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.
As the Congress considered the major tax reform package, both House and Senate language eliminated the Section 199 Domestic Production Activity Deduction (DPAD), significantly increasing the tax burden on any farmer who was a member of a cooperative. This was clearly a major threat to our industry, where the average beet grower would see a tax increase of $15,000 per year and a significantly higher increase for larger farming operations. Much of the tax reform work and language was closely held by the committees to avoid pressure from private industry as the bill was drafted, so this problem was revealed very late in the legislative process.
Members of Congress from agricultural districts and states had to find a solution and insert it in the bill when the House and Senate bills were being reconciled into one conference report that both Houses would have to approve. Senators John Hoeven (R-ND) and John Thune (R-SD) made fixing this a priority. Tax lawyers for the National Council of Farmer Cooperatives (NCFC) took the lead to find a new path for retaining an equivalent deduction for co-op members. After several weeks of intense work, with various CPAs from beet areas feeding impact analysis to members of Congress, a solution was included at the last minute in the negotiation process. The provisions are too complicated to explain in this article, so I recommend that you consult your cooperative and tax advisor for the specific details.
I would like to thank beet cooperative and grower leaders and the CPAs for their tremendous effort to get this done. A special thank you to American Crystal Sugar Washington representatives Kevin Price and Hillary Fabrico who, as members of NCFC, worked closely with NCFC and Senator Hoeven’s office to keep us up to date as this worked its way through the process. It once again shows how critically important it is to have a strong working relationship among industry partners and Capitol Hill. This was a huge success and good news for beet growers.
On biotech disclosure regulations, we continue to wait for the Administration to publish the proposed rule for implanting the bill that was passed in July of 2016. We have worked closely with USDA to provide them with a great deal of input and analysis to properly write the rule. We have provided important leadership for other segments of agriculture to follow and now wait to see how the Administration drafts the rule. Once the proposed rule is published in early 2018, we will have at least 60 days to analyze it and make further comments. This had long- term market implications and will set a standard for countries around the world, which is why we have and will continue to spent so much time and effort on this issue. We are hopeful that there will be more good news for beet growers.
The crop insurance price election for 2018 is $48.50 and the replant price was raised from $80 per acre to $110. There will be other upgrades in the policy in 2019 that will be beneficial to growers.
The 2018 Farm Bill will now be our major focus. Congressional and administration leaders have been invited to speak to attendees at our annual meeting in Washington, DC this year.
Grower leaders will make hundreds of congressional visits in February and March to explain and promote U.S. sugar policy and ask for congressional support to continue it and oppose any amendments that would harm producers. The House Agriculture Committee is anxious to move the bill early in 2018 in order to get their work done so any tweaks in the bill can be put in place in a timely manner for both farmers and USDA administrators.
In addition to the sugar provisions, we will work hard to protect crop insurance funding and additional dollars for agriculture research. We met with many congressional offices in December in an effort to get a clear understanding where members stood on various issues in the bill. The path forward in the Senate is likely to be slower and more difficult. We will be working closely with other farm and commodity groups to get this bill passed.
The 2018 elections will dominate the headlines in the coming months. Unexpected retirements have occurred as a result of the harassment allegations, which is unique to this election. There are health issues for some senators and with only a one member majority, the Republicans’ majority vote can change day to day. We have been meeting with candidates for open seats to explain our industry and policy. This is a never ending effort and your support of your political action committee allows us to have these engaging discussions. Thank you for your support of your PAC.
Luther Markwart, author of Dateline Washington, is executive vice president of the American Sugarbeet Growers Association.