AUGUSTA – Maine’s dairy and beef farmers are seeing red over a sales tax on bull semen.

Although the tax has been in place for decades, Maine’s farmers didn’t even realize it existed until last fall, when they suddenly discovered it on their artificial insemination bills.

Genex Cooperative Inc., Maine’s largest livestock semen distributor, previously had been absorbing the tax as part of its service. But as more and more states began initiating a tax on semen, the company no longer could afford the tax and began passing it back to the farmers

This surprised Maine’s dairy farmers, who had believed for decades that as an agriculture supply, semen was exempt from taxes.

The tax is a minimum of $800 to $1,000 per year on an average small dairy farm and up to $5,000 for some of Maine’s largest dairy operations.

This extra expenditure has pushed many farmers to lobby the state Legislature’s Agriculture Committee to amend the sales tax laws to exempt semen. The exemption has the backing of the Maine Farm Bureau, the Maine Dairy Industry Improvement Association and the Maine Beef Producers Association, among other groups.

Maine is one of only six states in the country that charges sales tax on semen, which is considered tangible personal property. It is used in the artificial insemination of cows, horses, goats, sheep, llamas, buffaloes and alpacas. Many dog breeders also purchase frozen semen, as does the poultry industry.

Prices vary, ranging from $15 a unit for goat semen to $40 a unit for high quality bull semen. At Maine’s sales tax of 5 percent, tax on the bull semen unit is $2.

Two inseminations always are done for conception, so for a farmer with an average herd size of 200 cows, the tax would be a minimum of $800 a year.

“This is just another layer of burden on the agricultural community,” Vicki Schmidt of Hebron said earlier this week. Schmidt breeds Shires, a draft horse recently removed from the endangered species list. She sells Shire equine semen and is one of a handful of small, independent sellers of semen in Maine.

“This is just ridiculous,” she said of the tax.

Julie Marie Bickford of the Maine Dairy Industry Association said the issue is a major concern among dairy farmers.

“This is one area where farmers are able to diversify and promote herd improvement,” Bickford said. She said farmers rarely use “live cover” of bulls or stallions anymore because the animals are too dangerous to keep and nearly all Maine’s dairy farmers use artificial insemination.

Based on Maine’s herd population of 38,000 cows, semen tax costs to the dairy industry would be about $300,000 annually, Bickford said. “But what about all the specialty livestock? What about swine, horses, llamas? This opens up some strange doors,” she said.

Although there are several independent semen providers in Maine, Genex Cooperative Inc., based in Wisconsin and New York, is the largest supplier. Genex spokesperson Terri Dallas said Wednesday that as states scramble for every dime of revenue, it appears that more and more will begin taxing agricultural items such as semen.

Although the state considers semen personal property, Genex maintains it is a “genetic investment,” she said.

In an average year, Genex sells 35,000 to 50,000 units, or frozen straws, of bull semen to dairy and beef producers in Maine, Dallas said.

No one in state government, however, seems to have a clear grasp of just how much revenue the semen tax represents.

Peter Beaulieu, director of the Sales, Fuel and Special Tax Division of the Bureau of Revenue Services, said his department has no available figures on semen tax. “Retailers report gross sales to us, not individual items sold,” he said.

Beaulieu also said that rumors that the bureau is looking back five years to capture lost revenue are untrue.

“The taxability of semen has been our determination for many years,” he said. Many other agricultural items are exempt from taxation, including feed, seed, hormones, fertilizer, pesticides, antibiotics, litter and medicines. “The fix would be to introduce legislation,” Beaulieu said.

State Sen. John Nutting, D-Leeds, chairman of the agriculture committee, said this week that no one has submitted a bill to exempt semen. There is talk, however, of amending an existing bill to accomplish the exemption.

“This is a sad state of affairs,” Nutting said Wednesday. He attacked Gov. John Baldacci’s stand on no new taxes, saying, “If your No. 1 priority is giving sales tax breaks to millionaire nonresidents, this is what happens. You end up taxing your own people.”

Nutting said the agriculture committee voted Wednesday morning to research what the fiscal impact of exempting semen would be on the state’s budget.

He said he would prefer that an amendment come from the governor, but “if the Ag Committee has to be forceful, then I think we’ll have to be.”