Typically, beef cow culling peaks, nationally, during the last few weeks leading up to Thanksgiving. The rapid pace of cow culling was documented in SAT back in early September, focusing on the South. At that time, there was some hope that the pace of culling might slow in the Fall due to large numbers sent to market earlier. Those hopes have failed to materialize as beef cow slaughter hit 84,800 head for the week ending October 22nd. That is the largest weekly beef cow slaughter since the week of November 19th, 2011.
Total beef cow culling is up 364,000 head in 2022 over 2021. All of the increase comes from states in the Southern half of the U.S. and the Plains. Slaughter in Region 6, which includes Texas and Oklahoma, is up 207,000 head over last year. Region 7, including Kansas and Nebraska is 171,000 head above 2021. Slaughter is up 59,000 head in the deep South and 12,000 head in the Southwest. Beef cow slaughter is lower than last year in the rest of the country. Increased culling continues to largely coincide with areas experiencing drought. Costs increasing faster than calf prices have also encouraged culling.
Cow prices typically bottom out in the Fall, as slaughter peaks, and this year is no exception. Prices have fallen below a year ago in local auctions in drought hit areas, especially for thin, lean cows. Prices have been as much as 20 percent above a year ago, even though trending lower, in local auctions away from drought areas and for cull cows in better shape.
Watch for beef cow slaughter in the coming weeks to see if it maintains an 85,000 head per week pace. The more sent to market now means an even larger decline in the cowherd for next year and higher prices to come.
Data Source: USDA-AMS & USDA-NASS Livestock Marketing Information Center
Author: David Anderson
Professor and Extension Economist Livestock and Food Products Marketing, Dairy, Policy
The U.S. has been the world’s fourth-largest peanut producer over the past five years, averaging 3.1 million tons produced annually. Over that time, the U.S. has exported over one-fifth of its total produced peanuts, making it the third-highest exporter of peanuts globally. However, the magnitude of U.S. peanut exports and the quantity sent to its primary export partners have fluctuated year-to-year.
While the main peanut export destinations from the U.S. have been its North American neighbors, Canada and Mexico, China has played an increasing role in recent years. After accounting for just 5% to 19% of U.S. peanut exports during the 2017/18 and 2018/19 marketing years, 2019/20 and 2020/21 saw China increase to receive 43% and 40% of U.S. peanut exports, respectively. In particular, China bought a large portion of in-shell peanuts which were used to produce peanut oil during those high-import years. However, China’s imports of U.S. peanuts dropped during the 2021/22 marketing year as China saw overall imports decrease, and Mexico once again overtook China as the largest importer of U.S. peanuts. Increased opportunities could remain to export lower quality peanuts for oil as has occurred recently.
U.S. Peanut Exports by Destination and Marketing Year
Data Source: U.S. Census Bureau Trade Data
Now, what should we expect this marketing year? One month into the 2022/23 marketing year, U.S. peanut exports are down 8% relative to the same period last year. While China’s imports of U.S. peanuts might not return to the levels seen in 2019/20 and 2020/21, it is worth mentioning that the USDA projects China to increase its peanut imports during the 2022/23 marketing year by 350 thousand tons over its 2021/22 level. Peanut demand in China had fallen in part because consumers switched to cheaper vegetable oils instead of the more-expensive peanut oil as they cut food expenditures during the COVID-19 pandemic. Another factor at play this year is the drought in China, which has raised concerns over how large their peanut and overall oilseed crop will be at harvest. In addition, insufficient or excess precipitation across different regions in India – a major peanut exporter to China – could subdue yields in a country that already saw decreased planted acreage this marketing year, potentially further reducing its production. These factors could increase opportunities for U.S. peanut exports to China this marketing year.
2022 marks the 100th anniversary of the Capper-Volstead Act, which gives farmers and ranchers the legal right to join together in cooperative associations. The founders of the first agricultural cooperatives held strong convictions and above all else, loyalty to the ideals of collective bargaining and market power for small farmers. Whether competing with large, investor-owned firms or serving an unmet need, this collection of farmers and ranchers planted a belief system and philosophy that would endure for decades. They built a culture around these values and grew a socio-economic model that enveloped the surrounding rural communities where the feed mill, cotton gin or grain storage silo set. These cooperatives invested in the future by developing capital locally and generating an economy that is a mainstay in the agricultural industry today.
Cooperatives are important on the national landscape for multiple reasons. According to the National Council of Farmer Cooperatives, 1,779 cooperatives in the United States provide300,000 jobs, sales exceeding $200 billion, with $7.8 billion in net income generated in their local economies. Therefore, it is imperative to ensure these businesses are successful. Not surprisingly then, a major part of the cooperative business culture is a recognition of the need for continual education for the board of directors and managers. As leaders of the cooperative system, directors and managers take time outside of the boardroom to participate in various seminars, webinars, conferences, and other educational events each year in order to protect their cooperative.
For example, the Texas Agricultural Cooperative Council hosts a variety of educational events each year, including:
Director Development workshops
The Farm Store Summit
Board Chair Conference
The TACC annual meeting
The Academy of Cooperative Excellence
South Texas Leadership Conference
If you were to run for a position on the board of directors of your local cooperative, what could you expect in terms of training topics? In our experience, much of director training is geared to simple best business practices and provide information on the challenges facing the modern agricultural industry: carbon sequestration, climate change, agricultural policy, surviving drought, and changes in land use. But some topics are more germane to cooperatives: distribution of cooperative returns, cooperative taxation, maintaining the separate roles of managers and directors, running a board meeting, legal issues, fiduciary duties, and simply, leadership.
The leadership demands on cooperative boards of directors and managers are increasingly becoming a topic of great interest and research. Current leaders are expected to meet new and complex economic and global challenges while continually pressing against the modern challenges of governance, such as inclusion, diversity, and the increasing difficulty of leadership succession. Park, Friend, McKee, and Manley (2019) introduced the concept that leadership competency in agricultural cooperatives is defined by six essential elements of effective leadership: consciousness, conduct, connectedness, interaction, representation, and cooperation. Cooperative leaders meet many challenges by applying these skills to communicate, inspire others and evoke change in this increasingly complex industry. These are the leaders which will continue to thrive and weather any storm, and it is their agricultural cooperatives that help promote this legacy of leadership education.
For more information:
The National Council of Farmer Cooperatives, http://ncfc.org
The United States is a world leader in pecan production totaling an estimated 115 thousand metric tons (TMT). Georgia led the country with over 40 TMT of pecans grown, despite production being 26.7 TMT lower than the previous year. New Mexico ranked closely behind growing 35.6 TMT of pecans. Georgia and New Mexico accounted for 65.5 percent of U.S. pecans in 2021. Arizona, Texas, and Oklahoma followed those two to round out the top five states for pecans grown.
In addition to being a major grower of pecans, the United States is an exporter of both in-shell and shelled pecans. In-shell exports have been leading shelled exports in terms of volume for years but have decreased each year. The largest decline occurred when China cut imported pecans from the United States from 30 TMT to 10 TMT in 2018 after additional tariffs were levied on U.S. pecans by China. Despite these additional tariffs being removed, imports have not been able to reach the same level as years prior. Mexico is currently the largest importer of U.S. shelled pecans; in 2021 Mexico represented 47.5 percent or 15.6 TMT of in-shell pecans exported from the United States. A large portion of the in-shell nuts exported to Mexico are shelled and then exported back to the United States to be packaged where they will be consumed domestically or exported one more time. Shelled pecan exports from the United States have been on the rise in recent years growing by 10 TMT since 2017. The largest importing countries for U.S. shelled pecans are Canada, the EU(primarily the Netherlands or Germany), and Mexico. These four countries account for 60.3 percent of all shelled pecans exported from the United States, or 19.3 TMT.
Most farmers right now are not thinking about taxes, let alone tax management. Many are still harvesting crops and beginning to think about the next season, but it is also time to start the office work and meet with your tax professional. A November or early December appointment with your tax professional will give you more tax management options before year-end.
Update your accounting of transactions for the year, and arrive prepared with the necessary reports that detail the following:
All revenue and sources of income.
All expenses with descriptions.
All capital asset sales and purchases (with details).
If an asset was traded, bring complete invoices and sales documents including information on the trade, the trade-in value, etc.
Related inventory of breeding, milking, or draft livestock.
Bank loan payments detailing principal and interest portions.
An estimate of additional revenue expected, along with what might be deferred if necessary.
An estimate of upcoming expenses, and an idea of what expenses might be shifted (deferred or prepaid) across tax years.
Any health insurance premiums paid out of pocket, may be eligible for a self-employer credit/deduction.
All draws that have been taken.
Preparing the above reports will help your tax professional determine an approximate tax liability for this year and allow for a discussion of different tax management strategies. Remember that tax management is not about how to get out of paying taxes but should be about how to move as much income through the tax system as possible at the least expensive tax rate possible.
Common tax management may include multiple tools or provisions. Work with your tax professional and ask about some of the following basic strategies:
Putting money into a retirement account with tax-preferred treatment such as a Traditional IRA or some 401k accounts.
Putting money into a Health Savings Account.
Making a commodity donation to a house of worship or other charitable organization may provide a greater tax benefit than a cash donation.
Utilizing prepays is a common way to lower the farm’s taxable income but check with your tax preparer about specific restrictions and requirements.
Paying the accrued interest of any debt at the end of the year.
Utilizing any remaining Net Operating Loss (NOL) that can be carried over. It is important to remember that the NOL can only offset up to 80% of the taxable income for the farm.
Use depreciation strategies with caution. Section 179 and Bonus Depreciation allow a farm to rapidly depreciate an asset in a shorter period, up to a single year. However, there are several limitations to these methods and subsequent tax consequences when the asset is sold.
Income Averaging is a method only available for farms and commercial fishing. It may help you avoid higher income tax brackets in one year if you have previous years with “unused” lower income tax brackets.
Keeping up with accounting and production records throughout the year will make the end-of-year office work easier and less stressful. Having a tax professional that you can trust and is willing to work with you will help a farm meet their goals and reduce tax liability over the long term. Visit ruraltax.org for additional information and publications about taxes, including a 2022 Farm Tax Estimator tool and other information for farms, timberland owners, and landowners.
