Home » Finance Committee passes tax package to help fund farm bill

Finance Committee passes tax package to help fund farm bill

Oct 5, 2007 2:00 PM, By Forrest Laws
Farm Press Editorial Staff

The Senate Finance Committee has adopted an agricultural tax package that would fund a standing disaster relief program and create new conservation, rural development and energy-related tax credits.

The $16-billion Heartland, Habitat, Harvest and Horticulture Act of 2007 or “fully-offset 4-H bill,” as its sponsors call it, would also free up previously obligated funds for the Senate Agriculture Committee to use elsewhere in farm bill spending.

Passage of the package’s disaster relief provisions, which would be funded through a Permanent Agricultural Assistance Trust Fund, marked a major milestone for its authors, Finance Committee Chairman Max Baucus, D-Mont., and Sen. Kent Conrad, Senate Budget Committee chairman.

“We will no longer have to go hat-in-hand every time disaster hits farm country,” said Conrad, D-N.D. “Having a relief system in place before disaster strikes, as opposed to piecing one together on a case-by-case basis, will save taxpayer dollars in the long run.”

Senate Agriculture Committee members, including Baucus and Conrad, were scheduled to hold a farm bill mark-up session following the finance committee vote, but ag committee chairman Tom Harkin postponed the meeting until after Congress’ Columbus Day recess.

Harkin applauded the work of the finance committee in passing the tax package, which sponsors say will be added to the Senate version of the 2007 farm bill when the latter is considered on the Senate floor.

“As the Senate edges closer to considering its version of the farm bill, this funding comes at an opportune time and gives us some important assistance in the critical farm bill investments that are needed now more than ever,” said Harkin. “We are still facing an extremely tight budget on this farm bill, and we welcome the help from these added funds.”

Baucus and Conrad have been championing a permanent disaster assistance program since drought conditions began taking their toll on crop and livestock producers in the upper Midwest and Far West states in 2003.

According to a press release issued by the finance committee, the agricultural tax package would provide $5.1 billion in disaster assistance over five or 10 years. Producers would be required to purchase federal crop insurance to be eligible for the new disaster assistance program.

The proposal uses tariff revenue to set up an agriculture disaster trust fund. Money from the latter would cover weather related losses for all crops, including specialty crops and forage and provide assistance to livestock producers.

Most importantly, said Conrad, farmers and ranchers hit by natural disasters could get relief without having to wait for ad hoc emergency spending. Congress has passed numerous agriculture disaster measures, usually after bruising fights with the administration over funding levels and disaster coverage.

The farm lobby’s response, on the whole, was muted. Most of the major farm organizations support the House-passed farm bill and are concerned the Senate ag committee may make wholesale changes to it. The American Agriculture Movement, the American Corn Growers Association and the new Specialty Crop Farm Bill Alliance, praised the finance committee action.

The specialty crop alliance, a coalition of more than 120 specialty crop organizations representing 350 crops, said addressing the farm bill’s conservation and disaster assistance priorities outside the baseline funding provided to the Senate ag committee will allow the latter to “address many important priorities for specialty crop producers.”

“This bill provides many key tax provisions for expanded production of clean, domestic, renewable energy,” said AAM President Larry Matlack. “But even more important was the inclusion of an agriculture disaster relief fund to provide standing authority for assistance to farm and ranch families when natural disaster strikes.”

Conservation groups were less enthusiastic, on the other hand. “We welcome the finance committee’s contribution to the conservation funding package for the 2007 farm bill,” said the Sustainable Agriculture Coalition’s Ferd Hoefner.

“The $3 billion in new tax credits for the Conservation Reserve Program and Working Grasslands Protection Program is not enough, by itself, however, to secure a decent conservation title in the new farm bill, and we regret the committee’s decision to reduce the conservation program savings by nearly $1 billion in the modified version of the bill.”

The $3 billion is, nonetheless, a “very significant contribution. We call on the ag committee to now do its part by retaining all of the $3 billion within the conservation title and then contributing at least another $2 billion from farm bill savings to secure a new conservation title.”

Some of the other key provisions in the Heartland, Habitat, Harvest and Horticulture Act include:

• A two-year extension of the biodiesel tax credits;

• New incentives for cellulosic ethanol production;

• A two-year extension of the small ethanol producer credit;

• Rural Renaissance bonds for distance learning and telemedicine and telecommunications projects;

• A two-year extension of the ethanol import tariff;

• A personal 30-percent tax credit for residential wind property.

e-mail: flaws@farmpress.com