News & Information
Fran Podvin of Ocean Spray Honored as NCFC Director of the Year (February 13, 2012)
Year of the Farmer Co-op Celebration Launched at NCFC’s 83rd Annual Meeting (February 9, 2012)
NCFC Update-Volume 9, Number 281
February 16, 2012
President Obama Releases Budget, Proposes $32 Billion in Deficit Reduction From Ag Spending
Earlier this week, the Obama Administration released its proposed budget for fiscal year 2013. Most notably for agriculture, it reduces USDA spending by $32 billion over the next decade and redirects that money to reducing the budget deficit.
The proposed budget would achieve these savings by eliminating direct payments, decreasing subsidies to crop insurance companies and producers, capping the Conservation Reserve Program (CRP) at 20 million acres (down from 32 million acres), and better targeting conservation funding to high priority areas. In addition, the budget would extend the disaster assistance programs through 2017.
Outside of the deficit reduction recommendations, the budget would set USDA’s spending authority at $155 billion for the next fiscal year. Discretionary spending would stay about the same as 2012 at $24 billion; mandatory spending (i.e., farm bill spending) would increase by $8 billion or so due to a one-time shift in the timing of some crop insurance costs as prescribed by the 2008 farm bill.
The budget also reflects the fact that 37 programs from the current farm bill—including the Supplemental Revenue Assistance Payments Program (SURE), the Specialty Crop Research Initiative, and the Biomass Crop Assistance Program (BCAP)—expire on September 30, 2012, and have no funding past this current fiscal year.
While a president’s budget is often considered “dead on arrival” in Congress, it frequently serves as a guidepost for members of the House and Senate Budget Committees as they develop their own budget resolution. It should be noted, however, that only the House of Representatives has adopted a budget recently; the Senate has not adopted a budget resolution in almost three years.
Budget Tax Proposals a Mixed Bag for Farmer Co-ops
The president’s budget proposal released this week also contained a number of tax provisions which could impact farmer co-ops. The suggested changes present a mixed bag for farmer co-ops, with several that would provide additional benefits and others that are causes for concern.
In fact, individual proposals themselves contain both negatives and positives with the prime example being the proposal to exclude oil and gas production from the Section 199 tax credit while expanding the credit for other qualified activities.
Another item squarely on the negative side of the ledger for many farmer co-ops is the repeal of the last-in, first-out (LIFO) inventory accounting method and of lower-of-cost-or-market accounting. Both these changes would be detrimental to cooperatives, and NCFC strongly opposes them.
On a more positive note, the proposal recommends an extension of biodiesel and renewable diesel tax credits through 2013. It would also extend for one year the 100 percent first-year depreciation deduction and would permanently extend the estate tax at 2009 levels—a top rate of 45% and exemption amounts of $7 million for couples and $3.5 million for individuals.
As with the suggested spending cuts in the president’s budget, the tax changes are unlikely to be enacted in the near term; they could, however, influence the Treasury Department as it prepares its proposed roadmap for corporate tax reform, slated to be released later this month.
Tax Leaders Agree on Payroll Tax Cut Extension
House Ways and Means and Senate Finance Committee leaders announced February 15 an agreement to extend the payroll tax cut through the end of 2012. The plan would not provide an offset for the $100 billion extension. The agreement also includes an extension of unemployment insurance and would prevent the cut in doctors’ Medicare reimbursement rate, but does not include any tax credit extenders or an extension of 100 percent bonus depreciation. Because the agreement is in the form of a conference report signed by a majority of the conferees from both houses, it is not amendable in either the House or the Senate. A vote is expected before the President’s Day recess.
Washington Roundup: Senate Agriculture Committee Holds Farm Bill Hearing Focused on Energy; FCC Blocks Lightsquared Proposal; House Delays Vote on Transportation Bill
- Senate Ag Committee Holds Farm Bill Hearing Focused on Energy: The Senate Agriculture Committee on Wednesday held the first in its announced series of farm bill hearings with a session focused on farm bill energy, rural development, and biobased product programs. Testifying were USDA Secretary Tom Vilsack, a panel of local and regional government officials, and a panel of producers and agribusiness leaders. The next hearing will be on February 28 and will focus on conservation programs.
- FCC Blocks Lightsquared Proposal: The Federal Communications Commission this week announced that it was moving to block the proposal from Lightsquared to build a mobile broadband network on spectrum adjacent to that used by GPS devices. Extensive testing by the National Telecommunications & Information Administration found that Lightsquared’s system would interfere with many GPS signals. NCFC and others in agriculture have been strongly opposed to any action that would interfere with GPS devices used by farmers and others to increase agricultural productivity.
- House Vote on Transportation Bill Delayed: The planned vote in the House of Representatives on the transportation bill (H.R. 7), originally scheduled for this week, has been pushed back until after the President’s Day recess. There continue to be disagreements within the Republican caucus over provisions in the bill to pay for new highway spending. The bill also contains an agricultural hours of service (HOS) exemption, as advocated for by NCFC and other farm groups, as well as provisions to encourage oil and gas production and authorize construction of the Keystone XL pipeline from the Alberta tar sands in Canada to Cushing, Okla.
Upcoming Events:
NCFC Meetings
- April 25-26, 2012—NCFC Cotton Committee Meeting—Phoenix Park Hotel, Washington, D.C.
- April 26-27, 2012—NCFC Executive Council Meeting—Phoenix Park Hotel, Washington, D.C.
- June 20-22, 2012—NCFC Washington Conference—Hyatt Regency Capitol Hill, Washington, D.C.
- September 25-26, 2012—NCFC Executive Council Meeting—Liaison Hotel, Washington, D.C.
- October 4-5, 2012—NCFC LTA Subcommittee Chair & Vice Chair Meeting—Hyatt Regency Mission Bay, San Diego, Calif.
- November 14-16, 2012—NCFC Government Affairs Committee Meeting—Vintner’s Inn, Santa Rosa, Calif.
- February 6-8, 2013—NCFC 84th Annual Meeting—Westin Kierland, Scottsdale, Ariz.
