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.
The largest U.S. grain processor, ADM, is pursuing a takeover of Bunge, another of the giants of the grain trade that collectively are known as ABCD — ADM, Bunge, Cargill, and Louis Dreyfus, an unnamed source told Reuters. Due to low prices engendered by a string of bumper crops worldwide, margins are tight in the grain trade.
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.
World consumption of grain will exceed 2.1 billion tonnes during 2017/18, a record due to "new peaks for food, feed and industrial uses," according to estimates by the London-based International Grains Council. "Food demand is expected to continue to drive increases for wheat while growth for feed and industrial use will push maize (corn) utilization to a new high."
Farm groups were among the first to testify at three days of hearings called by the Trump administration as it decides how to modify the North American Free Trade Agreement. Agriculture has been an overall winner under NAFTA.