If Congress passes a $1.3-trillion government funding bill this week, it will fix the so-called grain glitch, which gave farmers a powerful incentive to sell their grain and livestock to cooperatives.
Two large U.S. farm groups took opposite sides over legislation to repair an unintended flaw in the new tax law that gives farmers a huge deduction for crops and livestock sold to cooperatives.
The first major agricultural flaw found in the new tax law has “got to be changed,” said Iowa Sen. Chuck Grassley. Grain companies are very concerned that Section 199A of the new law “would put them out of business if we don’t do something,” he said.
Two major agribusiness groups are scrambling to fix a flaw in the new tax law that offers a big tax deduction to farmers who sell their crops through cooperatives but not when they deal with privately owned merchants. The flaw was created when lawmakers tried to replicate the benefits to farmes from a provision of the old tax code, known as Section 199, that was eliminated by the new law.
Dairy Farmers of America, the 20-year-old product of the largest merger in dairy cooperative history, has become a vertically integrated “corporation” that enjoys the legal benefits of a cooperative while increasingly serving its own bottom line rather than its member farmers, says Washington Monthly.
When it launches on April 1, Landus Cooperative will be the seventh-largest grain company in the United States, says DTN. Members of the Farmers Cooperative and the West Central Cooperative voted to merge under the name of Landus.
Agricultural cooperatives had record sales of more than $246 billion in 2013, the third year in a row of record-setting volume and a reflection of boom times in the farm sector, said the Agriculture Department.