Milling & Baking News - March 27, 2018 - 44

Washington

Omnibus spending bill includes
fix to Section 199A
WASHINGTON - The National Grain
and Feed Association on March 21 indicated the omnibus fiscal year 2018
appropriations bill will include stakeholder-driven provisions that would
correct the unintended consequences of
Section 199A of the Tax Cuts and Jobs
Act of 2017. The N.G.F.A. and the National Council of Farmer Cooperatives
spearheaded the effort to ensure Congress would restore a level playing field
for cooperatives and grain companies
in purchasing farmers' crops.
The legislative provisions would amend

Section 199A as it exists in current law,
under which producers may deduct up to
20% of gross payments received on sales of
agricultural cooperatives, without certain
limitations based on income. Meanwhile,
farmers selling to private/independent
companies are restricted to deducting 20%
of net business income, a considerably
smaller deduction.
"There is a huge sense of urgency in
getting this issue resolved, as producers continue to make marketing decisions, particularly given the welcome
rally in corn and soybean prices in recent

Perdue addresses concerns over
Section 199A and trade issues
SCOTTSDALE, ARIZ. - Secretary of Agriculture Sonny Perdue, in remarks made
March 19 to members of the National Grain
and Feed Association attending their annual meeting in Scottsdale, acknowledged
these were anxious times for U.S. farmers
given many were operating at break-even
or even below break-even because of relatively low crop prices and because of concerns over trade and other government
policies. Mr. Perdue's comments were
wide-ranging touching on U.S.D.A. reorganization, infrastructure, Renewable Fuel
Standard policy, the farm bill, trade and the
need to "fix" the infamous Section 199A of
the recently enacted tax law. Most emphasis was accorded to trade and Section 199A.
Mr. Perdue said it was critical to rectify

the unintended incentive given to producers in the tax law to sell their crop to
cooperatives in preference to private companies. Essentially, Section 199A as
written allows producers to deduct
20% of their gross sales if they sell
to cooperatives whereas they may
deduct only 20% of their net sales
if they sell to a non-cooperative
business. Industry has worked with
members of Congress to draft lan- Perdue
guage aimed at fixing the problem
they hope will be attached to the omnibus
spending bill to prevent another government shutdown (See related story above).
Mr. Perdue said it was important
and in everyone's interest to get the
matter resolved "so we can put it in

weeks," said Randy Gordon, president
and chief executive officer of the N.G.F.A.
"Thousands of grain elevators and other
agribusinesses, most of them small businesses that provide economic vitality to
rural communities, will be making costly
decisions on whether to reorganize their
business to be able to compete or even
whether to remain open for business
during coming weeks. N.G.F.A. is confident Congress understands the calamity
that will result unless the current Section
199A is corrected, and we will be working
tirelessly until it is. The inclusion of these
provisions in the omnibus bill is a huge
step in the right direction to preserve
competitive choices for producers when
marketing their agricultural products." MBN
the past and move forward."
He also praised the efforts of the
N.G.F.A. to resolve the Section 199A issue.
Mr. Perdue affirmed his support for an
improved NAFTA. He acknowledged
President Trump's negotiating strategy is
"a little unorthodox," but he asserted the
president's threat to withdraw from
the pact opened the way for the current talks. Mr. Perdue similarly suggested the administration's exempting Canada and Mexico from the
tariffs on steel and aluminum also
may improve prospects for negotiating a better NAFTA.
Mr. Perdue noted that the administration also was investigating whether it
might be possible to rejoin the Trans-Pacific Partnership if better terms could be secured than those negotiated by the Obama
administration and that currently form the
basis of the T.P.P. as it exists today. MBN

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Milling & Baking News - March 27, 2018

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