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.
Last week, Dean Foods announced it was canceling its contracts with more than 100 independent, conventional dairy farmers. The farmers, who are located in eight states, will have until May 31 to find a new market for their milk. Meanwhile, dairy prices are plummeting across the country. (No paywall)
The recently passed tax law included a provision that gives farmers a larger tax savings if they sell their goods to cooperatives. Now grain companies, angered by what they see as an advantage being given to their competitors, are setting up their own cooperatives in case the law isn’t amended.