Farm Finance - Can a Structured Sale Benefit You?
Published on Wed, 09/21/2016 - 2:44pm
What is a Structured Sale?
A Structured Sale is a unique type of installment sale pursuant to the Internal Revenue Code. An installment sale is a disposition of a qualifying asset in exchange for a specified series of payments. An installment sale permits the seller to spread the recognition of the gain from the sale proportionately to the tax years in which the related sales proceeds are received.
How is a Structured Sale unique?
Most sellers don’t consider an installment sale solely due to the risk of buyer default. In a structured sale the buyer agrees to the installment sale terms desired by the seller, but also brings 100% of the cash to close the transaction and leaves with ownership of the property. The money, along with the installment sale obligation, is assigned to a third party trustee who invests the money with a trusted U.S. financial institution in secure, fixed interest obligations. This trusted assignment process alleviates that typical seller concern of receiving payment!
When can a Structured Sale be used?
Capital Assets (subject to capital gain tax treatment)
• Sale of Real Estate
• Sales of a privately held business
• Partial 1031 Exchanges – enjoy the tax deferral on the “boot” or the amount left over after the tax free exchange has been executed. It can also be used as a contingency or backup in the event of a failed 1031 exchange
Non-Capital Assets (subject to ordinary tax treatment)
• Crop Sales – farmers and ranchers can manage their cash flow and defer taxes from the sale of their crops and livestock
• Oil and Gas lease bonuses – defer taxes and avoid high, one-time tax consequences
• Broker Fees/commissions – Real Estate Brokers can defer recognition and taxes on their commissions of large sales
What flexibility does the Structured Sale give to the Seller?
• Payments designed to meet the seller’s cash flow needs
• Structure all or a portion of the sale
• Multiple streams of income available
• Future lump sum options
• Defer and reduce applicable taxes
• All payments are guaranteed
AgroChem relocates to New Production Center
AgroChem, Inc. has relocated to a new production center to meet the growing demand for effective, safe chemical products for dairy producers worldwide.
“We know dairy producers are increasingly aware of the importance of health and hygiene in the production of quality milk,” said AgroChem’s President, Rob DeMarco. “With this new center, AgroChem is now one of the only companies focused specifically on the innovation and production of dairy health and hygiene chemicals.”
The new 38,000-square-foot production center features expanded manufacturing facilities, state-of-the art laboratories, a bulk tank farm, and an optimized floor plan. The efficient layout has reduced forklift hours, and the extensive process piping and controls have minimized handling of chemicals. Collectively, all the changes have improved efficiencies throughout the operation, leading to shorter lead times and increased output for AgroChem customers in North America, Europe and Asia.
AgroChem, Inc. is a leading supplier of various chemical products for the dairy industry including hoof care products, teat dips, parlor cleaning chemicals and hay and feed preservatives. For more information, visit www.agrocheminc.com
New from Holm & Laue
Usually, calves are housed in individual pens or hutches during the first weeks of life. Better animal care and containment of illness and diseases are the common arguments in favor of this. But it is not only animal rights activists who view the individual housing of herd animals as an increasingly critical issue. Nowadays, organic farming associations require their member farms to house the calves together in groups.
Studies have shown that calves from mini groups, even after being weaned from milk, exhibit better social behavior and even improved feed intake (“Effects of pair versus single housing on performance and behavior of dairy calves before and after weaning from milk”, by A. De Paula Vieira, M.A.G. von Keyserlingk, D.M. Weary, 2010).
An increasing number of farms already house two calves in a single hutch. What often began out of necessity due to twin births or a shortage of calf hutches, has proven for many farms to be an alternative housing option for young calves. After all, the transmission of illness and disease is limited here to a minimum (max. 2 calves) and in periods of fewer calvings, it is hard to put together homogeneous groups.
But until now, there has been no suitable calf hutch available for this type of housing, since all conventional hutches contradict the European animal welfare requirements for group housing of calves. By definition, a shared group pen for calves must be at least 4.5 m² in size and each calf must have access to a minimum area of 1.5 m². Conventional hutches have a maximum area of 3-4 m² and therefore may not be used as group housing.
Holm & Laue is the only supplier to provide a new product solution for this segment, the very first of its kind: the TwinHutch. In combination with a modified FlexyFence, this new calf hutch has a total area of 5.5 m². Plenty of room for mini groups of two to three calves.
Jaguar Animal Health Announces Results from Study
Jaguar Animal Health, Inc. (NASDAQ: JAGX) (“Jaguar” or the “Company”), an animal health company focused on developing and commercializing first-in-class gastrointestinal products for companion and production animals, foals, and high value horses, announced additional topline results today from its study conducted in conjunction with researchers from Cornell University College of Veterinary Medicine (“Cornell”) to evaluate the efficacy of the prophylactic use of a second-generation, powder formulation of Neonorm™ Calf, administered in liquid, on naturally occurring diarrhea and dehydration in preweaned dairy calves.
Neonorm™ Calf, one of Jaguar’s lead non-prescription products, has been formulated and clinically tested to help proactively retain fluid in dairy calves and reduce the severity of diarrhea-aiding the animals in avoiding debilitating, dangerous levels of dehydration associated with scours. The powder form of the product allows for ease of administration for entire herd management.
This double-blind, randomized study involved 40 newborn Holstein bull calves and compared the prophylactic use of Neonorm™ against a placebo. Treatment administration was performed twice daily for 14 days starting on the first feeding after colostrum administration. The calves were kept for an additional 10 days after the final treatment administration for clinical observation and sample collection. Calves were housed in individual pens and feeding was restricted to saleable whole milk. Data regarding fecal dry matter were used to measure water loss due to secretory diarrhea.
The study results show that calves under prophylactic administration of Neonorm™ had significantly lower water content in fecal samples at multiple measurement points, lower incidence of diarrhea, and had fewer fluid therapy interventions.
“The results appear to support the potential prophylactic benefits of an easy-to-administer powder formulation of Neonorm™ on reducing the incidence and severity of diarrhea and associated fluid loss, herd-wide, in calves,” commented Dr. Andre Gustavo Teixeira of Cornell, the principal investigator of the recently completed study.
$2.4 Million Investment Modernizes Iowa Feed Plant
A $2.4 million capital investment will boost production capacity at the Purina Animal Nutrition plant that has been making livestock feed in Mason City, Iowa for 56 years. The upgrades will increase availability of locally produced feed to farms in northcentral and northeast Iowa and southeast Minnesota.
“Purina Animal Nutrition has been making feed for animals in Iowa and Minnesota at this plant for decades, and our modernization project will help us continue to do so,” says Wesley Fiddelke, plant manager at the Purina Animal Nutrition Mason City, Iowa facility. “Agriculture is a major economic driver in this region, and we are proud to be in a position to keep growing and working with our local agricultural community.”
This Purina Animal Nutrition feed manufacturing facility makes 364 products in different forms for many styles of farm operations. Purina’s goal is to develop feed products that help animal owners unlock the greatest potential of every animal.
Most of the feed made at Purina Animal Nutrition in Mason City, Iowa is sold to farmer-owned cooperatives within a 120-mile radius of the plant. The local facility makes feed for swine, dairy cattle and beef cattle, as well as sheep and poultry.
Learn more about products and services for dairy farmers and pork producers in northcentral and northeast Iowa and southeast Minnesota at www.purinaproof.com.
Preparing for Corn Silage Harvest
By: Dr. Jon Pretz, Dairy Nutritionist
As corn silage growers near their anticipated harvest date, it’s important to walk fields to determine how the crop is progressing. Ultimately, harvest timing can be critical in achieving high-quality corn silage that delivers optimal performance for livestock. The following checklist can lead to a successful harvest.
1. Optimal Dry Matter: Be ready to chop when your corn silage has reached the optimal level of dry matter to ensure proper silage fermentation and compaction. For bunkers, piles, and bags, target 32 to 35 percent dry matter. Milk line is usually at half to three-quarter but depends on moisture in the field and drydown as milk line may not be the best indicator of when to chop.
2. Maturity vs. Starch Level: Be aware of plant dry matter and maturity as starch levels increase. If you delay harvest to achieve higher starch levels in your corn silage, you must process corn kernels to avoid the passage of harder starch particles.
3. Kernel Processing: Kernel processing is crucial, especially with hybrids that have hard or dense starch forms. All kernels should be damaged with kernels broke into four pieces or finer.
4. Theoretical Length of Chop and Roller Opening: Two different equipment changes can be made: TLC (theoretical length of chop) from 3/8 to 3/4 inch and roller opening from 1 to 4 mm (millimeters). Most discussion centers on TLC while both adjustments should be considered when getting an “optimal” corn silage particle size. The following guidelines can be used and refined using a Penn State box with your local Hubbard representative.
5. Inoculant or Preservative: Always add a research-based silage inoculant or preservative. Published research has shown a 3 percent increase in dry matter recovery and an increase of 2 percent in energy content as the fermentation is optimized. The benefit-to-cost ratio is typically 3-to-1 in nutrient recovery. Hubbard Feeds offers both inoculant (SIL-ALL®) and preservative (BULLETPROOF®) options for your forage needs.
6. Packing Density: Target corn silage density to exceed 15 pounds of dry matter per cubic foot in storage. This can be a challenge for bags and drier corn silage.
7. Cover Bunkers / Piles: Cover bunkers and piles with a layer of oxygen-barrier film and cover with overlapping plastic that lines the interior wall before covering with oxygen-barrier film.
8. Evaluate Silage Fermentation: Check the fermentation profile of your corn silage to determine if your corn silage has an optimal fermentation pattern. Using an inoculant will enhance your fermentation profile along with optimal packing and filling rates.
9. Calculate Needed Inventory: Calculate the amount of corn silage you will need for the 2016-2017 feeding year. Be sure to have enough 2016 corn silage to reach to December of 2017. Research has shown corn silage increases in feed value (more energy per pound of dry matter) if corn silage has been allowed to ferment for 3 to 5 months after ensiling.
10. Calculate Corn Silage Value: Calculate the value of your corn silage at harvest time to use in your farm budgeting program. One guideline is to charge the current price of a bushel of corn grain times 6 or 8 depending on the relationship of a bushel of corn per acre compared to tons of wet corn per acre.
HarvXtra® Alfalfa with Roundup Ready® Technology Available Soon
HarvXtra® Alfalfa with Roundup Ready® Technology from Forage Genetics International, LLC (FGI), the industry’s first genetically enhanced alfalfa developed to maximize quality compared to conventional alfalfa at the same stage of maturity, by reducing the amount of lignin in the plant, is widely available for planting across the continental United States starting Jan 1, 2017. Limited quantities of HarvXtra® Alfalfa with Roundup Ready® Technology planted in 2015 and 2016 scored high marks from farmers in an independent research trial, preparing the way for broader distribution in 2017.*
“We’re looking forward to offering HarvXtra® alfalfa benefits to more growers in the coming season,” said Shawn Barnett, FGI general manager. “By modifying lignin content beyond what’s possible with conventional alfalfa breeding techniques, HarvXtra® alfalfa has been proven to change the relationship between forage quality and date of maturity. During its introductory phase last year and into this season, growers have reported seeing improved forage quality and greater cutting flexibility.”
HarvXtra® alfalfa, which is also stacked with Roundup Ready® Technology, offers growers a significant increase in quality when a normal harvest schedule is maintained. Research trials show a 16 percent increase in relative forage quality (RFQ) and 16 percent higher neutral detergent fiber digestibility (NDFd) across cuttings. Alternatively, growers benefit from cutting flexibility, and the ability to delay harvest for 7-10 days for an increased yield potential of up to 26 percent over the life of the stand, without sacrificing forage quality.
For more information, visit harvxtra.com.
Cornell food science team wins 2016 IMPA new dairy product award
A team of food science students from Cornell University won the 2016 Idaho Milk Processors Association new product development competition Saturday. The innovative students not only earned some serious bragging rights, but $10,000, too, at IMPA’s annual meeting in Sun Valley, Idaho, for their grand-prize-winning new product idea -- Yojito drinkable yogurt.
Utah State University’s team earned first prize with its PRO2GO high-protein frozen dessert. Formulated with 63 percent dairy ingredients, PRO2GO is a delicious treat that’s perfect to enjoy after a workout, between meals, or whenever you crave a cool, refreshing snack.
A collaborative effort by the University of Idaho and Washington State University took second prize with Custard Delights, a quick refrigerated crème brûlée custard that’s a convenient, healthier alternative to a traditionally decadent dessert.
Garnering third prize, Brigham Young University’s team developed a new style of gnocchi, Gnocchi di Latte, which incorporates skim milk and milk protein isolate.
Supported by the United Dairymen of Idaho and judged by leading dairy farmers and industry experts, the annual contest challenges universities with strong nutrition and food science programs to create the most promising new food product containing dairy ingredients.
Dairy Forage Seminars Focus on Forage Management
The World Forage Analysis Superbowl has announced its lineup for the 2016 Dairy Forage Seminars, held in conjunction with World Dairy Expo®. Seminars will take place at 10 a.m. and 1:30 p.m., Wednesday through Friday and 10 a.m. on Saturday on the Dairy Forage Seminar Stage, located in the east end of the Arena Building.
Wednesday, Oct. 5
10:00 a.m. Invisible Losses from Corn Silage Piles and Bunkers: Real “Shrink” Losses Peter Robinson, Extension Dairy Nutrition and Management Specialist
University of California, Davis, CA
1:30 p.m. “It” Doesn’t just Happen: What Manure Evaluation Can Tell Us About Cows and Rations
Mary Beth Hall, Dairy Scientist
U.S. Dairy Forage Research Center, Madison, WI
Thursday, Oct. 6
10:00 a.m. Feeding Reduced Lignin Alfalfa: How Do We Achieve the Most from This New Technology?
David Weakley, Director of Dairy Forage Nutrition Research
Forage Genetics International, Gray Summit, MO
1:30 p.m. What to Look for When Feeding This Year’s Forage
John Goeser, Animal Nutrition Director
Rock River Laboratory, Watertown, WI
Friday, Oct. 7
10:00 a.m. Selecting, Establishing and Managing Cover Crops After Corn Silage
Heidi Johnson, Crops and Soils Agent
University of Wisconsin Extension, Dane County
1:30 p.m. Forage Quality for High Producing Dairy Herds: Key Performance Indicators
Randy Shaver, Extension Dairy Nutritionist
University of Wisconsin-Madison
Saturday, Oct. 8
10:00 a.m. Is It Better for Forages to be More Digestible or to Digest More Quickly?
David Combs, Professor of Dairy Science
University of Wisconsin-Madison
The World Forage Analysis Superbowl is organized in partnership with DairyBusiness Communications, Dairyland Laboratories, Inc., Hay & Forage Grower, U.S. Dairy Forage Research Center, the University of Wisconsin-Madison and World Dairy Expo.
New Kuhn Krause Excelerator® 8005 Vertical Tillage System
The new Excelerator® 8005 builds on the superior vertical tillage performance growers have come to expect from Kuhn Krause products. Our field proven 32-flute Excalibur® blades, adjustable gang angles and exclusive Star Wheel™ treader attachment continue to lead the industry in agronomic performance and customer expectations.
Kuhn Krause, Inc., a subsidiary of Kuhn North America, Inc., is a leading innovator in the field of agricultural equipment, specializing in tillage and grain drill equipment. Kuhn Krause products are sold through farm equipment dealers throughout the United States, Canada and many other countries.
For more information, contact Devan Brugger at email@example.com, or visit www.kuhnnorthamerica.com.