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Johanns outlines Bush administration farm bill proposals

By Jean Caspers-Simmet

simmet@agrinews.com

DES MOINES — Agriculture Secretary Mike Johanns outlined Bush administration farm bill proposals last week at the Iowa Power Farming Show in Des Moines. Earlier in the day he unveiled the proposals in Washington.

"We listened closely to producers and stakeholders all across the country in making farm policy more equitable, predictable and protected from challenge," said Johanns. "I believe with this farm bill we have the opportunity to change the face of rural America."

Starting in 2005, the ag secretary and his staff conducted 52 farm bill forums across the country, including events at Farmfest in Redwood Falls, Minn., and the Iowa State Fair in Des Moines to gather information. Johanns said that as far as he knows, he’s the only ag secretary to do that. Johanns proposes reforming commodity payment programs by converting the current price-based countercyclical program to a revenue-based program that is responsive to actual conditions and provides a strong safety net. Under a price-based program, farmers who experience crop loss are often under-compensated while those with high production tend to be over-compensated. This new revenue program will factor in U.S. crop yield when determining crop payments to better target support.

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The Marketing Assistance Loan Program for program commodities would be reformed to set loan rates for each commodity at 85 percent of an average of the past five years.

During his forums many called for meaningful payment limits, Johanns said. He proposes eliminating the three-entity rule and tying payments to an individual. The plan sets the subsidy payment limit for individuals at $360,000.

To receive commodity payments, producers must also meet a limit on adjusted gross income, which includes wages and other income minus farm expenses and depreciation. The plan reduces the adjusted gross income limit of $2.5 million to a new limit of $200,000. If a producer has an annual adjusted gross income of $200,000 or more, he or she wouldn’t be eligible for commodity payments. Johanns said Internal Revenue Service data for 2004 indicate that 97.7 percent of all American tax filers have an adjusted gross income under $200,000.

Land acquired though 1031 exchanges would no longer be eligible for commodity program payments.

"We got an earful on 1031 exchanges and how they’re running up land values and cash rents," Johanns said.

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