The Star Beacon; Ashtabula, Ohio

January 6, 2013

Farm bill extension averts milk price hikes

By WARREN DILLAWAY - warren@starbeacon.com
Star Beacon

JEFFERSON — As Congress argued over the infamous “fiscal cliff” legislation, dairy customers were wondering if they would be paying $7 to $8 for a a gallon of milk.

An extension of the present farm bill became a part of the “fiscal cliff” legislation that kept the milk pricing structure from reverting to a system created in the late 1940s by agreeing to the present structure until September, said Ashtabula County Extension Agent David Marrison.

“All they did was kick this down the road,” Marrison said.

Negotiations will continue throughout the year as a new system for dealing with the milk price structure sits in the balance.

“Congress has not agreed on a farm bill. We have been working on one (for several years),” he said.

One of the key components is the potential elimination of direct price supports paid to farmers. “Direct payments will probably be gone,” Marrison said.

A side benefit to the “fiscal cliff” negotiations was a change in the application of the estate tax.

Owners of large farms will benefit from the  $5 million estate tax exemption making it easier for them to pass on the business to their children, Marrison said. “That’s a win,” he said.

“It helps farmers because of the amount of money we have tied up in equipment and livestock,” he said. He said it will make it easier for estate planners.

Marrison said farmers also will be able to immediately deduct $500,000 right off the top of major equipment purchases instead of a seven-year depreciation schedule.

Dorset Township dairy farmer Jim Comp said a proposed farm bill included a voluntary price-support program that would have gotten away from the more direct payments presently used.

“It was kind of an insurance package,” he said.

Comp said he believes it is time to try something different in agriculture. He said the proposed legislation, originally discussed in 2005, would have included different levels of “insurance” you could pay for from the government.

“Milk marketing is a complex process,” Comp said.

He said the bottom line is that an ample food supply is an important part of American history and it will be essential to find ways to continue that reality in changing times.

He said it is important to find a way to help the farmer through bad weather or other cyclical issues that effect farming.

“I guess I would want a safety net to get through the bad times,” Comp said of his vision for a farm bill.

Marrison said the Taxpayer Relief Act, the “fiscal cliff” legislation, will extend the present subsidy program through Dec. 31.

“This extension also extends $5 billion worth of government subsidies for commodities such as corn and soybeans,” Marrison said. He said conservation, organic growing, beginning farmer and rancher programs were funded in the bill, but at lower rates.

Marrison said the same arguments involving the potential elimination of direct payments and the creation of an “insurance” system will likely be alive and well during the negotiations regarding a full farm bill that will be debated this year.