Wednesday January 2 Ag News

Johanns Statement on Senate’s Fiscal Cliff Vote

U.S. Sen. Mike Johanns (R-Neb.) tonight supported legislation negotiated by Senate Republican Leader Mitch McConnell (R-Ky.) and Vice President Joe Biden to avert the fiscal cliff and extend the current farm bill. The package passed by a vote of 89-8.

“This agreement isn’t my ideal option, but I firmly believe going over the cliff isn’t an option at all,” Johanns said. “I would have preferred stopping a tax hike for every American, significantly reducing spending and strengthening Social Security and Medicare. This package, however, is a vast improvement from the Administration’s original proposal and no one can overlook the fact it protects an estimated 99 percent of Americans from being hit with the largest tax hike in our nation’s history.”

The fiscal cliff is a combination of expiring tax relief and automatic spending cuts that would have kicked in at the beginning of next year. Since no package will be signed by President Obama before the New Year, any final deal will take place retroactively so tax rates will continue uninterrupted for the overwhelming majority of American taxpayers.

Below are the details of the package:
·         Permanently extends current tax rates for families earning less than $450,000 a year;
·         Makes permanent current capital gains and dividends rates for families earning less than $450,000 while changing the rate to 20 percent for families making more than $450,000;
·         Extends popular tax credits – like the tuition and child care tax credits – for five years;
·         Extends the current $5 million estate tax exemption but the tax rate on estates over that limit would change from 35 percent to 40 percent;
·         Prevents a 27 percent reduction in Medicare payments to doctors and other health care providers treating patients on Medicare;
·         Replaces two months of the approximately $100 billion across-the-board spending cuts known as sequestration scheduled to start in January;
·         Extends the current farm bill, which passed in 2008, through the end of this fiscal year;
·         Permanently patches the Alternative Minimum Tax. This tax was originally designed to prevent high-income earners from using exemptions to avoid paying income taxes but did not automatically adjust for inflation. Without patching the AMT, this tax would impact nearly 135,000 Nebraska households earning as little as $33,750 a year according to the Congressional Research Office.

Without this agreement, American taxpayers would face a tax increase of almost $536 billion a year – the steepest single tax increase in American history. Roughly half of these tax increases would come from the expiration of the current income and investment income tax rates implemented during President George W. Bush’s tenure.

Because entitlements and interest on our debt currently account for nearly two-thirds of our nation’s spending, Johanns believes addressing programs like Medicare and Social Security must be part of any long-term solution.



NEFB Congressional Action on Federal Tax Policy and Farm Bill
Steve Nelson, President, NE Farm Bureau

“Congress’ action to address the fiscal cliff and federal tax policy is best described as a mixed bag, while actions relating to federal farm policy can only be described as a complete disappointment.”

Federal Tax Policy
“We encouraged Congress to extend 2012 estate tax provisions to preserve the $5 million exemption level and maintain a 35 percent tax rate to protect a significant number of Nebraska farm and ranch families from being subject to the death tax. Had Congress failed to act the exemption would have lowered to $1 million which would have broadened the reach of the estate tax to more Nebraska farms. Congress’ action to keep the $5 million exemption is a positive. However, Congress ultimately raised the rate to 40 percent which is a concern. The same can be said of Congress’ action to raise capital gains tax rates. It clearly could have been worse as the rate could have gone up for all farmers.”

“We are pleased Congress included tax provisions to help small businesses, the backbone of America’s economy. Congress increased the maximum amount small businesses can expense for capital purchases up to $500,000 for next year while also extending the 50 percent bonus depreciation for the purchases of capital assets. Both provisions will help farmers, ranchers and other small businesses when they invest in new equipment and assets to improve their operations.”

Farm Bill
“While Congress’ action on tax policy was not perfect, the fact that Congress was unable to pass a new five-year farm bill is most disheartening. What we have now is the continuation of a farm bill that no longer fits the needs of Nebraska’s farmers and ranchers. In extending provisions of the 2008 Farm Bill, we will continue on with a direct payment program instead of moving toward a farm bill with a foundation rooted in crop and revenue insurance programs designed to address losses that are beyond a farmer’s control.”

“Also disappointing for Nebraska farmers and ranchers is the decision to include, but not fund, much needed livestock disaster programs, despite the fact that both Democrats and Republicans in the House and Senate supported reauthorization for these programs. Given the seriousness and impacts of the lingering drought, reauthorization and funding for these programs was critical, and now all we have is uncertainty and a reality that funding is highly questionable.”

“It is our hope that a new Congress will use 2013 to reevaluate the opportunities to address these issues through a new five-year farm bill.”



Farm Bill Deal A Disaster

In the waning hours of 2012, Senate Minority Leader Mitch McConnell (R-KY) and Vice President Joe Biden negotiated a nine-month extension of the Farm Bill that the Center for Rural Affairs criticized heavily.

“The farm bill extension measure attached to the fiscal cliff legislation passed by the House of Representatives late last night slashes investment in the future of small rural communities and family farming and ranching,” said Chuck Hassebrook, Executive Director of the Center for Rural Affairs in Lyons, Nebraska.

According to Hassebrook, many smaller, targeted programs that invest in proven strategies to create rural jobs, revitalize rural communities and initiatives to foster a new generation of family farmers and ranchers were completely left out of the final farm bill extension. The eleventh hour deal also prevents farmers and ranchers from being able to improve soil and water conservation through enrollment in the Conservation Stewardship Program in 2013.

“We applaud the efforts of Senate Agriculture Chair Debbie Stabenow (D-MI) and House Agriculture Chair Frank Lucas (R-OK) who negotiated an agreement last weekend to address these crucial shortcomings,” explained Hassebrook. “But, regrettably their efforts were set aside in final negotiations over the fiscal cliff bill.”

The nine-month extension of the previous Farm Bill was attached to the complex fiscal cliff bill and passed the Senate in the early morning hours yesterday and passed the House of Representatives less than 20 hours later.

“The message is clear - despite high market prices, virtually unlimited commodity and crop insurance premium subsidies to mega farms remain uncapped, but beginning farmers and rural communities are left twisting in the wind,” concluded Hassebrook. “And conservation of our precious land and water gets put on hold.”



Congress Votes to Reinstate Biodiesel Tax Incentive

The U.S. biodiesel industry applauded Tuesday as the U.S. House cleared a year-end fiscal package that reinstates the biodiesel tax incentive for 2012 and 2013. President Obama is expected to quickly sign the bill into law. 

"It's been a long year with a lot of missed opportunity and lost jobs in the biodiesel industry. But we're pleased that Congress has finally approved an extension so that we can get production back on track," said Anne Steckel, vice president of federal affairs at the National Biodiesel Board (NBB). "This is not an abstract issue. In the coming months, because of this decision, we'll begin to see real economic impacts with companies expanding production and hiring new employees."

The biodiesel tax incentive expired on Dec. 31, 2011. A recent study found that the industry would have produced an additional 300 million gallons this year with the tax incentive in place. That would have supported some 19,213 additional jobs, for a total of 83,258 jobs supported by the industry nationwide, according to the study, conducted by Cardno ENTRIX, an international economics consulting firm. Looking to next year, the study found that the industry would support some 112,078 jobs nationally with the tax credit in place versus 81,977 without it. Additionally, 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.

Along with these economic benefits, Steckel emphasized that biodiesel is helping reduce America's dependence on imported petroleum and making us less vulnerable to global petroleum markets that continue to disrupt the economy and threaten our national security, while significantly reducing tailpipe pollution and greenhouse gas emissions.

"This is important not just for jobs but for diversifying our energy supplies, improving our energy security and reducing costly emissions," Steckel said.

The $1-per-gallon biodiesel tax incentive was first implemented in 2005. Congress has allowed it to lapse twice, in 2010 and again in 2012. Under the legislation approved by the House on Tuesday and first passed by the Senate on Monday, the incentive will be reinstated retroactively to Jan. 1, 2012 and through the end of 2013.

Steckel thanked the industry's supporters on Capitol Hill for pressing for the incentive, particularly Sens. Maria Cantwell, D-Wash., and Charles Grassley, R-Iowa, and Reps. Aaron Schock, R-Ill.; and Collin Peterson, D-Minn.





NAWG Statement on Extending the 2008 Farm Bill

A statement from National Association of Wheat Growers President Erik Younggren, a wheat, soybean and sugar beet farmer from Hallock, Minn.:

“NAWG is pleased that leaders in Washington came to some agreement on fiscal and tax policy for our nation that includes an extension of farm policy through the 2013 wheat growing season. This will allow our nation’s farmers to know the parameters of tax policy and the farm safety net for spring planting decisions and allow continued operations of critical foreign market development programs.

“However, the extension of the 2008 farm bill is not ideal and we are concerned about unknown implications of automatic spending cuts, known as sequester, which are now postponed.

“We commend our agriculture leaders – Chairwoman Stabenow, Ranking Member Roberts, Chairman Lucas and Ranking Member Peterson – for their leadership in putting forth reforms that would have saved taxpayers tens of billions of dollars and regret that our joint efforts to reauthorize a five-year bill were not successful.

“It is of the utmost urgency to our farmer-members that Members of the 113th Congress reauthorize a new farm bill expeditiously. We call on policymakers to come to the table, compromise and send a five-year farm bill to the President for signature this year.”



RFA Comment on Extension of Cellulosic and Other Tax Credits

Commenting on passage of the American Taxpayer Relief Act of 2012, which included extension of three key ethanol related tax credits, Bob Dinneen, President and CEO of the Renewable Fuels Association, commented:

“The one year extension of the cellulosic producer tax credit and accelerated depreciation provides some measure of certainty to ensure that 2013 will be a year of growth and milestones for the advanced ethanol industry.   In addition, and equally significant, is the extension of the alternative fuel infrastructure tax credit which will accelerate E15’s entry into the marketplace this coming year.  The extension of these important provisions demonstrates the Obama Administration’s stalwart support of biofuels and Congress’s belief in the promise of energy independence and job creation through domestic renewable energy resources.”



NCGA: Congress’ Farm Bill Failure Hampers America

National Corn Growers Association President Pam Johnson released the following statement in response to Congress’ inaction to pass a new five-year farm bill before the end of 2012:

“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.

“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.”



With Extension Passed, ASA Calls on 113th Congress to Commit to a New Farm Bill

With a vote of 257-167 late Tuesday night, the House of Representatives concurred with the Senate in passing a package to avert the “fiscal cliff” that includes an extension of the 2008 Farm Bill, funding and authorizing key farm, research and nutrition programs through the end of the 2013 fiscal year in September. American Soybean Association (ASA) President Danny Murphy, a soybean farmer from Canton, Miss., releases the following statement on the vote:

“As we have been working with our colleagues on Capitol Hill for more than two years on a comprehensive, five-year bill, we are very disappointed that Congress was not able to come together and pass a new bill in the best interests of farmers. However, the extension of the 2008 Farm Bill allows important foreign market development, disaster assistance, and farm safety net programs to continue.

“ASA is also pleased that the larger package passed by both the House and the Senate to avert the ‘fiscal cliff’, of which the extension was a part, included a meaningful solution to the estate tax challenges faced by farm families and many other small businesses. The deal provides for a tax rate of 40 percent on estates with a value greater than $5 million, or $10 million per couple, and is indexed to inflation. All changes to the estate tax under the fiscal cliff package are permanent.

"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.

“While the extension is certainly preferable to the alternative of no bill at all, and prevents outdated permanent agricultural law enacted in the 1930s and 1940s from going into effect, it is only a stopgap measure, which does not provide the long-term certainty and stability that farmers need. 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. 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.

“As always, ASA is ready to work with the Senate and House Agriculture Committees to craft and pass a new farm bill before the current extension expires at the end of September.”



ASA Cheers Biodiesel, Estate Tax Victories in Fiscal Cliff Package

With yesterday’s passage of legislation by the House and Senate to avoid the year-end “fiscal cliff”, the American Soybean Association (ASA) welcomes provisions in the law that extend the biodiesel tax incentive and provide a permanent solution to the estate tax, two of ASA’s major priorities in 2012 and 2013. ASA President and Canton, Miss.-based farmer Danny Murphy noted the association’s enthusiasm for these tax provisions in the following statement:

“The extension of the biodiesel tax incentive and the solution provided for the estate tax that Congress included in the fiscal cliff package are two resounding victories for soybean farmers, and ASA applauds the House and the Senate for including these two policies that provide some certainty for farmers going forward. These have been two of ASA’s foremost priorities in recent years, and soybean farmers stand to benefit significantly from the stability and certainty created by these provisions.

“The estate tax, which would have reverted to levels unrealistic for family farm operations in the absence of congressional action, was permanently set through the legislation at a rate of 40 percent on estates valued at $5 million, or $10 million per couple, which is a much more viable framework for the land-based and capital-intensive nature of family farms like ours. This solution allows farmers to pass their operations from generation to generation without the undue burden of an unrealistic estate tax structure.

“With regard to the biodiesel tax incentive, the extension of the dollar-per-gallon credit retroactive to 2012 and through 2013 is also a significant win for the burgeoning biodiesel industry, an important market for soybean growers. More than half of all biodiesel produced in the U.S. uses the oil from American-grown soybeans as a feedstock, which helps to grow our domestic fuel supply and creates soy meal as a byproduct, providing protein-rich animal feed for livestock, poultry and aquaculture.

“ASA recognizes and appreciates the work put in by the House, the Senate and the Obama Administration in crafting this legislation to address many tax issues, including these two significant policy provisions for soybean farmers.”



NMPF to Focus on Passing New Farm Bill in 2013 after Congress Extends Existing Version

Now that the House of Representatives has passed the Senate’s fiscal cliff package extending existing farm programs into 2013, the National Milk Producers Federation (NMPF) said today it will continue its push in the 113th Congress for a five-year farm bill that includes the Dairy Security Act.

NMPF said that “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. The fiscal cliff package, among other things, extended the MILC program through Sept. 30th, 2013, and the price support program through Dec. 31st of this year.

Kozak thanked supporters of the Dairy Security Act – the new margin insurance-based safety net for dairy farmers – who worked diligently into the final hours of 2012 attempting to gain its inclusion in the final legislative fiscal cliff package.

As the Senate and House Agriculture committees begin work next month on a full, five-year farm bill, Kozak said that dairy farmers would reiterate the value of the Dairy Security Act, which 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.

Kozak did express satisfaction that the overall fiscal cliff deal prevents the estate tax from returning at punitively high levels in 2013. The package includes a 40% rate on estates valued at more than $5 million, up from the previous 35% rate, but far less than the 55% top rate on $1 million estates that could have become permanent absent the new package.



USDA Announces Commodity Credit Corporation Lending Rates for January 2013

The U.S. Department of Agriculture's Commodity Credit Corporation (CCC) today announced interest rates for January 2013. The CCC borrowing rate-based charge for January 2013 is 0.125 percent, unchanged from 0.125 in December 2012. For 1996 and subsequent crop year commodity and marketing assistance loans, the interest rate for loans disbursed during January 2013 is 1.125 percent, unchanged from 1.125 in December 2012.

Interest rates for Farm Storage Facility Loans approved for January 2013 are as follows, 1.125 percent with seven-year loan terms, unchanged from 1.125 in December 2012; 1.625 percent with 10-year loan terms, down from 1.750 in December 2012 and; 1.875 percent with 12-year loan terms, unchanged from 1.875 percent in December 2012.



Fertilizer Prices Steady at Year End

Retail fertilizer prices continued to remain steady the fourth week of December, as has been the case now for several months, according to data tracked by DTN. This marks the eighth week in a row prices have not moved in either direction.  Six of the eight major fertilizers slid lower compared to last month, but these moves were fairly minor. DAP had average price of $636 per ton, MAP $669/ton, potash $598/ton, urea $570/ton, 10-34-0 $602/ton and UAN28 $372/ton.  The remaining two fertilizers were higher compared to the fourth week of November, but again the move higher was extremely slight. Anhydrous had an average price of $865/ton and UAN32 was at $423/ton.

On a price per pound of nitrogen basis, the average urea price was at $0.62/lb.N, anhydrous $0.53/lb.N, UAN28 $0.66/lb.N and UAN32 $0.66/lb.N.

DTN's retail survey shows two of the eight major fertilizers are still showing a price increase compared to one year earlier. Anhydrous is now 8% higher while urea is 1% higher compared to last year.  Five fertilizers are actually lower in price compared to December 2011. UAN32 is 5% less expensive, DAP and UAN28 are both 6% lower, MAP is 8% lower and potash is 9% less compared to last year.  The remaining fertilizer is now down double digits from a year ago. 10-34-0 is now 27% less expensive from a year earlier.



ICGA: Making Iowa's Roads Better

Iowa's bridges and roads are essential to corn production, as rural roads make up nearly 90,000 miles of Iowa's 114,000 mile road system. The agricultural sector is a vital part of Iowa's economy, yet Iowa's farm to market roads and rural bridges are in great disrepair. The Iowa Corn Growers Association (ICGA) policy supports a fuel tax increase to fund transportation improvements to existing infrastructure in the state. A fuel tax increase was the ICGA's top priority in 2012 and will continue to be an issue in the 2013 legislative session.

An increased fuel tax would act as a user fee as it is the way to collect funding from out-of-state drivers who use and also contribute to the deterioration of our roads. The Iowa Department of Transportation has estimated to be 15 percent of passenger travel.

Funding to support Iowa's roads and bridges is currently not sufficient to meet the maintenance demands of Iowa's road system. Iowa's fuel tax has not been increased since 1989; while repair and construction costs have continuously increased for over 20 years. Although, no one wants to pay higher taxes, Iowa must make this investment as infrastructure repair costs will only become greater in the future.

The ICGA is urging the legislature to support a fuel tax increase to improve our road infrastructure.



GROWMARK Acquires Bunge's Interest in B-G Fertilizer

GROWMARK, Inc. announced it has agreed to purchase Bunge North America's interest in B-G Fertilizer, LLC.  B-G Fertilizer, LLC owns and operates the former CF Industries terminal located in Cincinnati, Ohio to serve the needs of retail customers that provide fertilizer to farmers. Terms of the transaction were not disclosed.

"We have had a great working relationship with Bunge during the past two years," said Jim Spradlin, GROWMARK Vice President, Agronomy. "The Cincinnati terminal has brought value to the dealers in the areas it serves and we look forward to continuing to provide the outstanding customer experience for which the team at Cincinnati is known."

GROWMARK and Bunge also announced that GROWMARK will lease Bunge fertilizer assets located in Council Bluffs, Iowa and Fulton, Illinois. These facilities will be incorporated into the current GROWMARK portfolio to expand the cooperative's scope and reach.



CTB Purchases the Assets of LeMar Industries

CTB, Inc., Milford, Ind., announced that it has purchased the assets of Martin Industries, Corp. and its related subsidiaries including LeMar Industries Corp. Headquartered in Des Moines, Iowa, LeMar is a leading designer and manufacturer of all of the structures and equipment related to loading, unloading and moving grain through a grain storage facility including catwalks, towers, bucket elevators, conveyors and sweeps. The company also makes temporary grain storage. Terms of the transaction were not disclosed.

Martin Industries is also the parent company for Riley Equipment, which makes bucket elevators, grain conveyors and other bulk material handling equipment; Hall Industries, a custom designer and metal fabricator with a state-of-the-art powder-coating operation; Midwest Bearing & Supply, a bearing and power transmission supply house; and The Grain Reclaim Machine Company, a grain pickup service. The company operates from facilities in Des Moines and Sheffield, Iowa, as well as from Vincennes, Indiana. Lemar's facilities encompass more than 300,000 square feet of manufacturing space with a focus on precision in-house engineering and lean manufacturing. The company employs nearly 200 people and is widely recognized for its proven ability to design custom solutions for customers in the U.S. and around the world. It is an American Institute of Steel Construction (AISC) certified fabricator.

CTB president and chief executive officer Victor A. Mancinelli noted that the acquisition completes CTB's offering to the grain industry. "Adding LeMar's leading grain handling systems to Brock's line of grain storage, handling, conditioning and drying solutions means that CTB's Brock division can now offer its customers and dealers a complete grain preservation package," said Mancinelli. "The acquisition also provides CTB with additional engineering expertise and talented people as well as with manufacturing options in the heart of the U.S. grain belt."

Mancinelli added, "LeMar has had a close relationship with Brock and its dealers for many years. This broadening of our already strong grain product line should benefit our dealers and customers tremendously through the ability to rely on Brock as a single source solution to their needs."

LeMar was founded in 1982 by Bob and Sharron Martin. Bob Martin has managed the company together with his sons Scott and Richard for the last 11 years. After the acquisition, the senior managers, Scott Martin and Jason Luster, will continue in their respective leadership roles and will report to CTB's Doug Niemeyer, Executive Vice President and General Manager of CTB's Brock Grain Systems business unit. Niemeyer remarked, "We are very pleased to add these two grain industry leaders to our team." CTB will continue operations in the existing LeMar facilities.

Commenting on the acquisition, Bob Martin said, "My family and I are thrilled to find such a great home for the business we started thirty years ago. Brock is well known as an industry leader, and, with its backing by CTB and Berkshire Hathaway, it offers great stability and promise for the future of LeMar's brands and product lines."



Despite Food Safety Problems, Australia’s Privatized Meat Inspection Deemed “Equivalent” to U.S. by USDA

Today the consumer advocacy group Food & Water Watch called on the U.S. Department of Agriculture to review its decision to allow the newly privatized meat inspection system of Australia to be considered equivalent to U.S. inspection. In a letter to Agriculture Secretary Tom Vilsack, the group pointed to repeated discoveries of meat imported from Australia that was contaminated with fecal material and digestive tract contents.

“Documents from USDA and Australian officials reveal that this is not an isolated problem,” said Wenonah Hauter, executive director of Food & Water Watch. “The repeated problems with products coming from Australia in 2012 show that this is a systemic problem and that privatized meat inspection in Australia is not working.”

One letter from a USDA official to Australian food safety officials, summed up the problems in imported products from Australia: “Within the last month, there have been five additional zero tolerance (fecal material/ingesta) POE (point-of-entry) violations in four separate establishments, including one establishment that had repetitive violations during this month (December, 2012), as well as earlier this calendar year.”

Australia is not the only country exporting meat to the United States that is operating a privatized inspection system, and is not the only exporting country with food safety problems. In 2012, there was a recall in the United States for 2.5 million pounds of Canadian beef products that were potentially contaminated with E. coli 0157:H7 produced using a privatized inspection system that the USDA had secretly recognized in 2006.

“U.S. consumers should not be endangered by unsafe imports from Australia or from any other country exporting to the United States,” said Hauter. “It is time for USDA to revoke the equivalency determinations of privatized meat inspection schemes, and to abandon its attempts to privatize inspection here in the United States.”

Food & Water Watch's letter can be found at: http://documents.foodandwaterwatch.org/doc/AU_meat_equivalent_USDA_letter.pdf.