WORK ON IMPLEMENTATION OF FARM BILL COMMENCES The Farm Bill was
signed into law on May 13, 2002. While this may have seemed to be the
completion of the work of crafting a new farm bill, signing the bill into
law only signals the beginning of the huge task of rule making in the
implementation of the bill.
The Domestic Policy and Conservation Committees along with NAWG staff
have reviewed these two titles and developed a list of concerns and
questions. On Wednesday, May 29, Daren Coppock, NAWG CEO and Patricia
Buschette, Farm Policy Director, met with Hunt Shipman, Deputy Under
Secretary for Farm and Foreign Agricultural Services of USDA. The purpose
of the meeting was to clarify concerns and, if possible, provide helpful
information relating to the Commodity Title of the bill. The issues that
arise from the Conservation Title will be reviewed at a later date.
At this point, issues are only being identified. NAWG brought to USDA’s
attention a number of concerns. Some of them require only a clarification
of the language, while some issues such as advance payments outside of the
provisions of the law appear not to be a possibility. Others require
additional congressional action to cure.
One of the very large concerns that producers will face is the fact
that county LDP rates have not been set. June 1st marks the beginning of
the marketing year, and these decisions are some ways from being resolved.
There is much to be resolved in the determination of county loan rates,
and while options are being considered, no decision has been reached. The
question is raised, of course, of LDP payments that are claimed before the
issue is resolved. It was acknowledged that possibilities include payments
made at the current LDP rate, with the potential of additional benefits
due under the current law being lost, or possibly of producers being “made
whole” with the additional amount paid when the rates are determined. The
setting of county loan rates would not be made before the marketing year
begins on June 1, 2002 and will likely take some time after that date.
USDA is looking at alternatives and the only certain answer offered was
not to lose beneficial interest. “Don’t claim an LDP until the issue is
resolved, ” Shipman advised.
The timing of payments has been “hard wired” into the bill, and no
flexibility appears possible. While Congress looked at the budgetary
constraints under which the bill was drafted, producers will be struggling
with their own budgetary constraints. NAWG and its state organizations
were aware of these concerns, but the need to integrate philosophies led
to compromises that are troublesome, but which must now be faced.
Provisions for updating base and yields complicate the administration
of the farm bill, as producers must make decisions that will best serve
their needs. Farm Service Agency offices, already operating under a
constrained budget, must be prepared to work with producers, some
uninformed of options available, and seeking to document yield
information.
One of the problems that has come to light is the bill’s provision for
producers to choose to receive up to half their direct payments in advance
of the normal payment date of October 1 for the 2003 through 2007 crop
years. The producer can decide in which month to receive the funds, but
the earliest date those payments can be made is December of the year
before the crop is harvested. An IRS doctrine known as "constructive
receipt" makes payments taxable in the earliest year in which those
payments can be received, regardless of when actually received.
Therefore, a producer who elects to take the advance pay for the 2003
crop year anytime from December 2002 to September 2003 would have a tax
liability for that payment in 2002. Because Congress exempted payments
under the 1996 farm act from this doctrine, program payments made under
the 1996 farm act were exempt. Congress failed to renew that provision in
the 2002 legislation. NAWG is exploring a number of options to remedy the
situation.
While there are problems, some of which may be fixed and some of which
must be faced the good news is that a farm bill is in place that provides
a safety net for producers and a food security program for the United
States.
