| Industry Issues / Farmers' Inventory Methods |  |
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| Farmers'
inventories A
farmer using inventories must inventory:
...all livestock and poultry, raised or purchased, held primarily
for sale;
...all harvested and purchased farm products held for sale, feed,
or seed, such as grain, hay ensilage, concentrates, cotton, tobacco;
...supplies, unless only small amounts are on hand;
...if in the hatchery business, eggs in incubation and growing
and pre-market chickens. (Inventories may be used for hens primarily
held for egg production which are also held for sale after their
egg-producing life.) Livestock
held for dairy, breeding, sporting or draft purposes may be inventoried
at the taxpayer's election. But raised livestock must be inventoried by
farmers using the unit-livestock-price method. Inventory valuation methods
for farmers Methods
that farmers use to value inventory include:
...Cost method
...Lower-of-cost-or-market method
...Farm price method. Each item, raised or purchased, is valued
at its market price less estimated direct cost of disposition. A farmer
using this method must use it for all his inventory, but may use the
unit-livestock-price method for livestock. ...Unit-livestock-price method. Livestock is reasonably classified according to kind and age. A standard unit price is used for each animal within a class. The unit prices must reflect any costs required to be capitalized under the uniform capitalization rules. No adjustments are made for a decrease in market value because of age. If this method is chosen, all raised livestock must be included in inventory. |
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