2018 is going to be a good year for sugarbeet growers. With the amended Mexican antidumping and countervailing duty suspension agreements going into effect last October, the beet crop going into the ground this spring will fully benefit from the price recovery provided by the amended agreements. Yes, there is and always will be work to defend and maintain the suspension agreements and make sure that Mexico complies with the provisions, but it is in the interest of both governments and industries that these agreements work as they were intended. These agreements will manage sugar imports from Mexico so there is no need for any discussions with Mexico regarding sugar in the NAFTA negotiations. What everyone must also realize is that USDA needs the best production and consumption data available to determine how much additional sugar is needed from Mexico or other quota-holding countries. Working with USDA to get that critical information is very important so they do not make decisions that oversupply the U.S. sugar market with imports. This is a very high priority for our industry.
Tax Reform: Much of the focus this fall has been on the tax reform bill as it makes dramatic reforms to lower corporate taxes and remove a number of personal deductions. Section 199, or the Domestic Production Activities Deduction (DPAD), was eliminated in both the House and Senate tax bills. The DPAD is calculated as 9% of qualified production activities income of the taxpayer (in our case, the cooperative), capped at 50% of cumulative W-2 wages of cooperative employees. Cooperatives can retain it at the cooperative and use it for capital improvements or pass the deduction through to their members. Section 199 is especially valuable to the grower-owners of cooperatives because their share of the cooperative’s DPAD is based off their share of the total beet payment (or patronage) paid to growers, not corporate profits. It is likely that without this deduction, grower taxes could go up--not down. Senator Hoeven (R-ND) led the charge to amend the Senate tax bill to retain Section 199 and had the support of 194 organizations, and eight senators cosponsored the amendment. But the amendment faced a budget point of order which would have required a 60-vote margin instead of a simple majority to gain Senate approval, so the amendment was not offered.
There is a flurry of activities in Washington this summer that will impact the beet sugar industry in the months and years ahead. Here are a few of them.
Farm Bill -- As of January 20, it appears that the last great hurdle of completing the farm bill is being resolved. Getting an agreement on dairy policy has held up the farm bill completion for weeks, and finally all of the key players in the debate may have found a way to exit the conflict, embrace a policy and move the farm bill to its conclusion. We will expect the bill to be passed by both Houses and to the President’s desk for signature in early February.
This has been a farm bill like no other. Now it must be defended from opponents who will seek various means and legislative opportunities to attack and undermine it. The battles over sugar policy are never over.
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Boredom is not an occupational hazard in the sugar industry. There are many diverse issues on the 2014 agenda that will impact our industry and that your grower and processor leaders will be watching and working on throughout the year.
Farm Bill — After three years of contentious battles in a toxic political environment, congressional approval of a five-year farm bill is likely in January and will be sent to the President for his signature. There has been more work on this bill than you have seen or can imagine to get it across the finish line. Again, we thank the champions of sugar policy in both the House and Senate for the great work they have done to maintain our policy and sustain our industry.
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As of the middle of November, key agricultural congressional leaders working to resolve the differences between the House and Senate bills were signaling, with a level of confidence, that a farm bill would be passed before the end of the year. It has taken far too long, there are far too many reforms, there are genuine and significant spending reductions, and it will solve international agricultural trade disputes. It will be one of the few actions taken by the Congress this year that achieves all of those objectives.
Oh, and by the way, next year is an election year. Members of Congress know they need to get this off of their plate.
Since the sugar provisions are the same in both the House and Senate versions, no changes are expected in our policy in the final farm bill.
Once the conference report is completed, American agriculture needs to lock arms and get this bill passed and signed by the President.
Luther Markwart, author of Dateline Washington, is executive vice president of the American Sugarbeet Growers Association.