Current Cattle Market Daily Headlines for January 26, 2021

by | Jan 26, 2021 | 0 comments

North Dakota considers making state beef checkoff voluntary

  • Representative Sebastian Ertelt of Libson, ND has introduced a bill in the North Dakota House of Representatives that would make the state beef checkoff voluntary.
  • In 2015, North Dakota cattle producers who supported the checkoff’s promotion, research and education efforts came together with the idea of adding a new, refundable dollar to the mandatory $1-per-head national checkoff.
    • The bill was enacted that year, 2015, in North Dakota’s Legislative Assembly to require all cattle sold in North Dakota or sold by a North Dakotan to pay an extra $1/hd. to the North Dakota Beef Commission.
      • North Dakota sale barns are required to withhold these funds from producers’ checks and producers who sell private treaty are required to submit payment to the beef commission.
      • Currently, producers can request the proper form within 60 days of payment, send the form with the appropriate additional paperwork required, and their checkoff dollars can be refunded.
    • House Bill 1487 would make a basic change to the law; instead of the law stating that producers “must” remit the state checkoff, Ertelt’s bill would amend the law to say that producers “may” remit payment.
      • This successfully changes the mandatory refundable checkoff program into a voluntary checkoff program.
    • According to the Independent Beef Association of North Dakota President Kerry Dockter, many producers still don’t realize this money is being taken out of their checks.
      • Dockter and his organization support the proposed bill to amend the law. He doesn’t believe the state checkoff funds are being used wisely because cattle prices have not improved and alternative proteins seem to be gaining popularity.
    • According to the North Dakota beef commission website, the state beef council received in $2,275,536 in fiscal year 2020. This includes the mandatory $1 per head federal beef checkoff and the mandatory refundable $1 per head state beef checkoff.
    • In a 2015 interview, North Dakota Stockmen’s Association executive vice president Julie Ellingson said that her association’s members support the state checkoff because they believe cattle producers in their state are missing out on opportunities to fund research and education.


Biden administration: what will happen to your taxes

  • Various agricultural groups worked hard to make significant tax policy advances for agriculture in the 2017 Tax Cut and Jobs Act, but now that the Democrats have control those efforts may all go out the window.
  • In the last couple of Congressional sessions, Republicans enacted business-friendly policies, but going forward, Democrats will most likely focus more on raising taxes on those with a high net worth and businesses.
    • For farmers and ranchers, the key issue will be how the Democrats’ tax policy addresses the estate tax and capital gains taxes on how much capital changes hands at death, as well as how farm businesses are set up.
  • The increased federal estate tax exclusion of $11.7 million for married couples and 40 percent tax, are set to expire the end of 2025. After that time, the federal estate tax exclusion amount will be back to $5 million.
    • According to Pat Wolff, senior director of congressional relations at the American Farm Bureau Federation, Democrats would like to shrink this exemption as far down as $3.5 million.
      • Roger McEowen, professor of agricultural law and taxation at Washburn University School of Law in Topeka, KS said that when you combine the exemption suggestions with proposed stepped-up basis changes, you create a massive problem that will effect just about every farming and ranching operation.
    • Even though President Biden promised no tax rate increase for those who earn less than $400,000, McEowen says that is “a misrepresentation and misleading sleight of the hand.”
      • At the end of the year, rates are less important than profitability; rates may not go up on taxable incomes beneath that threshold, but farmers and ranchers worry about increased costs due to regulation and taxes other than just incomes taxes.
    • Step-up in basis reduces capital gains tax liability on property passed down to an heir by excluding any appreciation in the property’s value that occurred during the decedent’s lifetime from taxation.
      • If you don’t get that step-up basis, even a fairly small farming or ranching operation with a worth of $500,000 could see the effective combined federal and state capital gain tax rate of 25-30 percent, explained McEowen.
        • He added that step-up basis has been a savior for farmers and ranchers, as well as businesses in transition planning.
      • Wolff closed by saying that the main priority when it comes to agriculture is making sure tax policy continues to create a profitable environment for producers and tax policies need to be put in place that allows for the transfer from one generation to the next.


Boxed beef prices

  • Choice boxed beef: $226.73 (+3.91)
  • Select boxed beef: $216.21 (+2.87)


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