Important Tax Update
On Nov. 16, the House of Representatives passed its version of the tax reform package, “The Tax Cuts and Jobs Act,” by a vote of 227-205. Included in this legislation was the elimination of Section 199, the Domestic Production Activities Deduction (DPAD). However, one day later, on Nov. 17, the Senate Finance Committee passed its version of the legislation that also eliminated Section 199 from the tax code by a vote of 14-12. It is expected that the legislation will be considered by the full Senate. As of the writing of this article in late November, the text of the legislation that passed out of the Senate Finance Committee is not yet available.
As mentioned in the last update, Section 199 was enacted as part of the American Jobs Creation Act of 2004, replacing the Extraterritorial Income Exclusion (ETI). The deduction applies to proceeds from agricultural or horticultural products that are manufactured, produced, grown or extracted by cooperatives, or that are marketed through cooperatives. The deduction is 9 percent (limited to 50 percent of the W-2 wages paid by the taxpayer during the year). Cooperatives pass the deduction through to their members or retain it at the cooperative and use it to invest in capital improvements. It is estimated by the National Council of Farmer Cooperatives that “farmer cooperatives pass 95 percent of the benefit—nearly $2 billion nationally—directly back to farmers across rural America.” Growers in many areas of production utilize the deduction— including dairy, grains, livestock, cotton, specialty crops, sugarbeets, and oil and gas refining. The impact of the deduction would have a significant impact on sugarbeet growers. Given the different structures and finances of sugarbeet cooperatives, the differences may be significant. But across the board, it is an important benefit to cooperatives.
As of this writing, the ASGA continues to work to advance changes to the Senate version of the bill so that sugarbeet producers can be made whole by a reinstatement of Section 199 or enhancement of other provisions of the tax code to make up for the loss of Section 199. If Section 199 or a comparable benefit to cooperatives can be included in legislation that passes the Senate, it is possible that a conference committee can include provisions beneficial to the sugarbeet industry in the legislation before it is sent to President Trump for signature. A conference committee is formed to reconcile differences in legislation that has passed both chambers. At this point, it is unclear if the House and the Senate will form a conference committee. The ASGA continues to forcefully advocate for a reinstatement of Section 199 or comparable benefit to sugarbeet producers.
Biotech Disclosure Regulations
We continue to work with the USDA’s Agricultural Marketing Service to address difficult issues in properly disclosing commodities or ingredients derived from biotech commodities that contain genetic material above a certain threshold set by the secretary of agriculture. We expect to see proposed regulations by early 2018, which will provide yet another opportunity to provide our views on how the disclosure law should be implemented. Once the USDA releases a proposed rule, the formal comment period will begin and the agency will set a deadline for providing written submissions. The amount of time for formal rulemaking varies, but in order for the final rule to be written by the statutory deadline of July 28, we do not expect longer than a 60-day comment period. All members of the sugarbeet industry are encouraged to provide individual comments to the USDA. The ASGA will provide information on how to submit individual comments as soon as possible.
Biotech Education & Outreach
The ASGA was joined by the American Farm Bureau Federation, the American Feed Industry Association, the American Seed Trade Association, the Biotechnology Innovation Organization (BIO), the Corn Refiners Association, the National Association of State Departments of Agriculture, the National Cotton Council and the National Milk Producers Federation on a comment letter drafted by the ASGA and submitted in response to questions the FDA posed on how best to provide education and outreach to the public on agricultural biotechnology and food and feed ingredients derived from biotechnology.
This initiative, to which Congress appropriated $3 million, is critical and long overdue because of the tremendous amount of misinformation about agricultural biotechnology in the public domain. For too long, stakeholders in the value chain from seed to plate have had to defend the thoroughness and safety of the regulatory system without the addition of the government voice.
2018 ASGA Annual Meeting
Sugarbeet growers will meet Feb. 3-6 in Washington, D.C., at the JW Marriott hotel, two blocks from the White House. With a farm bill up for renewal and a new administration in place, you need to hear directly from members of Congress and administration officials—and they need to see and hear from you. Many of these officials have been invited to speak at general sessions Feb. 5 and 6. This is a tremendous opportunity to come face to face with the key government and industry leaders who chart the policy and administrative agenda for American agriculture. In addition, the nation’s capital provides numerous things to see and do without the long lines of the usual tourist season. You can see much more in a shorter time.
You can go to www.americansugarbeet.org to make hotel reservations, register for the meeting, and get important information regarding special tours of the Capitol and the White House.