04/08/2013

S P E C I A L

R E P O R T

‘Taxes’

Farmers, ranchers focus on reform | 4

April 8, 2013 Vol. 92

‘Golden Plow’ Sen. Johanns earns award | 6

‘Pork’

Missouri grocers go to the source | 7

‘YF&R Survey’ Adequate land top concern | 8

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May will mark the last print issue of FBNews. The newspaper will continue via a website, fbnews.fb.org, and monthly e-newsletter, which you can sign up for at www.fb.org. Thank you for your loyal readership.

Farm Bureau supports repeal of employer health insurance mandate Legislation to repeal the federal mandate requiring employers to provide health insurance for their employees has the backing of farmers and ranchers, for whom health insurances costs are already an ongoing and significant expense.

The Patient Protection and Affordable Care Act (ACA), passed in 2010, penalizes businesses with 50 or more “full-time equivalent” employees if they do not provide

minimum health insurance coverage or if certain employees receive a tax credit and purchase insurance through the exchanges.

“In addition to the added financial burden placed on farm and ranch employers, regulations promulgated to implement this mandate are complex and confusing and require time-consuming record keeping to classify and define employees,” American Farm Bureau Federation President

Bob Stallman recently wrote to Congress.

In the letters, Stallman urged House and Senate lawmakers to support legislation (H.R. 903 and S. 399) that would repeal the mandate.

Last year, ACA was the subject of a U.S. Supreme Court case. One of the most watched parts of the case related to a mandate requirMandate Continued on Page 8

WRDA ready for Senate floor action

©istockphoto.com/typhoonski

n e w s p a p e r

THE FIVE-YEAR WATER RESOURCES DEVELOPMENT ACT expired last year, but the bill, which funds port improvements and lock and dam upgrades, is expected to be up for a Senate vote soon.

Passed unanimously by the Senate Environment and Public Works Committee, the Water Resources Development Act could be up for a vote on the Senate floor as early as this month. Action in the House is expected to follow this summer.

WRDA authorizes new projects for flood protection, port improvement and upgrades to the nation’s aging locks and dams infrastructure. The five-year authorization expired last year and many of the projects in the bill

are still awaiting appropriations.

Among the provisions in the committee’s bill are those that will promote investment in the nation’s water resources infrastructure, accelerate project delivery and reform implementation of the Army Corps of Engineers’ projects. The legislation also includes changes to project authorization, project delivery reforms, Harbor Maintenance Trust Fund reform and an innovative project financing pilot program.

Carrying more than 60 percent

of U.S. corn and soybeans to foreign markets, U.S. waterways and ports are critical to agriculture, but much of the inland waterway infrastructure is outdated and some of it is in great need of repair.

“We have locks and dams that were built back in the days of the Model T,” said Andrew Walmsley, American Farm Bureau Federation transportation specialist.

“We’ve improved our interstates.

Waterways Continued on Page 6

Viewpoint

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April 8, 2013

The

Bob Stallman

President, American Farm Bureau Federation

April showers bring … taxes It’s that time of year again—tax time.

Boston threw a tea party to protest it; Shakespeare and Mark Twain have prattled off quotes about it; the Beatles even dedicated a song to it. Nothing brings people together more than rallying against a tax.

While taxes are necessary for a functioning government and society (where would we be without public schools, roads and firefighters or police officers), if not reined in, they can become too much for American families and businesses.

There’s one for you Taxes should never impede job creation, higher wages and economic investment. But, unfortunately, complex and unjust tax laws have been doing just that. To get the country back on track, Congress is working to reform the tax code and congressional leaders say that nothing is off the table, which is good news for farmers and ranchers.

Farm Bureau supports an overhaul of the cur-

rent federal income tax system. The new tax code should encourage, not penalize, success and promote savings, investment and entrepreneurship. Importantly, it should be fair to farmers and ranchers and other family and small business owners. The tax system should be transparent and simple for Americans to understand.

Nineteen for me Farmers and ranchers work in a world of uncertainty. From volatile global markets to fluctuating operating expenses, from Mother Nature’s many moods to disease outbreaks, it makes running a farm or ranch challenging under the best of circumstances. Add a complex and burdensome tax code, and the challenge becomes even greater.

To provide a fairer tax system, Farm Bureau supports lowering tax rates for individuals and providing additional relief from the capital gains tax for farmers since they are hit especially hard by the tax. We also advocate repeal-

ing the Alternative Minimum Tax. This tax no longer serves its original purpose of preventing tax avoidance by higher income Americans, but instead creates a burden on the middle class.

While these measures would significantly help farmers and ranchers, it would benefit many other Americans and small family businesses.

Other tax provisions, like the Health Insurance Tax and the Medicare Contribution Tax, also need repealed. The HIT tax will raise insurance costs for farmers and ranchers, making it harder to purchase coverage for themselves, their families and their employees. The Medicare Contribution Tax, which is a tax on unearned income, will especially burden farmers and ranchers since theirs is such a capital-intensive business.

Benjamin Franklin once said that nothing in this world is more certain than death and taxes.

While both are inevitable, the federal tax code should be the lesser of the two evils. Making our tax system fair, simple, understandable and nonburdensome is imperative for all Americans.

Health care reform making many woozy

By Erin Anthony Three years ago this month President Barack Obama signed into law a sweeping overhaul of our nation’s health care system.

More than 1,000 days later, farmers, ranchers and other families and small business owners are still waiting for the “care” and “affordability” that the name of the law, the Patient Protection and Affordable Care Act, implies.

Instead, over the weeks and months since ACA became law, we’ve been watching the costs and complexities pile up on an already expensive and confusing system. The higher taxes and thousands of pages of new regulations that come with ACA are certainly not what the doctor ordered for a recovering Main Street economy.

Both the Congressional Budget Office and the Joint Committee on Taxation have said that ACA will levy more than $1 trillion dollars in taxes, barely a dime of which families and small employers can afford. Half of the 21 new taxes will hit families and business owners making less than $250,000 per year ($200,000 for

FBNews

Mace Thornton, Executive Director, Communications Erin Anthony, Editor Phyllis Brown, Assistant Editor Cyndie Sirekis, Contributing Writer Sarah Bittner, Contributing Writer Miranda McDaniel, Contributing Writer

individual filers). This flies in the face of the president’s promise to not increase taxes on low- and middle-income earners. It’s also hurtful to the nation’s job creators, most of whom file as individuals.

One of these taxes, called a “fee” in the law but known as the Health Insurance Tax to the rest of us, is a particular threat. The Joint Committee on Taxation says “a very large portion of the insurance industry fee [will] be passed forward to purchasers of insurance in the form of higher premiums.”

This tax, slated to raise more than $100 billion at the expense of families and small businesses, is expected to drive up the average American family’s health care premiums by approximately $500 per year, according to Douglas Holtz-Eakin, former CBO director.

Farmers and ranchers are particularly worried about a mandate requiring businesses to provide health insurance coverage to their employees if they have 50 or more “full-time equivalent” employees on the payroll. If they don’t provide minimum insurance coverage and if certain employees receive a tax credit and purchase insurance through the exchanges,

April 8, 2013 Vol. 92

these small business owners face hefty monetary penalties.

The amount of paperwork alone required by the new law would make the most robust of us queasy.

The administration’s own documents estimate that ACA’s new tax rules will add more than 40 million hours of paperwork per year to individuals and businesses.

With new regulations on the way, those numbers are only going up.

Three years, a Supreme Court ruling and many congressional tussles later, ACA appears to be here to stay. Farmers and ranchers may have accepted that, but they’re not resigned to swallowing this bad economic medicine.

Families and small businesses are hoping that by addressing some of the most problematic aspects of ACA, the economic prognosis for the whole country will improve. That’s why they’re calling for Congress to get rid of the HIT and eliminate the employer mandate. There’s also plenty to be done to help farmers, ranchers and many others get out from under the pile of regulations the law will bury them under.

Erin Anthony is the editor of FBNews.

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GM rolls out new two-year maintenance program General Motors is now offering a two-year scheduled maintenance program with the purchase of new 2013 Chevrolet Silverado or GMC Sierra 1500 trucks. The program offers buyers a two-year/24,000-mile scheduled maintenance plan that includes all oil and filter changes, tire rotations and multipoint inspections.

The maintenance program is in addition to GM’s three-year/36,000 Bumper-to-Bumper Warranty and five-year/100,000 Powertrain Warranty programs. The program can also be combined with the $500 discount given to eligible Farm Bureau members when purchasing a qualifying new GM vehicle.

In addition to partnering with American Farm Bureau, Inc., for member benefits, GM was a sponsor of the American Farm Bureau’s Young Farmers & Ranchers Discussion Meet, Achievement Award and Excellence in Agriculture competitions held at the American Farm Bureau Federation’s 2013 Annual Meeting. The first place winners of these competitive events received their choice of a full-sized Chevrolet Silverado or GMC Sierra pickup.

Farm Bureau TV: www.youtube.com/farmbureautv

Follow us on Twitter: www.twitter.com/farmbureau

“Like” us on Facebook: www.facebook.com/AmericanFarmBureau

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April 8, 2013

Senate considers tax amendments

Name Alabama Sessions (R) Shelby (R)

On March 23, the Senate passed its 2014 budget resolution, S. Con. Res. 8. The proposed budget resolution, which is non-binding, seeks $1.85 trillion in savings and leaves a shortfall of approximately $566 billion after 10 years. The Senate budget would include $975 billion in spending cuts, of which $493 billion would come from domestic spending, including $275 billion in health care savings.

In total, senators voted on 101 of the more than 500 amendments offered to the resolution.

Vote 1 The Senate approved, 75-24, an amendment, S.A. 656, offered by Sen. Mike Enzi (R-Wyo.) to allow states to collect sales and use taxes from remote sellers. AFBF urged a “yea” vote on the amendment.

Vote 2 The Senate rejected, 46-53, an amendment offered by Sen. John Thune (RS.D.), S.A. 307, that would have created a deficit neutral reserve fund that repeals the estate tax. AFBF urged a “yea” vote on the amendment.

1 2 Y Y Y Y

Name Hawaii Hirono (D) Schatz (D)

Alaska Begich (D) Murkowski (R)

Y n n Y

Arizona Flake (R) McCain (R)

1 2

|3

Y n Y n

Name Massachusetts Warren (D) Cowan (D)

Idaho Crapo (R) Risch (R)

Y Y Y Y

n Y Y Y

Illinois Durbin (D) Kirk (R)

Arkansas Boozman (R) Pryor (D)

Y Y Y n

California Boxer (D) Feinstein (D)

1 2

For the Record

Y n Y n

Name New Mexico Heinrich (D) Udall (D)

Michigan Levin (D) Stabenow (D)

Y n Y n

Y n Y Y

Minnesota Franken (D) Klobuchar (D)

Indiana Coats (R) Donnelly (D)

n Y Y n

Y n Y n

Iowa Grassley (R) Harkin (D)

Colorado Bennet (D) Udall (D)

Y n Y n

Connecticut Blumenthal (D) Murphy (D)

Y n Y n

Name South Dakota Johnson (D) Thune (R)

New York Gillibrand (D) Schumer (D)

Y n Y n

Tennessee Alexander (R) Corker (R)

Y Y Y Y

Y n Y n

North Carolina Burr (R) Hagan (D)

Y Y Y n

Texas Cornyn (R) Cruz (R)

n Y n Y

Mississippi Cochran (R) Wicker (R)

Y Y Y Y

North Dakota Heitkamp (D) Hoeven (R)

Y n Y Y

Utah Hatch (R) Lee (R)

n Y n Y

n Y Y n

Missouri Blunt (R) McCaskill (D)

Y Y Y n

Ohio Brown (D) Portman (R)

Y n Y Y

Vermont Leahy (D) Sanders (I)

Y n Y n

Kansas Moran (R) Roberts (R)

Y Y n Y

Montana Baucus (D) Tester (D)

n Y n n

Oklahoma Coburn (R) Inhofe (R)

Y Y n Y

Virginia Kaine (D) Warner (D)

Y n Y n

Y n Y n

Kentucky McConnell (R) Paul (R)

n Y n Y

Nebraska Fischer (R) Johanns (R)

Y Y Y Y

Oregon Merkley (D) Wyden (D)

n n n n

Washington Cantwell (D) Murray (D)

Y n Y n

Delaware Carper (D) Coons (D)

Y n Y n

Louisiana Landrieu (D) Vitter (R)

Y n n Y

Nevada Heller (R) Reid (D)

n Y Y n

Pennsylvania Casey (D) Toomey (R)

Y n n Y

West Virginia Manchin (D) Rockefeller (D)

Y Y Y n

Florida Nelson (D) Rubio (R)

Y n n Y

Maine Collins (R) King (I)

Y n Y n

New Hampshire Ayotte (R) n Y Shaheen (D) n n

Rhode Island Reed (D) Whitehouse (D)

Y n Y n

Wisconsin Baldwin (D) Johnson (R)

Y n Y Y

Georgia Chambliss (R) Isakson (R)

Y Y Y Y

Maryland Cardin (D) Mikulski (D)

Y n Y n

New Jersey Lautenberg (D) Menendez (D)

South Carolina Graham (R) Scott (R)

Y Y n Y

Wyoming Barrasso (R) Enzi (R)

n Y Y Y

? ?

Y n

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1 2 Y n Y Y

U.S. farmers, ranchers welcome Japan to TPP talks Already a major U.S. trading partner, Japan’s move to join the Trans Pacific Partnership will bolster the reach of the trade agreement for U.S. agriculture, according to American Farm Bureau Federation President Bob Stallman.

“As the fourth-largest U.S. agricultural export market, with nearly $14 billion in purchases in 2012, Japan is crucial to America’s farmers and ranchers. Both the United States and Japan will benefit from Japan being a TPP partner, and by sharing in improved sanitary and phytosanitary standards for agricultural trade and expanded

market access with TPP nations,” Stallman said in a statement.

In entering the negotiations, Japan becomes a part of ongoing talks that include the United States, Canada, Mexico, Peru, Chile, Australia, New Zealand, Malaysia, Brunei, Singapore and Vietnam.

By agreeing to join the negotiations under the same conditions as other participants, Japan has to agree that all products and sectors are on the table, explained David Salmonsen, AFBF trade specialist.

“Simply put, the Japanese must recognize and accept that the TPP

is a comprehensive agreement, that all sectors—sensitive or not— should be included in the negotiation and that the process will not start again from the beginning,” Salmonsen said.

Though significant trade barriers exist, Japan is the largest meat importer, on a value basis, in the world. Over $2 billion worth of U.S. pork and $1 billion worth of U.S. beef were exported to Japan in 2012. Beyond meats, the Japanese are significant importers of U.S. wheat and feed grains.

Japan is a growing market for U.S. fruit, despite tariffs of 10 per-

cent to 20 percent on fresh products and 12 percent on frozen products. There are considerable sanitary and phytosanitary issues related to many fruit products, making this and many other areas ripe for negotiation through the TPP. “It’s important that new entrants to the TPP recognize this is a comprehensive agreement and that individual sectors should not be excluded from the negotiation,” Stallman said. The TPP provides an opportunity to strengthen trade relationships, address remaining barriers and improve the competitiveness of the Asia/Pacific market.”

USDA planting report forecasts slightly bigger corn crop A crop report issued in late March by USDA indicates that America’s farmers are preparing to plant 97.3 million acres of corn, one of the largest crops in history, according to the American Farm Bureau Federation. The forecast is on target with what grain industry analysts had expected.

“The forecast gives us an indication of what farmers intend to plant as of early March, but between now and fall harvest the influence of still-dry soils, volatile commodity prices and weather uncertainty will play out, which may change what farmers plant,” said Todd Davis, AFBF crops economist.

According to Davis, if realized, this year’s corn planting would be the largest acreage since 1936, when 102 million acres were planted. The most recent modern era production year that comes close to this year’s corn planting outlook was 2012, when 97.1 million acres were planted. This year’s planting and a trend yield of 163.54 bushels per acre could result in a final U.S. corn yield of around 14.6 billion bushels.

The soybean planting estimate came in at 77.1 million acres, which is slightly less than the

2012 crop. However, according to USDA’s February yield projection of 44.4 bushels per acre, 77.1 million soybean acres would produce a record soybean crop of 3.38 billion bushels, Davis noted.

“If these early planting and yield projections are realized, corn and soybeans stocks will increase, which would ultimately lead to lower feed costs for livestock and poultry farmers,” Davis said.

USDA’s March 1 survey of grain stocks pegged the nation’s corn inventory at 5.4 billion bushels, down 10 percent compared to a year ago, while soybean stocks were measured at 999 million bushels, down 27 percent from a year prior.

“The drought is forecast to ease in the western Corn Belt but will persist in Nebraska and Kansas, intensifying in Texas and Oklahoma. However, just because the drought may be easing doesn’t guarantee record crop yields in those areas,” Davis cautioned.

Acreage of other feed grains is projected to be up from last year as well, with grain sorghum and oat plantings forecast to be up by 22 percent and 5 percent, respectively. Barley acreage is expected

to remain flat.

Wheat plantings are projected to be up 1 percent from last year.

Cotton plantings are projected to be 10 million acres, 19 percent lower than last year.

Taxes

Individual tax code reform a must for farmers, ranchers With more than 96 percent of farms and 75 percent of farm sales taxed under IRS provisions for individual taxpayers, as congressional lawmakers consider tax reform they must address the individual tax code and not focus exclusively on corporate tax provisions, Farm Bureau last week told Reps. Vern Buchanan (R-Fla.) and Allyson Schwartz (D-Pa.). Further, the new tax code should be simple, transparent, revenueneutral, and fair to farmers and ranchers.

Buchanan and Schwartz are leading a House Ways and Means Committee tax reform working group on small business.

There are 10 other working groups within the committee looking at the many layers of the tax system.

Although broadening the tax base and lowering the rate are important parts of tax reform, lawmakers should note that lowering rates will impact farms and ranches differently than other businesses because farmers’ and ranchers’ income can swing so wildly as a result of unpredictable weather and uncontrollable markets, American Farm Bureau Federation President Bob Stallman cautioned.

In fact, IRS data shows that in 2010 nearly three out of every four farm sole proprietors reported a farm loss, and since 1980 farm sole proprietors as a group have reported negative aggregate net farm income for tax purposes. In light of this, a lower individual

tax rate may not adequately compensate farmers for lost tax provisions and over time could result in a higher effective tax rate, which is why Farm Bureau is urging lawmakers to allow farmers and ranchers to apply the tax benefits of excess deductions and credits to previous and/or future tax years.

Among the tools farmers need to cash-flow their businesses and even out their taxable income is cash accounting—the deferral of commodity and product receipts and prepaying the cost of livestock feed, fertilizer and other farm supplies.

Farm Bureau supports the continuation of unrestricted cash accounting for farmers and ranchers who pay taxes as individuals and cautions against reducing the number of farms classified as corporate that are eligible to use it.

Another important instrument farmers and ranchers use to reduce income swings and manage tax liabilities is farm income averaging.

Growers would be even better served by this provision if the averaging period were extended from the current three-year period to a five-year period, Stallman wrote to the working group.

Allowing farmers the flexibility to determine how much eligible farm income to assign to a specific prior year would be beneficial, too.

Expensing and depreciation options are also important to capital-intensive businesses like farms and ranches. For example, the organization is calling on Congress to maintain the $500,000 Sec. 179 small business expensing

limitation and not reduce the $2 million acquisition limit. This helps with the single, large purchases farmers and ranchers make, particularly for equipment.

Like capital gains taxes, estate taxes continue to be one of the most worrisome tax issues facing farmers and ranchers. About 85 percent of farm and ranch assets are illiquid, leaving growers with few options for generating cash to pay the estate tax.

“When estate taxes exceed cash and other liquid assets, surviving family partners may be forced to sell land, buildings or equipment needed to keep their businesses running. This not only can cripple a farm or ranch operation, but also hurts the rural communities and businesses that agriculture supports,” Stallman wrote.

With agriculture cropland values increasing on average 15 percent from 2011 to 2012, more and more farms are in danger of topping the current $5 million exemption, and estate tax planning continues to be complex and expensive for those close to or over the threshold.

While Farm Bureau believes estate taxes should be eliminated, until permanent repeal is achieved, the exemption and gift tax exemption should be increased and Special Use Valuation (Sec. 2032A), a valuable estate tax planning tool for farmers and ranchers who live in high land value areas, should be expanded.

Capital gains tax hamstrings farmers, ranchers With large investments in land and buildings that are held for long periods of time, farmers and ranchers would face higher taxes on a significant portion of their farm income if Congress were to raise capital gains tax rates, the American Farm Bureau Federation recently told congressional lawmakers.

AFBF supports eliminating capital gains taxes. Until that can be accomplished, the organization is calling for a reduction in the tax’s rates for all taxpayers, along with special provisions such as one that would allow the deferment of capital gains taxes from the sale of property and machinery for those who invest the proceeds in a retirement account with taxes due at withdrawal.

AFBF President Bob Stallman in March wrote to Reps. Kenny Marchant (R-Texas) and Jim McDermott (D-Wash.), who as members of the House Ways and Means Committee are leading a tax reform working group addressing debt, equity and capital. Ten additional working groups are focusing on different facets of the tax system.

In his letter, Stallman explained how capital gains taxes can be a barrier to young farmers and ranchers who face many other challenges getting started in agriculture.

With the average age of a farmer at 58 years old, many will soon

consider retirement. When they do, they set the selling price of land or other assets high enough to recover the cost of capital gains taxes, which increases the likelihood that farmland will be developed for other uses since young farmers typically cannot afford those prices.

“For this reason, Farm Bureau supports a capital gains tax exclusion for the sale of agricultural land that remains in production or when a family business is transferred between parents and children,” Stallman wrote Regardless of how long they’ve been farming, capital gains taxes are crippling for all growers because of their capital-intensive livelihoods. In fact, farm real estate assets account for 85 percent of a farmer’s or rancher’s assets. On average, farmers own their farmland for 30 years, during which time land values can more than triple. In addition to capital gains imposed when land and buildings are sold, proceeds from the sale of cattle used for breeding, dairy, draft and some other livestock are treated as capital gains income.

Capital gains tax rates are now permanently set at 15 percent for taxpayers making less than $400,000 ($450,000 per couple).

Taxpayers over the threshold pay capital gains taxes at a 20 percent rate.

“The capital gains tax rate that farmers and ranchers will pay will almost always be at the higher levels because income will spike and can easily exceed the thresholds in a year that a farmer or rancher sells land,” Stallman wrote. “The higher rate will be imposed even though a farmer’s or rancher’s average annual income would not have exceeded the thresholds.”

The capital gains tax can also contribute to a “land lock,” which occurs when a farmer or rancher chooses to maximize assets for retirement by holding onto land and buildings rather than selling them, paying the capital gains tax and investing the balance in other retirement vehicles. Although this does keep land in agriculture, it prevents the land and other farming assets from being transferred to growers who want to start or expand their businesses.

Another concern for farmers and ranchers is that capital gains taxes amount to a “retirement tax” and is unfair to those who invest in their businesses rather than traditional retirement vehicles.

“Farmers and ranchers typically prepare for their senior years by reinvesting farm and ranch profits back into their business with the anticipation of selling assets to fund retirement,” Stallman wrote.

In light of this, Farm Bureau supports allowing a taxpayer to defer

taxes from the sale of property and machinery by investing the proceeds in a retirement account with taxes due at withdrawal.

The capital gains tax can also prevent farms and ranches from remaining efficient and profitable and from being responsive to market signals. Capital gains taxes are imposed when buildings, breeding livestock and farmland are sold, making it more difficult for producers to shed unneeded assets to generate revenue to adapt and upgrade their operations, Stallman explained. As such, farmers and ranchers support the indexing of assets for inflation.

April 8, 2013

S P E C I A L

R E P O R T

AFBF: Tax incentives needed for fledgling biofuels With fuel and energy making up more than 7 percent of a typical farmer’s or rancher’s production expenses, Farm Bureau members support policies that will create a diverse, domestic energy supply to fuel the country’s economic growth and prosperity while strengthening our energy security, American Farm Bureau Federation President Bob Stallman recently wrote to Capitol Hill lawmakers.

A significant part of our nation’s energy should come from the development and use of renewable energy sources such as ethanol, biodiesel, biomass, solar and

wind, Stallman said in a letter to Reps. Kevin Brady (R-Texas) and Mike Thompson (D-Calif.).

As members of the House Ways and Means Committee, Brady and Thompson are leading a tax reform working group addressing energy tax policy. Ten additional working groups are focusing on different facets of the tax system.

These renewable energy sources “are critical to our nation’s energy future and will help further strengthen the overall

national security of the United States,” Stallman wrote. “Renewable energy sources also contribute to the stability of the rural economy by creating another source of income to our nation’s farmers and ranchers.”

Tax incentives for biodiesel, biomass fuels and wind energy are critical to help these fledgling industries establish themselves.

Farm Bureau is also calling for tax incentives to expand the distribution of renewable fuel to

help close the gap between existing infrastructure and what is needed for renewable fuel usage to increase substantially.

Stallman cited an Air Improvement Resource Inc. study from 2011 that found less than 1.5 percent of U.S. service stations are equipped for E85. To provide reasonable access, about 33 percent of service stations should be equipped for E85. In addition, Farm Bureau said, massive capital investments are needed to install blender pumps that dispense “mid-level” ethanol blends of more than 10 percent ethanol but less than E85.

New Medicare, health insurance taxes burden farm families New Medicare taxes, the health insurance tax and penalties for failure to meet coverage requirements will harm the nation’s farm and ranch families, the American Farm Bureau Federation told Congress in early March.

The new Medicare Contribution Tax, which is a tax on unearned income such as rental income or capital gains, will burden farmers and ranchers more than many other taxpayers because farming and ranching is a capitalintensive business, AFBF noted in a statement submitted to the House Subcommittee on Oversight of the Ways and Means Committee.

Further, the imposition of the Medicare Contribution Tax when a farm or ranch is sold amounts to a “retirement tax” on agricultural producers because it will go into effect when farmers sell their businesses to fund retirement.

Beginning farmers could be affected as well, as adding this tax on top of capital gains taxes

will make it more difficult for them to acquire land needed to get established themselves in agriculture.

“When capital gains taxes are assessed on land sales, sellers are not as likely to sell or will demand a higher price to compensate for additional costs,” Farm Bureau said.

Farm Bureau supports repeal of the 3.8 percent Medicare Contribution Tax that will be applied to “unearned” income of so-called high-income taxpayers and the new 0.9 percent Medicare tax that will be imposed on wages and self-employment income above established thresholds for high-income individuals.

The definition of high income for the Medicare Contribution Tax on unearned income and the Medicare tax on wages and self-employed income is $200,000 per individual or $250,000 per couple. This is considerably lower than the levels for capital gains taxes, which

are $400,000 per individual or $450,000 per couple.

“Profitable years must make up for lean years in order for agricultural producers to remain in business,” Farm Bureau said. The Medicare Contribution Tax on unearned income and the Medicare tax on wages and self-employed income during a good year when adjusted gross income thresholds are exceeded makes it very difficult for growers to compensate for bad years.

Farm Bureau also supports legislation (H.R. 763) to repeal the Health Insurance Tax as it will raise insurance costs, making it harder for farmers and ranchers to purchase coverage for themselves, their families and their employees.

In addition, the health insurance coverage mandate accompanied by the threat of a tax penalty for noncompliance is only making the situation worse for people unable to afford health care coverage in the first place, according to AFBF.

Marketplace Fairness Act supports Main Street businesses

By Sen. Dick Durbin Main Street store owners in Illinois tell me how unfair it is to watch their online competitors offer lower prices on the exact same products because they do not have to collect sales taxes. Customers often come into their stores, try out the latest products and then return home to purchase the product online and avoid taxes.

Local businesses call it “showrooming” and it isn’t just a problem in Illinois.

It’s happening in cities, towns and farming communities all around the country. These are communities that can’t afford to lose local businesses that sponsor baseball teams and collect sales taxes that pay for services like fire and police and provide good-paying local jobs. Those of us from downstate Illinois know what happens to our towns when these Main Street businesses close.

I commend Farm Bureau for supporting the bipartisan Mar-

ketplace Fairness Act that I introduced with Sens. Enzi, Alexander and Heitkamp.

There are some critics who will say our bill is a tax increase. Not true. Our bill does not create one new penny in taxes, it simply allows states to require merchants who sell products online to collect taxes on sales to consumers in that state—just as Main Street businesses do every day.

Some will say that online retailers don’t use the local services that a tax would pay for so they should not be required to collect the sales taxes.

How is the gift I ordered online last year supposed to be delivered to my home in Springfield, Ill., without using local roads or bridges paid for by local taxes?

The truth is that brick-andmortar and online retailers sell similar products and use the same roads and bridges to deliver their products that every other business—including farmers— uses to move their products.

Twenty-two governors—15 Republicans and seven Democrats— support leveling the playing field for businesses by addressing sales tax fairness. Collecting the taxes that are owed on a purchase at the point of sale rather than relying on consumers to pay that tax voluntarily as much as a year later would mean $23 billion for states.

With that funding, many states and localities have said they would avoid increasing other types of taxes like property taxes or they would invest in vital programs for residents and critical infrastructure: the very same infrastructure that farmers, brickand-mortar retailers and online retailers all use to deliver products and services to their customers.

Recently, the Senate showed overwhelming bipartisan support for our effort to level the playing field for small businesses. Seventyfive senators voted in favor of an amendment I introduced with Sens. Enzi, Alexander and Heitkamp to the Senate budget resolu-

tion. While this was an important show of support, it was symbolic.

In order for this bill to become law, we need another vote.

We need your help. Contact your representatives in Washington, D.C., and let them know why the Marketplace Fairness Act is important to Main Street businesses and your community.

Small business men and women who keep our towns alive are counting on you.

U.S. Sen. Dick Durbin (D-Ill.) is the Senate’s assistant majority leader.

Capitol View

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Sen. Johanns awarded Farm Bureau ‘Golden Plow’ American Farm Bureau Federation President Bob Stallman presented Sen. Mike Johanns (R-Neb.) with AFBF’s “Golden Plow” award during an event last month at the AFBF office. The Golden Plow is the highest recognition the organization grants members of Congress.

The Nebraska Farm Bureau nominated Johanns for the award because of his dedicated work as a member of Congress on issues important to Farm Bureau members. Soon after being elected to the Senate in 2008, Sen. Johanns immediately began working to seek collaborative solutions to the challenges facing farmers and ranchers, such as tax reform, trade expansion and regulatory oversight, Stallman said. Johanns also serves as a member of the Senate Agriculture Committee.

While the award is based on Johanns’ congressional achievements, Stallman said his commitment to agriculture can be traced throughout a career of political service— first as governor of Nebraska and then as secretary of agriculture under President George W. Bush.

“Regardless of whether he has served as governor, secretary or senator, one thing that is never in doubt is Mike Johanns’ commitment to agriculture,” Stallman said. “Sen. Johanns is a very deserving leader with a long and distinguished career of serving farmers and ranchers and I am pleased to say he was approved unanimously to receive this award by the AFBF board of directors.”

AFBF’s Golden Plow award recognizes members of Congress for distinguished agricultural leadership and support of Farm Bureau policies. Recipients are chosen based on having a philosophy or record that demonstrates a commitment to: the private enterprise system; sound agricultural policies supported by Farm Bureau; fiscal conservatism; and reduced federal regulations on businesses and individuals.  American Farm Bureau Federation President Bob Stallman presented the organization’s “Golden Plow” award to Sen. Mike Johanns (R-Neb.) for his work in Congress to support farmers and ranchers on issues such as tax reform, trade expansion and regulatory oversight.

Waterways bill ready for Senate floor action Continued from page 1 We need to do the same thing with our waterways.”

Beyond keeping agriculture competitive with countries like Argentina and Brazil, which are aggressively modernizing their own transportation infrastructure, updating vital shipping waterways is key to efficiently and cost-effectively transporting hundreds of other commodities and products.

“With one 15-barge tow replacing more than 1,000 trucks, there

also are environmental advantages, along with questions about the ability of our highways to handle the increase in road traffic,” Walmsley pointed out.

Earlier this year, two other Farm Bureau-supported waterways bills were introduced. The Reinvesting in Vital Economic Rivers and Waterways (RIVER) Act of 2013 (S. 407) addresses two of the biggest obstacles to waterway improvement efforts—not having enough money to start a project and going way over budget and over

time when a project does get under way.

Original co-sponsors of the RIVER Act are Sens. Bob Casey (D-Pa.), Mary Landrieu (D-La.) and Amy Klobuchar (D-Minn.).

The similar Waterways are Vital for the Economy, Energy, Efficiency and Environment (WAVE 4) Act of 2013 (H.R. 1149) prioritizes construction and major rehabilitation projects, reforms the Corps of Engineers’ project delivery process and proposes a revenue enhancement.

Both bills would increase the current user fee paid by barge operators to fund essential infrastructure investments.

“Construction, dredging and repairs to our locks and dams will help ensure the reliability of the most affordable, energy-efficient and environmentally sustainable mode of transporting agricultural products,” AFBF President Bob Stallman wrote in a letter to WAVE 4’s sponsors, Reps. Ed Whitfield (R-Ky.) and Daniel Lipinski (D-Ill.).

State FB Links

Thornton to lead AFBF’s Communications The American Farm Bureau Federation announced that Mace Thornton will lead the organization’s Communications Department.

As executive director of communications, Thornton, an agricultural public relations veteran, will manage the organization’s communications staff, according to AFBF Executive Vice President and Treasurer Julie Anna Potts.

“Mace brings nearly three decades of diverse communications

experience to this position,” Potts said. “AFBF will greatly benefit from Mace’s experience and insights gained from working with the media as well as other organizations both inside and outside of agriculture.”

Thornton will implement AFBF’s communications strategies, manage the Communications Department and staff, and help lead AFBF as a member of its management team.

Thornton has more than 28 years of communications experience, with most of this time spent working in agriculture.

He joined AFBF in 1990 and has been serving as acting director, communications, since Oct. 1.

He has been a senior member of

the staff and has contributed to AFBF’s strategic communications, public relations, media relations, issues management and social media efforts. Prior to joining the AFBF staff, Thornton worked as a member of the Kansas Farm Bureau communications department and as a reporter for The McPherson (Kan.) Sentinel.

Thornton earned his bachelor’s degree in journalism from Benedictine College in Kansas. He grew up on a farm in the Sunflower State, where his family, members of the Doniphan County Farm Bureau, owned and operated a small farrow-to-finish hog operation. He recently completed a two-year term as president of the Agricultural Relations Coun-

cil, the only association dedicated to serving the unique needs of public relations professionals working in agriculture, food, fiber and other related industries.

“AFBF is pleased that Mace will be leading our communications efforts,” said AFBF President Bob Stallman. “As the American Farm Bureau reorganizes, integrates and realigns its organizational resources behind implementing our grassroots policies, we know that the strategic communications and analytical skills that Mace offers will take us down the road to success. Our mission to strategically communicate the grassroots policies that benefit America’s farm and ranch families is in good hands.”

Montana, Pennsylvania FBs reach quota

Montana Farm Bureau Federation President Bob Hanson (right) accepts a “quota jacket” from American Farm Bureau Federation President Bob Stallman. MFBF on March 1 became the first state Farm Bureau to achieve AFBF membership quota for 2013, reporting membership of 17,086 member families. This is the sixth consecutive year in which MFBF has been the first quota state. On April 1, Pennsylvania Farm Bureau became the second state to reach quota, reporting membership of 55,399 member families.

April 8, 2013

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State FB Links

By Chris Fennewald You are not the only one who wants to know how your pork is produced, so do members of the Missouri Grocers Association.

“The worst thing that can happen to us is when a consumer comes into our store and we don’t have the ability to answer their question,” said Dan Shaul, director of MGA, during a mini-workshop and tour of a hog farm near Washington, Mo. He said grocers are asked more often if the pork on their shelves comes from gestation-free hog farms. “That is the question we get and this is a great opportunity to learn,” said Shaul.

A handful of independent grocers learned about the use of gestation crates from hog farmers Chris Chinn and Richard Deppe.

They heard from veterinarian Steve Patterson about the pros and cons of gestation crates. Finally, they toured the hog buildings on the Deppe farm to see firsthand how the animals are treated.

The tour idea came from the Madison County Farm Bureau on the Illinois side of St. Louis. They wanted St. Louis area grocers to meet and visit pork producers.

Shaul worked with Farm Bureau to invite grocers to the tour.

The Deppe family began raising hogs in the 1950s and in the early 1970s began housing the hogs indoors. Today they have 1,200 sows and new buildings with automatically controlled heating, cooling and feeding systems.

And they continue to use gesta-

tion stalls. Richard Deppe’s children, led by son, Nathan, took grocers through the hog houses.

Daughter, Nicole Reed, is among the fourth-generation working on the farm. She said the stalls improve sow health and provide safety for newborn pigs.

During the workshop, Patterson said whether you use stalls or pens both work with proper care, but moving sows inside and into stalls allows stockers to care for larger groups of animals.

None of the grocers had set foot in a large-scale hog house and were impressed with the efficiency and care for the animals. Grocer Joyce Shaul was amazed at the amount of records kept for each sow and litter. They all noted the passion for care the Deppes have for the animals.

Richard Deppe’s sister, Trisha, explained her role caring for sows in the farrowing house. The new building includes rescue decks in each section to help save pigs in trouble. “I love what I do. These are my babies. I love to watch them grow,” she said.

Now the grocers must relate that passion to their customers, yet help them understand the science behind the farmer. Grocer Joe O’Neill said that on the store shelf there is no real differentiation between the gestation-free and gestation product. Customers may think they want more expensive gestation-free pork, yet they still shop by price. “There is a balance we have to find,” he said.

“Right now it is all emotion.”

Kelly Smith, director of Missouri

photo courtesy of Missouri Farm Bureau

Grocers go to the source to learn how pork is raised

To better prepare grocers in Missouri to answer what’s become a steady stream of questions from customers about the use of gestation stalls, the Deppe family welcomed grocers to their farm to see firsthand how their 1,200 sows are cared for and how gestations stalls are used and why.

Farm Bureau Marketing and Commodities, told the grocers much of that consumer emotion is driven by animal activists. “Family hog farmers may not be able to afford to go from one method of production to another without severely impacting their business financially,” he said.

The intent of activists is to stop livestock production, but they are actually hurting family operations and helping large vertically integrated companies that own the animals from birth to store shelf. “The hog industry is in a dilemma in planning for the future,” Smith said.

Armed with a better understanding of pork production, the grocers hope to continue their

State Focus

connection with farmers.

“The best relationship is when all sides have understood each other,” said Shaul. “People come to our stores because they enjoy the experience, the knowledge we can provide and everything associated with that. We need to solidify our relationship with the producer so we can continue to provide that knowledge.”

Grocers and farmers will plan for more events to share different businesses that have a common goal to provide the best product to consumers.

Chris Fennewald is editor of the Missouri Farm Bureau publications.

Newsmakers

Iowa FBF contributes money to children’s museum

Bill would give Md. farmers more certainty with bay regs

New York Farm Bureau applauds legislative boost for farming

Iowa Farm Bureau Federation and Woodbury County Farm Bureau each contributed $25,000 to the Children’s Museum of Siouxland, set to open in summer 2014. “We are excited by the potential this project has for children and families in the entire tri-state region,” said Doug Gronau, district Farm Bureau director. The Children’s Museum of Siouxland will feature an interactive agriculture exhibit that shows visitors of all ages about the food production cycle. There will be a replica farm, grocery store and café that will allow visitors to track the movement of food from the farm to their dinner table. “Many children in the area are unfamiliar with life on the farm and do not know any farmers. This new children’s museum will bring the farm to them so they can see how farmers grow the crops, how animals eat the crops and how it all contributes to the food choices they make at the grocery store,” said Woodbury County Farm Bureau President Greg Jochum.

A new bill would give Maryland farmers more certainty about how Chesapeake Bay restoration regulations will affect them. Under the legislation, farmers would be exempt from new regulations for 10 years if they agree to meet bay restoration goals and submit to inspections of their farms. Maryland Agriculture Secretary Buddy Hance said that farmers would have to agree to meet pollution reduction goals under a bay restoration effort being led by the U.S. Environmental Protection Agency and agree to inspections every three years. They’d also be required to submit annual reports, including soil test results on fertilized land. At the end of the 10 years, farmers would be required to meet any new requirements, but the program would give them time to prepare. Maryland Farm Bureau views the program as a “win-win” because farmers will be able to concentrate on farming while bay restoration efforts will get accomplished faster.

Dean Norton, president of New York Farm Bureau, recently praised the state Senate for passing a number of provisions to improve farming conditions, including a 2 percent cap on agriculture land assessments and funding to market apples, wine, maple products and Christmas trees. In addition, the state Senate and the Assembly provided additional dollars for programs that provide services for farmers looking to grow their farms. Norton also said that NYFB is looking forward to continuing to work on its priority issues with the state Senate and Assembly Agriculture committees this legislative session. “The legislative actions are in conjunction with Gov. Cuomo’s budget proposal that took many positive steps to recognize the importance of agriculture in this state, including his innovative Taste of NY plan and increased funding for environmental programs that will assist farmers in continuing their long legacy of caring for the land and water,” Norton said.

Dan Yunk, Kansas Farm Bureau’s executive director and CEO, will retire at the end of 2013. Yunk has served KFB for 13 years—first as vice president of human resources, then as CEO. Jeff Sutton has been named director of marketing, business partnerships and leadership development. He previously served as assistant director of marketing and assistant director of the KFB Foundation for Agriculture. Sutton has also worked as reporter/field producer for Georgia Farm Bureau’s “Georgia Farm Monitor” television program and the Georgia Farm Radio Network.

Dan Strasser joined the staff of the Tennessee Farm Bureau Federation as associate director of special programs. Strasser worked for the Tennessee Department of Agriculture since 2004, most recently serving as the director of market development.

Kent Bloodworth has joined the Mississippi Farm Bureau Federation as assistant general counsel.

Bloodworth grew up in his family’s agricultural retail business.

For the past six years, Bloodworth has worked as an associate attorney at a firm in Missouri.

Grassroots

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Adequate land ranks as top concern of young farmers Securing adequate land to grow crops and raise livestock was the top challenge identified in the latest survey of participants in the American Farm Bureau Federation’s Young Farmers & Ranchers program. That challenge was identified by 20 percent of respondents, followed by burdensome government regulations and “red tape,” which was identified by 5 percent of the young farmers and ranchers responding.

“Access to adequate land to begin farming or expand an established operation is a major concern for today’s young farmers,” said Zach Hunnicutt, AFBF’s national YF&R Committee chair and a crop farmer from Nebraska. “Another major challenge we all face in one form or another is the cost of complying with a maze of government regulations.”

Other issues ranked as top concerns included economic challenges, particularly profitability, 12 percent; water availability, 10 percent; taxes, 9 percent; health care availability and cost, 9 percent; availability of farm labor and related regulations, 8 percent; and willingness of parents to turn over the reins of the farm or ranch, 7 percent.

When asked to name the top three steps the federal government should take to help young farmers and ranchers, cutting government spending was the top response, with 24 percent listing this as most important.

Twelve percent of those surveyed said maintaining the farm safety net was most important, while financial assis-

tance for beginning farmers and tax reform were each cited by 11 percent as the priority that should be first on the list.

The 21st annual YF&R survey revealed that 90 percent of those surveyed are more optimistic about farming and ranching than they were five years ago. Last year, 94 percent of those surveyed said they were more optimistic about farming than they were five years ago.

The 2013 survey also shows 83 percent of the nation’s young farmers and ranchers say they are better off than they were five years ago. Last year, 94 percent reported being better off.

More than 94 percent considered themselves lifetime farmers, while 90 percent would like to see their children follow in their footsteps. The informal survey reveals that 84 percent believe their children will be able to follow in their footsteps.

The survey points out that 64 percent of YF&R members consider communicating with consumers a formal part of their jobs.

Many use social media platforms as a tool to accomplish this. The popular social media site Facebook is used by 82 percent of those surveyed who use the Internet. Thirty percent of respondents said they use the social networking site Twitter, and 18 percent use YouTube to post videos of their farms and ranches.

“Use of technology to improve production practices on the farm and to interact with consumers— our customers—continues to grow,” Hunnicutt said. “Having instant access to information and communication tools is the ‘new normal’ and that’s not going to change,” he said.

FB supports repeal of employer health insurance mandate Continued from page 1 ing that individuals have health insurance coverage and whether the penalties for not complying with the mandate qualified as a tax. Further, if the individual mandate and related penalties did qualify as a tax, did Congress have the constitutional authority to levy such a tax? In June 2012, the court ruled 5-4 that the law, including the individual mandate, is constitutional under the federal government’s taxing authority.

While health insurance exchanges may help address costs, Stallman wrote, ACA tax incentives designed to help small employers afford health insurance costs are inadequate and temporary.

“The health insurance coverage mandate accompanied by the threat of a tax penalty for non-

compliance is only making the situation worse for people unable to afford health care coverage in the first place,” he said.

Since the Supreme Court ruling, the IRS has issued numerous proposals to fill in the details about how the law will be implemented. One of the biggest concerns for agricultural employers is how the law will impact mandated coverage for seasonal farm workers or for farms and ranches that do exceed the 50 full-time employee threshold for providing coverage.

In comments recently submitted to the IRS, Farm Bureau continues to argue that farm workers are by the nature of their work “seasonal” and therefore should not be subject to ACA insurance coverage mandates.

The employer mandate becomes effective in 2014.

Nearly 80 percent of young farmers and ranchers surveyed said they regularly use mobile devices such as smart phones and tablets to communicate. That’s up from 66 percent last year.

Computers and the Internet remain vital tools for the nation’s young farmers and ranchers, with 92 percent surveyed reporting using a computer in their farming operation. Nearly all of those surveyed, 94 percent, have access to the Internet. High-speed Internet is used by 65 percent of those surveyed, with 22 percent relying on a satellite connection and just over 2 percent turning to dialup.

The survey also shows that America’s young farmers and ranchers are committed environmental caretakers, with 64 percent using conservation tillage to protect soil and reduce erosion on their farms.

AFBF President Bob Stallman said the annual YF&R survey underscores his belief that the future of U.S. agriculture is in good hands.

“The future looks bright for American agriculture and our nation as a whole, thanks to the commitment and solid knowledge base held by today’s young farmers and ranchers,” said Stallman.

The informal survey of young farmers and ranchers, ages 1835, was conducted at AFBF’s 2013 YF&R Leadership Conference in Phoenix, Ariz., in February. The purpose of the YF&R program is to help younger Farm Bureau members learn more about farming and ranching, network with other farmers and strengthen their leadership skills to assist in the growth of agriculture and Farm Bureau.

Corner Post Hired Labor Accounts for a Large Share of Production Costs for Some Crops

Source: USDA, ERS, using data from USDA’s 2006-2010 Agricultural Resource Management Survey