Farm business policy brief

Chris

Barron: Hey everybody, before we dive into today's episode of The Aggie Pitch, I want to invite you to check out our exclusive podcast, 19 Minutes. For just $30 a month, you'll have access to high-level business insights and new episodes that are released on the 9th, the 19th, and the 29th of each month. Topics include finance, cost of production, team health, taxes, collaboration, and much more. With 77 episodes already available, signing up gives you immediate access to all past and future content. Click on the link in the show notes and subscribe and start boosting your bottom line today. Welcome everybody to another episode of the Ag View Pitch. We are going to have a conversation today about all kinds of fun stuff. We've got Paul Niefer with us today. How's it going, Paul?

Paul

Neiffer: Good. And yeah, it seems like half the time or more when I get on here, when you use the word fun, it's not really fun. So, uh, and that's probably going to be— well, actually, part of it today won't be so much fun, and part of it might be some, some fun.

Chris

Barron: So, yeah, well, you've got the Beneficial Ownership, uh, Information Report is back on again, and so we're going to talk about that. And then we're also going to talk about the, the budget that the House passed and, and some things that might tie into our operations in terms of, you know, tax relief or something along those lines. So let's start out with the BOI, right? It's the Beneficial Ownership Information. Explain what's going on there again and why do we need to know about it?

Paul

Neiffer: Yeah, and this is like a whipsaw or a teeter-totter, up, down, it's on, it's off, it's on, it's off. I mean, I think we've had this happen about 6 times now, but essentially about a month ago we had the Supreme Court lift what was called the national injunction. So that was a national injunction that said you don't have to file the reports. And the Supreme Court came in and said, no, no, we're back on. And then FinCEN.gov, which is where you report these beneficial ownership information reporting, that's the website. It's FinCEN.gov. So FinCEN.gov came out and said that because of this other court case, it's called the Samantha Smith et al. case that was winding its way through the court system. That, well, we're going to delay you having to file these reports. But then another judge came out and lifted that stay. So, and that happened last week.

So I think it was last week, either late or early last week, or maybe late the week before.

Chris

Barron: I can't remember.

Paul

Neiffer: It's too many things have happened. But they came out and said, effective now, you have to file the report by March 21st, 2025. Now, that's what's in place right now. Now, the issue— well, maybe issue is not the right word. They also said, hey, we are studying ways of not having you have to file these reports if you're fairly simple, like a husband and wife LLC that owns some farmland. Why in the world are they having to file this report? Because they're not money laundering, they're not doing bad things. So they said, we're reserving the right to come out with some additional guidance indicating whether you really need to file these reports or not. But we haven't seen that guidance. Also, we have a continuing resolution or a budget bill, and it's not even a budget bill. It's the funding bill. It's the bill that keeps Congress open or that keeps us funded.

That has to be done by March 14th. In the House, they passed, I think, like 394 to 0, a bill to extend the filing deadline to December 31st, 2025. In the Senate, that bill was introduced. It hasn't been voted on, but I get the feeling, and this is just me surmising, I get the feeling that that bill might be part of the March 14th continuing resolution. So maybe the March 21st deadline is really going to be December 31st. But right now we don't know. So what the rule is now, I think that's the only thing I can tell you. What the rule is now, you have to get these reports filed by March 21st. So you have essentially 20 days to get it done. And my advice for most farmers, if they have one or two of these, just get it done, get it out of your hair so you don't have to keep fretting about this.

Chris

Barron: The typical amount of time it takes Chris, to file one of these reports?

Paul

Neiffer: 5 to 10 minutes. It is for the typical farmer that's got 1 or 2 LLCs and it's owned by him or her and their spouse, maybe 1 or 2 kids. It's going to take you 10 minutes max to file these. So I would just get them done. Yeah.

Chris

Barron: And a lot of people probably do have them done. Is there anything else? I mean, as long as they've gone into the—

Paul

Neiffer: as long as they've gone in and nothing's changed, you know, you haven't changed ownership, you haven't changed driver's license information, you haven't changed your physical address, you're done. You're done forever until, you know, a change happens. So if you've already done it, this March 21st deadline doesn't mean anything.

Chris

Barron: What's the definition of a change?

Paul

Neiffer: So like if before you were reporting somebody and they're no longer associated with the company, that would be a change. Let's say their ownership went— before they were under 25%, now they're over 25%. That's a change. Or let's say you had a kid that owned 5%, you didn't have to report him, but now he's in charge of the LLC. That's a change. If you got a new driver's license or a new physical address for either the company or for your home address, that's a change. Those are the typical changes that I would see.

Chris

Barron: And what about gifting? If you got a family member gifting over to— Yeah.

Paul

Neiffer: So if you before you were over 25% and you gifted some to your kids and that dropped you below 25%, then and you need to update, well, you may not have to update yours because you have probably significant control. So that still may not require a change. So you have these hurdles that you have to meet in order for it to be a change. So I think for most, most of the people that would be listening to this, you know, listening to this, that the major change is going to be, you know, you got a new driver's license, it's got a new number. Or you moved. That's going to be the big change.

Chris

Barron: Yeah. What are the consequences if it's not done right now?

Paul

Neiffer: Potentially. Now, I think if you just miss it and they catch you and say, hey, get this updated, probably nothing, but potentially $600 a day penalty approximately. I'm not sure what the final number was. Last year was $591. It's indexed to inflation, so I'm guessing maybe $610, something like that.

Chris

Barron: Gotcha. Okay, um, well, that's fun information.

Paul

Neiffer: So that was the fun part.

Chris

Barron: Yeah, right. Uh, let's transition over to the, the budget that the House passed and what does that mean. And it's got to go to the Senate yet, but talk a little bit about the tax implications.

Paul

Neiffer: Yeah, so we know that President Trump and the Republicans would like to permanently extend the Trump tax cuts from 2017. Also, President Trump wants to eliminate the taxes on tips and Social Security and overtime. Likely none of that's all going happen. But that all costs money, you know, to permanently extend the Trump tax cuts over a 10-year period, because that's how the scoring is done, costs at least $4.5 trillion. You add in everything else that Trump would like to do, that's another $2 to $3 trillion. So you're looking at $6 or $7 or $8 trillion increase to the deficit by doing all this. What the House passed was they said, hey, we're willing to have the deficit go up by $4.5 trillion over 10 years. But in return, we're requiring cost cuts, you know, primarily in Medicaid, but cost cuts and also in USDA funding of about $230 billion, cost cuts of $2 trillion.

So the net effect to the deficit would be $2.5 trillion, which, you know, maybe that's reasonable. Now, what they said is if you're not able to cut costs by $2 trillion, We're going to require you to reduce that $4.5 trillion that you can increase the deficit by on a dollar, dollar-for-dollar basis down to $1.5 trillion. So if they, if the cost cuts come in at $1.5 trillion or less, then the maximum they can increase the deficit to cut taxes is $4 trillion. Now, like I say, over on the Senate side, the Senate is proposing what they call sort of a current baseline where they're saying Hey, we know that Trump's tax cuts are supposed to expire at the end of the year, at the end of '25. But we all know that they were going to be extended. And since we knew they were going to be extended, we don't have to count that as part of that $4.5 trillion.

So if the House and the Senate go along with that, then there's going to be an extra $4.5 trillion for extra benefits. You know, the no taxes on tips, no tax Social Security, no taxes on overtime. Maybe cutting the corporate tax rate for domestic production down to 15%. You know, that's something that Trump would like to do. You know, if they get that crammed through, you know, we're going to see the deficit go up by potentially $9 trillion over 10 years. Yeah, that's, that's what my concern is. Just because they say we don't have to count this $4.5 trillion, Yeah, or whatever the permanent extension, the Trump tax cuts is, it's still going to increase the deficit by $4.5 trillion. So, you know, the Republicans, you know, they're definitely doing funny math right now. Interesting. But it may happen. It may happen.

Chris

Barron: And all the stuff Doge is doing isn't going to make much of a dent in it anyway, right? I mean, it's just, I mean, they're trying to do, I think, the right thing, but there's there's definitely turmoil.

Paul

Neiffer: Yes, there's turmoil for sure. Yeah. Let's say you cut 1 million federal employees. Let's, let's just think about this. We cut 1 million federal employees, which would that be a pretty good-sized cut? And we're not talking the Army or the armed forces. We're just talking, you know, the administration side. So 1 million, let's say the average wage and benefits is $100,000, just as an example. I got to do my calculation here. I want to make sure I'm not off by some dollars here. So let's go. We got 100,000 times 1 million. That is— that's 1 to the 11th power. So let's see if I can— that is 100 billion. Okay, so you eliminate 1 million a million federal employees, that's going to save $100 billion a year. Okay, it sounds like a lot of money.

Well, those federal employees were paying a whole bunch of taxes into the system, so that, uh, that we're going to reduce the $100 billion of savings by about, let's say, $25 billion. Now we're down to $75 billion, and you know, that still, you know, over 10 years, that's $750 billion, and we've increased the deficit by $9 trillion. Yeah. So yeah, the math still doesn't work. So we'll see. We'll see.

Chris

Barron: Yeah, it's going to be interesting because, you know, it's— and I mean, it's such a political thing. But, you know, one of the things that I've always noticed in budgeting for the farm operations is, you know, we can try to save money or whatever, but you can never save yourself to prosperity. You kind of got to figure out how to generate revenue rather And you can slow the spending down and that doesn't hurt and helps, but you got to figure out how to generate— how do you increase productivity is really one of the things I think that, I don't know, complicated matter.

Paul

Neiffer: And our problem is that, you know, our GDP is growing at 2% or 3% and our deficit's growing a whole lot more than that. And eventually, Is the US going to become like a— I'm not going to say a third world country, but are we going to become like a Greece or an Italy or a Spain or France, some of these other countries where our debt— now we've been able, because we are the currency of the world, we can print ourselves out of it. But at some point, that tends to go the other way. So I— but we don't have the Democrats and we don't have the Republicans really that interested in or a president that interested in this because Trump wants to eliminate the debt ceiling anyway. So, uh, you know, uh, President Trump throughout his history has used debt and a lot of debt, so debt doesn't scare him.

So, and I'm not saying it scares me right now, but eventually I, I'm more scared for either my kids or my grandkids than I am for me.

Chris

Barron: Yeah, yeah, that it's You can't, you know, at the rate of increase, I don't— I just can't imagine how that is sustainable over like, like over like decades, right? I mean, you might be able to survive for quite a while, but you know, eventually you got to pay the piper to, to, you know, and we've— I don't know, it's pretty big.

Paul

Neiffer: And we have a Medicare and a Social Security issue in about 6 or 7 years staring us in our face. So there's going to be some changes there, and that definitely is going to affect our kids and grandkids. More, more than you and I.

Chris

Barron: Yeah, it's gonna affect a lot of people listening to this because we have a lot of 30-somethings.

Paul

Neiffer: Yep.

Chris

Barron: And you're gonna, you know, it's gonna affect them as well. That's why I want to have this conversation. Anything else that, that, that is something people need to do, pay attention to, watch, or whatever?

Paul

Neiffer: Well, since we're taping this on, on March 1st, likely, you know, here within, I think this week, we're gonna get an announcement from USDA on the economic aid, you know, the $10 billion of economic aid. You know, Jim Wiesmeyer's newsletter came out and indicated probably what you're going to get upfront is only about 85% because they want to make sure that they don't exceed the $10 billion of funding. You know, I saw some projections the total would be $9.8 billion, but I think that's on the low side. I think there's still more acres that to be factored in. So I think you know, you're going to be looking at getting about 85% of that. And then probably 2, 3 months from now, you get the remaining 15%.

Chris

Barron: So a lot of guys in the budgets have been factoring in 40 to on corn, you know, and it's like 43-something, 40 on corn and, and about 32 or so on.

Paul

Neiffer: Yeah, I think the numbers that I put on the blog based on what the House Ag Committee had projected we're starting to hear that those are probably the correct numbers. I think corn is $43.80, soybeans is like $30.81, wheat's like $31, cotton's like $84, rice is $71, $72, something like that. But if people want to see those numbers, you know, those are out there. There's plenty of them out there. You know, FAPRI, who is University of Missouri. And I think, Traction, which is sort of the farm credit, they used a little bit lower numbers, but they were basing the acres, the 10-year average acres, using including '24. And I think what the House was doing was using '23. So 10 years through '23, because we know what those numbers are.

And I think that's what USDA is going to use is the firm numbers, not the numbers that are still being sort of massage— well, not massage, but final, final counts.

Chris

Barron: So that, that economic aid, that $40, you know, the numbers you just said, is this other $10 billion in addition? Is there something that's coming in addition to—

Paul

Neiffer: Yes. So in addition, we got the disaster aid, and that's about $18 to $19 billion. That's for '23 and '24. So if you collected crop insurance, either '23 or '24, likely you're going to get an additional payment. You're going to get topped off. But those details, you know, that's probably still 2, 3 months from now before we know for sure how that's going to be implemented. You know, many of you got an ERP, Emergency Relief Program payment from 2021, '22, maybe similar. You know, there were some issues with the '22 program, but what I hear is because under those programs, if you didn't collect crop insurance, but you would have been entitled to a payment based on, you know, going from 80 to 95, let's say you didn't get paid under that provision, you had to go to what's called the Phase 2 or Track 2.

What I've heard now, this is what I've heard is let's say you were at the 80% level, you didn't collect a payment. Or let's say you're at the 85% level, which, Chris, you know, in 2023 on the ground that you farm for me, I missed a payment by $100. You know, we had a freeze, but my yield didn't drop enough. I missed a payment by $100. Well, if my crop insurance was at the 95% level, I would have collected a pretty good-sized payment. So what I've heard is even though I did not collect a payment, they'll go back and recalculate as if I was at the 95% level. Therefore, I would be entitled to a payment. Now, that's what I hear that, that the industry is pushing. We think USDA is maybe doing something like that, but we don't know for sure. So again, we're going to have to wait a month or 2 months or 3 months to get all those details.

Chris

Barron: Do you see DOJ interfering with any of that stuff, or do you think that they're going to stay away from that because Trump's trying to make sure farmers?

Paul

Neiffer: Well, I think, you know, they have to stay away from that because that was authorized directly by Congress back in December. You know, that $30 billion of aid, the $10 billion of economic aid— lawsuit then— that would definitely be a lawsuit that they would automatically lose because that was authorized by Congress.

Chris

Barron: Okay.

Paul

Neiffer: You know, a lot of this other stuff, yeah, you got authorization, but, you know, it's not direct. I mean, this is pretty much direct, although the Inflation Reduction Act authorized about $20 billion of, you know, EQUIP and CSP and so on. And, you know, Doge, or the administration, has delayed that. But again, that was authorized by Congress. That would require Congress to come back in and eliminate or cut it. So, uh, but there's a lot of that authorization was later years, you know, '26, '27, '28. So So they, they have some leeway there.

Chris

Barron: Okay. Well, anything, any, anything else that we didn't hit on that's kind of covered?

Paul

Neiffer: The only fun part is, you know, the weather's starting to look up. You know, we got spring planting just around the corner. And the, the good news is I have plenty to blog about on my blog, farmcpareport.com. So, you know, over the next 6 months, I'm not going to run out of anything to talk about.

Chris

Barron: Yeah, well, maybe people can be checking that out and yeah, For sure. And that sounds really good. I think, like you said, the happy part is once farmers can get back out and smell the soil and get— start planting again, they'll be happy. So yeah. And then in the meantime, hopefully this stuff gets figured out. So, you know, everybody's going to be able to use a little bit of extra revenue to come in, I think, during the course of 2025 for sure. So that's, that's good news too.

Paul

Neiffer: Farmers are always looking forward to either tractor therapy, sprayer therapy, or combine therapy. So that's that, and I'm including me.

Chris

Barron: Yeah. Yeah. Well, we'll have the tractors ready for you. So whenever you want to come in and have at it, we'll keep you busy. So.

Paul

Neiffer: Okay. Sounds good. Thanks, Chris.

Chris

Barron: Yeah. Thanks, Paul. Thanks, everybody, for listening. We'll catch you again next time on the Agri-Pitch.