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.
Mexico — On March 28, U.S. sugar producers and processors (the American Sugar Coalition) filed anti-dumping and countervailing duty petitions against subsidized and dumped imported sugar from Mexico due to that harm the imports have caused to U.S. producers and the violation of U.S. trade laws.
• Antidumping law allows the United States to collect anti-dumping duties after administrative determinations by the United States International Trade Commission (ITC) and Department of Commerce (DOC) that a foreign product is being sold in the U.S. market at less than fair value and that the imports are materially injuring (or threatening to materially injure) the U.S. industry.
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Luther Markwart, author of Dateline Washington, is executive vice president of the American Sugarbeet Growers Association.