IL Farmers Identify Regulations as Biggest Threat to Long-Term Profitability
Date Posted: December 5, 2012
Chicago—Delegates and attendees at the 2012 Illinois Farm Bureau Annual Meeting rated government over-regulation as the biggest threat to the profitability of Illinois agriculture in the next ten years.
The answer was in response to a survey of 399 delegates, alternates and other Farm Bureau members attending the meeting Dec. 1-4 in Chicago.
“As a member-driven organization, it’s extremely important for us to reach out to our members and find out what concerns them, both for the upcoming year and years to come,” said Illinois Farm Bureau President Philip Nelson.
“Keeping our finger on the pulse of our organization, and the members that make it up, helps to ensure that we’re pursuing issues that are most important to our members and will benefit them the most.”
In all, 58 percent of respondents who answered the open-ended question named regulations, governmental entities and/or the U.S. Environmental Protection Agency as the biggest threat to profitability.
This was the second consecutive year that regulations were the most-often cited response to the open-ended question.
In addition, respondents also mentioned taxes (16 percent), input costs (14 percent), high cash rents and land prices (7 percent) and grain prices (7 percent) as concerns.
In response to an open-ended question about the 2012 drought and what changes they will make to their farming operations in 2013 as a result, 48 percent of respondents who answered the question said they had no significant changes planned.
Eleven percent said they will make different planting decisions, including less corn-on-corn, switching from corn to soybeans, planting more wheat in the fall or devoting more acres to hay.
Seven percent said they would irrigate more land.
Four percent said they would increase the use of minimal tillage.
Two percent said they would pray for rain. Respondents were allowed to list multiple answers.
When asked about their corn planting intentions for next year, 66 percent who answered the question indicated their corn acreage would remain the same.
Eighteen percent said they plan to plant more corn; 16 percent said they would plant fewer corn acres.
Forty-nine percent of respondents self-identified as livestock producers.
Of those, 64 percent said they do not plan on expanding herd size in the next five years.
The most commonly cited reasons include no room to expand (29 percent), retirement or advancing age (26 percent), difficulty in finding qualified workers (10 percent), and high input costs (9 percent).
Sixty-six percent of corn growers indicated they plan to increase their corn acreage over the next five years.
Among those not planning to expand, the most common reasons given were lack of available land and farm size (28 percent) while 14 percent cited high cash rents and land purchase costs.
The open-ended question allowed respondents to list multiple factors.
Those surveyed were asked whether they purchased crop insurance in 2012. Eighty-four percent indicated that they had.
Eighty-seven percent said they plan to purchase it for 2013.
When asked if they filed a claim, 84 percent who answered the questions said they did.
A large number of claims are expected to be filed in regions throughout the country as a result of the drought.
The survey also gauged Farm Bureau members’ opinions on two tax-related questions.
When asked whether they had used the Section 179 small business expensing option in the past ten years, 71 percent of those answered said that they had.
Section 179 of the Internal Revenue Code allows taxpayers to expense, or deduct as a current expense rather than a capital expense, up to $125,000 of the total cost of a new or used qualified depreciable item they buy and place in service in the current year.
Each year, farmers make large capital purchases in the form of equipment and are often able to utilize Section 179 in their operations.
A second tax-related question was asked of the 70 percent of respondents who self-identified as landowners.
Those respondents were asked, considering the value of their farmland and other assets, whether a change from the current $5 million personal exemption to a $1 million personal exemption would create a liability for their heirs that would require the sale of assets.
Eighty-one percent of respondents answered “yes.”
For farmers, estate planning is critical.
Currently, if a farmer retires or dies and passes the farm onto other family members, and their farming operation is valued at less than $5 million, their heirs would owe no federal estate taxes.
However, the current estate tax rates are set to expire, reverting to a $1 million threshold.
Because farming is capital and land intensive, most operations are valued at far more than $1 million, meaning that any heirs would almost certainly have to sell land and assets to pay federal taxes, rather than continue farming.
“Clearly, our members have concerns about their ability to continue to farm efficiently and, certainly, their concerns are not unfounded,” Nelson said.
“It’s no surprise that government regulations topped their list of biggest concerns.
"As a farmer, I find burdensome regulations concerning myself. Still, these results are beneficial as we look to the future and try to ensure that we’re addressing the issues that are most important to our members.”
The IFB is a member of the American Farm Bureau Federation, a national organization of farmers and ranchers.
Founded in 1916, IFB is a non-profit, membership organization controlled by farmers who join through their County Farm Bureau.
IFB has a total membership of 412,177 and a voting membership of 82,550. IFB represents two out of three Illinois farmers.
For more information, call 309-557-2083.