Fifteen senators sent a letter to Treasury Secretary Henry Paulson requesting that he extend the tax relief for ranchers who were forced to sell off large portions of their breeding stock as a result of drought conditions during 2002.
The letter was also signed by Senators Ben Nelson, D-Neb, Wayne Allard, R-Colo., Max Baucus, D-Mont., Christopher Bond, R-Mo., Sam Brownback, R-Kan., Conrad Burns, R-Mont., Kent Conrad, D-N.D., Byron Dorgan, D-N.D., Michael Enzi, R-Wyo., Tim Johnson, D-S.D., Pat Roberts, R-Kan., Ken Salazar, D-Colo., Jim Talent, R-Mo., Craig Thomas, R-Wyo., and John Thune, R-S.D.
The American Jobs Creation Act of 2003 contained a provision to amend Section 1033 (e) of the Uniform Tax Code. This amendment extended the tax deferment period for weather-related sales of livestock, known as involuntary conversions, from two years to four years. The amendment also stipulated that the Secretary of the Treasury could further extend the deferral period. "A further extension of this deferment period is important to the producers in our states who continue to suffer from the devastating effects of drought," states the bi-partisan group of senators.
The National Cattlemen's Beef Association says extending the tax deferment period will allow producers to replace the animals they were forced to sell in 2002 at a more feasible time. "If ranchers were forced to restock their herds now - during our current drought - many would be forced to sell them again quickly because there is no way to keep cattle on the ranch without feed or water," says Jordan.
The current drought conditions are expected to affect cattlemen through the winter and into the spring next year because of reduced hay supplies. "We've got a situation where you can't get your hands on hay, and if you can, hay prices are sky-high," says NCBA's Chief Economist Gregg Doud. "But this also has a long-term effect because folks can't expand their herds and grow their businesses. It's definitely a time when ranchers are cutting back - not expanding."