US agribusinesses scramble to fix botched tax code change
Lobby groups representing hundreds of farm co-operatives and agribusinesses are scrambling to reverse the impact of a tax provision that will encourage farmers to sell product to co-operatives at the expense of big corporations.
In a circular to members seen by Agricensus, the US National Grain and Feed Association (NGFA), which has over 1,000 members involved in the trade of corn, soybeans and wheat, said it had not lobbied for a change in legislation, but was working expeditiously with Congress to reverse the measure.
The circular, signed by NGFA President and CEO Randy Gordon, said the group would work with cooperatives and corporations alike to "preserve the benefits that cooperatives and their farmer patrons previously enjoyed" while addressing "unforeseen impacts" that could change the competitive landscape of the market.
The note reveals the extent to which the well-funded lobby group was blindsided by the last minute insertion of the amendment into President Trump's Tax Cuts and Jobs Act passed last month, and revealed details of key meetings with architects of the amendment, Senators John Hoeven and John Thune.
Surprise!
Acknowledging the “considerable concern”, Gordon makes clear that the NGFA was "not privy" to the amendment, known as Section 199A, and only became aware of the situation shortly after Christmas.
He also received assurances from both Hoeven and Thune that their intent in introducing Section 199A had been to replicate the protection that the original Section 199 had afforded farmers – and not to give specific parts of the industry a competitive advantage over other sectors.
The original Section 199 did not give different tax treatment to co-operatives or corporations.
The note, which used the phrase ‘unintended consequences’ twice, confirmed that the NGFA had now been asked to coordinate the response to the tax change with contributions from the National Council of Farmer Cooperatives (NCFC), tax advisors to the Senate Agriculture Committee Chair Pat Roberts, as well as staff from the offices of Senator Thune and Senator Hoeven.
Randy Gordon had not replied to an approach for comment at time of writing.