Opinion: Opportunities Abound
11/15/2024
The (Re)Election of Donald Trump as president and the Republican majority in the Senate and the House of Representative foretell many potential actions that will be pursued to hopefully improve the lives and the standard of living of Americans across the demographic and geographic spectrum.
This article is not intended to have a political tone or to advocate partisan positions. Those discussions are for another article, time and place.
I focus my writing here on the agricultural industry as a whole and on the management of farms and ranches, regardless of political opinions.
One issue of heightened importance, no matter one’s political persuasion, is the financial health of American farm, ranch and forestry owners. Whether landowner or tenant, families engaged in the management and production of anything utilized to feed, clothe, fuel, or otherwise enhance the financial health and vitality of all Americans (and the world) need to sharpen their focus and determination to manage their businesses for long-term viability and profitability.
Generational management and wealth succession have been hot topics for many years. Under a new Trump Administration, ably supported by a Congress and Senate focused on this issue, I hope and expect to see positive actions being supported to help the productive agricultural sector of the American economy not only to survive, but to thrive for many years.
Certainly, many sources will come with their special interest issue. The debates will swirl and much energy will be expended trying to get favorable results for different sectors.
Tax and economic policy are top-of-mind in the agricultural universe right now. The expiration of a variety of favorable tax policies coming at the end of 2025 are among the issues being taken under consideration.
Farm families and producers, whatever their business structure, (proprietorship, corporate, trust or other) should be cognizant of and actively reviewing and managing their financial portfolio structure for generational success.
The financial distress in many family farm portfolios may have its origins in too much focus on one-year-at-a-time tax avoidance strategies rather than the intentional building-up of cash and liquidity reserves. Buying equipment and other capital assets in order to capture excess depreciation may be a viable activity only if it enhances operational efficiency. Buying primarily to lessen federal tax liability can be a dangerous game. For a reason, it’s called deferring taxes rather than eliminating them. The liability never goes away.
Management accounting, based on sound financial concepts, i.e. accrual based bookkeeping and financial statement analysis, must be the driving ambition and focus of producers and families.
Equipment manufacturers will be advocating for things such as accelerated depreciation and other tax policies that will encourage and entice producers to buy more capital items. I understand this. Every sector of the economy is seeking to maintain their industry to maximize profitability. Employment of hundreds of thousands of people in industry is to be factored into the discussion. I empathize with them as well.
Bottom-line, though, farm families need to manage their finances for their own benefit, just as every other sector of the economy needs to do the same. Farm Bills notwithstanding, producers and families must build their own safety net.
***********************************
This article is the opinion and perspective of the author and may or may not be consistent with those of anyone else. Mention of specific people or items in the article is not an endorsement of the individual, the company or the organization from which it originates.
Pete Weisenberger
ASAC Board Member
Weisenberger Agricultural Services, LLC
peteweis846@gmail.com
The (Re)Election of Donald Trump as president and the Republican majority in the Senate and the House of Representative foretell many potential actions that will be pursued to hopefully improve the lives and the standard of living of Americans across the demographic and geographic spectrum.
This article is not intended to have a political tone or to advocate partisan positions. Those discussions are for another article, time and place.
I focus my writing here on the agricultural industry as a whole and on the management of farms and ranches, regardless of political opinions.
One issue of heightened importance, no matter one’s political persuasion, is the financial health of American farm, ranch and forestry owners. Whether landowner or tenant, families engaged in the management and production of anything utilized to feed, clothe, fuel, or otherwise enhance the financial health and vitality of all Americans (and the world) need to sharpen their focus and determination to manage their businesses for long-term viability and profitability.
Generational management and wealth succession have been hot topics for many years. Under a new Trump Administration, ably supported by a Congress and Senate focused on this issue, I hope and expect to see positive actions being supported to help the productive agricultural sector of the American economy not only to survive, but to thrive for many years.
Certainly, many sources will come with their special interest issue. The debates will swirl and much energy will be expended trying to get favorable results for different sectors.
Tax and economic policy are top-of-mind in the agricultural universe right now. The expiration of a variety of favorable tax policies coming at the end of 2025 are among the issues being taken under consideration.
Farm families and producers, whatever their business structure, (proprietorship, corporate, trust or other) should be cognizant of and actively reviewing and managing their financial portfolio structure for generational success.
The financial distress in many family farm portfolios may have its origins in too much focus on one-year-at-a-time tax avoidance strategies rather than the intentional building-up of cash and liquidity reserves. Buying equipment and other capital assets in order to capture excess depreciation may be a viable activity only if it enhances operational efficiency. Buying primarily to lessen federal tax liability can be a dangerous game. For a reason, it’s called deferring taxes rather than eliminating them. The liability never goes away.
Management accounting, based on sound financial concepts, i.e. accrual based bookkeeping and financial statement analysis, must be the driving ambition and focus of producers and families.
Equipment manufacturers will be advocating for things such as accelerated depreciation and other tax policies that will encourage and entice producers to buy more capital items. I understand this. Every sector of the economy is seeking to maintain their industry to maximize profitability. Employment of hundreds of thousands of people in industry is to be factored into the discussion. I empathize with them as well.
Bottom-line, though, farm families need to manage their finances for their own benefit, just as every other sector of the economy needs to do the same. Farm Bills notwithstanding, producers and families must build their own safety net.
***********************************
This article is the opinion and perspective of the author and may or may not be consistent with those of anyone else. Mention of specific people or items in the article is not an endorsement of the individual, the company or the organization from which it originates.
Pete Weisenberger
ASAC Board Member
Weisenberger Agricultural Services, LLC
peteweis846@gmail.com
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