ndustry Comments on Agriculture Equipment Depreciation
April 19, 2013
More than 20 national agriculture groups, including the American Sheep Industry Association, representing farmers and ranchers, equipment manufacturers and dealers urged the Ways and Means Committee Manufacturing Working Group to make permanent a five-year depreciation schedule for agricultural equipment.
In the Renewable Energy and Job Creation Act of 2008, Congress appropriately changed the depreciation schedule for agricultural equipment from seven years to five years. However, the modified schedule and all of the benefits it provided to U.S. agriculture and manufacturing expired at the end of 2009.
Agriculture is an equipment-intensive industry with nearly $133 billion of stock in use during any given year. The share of farm assets attributable to machinery and farm-use motor vehicles makes up 5.6 percent of total assets owned by farmers and ranchers. The U.S. Department of Agriculture’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 increases farm income by $850 million in a typical year, helping farmers and ranchers cover their debt service, and facilitates the replacement of worn-out machinery.