Derrick Wallace watches as catfish are harvested out of a pond by crane in Brooksville Tuesday afternoon. Catfish farmers say while they appreciate the new sales tax break that went into effect on July 1, the state of the industry is still uncertain, due primarily to competition from catfish-producing countries in Southeast Asia. Photo by: Zachary Odom/Dispatch Staff
July 9, 2014 10:52:25 AM
Mississippi farmers are saving some money as of this month. Mississippi House Bill 844, which went into effect on July 1, exempts certain agriculture businesses from paying state sales tax on utility bills.
Brandon Presley, Northern District Commissioner for the Mississippi Public Service Commission, said farmers pay a 7-percent sales tax on their monthly utility bills.
According to the Public Service Commission's statement, this exemption applies to the production of poultry and poultry products, livestock production and products, domesticated fish production and products, marine aquaculture products, milk processing and milk products, the processing of poultry and livestock feed, or the irrigation of crops.
Farmers can register for the subsidy with their utility service provider.
Brenda Lathan, the Vice President of Economic Development for Lowndes County, said that breaks like these are important to local farmers.
"Something like this is really going to help them, because they have struggled with out of pocket costs," Lathan said.
For many farmers, however, the amount saved is going to be rather small. While 7 percent is the sales tax applied to most utility bills, most large-scale farmers are taxed as manufacturers and are taxed at a 1.5 percent rate for utilities.
"It really won't have a big impact on us," said Ronnie West, the owner of Westberry Farm, a local catfish farmer.
Westberry Farm budgets $70,000 a year to pay its utility bill, West said. At the company's present sales tax rate on utilities at 1.5 percent, House Bill 844 will save the company approximately $1,050 annually.
This step was taken by the legislature in an attempt to level the playing field for Mississippi farmers, who compete with producers from areas with more tax breaks and subsidies, such as neighboring Alabama.
Catching up the catfish industry
The bill will impact many farmers in the state, but there is particular interest in cutting the costs of catfish farmers, Presley said.
Catfish farms in Mississippi and across the South have been regaining hope this year thanks to an extension of the Farm Bill passed in 2014. American catfish producers have been struggling to stay competitive with markets in Southeast Asia, particularly from Vietnam.
"We can't compete with products from Vietnam if they aren't on the same field," West said.
The Asian pangasius fish is a cousin to American catfish and is sold in the United States and abroad as catfish. Since Vietnam agreed to a trade deal with the United States, the European Union and Japan in 1996, the Vietnamese government has given ample subsidies to its commercial fish industry.
The 2014 extension of the Farm Bill now includes a provision that foreign and domestic products be put through the same level of USDA inspection, which lawmakers hope will help level the playing field once all products are held to the same quality standards. Sen. Thad Cochran fought for this extension.
"It is one of the largest agriculture industries in the state of Mississippi," said Lathan. "I think it will continue to grow because out legislators in Washington are working hard to regulate catfish."
Presley said he hopes that all farmers will take advantage of the subsidy to cut costs and improve their bottom lines. He said that he believes this is the beginning of helping to give Mississippi farmers an advantage.
"This is step one in a program you are going to see more about," Presley said.
Farmers remain skeptical
West said that the new provisions in the Farm Bill, and the savings his farm will receive from House Bill 844, are encouraging, but that he hasn't seen many steps taken as of now.
Fred Johnson, the general manager of Superior Catfish processing plant, said that he has not yet heard of any further attempts to help the catfish industry, either.
Superior Catfish also will be benefiting from House Bill 844, which he said they appreciate.
Johnson said that his company budgets $400,000 annually for their utilities, which will mean he will save approximately $450 per month and $6,000 annually as a result of the sales tax adjustment.
Presley said that he will be proposing more subsidies to state legislature that will aim at aiding the catfish industry fight competition from Southeast Asia.
"I am for doing anything we can to kill communist catfish and to support Mississippi catfish," Presley said.
Mississippi catfish farmers will have to wait and see how the USDA inspections ordered on all domestic and imported fish authorized by the 2014 Farm Bill are applied. The inspections are supposed to start on catfish products in 2016.
There have already been strong lobbying efforts made in Vietnam and China to fight against USDA inspections of exports to the United States, according to the Delta Council, an economic development organization based in the Delta and other parts of north Mississippi.
1. Lowndes Narcotics Unit searching for 10 suspects COLUMBUS & LOWNDES COUNTY
2. The accidental entrepreneurs STARKVILLE & OKTIBBEHA COUNTY
3. Two arrested in Motel 6 robbery COLUMBUS & LOWNDES COUNTY
4. Dak Prescott acquitted of DUI, speeding STARKVILLE & OKTIBBEHA COUNTY
5. Starkville man arrested for statutory rape COLUMBUS & LOWNDES COUNTY