We all live in a world of volatility and uncertainty. Whether you view this statement as profound, debatable, or the understatement of the year, I think you would agree that the level of commodity price fluctuations, and their impact on your dairy’s bottom line profitability, has heightened in recent years (we will discuss some facts on this later). Individual dairy producers’ views and opinions on how they manage the volatility can result in a wide spectrum of emotions; ranging from fear and confusion to an adrenaline rush.
I keep saying to myself, I don’t understand! I really don’t. I am a dairy farmer’s wife in Kentucky and we produce a high quality, wholesome product which sells in the stores today for $2.49 a gallon. In 1997 this same gallon of milk sold for an average price of $2.36 in Louisville, KY according to a 2000 summary by the Federal Milk Market Administrator. Dairy farmers have no say in those prices either at the store or the farm. We take the price given to us for our milk.
The Internal Revenue Service offers numerous tax breaks for ranchers and farmers. You may qualify for standard tax deductions for business expenses -- such as livestock feed and employee benefits -- or for deductions for land conservation costs. You can also take a tax deduction for depreciation of certain capital assets and may qualify for a deduction for operating losses. The number of deductions you can take may depend on your specific ranching operation. Remember that IRS rules can change annually.
Choosing a life in agriculture can bring with it the benefits of being your own boss. You decide on the tasks to accomplish, the schedule to be followed, and the priorities for each day. But it also comes with the uncertainty of managing “change orders” brought on by everything from Mother Nature’s whims to untimely break downs of equipment or labor, which might determine that the priority for the day is unscheduled leave.