HJ/EDHerald Journal / Enterprise Dispatch, Feb. 20, 2006

Legislators working on bill to help dairy farmers

By Liz Hellmann
Staff Writer

After losing a close battle to pass a similar bill last year, dairy farmer George Bakeberg of Howard Lake is hoping this legislative session will bring good news for local farmers.

“Last year, we thought we had it, but we lost it at the last hour to budget balancing,” Bakeberg said.

The bill Bakeberg, and other local farmers, are pushing for allows an income and corporate franchise tax credit for investment in dairy operations, with a ceiling of $500,000.

In other words, farmers would be able to receive a credit for 10 percent of the first $500,000 they spend on barns, fences, watering facilities, feed storage, handling equipment, and manure management facilities.

They could improve their dairy farms, and Uncle Sam would help offset the liability.

“Anytime you can get a tax break for building, it’s a good thing,” Bakeberg said.

The bill, which is co-authored by Rep. Dean Urdahl (R-Grove City), was reviewed by the Minnesota tax committee Feb. 1, in Paynesville.

Local farmers in attendance at the meeting included Bakeberg, Ryan Bakeberg of Howard Lake, and Sean Groos of Howard Lake.

“The hearing went very well. It was good that the tax committee came out to the country, instead of the country coming to them, which is the way it usually is,” Bakeberg said.

At the hearing, Urdahl acknowledged that the bill would not solve all of the problems facing dairy producers, but it would be a start.

Since 1970, Minnesota has lost about 400,000 cows, according to Urdahl. The state has dropped from producing 7 percent of the nation’s milk in 1980, to 5 percent in 2003.

“We’ve seen a big decline in the last 10 years,” said Brian Yager, who testified at the hearing as chairman of the farm supply committee of the Minnesota Association of Cooperatives.

“Losing that many farms hurts the implement dealers, cooperatives, dairy processors and manufacturers, and more. It’s kind of like a rippling effect,” Yager said.

Research also indicates that a typical dairy herd in the Upper Midwest with 50 to 100 cows, averaging $248,000, will recycle $203,000 of that through the community in businesses and services, according to Yager.

Although there has never been a bill like this in Minnesota, Wisconsin has already passed such a bill.

“In Wisconsin, it has encouraged younger people to take over family farms,” Yager said.

Based on the results of the similar program in Wisconsin, Urdahl estimates that 2,200 farms, or 40 percent of Minnesota dairy farms would take advantage of the tax credit.

Urdahl isn’t the only one optimistic about the program. The bill is supported by both the Farmers Bureau and the Farmers Union.

The tax committee approved the bill, which will then be put to the test during the next legislative session, which will reconvene Wednesday, March 1.

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