State legiSlatorS did not resolve the looming pension debt or other pending issues during the first few days of the lame duck legislative session. ............................2
r o C k r e m o va l i n t h e Thebes reach of the Upper Mississippi is “progressing beautifully,” according to the St. Louis District Corps of Engineers. .......................4
USDa’S highly anticipated reports Friday will provide some direction for the crop markets. Final production estimates for 2012 will be revealed. ...................10
Monday, January 7, 2013
Two sections Volume 41, No. 1
Congress avoids fiscal cliff, major estate tax hit BY MARTIN ROSS FarmWeek
Many Illinois farmers, including Paul Taylor, began the new year prepared for the worst as Congress continued to haggle over a “fiscal cliff ” solution. A lame duck Congress nonetheless reached an 11thhour agreement Jan. 1 that provides a permanent $5 million individual/$10 million-percouple estate tax exemption and extends a variety of expiring tax provisions important to farmers, ag businesses, and the renewable energy sector. Illinois Farm Bureau President Philip Nelson hailed efforts by Senate Majority Whip Dick Durbin, a Springfield Democrat, to help ensure an “overwhelming” 89-8 New Year’s Day vote for the measure. The House then voted 257-167 to pass the package prior to adjournment of the 112th Congress. “I told my wife when we went to bed New Year’s Eve, ‘I bet it won’t pass,’” Taylor, a DeKalb County producer and Illinois Corn Growers Association president, told FarmWeek. “I’m enthusiastic that Congress did something.” Taylor’s enthusiasm
nonetheless was tempered by “the frustration that the work our corn farmer-members invested to pass a five-year farm bill was effectively tossed out the window” with Congress’ mere nine-month extension of 2008 farm bill provisions. American Farm Bureau Federation policy specialist Pat Wolff told FarmWeek “we (agriculture) did wonderfully” under the fiscal cliff measure. The $5 million personal “death tax” exemption is indexed for inflation, and new law provides for a step-up in basis. And with the certainty provided by permanent estate tax relief farmers “don’t have to do their estate plan over every two years,” Wolff said. Had Congress not acted, the individual exemption would have dropped to $1 million dollars — a treacherously low trigger given Illinois land values, and the estate tax rate would have risen to 55 percent. Lawmakers nonetheless approved a 5 percent increase in the existing 35 percent estate tax rate. The new 40 percent rate was a reported concession for those who sought a mere $3.5 million exemption. “Though many of our mem-
bers would like to see the estate tax eliminated, this action at least lowers farm family exposure until the opportunity to eliminate this tax arises,” IFB’S Nelson said. The plan also leaves the capital gains tax rate unchanged at 15 percent for individuals earning below $400,000 annually
and couples earning below $450,000. The top capital gains rate rises from 15 percent to 20 percent. In 2012 and 2013, the Section 179 expensing option — the maximum amount a small business can immediately expense when purchasing equipment or other business
assets, instead of depreciating them over time — will be $500,000, reduced dollar-fordollar when expenditures exceed $2 million. The Section 179 threshold will fall to a maximum $20,000 dollar-for-dollar reduction on See Fiscal cliff, page 3
OREOS AND TURNIPS
Belted Galloway cattle graze on turnips and rye cover crops near Congerville in Woodford County. David and Leanne Fogle and their family raise the distinctively marked Scottish breed (sometimes referred to as Oreo cattle) as Wayside Valley Belted Galloways. Read about another farmer whose cattle graze on cover crops over winter on page 5. (Photo by Ken Kashian)
Periodicals: Time Valued
Nine months for Congress to deliver new farm bill?
Congress purportedly saved consumers some milk money but failed in the waning hours of 2012 to approve key ag budget savings and a new farm safety net. As part of a New Year’s fiscal cliff deal, lawmakers approved a nine-month extension of expired 2008 farm bill provisions without providing extended program funding. Farm Bureau sought approval of a five-year bill based on Senate- and House Ag Committeeapproved proposals that included $23 billion to $33 billion in deficit savings. Now, the 113th Congress essentially must reboot farm bill
debate amid uncertainty about potentially severe ag budget “sequestration” cuts. Under a continuing budget resolution, current ag spending expires March 27, though existing 2012 corn and soybean programs extend through August and the extension continues existing program authorizations through Sept. 30. The extension measure extends the Milk Income Loss Contract (MILC) program to cover dairy losses and authorizes livestock disaster provisions — albeit without funding. Illinois Farm Bureau President Philip Nelson argued “it will be important for Farm Bureau
FarmWeek on the web: FarmWeekNow.com
members to work hard to encourage Congress to address a five-year farm bill this summer and not wait until the 11th hour again.” Lawmakers touted the need for farm bill extension to avoid reversion to 1949 “permanent” ag law and outmoded dairy programs that could significantly boost consumer milk prices. Illinois Corn Growers Association President Paul Taylor is more concerned about U.S. farmers falling behind as “tens of thousands, hundreds of thousands of hectares of land come into production in South America, the Ukraine, all over.” “We haven’t repealed the
rules of economics,” he told FarmWeek. “We’ll be swimming in corn and wheat at some point. We’re really disappointed we didn’t get a new farm bill. “We’re still concerned about the vulnerability of crop insurance as the base of what most of our growers tell us is important for revenue management. I know everybody was concerned about $7-a-gallon milk. I don’t know that they were really concerned about the rest of it.” Taylor, a DeKalb County producer, said he was hopeful Senate Ag Chairman Deb Stabenow (D-Mich.) could lead See Farm bill, page 3
Illinois Farm Bureau®on the web: www.ilfb.org