Legislative Report from RDL & Associates

Dave Ladd, President of RDL & Associates, was recently interviewed by Scott Colombe with of the Little Falls Radio to provide an overview of issues of importance to agriculture.

The interview touches upon the lead up and passage of the omnibus spending package, status of the 2018 Farm Bill, the Renewable Fuels Standard (RFS) and Renewable Identification Numbers (RINs) and tariffs.

The interview is 12:33 in duration.  For additional information, please contact Mr. Ladd at daveladd66@gmail.com.

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Omnibus Overview: Select Agriculture Provisions

Dave Ladd, President of RDL & Associates, was recently interviewed by Linda Brekke of the Linder Farm Network to provide an overview of the recently passed Omnibus Spending bill.

This segment deals with the select agriculture provisions and is :59 in duration.

For additional information, please contact Mr. Ladd at daveladd66@gmail.com.

Omnibus Overview: Section 199A

Dave Ladd, President of RDL & Associates, was recently interviewed by Linda Brekke of the Linder Farm Network to provide an overview of the recently passed Omnibus Spending bill.

This segment deals with the Section 199A “fix: and is :52 in duration.

For additional information, please contact Mr. Ladd at daveladd66@gmail.com.

Hope for Grain Fix as Tax Measures Face Uphill Climb on Omnibus (via CQ)

An internet sales tax measure and technical changes to fix glitches in the new tax law are unlikely to be included in an upcoming omnibus appropriations package, people familiar with the high-level spending talks said Tuesday.

A Democratic leadership aide said Speaker Paul D. Ryan, R-Wis., has made clear that there will be no tax provisions in the omnibus, and other people briefed or involved in the spending discussions have also said that technical corrections and especially online sales tax legislation are effectively off the table at this point in the negotiations. A spokeswoman for Ryan did not immediately respond to a request for comment.

The fiscal 2018 omnibus spending bill has been seen as one of the last, best chances for GOP tax writers looking to patch several glitches in their landmark tax code overhaul (PL 115-97), like a provision that has put private grain dealers at a competitive disadvantage with agricultural cooperatives.

House Ways and Means Chairman Kevin Brady, R-Texas, said Tuesday that there was still an outside chance for the grain fix to be included, as well as an extension of Federal Aviation Administration excise taxes that would otherwise expire March 31.

“I don’t want to get ahead of the Speaker and Leader McConnell and the bipartisan leadership here, but there is an urgency to the FAA tax extension and certainly to the co-op fix as well,” Brady said. “We’re very close to being able to share final details on the resolution for the co-op provision in a way that rebalances it back to where it was pre-tax reform. So we’ve had good discussions all across the board, and we continue to work with our Senate counterparts.”

Grain Glitch Fix

Later on Tuesday, Senate Finance Chairman Orrin G. Hatch, R-Utah, released a memo describing changes to the agricultural business deduction that he worked out with several GOP members and two outside stakeholders, the National Council of Farmer Cooperatives and the National Grain and Feed Association.

Under the new tax law, farmers can deduct up to 20 percent of their gross sales to agricultural cooperatives without certain limitations based on income. However sales to private operators receive less favorable treatment, as farmers above the law’s income threshold can’t claim additional deductions. In addition, the deductions can’t exceed 20 percent of net business income, which is smaller than gross income after backing out expenses.

The new agreement would reduce the deduction for farmers selling to co-ops by the same amount the farmer would have forgone under the old rules — either 9 percent of net income from those sales or 50 percent of wages attributable to such sales. That would effectively lessen the new incentive for farmers to sell to co-ops over private dealers.

In turn, cooperatives would again be able to take advantage of a special rule in place before the tax code overhaul. The rule gave co-ops flexibility to deduct based on gross sales and use the deduction to offset their income or pass the benefit along to farmer patrons.

In a joint statement, Hatch as well as Agriculture Chairman Pat Roberts of Kansas, Charles E. Grassley of Iowa, John Thune of South Dakota and John Hoeven of North Dakota said they were “committed to working with our colleagues to act swiftly on the measure and get it signed into law as soon as possible.” Similarly, Brady said in a statement that he hoped lawmakers “could enact this solution as quickly as possible.”

But Finance aides said there were no assurances, at least as of Tuesday, that the agricultural fix would be included in the omnibus. One snag with including an array of tax provisions in the omnibus was the expected price tag, as including one item could open the door to others.

And many Democrats since the new tax law was enacted in December have suggested they’re not eager to help Republicans plug the holes in their signature legislation.

“The way this tax bill was done, rushed through, partisan, in the dark of night, we don’t have much of an inclination — unless they want to open up other parts of the tax bill that we think need changes — to help them clean up the mess they made,” Senate Democratic Leader Charles E. Schumer of New York said Tuesday.

Brady said he thought some issues with the new law which “surfaced early on as fairly minor corrections, could be dealt with now” but that “immediate action and focus has to remain on FAA bill and on the co-ops solution.”

The fiscal 2018 spending package is now being discussed by top Republican and Democratic appropriators and leadership as well as the White House. Negotiators have been aiming to reach a deal and release the $1.3 trillion bill this week, well before the March 23 deadline when a stopgap funding measure (PL 115-123) expires, but it’s unclear if they will hit that target as a number of major policy and spending issues remain unresolved.

House Democratic Whip Steny H. Hoyer said Tuesday there “are a lot of riders still in play,” including on environmental policy, women’s health issues and campaign finance. Senate Homeland Security Appropriations Subcommittee Chairman John Boozman, R-Ark., said a final package may not be released until Sunday or Monday. Accordingly, there is still time for lawmakers to include other tax items.

Lawmakers in both chambers have also pushed to attach an internet sales tax enforcement measure to the omnibus. Legislation introduced by Representative Kristi Noem, R S.D., (HR 2193) and Senate Budget Chairman Michael B. Enzi, R-Wyo., (S 976) have both been discussed as add-ons.

Hatch is opposed, however, as is House Judiciary Chairman Robert W. Goodlatte, R-Va., and the online tax measures are almost certainly out of the spending bill, one person involved in the negotiations said Tuesday.

Al-Corn Clean Fuel CEO: “RIN cap doesn’t create demand, it destroys it (via AgNewsWire)

Randy Doyal, CEO of Al-Corn Clean Fuel in Claremont, Minnesota says a cap on the price of a RIN sets the price for a refiner to buy a waiver so he has no incentive to blend any ethanol. “It doesn’t create demand, it destroys it, and that’s not acceptable,” said Doyal.

 

Roberts aiming for April farm bill (via POLITICO)

The Senate Agriculture Committee is working toward releasing its farm bill in early April, Chairman Pat Roberts said on Wednesday.

“Yes, we will have a farm bill,” Roberts said, as he accepted a lifetime achievement award from the Global Child Nutrition Foundation. He noted that farmers and other stakeholders need predictability. “We will make every effort to provide that,” he added.

During his remarks, Roberts said he couldn’t give a set timeline for moving forward on the farm bill. But he hinted: “I think April is a very good month to have something happen.”

After the event, the Kansas Republican acknowledged that Congress faces a crowded to-do list this spring, but got more specific about his committee’s efforts to draft a farm bill, which appear to be ramping up. He said that his staff is already sharing legislative language with the minority staff. Roberts also said he would soon be meeting with ranking member Debbie Stabenow (D-Mich.) to discuss the bill.

“Staff is meeting these next couple of weeks,” he added. “I know they’re doing the same thing in the House.”

Roberts noted that there were more than 60 amendments last farm bill cycle and that the upper chamber was able to get it through the full Senate in two days. He added, however, that Congress has several other pressing priorities, including passing an omnibus spending bill later this month and addressing school safety concerns.

“We don’t talk much about agriculture … in the Republican conference, and I don’t think Debbie does, either, but now’s the time to say, ‘OK, we have a farm bill. We’re coming to a very rough patch. Farmers really need predictability and stability,’” he said.

Roberts was asked if he still expects the House Agriculture Committee will be first to release its version of the farm bill as has been widely expected.

“I don’t know that,” he responded, adding: “Y’all ask me, ‘Give me a specific date.’ I can’t do that. ‘When?’ Well, I think early April. I had hoped March, but we need to get it right and we need the time to get it right.”

“I’m not racing with the House, I’m not racing with anybody,” he added. “I just want to get it right and get it done.”

U.S.-Mexico dairy trade generates billions (via Morning AgClips)

The current free trade agreement with Mexico is the driving force behind $1.2 billion in U.S. dairy exports to our southern neighbor, as well as billions more in economic contributions, according to an analysis released today by Informa Economics.

Mexico is the No. 1 market for U.S. dairy product exports, accounting for roughly one-fourth of total U.S. exports. In 2016, the most recent year examined by Informa, the United States shipped $1.2 billion worth of dairy products to Mexico, up from $201 million in 2002. In 2016, Mexico accounted for 45 percent of total U.S. skim milk powder exports to all destinations, as well as 30 percent of cheese exports, 10 percent of butter exports and 8 percent of whey exports.

According to the analysis, total economic contributions (direct, indirect and induced) created by dairy sales to Mexico show the true importance of these exports to the overall U.S. economy. Including impacts to industries that are linked to U.S. dairy exports to Mexico, the aggregate 2012-2016 output value of $6.7 billion is magnified to $23.3 billion in economic output.

Informa’s analysis found that for every $1 of sales associated with dairy exports to Mexico, an additional $2.50 in output (industry sales) is supported elsewhere in the U.S. economy. U.S. dairy exports to Mexico also created 16,492 full-time equivalent jobs while directly generating an aggregate GDP of $8.4 billion over that five-year period.

“This analysis not only illustrates the importance of preserving existing market access to Mexico under North American Free Trade Agreement (NAFTA), but also demonstrates why we are urgently pursuing new opportunities via U.S. free trade agreements around the globe,” said U.S. Dairy Export Council (USDEC) President and CEO Tom Vilsack. “Virtually every U.S. free trade agreement to date has yielded positive results for dairy, and current negotiations hold great potential for the industry.”

The authors of the analysis note that under NAFTA, U.S. exports of dairy products to Mexico are duty free. This provides a significant advantage to the United States because export competitors shipping to Mexico are subject to MFN tariff rates of 20-45 percent on cheese, 45 percent on skim milk powder and 10 percent on whey products.

“Without NAFTA, the United States would be paying higher tariffs in terms of MFN tariff rates of 20 to 45 percent, or the same levels as its competitors,” the authors wrote.

Some competitors, including the European Union (EU), are already negotiating trade agreements with Mexico that could make their exports more competitive in the Mexican market.

“As this analysis shows, the relationship between the U.S. and Mexican dairy sectors is of great importance, not just to our producers, but to our economy as a whole,” said Jim Mulhern, president and CEO of the National Milk Producers Federation (NMPF). “We are committed to working toward a modernized NAFTA agreement that preserves this open and dependable trade relationship with Mexico, while removing massive barriers to dairy trade with Canada that were not adequately addressed in the original agreement.”

The analysis notes that while transportation advantages will continue with or without NAFTA, these logistical advantages would, at best, only partially offset economic losses in terms of business sales, GDP and jobs.

The study also reviews the potential increase in competition through the renegotiation of the EU-Mexico free trade agreement and the implementation of the newly established Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP-11) negotiations. Both negotiations could improve market access for competitor dairy product exports to Mexico.