Legislative Update

Farm Bill Negotiations Continue
03/07/08

The Congress continues to discuss the Farm Bill, which is the package of food and agricultural programs that needs to be reauthorized every five years.  Currently, these programs are subject to a short term extension that expires March 15th.  As we have noted before, included within the tax title of the Senate version of the Farm Bill (H.R. 2419) are two proposals related to section 1031.  The first would allow exchanges of certain irrigation or ditch company stock if the state recognizes such stock as interests in real property (sec. 12403 of the Senate-passed bill). The second remaining provision would generally disallow exchanges of subsidized farmland with nonagricultural real property (sec. 12504 of the Senate-passed bill).

The FEA and key allies in the real estate and farm and ranch communities and other areas have voiced opposition to the provision that prevents exchanges involving subsidized farmland, and have sent formal letters to the Farm Bill conferees to that effect.  We have also had our Washington D.C. firm work with our grassroots to get the message to key decision-makers.  While there has been little overall progress on the Farm Bill, we have received an assurance  by staff of the Senate Finance Committee that Chairman Baucus opposes the inclusion of the subsidized farmland provision in the final bill.  That is a positive development but the final negotiations have not yet occurred on the bill.

The larger discussions on agricultural policy in the Farm Bill have been ongoing. At this writing, important meetings are scheduled for the last week in February and the issues could be settled soon. One of the most significant outstanding issues involves taxes and how large of tax title there will be in the Farm Bill and whether it will fund farm programs or go beyond that and include tax incentives/benefits related to agriculture. The FEA and our allies and Washington, D.C. firm will remain active in communicating our position as the key decisions get made.