Georgia Farm Bureau's Leadership Alert - July 21, 2010

July 21, 2010

www.gfb.org

Vol. 28 No. 29

LINCOLN, KYL PROPOSE ESTATE TAX RELIEF AMENDMENT TO LENDING BILL

The Small Business Lending Bill (HR 5297) would help some families keep their farms if Congress approves an amendment to reform the federal estate tax.

Sens. Blanche Lincoln (D-Ark) and Jon Kyl (R-Ariz.) proposed the amendment, which would permanently set the top estate tax rate at 35 percent, with a $5 million per person exemption phased in over 10 years and indexed for inflation. Last December, the House passed an estate-tax bill that set the top rate at 45 percent and provided a $3.5 million per person exemption.

Lincoln, chairperson of the Senate Committee on Agriculture, Nutrition and Forestry, called for decisive action to help prevent farm families from being forced to sell off farm assets in order to pay the estate tax, commonly known as the “death tax.”

“Uncertainty in the estate tax law has caused incredible difficulties for these individuals, which is why I have fought for a quick resolution to the issue that is both permanent and fair. One way to improve upon an already strong legislative initiative that includes tax incentives and a number of other benefits for small businesses is to ensure that we reach a permanent solution on the estate tax to provide small business owners and farmers with the certainty they need,” Lincoln said.

The estate tax rate this year is zero, but without congressional intervention the federal estate tax will revert in 2011 to what it was before 2001, a top tax rate of 55 percent with a $1 million exemption. The proposal by Lincoln and Kyl, who sits on the Senate Finance Committee, would provide a “stepped up basis” to be used to determine the capital gains tax liability when inherited assets are sold. The Lincoln-Kyl proposal would also allow the heirs of people who die in 2010 to choose whether to settle their estates under current law (no estate tax with modified stepped up basis) or file under the new law.

Farm Bureau supports the Lincoln-Kyl amendment to HR 5297, noting that 84 percent of farm assets are real estate-based, causing farm families to be hit particularly hard when estate taxes come due. Georgia Sens. Saxby Chambliss and Johnny Isakson both support the amendment.

American Farm Bureau Federation President Bob Stallman sent a letter last week to Senate Majority Leader Harry Reid (D-Nev.) asking that the full Senate be allowed to consider the Lincoln-Kyl proposal.

“This will give farmers and ranchers a better opportunity to continue food, fiber and fuel production and transfer family-owned operations from one generation to the next,” Stallman said.

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RUSSIA SIGNS AGREEMENT TO RESUME U.S. POULTRY IMPORTS After agreeing last month to end a six-month ban and accept imports of U.S. chicken Russia signed an agreement finalizing the deal last week.

To export chicken to Russia, which in 2008 purchased $767 million worth of chicken from U.S. growers, U.S. processors will have to convert their pathogen-reduction treatments (PRTs) to one of three deemed acceptable by Russia, which will not allow poultry rinsed with chlorine. The accepted treatments are peroxyacetic acid, cetylpyridinium (sold as Cecure) and hydrogen peroxide.

Conversions from chlorine rinses to PRTs accepted by Russia could delay the initial export shipments from some U.S. processors, a process complicated by USDA rules that require chlorine rinses for carcasses that have to be reconditioned after showing excessive contamination. The USDA’s Food Safety Inspection Service (FSIS) gives waivers that allow the substitution of peroxyacetic acid for chlorine, but processors that are granted the waivers have to enroll in the FSIS Salmonella Initiative Program.

The agreement calls for the USDA to publish information on its Web site about the permitted pathogen-removal treatments and for the U.S. to provide Russia with a list of processing facilities authorized to ship poultry to Russia.

AGREEMENT ENDS HSUS BALLOT INITIATIVE IN OHIO Ohio Gov. Ted Strickland and agricultural groups reached an agreement with the Humane Society of the United States (HSUS), which stopped its ballot initiative on animal rights in Ohio in exchange for a number of concessions.

Under the accord, announced June 30, the HSUS will recognize the Ohio Livestock Care Standards Board (OLCSB) as the appropriate authority for defining acceptable farm animal care practices. The OLCSB, comprised of various animal agriculture and animal health stakeholders, was created through passage of Ohio’s Issue 2 last fall.

The HSUS claimed to have 500,000 signatures on a petition to place a number of animal care measures on the state ballot in November.

The agreement included several HSUS recommendations related to animal agriculture: a ban on veal crates by 2017; a ban on use of new sow gestation crates after Dec. 31, 2010, with a 15-year phase-out period for producers who currently use them; a moratorium on permits for new battery cage confinement facilities for laying hens; a ban on strangulation of livestock and a call for mandatory humane euthanasia methods; and a ban on transporting “downer” cows for slaughter.

It also had several measures outside the scope of agriculture, including increasing the severity of penalties for cockfighting and restrictions on breeding kennels, as well as a ban on acquisition of certain exotic animals to be kept as pets.

The Ohio Farm Bureau Federation supported the agreement, noting that the state’s farmers now have certainty for an extended period of time regarding animal housing regulations and that the livestock industry will be less vulnerable to emotional video used to sway public opinion on farm animal care. Farmers, their organizations and allies will not be forced into a multi-million dollar media battle.

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CROP INSURANCE COMPANIES AGREE TO FUNDING CUTS The United States Department of Agriculture (USDA) last week received signed Standard Reinsurance Agreements (SRA) from all private companies that participate in the federal crop insurance program, a move that reduces funds the USDA provides for the companies’ administrative costs by 20 percent over 10 years.

Agriculture Secretary Tom Vilsack said the move would save the government $6 billion over 10 years, $4 billion of which would go directly to federal deficit reduction and the remaining $2 billion will be directed to existing risk-management plans. The 2008 farm bill authorized the USDA’s Risk Management Agency to negotiate the SRA for the 2011 crop year.

The 16 private companies, which included Farm Bureau-affiliated American Agricultural Insurance Company, were required to sign the SRA in order to continue to receive federal subsidies. Under the SRA, payments for their administrative costs will be limited to $1.3 billion for the 2011 crop year and will rise to $1.37 billion in 2015.

While insurance industry representatives voiced concerns that the reduced subsidies would drive some companies out of business, Vilsack said the agreement makes the federal crop insurance program more sustainable while improving the farm safety net.

A 2009 USDA study of rates of return for the previous 21 years shows that the crop insurance companies averaged 17 percent return when the average reasonable rate for that period was 12.7 percent. The SRA lowers the crop insurance companies rate of return to 14.5 percent.

SENATE PASSES FINANCIAL REFORM BILL The Restoring American Financial Stability Act of 2010 passed the Senate last week and now waits for President Obama to sign it into law. The bill places “over-the-counter” derivatives trading under regulatory control of the Commodities Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).

Derivatives trading, which many agricultural producers use to minimize their exposure to risk associated with market fluctuations, will face approval through a central clearing house.

The bill sets up measures to improve transparency in derivatives trading and provides a role for regulators with the CFTC and SEC to determine which derivatives contracts should be cleared.

Sen. Saxby Chambliss (R-Ga.), the ranking member of the Senate Ag Committee, proposed an exemption for small businesses when the bill was in committee, but that measure was voted down. Chambliss was critical of the bill after passage, saying it ignored the roles played by Fannie Mae and Freddie Mac in the financial crisis and unfairly penalizes small business owners.

“This legislation will in fact enable regulators to impose restrictions on businesses that had nothing to do with creating the financial crisis. These types of entities were clearly not the cause of the economic crisis, and yet, they will now be subject to the same regulations as the large financial institutions on Wall Street,” Chambliss said.

Leadership Alert page 4 of 4 UPCOMING EVENTS

GFB YOUNG FARMER FAMILY CONFERENCE & DISCUSSION MEET July 24-25 Lake Blackshear Cordele Registration is full but be sure to wish any young farmers from your county competing in the discussion meet good luck!

GA FARM BUREAU COMMODITIES CONFERENCE July 29 UGA Tifton Campus Conference Center Tifton This is the annual kick-off of Georgia Farm Bureau’s policy development process. Members of the GFB Commodity Advisory Committees will discuss policy issues affecting their commodities. They will also tour research sites at the Coastal Plains Experiment Station and UGA research farms. For more information call the GFB Commodities/Marketing Department at 1-800-342-1196.

SOUTHEAST BIO-ENERGY & RENEWABLE ENERGY CONFERENCE Aug. 3-5 UGA Tifton Campus Conference Center Tifton This fifth annual event includes sessions on the topics of rising gas prices, development of energy market jobs, wood pellet production and many other topics. For information visit www.sebioenergy.org or contact Evelyn Folds at 229-386-7274 or efolds@uga.edu.

UGA TURFGRASS FIELD DAY Aug. 4 UGA Griffin Campus 8 a.m. - 2 p.m.

Griffin This event will present the latest research information on management of turfgrass varieties grown in Georgia. The morning sessions will also be offered in Spanish. Participants can earn four hours of Georgia Pesticide License Credit in category 24 and four hours in category 21.

Registration fee is $65. For information or to register, visit www.GeorgiaTurf.com or call 770229-3477.

UGA SOUTHEAST RESEARCH AND EDUCATION CENTER FIELD DAY August 18 UGA Southeast Research and Education Center Midville Event will highlight UGA field crop variety tests for corn, soybean and peanuts, trials to test peanut fungicides and control cotton stinkbugs and biofuel projects. Event starts at 9 a.m. followed by a provided lunch at 12:30 p.m. Call 706-542-1060 for more information.

COTTON, PEANUTS AND SOYBEAN FIELD DAY August 26 Southwest Georgia Research and Educational Center Plains Event begins at 8:30 am. Lunch will be provided. Call 229-824-4375 for more information.

PROGRESSIVE AGRICULTURE SAFETY DAY Aug. 28 Habersham County Fairgrounds Clarkesville This event, which lasts from 8 a.m. to 5p.m., is open to children ages 5 – 13 and utilizes interactive activities to teach kids about farm and rural safety. Topics include snake and wildlife safety, ATV safety, chemical safety, meth awareness, and tractor/PTO safety. Children ages 9 and under must be supervised by an adult. For information or to register please contact the Habersham County Farm Bureau at 706-776-6739 or jhcanup@gfb.org.