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February 1, 2002

Record and near-record prices and higher marketings of livestock were the main factors.

Canadian government outlays, while lower than the U.S. government's, were the highest since the 1990s.

Canadian farm cash income has risen each year since 1996.

Source: Pro Farmer, Vol. 30, No. 2, Jan. 12, 2002

USDA forecast: net farm income to drop
USDA's first 2002 net farm income forecast is $40.6 billion, down from the $49.3 billion mark for 2001. USDA says that's an $8.7 billion year-over-year decline, but it's off only $5.8 billion from the 1992-2001 average.

With new farm legislation still in the hopper, USDA sees trends like stronger crop prices, but they'll remain under the 10-year average. Loan Deficiency Payments are forecast to decline by $1.3 billion in 2002 versus 2001.

Government payments are expected to hit $10.7 billion, a big drop from the $21 billion paid out in 2001. But remember, this forecast does not assume any "extra" government aid payments like those issued to producers the last four crop years.

Source: Pro Farmer, Vol. 30, No. 2, Jan. 12, 2002

Note motor fuel tax code changes
The 77^th 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

IRA limits increased by Tax Relief Act
You can make larger contributions to retirement savings plans beginning in 2002 thanks to the Tax Relief Act passed by Congress last spring.

The limit for annual contributions to Individual Retirement Accounts (IRAs) has increased to $3,000 this year, up from the previous limit of $2,000.

Beginning in 2005 and continuing through 2008, there will be additional increases. This marks the first increase in contribution limits since IRAs were created in 1981. Qualifying taxpayers who attain the age of 50 or older during the tax year can contribute an additional $500 thanks to a "catch up" provision in the new law.

IRA contributions are tax deductible for the self-employed (most farmers and ranchers).

If you haven't yet funded your IRA for the 2001 tax year, you can do so until you file your taxes or until April 15, whichever is earlier.
Source: Doane's Agricultural Report, Vol. 65, No. 2, Jan. 11, 2002