Farm Bill Passes; Retailers Benefit

The Food, Conservation & Energy Act of 2008 Conference Report (H.R. 2419) — also known as the 2008 farm bill — has passed in both the U.S. House of Representatives and the Senate. Several key policies benefit ag retailers.

The House passed the bill on May 14 by a vote of 318-106 and the Senate approved the bill a day later by a vote of 81-15, a veto-proof majority in both chambers. This bipartisan legislation will continue to provide a safety net for America’s growers, promote bioenergy and conservation programs, and provide nutrition programs, according to an Agricultural Retailers Association (ARA) press release.

President George W. Bush has stated that he plans to veto this bill, possibly this week. Most experts expect both houses to override that veto.

The bill offers several provisions directly targeting the ag retail sector. “We’re pretty excited about having a number of issues in, especially the one that we’ve been working on for about three years — the Agricultural Chemical Security Credit,” says Dan Weber, ARA chairman and vice president of agronomy for Ceres Solutions.

Much of the credit for the farm bill’s passage goes to the many industry organizations that worked together and on specific areas of the farm bill, according to Ken Manning, ARA chairman-elect and Wilbur-Ellis Co.’s vice president and Pacific Intermountain business unit manager. The organizations include ARA, CropLife America, The Fertilizer Institute, and the Crop Producers & Distributors Association.

This bill is a bit unique from the retailer’s perspective, Manning points out. “The farm bill is one of the most important pieces of legislation for our industry to our customers, and now, with some of the various provisions that are included, it’s very important for our retailers as well.”

The key provisions for retailers in the 2008 Farm Bill Conference Report include:

  • Agricultural Chemicals Security Credit — Initiated by ARA, this proposal will allow agricultural retailers, distributors, aerial applicators, as well as manufacturers and formulators of certain fertilizer and pesticides a business tax credit equivalent to 30 percent of the total amount paid or incurred on implementing qualified security measures at their fertilizer and pesticide storage facilities. The provision provides for up to a $100,000 in security tax credits per facility, with an overall company cap of $2 million per year. The tax credit shall apply to security measures paid or incurred after the date of the enactment of the 2008 Farm Bill.

    “We thought it was important to figure out some way to help offset some of the security costs — which are mandated now, not options anymore,” Weber says. “We’re certainly not going to be able to do that through the normal margin structure.”

  • Technical Service Provider (TSP) Program Reforms — The reforms to the TSP program should help increase its availability and range of technical expertise available to growers, ranchers, and eligible landowners to plan and implement conservation measures.
  • Grants to Reduce Production of Methamphetamines from Anhydrous Ammonia — The grant would be used to add to an anhydrous ammonia nurse tank a physical lock or an additive that would help reduce the amount of methamphetamine that can be produced from any anhydrous ammonia removed from the nurse tank.

    Weber, who has been heavily involved with this provision, says that although this issue hasn’t received much press lately, it’s still a major problem. His own company had anhydrous ammonia stolen from one of its outlets just last week. “It really looks bad for agriculture when these kind of things happen in the neighborhood,” he says.

  • Limits Speculation and Increases Transparency in Energy Markets — Since 2002, Commodity Futures Trading Commission rules have exempted electronic energy markets for large traders from direct government regulations. This legislation includes measures to increase federal oversight authority to detect and prevent manipulation and limit speculation in U.S. electronic energy markets by increasing reporting requirements.

    Weber notes that the bill also includes funding to study the transportation system, which is especially critical to smaller retailers trying to preserve rail transport.

In the ARA press release, Jack Eberspacher, ARA president and CEO, thanked Sen. Pat Roberts (R-KS) and other legislators for their efforts on behalf of the security tax credit provision, along with ARA’s Richard Gupton, vice president of legislative policy & counsel, “for his efforts to secure passage of this bill.”

ARA also recognized special efforts made by state agribusiness organizations in Georgia, Kansas, Montana, Minnesota, Michigan, Nebraska, and North Carolina to ensure the Agricultural Chemicals Security Credit provision remained in the farm bill. “We would also like to thank other national, regional, and state members of the Agribusiness Security Coalition for their support of this important legislation,” Eberspacher added.

The bill has drawn support from more than 500 organizations, including American Farmland Trust (AFT), a conservation group. According to a press release, AFT “fought hard for subsidy reform with the Average Crop Revenue Election (ACRE) program, and won a victory for inclusion on this new program.”

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