FARRM Accounts Authorized in Senate Bill

July 22,1999

The Senate Finance Committee's $792 billion tax cut proposal now includes farm and ranch risk management (FARRM) accounts for farmers. Sen. Charles Grassley (R-IA) proposed an amendment with the provision that would allow eligible farmers to contribute up to 20% of their taxable income for five years with taxes applying when the money was withdrawn.

"Obviously this year is not profitable for farmers," said Grassley, "and it is critical that congress and the President respond with a substantial cash payment on top of existing farm program payments that will be delivered to farmers this year."

But in future years, he added, FARRM accounts "could help save cash-strapped farmers from gong under when the bottom falls out of the marketplace." FARRM accounts did not make it into the House Ways and Means Committee's tax cut; they were defeated on a voice vote.

Another Grassley amendment calls for a tax credit for biomass development as an alternative source of energy. Biomass includes wood chips, agricultural byproducts, such as switch grass and untreated construction debris.