Top Five Concerns for Agriculture Manufacturing Companies

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Reading Time: 2 minutesSeveral emerging news issues will have significant impact for agriculture manufacturing companies in the coming months. Make sure you are prepared. It’s an Election Year—Anything can happen in an election year, but several important issues could take center stage. Chief among them is trade. Both Donald Trump and Hillary Clinton have voiced opposition to the Trans-Pacific Partnership, a pact that most farm organizations support because it opens up more trade avenues for US commodities. Bonus depreciation and Section 179, which have been extended to $500,000 could also be on the chopping block. These are important tax incentives for farmers looking to add equipment. There are also concerns about the potential for additional regulations on carbon emissions. The Research and Experimentation Tax Credit or R&D Tax Credit has been extended, but it too could be in jeopardy as Congress and a new president look to reduce the deficit. New Overtime Regulations—The impact of new regulations requiring overtime pay for employees making less than $47,476 per year will have varying impact by employer, but it will certainly be far-reaching. This is twice the previous overtime pay threshold of $23,660 a year, which had remained unchanged for more than a decade. Expect employers to get creative with how they pay front-line managers, possibly adding employees who will job-share rather than paying the higher overtime rates. Commodity Price Fluctuations—Agriculture manufacturing clients we talk to are planning output levels for corn in the low $3.00 range and not expecting prices to come up anytime soon. This has serious implications for agriculture manufacturers as the protracted softness in commodity markets comes with lower demand for equipment. Farmers are likely to make do with what they have for the time being. One bright spot is that energy prices have seemed to move in tandem with commodity prices, according to a World Bank study, giving manufacturers a break. Aging Workforce—According to the Manufacturing Institute, the US manufacturing sector appears to be disproportionately experiencing the ramifications of an aging workforce. In 2000, the median age of the manufacturing workforce—at 40.5—was 1.1 years above the median age of the total non-farm workforce. By 2012, this gap doubled, with the median age in manufacturing being 44.7 years versus 42.3 years for the total non-farm workforce. The agriculture manufacturing sector needs an influx of young talent, but this is unlikely to happen until the industry pulls out of its current doldrums. Exports—The most recent National Association of Manufacturers survey revealed that members expect export growth of 0.2% in the next 12 months, compared with an overall sales increase of 1.2%. As sales at home remain soft, more agriculture manufacturers could be looking at diversifying by selling to a country that has a complementary season to the US.

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