Farm Service 790 is hosted by Terry Henne.  He offers the latest information in Agriculture - Events, Topics, Prices and Weather.  If it relates to Agriculture, Terry Henne is talking about it.

The Affordable Care Act’s excise tax and its effect on agricultural employers

Failure to Comply with Market Reforms could have potential negative ramifications to even Small Employers with less than 50 FTE’s for an Annual Monthly Average in the form of a $100-per-day per employee penalty.

Since the inception of the Affordable Care Act (ACA), there has been a great amount of discussion about the requirements for employers and what Applicable Large Employers (ALE) – defined as 50 or more FTE’s for an annual monthly average – are required to provide. However, the ACA is a very large piece of legislation that contains far-reaching regulations that cover not only ALE’s but may also affect small employers defined as having less than 50 FTE’s for an annual monthly average.

Unfortunately, a portion of the ACA known as the Failure to Comply with Market Reforms (I.R.C. 9801 – 9813) has not received the same amount of attention as parts of the ACA that affect Applicable Large Employers but can have profound ramifications on small employers. The Failure to Comply with Market Reforms establishes an excise tax of $100-per-day per employee penalty if a health benefit being offered does not meet one or more of a number of requirements.

In many cases farmers are unable to afford offering full-fledged health benefit plans to their employees due to farm profitability and cash-flow, but may try to be a good employer by offering some other form of health benefit compensation. It is these other health benefit compensations – regardless of how formal or informal they may be – that can get a small employer sideways with the Failure to Comply with Market Reforms piece of the ACA legislation.

Some questions to consider are: is the farm/employer providing healthcare coverage to all or just some employees? Does their coverage meet all essential benefits and affordability? Is the reimbursement being taxed as part of their income? These are many of the challenges that must be considered and discussed with the farms legal and tax advisors. A common example of what could be affected by the Failure to Comply with Market Reforms portion of the ACA legislation is when a farm employer has an informal agreement with some of their farm employees, for instance, if a small farm has six employees and reimburses them for their healthcare coverage premium or reimburses them for medical coverage. This situation can become even more complicated if they only provide this to a small number of their employees versus to all employees due to other regulations.

All farms should maintain a relationship and have regular communication with a good set of advisors which may include legal representatives, tax preparers (CPA’s, etc.), the local university Extension service and others. It is with this advisory team that a farm should discuss what is being done and its potential ramifications. With any type of benefit that could possibly be perceived as a health care benefit a small employer may open themselves up to a potential tax penalty liability. Each farm’s situation is unique and must be dealt with accordingly.

 Michigan State University Extension reminds you to always contact your trusted legal and tax advisors.

For further information please contact me at or visit the MSU Extension Farm Information Resource Management webpage

Tax update for 2016

Announcement of annual tax adjustments have been released with some changes and some staying the same.

Taking full advantage of deductions and knowing the trigger points that take away some popular deductions is important for each of us that pays taxes. Here are some items for tax year 2016; the Internal Revenue Service recently announced annual inflation adjustments for more than 50 tax provisions, including the tax rate schedules, and other tax changes. Revenue Procedure 2015-53 provides details about these annual adjustments. This is the first installment of three on some of the tax items for 2016 that impact most taxpayers include the following dollar amounts:

  • For tax year 2016,
    • Your individual income taxes will have a 39.6 percent tax rate affects single taxpayers whose income exceeds $415,050 ($466,950 for married taxpayers filing jointly) The the other rates – 10, 15, 25, 28, 33 and 35 percent – and the related income tax thresholds for tax year 2016 are described in the revenue procedure. As a tax management strategy try
  • One exemption that many utilize to reduce your taxable income;
    • The standard deduction for heads of household rises to $9,300 for tax year 2016, up from $9,250, for tax year 2015.
    • The other standard deduction amounts for 2016 remain as they were for 2015: $6,300 for singles and married persons filing separate returns and $12,600 for married couples filing jointly. This exemption is provides the benefit to lower taxable income from all sources.
  • Itemizing deduction can be another helpful tool to reduce taxable income this deduction allows you to reduce income for medical expenses, property taxes, donations and other items. To take advantage of this deduction you need to be sure to keep a file to collect all of your receipts for these expenses to see if they total enough to increase the deduction above the standard value. The limitation for itemized deductions to be claimed on tax year 2016 returns of individuals begins with incomes of $259,400 or more ($311,300 for married couples filing jointly). This means that if your individual or household (combined) income is below these levels you can take advantage of itemizing deduction for these items. Of course the IRS gives you a $9,100 individual or $11,000 married filing jointly alternative that will not require you to gather the necessary paperwork support itemizing expenses above the standard allowance.
  • The personal exemption for tax year 2016 raises $50 to $4,050, up from the 2015 exemption of $4,000. However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $259,400 ($311,300 for married couples filing jointly). It phases out completely at $381,900 ($433,800 for married couples filing jointly.)

The next couple articles in this Michigan State University Extension series will review; AMT, lifetime learning credit, estate exemption.

IRS Issue Number: IR-2015-119 press release Oct. 21, 2015.                  

For more information you can visit the Michigan State University Extension- FIRM web site for tax and other farm risk management resources and reports or contact me, one of the farm risk management educators, at 989-672-3870 or

2015 Section 179 Expense Deduction and Bonus Depreciation again up in the air

The inability of the U.S. Congress to deal with federal tax code issues could make it tough for businesses that use the Section 179 Expense Deduction Special Depreciation Allowance to increase deductions for the 2015 tax year.

For a number of years, agricultural producers have made use of both IRS code section 179 Expense Deduction and the Special Depreciation Allowance, also known as bonus depreciation. The reliance on these as tax management tools may again become limited due to Congressional inaction. Over the past few years, these tax management tools have been made available for a single year and Congress has only acted late in the year, usually in December or even as late as in the first couple of days in January of the new tax year to retroactively make these tax strategies available. Congress’ failure to act in a timely manner on such basic tax code places a burden on farms and other small business to appropriately plan throughout the year and leaves them scrambling to manage their business. As it presently stands for the 2015 tax year, Section 179 has a limit of $25,000 with a phase out beginning at $200,000 and no bonus depreciation is allowed unless congress takes action to change this.

The IRS section 179 Expense Deduction allows a business owner to “recover all or part of the cost of certain qualifying property”. This must be done within the tax year that the property was placed into service. The benefit is that a producer can expense, with limitations, a capital purchase instead of depreciating the item over time using the appropriate number of recovery years. For an item to be able to be “direct expensed,” it must be qualified property.

Qualifying property is property that is eligible, acquired for business use and is acquired through purchase. Eligible property is property that is considered tangible personal property. For example, this includes single purpose agricultural or horticultural structures, machinery and equipment, as well as breeding and dairy livestock and fur-bearing animals.

The limit for section 179 for the previous tax years was $500,000 with a dollar for dollar phase-out beginning at $2 million. The limit for the 2015 tax year will be $25,000. There were also changes passed in January 2013 for the 2012 and 2013 tax years. Other tax laws modified during this period included a permanent increase on the exemption amount for the Alternative Minimum Tax (AMT) and the Estate Tax. 

The Special Depreciation Allowance, also known as bonus depreciation, was kept at the 50 percent level for 2013 and 2014 and again disappeared completely for the 2015 tax year unless Congress takes action. Generally, section 179 is used first then bonus depreciation may be used for qualifying property. A point to remember is that bonus depreciation can only be used for original use assets (new not used) while used property may be eligible for section 179.

Fruit farmers are normally not eligible to use bonus depreciation because they have elected out of the Uniform Capitalization Rules (UNICAP). This has allowed fruit growers to expense most pre-productive expenses but requires them to use the Alternative Depreciation System (ADS) and makes them ineligible for bonus depreciation.

In agriculture, as with any other business, one has to make management decision based on the laws that presently exist not what may be. Michigan State University Extension recommends performing the necessary tax planning and financial business analysis using the present law while keeping the changes in mind to determine the best course of action as it deals with capital asset purchases over the next couple of years. Consult your tax professional or local MSU Extension farm management educator if you have questions about your specific situation.

For further information please contact me at or view the MSU Extension Farm Information Resource Management webpage.

Dry Bean Regional Meetings Scheduled

Wednesday, December 16 - 9:30a-1p
Cheese Haus

Thursday, December 17 - 9:30a-1p
Ubly Heights

Friday, December 18 - 9:30a-1p
Turk Lake Restaurant
Turk Lake

Dry Bean Outlook Conference

December 15 - Double Tree Hotel in Bay City

Registration begins at 8:30a, welcome and introductions at 9:30a

Registration and program details are available by going the the address below:


Pre-registration is suggested for seating and meal planning.  CCA Credits - 2CM; 1PM; .5SW;.5NM;  RUP Credits pending

Funding opportunity for farmers

North Central Region Sustainable Agriculture Research and Education (SARE) Farmer and Rancher grants due Dec. 3, 2015.


The North Central Region Sustainable Agriculture Research and Education (SARE) Farmer and Rancher grant program is now accepting applications from qualified farmers and ranchers. The program, which began in 1992, is for producers interested in enhancing the sustainability of their operations. Specifically, it is for conducting on-farm research, demonstration and/or education. Proposals that have been funded in the past generally seek to improve profitability, environmental stewardship, and enhance rural communities. There are several benefits to the program. First. Proposals can be multi-year endeavors. Depending upon the proposal, often one year is not sufficient to document outcomes; the NCR SARE farmer/rancher grant can be up to two years in length. Second, multiple farmers can apply together. Individual farmers can apply for up to $7500, two farmers can apply for up to $15,000 and a group of three or more can apply for up to $22,500. Finally, NCR SARE keeps a database of previously funded proposals that offer a wealth of information for farmers seeking to apply.

Many Michigan proposals have been funded over the last few years. Successful applicants generally are clearly written, attempt to address a specific issue, have a well justified and detailed budget, have an effective and well-conceived dissemination plan, pay farmers for their time and effort, and have solicited the assistance of Michigan State University Extension, the USDA NRCS, or a local Conservation District. Developing a relationship with one of these entities can also result in a letter of support, which is needed as well.

If you have questions please visit the NCR SARE website or contact your local Michigan State University Extension educator.

Plan now for winter storage of pesticides

For farmers, the busiest time of the year is the fall. Adding something else seems to be intolerable, for those farms that have extra pesticides winter storage needs to be added to the long chore list. The best way to ensure that there is no chance of pesticide problems is to return any extra product to a pesticide dealer. If returning pesticide to a dealer is not an option, farms need to have proper pesticide storage. When pesticides are not properly stored there is a chance that products could freeze, containers could be compromised, posing a threat to people, livestock, and the environment.

The easiest way to reduce the risk of pesticide exposure to humans, livestock, and the environment is to have proper pesticide storage. The ideal storage is one that is separate from any other activities. The building should be locked, have a spill kit and a chemical fire extinguisher. The floor should be sealed, with concrete curbs to contain any spills. The building should be clearly marked as pesticide storage. If a farm is unable to dedicate a building for pesticide storage at the very least there should be a cabinet dedicated to storing pesticides. As with the building, the cabinet needs to be locked and clearly labeled as pesticide storage.

Once the storage location is set farmers need to be concerned with how they store pesticides. Shelving units should be metal or plastic with a lip. Wood should not be used since it will absorb spills. It is also important to put any dry formulations on the top shelves above any liquids to prevent cross contamination if liquid containers leak. Pesticides should be separated by type i.e. herbicides, insecticides, fungicides, etc. The oldest product should be in front so that it will be used first next spring. It is also very important that all pesticides are clearly labeled. If the label is missing or unreadable contact your chemical dealer or visit the Crop Data Management System to obtain a new label. Remember to affix the label on the container.

There are instances when a farm has outdated, unusable, or even banned pesticides. In these cases pesticides can be taken to a Clean Sweep site. Clean Sweep accepts unwanted pesticides and disposes of them properly. This is a free service funded through the Michigan Department of Agriculture and Rural Development to all residents in Michigan.

To find out more information on proper pesticide storage get a copy of “On-farm Agrichemical Storage and Handling”, Michigan State University Extension bulletin E-2355 from the MSU Extension Bookstore. For more information on storage of pesticides and a guide for proper storage temperature of common pesticides obtain a copy of University of Wyoming Extension bulletin MP-93.5, “Cold Weather Storage and Handling of Liquid Pesticides.”

2015 Integrated Crop and Pest Management Update

Date: December 15, 2015
Time: 9 a.m. - 3:30 p.m.
Location: MSU Pavilion 4301 Farm Lane East Lansing, MI 48910
Contact: George Silva with Eaton County MSU Extension at 517-543-4467 or email


Dec. 15, 2015
9 a.m.-3:30 p.m.

MSU Pavilion
4301 Farm Lane
East Lansing, MI 48910

 This event will address:

  • Research based MSU recommendations for weed, insect, disease and fertilizer for 2016
  • Review of the 2015 late planting season
  • Weeds, insects and disease resistance management
  • Soil fertility and nutrient management
  • Soil Health
  • 2016 Weed Control Guide E-434

Cost: $60 (includes refreshments, lunch and handouts including the 2015 MSU Weed Control Guide and other bulletins)

Registration is now open through midnight, Monday, December 14, 2015. Please note: this event is limited to 350 participants.

Seneca Valley Virus in swine

Suspect cases in Michigan should report to Michigan Department of Agriculture and Rural Development.

Pork producers might be aware of a disease circulating in pigs call the Seneca Valley Virus (SVV). As the daily observations and health status checks of your herd are completed, producers should be looking for signs of SVV. The clinical signs associated with SVV in pigs include vesicles (blisters) or erosions (results of ruptured vesicles) on a pig’s snout, mouth, and/or feet where the hoof meets the skin. There have been reports of unexplained lameness, off-feed events and diarrhea in piglets prior to the emergence of vesicles or erosions in groups of pigs. It is important to remember that SVV is a production disease, which means there is no risk in consuming pork products. According to the Swine Health Information Center, there is no record of SVV causing symptomatic human disease. Interestingly, the virus has potent oncolytic abilities which are currently being explored in human cancer treatment research.

The clinical signs related to SVV cannot be distinguished from vesicular foreign animal diseases (FAD) including foot-and-mouth disease, vesicular stomatitis, and swine vesicular disease, which are reportable trade-limiting FADs in pigs. Any time these clinical signs are observed in pigs it is imperative that the state animal health official is notified immediately either directly or through the herd veterinarian so they can initiate an investigation to confirm that the clinical signs are not caused by a FAD. In Michigan the Diagnostic Center for Population and Animal Health (MSU DCPAH) has provided diagnostic results for Foot and Mouth Disease within a 24 hour turnover.

Michigan State University Extension reminds you, do not move animals that are ill or exhibiting clinical signs of illness. If you see these lesions on the feet, coronary band, or the snout of pigs, please contact Michigan Department of Agriculture and Rural Development (MDARD) at 800-292-3939 (After-hours at 517-373-0440). Affected animals should be segregated and isolated on site, samples will be collected and submitted under the direction of the state veterinarian. The United States Department of Agriculture (USDA) will work with producers to approve movement to slaughter and FSIS coordination. Producers should also be diligent in movement recordkeeping, as this information will be helpful in the case of an FAD investigation.

Veterinarians should be observing their herds for signs for lesions or vesicles. Communication between the producer and herd veterinarian is important and this relationship will aid in the investigating process. If a veterinarian experiences a suspect case of SVV they should contact MDARD, stay at the site and stop all movement of people and pigs from that location. Open lines of communication will ease the process for all involved with this process.

Barn-level education for employees and those involved in the pork industry to help aid in the recognition and reporting of suspected FADs is available through the National Pork Board. FAD Push Packs can be ordered via the pork store or by contacting a member of the MSU Extension Pork team. More information on this emerging disease can be found at the Swine Health Information Center.

Pork producers remember: Got vesicles? Report ‘em! MDARD 800-292-3939 (After hours at 517-373-0440).

Milk and Grain Marketing Series


Commodity price outlook for 2016 continues to turn gloomy for corn, soybeans and wheat as harvest wraps up across Michigan. Dairy stocks are continuing to build heading into the end of this year. Fed cattle prices have declined sharply since early September. Land rental rates remain high along with the costs for most farm inputs.

Historically, farm input costs adjust to the changes in commodity prices, but this tends to occur over a longer period of time. Farms need to make adjustments in their cost of production budgets as well as the marketing plans to survive until commodity prices and input cost become more in line, allowing the farm to generate positive returns.

To assist farmers making marketing decisions, a Milk and Grain Marketing Series will be held this year on Dec. 8, 2015 and meet quarterly on March 8, 2016, June 14, 2016 and Sept. 13, 2016. Fred Hinkley, Michigan State University Extension educator emeritus and marketing specialist, will provide insight and outlook on the milk and grain markets and suggest strategies to minimize financial risk.

Agriculture markets are more volatile than ever. For most farms, profits are largely determined by how well you market your production. Now more than ever your farm’s future success depends on your ability to understand the markets and use the basic marketing tools.

The meetings will be held at the Isabella County Building, Room 320, 200 N. Main Street, Mt. Pleasant, MI 48858, from 10 a.m. to 12 p.m. The cost for attending these meetings will be $400 per farm. This will cover all four meetings and will not limit the number from each farm/agribusiness that may attend.

Pre-registration is encouraged by Dec. 1. You can register for the program online at the Milk and Grain Marketing Series page.

If you have any questions, please contact me at 989-317-4079, 989-560-1371 or

Northern Michigan Pesticide Applicator Certification Center


Date: December 10, 2015
Time: Core manual training 8 a.m. - 12 p.m. MDARD Exams at 1 p.m.
Location: Presque Isle District Library, 181 E. Erie St., Rogers City, MI 49779
Contact: James DeDecker, 989-734-2168,

Northern Michigan Pesticide Applicators Certification Center: This will be a half-day core manual training seminar for farm, forestry, right-of way, turf and ornamental applicators. The training will take place in the morning from 8 a.m. until 12 p.m. The MDARD exams will be at 1 p.m. Lunch is on your own.

Hiring labor for your farming operation? Use the Agricultural Employer Checklist

Agricultural employers of labor in Michigan have a newly updated tool in the form of the Agricultural Employer Checklist, which was revised Oct. 1, 2015 and updated by Stan Moore, Adam Kantrovich, Corey Risch and John Jones of Michigan State University Extension. The checklist was developed in 2011 and revised to incorporate changes that are needed to reflect the hiring process for agricultural workers in Michigan. The document is available on the MSU Extension Farm Information Resource Management (FIRM) Labor and Human Resource Management website, or can be downloaded at: Agricultural Employer Checklist.

The checklist is put together in five sections that outlines the steps used when hiring labor. “Section 1: Employers Prepare to Hire Agricultural Employees” provides what steps should be taken by the employer in this phase of hiring. Section 2 outlines the processes the employer must do “After Hiring Agricultural Employees, Employers Must.” In Section 3, the checklist outlines what the “Employer Must Provide to the Employee,” and Section 4 gives the documents that an agricultural “Employer Must Complete Annually.”

Section 5 gives employers a list of all the “Other Potential Labor Regulations” that agricultural employers need to be aware of, including unemployment insurance, pesticide and worker protection rules, OSHA and MIOSHA regulations, the Affordable Care Act and the Migrant and Seasonal Agricultural Worker Protection Act. Finally, a list of references is placed in Section 6 along with links to useful publications that all employers should have on file.

According to Kantrovich, MSU Extension FIRM states that this is not a complete list, but one that contains many of the more common items to be aware of, and “always consult your legal and tax consultants about your specific situation.”

For additional information on labor and human resource management, see the MSU Extension Labor and Human Resource Management website or contact your local MSU Extension educator.

2015 Integrated Crop and Pest Management Update

Michigan State University Extension and Eaton County MSU Extension will host the 2015 Integrated Crop and Pest Management Update on Tuesday, Dec. 15, 2015, from 9 a.m. to 4 p.m. at the MSU Pavilion for Agriculture and Livestock Education (4301 Farm Lane, East Lansing, MI 48824). Participants will receive MSU Extension’s 2016 recommendations for potential pest (weed, insect and disease) problems and fertilizer practices.

This program is intended for agribusiness, retail sales and service professionals, private crop consultants, field crop educators and farmers. This event will provide agribusiness industries with MSU pesticide recommendations in a timely fashion so they can make their bulk purchasing and sales decisions before the year’s end.

The Michigan field crops industry encountered another challenging year associated with excess rain, rising input costs, changing commodity prices, rapidly evolving technologies and potential new pests. The agenda will include a review of the 2015 growing season, insect and weed resistance management, soil health and fertility, and the “2016 Weed Control Guide for Field Crops” Bulletin E0434.

Participants will receive six MDARD credits (Com. Core, Priv. Core, 1A), CCA credits (pending) and MAEAP phase 1 credit (pending) for this session.

Online registration is now available. You can also download a brochure for mail-in check registration. Please contact George Silva at 517-543-4467 or if you have questions.

Storm Readiness Is Smart

Get your home ready for the storm season.  It can happen any time, especially when you least expect it.  Click on the link below for MSU's recommendations:


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