AgDM newsletter article, December 1998

Omnibus Spending Bill *

Neil HarlBy Neil Harl, Charles F. Curtiss Distinguished Professor in Agriculture and Professor of Economics, 515/294-6354, harl@iastate.edu

On October 15, 1998, the Congress and the Administration reached agreement on an Omnibus Spending Bill.  Several provisions are of particular importance to the agricultural sector and are discussed briefly here.

Chapter 12 Bankruptcy

The legislation contains a six-month extension for Chapter 12 bankruptcy (which had expired on September 30, 1998).  The extension expires on April 1, 1999.  The Bankruptcy Reform Bill, which did not pass, would have made Chapter 12 permanent.

Tax provisions

The omnibus legislation embraced four tax provisions for the farm and small business sectors—

Disaster relief

The legislation includes $2.575 billion in funding to address crop disaster losses.  The Secretary of Agriculture is given broad authority to create and implement a disaster program.

Several conditions are imposed on the legislation—

Market loss assistance

The legislation provides $3.15 billion in payments to producers eligible for contract payments under provisions of the 1996 farm bill.  The assistance will be paid in the form of a one-time payment similar to the Agriculture Market Transition (AMTA) payments under the 1996 farm bill.  The additional payment will total about 52 percent of the AMTA payment received by a producer in fiscal year 1998.

From the amount allocated for market loss assistance, dairy producers will receive payments totaling $200 million through procedures to be determined by the Secretary.

Bio diesel

In order to provide market loss assistance to soybean producers who are not eligible for AMTA payments, the legislation amends the Energy Policy Act of 1992 to provide fuel use credits to operators of vehicle fleets who use fuel containing at least 20 percent bio diesel by volume.  It is estimated that the increased demand will increase prices by up to 14 cents per bushel.

Price reporting

A one-year pilot project and study of price reporting is included with pork added in the final stages of negotiations.

* Reprinted with permission from the October 14, 1998 issue of Agricultural Law Digest, agricultural law press publication.  Footnotes not included.

 

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