Farmers are worried they'll be paying more for fertilizer, fuel and pesticides under energy and environmental taxes being considered by Congress and the Clinton administration.
Corn growers are especially concerned, because they use so much fertilizer. Facing stagnant prices because of a record harvest and a cutoff of grain shipments to Russia, the farmers say they will have to swallow the added costs."There's no way we can say we'll pass it on," said Stanley Blunier, who farms 900 acres near Forrest in central Illinois, a top corn state. "We have to rely on what they offer us for the grain."
House Speaker Thomas Foley said Sunday that the administration was considering a broad tax based on the heat content of all types of energy. Farmers and fertilizer and pesticide industries are waiting for details when President Clinton unveils his economic plan to Congress Wednesday night.
Farmers use diesel, gasoline, liquefied petroleum gas and natural gas to run their machinery, dry grain or operate finishing sheds for hogs and other animals.
Living in the country, they drive farther for routine activities like shopping, going to the doctor or taking equipment in for repair.
Farmers also have indirect energy costs. Nitrogen fertilizers are made with natural gas, and pesticides have a high energy content as well.
Ron Thiessen, a Nebraska cattle rancher, said he must make a 90-mile round trip from his home in Chadron to Gordon to get parts for his windrower. It's a 200-mile round trip if he needs to see a medical specialist in Rapid City, S.D., or Scottsbluff, Neb. "Electricity costs would probably go up, too," he said.
Even though fuels used off the road are exempt from a federal excise tax, farmers worry a new motor fuels tax won't be.
The American Farm Bureau Federation estimates a 10-cent-per-gallon motor fuels tax, if imposed as a sales tax or con-sump-tion tax, would cost farmers $600 million directly and $600 million indirectly. The combined $1.2 billion would cut farm income 2 percent to 2.5 percent, the Farm Bureau said.
Moreover, some farm uses, such as transporting grain to an elevator or cattles to market, occur on highways and aren't covered by the exemption, Blunier and Thiessen said.
The Agriculture Department estimates farms used 667 trillion British thermal units' worth of fertilizer in 1991 and 115 trillion Btus' worth of pesticides in 1989. More than 32 million Btu go into making a ton of fertilizer, USDA said.
The Btu is the energy unit upon which a tax would be based. Blu-nier estimates he uses 40 tons of ammonia on his 500 acres of corn each year. The Fertilizer Institute said farmers paid $202 a ton in 1991 for ammonia, a nitrogen fertilizer.
The institute said it is particularly worried the Clinton package could contain another proposal, currently in legislation offered by Rep. Gerry Studds, D-Mass. The bill would create a fund from taxes on pollutants, including fertilizers and pesticides, to build sewage treatment plants and other public works. Fertilizers and pesticides are major sources of water pollution.
The institute said the tax would add $28 to $52 to the cost of a ton of ammonia and 46 cents to a pound of active ingredients in pesticides.