USDA OFFICIALS DEFEND FARM BILL IMPLEMENTATION

        Agriculture Secretary Ann M. Venemen and top department officials testified before the Senate Agriculture Committee on September 17 and said progress is being made to implement the 2002 farm bill. Several senators expressed their dissatisfaction and frustration about how some of the new rules are being developed, including loan rates for certain crops, the national dairy program, and conservation funding.

        In her opening statement, Veneman told the committee that implementing the farm bill was a "massive undertaking" that included the challenge of reviewing, clearing, and publishing a very large number of regulatory rules, notices, guidance, reports, and studies.

        Veneman said the work was on track and emphasized that "farmers will get their checks on time." She also told the committee that USDA needs more funding to continue the implementation because the $55 million provided in the bill is inadequate. Veneman said President Bush requested an additional $60 million from the House and Senate Appropriations committees to cover the farm bill workload.

        Other USDA officials who accompanied Veneman in testifying were Under Secretary for Farm and Foreign Agricultural Services, Chief Economist Keith Collins, and Natural Resources Conservation Service (NRCS) Chief Bruce Knight.

        Chairman Tom Harkin (D-Iowa) and most committee members said they were satisfied with the progress and timetable for implementation, but they pointedly and strongly disagreed with several USDA actions. Sen. Patrick Leahy (I-Vt.) said USDA was making the national dairy program "overly burdensome, overly complicated, and overly restrictive."

        Leahy was especially displeased about rules related to "transition" payments which he said would address the unfairness that results in medium-sized dairy operations receiving smaller payments than both larger operations and smaller operations. Leahy pointedly asked if the Office of Management and Budget (OMB) had directed USDA to limit payments to dairy farmers.

        Sen. Kent Conrad (D-N.D.) took USDA to task over loan rates for oilseeds, which he said was "reeking havoc" on the industry. Conrad said he was disturbed that USDA was not following the statutory intent of Congress on setting loan rates. Sen. Mike Crapo (R-Idaho) expressed concern about loan rates for pulse crops, lentils, and chickpeas.

        Sen. Paul Wellstone (D-Minn.) echoed Leahy's concerns about implementation of the dairy program and pressed Veneman for her opinion on the drought assistance amendment approved by the Senate. Veneman outlined a number of actions USDA is taking to help producers and said she would continue to work with Congress on the issue.

        Chairman Harkin (D-IA) expressed concern about technical assistance funds for the Conservation Reserve Program (CRP) and other conservation programs. Harkin said the law clearly states that the funds should be released from the Commodity Credit Corporation (CCC). Veneman said that USDA lawyers and counsel for the Office of Budget and Management (OMB) are in disagreement over the spending. Sen. Debbie Stabenow (D-Mich.) urged USDA to release the full $200 million for purchases of specialty crops, as required by the farm bill.

 

SENATORS OFFER TAX AND FARM ECONOMIC BILL

       Senate Finance Committee Chairman Max Baucus (D-Mont.) and ranking member Chuck Grassley (R-Iowa) this week unveiled a package of about $14 billion in small business and agriculture tax breaks. The legislation provides a number of tax incentives for farmers, ranchers, and fishermen that were included in a bill (S. 312) introduced by the senators last year. T

        The Small Business and Farm Economic Recovery Act would establish tax deductible savings accounts, FFARRM Accounts, for farmers, ranchers and fishermen. It includes a provision to allow farm rental income and Conservation Reserve Program (CRP) payments to be excluded from self-employment income. It also extends income averaging to fishermen, as well as farmers, and makes it available under the Alternative Minimum Tax (AMT).

        To promote economic and rural development, the proposal allows for accelerated depreciation for businesses and farms in counties that have experienced rural out-migration. Investments made in these counties would be eligible for a shorter recovery period than provided in current law.

        The measure also establishes a tax credit to encourage the use of broadband technology. It provides ten percent investment tax credit for current generation broadband services to subscribers in rural and underserved areas. It further provides a 20 percent tax credit for next generation broadband services.

        Finally, the bill would simplify small business taxation including section 179 expensing and leasehold improvements. The Senate Finance Committee is scheduled to begin marking-up the legislation late this week.