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.”