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OSU's Shannon Ferrell Says Great Estate and Succession Planning Must Be More Than Just a Few Legal Documents
  

Passing the farm or ranch to the next generation requires more than just a solid estate plan. Speaking at the Oklahoma Cattlemen's Foundation Succession and Estate Planning seminar Wednesday, Oklahoma State University Department of Agricultural Economics Ag Law Professor Shannon Ferrell said the process is about more than paperwork and numbers. While landowners need to have their details outlined in an estate plan, he said stakeholders also need to have those crucial conversations and outline how the transfer of management will take place over time. 


In speaking nationally on estate planning issues, Ferrell hears several key concerns. He said producers want to make sure their family can keep the farm operation together for the next generation and that they can keep their family engaged. Landowners also have concerns on how to move forward with an estate plan, will or trust. In looking at research, he said the most successful businesses have a plan in place that will make sure the assets, business and values are transferred to that next generation, along with making sure the next generation is prepared, willing and able to take their role in the business.


Estate plans should be updated regularly. Ferrell said once you have a transition plan in place, this plan needs to be reviewed and updated. He recommends landowners review the document every time there is a significant event. This includes anytime the stakeholders change through birth, death, marriage or divorce. This also includes anytime land or a new enterprise is added. Ferrell recommends reviewing the estate plan every two to three years to make sure none of the tax issues or laws have changed.

I talked with Shannon at the Oklahoma Cattlemen's Foundation Succession and Estate Planning Seminar during the morning break. Click or tap here to read more or to listen to the full interview.

Farm Groups Find President's Budget Cuts Hurt Producers as Farm Income Drops Sharply 

The American Farm Bureau Federation (AFBF) and American Soybean Association (ASA) took a hard look at the budget proposal for fiscal year 2017 issued from President Barack Obama. The association expressed strong opposition to a proposed $18 billion cut to crop insurance and a lack of funding for infrastructure improvements.


"A global glut of food production has sent U.S. farm revenues down sharply," said AFBF President Zippy Duvall.  "With farm income down 56 percent in the past two years alone, America's farmers and ranchers face difficult times. Yet, the president's just-released budget would cut 27 USDA programs, including a 10-year, $18 billion cut to the federal crop insurance programs so important to farmers. And all this happens as farm income is projected to decline another 3 percent in 2016."  Click or tap here to read more from AFBF.

"We once again find ourselves fighting attempts to cut crop insurance," said Richard Wilkins, ASA President and a farmer from Greenwood, Del. "Our policy has always been that we will strongly and absolutely oppose any attempt to target farm bill programs for additional cuts, and it goes without saying that we will continue to fight proposed cuts to the farm safety net. All it takes is a quick glance around the farm economy to see that we need a stronger safety net for our farmers, not a weaker one."  Click or tap here to read more from ASA.

CME Group to Shorten Trading Hours for Cattle and Lean Hog Futures as of February 29

CME Group, the world's leading and most diverse derivatives marketplace, today announced it will take a number of steps designed to further enhance its livestock markets.   


Reduction of CME livestock trading hours: based on customer requests, CME livestock futures and options trading hours will be reduced to align with the period of greatest liquidity in these markets. During 2015, roughly 87 percent of daily livestock futures and options trades occurred during the proposed hours.


Effective Monday, February 29, and pending CFTC approval, the proposed trading hours for Live Cattle, Feeder Cattle and Lean Hog futures and options will be as follows:


CME Globex futures and options - 8:30 a.m. to 1:05 p.m. CT Monday to Friday


Open outcry options - 8:30 a.m. to 1:02 p.m. CT Monday to Friday


The daily settlement period and procedures for CME livestock contracts will remain unchanged.  Click or tap here to read more.   

Jayson Lusk Weighs in on Crop Insurance- Saying Removal of Premium Subsidies Would Benefit California Farmers and Hurt Kansas Producers

Dr. Jayson Lusk, Ag Economist for Oklahoma State University, has written on his blog about an abstract on Crop Insurance that has been published in the Journal Applied Economics Perspectives and Policy where he takes a look at who wins and who loses with Crop Insurance subsidies provided to some producers in US Agriculture.


According to Dr. Lusk, "Farmers of the major commodity crops (and increasingly even minor crops including fruits and vegetables) are eligible to buy subsidized crop insurance. The insurance is, in principle, priced at actuarial fair rate (i.e., the price of the insurance is equal to the expected loss), but the government subsidizes the insurance premium paid by the farmer (in addition to some of the costs of the insurers). The average subsidy is around 65% of the premium amount. If there were a similar program for your car insurance, and the annual premium you pay for your car is $1000/year, you'd get back $650 in subsidy. In addition to this premium subsidy, the latest farm bill also has provisions to subsidize the deducible in the case of a loss. All this begs the question: what impact do these subsidies have on food prices and production? "


From the abstract:    
    

"Results indicate that the removal of the premium subsidy for crop insurance would have resulted in aggregate net economic benefits of $622, $932, and $522 million in 2012, 2013, and 2014, respectively. The deadweight loss amounts to about 9.6%, 14.4%, and 8.0% of the total crop insurance subsides paid to agricultural producers in 2012, 2013, and 2014, respectively. In aggregate, removal of the premium subsidy for crop insurance reduces farm producer surplus and consumer surplus, with taxpayers being the only aggregate beneficiary. The findings reveal that the costs of such farm policies are often hidden from food consumers in the form of a higher tax burden. On a disaggregate level, there is significant variation in effects of removal of the premium subsidy for crop insurance across states. Agricultural producers in several Western states, such as California, Oregon, and Washington, are projected to benefit from the removal of the premium subsides for crop insurance, whereas producers in the Plains States, such as North Dakota, South Dakota, and Kansas, are projected to be the biggest losers."


There's more to read from Dr. Lusk on his blog- which is available here.

Gaining Access to China Could Be a Big Boost for U.S. Beef Exports in 2016

The Chinese are buying a lot of beef internationally now, but they aren't buying it from the United States. The preferred supplier looks to be Australia. U.S. Meat Export Federation (USMEF) President and CEO Phil Seng said the U.S. continues to struggle getting market access since the market was closed after a cow was discovered with Bovine Spongiform Encephalopathy (BSE) in the U.S. in 2003, which led China to ban U.S. beef. One of the key demands from China looks to be the traceability of U.S. beef. Seng said traceability was one of the original 22 demands from the Chinese government. Nearly all the demands have gone away, except traceability.


Under the World Organization for Animal Health (OIE), the US is considered a negligible risk. This means the U.S. has a credible traceability system that is recognized by OIE. Seng said the U.S. is working to get China more assurances on the voluntary traceability system and he is hopeful the Chinese will come to the U.S. with their audit team to look at packing plants and the record keeping process.


"So, I think we have a great story to tell and hopefully the sooner we get them here and get this thing going the better, because if you want to really make a big boost in 2016 get into that Chinese market open," Seng said. "It's been the fastest growing beef market over the last decade."

I featured Seng on the Beef Buzz feature. Click or tap here to listen to today's Beef Buzz.

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Legislation Requires Animal-Rights Contributions Raised in Oklahoma, Be Spent in State- But Not for "Political" Purposes  

A proposed law that would prohibit animal-rights organizations from raising funds in this state to spend in another state or on political campaigns was endorsed unanimously Wednesday by a legislative panel.


House Bill 2250 by state Rep. Brian Renegar would forbid any animal-rights charitable organization, professional fund-raiser or professional solicitor engaged by such an organization, from soliciting contributions in Oklahoma for use on "program services or functional expenses outside of this state, or for political purposes inside or outside this state."


Renegar, D-McAlester, and Rep. Scott Biggs, R-Chickasha, both indicated HB 2250 was triggered by the actions of the Humane Society of the United States after the Moore tornado of 2013. The HSUS raised "about a million dollars" from Oklahomans who were concerned about pets and livestock injured or orphaned by the twister, but the agency spent "only about $100,000" of those contributions in Oklahoma and diverted the balance elsewhere, Biggs told the House Committee on Agriculture and Rural Development.

Renegar also said he included the ban on using animal-rights contributions for "political purposes" because of State Question 777, the "right to farm" issue that will appear on the general election ballot in November.  Click or tap here to read more.

Today's Acronyms- TPP, AMR and CFTC (and EPA for the Bonus Round) 

Our world is full of Acronyms- and in the world of farming and ranching, we have more than our share.  This morning- I wanted to update you on three acronyms in the news-

TPP- House Speaker Paul Ryan said this week his chamber does not have the votes yet to pass the Trans-Pacific Partnership. The Wisconsin Republican also said lawmakers have a long list of issues regarding the TPP, which was signed last week in New Zealand. Currently, the trade agreement faces opposition from a majority of Democrats on Capitol Hill and presidential candidates in both parties. Some are pressing the White House to make changes to the deal to ensure passage.

However, congressional leaders still don't expect a vote until after the November Elections. Congress can only pass or fail the agreement under the terms set by Trade Promotion Authority which was passed by Congress last year. Senate Majority Leader Mitch McConnell and Finance Committee Chairman Orrin Hatch both have said they want to get the deal done, but not without addressing their concerns. Ryan and McConnell met with the president at the White House last week to discuss trade and other issues facing Congress in the final year of his presidency.

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AMR- This stands for Antimicrobial resistance, which is an emerging public health threat requiring a globally coordinated effort to counter the risks it poses to food security, according to FAO Deputy Director-General Helena Semedo.

Overuse and misuse of antibiotics and other antimicrobial agents foster increasing resistance among the very microbes that cause the infections and disease they were designed to quell, threatening to reverse a century of progress in human and animal health, she said.

"We have to help save live-saving drugs," she told European ministers of health and agriculture at a conference on antimicrobial resistance in Amsterdam.

Aside from the human health considerations, the emergence of microbes resistant to antibiotics and other pharmaceutical agents puts animal health at risk and consequently has an impact on rural livelihoods and food security. "AMR is a global threat that in this inter-connected world cannot be solved in Europe alone," Semedo said.

Read more by clicking here.

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CFTC- We had to get at least one government entity into our Acronyms of the Day- this is, of course, the Commodity Futures Trading Commission- and the House Ag Committee held a hearing that featured the Chairman of the CFTC. House Members raised many concerns with CFTC Chairman Timothy Massad, including the importance of strong futures and derivatives markets for end-users, reforms to Dodd-Frank, the Reg AT rule and its potential impact on smaller market participants, and the continued need to reauthorize the commission. Last year the House passed H.R. 2289, the Commodity-End User Relief Act, to reauthorize the CFTC, with no corresponding action in the Senate. The CFTC has been unauthorized since September 2013.

For more on the Wednesday hearing in DC- Click here.

AND ONE MORE ACRONYM-  EPA Administrator Gina McCarthy will be in front of Mike Conaway and his House Ag Committee this morning starting at 9:00 AM central time- click here for the spot on the world wide web where you will be able to tune in and watch the fun as they talk WOTUS and more. Okay I lied- TWO more Acronyms.

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