OMAHA (DTN) -- Tax policies loom large for agricultural groups as Congress prepares to return to Washington next week.

While lawmakers may debate whether to extend all or some of the 2001 income tax cuts, the agricultural agenda will focus heavily on protecting farms from the estate tax in 2011 and whether to extend tax credits for biofuels. Members of the National Cattlemen's Beef Association and National Farmers Union fly producers into Washington next week to lobby Capitol Hill and meet with officials from key agencies. The ethanol group Growth Energy has a legislative meeting as well.

Mary Kay Thatcher, a lobbyist for the American Farm Bureau Federation, said tax policy is the top agenda item, but it's unlikely Congress could come together on a controversial topic such as the estate tax with fewer than 16 legislative days before lawmakers break for elections.

"Probably our biggest priority is estate taxes, which is looking more and more dismal," Thatcher said.

Most Democrats are unwilling to budge on legislation that would appear to be a tax break for wealthier Americans. It's more likely that an estate tax bill would wait until a lame-duck session after the elections. Sen. Blanche Lincoln, D-Ark., and Sen. Jon Kyl, R-Ariz., have proposed a $5 million asset exemption that doubles for married couples and a 35-percent tax rate. Other lawmakers have touted going back to 2009 levels of a $3.5 million exemption and 45-percent rate.

The National Farmers Union supports a $4 million exemption and 45-percent tax rate as well as protecting the stepped-up basis for assets. NFU also would like to see the 2001 tax cuts expire for the wealthiest people.

Farm Bureau and NFU both want to see movement on a bill that would loosen travel and export restrictions to Cuba. NFU is planning a press event Tuesday that may include some key farm-state lawmakers from both the Senate and House to highlight the bill.

Chances of passing the Food Safety Modernization Act in the Senate increased dramatically over the August break with the 550-million egg recall in Iowa and some of the reports about conditions at the large farm operations at the center of the investigation. Sen. Charles Grassley, R-Iowa, who was not a co-sponsor of the bill, has argued that Senate Majority Leader Harry Reid, D-Nev., should quickly bring the bill to a floor debate.

"I would have to say the chances of seeing that bill move in the next three weeks are a lot more doable given the egg recall," Thatcher said.

Proponents for small farmers have been some of the biggest opponents of the food safety bill, fearing legislation could lead to restrictions on direct sales and farmer markets. Another hang-up to passage is an amendment by Sen. Dianne Feinstein, D-Calif., to ban food manufacturers from using a chemical used in plastics called bisphenol-A, or BPA, in children's bottles. Food companies that largely support the food safety bill are balking at the proposal.

Other major themes from NFU next week will include defending USDA's proposed livestock competition rule, seeking reforms for current dairy policies and advocating for climate legislation, a bill that definitively will not be part of Congress' agenda. Further, NFU members will be stressing the safety net. NFU supports the permanent disaster program and would like to see the Average Crop Revenue Election program move to a county trigger. NFU states direct payments are hard to justify to taxpayers, especially when commodity prices are high.

"Of course, we're going to focus on the farm bill," said Melisa Augusto, a spokeswoman for NFU.

Growth Energy members will be keying in on comments from Environmental Protection Agency Administrator Lisa Jackson about the status of the E-15 request. EPA is expected to make a decision on E-15 potentially by the end of this month, but there are questions over whether Jackson will kick the can down the road some more. Another pressing challenge will be to rally support to extend the 45-cent per-gallon ethanol blenders credit and 54-cent import tariff, both of which expire Dec. 31. The $1 per-gallon biodiesel tax credit expired at the end of last year and still hasn't come to a final vote for re-extension despite passing each chamber of Congress at least once this year.

Chris Clayton can be reached at chris.clayton@telventdtn.com

(KM/CZ)

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