Winter 2001
In This Issue
Full speed ahead for Oregon's top agricultural industry
Board of ag profile: Bernie Faber
Director's column: A look ahead to Oregon agriculture 2002
ODA now accepting applications for $3.2 million specialty crop grant funding program
Oregon farmers urged to plan now for new tax law
New pesticide use reporting law ready for implementation
Oregon shows slightly higher net farm income
2000-2001 Oregon Agriculture & Fisheries Statistics released
CREP: helping farmers help the environment
Sudden oak death eradication efforts underway
ODA now accepting applications for $3.2 million specialty crop grant funding program
The Oregon Department of Agriculture is now accepting grant applications through January 31, 2002 for funding of projects as part of an emergency assistance program for specialty crops. Funds in the amount of $3.2 million are available to Oregon producers and agricultural businesses or organizations. Applications will be reviewed by ODA and the State Board of Agriculture. Projects chosen to receive funding will be announced after February 21, 2002.
In administering the competitive grant program, ODA's goal is to fund as many high priority projects as possible with the available funding in a manner that is equitable and meaningful. There are no strict funding caps on grant amounts. Because Oregon has more than 30,000 producers of specialty crops, proposals that involve collaboration or partnerships between producers, industry groups, academics, or other organizations are encouraged. Proposals cannot be directed to projects that involve federal program crops, including wheat, feed grains, oilseeds, cotton, rice, peanuts, and tobacco. Virtually all other commodities qualify.
Successful proposals must clearly demonstrate economic benefit to a large number of specialty crop producers. Those commodities and geographic areas of the state experiencing a great deal of economic stress will receive the most attention.
The $3.2 million has been made available by the U.S. Department of Agriculture in an effort to provide much needed financial assistance to struggling specialty crops.
Specialty Crop Program grant applications are available online by visiting ODA's website at <oda.state.or.us> or by contacting Brent Searle at 503-986-4558.
Oregon farmers urged to plan now for new tax law
Significant changes in the U.S. tax law could greatly benefit Oregon's farmers and ranchers. But they need to know about those changes and plan for them now. A newly available internet workshop is helping provide the information so vitally important to all kinds of taxpayers.
"There is nothing in the new tax law specific to farmers, as it affects every individual and every business owner," says Patricia Frishkoff, director of Oregon State University's Austin Family Business Program. "But I think it has implications that farmers especially need to look at given the current economic situation in the agriculture industry."
Frishkoff, who has worked with many farm families over the years on such important issues as farm succession, has always stressed the importance of proper planning. Now she says there has never been a more critical time for farmers and ranchers to look at the opportunities created by tax law changes.
"Planning is as critical as milking the cows twice a day," says Frishkoff. "Unfortunately, it waits more easily than the cows do. People don't view planning as urgent until they get into a troubled time. Well, we're in a troubled time right now. Every farmer needs to look for every opportunity to gain a penny or save a penny."
While many taxpayers — not just farmers and ranchers — often wait until April to deal with their own tax situation, the new tax law has already taken effect. There are significant reasons why it's a good idea to do something before the close of 2001.
"You can't just take advantage of opportunities on the day you file," warns Frishkoff. "You have to do some thinking, discussing, and planning ahead of time."
Virtually all taxpayers have already received a benefit of the new tax law in the form of a rebate check from the federal government. That money may already be spent or put into the bank. Frishkoff says all that happened prior to September 11.
"I doubt that anyone has even thought about the tax law change since the tragedies of September 11, in New York City and Washington D.C.," she says. "We've got to get back to the business of planning and have people remember there are opportunities that need to be looked at in a timely enough manner to take advantage. That means getting some things planned well before December 31."
The technical aspects of the new tax law may be complex, but the basic concepts are fairly simple. There are three main areas in which significant changes can affect farmers and ranchers in Oregon.
First, the reduction in rates for individual income taxes will most likely impact the individual farmer — especially if the business is structured in a way that allows income to pass directly to the owner and is reflected on the individual income tax return. Tax on that income has been lowered effective July 2001. Those farms fortunate enough to have income will be able to pay less on individual incomes, and the rate will be reduced in steps through 2006.
"The complexity in the law is in the phase-in of the changes," says Frishkoff. "You don't want to wait until 2006 to do some planning or you will miss the opportunities you will have over the next five years."
Second, for those farmers and ranchers who might have a little extra money right now, the new tax law contains some very good incentives for retirement savings — especially for individuals who are more than 50 years old.
"Even if it were just an extra $500," says Frishkoff. "The retirement savings are really worth looking at for the business owner."
Finally, a change in estate taxes may help make it easier to pass on the farm to the next generation. A combination of lower tax rates and higher exemptions will be phased in over the next several years. Frishkoff cites an example.
"Right now the estate tax rate is 55%, but in 2009 it will have dropped to 45%. That's still high, but it's better than where we are now. The exemption will have climbed from $675,000 worth of assets that an individual can protect to $3.5 million. So if you take your $3.5 million and your spouse's $3.5 million, you have a lot more of the farm you can protect from estate taxes."
There is a change in the rate or the exemption every year between now and 2009. Frishkoff says an annual review of the estate plan is a good idea.
"If something happens to grandad, dad, mom, or yourself, you want to be able to take complete advantage of what the law allows," she says.
All these changes should compel taxpayers to do some thinking, talking, and planning. That will lead to a list of questions that can then be taken to a tax planner.
"Suppose you did a little consulting job — you would be better off doing that job in January than December this year because you'll play less taxes," says Frishkoff. "You plan on selling a tractor? Sell it in January instead of December because the tax you will pay on that income will be lower in 2002."
OSU, working with U.S. Bank and with a grant provided by the U.S. Department of Agriculture's Risk Management Agency, has a free tax cuts workshop on the web. The video-streaming workshop comes complete with downloadable notes. Among the segments offered is one entitled "Critical Decisions for Farmers and Forest Landowners." Those interested in accessing the free online workshop should visit the OSU website at: <www.familybusinessonline.org>
"The harvest season is over for most people, they may have some free time," says Frishkoff. "Now's the time to see what opportunities the new tax law brings them."