Farm Income & Tax Strategies

[RockChucker30]

Really curious to see what everyone else is doing here...

I'm showing farm income from a herd of meat goats. The goats get hung in fences, they die, coyotes eat them, and they're a pain if we want to go out of town on vacation or a prolonged hunting trip. I grew up raising cattle and goats, but although I like livestock, long term I'd prefer to not have livestock.

I want to show farm income though, as it allows land improvements, food plot expenses, and machinery to be used as a tax deduction, plus mileage, fuel, etc, etc.

So what is everyones strategy here? Some options I'm interested in:

1. NRCS / CRP / Government Programs (don't know anywhere near enough about this)
2. Orchards - I've got some fruit trees already, want more plus chestnuts, anyone selling fruit or nuts to show farm income? Don't know how much trouble this would be
3. Land rent - my Dad is currently doing this with part of the farm, but I'd rather convert soybean ground into NWSG and wildflowers.....

We've got about 200 acres, about half wooded in small woodlots. I don't think forestry would work, but I don't know.

Don't know what to plan for over the long haul.

 

[S.T.Fanatic]

Stay out of government programs and harvest your seed from your native plantings.

 

[bwoods11]

If you rent even 8-10 acres out for beans/corn, alfalfa you can claim the income, and work with write-offs. Fenced pasture? All options.

 

[RockChucker30]

We've got about 40 acres in beans now, and a neighbor is cutting hay off another 30 acres or so. However....long term I'd rather see all that ground in prairie grass, forbs, and wildflowers, and keep it from growing up in trees with controlled burns.

This isn't about the money, more about happiness. Though if happiness is also tax deductible, that's even more happiness.

 

[S.T.Fanatic]

Plant your natives in strips so you can collect individual seeds or have a couple different blocks that are in a marketable "blend" that can be collected and sold. Native seeds demand a high premium. I'd love to harvest ours but the family thought it was a good idea to take government welfare payment instead of retaining full property rights.

 

[j-bird]

My 2 cents worth.... At least talk to your local NRCS office and see what programs are available to you and see what they can offer that might appeal to you. The nice thing about the government programs is that in many cases you can get cost share for implementing certain plans, as well as potentially annual payments as well. No, nothing is for free.....so they have rules and limitations as to what you can and can't do (what you can plant, how much area is allowed, how you have to maintain it and the like). Other things you can look into is some states have tax shelter programs where, again if you play by their rules, they will reduce the property tax burden on certain habitat types and the like (IN has a classified forest program where if you play by the rules they adjust the property enrolled to an assessed value of $1 an acre). The other concern with government programs is that they tend to carry a significant penalty should you decide to not play by the rules or choose to suspend your contract early. Some of these programs also carry over even if the land ownership changes and as such could potentially limit options should you decide to sell. Contracts also expire and may not always be renewed, so you may need to have a "plan B" in your back pocket as well.

The most flexible plan however....is simply biting the bullet and doing what you when you want and how you want (without the government involved)....but all that comes out of your pocket.

I have 2 CRP contracts where I installed buffers between field/wooded edges and another in areas along a stream. These have worked well for me, but there are rules. The ag field that I gave up to install these the government gives me an annual payment for as well as cost share for maintenance costs to a limit. Those rates are generally on par for what I was making in rental before....but with removing the less productive ground my current rental rates for the current row crops has actually increased. However these programs are limited to only 120' from the edge, so again it has limitations...and you have to be able to prove cropping history. The areas that got excluded that didn't make sense to farm...and acre here an half acre there....I simply bit the bullet and made them into my plots and orchards.

Income comes from many places....live stock, row crops, forage crops, timber cutting, you name it. As long as you are trying to actually earn an income. Some don't like having the government involved and I understand that. I, thus far, have not had a huge issue with it....but time will tell.

 

[yoderjac]

We have a pine farm a little under 400 acres. Most businesses need to show profit before too long or the IRS deems them a hobby. Since trees require such a long time from planting to market, they don't expect profit to be shown for a long time. We developed a "Forest Stewardship Plan". This includes things like timber management units, riparian buffers, and wildlife support activities. This covers most of our activities except the hunting itself. Planting and spraying costs along with all of the wildlife activity show as expenses for many years before the first commercial thinning. That first commercial thinning was the first income we showed.

We also entered in to some USDA NRCS programs. We looked at others that were not worth the aggravation, but some were very beneficial. We benefited from the EQIP program a few years back. They developed a multi-year plan first that included firebreaks, herbicide application on clear-cuts, and controlled burns. They paid us so much per liner foot of firebreak, per acre for the herbicide application, and per acre for the controlled burn. We had the option of doing the work ourselves and pocketing the money or contracting it out. We opted to contract it out. We got the firebreaks done for less than they paid but the herbicide application cost us a bit more then they paid. We broke even on the controlled burns and overall. So, we essentially got good habitat work done that we wanted to do for free.

200 acres is on the small side for timber, but it depends on your location. Easy access to a hard top road for loggers helps. Many companies don't want to buy small stands of timber because of the economies of scale. I don't know if this works in your case or not, but a pine farm works for us.

Thanks,

jack

 

[SwampCat]

Bees

 

[Boll Weevil]

The model Jack presents above is much like what I'm doing but also rent out my tillable ground so show that income annually. Having a tree farm certification from the American Tree Farm System might help your cause if you go this route.

 

[Tree Spud]

Bees

Care to explain?

 

[SwampCat]

Care to explain?

Raise bees. Sell honey, wax, hive products, and bees. If want to get into it deep - pollination contracts.

If you are in the right state - not TN - but WI will work - NRCS pollinator contracts on your land pay high dollar.

 

[RockChucker30]

SwampCat, how hard would it be to gross 2-5k with bees? My neighbor has a couple hives and it seems like some years they do great, but last winter he lost all but one hive for whatever reason.

Selling some apples at a farmers market in the fall plus raising bees sounds like fun...definitely work, but better than trimming hooves and checking fences after every storm.

I'm not opposed to some NRCS stuff either, but it'd have to be the right deal. If they would pay to get some ground in NWSG and help maintain that I'd be real interested.

 

[SwampCat]

I think average honey production for this part of the country - TN, AR, etc is about 50 lbs per hive per year. That is pretty close to what I average - for established hives - not for last years splits, swarms, nucs, etc. I keep about fifteen hives and produce 500 lbs of honey and I sell at $5 per lb - the cheapest in my neck of the woods. I also sell three to five nucs each year at $125 - which is also cheap. Some years, I have sold established hives. I dont go to farmers markets - just local word of mouth. Could easily sell twice what I sell just word of mouth. Could sell dozens of nucs. If you went to farmers markets, you could make various chapsticks and hand balms from bees wax which are always good sellers. If you are handy with wood working equipment, you can usually do pretty good selling woodenware. There is some initial financial investment for wooden ware, bees, extractor, etc.

 

[RockChucker30]

That sounds really interesting, probably something I'd enjoy.

Do you know of any good resources where I can read, watch, or learn the basics? I know there's a steep learning curve and I'm at step 0. Thanks


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[SwampCat]

That sounds really interesting, probably something I'd enjoy.

Do you know of any good resources where I can read, watch, or learn the basics? I know there's a steep learning curve and I'm at step 0. Thanks


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Bee source forum
https://www.beesource.com/forums/#/

 

[H20fwler]

I'm blessed to have a good job and an understanding wife that knows the enjoyment the whole family gets from all the different things we do on the farms. So I don't have any tax deferment strategies at all, used to have some in CRP but didn't renew two years ago and just do my own thing with the land now. I do think the taxes are definitely to high for prime farm ground I took out of production to let go idle but it's worth it to me.

 

[buckdeer1]

I just let my buffers expire after 10 years but they would only let me renew for 1 year.Seems crazy with all the CRP coming out that if they could just pay for established why not leave it.I would say be real careful if they want to test for wetland,it can be impossible to get out of.I have had about every NRCS program there is and now I am about out of them all,not by my choice.I imagine I have made around 20K off them

 

[RockChucker30]

I think average honey production for this part of the country - TN, AR, etc is about 50 lbs per hive per year. That is pretty close to what I average - for established hives - not for last years splits, swarms, nucs, etc. I keep about fifteen hives and produce 500 lbs of honey and I sell at $5 per lb - the cheapest in my neck of the woods. I also sell three to five nucs each year at $125 - which is also cheap. Some years, I have sold established hives. I dont go to farmers markets - just local word of mouth. Could easily sell twice what I sell just word of mouth. Could sell dozens of nucs. If you went to farmers markets, you could make various chapsticks and hand balms from bees wax which are always good sellers. If you are handy with wood working equipment, you can usually do pretty good selling woodenware. There is some initial financial investment for wooden ware, bees, extractor, etc.

My neighbors are out of the bee business and I’m buying their equipment. They said old eyes and old backs weren’t keeping up with the bees.

I sold goats and started researching promoting native flowers. I’m adding brassicas and crimson and white clover into the foodplot rotation, as well as planting more fruit trees.

I think all these things will benefit each other. Food plots help deer and bees, native forbs help deer and bees, bees help the fruit trees, seems like a good synergy.

I appreciate the suggestion. I’ve learned a lot in the last few weeks and bees are fascinating.


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[S.T.Fanatic]

We have to deal with the cold weather up here and it can be tough on the bees. My buddy has been sending his hives out to California for the past couple of winters so he doesn't have to worry about keeping them warm enough and can keep them producing honey all winter long.

 

[RockChucker30]

Cold weather up north vs small hive beetle down here. Bees are tough everywhere these days.

Varroa introduces in late 80’s from Asia, Small Hive Beetle from Africa in ‘98, Nosema in ‘06, the exotics make everything tough.

Ask me how I feel about chestnut blight, emerald ash borer, Dutch elm disease, butternut canker, Chinese Privet, Multiflora......


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