The following information is bonus material from Top Producer. It corresponds with the article "Little Aid to Ag” by Jeanne Bernick. You can find the article on page 24 in the Summer 2009 issue.
Weighing in at a whopping $787 billion, the American Recovery and Reinvestment Act of 2009, also known as the economic stimulus bill, doesn't do a whole lot for individual farmers, say agriculture analysts.
Agriculture programs, including nutrition assistance, rural development and conservation, receive only about $27 billion of the total package, or 3.3%, as estimated by the Congressional Budget Office (CBO). That's a tiny bit more than USDA's budget—and the bulk of ag stimulus dollars—$21 billion—will be used for nutrition assistance.
American Farm Bureau Federation budget specialist Pat Wolff believes three things in this legislation are significant for farmers: Rural broadband support, incentives for renewable fuels and business tax provisions.
"This stimulus package finally will push broadband out to local communities,” Wolff says. The legislation provides $7.2 billion for grants, loans and loan guarantees to expand broadband Internet access, mostly for underserved rural areas.
As a boost to renewable fuels, the legislation also offers loans to biofuel producers and extends biomass, solar and wind energy tax credits that were due to expire next year, including a tax credit for fuel stations that want to put in a new E85 pumps.
Tax help. In terms of putting real cash in farmers pockets, the new stimulus legislation makes more than 300 changes to the existing IRS code, says Rob Holcomb, University of Minnesota Ag Business Management Extension Educator.
One notable change is to section 179 of the tax code, he says. For the current tax year, the section 179 business equipment deduction limit was scheduled to be $133,000 with a qualifying property limit of $530,000. The stimulus package changes the maximum section 179 deduction to $250,000, with a qualifying property limit of $800,000 for tax year 2009, Holcomb says.
In addition, the legislation reinstates bonus depreciation through Dec. 31, 2009 for new property (the original use of which commences with the taxpayer). Property eligible for bonus depreciation includes barns and machine sheds. Bonus depreciation will also be extended through the 2010 tax year for property with a recovery period of 10 years or longer.
In the end, rural communities will be the real winners, with stimulus funding toward rural broadband, food assistance and money to support rural water and waste disposal, says Senate Ag Committee Chairman Tom Harkin. For individual farmers, the best stimulus package is simply a speedy economic recovery for America, he adds.