What happens with the farm bill hinges largely on what happens with the fiscal cliff.
National Farmers Union President Roger Johnson sent a letter to President Obama Thursday claiming farmers, consumers and agribusinesses will be subjected to severe consequences in early 2013 should no new farm bill be passed. Johnson claims the costs of a farm bill extension will be high and yield little; he finds the work involved in an extension virtually identical to the work spent passing a 5-year bill. Johnson says farm and food policy in the U.S. supports 16 million jobs nationwide, and helps farmers manage risk, feeds America, and provides funding for important conservation and energy programs with investments in rural economies, but he says off that is now in jeopardy.
Meanwhile Republicans and President Obama are deadlocked over the estate tax. If cooler heads don’t prevail, some farm families (47% of Iowa’s farms) will feel the pressure from a major tax increase. Senate Finance Chair Max Baucus wants to keep estate taxes low to cushion farms and ranches with generation succession plans. Currently the estate tax exempts $5 million of assets and taxes what’s left at 35%. Unless Congress acts by December 31, the exemption will shrink to $1 million, and everything left after that will be taxed at a 55% rate.
On an average Iowa farm worth $2.6 million, that’s a payment of $880,000 on $1.6 million left after the exemption.
Currently 96% of farm and ranches in America are family-owned and operated, but in 2011 less than 50 farms and ranches paid the estate tax.