Privately owned grain companies, from the giants of the grain trade to local merchandisers, “fear their grain supply will dry up” because of a provision in the newly enacted tax law, said Reuters. The provision, which was added during final negotiations over the law, was meant to offset the impact on cooperatives of the elimination of the so-called Section 199 deduction for members of farmer co-ops.
“The new tax law allows farmers and ranchers to claim a 20 percent deduction on all payments received on sales to cooperatives,” said Reuters. “There is no comparable provision for farmers doing the same business with private or investor-owned companies.” The National Council of Farmer Cooperatives, which pushed for a replacement for Section 199, told its members, “The producer/member deduction is more generous than most of us thought possible a few months ago.”
The general manager of a grain elevator company in central Illinois told Reuters that some farmers are asking about moving grain from privately owned elevators so they can sell it to cooperatives. “An association that represents cooperatives also has received questions from people who want to open new cooperatives.”