November 20, 2017

Ag Groups Offer Mixed Reaction To Passage Of Tax Reform Bill

House Republicans passed their version of tax reform with  votes to spare (227-205), while Senate Republicans waged battle with Democrats in committee to advance their bill.

Majority Republicans stayed largely unified amid solid Democratic opposition. Their win was a key victory in efforts to advance the GOP legislation that still faces a tough battle in the Senate, where Republicans have a razor-thin majority and can afford to lose just two-votes and still pass their bill.

Key for Agriculture, the House bill ends the estate tax by 2024, the Senate doubles the exclusion for couples and individuals, but sunsets that in ten-years, and both keep ‘stepped-up basis’ for valuing assets.

House GOP Whip, Steve Scalise. . . .

Scalise

Both bills also reduce the so-called ‘pass-through’ small business tax rate on salaries and wages, cut corporate rates, lower all personal tax rates, hasten and expand business expensing and cash accounting, double the standard deduction, and boost the child tax credit.

Again, the Senate sunsets lower rates after 2027, though that could be changed on the Senate floor to make the breaks permanent.  Senate Democrats charge the Senate bill’s elimination of the Obamacare individual mandate penalty would lead to millions more uninsured and higher insurance premiums—what they called a “hidden Republican tax increase.”

Republicans countered, premiums are already skyrocketing even with the mandate penalty, as insurers leave Obamacare marketplaces amid declining revenues

Farm groups offered a mixed reaction to House passage of a tax reform package. The American Farm Bureau Federation called the action a “step closer to a tax code that works for all farmers and ranchers.” The National Cattlemen’s Beef Association called the passage a “step in the right direction,” noting specifically the language within the package that would immediately double the death-tax exemption and put the tax on the path to extinction in five years. However, NCBA also expressed concern that the reform package would significantly limit the ability of some businesses from deducting their interest expenses. The National Council of Farmer Cooperates called passage of the bill “unfortunate,” as the organization says the reform package will raise taxes on farmers and co-ops across the country by eliminating the Section 199 deduction. And, The National Farmers Union said it was “alarmed” by the passage because the legislation would jeopardize farm bill funding, while increasing the federal debt and harming farmers and ranchers.

 

Price of Thanksgiving Dinner Lowest In Five Years

Thanksgiving is just under a week away and shoppers are hitting the grocery stores in full force. If those shoppers a looking for a deal, they’re in luck, according to the American Farm Bureau. The group’s 32nd Annual Thanksgiving Dinner Price Survey says shoppers will be spending the least amount in five years.  The Survey says the average cost for a “classic” Thanksgiving dinner fell just under two percent and came in under $5 per person.  American Farm Bureau market intelligence director John Newton. . .

Thanksgiving Dinner 1

The decline was driven by lower retail turkey prices, along with lower prices for milk and rolls. The average cost of turkey this year is $22.38 for the whole bird…

Thanksgiving Dinner 2

Meanwhile, the supply of pumpkins for processing for pumpkin pie has rebounded from a couple of years ago…

Thanksgiving Dinner 3

The shopping list for Farm Bureau’s informal survey includes turkey, bread stuffing, sweet potatoes, rolls with butter, peas, cranberries, a veggie tray, pumpkin pie with whipped cream, and coffee and milk, all in quantities sufficient to serve a family of 10 with plenty for leftovers.  Foods showing the largest decreases this year in addition to turkey, were a gallon of milk, $2.99; a dozen rolls, $2.26; two nine-inch pie shells, $2.45; a 3-pound bag of sweet potatoes, $3.52; a 1-pound bag of green peas, $1.53; and a group of miscellaneous items including coffee and ingredients necessary to prepare the meal (butter, evaporated milk, onions, eggs, sugar and flour), $2.72.

Items that increased modestly in price were: a half-pint of whipping cream, $2.08; a 14-ounce package of cubed bread stuffing, $2.81; a 30-ounce can of pumpkin pie mix, $3.21; a 12-ounce bag of fresh cranberries, $2.43; and a 1-pound veggie tray, $.74.

Two U.S. Senators Propose Elimination of Harvest Price Option Subsidy

U.S. Sens. Jeff Flake (R-Ariz.) and Jeanne Shaheen (D-N.H.) last week reintroduced the Harvest Price Subsidy Prohibition Act; a bill they say would eliminate a costly but little-publicized crop insurance subsidy known as the Harvest Price Option (HPO). The bill would save taxpayers $21.1 billion according to the nonpartisan Congressional Budget Office. A companion bill was also introduced in the House today by Congressman John J. Duncan, Jr. (R-Tenn.).

Under a traditional crop insurance plan, farmers will only receive a payout if they earn less money at harvest time than they were projected to make when they planted their crop. By softening the blow of unanticipated losses, traditional crop insurance serves as a safety net. However, under an HPO policy, if that crop’s price at harvest time ends up higher than the insured planting price the insurance payout is recalculated based on the higher price. The Senators suggest that by paying out more money than “the farmer ever anticipated earning”, HPO policies go far beyond the safety-net concept – they are simply a taxpayer-subsidized profit guarantee.  Advocates for the policy say the option is necessary as it allows farmers to more effectively manage their risk and more aggressively forward contract production without the fear of additional losses should they have to buy out of the contracts due to short production.

This is the the first time Senator Flake has attempted to eliminate the Harvest Price Option.  He offered a similar Harvest Price Subsidy Prohibition Act in 2013 as an amendment to the farm bill. In a statement Flake explained his reasoning this way:

“HPO is like insuring your car for $5,000, and getting a check for $10,000 after it’s totaled. It’s the kind of program that only makes sense in Washington,” saidFlake. “Making a living in agriculture isn’t easy or predictable, and there’s a case to be made for safety net programs such as traditional crop insurance. But HPO isn’t a safety net, it’s a taxpayer-funded windfall. With a $20 trillion national debt, taxpayers shouldn’t be expected to pay Big Ag billions of dollars for profits that they never expected to earn in the first place.”

Joining Flake in sponsoring the bill is Senator Jeanne Shaheen, a democrat from New Hampshire.  She said the legislation is a “smart,pragmatic bill that will provide our current crop insurance program with a much needed fix.  We ought to act on it immediately to save taxpayer dollars.” Lobbying groups offering support to the measure include Americans for Prosperity, National Taxpayers Union, Taxpayers for Common Sense, Coalition to Reduce Spending, The Council for Citizens Against Government Waste and the Environmental Working Group, among others.