GFB MEMBERS TELL TAX COUNCIL: DON'T TAX FARM INPUTS- GFB.ORG

(9/1/10)   Georgia Farm Bureau members attending fact-finding sessions being held across the state by the Special Council on Tax Reform and Fairness for Georgians are telling the council how their farms will be negatively impacted if the inputs they use to produce their commodities become subject to sales taxes.

The council, created by Georgia House Bill 1405 earlier this year, is charged with thoroughly studying Georgia's current tax structure and submitting its findings and recommendations for changes to the speaker of the house and lieutenant governor at the beginning of the 2011 legislative session.

 

Coweta County Farm Bureau Director Bud Butcher spoke at the Atlanta meeting Aug. 26. McDuffie County Farm Bureau member Mark Rodgers spoke at the Augusta meeting Aug. 30. Toombs County Farm Bureau Director Chris Hopkins spoke at the Savannah meeting Aug. 31. Berrien County Farm Bureau Secretary/Treasurer Tim McMillan is scheduled to speak at the Valdosta meeting Sept. 1. Crawford County Farm Bureau Vice President Leighton Cooley is scheduled to speak at the Macon meeting Sept. 2, and GFB President Zippy Duvall plans to speak at the Gainesville meeting Sept. 9. A GFB member will also speak at the Rome meeting Sept. 7.

 

Butcher, who operates a 300-head dairy, told the council his annual cost of production would increase an average of $45,360 should the state decide to place a sales tax on the feed, equipment, seed, fertilizer, chemicals and vet services he uses on his farm. Butcher calculated this figure based on a seven percent sales tax on the yearly average he has spent on these input items the last five years.

 

"If the state tax code is changed to charge sales taxes on the inputs to my dairy, that expense will be significant enough to jeopardize our operations," Butcher told the council. "That number represents a cash expense for which there is absolutely no corresponding return, no increased efficiency, no added value. I don't have any way to recover that cost."

 

During the Atlanta meeting, Georgia Rep. Chuck Sims (R-Dist. 169) recommended the sales tax on groceries be reinstated and collected at the distributor level rather than in retail stores using a system similar to the one the state uses to collect the sales tax on gas.

 

"I think you need to exempt anyone over 65 and anyone on disability, but had we had this [grocery sales tax] we would not be in the financial situation we are in today."

Conservative studies show a grocery tax could raise more than $500 million a year in  revenue.

 

 

 

 

 

 

 

 

 

 

 

 

 

Farm real estate values in Georgia fell by nearly 5 percent from 2009 to 2010 while farm land average rent per acre rose by 5 percent, according to a report from the United States Department of Agriculture's (USDA) National Agriculture Statistics Service (NASS).??

The farm real estate average value in Georgia was $3,900 per acre in 2010, down from $4,100 in 2009. The drop in value contrasted with the national average, which grew by 1 percent, but Georgia farm real estate value is still 82 percent higher than the national average, which is $2,140 per acre for 2010. Cropland average value in the state fell from $4,050 to $3,690 (9 percent), compared with a 1 percent rise nationally ($2,670 in 2009 to $2,700 in 2010).

Georgia's non-irrigated cropland values fell 10 percent from $4,200 to $3,800. ?Georgia's pasture average value fell 10 percent from $6,000 to $5,400, while the national average stayed the same at $1,070 per acre.??

Average rent per acre of Georgia farmland grew from $76.50 in 2009 to $80 in 2010. Rents on cropland nationwide rose from $99 to $102 per acre. Rent on irrigated land fell from $143 to $141, while non-irrigated land gained in value from $49 to $51.

The average rent on pasture in 2010 is $24 per acre, down from $25 last year, a fall of 4 percent. Nationwide, rent on pasture remained at $11 per acre.

 

Is This Orderly Marketing of Milk??? - kydairy.org
The June Daily Dairy Report stated that over the last eight weeks, an average of 235 loads (11.2 million lbs.) of milk per week has been shipped out of the Southeast region for processing in the Midwest, Northwest and Southwest. This figure is up 23 percent from a year ago. Spot shipments out of the Southeast will continue until August.”The statements do not make sense to those familiar with the SE milk market. Why would milk from a deficit market be shipped to the Midwest, Northwest and Southwest to be processed into manufactured products?  Aren’t these the same areas that supply the milk deficit SE? To add to the confusion, on May 12, the Southern Marketing Agency was granted an extension of Transportation Credits to be paid in the month of June to help pay for hauling supplemental milk into the market.

 

 

"Leadership is not a position, it is a choice." This quote could define the mindset of a group of Southern producers who elected to take time from a busy August harvest schedule to break ground for a new Southern dairy policy coalition. 

 

With negotiations for the 2012 Farm Bill looming ahead, coupled with the fact that portions of the 2008 Farm Bill pertaining to more accurate dairy price reporting have never been enacted, dairy farmers the nation over are becoming actively involved in grass-roots groups that are determined to right the ship where the farmer side of dairy policy is concerned.

The Dairy Policy Action Committee, (DPAC) formed only last November, is actively expanding its outreach beyond its PA-OH origins.  US Milk sent an observer/participant to a DPAC meeting in January, and active communications between the two ensued on a regular basis. 

 

Concurrently, DPAC began communicating with other Southeastern dairy groups as well.  Georgia Milk Producers, Kentucky Dairy Development Organization, and Tennessee Milk Producers were among the groups and other state dairy leaders contacted.  This outreach culminated in a Southeast meeting on Aug. 5th in Athens, TN  (central to the region, since so many people drove to this session).

 

Cliff Hawbaker, president of DPAC, Rob Barley, VP, and Sherry Bunting, correspondence secretary, drove down from PA to attend the meeting.  Their purpose was to provide the background of DPAC's formation,  and to explain the methodical approach to communication, meetings, and accomplishment.  This organized and determined approach, along with accurate and timely communications, is what has encouraged other groups to join the DPAC movement.

 

Producers attending this 'exploratory meeting' were invited due to their working knowledge of a broad range of dairy topics, particularly marketing issues.  These producers sold milk through a mix of co-ops, marketing agencies, and independent agreements, and herd sizes varied from just over 100 head to in excess of 5,000 head.  They came from FL, GA, AL, MS, AK, TN, KY, NC, and VA.

 

Transportation credits, location differentials, and bloc voting were all consensus topics determined to be of 'highest priorities' by the group, as well as the need to take an active role in influencing NMPF's "Foundation for the Future" proposals.  COOL and accurate labeling will also be pursued.  The groups will continue to define issues common to both North and South, acknowledging that there will likely always be regional differences as well.

 

It was determined that this group would form the organizational core of "DPAC South" [working title], and would meet again on September 9th to further define an organizational structure and determine initial plans of action.  Once this structure is developed, then meetings will be opened to all Southern dairy producers willing to take an active role in making a difference in policy. 

 

 

"Leadership is not a position, it is a choice." This quote could define the mindset of a group of Southern producers who elected to take time from a busy August harvest schedule to break ground for a new Southern dairy policy coalition. 

 

With negotiations for the 2012 Farm Bill looming ahead, coupled with the fact that portions of the 2008 Farm Bill pertaining to more accurate dairy price reporting have never been enacted, dairy farmers the nation over are becoming actively involved in grass-roots groups that are determined to right the ship where the farmer side of dairy policy is concerned.

The Dairy Policy Action Committee, (DPAC) formed only last November, is actively expanding its outreach beyond its PA-OH origins.  US Milk sent an observer/participant to a DPAC meeting in January, and active communications between the two ensued on a regular basis. 

 

Concurrently, DPAC began communicating with other Southeastern dairy groups as well.  Georgia Milk Producers, Kentucky Dairy Development Organization, and Tennessee Milk Producers were among the groups and other state dairy leaders contacted.  This outreach culminated in a Southeast meeting on Aug. 5th in Athens, TN  (central to the region, since so many people drove to this session).

 

Cliff Hawbaker, president of DPAC, Rob Barley, VP, and Sherry Bunting, correspondence secretary, drove down from PA to attend the meeting.  Their purpose was to provide the background of DPAC's formation,  and to explain the methodical approach to communication, meetings, and accomplishment.  This organized and determined approach, along with accurate and timely communications, is what has encouraged other groups to join the DPAC movement.

 

Producers attending this 'exploratory meeting' were invited due to their working knowledge of a broad range of dairy topics, particularly marketing issues.  These producers sold milk through a mix of co-ops, marketing agencies, and independent agreements, and herd sizes varied from just over 100 head to in excess of 5,000 head.  They came from FL, GA, AL, MS, AK, TN, KY, NC, and VA.

 

Transportation credits, location differentials, and bloc voting were all consensus topics determined to be of 'highest priorities' by the group, as well as the need to take an active role in influencing NMPF's "Foundation for the Future" proposals.  COOL and accurate labeling will also be pursued.  The groups will continue to define issues common to both North and South, acknowledging that there will likely always be regional differences as well.

 

It was determined that this group would form the organizational core of "DPAC South" [working title], and would meet again on September 9th to further define an organizational structure and determine initial plans of action.  Once this structure is developed, then meetings will be opened to all Southern dairy producers willing to take an active role in making a difference in policy. 

 

 

 

 

(August 12, 2010) The Agriculture Department again raised its 2010 and 20111 milk production forecasts in its latest World Agricultural Supply and Demand Estimates report (WASDE) issued this morning. 

Producers continue to add cows and milk per cow has increased, says USDA. Look for 2010 output to reach 192 billion pounds, up 800 million pounds from last month’s estimate. The 2011 estimate is now 194.6 billion, up 1.1 billion pounds. Output in 2009 totaled 189.3 billion.

 

Exports for 2010 and 2011 were raised sharply as June numbers were strong, global supplies remain relatively tight, and demand in a number of markets is expected to support higher than previously forecast sales. However, sales in 2011 will be dampened by increased competition, according to USDA.

 

Strong demand for butter and cheese resulted in higher forecast prices for 2010 but prices for nonfat dry milk (NDM) and whey were lowered from last month. For 2011, cheese, NDM, and whey price forecasts were reduced but butter was raised.

The Class III milk price forecast for 2010 was raised as the higher cheese price more than offset the lower whey price, but the Class IV price forecast was reduced as the lower NDM price more than offset the higher butter price.

 

Look for the 2010 Class III price to range $14.15-$14.35 per hundredweight, up from the $13.80-$14.10 projected a month ago. The 2011 average is now projected at $14.15-$15.15, down from last month’s estimate of $14.40-$15.40. The 2009 average was $11.36.

 

The 2010 Class IV price will range $14.50-$14.80, down from $14.65-$15.05 expected last month, and the 2011 average is now predicted at $14.00-$15.10, down from $14.40-$15.59 projected a month ago. The 2009 average was $10.89. The all milk price is forecast to average $15.90-$16.10 for 2010 and $15.55-$16.55 for 2011.

 

Butter prices continue to gain – dairyherd.com
Class III futures settled yesterday on light volume as lack of fresh news convinces traders to move prices in one direction or the other. CME spot cheese did manage to gain a ½ penny in both blocks and barrels but futures traders did not show much enthusiasm.  Overnight trading is light and mixed and unless we get a big surprise from the CME spot market over the next couple of days, we expect a quiet but firm trade to close out the week.

 

Another potential reason for the light volume yesterday is that the Idaho Milk Processors Annual Conference begins today in Sun Valley and many of the top industry players from around the country attend this important meeting.  Dave has been in Idaho all week and will be in attendance – we look forward to hearing from him to get a feel of market conditions during his conversations with the industry’s elite.

 

CME spot butter prices continued their impressive gains yesterday easily surpassing $1.90 to settle at $1.9175.  We have commented enough about the tightness of butterfat and cream in the country, but cream multiples remain extremely high and yesterday’s weekly USDA commentary suggest that ‘manufacturers and handlers are questioning how much above $2.00/lb the price will go’. We rarely comment on the USDA’s weekly butter stocks report but for the week ending Aug 9, 9.07 million pounds were in USDA selected warehouses.  This is the lowest August storage figure since 1998.  August 1998’s monthly CME butter price average was $2.1730. September 1998’s average price was $2.7566. We don’t believe that butter demand is strong enough to get prices up to September 1998 levels, but we do believe that $2.00 is a very realistic target given the current supply/demand situation.

 

After the CME launched International Skimmed Milk Powder (ISM) futures contract on May 24, 2010, not a single trade has occurred - until yesterday.  One September ISM futures contact traded at $2,780/MT ($1.2610/lb) at 2:30AM during yesterday’s overnight session.  ISM is the first exchange-listed dairy contract with physical delivery points located around the world.  We will start to keep an eye on this contract for more activity.

 

Editor’s note: This market commentary is provided by  Dave Kurzawski and  Eric Meyer, risk-management consultants with FC Stone/Downes-O’Neill, Chicago, Ill.