Letter Conveys NCC's Support of Tax Code Change

The NCC sent a letter to Rep. Abraham (R-LA) conveying support for his introduction of the Fairness for Agricultural Machinery and Equipment Act that would make permanent a provision in the tax code to shorten the Modified Accelerated Cost Recovery System depreciation schedule for farm equipment from seven to five years.

Published: June 17, 2016
Updated: June 17, 2016

June 17, 2016

Congressman Ralph Abraham, M.D.
417 Cannon House Office Building
Washington DC

Dear Congressman Abraham:

The National Cotton Council supports your legislation, H.R. 4474, the Fairness for Agricultural Machinery and Equipment (FAME) Act, which would reinstate and make permanent five-year depreciation for farm business machinery and equipment.

Agricultural equipment is depreciated over a seven-year schedule while equipment used in other sectors which has similar use patterns and life spans, benefits from a five-year schedule. According to USDA's Economic Research Service, the value of farm machinery and motor vehicles in use on farms in 2014 was $259 billion. In fact, machinery and farm-use motor vehicles account for over 8 percent of total assets owned by farmers and ranchers.

USDA's Farm Service Agency surveys show that, on average, farmers and ranchers finance business equipment and machinery for five years. Aligning depreciation and debt service would certainly increase after-tax farm income helping farmers cover their debt service and facilitating the replacement of older machinery. This will lead to improved farm safety as newer equipment is fitted with the latest safety features that will help prevent injury and save lives. Another positive impact of new machinery is that many of them employ global positioning system and precision agriculture technologies that reduce fuel usage and allow for the more efficient application of fertilizer and crop protection products, which not only helps the farmers' bottom line but is a direct environmental benefit.

Cotton farmers are entering their third year of depressed prices and need every tool available to simply survive the current economic climate. Your bill would add extra incentive for a farmer to purchase new machinery to make their operation even more efficient and environmentally friendly.

Thank you for your consideration.


Gary M. Adams
President and CEO