Tax incentives that allow for generous savings on the purchase of new and used equipment will end January 1, 2013.
Capitol Hill
Source: http://www.geoglance.com/photos/DC/1/capitol-hill
As the year comes to an end, so does the ability to take advantage of the increased tax credit offered by Section 179. The stimulus acts have greatly expanded the limits of the Section 179 deduction and have also added a one-time “Bonus Depreciation” on equipment that exceeds the deduction limit.
According to Section179.org, this deduction was intended to boost spending among small and medium sized businesses; it allows a company to deduct a significant portion of the purchase price of equipment bought in 2012 as opposed to just normal depreciation over several years. In addition to the tax credit, new equipment purchases also qualify for a bonus depreciation.
Once January 1 rolls around, the deduction amount is drastically decreased from $139,000 to $25,000 for 2013. Additionally, 2012 is the last year to take advantage of the bonus depreciation making the end of 2012 the perfect time to buy equipment.
Breakdown of purchasing an Apache in 2012 versus 2013.
In accordance with Section179.org, a few rules go along with the Section 179 deduction and bonus depreciation. To utilize the $139,000 tax deduction, the company must purchase, finance or lease less than $560,000 in new and used equipment during the 2012 tax year. If the company purchases more than $560,000 in equipment, the deduction is decreased dollar for dollar for any amount over $560,000.
Beyond this, companies that purchase new equipment qualify for the added bonus depreciation which allows an additional 50 percent depreciation deduction on new equipment.
To calculate the total deduction, the Section 179 deduction is taken before the bonus depreciation. Amounts not deducted by Section 179 or the bonus depreciation can be depreciated using normal depreciation.
The exception to this rule applies to businesses without a taxable profit for 2012. In this case, Section 179 does not apply, and the business is allowed to carry the loss forward while still deducting some of the cost of new equipment. The rules that apply to the Section 179 deduction can be found at Section179.org.
A time honored tradition for many, predicting the coming winter’s forecast using woolly worms or persimmon seeds has been around for years.
The woolly worm is thought to predict the harshness of the coming winter based on the thickness of the insect’s middle band. Black bands on both ends of the woolly worm are connected by a reddish-brown middle band.
According to tradition, if the reddish-brown band is narrow, it means a harsh winter is coming. On the other hand, if a thick middle band is present, a mild winter is in store.
Upon closer examination of the woolly worm, it is noted that woolly worms have 13 segments which coincides with winter lasting roughly 13 weeks long. Each black band is thought to represent a week of bad winter weather.
Woolly worms are known scientifically as Pyrrhactia Isabella, and they are the larval form of the Isabella tiger moth. They have many other nicknames such as woolly bears, black-ended bears and banded woolly bears.
While there is no scientific evidence to prove that woolly worms can predict the winter forecast, it is still a fun, timeless tradition for many.
Persimmon seeds are also a well-known way to predict the oncoming winter weather. To predict this winter’s weather using persimmon seeds find persimmons grown in your area. Using locally grown persimmons are supposed to be more accurate for predicting that area’s winter.
The persimmon seeds will take on one of three familiar shapes: a fork, a knife or a spoon. A fork-shaped seed predicts a mild winter, while a knife forecasts a cold, icy winter. The spoon-shaped seed foretells an extremely snowy winter.
Kevin Covey, the Director of Service and Parts at Equipment Technologies, predicted this year’s winter based on 9 persimmon seeds he gathered from his own persimmon tree.
“Each persimmon normally has two or three seeds,” Covey said. “We found eight spoons and one knife.”
Here at Equipment Technologies, we are predicting a snowy winter based on persimmon seeds, and our woolly worms are forecasting a harsh winter.
Depending on the area you live in, there may be other traditions of predicting the winter weather.
Other ways to predict the coming winter include the Farmer’s Almanac and the National Weather Service. The Farmer’s Almanac is predicting colder than usual temperatures and more snow east of the Rockies and warmer, milder weather west of the Rockies.
On the other hand, the National Weather Service is predicting a generally milder winter based on El Nino and La Nina.
As the end of the year is quickly approaching, many questions regarding the country’s legislation, that has expired or is set to expire soon, still remain. The election results have done little to move issues along.
Even though President Barack Obama won both the popular and electoral votes, many in the American agricultural sector are concerned what this will mean for the industry.
According to an Agri Marketing magazine post-election poll, over two-thirds of the individuals polled believe that the reelection of President Obama will have a negative effect on the country’s agriculture industry.
One of the most pressing agriculture issues facing the government is the expired farm bill.
Industry concerns:
Congress is back in session in the time known as lame duck session, when historically not much is accomplished; however, this lame duck session is expected to be more active than in years past due to the farm bill and “fiscal cliff”. Expectations are hopeful among the agriculture community for Congress to address the farm bill during the lame duck session, but it is still unclear if they will agree on some sort of resolution, either short or long term, in order to avoid resorting back to antiquated agriculture laws.
While the Republicans are pushing hard for deeper cuts in the Supplemental Nutrition Assistance Program (SNAP), the Democrats are holding strong on smaller cuts to the program. The government keeps pushing the farm bill back and much of the controversy lies in the SNAP program; however, looking at the entire budget for the next ten years, the farm bill only accounts for a projected estimate of 2.15 percent of the total budget.
Despite the fact that SNAP is the largest chunk of the farm bill, it still is not a significant amount of the overall federal budget. At the end of the day, the amount being argued over is trivial when compared to the lack of farm bill that exists and how much it affects America’s farmers.
At this point, a large majority are losing faith that a new farm bill will be passed before January 1.
Government Concerns:
Along with the expired farm bill, the House is working on other negotiations to avoid the “fiscal cliff” at the beginning of next year. The “fiscal cliff” controversy is creating a strong push for budget cuts.
When looking at the farm bill, a major concern is the amount of money that is spent each year on SNAP and how much this amount has increased since the program started. Since many of the policies in the farm bill don’t expire until the end of the year, Congress is not seeing the immediate effects of the expired bill.
While both producers and the government are facing concerns with the expired farm bill, each side views the issue differently. Producers fear the uncertainty for next year’s planting season, while Congress is arguing over what can be cut from the budget.
The lack of a farm bill creates uncertainty and instability in the agriculture industry which trickles down to every part of the industry including application in general and equipment manufacturing – obviously top of mind for us. Without the federal government acting in interest of production agriculture by way of a farm bill that includes proactive measures in the areas of crop insurance, conservation and disaster assistance, the industry faces the potential for major setbacks.
As harvest finishes in the majority of the country, the time
of year has come to put most farm machinery away, including your Apache, until
spring. One of the keys to keeping your sprayer in working order for next
spring is proper winterization before the freezing temperatures settle in for
the season.
1. Clean your Apache
Cleaning the sprayer includes both the inside and outside of the machine. While
it is important to thoroughly rinse the wet system, it is equally important to give
attention to the exterior of the sprayer. Proper cleaning will help prevent
premature rust and corrosion. Using a pressure washer, clean the outside of the
sprayer including the booms, frame and undercarriage. Additionally, remove all
filters, screen tips and check valves to wash them, and then reinstall all
parts to keep moisture out during the winter.
To clean the inside of the sprayer, completely rinse the
entire system to ensure any chemicals aren’t left from the last application. Here is a video with a few reminders on properly flushing the wet system.
2. Inspect the sprayer
After washing the sprayer, check it over for any cracks, chips or scratches in
the paint and touch up these areas to avoid corrosion. While inspecting your Apache,
take this opportunity to grease all service points on the sprayer. If any leaks
are found inside the spray tank, repair them before storing the sprayer.
3. Winterize the wet system
After cleaning the sprayer’s exterior and rinsing the inside of the system, it
is important to circulate antifreeze through the entire wet system to keep it
from freezing during the cold months. Recreational Vehicle antifreeze is
recommended since it is less toxic to animals and may be sprayed on the ground.
To start, put approximately 30 gallons of RV antifreeze in
the product tank, although more may be required depending on the boom length. Following
which, put an additional 5 gallons of RV antifreeze in the rinse tank. With your
Apache running, turn on the product pump to circulate agitation of the antifreeze.
While the pump is running, turn on each boom section until RV antifreeze comes
out of the nozzles. If you are operating a 2011 or 2012 Apache model, turn on
the flow back rinse switch to winterize the flow back line.
To winterize the rinse tank, turn the fill station control
valve to rinse-to-pump and the agitation valve to rotoflush. After circulating
for a few seconds, turn the product pump off, the agitation valve back to
agitation and the fill station control valve back to product-to-pump.
If the sprayer is equipped with an eductor, put the eductor
in the operation position and turn on the product pump. Open the eductor safety
valve, the main eductor valve and the red tank valve. Following which, open the
lid rinse valve and let the antifreeze circulate in the eductor for a few
seconds and finish by closing the valves and turning off the product pump.
To run the antifreeze through the entire wet system, don’t
exclude any components such as the lines that connect to the agitation and pump
pressure gauges. Make sure they have antifreeze in them as well to avoid frozen
gauges. Finally, open the strainer drain valve to ensure RV antifreeze is
present in the strainer.
Check out this video for a more detailed step-by-step guide on winterizing your Apache’s wet system.
4. Winterize the foam marker system
If your Apache sprayer has a foam marker system, don’t forget to include it in
the winterization process. Start by draining the foam tank and disconnecting
the hoses from the foam chamber. Next, replace the strainer bowl. Then, add two
quarts of windshield washer fluid, and finish by running the foam markers until
windshield washer fluid comes out of the hose at the foam chamber. RV
antifreeze can be used in place of the windshield washer fluid, but depending
on the size of containers, the windshield washer fluid may be easier to handle.
5. Store the sprayer
The best place to house a sprayer during the winter is in a dry, storage
building. Cover all openings on the sprayer to keep insects and dirt out of the
system. If the sprayer is stored outside, take the time to remove all hoses. To
complete the winterization process, remove the fully charged battery and any
consoles from the cab and store them in a warm area. Finish by filling your
Apache’s fuel tank to reduce condensation and moisture build up.
By taking good preventative practices with your Apache
sprayer this fall, you will save time and repair costs in the spring.
Nathan Rowings (far right) shows off what will soon be his hydraulically-powered remote control Apache AS710 to employees at Equipment Technologies.
Nathan Rowings, an Apache AS710 sprayer owner from Greencastle, Indiana, has taken his appreciation of Apache sprayers to a whole new level.
For the past three years, Rowings has been in the process of building a scaled replica of his AS710. Not just one he can put on display, but one he can operate. His plan is to have the model sprayer hydraulically-powered by remote control and install a functioning wet system. That's right; it will actually spray water out the booms.
"I've just always been into models and RC cars growing up," said Rowings. "This is the first one I've built myself. I think it's going to turn out great."
The model is nearly identically scaled to the sprayer's engineered design. The most important tool Rowings says he is using is a jewelers blowtorch to help him weld the different pieces together. In the end, the model sprayer will get a fresh coat of Apache red paint and decals will be stuck on. Rowings says he will keep us posted on his progress and will bring his RC sprayer back to the factory when it's complete.
"I've been working on it off and on for some time, but hope to have it finished by August 2013," said Rowings.
2013 AS1220 Plus II tackling 40% grades in eastern Washington.
If you've been on the fence trying to decided whether to buy new or used equipment for your operation, this is definitely the year to buy.
Section 179 is a generous tax deduction of $139,000 available for most new and used capital equipment. However, the big savings won't last. Once the calendar turns to 2013, the annual deduction limit will drastically reduce to its pre-2003 level of only $25,000. Needless to say, the savings are now!
To give you an idea of the difference in savings for when you buy, here's a breakdown comparing 2012's Section 179 deduction to the deduction change beginning January 1, 2013:
This is not the growing year any of us wanted to see. Fields
are dry, brown and some growers are already considering insurance relief and
calling it a year. This is not a time to panic, but rather a time to focus cashing
in on the facts.
If you look at precipitation totals for the year, they are
below average. The Corn Belt saw stretches of over 100 degree temperatures with
barely 0.10” of rain. But as you can see in the map below, you can’t say it
isn’t raining. It’s just not raining where many need it most.
Courtesy: NOAA
This map provided by the National Oceanic and Atmospheric Administration
shows the amount of precipitation 14 days prior to July 18. Much of the Upper
Midwest saw at least 1.5” and the South experienced as much as 6” in some
places.
A lot can happen in a few weeks’ span. It was at the end of
May when Illinois farmers were reporting “80% of their corn was in good to
excellent condition,” in a Peoria Journal Star article [link]. There is still plenty of time for rain to make a difference. In the hardest hit areas, this is especially true for the soybean crop. When that time comes, growers will then have to turn their attention
and watch for three perils before harvest: fungus, bugs and weeds. Perils all too familiar to applicators.
The combination of extreme heat and minimal rain has
increased certain insect populations, making conditions ideal for eggs to
hatch. Spider mites, podworms and others are out in droves during this unusual
season. Then when a little rain does come, fungus begins to develop. Finally, weeds in the field absorb any moisture that falls away from the stressed
crop. The best line of defense in saving yields and protecting your investment
from the terrible trifecta of fungus, insects and weeds is a self-propelled
sprayer.
Looking at the NOAA map above, a typical Corn Belt farmer, for example, would be relying on corn and/or soybean harvests along with crop insurance as generated
income this year. Projected corn yields in June dropped 12% from May, which
seems like a significant downturn. In general, a 12% drop is pretty common as seen
in the chart below. This yield decline is packing a larger than usual
punch to growers because we haven’t experienced a significant drop in yield in more
than 10 years. The positive side to this story is that the past years have put the grower in a favorable financial position.
Courtesy: USDA
Soybean prices through the middle part of July, however, are
dancing around $16.00/bushel with experts predicting the price to hold until
after harvest. That is if any rain falls. One soybean agronomist was recently
quoted as saying that from water deficit stress during the reproductive growth
stage, the soybean plant is vulnerable to “reduced pod numbers, reduced seed
per pod and small seed." [link]
Adding crop insurance into the mix, it’s clear a farmer’s
net income this year will have to be spent wisely. Risks exist every year. When
playing the odds with Mother Nature accompanied with declining income, it’s
assuring to not only have a low risk financial investment sitting on the farm,
but also a machine that increases yield potential for seasons to come.
Already identifying the importance of owning a
self-propelled sprayer, the clear choice among all competitors is the Apache
sprayer. Whether it’s an off year or not, cost of ownership and return on
investment are two critical points of concern when purchasing any farm
equipment. The Apache leads the way on both fronts.
When you compare the Apache to competitors, there are
numerous factors giving the Apache the lowest cost of ownership in the
industry:
- Service costs are lower
- Replacement parts cost thousands of dollars less
- More efficient fuel economy
- Factory-installed state of the art precision options
- An industry best 5-year warranty saves money on parts and labor
- Purchase price is $25,000 to $75,000 less than comparable hydrostat sprayers
In addition, the Apache offers the highest resale value in the industry. Based on a statistical analysis by a Indiana University school of business professor, a five year old Apache has an average resale value of 72% of its original purchase price.
That’s making a sound financial decision based on
consistency in an inconsistent world.
