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  • The Obama administration decision to normalize relations with Cuba, which one official called the most significant change in policy toward the country in half a century, includes easier terms for selling food and agricultural equipment to the island nation.Cuba bought nearly $350 million of U.S. farm exports last year, mostly frozen chicken, corn, soybeans and soymeal, says she U.S.-Cuba Trade and Economic Council, which monitors bi-national trade.U.S. farm groups, who long regarded Cuba as a natural, nearby customer for American-grown food, applauded the move, announced by President Obama today after several months of behind-the-scenes negotiations. The American Farm Bureau Federation said improved relations "will expand access to a market of 11 million customers for U.S. agriculture."Key for agricultural exports will be revision of a Treasury Department regulation that requires payment in cash before ships leave U.S. harbors and permission for U.S. banks to open correspondent accounts with Cuban banks. The "cash in advance" rule will become "cash before transfer of title" at Cuban ports, said the White House, and the direct relations with Cuban banks will speed transactions. At present, payments must be routed through third-party banks, which takes time and adds to costs.As part of steps to encourage growth of Cuba's private sector, sales will be allowed of agricultural equipment for small farmers, said the White House.The Incoming chairman of the House Agriculture Committee, Republican Mike Conaway of Texas, said long-standing trade embargo on Cuba was undermined by "a poorly negotiated deal" that would not bring democracy to Cuba. The National Farmers Union said the embargo, which remains in place, "has made no sense for a long time" and that improved relations "will also open new markers of U.S. farmers."Cuba was once the largest market for U.S. rice exports and could become a major customer again, said USA Rice Federation. The National Corn Growers Association said removal of regulatory and financial barriers wold boost U.S. competitiveness. The American Soybean Association saw the opportunity to sell U.S. soy products from cooking oil to livestock feed in Cuba.

  • USDA rules on who is considered actively engaged in farming and eligible to receive commodity program payments should be out in early 2015, U.S. Deputy Secretary of Agriculture Krysta Harden told Agriculture.com Wednesday.Harden, who spoke earlier at the 50th anniversary meeting of the Iowa Soybean Association, was responding to a question about a letter from members of Congress to Agriculture Secretary Tom Vilsack this week that asked USDA to close a loophole that has allowed nonfarm investors in large operations to avoid payment limits by claiming to be actively engaged in the business.Harden said USDA focused on writing rules for other parts of the 2014 Agricultural Act first, starting with disaster assistance and then the signup for new commodity programs.“Actively engaged is a little more complicated and it’s going to take us a little bit longer,” Harden said.Although Visack is sympathetic to tightening up the loophole, “the farm bill did limit this to a certain category,” Harden said and that she’s not certain how many farmers would be affected.Senator Chuck Grassley, a long time advocate of tougher payment limits, and five other members of the Senate and House of Representatives wrote to Vilsack Monday to say that USDA still has the power to define actively engaged narrowly, even though the conference committee that wrote the final farm law stripped out a provision that would have allowed only one farm operator who isn’t actively engaged in farming to receive payments.“Although not included in the final conference report, there were bipartisan majorities in both chambers of Congress that approved a limit of one non-farming ‘farm manager’ per operation who could remain eligible for farm subsidies. We believe the new rule USDA is required to write should take this approach, especially since both bodies of Congress have already approved it with individual votes. Additionally, beyond the rule required by the 2014 farm bill, USDA has always had the ability to close this loophole through Administrative rulemaking,” said the letter. It was signed by Grassley, Senators Sherrod Brown (D-OH) and Tim Johnson (D-SD) and Representatives Jeff Fortenberry (R-NE), Rosa DeLauro (D-CT) and Earl Blumenauer (D-OR).The letter cites a Government Accountability Office report that found that nonworking farm managers collected more than $266 million in farm program payments in 2012.When Harden spoke to the ISA members she was asked about cuts to conservation programs that were included in the government spending bill recently passed by Congress. The bill trims spending on the Conservation Stewardship Program (CSP) and the Environmental Quality Incentives Program (EQIP).“It’s troubling to me personally,” Harden said. “It became a target and is a pot of money.” The cuts allowed members of Congress to fund other more favored programs.When the Obama Administration prepares its budget proposals for 2016 “we will continue to push for funding,” she said.

  • It's been a volatile week in some market sectors as farmers get welcome news on the tax front.

  • With just shy of 2 weeks left until the end of the year, Congress has finally made it official: The IRS Section 179 tax deduction limits that were scheduled for a major haircut this year have been restored to previous limits, and it's retroactive through all of 2014 for purchases up until December 31.The Senate on Tuesday approved a bill pushed through the House of Representatives 2 weeks ago that keeps the deduction levels intact; you can now still deduct the full purchase price of a piece of equipment, machinery or other big-ticket item in a few categories, up to $500,000. In addition to machinery, the deduction covers computers, "off-the-shelf" computer software for business use, office furniture and equipment and other business vehicles and "tangible personal property used in business," according to Section179.org."The Tax Extenders Bill passed by the House on Dec. 3, 2014, was voted on and passed by the Senate on Dec. 16, 2014, retroactively expanding the Section 179 deduction limits thru 12/31/2014," according to a report on Section179.org. "Only this 2014 tax year will be covered by this measure - therefore it is a good business decision for many to buy/finance equipment immediately to make the December 31, 2014 cutoff for the write-off provisions. Technically, the bill is a one-year, retroactive extension of the tax breaks, even though it only lasts through the end of the month."But, if you're claiming the deduction, for which the Senate also reinstated the 50% bonus depreciation provision, you better hustle. You'll have to apply for Section 179-qualified financing immediately if you're going to make the year-end deadline.See more on the Section 179 reinstatementQ&A: Claiming a Section 179 Deduction

 

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