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August 14, 2015 CapitalPress.com 9 Washington Farm tax breaks up for review by panel Auditor urges clarification on policy goals By DON JENKINS Capital Press OLYMPIA — A slew of tax breaks that save farm- ers and ranchers millions of dollars annually on tractor repairs, diesel fuel, chicken bedding and others goods and services are up for scrutiny by a watchdog panel. Since 2007 a citizens com- mission has been grinding through more than 600 state laws that grant preferential tax treatment to individuals and industries. This year hap- pens to be agriculture’s turn to be a focus, said Legislative Auditor Keenan Konopaski, who heads a nonpartisan staff of policy analysts. The commission has no tax-writing authority, though it makes recommendations to the Legislature. Lawmak- ers established the panel to address concern about tax “loopholes.” Tax exemp- tions, nevertheless, continue to remain widely popular with legislators. This year, the Legislature extended tax breaks for food processors and beekeepers. At least seven tax laws that benefit sectors of agri- culture will get a close look by the commission between now and December. Konopaski isn’t proposing that any tax break be elimi- nated, though he is asking the five-member commission to clarify the purpose and, in some cases, set standards to judge the public benefit of the exemptions. The tax laws up for review are: • A sales tax exemption on replacement parts and repair services for farm equipment that will save producers an estimated $62.2 million over the next two years. The Legislature granted the tax break in 2006 in response to increasing production costs and stagnating crop pric- es. Since then, according to legislative staff, production costs rose by 38 percent, while farm income increased by 141 percent. Auditors are asking whether the Legisla- ture’s rationale in granting the tax break still applies. • A sales tax exemption on diesel, biodiesel and aircraft fuel consumed to grow crops that will save farmers an es- timated $53.2 million over the next two years. The tax break was granted in 2006 while diesel prices were ris- ing. Lawmakers enacted an emergency clause, putting the exemption in place in time for spring planting. Even if the sales tax ex- emption were eliminated, farmers would be exempt from fuel taxes for tractors and other off-road vehicles. • Distributors of grains and unprocessed milk, such as grain elevators and co- operatives, are exempt from business taxes on wholesale income. The exemption will save distributors an estimat- ed $14.8 million over the next two years. The law goes back to 1939 when sales of wheat, barley and oats were exempted from taxes. Other crops were added over the years, and unprocessed milk was added in 2007. It’s un- clear why lawmakers pro- vided the exemption to some crops, but not to other agri- cultural products, according to auditors. • Medicine for farm an- imals is exempt from sales taxes. Producers will save an estimated $5.4 million over the next two years. Legisla- tive analysts say lawmakers should explain the policy’s objective. • Bedding materials for chickens and propane or natural gas to heat chicken coops are exempt from sales taxes. The exemptions will save poultry producers an es- timated $5.3 million over the next two years. • The value of a fami- ly-owned farm can be de- ducted in calculating estate taxes, helping keep the farm in the family. That’s fine, according to auditors. But they question whether heirs should then be free to imme- diately sell the farm without paying estate taxes. • Builders are exempt from sales taxes on materials and labor to build or equip ware- houses and grain elevators. Auditors suggested measur- ing whether the tax exemption was stimulating trade. Inslee’s trade trip to include pitches for spuds, blueberries, wine Delegation to promote Washington goods in Japan, South Korea By DON JENKINS Capital Press OLYMPIA — Washing- ton potato growers, blueberry farmers and wine-makers will be represented on a trade mis- sion this month to Japan and South Korea led by Gov. Jay Inslee. All three agriculture groups have ambitions to increase sales in Asia. Potato and blue- berry farmers hope to capitalize if trade barriers come down, while vintners are pitching Washington wines to retail out- lets in Korea. About 60 business and gov- ernment leaders, including state Agriculture Director Derek Sandison, are expected to make the trip to promote Washington agriculture, aerospace, manu- facturing and technology in- dustries. Inslee will leave Aug. 28 and begin by meeting with government and business lead- ers in Seoul, South Korea. The trip will end with a display of Washington food and wine at a Tokyo Costco. In between, the delegation will travel to Wash- ington’s sister state in Korea, North Jeolla province, and the Japanese cities Kobe and Na- goya. Washington exported $1.6 billion worth of agricultural goods to Japan last year, in- cluding $218 million in frozen potatoes, despite an 8.5 percent tariff. The Washington State Pota- to Commission hopes sales will increase if the Trans-Pacific Partnership does away with the tariff, the commission’s assis- tant executive director, Matt Harris, said. The 12-nation pact is being negotiated in secret and hasn’t been presented to Con- gress for ratification. Washington saw frozen po- tato sales to Korea jump from about $40 million to $62 mil- lion annually in 2014 after a U.S.-Korea free-trade agree- ment was signed in 2012, elim- inating an 18.5 percent tariff. “We haven’t seen (sales) slow down yet. We hope we haven’t hit that plateau of growth,” Harris said. Harris and the commission’s marketing director, Ryan Hol- terhoff, will make the trip to firm up relations with distribu- tors and probe how consumers can be won over. “It is import- ant for us to make connections to customers,” Harris said. “To show we care.” The blueberry industry has been looking toward Asia for customers as production has in- creased. The U.S. Department of Agriculture has purchased surplus blueberries for food banks and soup kitchens to sta- bilize prices. “We know the handwriting is on the wall. We need to de- velop new markets,” Washing- ton State Blueberry Commis- sion Executive Director Alan Schreiber said. Washington blueberry farm- ers hope to gain permission to sell fresh berries to Korea. Or- egon farmers gained access in 2012 after 10 years of negotia- tions to set food-safety regula- tions. Schreiber said he hoped that Washington farmers will win access “within three years.” The trade trip won’t yield any immediate results, but it’s im- portant to “show the flag,” he said. “Foreign markets take time to develop, and this is just one of the things you do,” Schreiber said. Washington State Wine Commission will focus on the Korean leg of the trip, the com- mission’s president, Steve War- ner, said. Japan already represents 9 percent of Washington wine exports, while Korea takes in 4.1 percent. Washington wines are avail- able for on-premise consump- tion at Western-style restau- rants and hotels in Korea, but they need to break into more retail outlets. “In order to be successful, we have to do on-premise and off-premise,” he said. “We’re just scratching the surface,” Warner said. “I’m re- ally happy with where we are, and I think there are tremen- dous opportunities.” Washington exported $469 million in agricultural products last year to South Korea. Dan Wheat/Capital Press Joshua Adkins, a Syngenta research and development scientist, talks to growers about disease control in dry beans during a field day south of Ephrata, Wash., on Aug. 5. Farmers get a look at new pesticide products By DAN WHEAT Capital Press EPHRATA, Wash. — New fungicides for potatoes, under the brand name Orondis, will be released in the U.S. by Syn- genta next year. The active ingredient, Ox- athiapiprolin, is good against late blight and is an entirely new mode of action, said Josh- ua Adkins, a Syngenta research and development scientist. Adkins was one of several personnel of the global agro- chemical and seed company talking about new Syngenta ingredient in Aprovia to con- trol powdery mildew and scab on apples, pears and grapes. Solatenol is mixed with other active ingredients in Ela- tus for potatoes and Trivapro for cereal grains and corn. Mixed with Azoxystrobin in Elatus for potatoes, Solate- nol is excellent in crop safety, preventive fungicidal activity and in standing up to rain, Ad- kins said. It fits into resistance management programs with no cross-resistance to strobi- lurin or triazole fungicides and is excellent in combating Rhi- zoctonia fungi. Solatenol demonstrates similar qualities in Trivapro for wheat, he said. Sedaxane is the active in- gredient in Vibrance fungicide blended with other seed treat- ments depending on the crop. It is used in soybeans, corn, wheat and pulse crops and just getting registered for potatoes. Bicyclopyrone is the ac- tive ingredient in Acuron, a broad-spectrum herbicide for field and sweet corn. It also will be used for a new product, yet to be named, for launch in 2017 for weed control in cere- als. Groups support senators for backing trade authority By MATTHEW WEAVER Capital Press Agriculture groups in Wash- ington state are supporting their U.S. senators for backing fast- track trade promotion authority for President Barack Obama. Seventeen of the state’s ag- riculture groups are defending Sens. Patty Murray and Maria Cantwell against criticism from within their own Democratic party for supporting fast-track authority. Organizations signing a let- ter of support include the Hop Growers of Washington, the U.S. Pea and Lentil Associa- tion, the Washington Cattle- men’s Association, the Wash- ington Association of Grape Growers, Washington Farm Bureau, Washington Friends of Farms and Forests, Wash- ington State Fruit Commission, Washington State Potato Com- mission, Washington Grain Commission and Washington Association of Wheat Growers. Joyce Capital, Inc. In agriculture, nothing is certain. Your interest rate should be. We offer competitive interest rates for your agricultural financing needs: • Term agricultural loans (purchases & refinances) products to more than 100 up- per Columbia Basin growers at a Syngenta field day at Qualls Agricultural Laboratories south of Ephrata, Aug. 5. “It’s very effective at low rates so that’s exciting because we’re able to control disease with less product,” Adkins said. Solatenol is an active ingre- dient in Syngenta’s first foliar SDHI (succinate dehydroge- nase inhibitor) fungicides that are being registered this year and will be on the market in 2016. Solatenol is the sole active • FSA Preferred Lender “Agriculture is very trade-dependent,” said Ni- cole Berg, WAWG national legislation committee chair and a Paterson, Wash., farm- er. “We need to have stable, consistent trade policy. This issue needs to be done on a bipartisan concept, which is something that it seems in politics today is not quite there.” The groups felt Cantwell’s and Murray’s efforts needed to be validated and appreciat- ed, Berg said. “There were not a lot of Democrats that went on this issue, there was a divide on giving the president that authority,” said John Stuhl- miller, CEO for the Farm Bureau. “We’re grateful that they bucked the party on that one and went with what’s good for the state, which is increased opportunities for trade.” The ag groups see fast-track authority as critical for nego- tiating the Trans-Pacific Part- nership free trade agreement, which includes 12 countries, including the United States, Ja- pan, Mexico, Canada and Aus- tralia. Stuhlmiller said final lan- guage for the TPP agreement could be presented to Congress by the end of the year. Fast-track authority means the Senate can only take an up- or-down vote on a trade pact and cannot modify it. Congratulations to Oregon’s cattle and calf producers on becoming Oregon’s #1 agricultural commodity.* When one sector of Oregon agriculture succeeds, we all do. Here’s to future growth. • Amortizations up to 25 years From your friends at CONTACT: Kevin Arrien, or Joe Lodge at Joyce Capital, Inc. Agricultural Loan Agents www.oan.org www.farwestshow.com www.diggermagazine.com (208) 338-1560 • Boise, ID joe@arrien.biz 33-2/#17 *Source: Oregon Agriculture Facts and Figures, July 2015 33-2/#8