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Pennsylvania Ag News Headlines
PFB: Tax Reform, NAFTA, Royalties, Dairying Top Concerns
Pennsylvania Ag Connection - 11/15/2017

Pennsylvania Farm Bureau (PFB) emphasized that international trade plays a major role in having a strong agriculture economy and that is why farmers are alarmed that President Trump continues to threaten a U.S. withdrawal from the North America Free Trade Agreement (NAFTA). Under NAFTA, agricultural exports from the U.S. to Canada and Mexico increased by more than $29 billion, from $8.9 billion in 1993 to $38 billion in 2015.

"Complete withdrawal from NAFTA is not a desirable option for American agriculture or Pennsylvania farmers, especially when you consider that 37 percent of all Pennsylvania agriculture products exported to foreign countries goes to Canada and Mexico," said PFB President Rick Ebert, during a news conference at the state's largest farm organization's 67th Annual Meeting in Hershey.

Farm Bureau is urging trade negotiators to work through their differences to reach an agreement that benefits all three nations.

"We're encouraging President TOrump and his trade negotiators to continue working toward an agreement that protects NAFTA's strong agricultural component, while creating new opportunities for businesses across the nation," added Ebert.

Meanwhile, PFB is encouraged that the issue of federal tax reform is being seriously considered in Washington D.C., following the approval of legislation by the House Ways and Means Committee. The Tax Cuts and Jobs Act (H.R. 1) includes a significant number of changes to the federal tax code.

"Although the tax reform plan shows promise and touches on some key areas relevant to farmers who file taxes as individuals or businesses, some details of the plan need to be further refined in order to provide long-term relief," said Ebert. "Our main emphasis moving forward is to make sure that revisions to the tax code have a positive impact on the effective tax rate for farmers, which will determine whether reform efforts help or hurt our family farms."

The full House of Representatives is expected to consider the tax reform bill later this week.

PFB also recognizes that many farm families across the Commonwealth are facing challenges, including the dairy industry, which is the largest segment of Pennsylvania's agriculture industry, contributing more than 35% of all agricultural income and generating more than $5 billion in revenue to the state's economy.

"An oversupply of milk in the Northeast and across the nation, which has resulted in lower milk checks, has placed a significant economic strain on dairy farmers in Pennsylvania," continued Ebert. "The reality is that milk consumption in the U.S. is flat and has significantly dropped compared to levels from four decades ago. The decline in milk consumption by Americans, a strong U.S. dollar and a drop in foreign trade of dairy products over the past couple of years, have all negatively impacted the bottom line of milk producers."

Farm Bureau has been working with a variety of stakeholders in the dairy industry to identify and create new opportunities and tools to assist dairy farmers. "We can't control the price of milk, but we can strive to develop policies and products that aim to protect dairy farmers during hard economic times. For example, our partners at the American Farm Bureau Federation are developing a new insurance product that they hope will be a viable option for dairy farmers in 2018."

At the state capital, Farm Bureau is continuing to engage with members of the state General Assembly to garner support for legislation that would guarantee farmers and other landowners a minimum royalty of 12.5% for gas extracted from their land, regardless of the cost associated with getting the gas to market.

"We contend that farmers are being underpaid by some gas well operators who are unjustifiably driving royalty payments far below the state minimum by assessing production cost deductions. These companies are taking money out of the pockets of farm families and other leaseholders in violation of the intent of the original state law. The state and its citizens also lose out, because tax revenue that would have been generated by higher royalty checks is lost," concluded Ebert.

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