Congress Approves $1.35 Trillion Tax Relief Package
President Bush is scheduled to sign Economic Growth and Tax Relief Reconciliation Act of '01 week of June 4. Tax cut is centerpiece of President's agenda. Senate cleared measure, 58-30, following House approval on 240-154 vote.
In addition to income tax reduction, immediate refunds to stimulate economy, reduction of marriage penalty, relief from alternative Minimum Tax and number of other provisions, package would phase out and ultimately eliminate estate tax over next 10 years. However, all provisions, including estate tax elimination, expire Dec. 31, ' 10, unless Congress acts to extend provisions.
Estate tax will be repealed in '10. From '02-10, estate and gift tax rates are as follows:
|
Calendar Year |
Exemption |
Highest Rate |
|
'02 |
$1.0 million |
50% |
|
'03 |
$1.0 million |
49% |
|
'04 |
$1.5 million |
48% |
|
'05 |
$1.5 million |
47% |
|
'06 |
$2.0 million |
46% |
|
'07 |
$2.0 million |
45% |
|
'08 |
$2.0 million |
45% |
|
'09 |
$3.5 million |
45% |
|
'10 |
repeal |
top individual rate under bill (gift tax only) |
As of '10, instead of "stepping-up" basis for valuation of inherited assets, capital gains tax would be owed on difference between what deceased paid for assets and current market value, allowing exemption of $1.3 million in gain plus $3 million for surviving spouse.
FSA Announces Supplemental Quality Loss Program for '00 Crop
As final stage of implementation of '00 crop disaster program, USDA Farm Service Agency announced implementation of Quality Loss Program (QLP) for '00. Program will be operated as supplemental quality loss program for situations where ' 00 crop disaster payments did not adequately reflect quality losses. Crop Disaster Program (CDP) for ' 00 covered quality losses by converting quality losses to equivalent yield losses. However, QLP is additional method of calculating quality losses in event yield conversion under CDP did not adequately compensate producers.
FSA procedure is designed to determine whether new QLP program will result in any additional compensation for quality losses beyond that already received by producer under CDP payments. Separate applications must be made under QLP program, and USDA will make additional payments if QLP would result in additional compensation. Sign-up dates and additional procedures will be provided in future FSA notice.
QLP payments will be determined using eligible affected production, which is defined as harvested production of '00 crop that suffered minimum of 20% reduction in quality attributable to eligible cause of loss. Unharvested production is not eligible for QLP. Affected production may be calculated using smallest measurable unit for which records exist - bale, truck load, bin, etc. Producers must provide written documentation substantiating quality of production - sales prices which reflect discounts will not, by themselves, be sufficient.
QLP payments will be calculated by multiplying 65% of affected production by 65% of loss in price attributable to decreased quality (so-called "affected price") result of CDP primary market price minus affected price. Combined total payments for QLP and CDP are limited to $80,000 per "person" and $2.5 million per "person" gross revenue provision for '99 tax year applies to both QLP and CDP. QLP payments cannot be earned for losses on more than one crop on same acreage unless there is established multi-cropping practice on farm. Same quality discount schedule will be used for QLP as was applied to CDP. It is possible, therefore, that producers receiving compensation for quality losses under CDP may not be eligible for additional payments under QLP.
Cottonseed Assistance Payments Begin
USDA reports that electronic transfer of payments started on June 1 under Cottonseed Assistance Program. USDA also indicates payment rate of $15.34 per ton of cottonseed on '00 production. Payments under program are being made to offset impact of low seed prices on cotton ginners and producers. Final details will be made available through upcoming USDA news release.
Senate Leadership, Committee Chairs Will Change June 5
With announcement by Sen. Jeffords (R-VT) that he will become Independent on June 5 and caucus with Senate Democrats, Senate balance will shift to 51 Democrats and 49 Republicans.
According to reports, Sen. Daschle (D-SD) will become Majority Leader effective June 5 and ranking Democrats will become committee chairmen. However, committee arrangements and ratios will be subject to negotiation. Initial reports indicate that Sen. Harkin (D-IA) will chair Agriculture Committee; Sen. Hollings (D-SC), Commerce; Sen. Bingaman (D-NM), Energy; Sen. Baucus (D-MT), Finance; Sen. Conrad (D-ND), Budget; and Sen. Byrd (D-WV), Appropriations. Sen. Kohl (D-WI) will assume chair of Agriculture Appropriations subcommittee and Sen. Cochran (R-MS) will be Ranking Member.
New Agriculture Committee Chairman Harkin served in House from '75-85 and has been in Senate since '85. He served on Agriculture Committee throughout his House and Senate career. In recent interview, Harkin said, "we all agree, we've got to change farm policy. But, I'm not interested in going back; I want to move ahead. A central part of this is going to be conservation." He has co-authored legislation introduced week of May 21 known as Conservation Security Act (see related article) that provides compensation for employing conservation practices and for adopting conservation plans on entire operation. He has also expressed support for committee to enhance its oversight of consolidation in agriculture.
Bill Would Pay for Conservation Practices
Sens. Harkin (D-IA), Smith (D-OR) and 15 co-sponsors introduced Conservation Security Act (CSA), "comprehensive, flexible, farmer friendly, voluntary approach to agricultural conservation policy that provides incentive payments to producers of all types of products including fruits, vegetables, specialty crops, row crops and livestock for maintaining or adopting conservation practices on agricultural land in production." Program features Conservation Security Contract in which producer adopts voluntary conservation plan and receives payments based on number of criteria, including practices employed, environmental benefits generated, income foregone as result of instituting practices and other considerations.
Payments are limited to $20,000, $35,000 and $50,000 for 3 separate tiers or levels of conservation commitment. Tier I involves 5-year contract and focuses on individual practices (integrated pest management, cover crops, nutrient management, etc.); Tier II requires system-based approach; and Tier III includes total operation. Tier II and III contracts run from 5 to10 years at option of participant.
Proponents believe CSA payments would be classified as "green box" or "non trade-distorting" under World Trade Organization commitments. Program is not designed to replace other conservation program. Sen. Harkin said funding for program would come out of additional $74 billion set aside in budget resolution for farm programs over next 10 years, but maintained that it would have "no impact on the commodity programs." Reps. Thune (R-SD), Kaptur (D-OH) and Boswell (D-IA) introduced companion legislation (HR 1949) in House of Representatives.
Senate Confirms Fisher as EPA Deputy Administrator
Senate confirmed Linda J. Fisher to be deputy administrator of EPA, making her top managerial and policy assistant to Administrator Whitman.
Fisher was EPA official during Reagan Administration and first Bush Administration. She was chief of staff for EPA Administrator Lee Thomas from '85-88; Assistant Administrator for Policy, Planning and Evaluation from '88-89; and Assistant Administrator for Prevention, Pesticides and Toxic Substances from '89-93. Fisher served as Vice President of Government Affairs for Monsanto from '95 to June '00.
Sen. Reid (NV), ranking Democrat on Senate Environment and Public Works Committee, has blocked confirmation of other key EPA appointments, including that of Steve Johnson, nominated for Assistant Administrator for Pesticides and Toxic Substances. Hold on confirmations is to force EPA to issue radiation standards for nuclear waste repository in his state.
Biotech Produces Healthier Cottonseed Oil
Australian research firm, CSIRO Plant Industry, announced world' s first biotechnology enhanced cotton plants that will produce healthier cooking oils and margarine. Cottonseed oil is already extensively used as ingredient in these products but to make it suitable for these uses it is generally subjected to process known as "hydrogenation," which can produce cholesterol-raising trans fatty acids as by-product.
"Oil from our improved cottonseed is suitable for cooking purposes without need for hydrogenation," says Dr Allan Green, leader of the research team. "Products made from these oils will be healthier because they will not contain trans fatty acids."
To produce new oils, scientists switched off genes in cottonseed that normally convert oleic acid, monounsaturated fatty acid, into polyunsaturated fatty acids. Polyunsaturates are nutritionally valuable, but break down under extreme heat, making them unsuitable for cooking uses.
"Hydrogenation process converts polyunsaturates back into monounsaturates, but we have prevented their formation in the first place," says Dr Qing Liu, scientist who genetically modified cotton. "By turning off gene that produces polyunsaturates, we have produced for first time an inherently high-oleic cottonseed oil. We haven' t added any foreign genes to cotton to achieve this, but have reintroduced a very small amount of the cotton plant' s own DNA."
Healthy high oleic cottonseed oil will remain stable under high temperatures, making it suitable replacement for hydrogenated oils and saturated oils in food service applications.
In related development, CSIRO research team has also successfully used gene technology to alter proportions of saturated fatty acids in cottonseed oil. Saturated fatty acids provide solid properties that make cottonseed oil useful in margarine production.
About one-quarter of cottonseed oil is made up of 2 saturated fatty acids, called palmitate and stearate. Conventional cottonseed contains mostly palmitate, with small amounts of stearate. Nutritionists believe that stearate does not raise blood cholesterol, but palmitate does.
Dr Liu has modified cottonseed so that it produces stearate instead of palmitate, making it healthier product for margarine.
First field trials could begin in '02, with possibility that commercial varieties could be available to growers by '04 and first commercial harvest in '05.
"Improvement in nutritional value of our food oils is an example of how gene technology can be used to provide consumer benefits not achievable with conventional breeding approaches," Dr. Liu said.
Net Export Sales Climb
Net export sales for week ending May 24 were approximately 114,800 bales (480 lb.), more than double previous week' s sales, raising total '00-01 sales to slightly over 7.9 million. Total sales at same point in '99-00 marketing year were about 7.47 million bales. Shipments for week were more than 147,000 bales, bringing total exports to date to approximately 5.18 million bales, down from 5.69 million at comparable point in '99-00 marketing year.
Effective June 01-07, '01
Adjusted World Price, SLM 1 1/16 34.86 cents*
Coarse Count Adjustment 0.00 cents
Current Step 2 Certificate Value 0.51 cents
Marketing Loan Gain Value 17.06 cents
*No Adjustment Made Under Step 1
Five-Day Average
Current 3135 c.i.f. Northern Europe 48.30 cents
Forward 3135 c.i.f. Northern Europe 48.50 cents
Coarse Count c.i.f. Northern Europe 47.63 cents
Current US c.i.f. Northern Europe 50.06 cents
Forward US c.i.f. Northern Europe 53.25 cents