Farm bill extension falls short of ag expectations

By Matt Reese

As part of the scramble for fiscal cliff legislation that was passed by Congress to kick off the New Year, the majority of the 2008 Farm Bill will be extended through September 30 of this year. Many in agriculture have expressed disappointment that Congress could not put together a comprehensive farm bill.

Dairy producers are very disappointed with the extension of the farm bill.

“America’s farmers have clearly made known the importance and need of a new farm bill in 2012. Once again Congress’ failure to act pushes agriculture aside hampering farmers’ ability to make sound business decisions for the next five years. The National Corn Growers Association is tired of the endless excuses and lack of accountability. The system is clearly broken,” said Pam Johnson, National Corn Growers Association President. “We hope the 113th Congress proves to be more fruitful and that the leaders in Congress can place petty partisanship aside to create a bill that benefits all of America.”

A number of smaller, targeted farm bill programs were not included in the extension. This includes a reformed dairy program, and disaster aid for livestock and fruit producers. The extension also, in effect, prevents enrollment in the Conservation Stewardship Program. The extension of the 2008 Farm Bill, however, does allow for important foreign market development, row crop disaster assistance, and farm safety net programs to continue. It also included the mostly ineffective MILC measures for dairy farmers. In place of the MILC program, the dairy industry favored the proposed Dairy Security Act included in the versions of the farm bill debated earlier in the year. The proposed Dairy Security Act eliminates the dairy product price support program, direct payments, and export subsidies, and establishes a voluntary risk management tool for farmers that saves the government money.

“We need to spend the coming months figuring out how to move farm policy forward. The status quo is not an acceptable outcome, either for farmers or taxpayers. The renewal of current programs doesn’t offer dairy farmers a meaningful safety net,” said Jerry Kozak, President and CEO of NMPF. “Dairy farmers across the country have united behind the Dairy Security Act provisions in the original farm bills that have already been approved by the full Senate and by the House Agriculture Committee. These stop-gap efforts don’t even qualify as kicking the can down the road. It’s little more than a New Year’s Day, hair-of-the-dog stab at temporarily putting off decisions that should have been made in 2012 about how to move farm policy forward, not offer more of the same.”

Now the farm bill process will have to begin anew, though the politics will likely remain the same.

“Once the extension expires at the end of the fiscal year in September, we will be left at the same impasse we’ve had since the House Agriculture Committee passed its farm bill in July unless our elected leaders can find a way to come back to the bargaining table with a renewed focus on what’s important, not just for soybean farmers, but for all of agriculture and for the nation as a whole,” said Danny Murphy, American Soybean Association (ASA) president. “It’s imperative that our members of Congress in both chambers and in both parties move past party politics and get the job done this time.”

With regard to the “fiscal cliff,” the bill extends the current $5 million estate tax exemption. The tax rate on estates over $5 million (or $10 million per couple) would increase from 35% to 40%. It also makes permanent current capital gains and dividends rates for families earning less than $450,000 while changing the rate to 20% for families making more than $450,000. It permanently extends current tax rates for families earning less than $450,000 a year as well.

It addition, the bill permanently patches the Alternative Minimum Tax, which was originally designed to prevent high-income earners from using exemptions to avoid paying income taxes but did not automatically adjust for inflation. The bill replaces two months of the approximately $100 billion across-the-board spending cuts known as sequestration scheduled to start in January.

ASA praised this “meaningful solution” to the estate tax challenges faced by farm families and many other small businesses.

“Additionally, ASA welcomes the extension of the biodiesel tax incentive of one dollar, included in the fiscal cliff deal, and retroactive to 2012 and on through 2013. Both the estate tax solution and the extension of the biodiesel tax incentive are top priorities for ASA,” Murphy said.


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