US farmers hustle to avoid 'fiscal cliff' blowback

Fri Dec 21, 2012 5:23pm EST
 
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* Farmers accelerate grain sales to avoid higher taxes

* New equipment purchases appealing before year's end

* Expired federal Farm Bill adds uncertainty for planning

By P.J. Huffstutter and Tom Polansek

CHICAGO, Dec 21 (Reuters) - As the United States inches closer toward the "fiscal cliff," Iowa farmer Brian Van Meetern is hurriedly selling his grain before year's end and buying a new $50,000 sprayer for his farm.

Van Meetern, who works at an accounting firm during the winter, might have to pay a higher income tax and get a lower deduction in depreciation for farm equipment in 2013 if there is no deal in the budget battle before the new year.

It's a strategy that is being mimicked across the nation's heartland where farmers and ranchers are plowing back profits into their operations in the face of less favorable tax policies that may take effect next year due to the stalemate over the budget talks in Washington.

Some farmers are buying new drainage tubes for their fields and digging new wells for irrigation systems. Others are moving up their plans to buy seed and other inputs like fertilizer.

Unless the U.S. Congress acts, an estimated $600 billion in tax hikes and federal spending cuts will begin to take effect in January, with a potentially devastating impact on the economy.   Continued...