A24-Lancaster Farming, Saturday, June 29, 2002 NCFC Testifies Tax Fairness For Farmer Cooperatives WASHINGTON, D.C. The National Council of Fanner Co operatives (NCFC) in testimony to the Senate Committee on Fi nance’s Hearing on Small Busi ness and Rural Development ex pressed its strong support of 5.312, the Tax Empowerment and Relief for Farmers and Fish ermen (TERFF) Act, introduced by Senators Charles Grassley (R -IA) and Max Baucus (D-Mont.). “Farmer cooperatives, their farmer owners, employees, and their families all have a huge in terest in rural America, since that is where they call home,” testified David Graves, president and CEO of NCFC. There are over 3,000 farmer cooperatives in the U.S., Graves noted, whose member owners in- Walk-In • Catalog • Web Sales - www.farmerboyag.com Call or email us today for a FREE catalog. TOU I RKI. -1-800-845-3374 • 717-866-7565 Attention Dairymen: JUNE IS DAIRY MONTH Take Advantage Now of our Huge Savings on Feed Bins & Accessories iron Keeps Feed Flowing Smoothly and Promotes First Feed In - First Feed Out. Bin-Level Indicator We Assemble, Deliver and Set-up Bins on your farm. elude a majority of America’s nearly 2 million individual farm ers. Being farmer owned and controlled, he emphasized, their earnings are returned to their farmer members on a patronage basis helping farmers improve their overall income and contrib uting significantly to the econom ic and tax base of rural commu nities. “ln addition,” Graves pointed out, “farmer cooperatives repre sent a significant source of em ployment for many rural commu nities all across the country providing jobs for approximately 300,000 full- and part-time em ployees with a combined payroll of more than $8 billion.” A major challenge facing farm er cooperatives is access to capi- Bulk Feed Bins with An ii „:,(|s|) nex ' F,oTM feed s v**« m * A-P's bulk feed tanks and Flex- Flo™ Systems perfectly illus trate the attention to detail that quality demands and pro vides the Dairy, Hog and Poultry farmers with the finest storage and feeding equip ment available. Sec us For All Your DAIRY - POULTRY - SWINE Remodeling A Equlpmcnt/lnstallatlon Needs ARMER BOY AG Sup OLESALE AGRICULTURAL SUPPLI tal, said Graves. Being farmer owned and controlled, they can not go to Wall Street as easily as other types of businesses. Current tax policy and regulations also limit their ability to raise equity capital. To help address this issue, S. 312 includes a provision that would modify the Dividend Allo cation Rule, which currently, in the case of farmer cooperatives, imposes the equivalent of a “tri ple tax” on cooperative earnings when dividends are paid on capi tal stock, reducing the patronage earnings paid to farmer-mem bers. The rule discourages farmer cooperatives from raising equity capital through the use of such I.A”" \ . 7^ 1-800-845-3374 financial tools, and puts them at a competitive disadvantage. “Clearly,” Graves urged, “this unfair and discriminatory tax burden should be eliminated.” 5.312 also contains several other provisions that would bene fit farmer cooperatives by: • Clarifying current tax law to allow farmers to cooperatively market value-added products through animal processing (the conversion of feed by chickens into products such as eggs, for example) on the same basis as products derived from mechani cal processing (wheat into flour); • Allowing the existing 10 cent credit for small ethanol produc ers to be passed through by a fanner cooperative directly to and for the benefit of its farmer owners; and • Extending declaratory judgment procedures to ensure that farmer cooperatives have the same rights to judicial review on tax-related issues as any other similar type entity. “Maintaining and strengthen ing the ability of farmers to join together in cooperative self-help efforts is vital to the economic well being of fanners and the rural communities where they live, Graves concluded. “For this reason, NCFC strongly supports S. 312, and commends Senators Grassley and Baucus for intro ducing this important legisla tion.”