Tag: Ag Policy

Lawmakers on both sides of the aisle have been concerned about the implications of stepped-up basis on U.S. farms proposed in President Biden’s America’s Family Plan. But now it seems everyone can take a breather.

This week, the House Ways and Means Committee unveiled a new plan that excluded the transfer tax and left intact the “step-up in basis” (a rule allowing an appreciated asset’s value to be reset to the fair market value at the owner’s death).

That’s after the National Farmers Union (NFU) released a letter late last week urging Congress to preserve the rule, with other farm groups agreeing.

Tax translation: Family farmers and ranchers can rest easier if this plan moves forward as it’s more favorable to their interests. Essentially, if there’s a death, the family won’t have to $hell out a mint in transfer taxes to continue the farming operation. But dairy farmers and larger farms may have to pay more, and the Senate verdict is still outstanding.

Break it down: Positive changes to the House plan include the tax rate dropping for “C Corporation” farms, an increase in estate tax exclusions, and replacing an extra 12.4% self-employment tax with a 3.8% net investment income tax.

The Senate is still working on its tax proposal, so this House plan is only the first step. Because the only certainties in life? Death, taxes, and political back-and-forth about taxes.

The Mandatory Country of Origin Labeling (M-COOL) boomerang is baaaaaack.

The American Beef Labeling Act, championed by Senators John Thune (South Dakota) and Jon Tester (Montana), will be formally introduced next week.

Enter: the words “beef” and “ground beef” in current M-COOL laws. After a nice 12-month delay, of course, which would allow the U.S. Trade Representative and Ag Secretary time to pencil out implementation within the World Trade Organization rules.

Flashback: Beef COOL has been on the menu for quite some time; it was included in the 2002 and 2008 farm bills and became law in 2009. Canada and Mexico then took their unfair trade advantage complaint to the WTO, who authorized retaliatory tariffs on American goods. In 2015, Congress repealed M-COOL to avoid those pesky tariffs.

Soundbite: “Transparency in labeling benefits both producers and consumers,” Thune said. “Unfortunately, the current beef labeling system in this country allows imported beef that is neither born nor raised in the United States, but simply finished here, to be labeled as a product of the USA.”

Win-win: Producer groups like the South Dakota Stockgrowers, R-CALF, and the U.S. Cattlemen’s Association have noted support for defining what “U.S. beef” really means. COVID disruptions have led some producers to double down on the belief that COOL could provide a path to demand for U.S.-produced cattle.

One trillion dollars has twelve zeros and four commas, and we can’t really wrap our heads around that much money. But it’s how much the Senate advanced on Tuesday in the Infrastructure Investment and Jobs Act, a bill that’s gotten praise from ag groups.

What’s in it for ag: Groups like the National Corn Growers Association (NCGA), American Farm Bureau Federation (AFBF), the National Cattlemen’s Beef Association, and the Agricultural Retailers Association are here for the bill, saying it’s a step in the right direction for rural America.

The bill includes $17.3B for the nation’s ports and inland waterways. Since 60% of corn exports use those waterways, NCGA is particularly happy with those funds.

And there’s $65B in the bill for broadband internet access – $2B specifically for rural broadband. Internet access for farmers is a key action step for rural America and agriculture groups across the country since 29% of farmers don’t have access to internet service.

“Extending digital access to rural America is just as important as paved roads and solid bridges,” Zippy Duvall, president of AFBF, said.

Bipartisan bill: U.S. Secretary of Agriculture Tom Vilsack is pleased with the bipartisan support the bill has received so far, pointing out there were 19 Republicans and 50 Democrats in the Senate who supported it.

Vilsack says it’s “pretty hard to say no to a bill like this” that includes jobs, an impact on education, improved access to rural healthcare, maintained competitiveness in agriculture, and clean drinking water.

What’s next: Next to vote is the House of Representatives, where sources say the bill’s fate isn’t as certain. Ag groups like AFBF hope House leaders leave tax rates and stepped-up basis alone. If the House makes tweaks, it’ll go back to the Senate.

Iowa senators are out to save producers’ bacon… literally.

Republicans Joni Ernst and Chuck Grassley are co-sponsoring the Exposing Agricultural Trade Suppression (EATS) Act to oppose Prop 12, the California Farm Animal Confinement Proposition.

Refresher: Prop 12 mandates pork sourced from breeding pigs or immediate offspring of breeding pigs “confined in a cruel manner” can’t be sold in California. The proposition defines “cruel manner” as having “less than 24 square feet of usable floor space per pig,” and is set to go into effect Jan. 1, 2022.

The EATS Act comes after the North American Meat Institute filed a petition with the U.S. Supreme Court that challenged the constitutionality of Prop 12, and 20 states filed an amicus curiae brief supporting that petition.

The deets of the EATS: The act would keep each state from impeding the agricultural production and manufacturing of other states. In other words? Each state has to mind its own business.

It’s consistent with the Commerce Clause of the Constitution, which says the federal government (not other states) regulates interstate commerce.

According to the Associated Press, only 4% of hog operations currently comply with the new rule, and California currently consumes 15% of supply. Something doesn’t quite add up, which means Californians might not be bringing home the bacon for much longer if Prop 12 stands.

Promoting competition is the name of the game for President Biden’s latest executive order signed last Friday. The order tackles competitive issues across 12 agencies with 72 initiatives.

Let’s just say there’s a lot to unpack here.

So what does this mean for agriculture?

One big change will be potential new rules under the Packers and Stockyards Act, which could help farmers bring and win claims, stop chicken processors from underpaying producers, and adopt anti-retaliation protections for farmers who speak out against bad practices.

Other hopeful outcomes include:

• More accurate food labels that enable consumers to choose products made in the U.S. versus internationally.
• Increased opportunities for farmers to access markets and receive a fair return.
• Unraveling equipment-related restrictions on customers’ ability to use independent repair shops or DIY repairs.

And while we’re here… Ag Secretary Tom Vilsack also announced on Friday the USDA will invest $500M into new, small to medium-sized meat and poultry plants.

In other words, meat processor capacity is expanding, and so is the competition.

Soundbite: “It seems to me, in fairness, profit ought to go both ways,” Vilsack said about meatpackers making profits while cattle producers sell at a loss.