Florida (DR-4828-FL), North Carolina (DR-4827-NC), South Carolina (DR-4829-SC), Tennessee (DR-4832-TN), and Virginia (DR-4831-VA).  Be sure to consult your accountant and/or tax specialists.

Figure 1. Designated areas due to Hurricane Helene

Timber Stand Damage 

Many producers don’t like doing record keeping. Keeping up-to-date records can be time-consuming and sometimes boring, with having to sift through all your deposits and receipts and then input these into spreadsheets and creating income and cash flow statements. The reward is not always readily seen compared to other farming activities. If you have weeds in your field and you spray it with herbicide, the weeds die. If you feed your calves, they gain weight. Conversely, the benefits of record-keeping may not be seen for months, but it can be the difference between losing and making money. 

Good records are the foundation of decision-making on the farm and should be used to inform your marketing, crop insurance, and loan choices. Any decision made on the farm has a financial impact that affects your revenue, costs, or both and, subsequently, your bottom line. Record keeping is important when things are tough as it allows you to evaluate areas of the farm that can be improved or where costs can be cut. The more detailed your records the more specific changes you can make. This will allow you to evaluate your farm as a whole, by specific crops, or even by specific fields, to determine where problems may arise. A detailed analysis could show that a field was unprofitable because it had some nutrient deficiencies or maybe the crop grown on that field needs to be re-evaluated. Or perhaps the terms of rental agreement is what is causing that field to not be profitable. After diagnosing the issue, you can then determine how changes to this field will impact the farm’s financial performance as a whole. In a tough year, this sort of evaluation is crucial to breaking-even or at least minimizing losses.

Record keeping is equally important when things are going well and to avoid overextending your farm financially. In a good year, the question that needs to be asked when making a large purchase, like equipment, is not “Can I afford this now?” but “Can I afford this over its lifetime?”. There are many instances when high market prices encourage large purchases that set a farm up for failure when prices inevitably fall. If a purchase causes your break-evens to increase so that it is only profitable when prices are above average or high, then it is a risky investment. 

Accurate record-keeping starts with accounting for all income and expense transactions. For each income transaction, you should include: Date, Reference Number, Purchaser, Amount Deposited, and the Type of Income (Table 1). For expense transactions, the following should be included: Date, Check/Reference Number, Payee, Amount Paid, and the Type of Expense (Table 2). Having this information will ensure that each transaction is accurately recorded. The more detailed your record keeping, the more specific adjustments can be made. 

There are programs that can help with record keeping, such as QuickBooks or Excel, or you can handwrite them. Any record-keeping is better than none. Many producers already have data on specific fields through yield maps, soil maps, etc. Using these along with your other records to make more specific evaluations and how these changes impact the farm’s financial statements and ratios is key to long-term financial stability. 

Financial record keeping is an important aspect of farming. Tracking how your farm is doing over time can help you diagnose any potential issues that may arise. Having an accountant can help you understand how your farm is doing financially and prepare your tax returns. To save time and money, it is essential to provide your accountant with accurate records that reflect what actually happened on your farm. Mislabeling an income or expense can lead to incorrect categorization that will take your accountant more time to correct and/or could create a higher tax bill. 

You know your farm better than your accountant, and the more detailed records you have on your farm, the better they are going to be able to help you prepare your financial documents. The following are some tips to make your records more organized for your accountant:

This list is just a starting point for what you need to think about before visiting your accountant. Again, you know your farm better than your accountant, so the more information you can bring to your accountant, the better they will be able to help you. This will save both your accountant’s time and your money. It will also allow you to get a better understanding of how your farm is doing financially. In both good and tough years, it is important to know your full financial situation so that you can plan accordingly. 

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Mills, Brian E., Kitty Charlton, and Kevin Kim. “What to Bring to Your Accountant.” Southern Ag Today 4(53.1). December 30, 2024. Permalink

Farm business structure is an important aspect of farming, though it can often be overlooked. Properly structuring your farm operation can lead to management, financial, and legal advantages. It is important to consider your own financial goals before choosing a structure for your farming operation.

Sole proprietorships are businesses owned by one individual. They are the least complex business structure to start; if you have done nothing to start a business for your farm, then you are operating as a sole proprietorship by default.  While sole proprietorships are low maintenance, there are some disadvantages. Since the business and individual are legally one entity, the individual is responsible for all obligations of the business, which puts personal assets at risk. Sole proprietorships are best suited for small farms without many assets at risk and are also best if one wants full decision-making authority for the operation. To legally add another decision-maker to the operation, while still operating similarly to a sole proprietorship, one should consider starting a partnership.  

Partnerships are like sole proprietorships but allow for multiple owners. Partnerships combine the resources of multiple people, which can make operating or obtaining credit easier. Certain partnerships allow for silent partners, who contribute resources but do not make operational decisions. Partnerships have no legal separation between the farm and owners, meaning each partner’s personal assets are at risk. Additionally, there is risk in working with others; if one partner does not uphold their end of the business, the remaining partners will be responsible. Partnerships are best for farmers that currently do or want to do business with others, perhaps a spouse or family member. Partnerships also help with farm transition and estate planning. If one wishes to pass their share of the partnership to their child after death, they should detail this in the partnership agreement to avoid a dispute that could cause the partnership to dissolve. They are best for small or beginning farmers, or farms with minimal assets at risk. 

Limited Liability Companies (LLCs) limit the personal liability of members while offering an easier establishment than corporations; LLCs have a structure similar to partnerships and sole proprietorships. The main benefit of establishing an LLC is protecting personal assets if the farm experiences financial or legal issues. LLCs have one or multiple owners. LLCs are more appropriate for farmers interested in limiting their personal liability while maintaining a simple farm business structure. An LLC structure could be beneficial if the farm is high-risk and the members want to protect their personal assets. 

Corporations are legal entities that are legally separated from their owners. A disadvantage of corporations is complex establishment and management. Corporations are typically more regulated than other structures, creating additional reporting. Corporations are good for large, high-risk businesses. Since the individual and the business are separate legal entities, there is no risk of losing personal assets if the corporation fails. This could be beneficial for a large-scale farm or one with a high chance of becoming delinquent on financing.  Businesses low on capital that need to raise funds could benefit from a corporation because it allows for capital to be generated from either debt or a variety of owner investment.

While this article is not an exhaustive guide to business structures; it serves as a brief overview of each structure to help producers make informed decisions on the best business structure for their farming enterprise. It is important to consult with legal and tax professionals to evaluate the detailed advantages and disadvantages of business structure options. 

References

Backman, Carrie. (2015). Business Structure for Small Farms: A Quick Guide. Retrieved on March 11, 2024, fromhttps://s3.wp.wsu.edu/uploads/sites/2073/2019/01/Business-Structure-For-Small-Farms_A-Quick-Guide.pdf

Childs, Milton. (2004). Using Family Limited Partnerships for Estate Planning. Marquette Elder’s Advisor: Vol. 5: Iss. 2, Article 5. https://scholarship.law.marquette.edu/cgi/viewcontent.cgi?article=1104&context=elders

Internal Revenue Service. (2024). Forms, Instructions & Publications. Retrieved on March 15, 2024, from https://www.irs.gov/forms-instructions

Tax Policy Center. (n.d.). What are pass-through businesses? Retrieved on March 13, 2024, from https://www.taxpolicycenter.org/briefing-book/what-are-pass-through-businesses

U.S. Small Business Administration. (n.d.). Choose your business structure. Retrieved on March 13, 2024, from https://www.sba.gov/business-guide/launch-your-business/choose-business-structure#id-compare-business-structure s

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Myer, IvaNelle, and Ryan Loy. “Business Structure Basics.” Southern Ag Today 4(52.1). December 23, 2024. Permalink