Section 199A: tax resolution deadline looms as talks continue

Industry representatives are still discussing how to address the consequences of a tax break introduced in December as the first deadline to get the measures pushed through congress looms, sources told Agricensus Wednesday.

The tax break, known as Section 199A, erroneously introduced an incentive for farmers to trade with cooperatives, effectively freezing major agribusinesses like Cargill and ADM out of the supply chain.

Representatives from the senate, the National Council of Farmer Cooperatives, major industry players, along with other interested parties have been engaged in an effort to resolve the legislation, in a process spearheaded by the National Grain and Feed Association.

However, those conversations remain underway and have, as yet, failed to yield any solutions that can be put towards the US congress.

“They are still working on a fix. That is about all I can report at this time,” Sarah Little, Communication Director for US Senator Pat Roberts told Agricensus Wednesday.

A spokesperson at the NGFA declined to comment.

The NCFC was also approached for comment but no reply was recieved at time of publication.

Cunning plan
The NGFA updated its members at the end of January that the 199A resolution would be attached to the funding bill expected to be pushed through the House by February 8.

On that date, and if there is no agreement, US government funding will expire and a second government shutdown in the space of a month would follow.

However, members of the House are said to be already working on a deal that could see the potential funding crisis averted through compromise agreements – while no resolution of the Section 199A situation appears to be in sight.

Unintended consequences
Earlier this week, ADM’s CEO Juan Luciano had warned during the company’s quarterly results it had been pursuing parallel contingency plans in the event a resolution to 199A was slow in arriving.

"Of course the team has been looking at parallel potential options… We don’t want to go there, we think it will be revised, but of course we are not going to sit idle and lose our share," Luciano told analysts and investors on the call.