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FOR IMMEDIATE RELEASE

Farm Bureau applauds tax cut vote on HB 1039

3/18/2013 at 12:00 a.m.


The Arkansas House of Representatives Monday overwhelmingly passed HB 1039, the bill that would create a sales tax exemption for utilities used in agricultural facilities, including commercial poultry and livestock facilities.

A total of 94 members of the House of Representatives passed the tax cut, which once fully implemented will provide a $10 million tax savings to Arkansas’ poultry and livestock farmers. There were no “nay” votes, though 1 member voted “present” and 5 were listed as “non voting.”

“We want to thank those representatives for their strong support of HB 1039,” said Randy Veach, president of the Arkansas Farm Bureau. “This bill was a priority for our organization, and will help the poultry and livestock producers in every part of the state.”

The bill now moves to the Senate, which is expected to take action on the bill within the next two weeks. Sen. Larry Teague of Nashville is the lead sponsor there. Rep. Jeffrey Wardlaw of Hermitage was the bill’s lead sponsor in the House.

“Farms and ranches have been especially hard hit by higher energy costs in recent years, none more so than poultry,” said Veach. “The average poultry farm annually spends about $10,000 per house on energy. Multiply that number by two or four or 10 houses, and you have some idea how much farmers are spending for energy. Both the rising cost and use of energy contribute to this large input cost. For most poultry farms, this is the largest expense, aside from the building itself.”

Agriculture is Arkansas’ economic foundation, and poultry is the largest agricultural product produced in Arkansas in terms of cash receipts, providing 47 percent of the total. According to the most recent Census of Agriculture, 6,089 farms in Arkansas produced some type of poultry, including poultry production in every county in Arkansas. Poultry production has allowed citizens in rural parts of the state to establish some financial security, and it supports thousands of jobs beyond the farm. 

“These utilities are taxed, and farmers pay several hundred dollars — even thousands in taxes annually — just on utilities,” said Veach. “Energy input expenses for poultry farms is 40 percent of the total input cost for the farmer. The economic struggles of the past few years have seen the numbers of swine, dairy and aquaculture farms dwindle. Tax relief even in small amounts may be critical to the survival of these family farms.”   

HB 1039, if adopted by the Senate and signed by Gov. Mike Beebe, would keep Arkansas farmers on a level playing field with their counterparts in other states. Most of the surrounding states have full or partial exemptions for agriculture utilities. While no one is going to pick up the farm and move to Oklahoma, or some other state, it still makes sense to help our rural communities with this tax relief.

“The structure of the poultry, dairy and swine industries doesn’t allow farmers to pass on their costs to consumers, so farmers are simply absorbing the increase in utility costs,” said Veach. “All livestock sectors of agriculture were hit hard by the drought, but higher feed costs absorbed by the companies means that the poultry companies and dairy cooperatives of the world haven’t been able to give raises to farmers. This tax cut would mean a small bonus for farmers who haven’t seen one in these tight economic times. 

“This tax relief also makes sense from a tax code consistency standpoint. Manufacturers have a reduced tax rate on utilities, which means the processing plant and feed mill have seen tax relief but not the farmer. During the past few years, the legislature has adopted tax cuts for manufacturers, the trucking industry, on groceries and a school supplies sales tax holiday. Now is the time for agriculture.”

Arkansas Farm Bureau is a nonprofit, private advocacy organization of more than 200,000 families throughout the state working to improve farm and rural life.

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For more information contact:

Steve Eddington
(501) 228-1383
PO Box 31, Little Rock 72203

or

Gregg Patterson
(501) 228-1282
PO Box 31, Little Rock 72203

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