MKC Welcomes Summer Interns

By Katie Rose, MKC communications intern

Some college students study abroad or go home for the summer. Others attend summer school and some spend their time at an internship gaining experience in their field of study. This summer, 12 students chose the latter and MKC welcomed them on board on May 26.

On their first day at MKC the interns spent time getting orientated with MKC and heard from MKC employees from varying departments including safety, communications, Team Marketing Alliance and were welcomed by President and CEO Dave Christiansen.

The second day of orientation was spent at the Winfield Answer Plot near Inman. Armed with mud boots, the interns gained a basic knowledge of agronomy, which will be a vital part in all of their summer experiences.

Eric Hanson, Winfield agronomist, led a portion of the morning where the interns looked at growth rate of corn, damage from heavy rains and learned about a variety of chemicals to apply to corn and soybean crops. The interns also heard from Holly Thrasher, WinField technical seed manager, who discussed plant population and nitrogen inputs in corn and soybean varieties. Elizabeth Koch, WinField agriculture technology specialist, also shared yield maps and profit projection maps developed by the Winfield R7© Tool.

“The best part of the day was definitely the hands-on parts and getting to look at the effects of different diseases,” said Cassidy Stimpert, Manhattan location summer intern.

The afternoon was spent at the 2015 WinField Agronomy Summer Intern Training in Inman with cooperative interns from across the nation. The program was kicked off with an overview of how a cooperative system operates, examples of cooperatives across the nation and the Seven Basic Cooperative Principles. Later, Andy Schmidt, Winfield regional agronomist, walked the students through the basic weed and insect identifications the agronomy interns could potentially see in the field this summer.

The interns were encouraged to download the NutriSolutions© 360 System app developed by WinField, which is a tool used in the field by the agronomy staff to help track tissue samples collected and sent to testing labs. They were also given resource books that will be able to assist them in the field. The interns also had the opportunity to hear from WinField employees who gave tips based off their previous internship experiences.

Koch told the interns to not be afraid of networking and to work hard and play harder. A reoccurring piece of advice for the interns was to not be afraid of trying new things and asking questions. In closing, Brian Townley, WinField agronomy adviser, told the interns this is a great time for them to be in agriculture.

“Hearing how important internships are and how they are the pathway to starting a career was the most impactful from the sessions,” said Taylor Oller, Haven location summer intern.

After the sessions in Inman, all the training participants were invited back to the Answer Plot to receive more hands-on experience in the field. MKC interns were asked to determine the growth stage of corn using the number of collars on the plant and scout fields while also identifying potential problems corn could be facing.

The interns are very excited for the summer and what they can take away from their experience. “I’m looking forward to getting out in the field, and working on equipment of high importance,” said Nathaniel Lanier, MKC information systems intern. “If a scale goes down during harvest I get to help get things working again.”

Be sure to say “hi” if see an MKC intern this summer!

Members Take Advantage of the Domestic Production Activity Deduction

Everyday is an excellent time to make sure you are maximizing profit and taking advantage of all potential deductions available. One deduction available to farmers which MKC can pass through to its’ members is the Domestic Production Activities Deduction (DPAD). Grain farmers can use this deduction to reduce the total income tax they must pay to the federal government.

According to tax professional Jim Graber, the DPAD has saved his clients well over $100,000 in the 2014 tax season with his average client saving approximately $1,000 through the deduction. Graber sees both sides of this deduction as he is also a producer near Newton.

One concern Graber has is some producers and tax preparers don’t understand how the per-unit retains is to be reported. Graber says if done correctly the per-unit retains is reported on the dividend line along with the dividend and then subtracted from the grain sales line. “The DPAD is then placed on the form 8903 and added to other DPAD the farm may produce,” he says. “If someone says the per-unit retains and the DPAD is increasing taxes, something isn’t being done right.” Graber comments besides lowering the tax, the DPAD can also result in increased earned income credit, retirement savers credit, less of social security taxed, and many other benefits that result when Adjusted Gross Income is lowered. 

Graber encourages all MKC members to take advantage of this opportunity to maximize their deductions. “A benefit of doing business with MKC compared to other businesses is sharing in the profits through patronage refunds and also sharing in the DPAD deduction the co-op has been able to pass back to its patrons,” Graber says. 

Graber encourages all producers to do the math when deciding where they choose to haul their grain. “This deduction also has a significant positive financial impact on the local communities and MKC members,” he says.

How is the DPAD calculated?

According to TMA Controller Tricia Jantz, the tax benefit is a separate calculation from patronage and is available to co-op members who delivered and sold grain through the co-op.

The following is a sample scenario showing the impact DPAD would make on an individual’s taxable income.

A farmer sold 20,000 bushels of grain that was delivered to an MKC facility for the twelve months ending on February 28. At year end, MKC declared a patronage rate of 20 cents per bushel and a domestic production activities deduction of 15 cents per bushel. Assuming this producer was a member of MKC, the producer would receive $4,000 through patronage and a $3,000 Domestic Production Activities Deduction.

MKC includes the amount of DPAD deduction on the 1099 PATR mailed in January. The 1099 PATR includes the amount of patronage dividend the co-op distributes as well as the amount of DPAD that is passed back to the patrons.

Section 199 Review

In the summer 2013, MKC announced they would be passing this significant tax deduction to producer members through DPAD. Often referred to as the Section 199 Tax Deduction, DPAD is a special federal income tax provision allowing a cooperative to allocate to its members a tax deduction generated by “qualified production activities.” As outlined by the Internal Revenue Service and as it relates to the DPAD, grain payments made by the co-op to its members are considered qualified production activities by the cooperative, thus making the co-op and its members eligible for the deduction.

Jantz says producers will automatically be included in the deduction as long they are a member of MKC, have signed a Master Marketing Agreement required by the IRS, sold grain to the co-op and initiated grain settlements either by check or ACH.

“One requirement we get a lot of questions about is the Master Marketing Agreement,” Jantz says. “The agreement is between the member and cooperative that outlines and documents the terms, obligations, warranties and remedies in regards to sales and purchase contracts.  It also acknowledges that grain purchases between the cooperative and member constitute “per unit retain allocations” for the purposes of calculating the Domestic Production Activities Deduction.” Jantz noted a similar Master Marketing Agreement is already included with all TMA grain purchase contracts and is a very quick and easy process that can either be done electronically or as a printed agreement. According to Jantz, 2,178 MKC members participated in the DPAD for tax year 2014.

DPAD for MKC Members
“I am extremely grateful for this tax deduction as a producer and for the amount of money it saves the clients I work with,” Graber says. “I appreciate the work many MKC and TMA employees did to make this deduction possible.”

Although it may seem complicated, the Domestic Production Activities Deduction can prove beneficial in reducing income tax liability from your farming operation. If you still need to meet all of the requirements to take advantage of the tax deduction, please contact Sarah Unruh, MKC staff accountant, at 800-864-4428. 

Please consult your tax adviser for further information on DPAD and how it applies to your individual situation.

Ease of Doing Business Through Online Portal Accounts

It wasn’t that long ago your doctor walked into the exam room with a laptop instead of that thick, awkward file they normally carried. This signaled a new era in medical practice. But that isn’t the only field the virtual world is making business easier in.

Agriculture has seen technology introduced in many arenas. To meet the customer’s needs, MKC saw the need to offer technology to help customers manage their accounts and have the information easily accessible at times when it is convenient for them.

For Les Wedel, the online portal certainly makes non-field work easier. “With everything going on, anything that makes something more convenient is a great thing,” Wedel says. “And that is exactly what the online portal provides.”

Wedel signed-up for MKC and Team Marketing Alliance online portals two years ago. After attending a workshop at his nearby location and some practice, he was soon paying bills online and checking purchases. “The website is very user friendly and easy to access,” Wedel says. He was also checking grain tickets at his convenience. “After deliveries, I can check grain tickets in the evening or first thing the next morning,” he says. “I haven’t had to visit the office to take care of the business I can do online for several years now.”

The Goessel area farmer appreciates how he can use the portal anytime. “I am often on the website late at night after the co-op has closed checking proof of yields or contracts,” Wedel commented. “I schedule the payments of my monthly statement and know that it will be paid on time and I don’t have to worry about it later.”

During tax preparation season, Wedel appreciates being able to check figures and download ledger sheets for his inputs. He adds during planting season he uses the portal most often to check prepay.

Burns area farmer John Taylor often doesn’t think to call his MKC location or field marketer until late in the evening. “Instead of having to remember to call the next morning about my questions, I can access my account online and see if I can answer my question through the information available to me there,” Taylor says.

Like Wedel, Taylor uses the portal to review his statement and pay his bill. He also easily extracts proof-of-yield information needed for farm programs and looks at his grain contracts.

“All of this information is at my fingertips,” Taylor says. “The information can be itemized and I can go back six months, even a year, to review information that is critical to my operation.”

Taylors says sometimes the need arises to review this information with his field marketer. Prior to Taylor’s online portal account, they would have to sort through statements and pull everything out. “Now my account can be quickly accessed on a computer and my questions can quickly be answered by looking at my online account together,” he explains.

Both Wedel and Taylor encourage producers to take advantage of this technology. “It sure makes doing business a lot easier than it was 10 years ago,” Wedel says.

To establish online access to your MKC account, please visit www.mkcoop.com or call 800-864-4428.