January 19, 2018

Grain, Cooperative Groups Huddle on Tax Fix, Shift Could Cascade Across Agriculture

cooperatives A Statement of Chuck Conner, president & CEO, National Council of Farmer Cooperatives (NCFC) and Randy Gordon, president & CEO, National Grain and Feed Association (NGFA), on Section 199A Tax Provisions“We are aware of questions and concerns raised about the potential marketplace effects of the new section 199A of the Tax Cuts and Jobs Act as it relates to producers and agribusinesses.   Congress’s intent in including this provision was to replicate the tax treatment previously available to co-op farmer-members, consistent with the bill’s overarching goal of creating jobs and economic growth including in rural America.

“We are working intensively with stakeholders, including cooperatives, non-cooperative-owned agribusinesses and Senate offices, including Senators Hoeven, Thune and Roberts. The goal of these discussions is to arrive at an equitable solution that preserves the benefits that cooperatives and their farmer patrons previously enjoyed under Section 199 of the tax code, while addressing any unforeseen impacts on producers’ marketing decisions. NCFC, NGFA and our stakeholders are committed to reaching a solution in a thoughtful and expeditious manner, and to working with Congress to address this issue promptly.”

About the National Council of Farmer Cooperatives

Since 1929, NCFC has been the voice of America’s farmer cooperatives.  Our members are regional and national farmer cooperatives, which are in turn composed of over 2,000 local farmer cooperatives across the country.  NCFC members also include 26 state and regional councils of cooperatives.  Farmer cooperatives allow individual farmers the ability to own and lead organizations that are essential for continued competitiveness in both the domestic and international markets.

America’s farmer-owned cooperatives provide a comprehensive array of services for their members.  These diverse organizations handle, process and market virtually every type of agricultural commodity.  They also provide farmers with access to infrastructure necessary to manufacture, distribute and sell a variety of farm inputs.  Additionally, they provide credit and related financial services, including export financing.

About the National Grain and Feed Association

The NGFA, established in 1896, consists of more than 1,050 grain, feed, processing, exporting and other grain-related companies – both independent and cooperative.  Its members operate more than 7,000 facilities nationwide and handle more than 70 percent of the U.S. grain and oilseed crop.  NGFA also consists of 36 affiliated state and regional associations, and has strategic alliances with the North American Export Grain Association and Pet Food Institute.

Hoeven Amendment Would Prevent Tax Increases for Farmers, Co-op

The National Council of Farmer Cooperatives today expressed strong support by an amendment filed today by Senators John Hoeven of North Dakota and Jerry Moran of Kansas that would prevent a tax increase on farmers and their co-ops. The amendment to H.R. 1, the Tax Cuts and Jobs Act of 2017, would retain the “Domestic Production Activities Deduction” (DPAD), also known as Section 199, for agriculture.

“We urge every senator who wants to avoid increasing taxes on farmers and their co-ops to support the amendment filed by Senators Hoeven and Moran,” said Chuck Conner, president and CEO of NCFC. “Section 199 has a proven track record of letting farmers keep more of the money that they earn, of creating jobs in local communities and boosting economies across rural America.”

“Without this amendment, farmers and their co-ops will face increased taxes at a time of continued low commodity prices, when they can afford such a financial hit the least,” said Conner. “Rural areas will see money that had been invested locally leave their communities, having an impact far beyond agriculture.”

In addition, NCFC and 193 other farm groups, cooperatives and agribusinesses today sent a letter to Senate leadership expressing their support for inclusion of the Hoeven amendment in the tax reform package.

About NCFC

Since 1929, NCFC has been the voice of America’s farmer cooperatives.  Our members are regional and national farmer cooperatives, which are in turn composed of over 2,000 local farmer cooperatives across the country.  NCFC members also include 26 state and regional councils of cooperatives.  Farmer cooperatives allow individual farmers the ability to own and lead organizations that are essential for continued competitiveness in both the domestic and international markets.

America’s farmer-owned cooperatives provide a comprehensive array of services for their members.  These diverse organizations handle, process and market virtually every type of agricultural commodity.  They also provide farmers with access to infrastructure necessary to manufacture, distribute and sell a variety of farm inputs.  Additionally, they provide credit and related financial services, including export financing.

NDFU Warns that Farmers Should Be Aware of Tax Reform Implications

NDFU

While the U.S. House of Representatives’ newly passed Tax Cuts and Jobs Act aims to simplify the tax code and cut taxes for individuals and corporations, it may possibly raise the tax burden on family farmers and ranchers if left unchecked by the U.S. Senate or conference committee, according to North Dakota Farmers Union (NDFU) President Mark Watne.

Provisions that are important to agriculture like deductions on state and local taxes, accelerated depreciation (Section 179), carryback provisions, “like kind” exchanges, and Section 199 for cooperatives could be eliminated, capped or reduced depending upon the outcome of congressional action. Watne said the lowering of individual tax rates may not be enough to offset the elimination of these deductions.

“With the rush in Congress to pass tax reforms by year end, there are just too many unknowns,” Watne said. “We need to slow down, get the nonpartisan CBO score and determine exactly what the tax implication is for farmers, especially if tax cuts aren’t offset by growth in GDP. The last thing we need on the farm is increased taxes.”

Watne said statutory pay-as-you-go (PAYGO) rules require that increases in deficit spending be offset by reduced spending in non-exempt mandatory programs, such as ARC, PLC, disaster assistance programs for commodities, and administrative costs for crop insurance delivery.

“I’m very concerned about the pot of money we will have available to write farm bills,” said Watne. “The baseline for farm bill funding has been cut already by $100 billion over the past 10 years. It’s too low of a benchmark to begin with and we can’t afford to slash farm programs, like crop insurance, to fund tax cuts. That would be disastrous for agriculture and for our country.”

Watne said Farmers Union is working with others to develop a tool that farmers can access online to determine what their tax burden will be given different tax scenarios.

NDFU Website