United States-Tax Breaks for drought stricken farmers.

UNITED STATES-TAX BREAKS FOR DROUGHT STRICKEN FARMERS.

Livestock producers forced to sell during drought conditions in 2008 are eligible for tax breaks offered by the IRS, experts say.

"As the April 15 reporting deadline approaches, it is important to review the income tax aspects of weather-related livestock sales," said Jose Pena, a Texas AgriLife Extension Service economist based in Uvalde.

Producers who have already filed returns without the tax breaks can file amended returns to take advantage of the benefits, Pena said.

The IRS allows producers to defer taxes on drought-related livestock sales, said Lance Williams, producer relations specialist with the Texas Department of Agriculture in Austin.

"Producers can get specifics from their certified public accountants and the IRS tax codes," Williams said.

In addition to the sale of livestock, the breaks also apply to animals purchased in the future as replacements, Pena said.

"Reporting income from the sale of inventory livestock may be delayed," he said. "If you sell or exchange more livestock, including poultry, than you normally would in a year because of a drought, flood or other weather-related conditions, you may be able to postpone reporting the gain until the next year."

The drought-related break on replacing livestock extends over two years, and up to four years if an area has been officially declared a disaster area, he said. The tax deferment for livestock sales allows a one-year postponement.

"Most producers who have more than 30 or 40 cows typically use CPAs who can help them," Pena said. "We’re just reminding producers as the deadline approaches that these tax treatments are available."

For more information, please visit http://www.irs.gov/pub/irs-pdf/p225.pdf and http://www.irs.gov/irb/2008-42_IRB/ar10.html .

UNITED STATES-SANDERSON FARMS.

A Wall Street analyst raised earnings forecasts for Sanderson Farms, describing management’s tone in a recent meeting as "cautiously optimistic."

BB&T Capital Markets raised its earnings forecast for the company’s fiscal second quarter ending in April by 10 cents to 49 cents per share and raised the full-year forecast to $3.60 per share from $3.05.

In a note to investors, analyst Heather Jones attributed to more positive outlook to:

very significant production cuts

meaningful, sustained breeder flock reductions

improved overall pricing (but relatively soft breast pricing)

indications demand is stabilizing and

improved trends in exports.

Sanderson expects demand to continue to come from retail and exports, as it does not anticipate a recovery in foodservice until at least 2010. Exports are meaningfully improved with double-digit increases over a year ago in February and Russian chicken inventories relatively low, Jones noted.

Production cuts, however, take the largest share of the credit for improved prices. Pilgrim’s Pride has announced plans to cut 9 percent to 10 percent of its capacity, which translates to about 2 percent of industry capacity.

Sanderson Farms has cut weights by 10 percent at its big bird plants, a move it will re-evaluate for the second half of the year. "It is our opinion that it will likely not increase weights the full 10 percent, if at all, from current levels given its view on current and prospective fast-casual foodservice demand," Jones wrote