The chairman of a House Agriculture subcommittee proposed a tax-deferred disaster savings account that farmers could tap during hard times without waiting for government assistance. Rep. Rick Crawford said the damaging rains in his home state of Arkansas last month show the merit of letting producers take disaster preparedness into their own hands.
Crop damage from the rains could hit $50 million when the fall harvest is complete and the full scope of losses is known, a University of Arkansas economist told legislators. Rice was hit the hardest, with yield losses estimated at $18.1 million, said the Pine Bluff (Ark) Commercial. “Many rice, soybean, corn and grain sorghum grains were damaged by sprouting in the field, and soybean pods split open. The result was that significant percentages of harvested crops were rated poor or very poor when they arrived at market,” said the newspaper.
The disaster savings account would be structured similar to IRAs, said Crawford. To encourage producers to set up the so-called Farm Risk Abatement and Mitigation Election accounts, contributions would be tax deductible up to $50,000 per year and farmers could retain 10 percent of their contributions in the form of a tax credit during the first few years after opening the account, says a Crawford release.