Home News Trade groups react to farm bill extension

Trade groups react to farm bill extension

Once consumers realized milk prices could double after January 1 if farm policy was not addressed as part of the fiscal cliff deal, Congress had no choice but to handle farm legislation in the American Taxpayer Relief Act. Reaction by agricultural trade groups to the last-minute additions was mixed; most found the provisions to be “status quo,” and nearly all are awaiting the next fight over the five-year bill.

American Farm Bureau Federation President Bob Stallman says there’s still a lot of work ahead in addressing the spending side of the ledger. He does believe the package injected a good dose of certainty into the nation’s tax policy; the measure restores the five-million dollar exemption level for the estate tax and includes permanent capital gains tax provisions that retain lower rates. One drawback, according to Stallman, is the 40% top estate tax rate, up from 35%. As for the farm bill extension, Stallman says it’s little more than a stop-gap measure. He says Farm Bureau is glad a measure is in place for most of this year, but they’re disappointed Congress did not roll a comprehensive five-year farm bill proposal into the fiscal cliff package.

While that package does include some wins for soybean growers, American Soybean Association President Danny Murphy says the group is disappointed Congress couldn’t come together to pass a new, comprehensive, five-year farm bill. He says an extension is certainly preferable to the alternative of no bill at all, but notes the country will come full circle at the end of September unless our elected leaders can find a way to come back to the bargaining table with a renewed focus on farm policy. Murphy calls it “imperative” for members of Congress to abandon party politics and to get the job done the second time. He says ASA stands ready to work with both Ag Committees to craft and pass a new farm bill before the current extension expires.

Murphy also adds that the extension of the biodiesel credit and the permanent solution to the estate tax were both victories for soybean farmers. The estate tax would have reverted to levels unrealistic for family farm operations in the absence of congressional action, according to Murphy, who says the 40% rate is a much more viable framework for the land-based and capital-intensive nature of family farms. According to Murphy – this solution will allow farmers to pass their operations from generation to generation without the undue burden of an unrealistic estate tax structure.

The extension of the biodiesel tax incentive, says Murphy, is a significant win for the biodiesel industry. He says more than half of all biodiesel produced in the U.S. uses the oil from American-grown soybeans, which helps grow the domestic fuel supply and creates soy meal as a by-product, providing protein-rich animal feed for livestock, poultry and aquaculture.

The National Biodiesel Board applauded the inclusion of the biodiesel tax incentive in the fiscal package approved by Congress Tuesday. The incentive is reinstated retroactively for 2012 and 2013. NBB Vice President of Federal Affairs Anne Steckel said it was a long year with missed opportunities and lost jobs in the biodiesel industry.

The biodiesel tax incentive expired on December 31, 2011. A recent study found the industry would have produced an additional 300 million gallons this year with the tax incentive in place – which would have supported more than 19,000 additional jobs. NBB notes the study found, with respect to next year, that the industry would support just over 112,000 jobs nationally with the tax credit in place. That’s compared to just under 82,000 without it. The return of the incentive is projected to increase household income by some $1.6 billion next year, while supporting an additional $3.1 billion in GDP.

On the ethanol side, the American Taxpayer Relief Act of 2012 includes the extension of three key ethanol related tax credits. Renewable Fuels Association President and CEO Bob Dinneen says the one year extension of the cellulosic producer tax credit and accelerated depreciation provides some certainty to ensure 2013 will be a year of growth and milestones for the advanced ethanol industry. Equally significant, Dinneen says, is the extension of the alternative fuel infrastructure credit. He says it will accelerate the entry of E15 into the marketplace this year. According to Dinneen, the extension of these provisions demonstrates federal support of biofuels, both from the White House and Capitol Hill.

To that end, Growth Energy CEO Tom Buis commended the House and Senate for recognizing the importance of renewable fuels and acting to extend the cellulosic producer and the alternative fuel infrastructure tax credits through 2013 as part of the American Taxpayer Relief Act of 2012. With the extension of the alternative fuel infrastructure credit, Buis says Congress has taken a critical step to bring E15 to the marketplacem, which he says will help the renewable fuels industry break through the blend wall.

While the extensions are important for sustained development in the biofuels industry, Buis says the short-term extension doesn’t provide the necessary certainty for investors and businesses to plan for the long-term. In addition, Buis says the farm bill extension does not include funding to ethanol infrastructure development under the Rural Energy for America Program or second-generation production under the Biomass Crop Assistance Program and the Biorefinery Assistance Program.