In addition to preserving a stable crop insurance system and reaching an agreement on a safety net plan to back crop insurance, Vilsack said programs must be adjusted to encourage more beginning farmers and ranchers. He specifically addressed the tax structure that makes it more profitable to hold on to land instead of selling or transferring it while the landowner is still alive. He suggested a tax structure that would reward farmers for selling their land to beginning farmers.
“Right now there’s a barrier in the transfer of land,” he said. “There’s no incentive for anyone to sell to a beginning farmer.”
“If I sold my farm today, there’d be a substantial amount of taxes I’d have to pay,” Vislack said, noting this creates an odd incentive for his children to root for him to pass away. “I want them to root for me to live. The taxing structure doesn’t allow this today.”
Vilsack also noted that one of the only areas President Obama’s FY 2013 budget proposed a budget increase is agriculture research in the competitive grants program.
“Middle classes are being formed in countries across the world. Demand for products America provides is going to continue to grow,” he said. “I know times are tough. We have to be fiscally responsible, but one area where we can’t afford to decrease our budget is in the area of basic research.”
Citing the failed “Super Committee” last fall and the current struggle to pass the transportation bill, Vilsack said the pressure is on Congress to pass a new Farm Bill because, “we don’t make excuses.”
He applauded the joint work of the House and Senate Agriculture Committee leaders last fall to draft a bipartisan Farm Bill proposal, but emphasized that more work will begin after the Congressional Budget Office (CBO) releases its budget numbers this spring.
He said that the three “pots” of the Farm Bill include farm programs, conservation and nutrition. The Obama Administration proposed a controversial $8 billion cut to the federal crop insurance program in its FY 2013 budget proposal, which several agriculture groups spoke against. Vilsack said today that discussions will continue on where budget savings will be made, but “we can’t do that until we have the numbers.”
He did support adjustments to the crop insurance system such as one proposed in Obama’s budget that would limit a crop insurance provider’s return on investment (ROI) to 12 percent. He said this would still support a secure crop insurance system, but noted “some folks would disagree.”
Despite disagreements, Vilsack emphasized that simply making budget reductions with direct payment elimination and adjusting payment programs is the minimum that needs to get done with this Farm Bill. “We have a tremendous opportunity here,” he said, especially to make programs more flexible for conservation and young and beginning farmers.
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