The American Soybean Association (ASA) today renewed its support for Farm And Ranch Risk Management (FARRM) accounts that would help farmers better manage year-to-year fluctuations in their cash flow. ASA President Mike Yost, a soybean and corn producer from Murdock, Minn., said, "This important measure would provide a much-needed cash flow tool to agricultural producers, allowing income from a good year to be held on a tax-deferred basis until drawn on in a poor year. Combined with a reformed crop insurance program and the income averaging authority provided by Congress and the Administration last year, FARRM accounts will provide valuable risk management options for farmers and ranchers as they face very challenging marketing and financial conditions in the next few years."

For more than three years, the ASA has urged Congress to authorize tax legislation that would establish FARRM accounts. Such a program would give producers the ability to place up to 20% of their profit from sales of agricultural products in tax-deferred, interest-bearing accounts each year, with a limit of 100% of average annual income. Funds could remain in FARRM accounts until the sixth year after deposit, when they would have to be withdrawn. This would help farmers manage increased price and income volatility by allowing them to set up "rainy day" FARRM accounts.

"I want to congratulate Representatives Kenny Holshof, Karen Thurman, and their colleagues who have agreed to reintroduce legislation to establish Farm And Ranch Risk Management accounts," Yost said. "There won’t be much profit in the farm economy this year to invest in FARRM accounts, but you only have to look back a couple of years to higher commodity prices when a FARRM account would have been a very good option for producers. In fact, they could well have enabled farmers and ranchers to make better plans for the current downturn in prices and farm income."