“We are concerned that language in the Tax Cuts and Jobs Act has fundamentally disrupted the agricultural economy by giving farmers, ranchers and dairy producers a substantial tax incentive not to sell their products to thousands of independent companies across the American heartland,” they wrote.
The problem is the new tax law tilts the playing field toward coop grain elevators by providing a 20% deduction on all grain sales to farmer cooperatives. If the provision isn’t changed, the companies warn, “countless businesses — including thousands of small, family-owned independent companies — will be forced into costly restructuring, selling to rivals or going out of business. This will not only destroy homegrown jobs and rural economies, but it will also disrupt the supply chain for agricultural products and destabilize the market for everything from milk and grain to meat and poultry.”
The American Farm Bureau Federation said it supports leveling the playing field, saying:
“Unfortunately, Section 199A had the unintended consequence of distorting commodity markets and treating farm and ranch businesses differently depending on where they sold their commodities.”
Farm Bureau added in its letter, “The proposed solution restores the balance of competition within the marketplace and provides fairness in the tax treatment of farm and ranch businesses. The need for swift passage is critical to provide certainty to farmers and ranchers as they sell stored commodities and make marketing decisions for this year’s crop.”
The National Farmers Union, however, is calling on Congress not to change a thing, arguing that the provision was an attempt to level the playing field for cooperatives.