St. Louis Public Radio News
7:40 am
Mon May 28, 2007

Cattle ranchers target of one of many tax breaks

Jefferson City, MO – A proposed tax break is being hailed as what's needed to help spur the state's cattle industry by enabling farmers and ranchers to hang on to their animals longer, bringing higher profits when they are sold.

The beef tax credit is part of a larger tax break bill lawmakers passed a few weeks ago that is under review by Gov. Matt Blunt.

It would give a tax break to farmers who sell their cattle after they reach 450 pounds when cattle are generally weaned from milk.

Mark Akin, general manager of Circle A Ranch near Iberia, said the tax break would encourage the state's cattlemen to keep cattle in Missouri rather than ship them west to be fattened and processed, like he has for the past 14 years.

Although Missouri is among the nation's leaders in calf production, the majority of those animals are shipped to feedlots in neighboring states where corn feed has typically been cheaper.

But the growing demand for corn spurred by the ethanol industry has put prices in Missouri on par with those elsewhere, making this the right time for the state to develop its cattle industry, said Merrel Breyer, president of the Missouri Cattlemen's Association.

Average corn prices have risen nationally from roughly $2 per bushel to almost $4. Plus, ethanol production creates waste, called distillers grain, that can be used to feed cattle.

"This is the starting gate," said Breyer. "This allows us to start looking into it, and then we can jump in."

Rep. Charlie Schlottach, who owns a cattle operation and conceived the tax credit, estimates that of the state's 2 million cattle, about 1.2 million are shipped out before they weigh 450 pounds.

Keeping some of those animals and helping start feeding operations, cattle producers say, could expand the billion-dollar-per-year cattle industry. At least one economic impact study found the bill would return $13.50 for every dollar spent on tax incentives.

Akin said the availability of distillers grain prompted the Circle A Ranch to begin developing a feeding system. He said the tax incentive makes that even easier.

"We were doing that anyhow, so it just helps out with defraying some of the cost in operating the way that we need to," Akin said.

Schlottach said much of that tax credit would go toward developing the infrastructure for feedlots, such as equipment, lots, feeders and watering equipment.

The beef tax credit would allow up to $30 million in tax breaks but no more than $10 million per year.