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January 18, 2002
U.S. consumers spent $661.1 billion on food in 2000, excluding imports and seafood. Consumers' preference for quick, easy-to-prepare convenience foods, including more away-from-home eating, translated into an increased demand for food marketing services, such as labor, packaging, transportation, and energy.
The estimated bill for marketing domestic farm foods
totaled $537.8 billion in 2000 and represented 81 percent of consumer
expenditures for farm foods. The remaining 19 percent, or $123.3 billion,
represents the gross return paid to farmers.
Source: USDA: Food Marketing,
Sept.-Dec. 2001
Lower nitrogen prices reduce
fertilizer costs
Lower nitrogen prices will reduce fertilizer expenses for 2002 crops.
According to industry data, nitrogen prices are down more than 40 percent
from the spring highs and about 25 percent from last year.
Natural gas (the major cost factor in nitrogen) has returned to normal price levels following a surge last winter.
If you prepaid your fertilizer in this calendar year tax
rules allow qualified farmers to deduct prepaid expenses of up to 50 percent
of their normal annual production expenses.
Source: Doane's Agricultural Report, December 7, 2001
Deere approves soy-diesel
fuel for all products
John Deere has approved soy-diesel fuel for use in all of its diesel-powered
products. Deere advises users to be sure the fuel meets ASTM PS 121-99 or
DIN 51606 specifications, keep tanks as full as possible to prevent moisture,
limit extended storage, and protect fuel from extreme temperatures.
Owners of older engines should check with local Deere dealers
and fuel suppliers.
Source: Doane's Agricultural Report, December 7,
2001
Fuel Tax Bill amended to define ag
purpose
The 77th Legislature, 2001, in House Bill 1241,
amended Tax Code, chapter 153, entitled Motor Fuel Tax, to provide a definition
of agriculture purpose. Subsection (c) was amended to further clarify that
an agricultural purpose does not include processing, packing or marketing
of agricultural products by someone other than the original producer. The
amendment adds timber operations to the list of examples of farms, and includes
wildlife management as an agricultural non-highway purpose.
Source: Tax Policy News, November 2001
U.S. exports increase second year
in a row
USDA recently reported that agricultural exports increased by $2.1
billion to $53.0 billion in fiscal year 2001, the 12 months ending on September
30, 2001. This was the second year of increases after exports bottomed out
at $49.2 billion in FY1999. All of the increase came in intermediate and consumer
oriented products.
Raw bulk commodities like corn, wheat, soybeans and cotton showed no growth for the second straight year, with exports of about $18.5 billion.
This is a continuation of a trend that has been ongoing for the last 20 years. Bulk commodities have been subject to wide swings in exports. Intermediate products, like soybean meal, processed feed products and animal hides and skins, have been stable markets with a slight trend toward growth.
Consumer oriented products, like red meat and poultry, snack
foods and fresh or processed fruits and vegetables and products have suffered
only slight pauses in growth. Once the pause is over, they begin hitting new
highs.
Source: AFBF, Economic Analysis Team, Dec. 7, 2001
