Harvest was late for most of the Midwest this year, but by now everyone has the crops out of the field. Your plans have turned fully towards next year’s crop and all the decisions necessary to make 2019 the best possible, but the 2019 markets don’t create a lot of positive energy.
2019 Farm Planning
You are looking at every input and cost for next year and working to reduce them as much as possible. Some of your rent contracts have you committed for another year or so, but for those that you can negotiate down you are probably in or have had conversation with the land owner. No one is sure of the outcome of the tariff issues so planning to capitalize on a spike in the futures market is like catching lightning in a bottle.
Your CPA is telling you that you that your single digit percentage working capital will constrain many of your purchase decisions for the farm operation. Crop Insurance partnered with a commodity marketing plan provides a sound risk management strategy for the farm. But even if all goes well, the farm plan may not show financial improvement for 2019.
Farm land prices are softening or decreasing in some states. Farmers have historically seen their asset positions improve due to escalating farm land values, but the forecast for 2019 land values aren’t that optimistic.
So, what are the options?
You may have thought about selling some of your owned farmland to help with the tight financial situation but have held off due to the taxes (federal and state) and the loss of value just when you need it most.
But what if you could gain 95% of the farm land sale in cash (as a low interest loan), defer taxes for up to 30 years and get your financial situation healthy? In other words, instead of losing dollars on the sale of your land to capital gains tax, you would defer the owed taxes, have cash and the opportunity to re-work your operation and have a healthy cash flow positive financial statement.
You can invest the money in your farm or another financial vehicle of your choice. The key is that it is your choice.
Remember that the taxes are deferred and they will be due at the end of the deferral period (up to 30 years). It is an opportunity to grow and implement a plan that increases your financial base and cash flow.
The Need for a Plan
The Monetized Deferred Payment Transaction (U.S. Patent Pending) MDPT provides an opportunity to dig out of a financial situation that may have been building for years. The need to eventually pay the taxes demands a plan that is different than what you have done in the past, or you will be right back in a similar financial hole in which you just dug yourself out…with taxes to pay in the future.
MDPT offers a powerful opportunity to improve the financial base of your farm operation. It delivers a fresh approach to the financial position of your farm so take the opportunity and build a future of your choice.