10 Quick Tips to Cutting Costs on the Farm

cuttingcosts_blog.jpgWith the markets the way they are, cutting costs around the farm has become as critical as ever to maintain a strong bottom line. Here are ten quick tips to cutting costs you may or may not have thought of!

  1. Watching the weight – cutting back the weight of your tractors can save 3 to 5 percent in fuel costs. Though it’s easier said than done – finding that perfect tractor ballast is a balance of wheel slip and rolling resistance. Too light of a tractor and you’ll increase slippage and waste fuel. For untilled soil, aim for 6-13 percent wheel slip range; for tilled soil, 8-16 percent; for concrete, 4-8 percent. Find out more here.
  2. Another pass? It’s sort of like that extra cookie after dinner, do you really need that extra tillage pass? Energy is one of the easiest ways to cut costs and tillage is one of the top energy consumer on farms. Deciding on if you can cut back on your tillage or potentially cut it out completely could make a major dent in the average fuel costs of $7,000 to 17,000 per farm. If tillage is necessary, is secondary tillage also necessary?
  3. Put a roof over it – Who doesn’t love a solid roof over their head? Equipment especially would love it because that not only keeps clutter on your farm to a minimum, it also increases the trade-in value of that hunk of steel. With farm equipment being the second highest cost on the farm, why not make that great investment? It’s a win-win for us all really.
  4. Previously owned, previously loved – Previously loved, or Reman parts can significantly help you cut those costs back, especially now that you can find almost anything for your equipment through reman. Plus, they are typically backed with full warranties and come from the big names such as John Deere, CNH and AGCO. Not to mention they can save you 20-40% on costs!
  5. There’s no time for down time – down time isn’t just a sad sounding phrase – it’s a money draining one. Cut back your usage of that term with a little Planned Preventative Maintenance (PPM). In order to do that you have to keep to that scheduled maintenance, no ifs, ands or buts about it!
  6. Who knew it wasn’t new –  Technology is quickly becoming a necessary finance on the farm – but you don’t have to buy everything new. With that said, you need to weigh the costs and benefits of each piece of tech you’re considering investing in. Some of those factors include how the equipment was cared for and whether there is a warranty. Technology, new or used, can have a strong return on investment if purchased wisely.
  7. The government might have your back –  Sometimes the government is looking out for you and one of those ways is through Section 179. Have you heard of it? If not – look it up! This option allows you to write-off a certain amount based on your equipment purchases. Seriously – go look it up!
  8. Tap that irrigation – Unnecessary irrigation can cost you between $7.50 – $18.90 per acre or 4-9 cents per bushel. Let’s cut that out! Make your goal to provide enough water in a crop’s root zone to carry it to maturity, produce top yields and then leave the field fairly dry post-maturity. Anything more than that is wasting water ($$$) and fuel ($$$). Find out more here.
  9. Inflation isn’t just for the economy – What could be burning 8-10% more fuel than you need to be? Wrongly inflated tires, that’s what! Tires are typically overinflated by 8 to 10 PSI, which can increase fuel costs by 10-12%. Let’s fix that shall we? Check out that tire inflation guide on your tire manufacturer’s website and get those tires properly inflated and saving you some of that hard earned money.
  10. There’s no crying in drying – You won’t save time with dryerating grain but you will save some of that money! You can cut costs by as much of 25% or more. What’s best is that you don’t necessarily need more grain equipment, just a strong will because that means there’s a way! Find out more here.

 

 

 

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Call Your Senator – Get Section 179 Restored!

179_blogThe current limit for Section 179 is $25,000. In years past, this limit has been restored last-minute but only with the actions of our senators. Read below to find out more about Section 179 and what you need to do to get the amount raised.

Quick facts about Section 179

  • Section 179 is a tax code created to help businesses. By allowing businesses to deduct the full amount of the purchase price of equipment (up to certain limits), Section 179 is a fantastic incentive for businesses to purchase, finance or lease equipment this year.
  • Section 179 is valid on most types of equipment. There is little sense in allowing a deduction on only obscure equipment, so Section 179 is aimed at general business equipment as well as off-the-shelf software. If you use it in your business, it probably qualifies. See a list of qualifying Section 179 equipment.
  • Section 179 can greatly help your bottom line. By deducting the full cost, you lower the amount you pay for equipment and/or software substantially. And these benefits can be further expanded if you choose tolease or finance your equipment & software.
  • Section 179 is simple to use. All you need to do is buy (or lease) the equipment, and use a special IRS form. That’s it. Details here.
  • Section 179 enhancements typically expire at year’s end. The various Stimulus Acts over the past few years have included special provisions for Section 179 and Bonus Depreciation, and greatly increased the limits on how much businesses could deduct. But the enhancements usually expire at the end of the year.
  • There is simply no better time than now to take advantage of Section 179 and Bonus Depreciation. Why? Because it is a Use-It-or-Lose-It write-off that ends December 31st.

Reach out to your senator. In order to get the write-off amount raised, we need your help. Below is a letter template you can use to send to your senator.

[Date]

The Honorable [Senator Name]

United States Senate

Washington, D.C. 20510

Via Electronic Mail

Dear Senator [Name]:

My name is [insert owner name].  As a voter and tax payer, I am writing to urge you to pass tax legislation which will allow myself to do business in an economically and environmentally responsible way.

The Section 179 tax deduction for 2015 is currently limited to $25,000 and the deduction’s phase-out begins with $200,000 of assets placed in service during the calendar year. These rates are too low to have a significant impact. The demand on farmers to increase crop growth has led to significant technological innovations. As such, many key pieces of agricultural equipment used by today’s farmer, such as tractors, cost several hundred thousand dollars. For tax years 2009 through 2014, Section 179 provided agricultural businesses and farmers with a deduction for the first $500,000 of qualified assets placed in service during the year and the deduction began to phase out if the taxpayer’s cost of qualified assets placed in service during the year exceeded $2,000,000. Tax incentives at these levels encourage farmers to invest in newer technology that will improve crop yields and which have a less harmful effect on the environment. In addition to Section 179 deductions, bonus depreciation incentives previously allowed business owners to accelerate the deductions of investments; equipment purchasers taking advantage of bonus depreciation obtained a 50% deduction in year one, rather than over the seven year agricultural equipment depreciation schedule period. Bonus depreciation and appropriate Section 179 levels were allowed to expire at the end of 2014.

Last year, Congress waited until just days before the end of 2014 to implement Section 179 and Bonus Depreciation retroactively for the calendar year. This small window of time did not given many would-be customers enough time to plan and evaluate the needs of their businesses for purposes of purchasing equipment. Congress’ continued refusal to pass these incentives prior to December of 2015 again undercuts the very purpose of the provisions and will unnecessarily hamper the intended impact. As such, I ask that you support an increase in Section 179 levels to those passed in 2014 and that you re-authorize 50% bonus depreciation for a minimum of two years for both incentives. In addition, I ask that you shorten the depreciation schedule for agricultural equipment to five years (from seven) to encourage capital expenditures, grow jobs and the economy, and to help incentivize the operation of ecologically and economically responsible equipment in the agricultural industry.

I welcome the opportunity to speak with you about the impact of these incentives on my business.

Very Truly Yours,

[Name]

7 Things Only Farmers Will Appreciate

  1. Baling twine – enough said
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  2. When the drawbar lines up on the first try
    hitch
  3. When the weather man is actually right
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  4. The smell of this – 
    freshhay
  5. Tractor or combine lights – they make riding all night that much easier

    Jake B - Southern IL

    Jake B –
    Southern IL

  6. The sound of johnny popper
  7. Automatic Gates – especially when it’s cold and you’ve got a heated cab!
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    What’s something you think only Farmers appreciate?

Top Ten Reasons Farm Trucks Aren’t Stolen

TOP 10 REASONS FARM TRUCKS AREN’T STOLEN:

#10 They have about 20 miles before they overheat, breakdown or run out of fuel.

#9 Only the owner knows how to operate the door to get in or out.

#8 It is difficult to drive fast with all the fenceing tools, grease guns, ropes, chains, syringes, buckets, boots and loose papers in the cab.

#7 It takes too long to start, and the smoke coming up through the rusted-out floor clouds your vision.

#6 The Border Collie in the back looks mean.

#5 They’re too easy to spot. The description might go something like this: The driver’s side door is red, the passenger side door is green, the right front fender is yellow, etc.

#4 The large round bale in the back makes it hard to see if you’re being chased. You could use the mirrors if they weren’t cracked and covered with duct tape and cow manure.

#3 Top speed is approximately 45 mph.

#2 Who wants to steal a truck that needs a year’s worth of maintenance, u- joints, $3,000 in body work, tail-lights and windshield?

#1 It is hard to commit a crime with everyone waving at you

What’s your Harvest Status?

Harvest is kicking off or finishing up in most areas of the country and Canada as well. Check out how your where your fellow farmers stand with #harvest15 with their shots from the field below!

Jon L - Corn silage this week beans the next up in central wisconsin

Jon L –
Corn silage this week beans the next up in central wisconsin

Jared B - 3/4 done with beans n Greene County ohio

Jared B –
3/4 done with beans n Greene County ohio

Scott L - Our bunk is full now on to some custom chopping!! Then back to some dry chopped hay for bedding in western NY

Scott L –
Our bunk is full now on to some custom chopping!! Then back to some dry chopped hay for bedding in western NY

Dane T.

Dane T.

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