Farm co-ops urge GOP to preserve deduction Presented by Boehringer Ingelheim Animal Health

With Sabrina Rodriguez, Maya Parthasarathy, Jenny Hopkinson and Helena Bottemiller Evich

FARM CO-OPS TO GOP: PRESERVE SECTION 199 DEDUCTION: The National Council of Farmer Cooperatives will announce today that it is opposed to congressional Republicans’ proposal to eliminate the Section 199 deduction, which is part of their broader framework for overhauling the tax code. The deduction — one of the few mentioned by name in the GOP’s framework — is a 9 percent tax break for most manufacturers, Pro Ag’s Catherine Boudreau reports. Those who benefit include agricultural co-ops like Land O’ Lakes, American Crystal Sugar and Blue Diamond, which are represented by NCFC. But the majority of co-ops have been passing on the benefits directly to their farmer members, returning an estimated $2 billion annually to communities across the country, according to the industry trade group.

“It’s a popular deduction across a diverse range of business sectors, but I think many sectors have determined that if the corporate tax rate is reduced, that will more than compensate them for losing the Section 199 deduction,” said Chuck Conner, president and CEO of NCFC, referring to the Republican’s plan to reduce the corporate tax rate from 35 to 20 percent. “In the case of cooperatives, we would get little to no benefit.”

Conner said eliminating the Section 199 deduction runs counter to Congress’ fundamental goal of putting more money in people’s pockets to spur economic growth. “Farmers will have less money to invest,” he said. “Most members of Congress would say that’s not what they want to do.”

What’s the latest on tax reform? Beyond Section 199, the GOP framework says that "numerous other special exclusions and deductions will be repealed or restricted" to generate revenue and pay for tax rate cuts, a feat that is likely to be supremely difficult. On Tuesday, the proposed elimination of a federal deduction that people apply to state and local taxes was in the cross hairs, reports POLITICO’s Rachael Bade, Sarah Ferris and Aaron Lorenzo. A handful of New York Republicans are threatening to vote against the budget on Thursday — a key hurdle Congress must jump to get to tax reform — unless leadership retreats from that plan.

HAPPY WEDNESDAY, OCT. 25! Where MA is always up for a good pun. Today’s winner is the Economist’s push news alert “Don’t cry for meat, Argentina” (The story was on the trend toward meatless Mondays in the beef-loving nation.). Got any more cheap puns, tips, birthday or wedding anniversary shoutouts? (Today Christine, one of your hosts, is celebrating nine years of marital bliss!) Send them or other ruminations to [email protected] or @chaughney. Follow the whole team at @Morning_Ag.

A message from Boehringer Ingelheim Animal Health: When animals are healthy, people are, too. Our 3,100 U.S. employees enhance the well-being of animals and people by guarding against diseases that threaten their health and our food supply. We’re proud to build on our long history of supporting U.S. producers by supplying a FMD vaccine bank for the USDA. Learn more.

DRAMA-FILLED MARKUP FOR H-2A REPLACEMENT: The House Judiciary Committee will reconvene today after calling an unusual recess in the middle of a contentious markup of a bill sponsored by Chairman Bob Goodlatte to revamp the agricultural guest-worker program. Democratic lawmakers opposed to the bill took up a significant part of the hearing, which started almost 45 minutes behind schedule and ran on for more than two hours of debate. Goodlatte himself was so incensed that he left the hearing room, returning only to vote on amendments.

Why all the Democratic backlash? Democratic committee members repeatedly slammed the bill, saying it would hurt both foreign guest-workers and American workers. The bill would eliminate requirements that employers provide transportation and housing. Visa holders would also not receive protection from the Fair Labor Standards Act. Employers would be required to pay such workers slightly above minimum wage, but it would be a sharp decrease from the average prevailing wage for many industries.

The future of the bill remains unclear: Rep. Luis Gutierrez (D-Ill.) asserted that even if the bill moved out of committee, anyone who thought it would be enacted into law was “living a fantasy.” In 2013, Goodlatte sponsored a bill with the same name that was voted out of committee, but never taken up on the House floor. More from Pro’s Sabrina Rodriguez here.

RURAL TASK FORCE REPORT SENT TO WHITE HOUSE: The Interagency Task Force on Agriculture and Rural Prosperity led by Agriculture Secretary Sonny Perdue has sent its report to the White House for review, USDA spokesman Tim Murtaugh told MA. “We met the deadline,” Murtaugh said, adding that President Donald Trump will finalize the report “at the time of his choosing.”

Trump established the task force in April via an executive order, directing cabinet members to spend 180 days studying problems in rural America and devising recommendations to fix them. They were to focus particularly on identifying regulations that stifle job creation, improving infrastructure and spurring technological innovation. Perdue has convened a handful of meetings and listening sessions since its inception. No word on what the recommendations might be.

ROW CROPS:

— A day of ag and food bills: Sens. Heidi Heitkamp (D-N.D.) and Joni Ernst (R-Iowa) on Tuesday introduced marker legislation for the 2018 farm bill. It would make changes to the Agriculture Risk Coverage county program to address discrepancies in subsidy payments, reported mainly by participating corn and soybean growers. The bill would direct the USDA Farm Service Agency to use crop yield data from the Risk Management Agency as a first choice instead of information from the National Agricultural Statistics Service, among other provisions. More from Catherine here.

Reps. G.T. Thompson (R-Pa.) and Joe Courtney (D-Conn.) also introduced a bill that would allow flavored low-fat milk, now restricted in the federal lunch and breakfast programs, back into the cafeteria as a way to increase consumption of the dairy product. Perdue proposed in May the same changes as part of a broader plan to give schools more leeway to serve food that students find appetizing. More than five months after being announced, the proposed changes are still under review by the White House Office of Management and Budget.

— No need to address him as Senator Rock: In his usual expletive-laden fashion, Kid Rock told Howard Stern that he was not running for Senate against Senate Agriculture Committee Ranking Member Debbie Stabenow. Instead, he'll be dropping his new album, "Sweet Southern Sugar" on Nov. 3. More from POLITICO’s Rebecca Morin here.

— A grim picture: A GAO report issued Tuesday said that greenhouse gas emissions and climate change could cost the United States as much as $9.2 billion between 2020 and 2039 in lost crop yields. It also said that extreme weather and fire events have cost the federal government $350 billion over the past 10 years -- including in crop and flood insurance costs, Pro Ag’s Jenny Hopkinson writes. Separately, Columbia Journalism Review examines why it’s important for ag reporters to cover climate change issues.

— Governors call for wildfire funding fix: The National Governors Association is urging Capitol Hill in a letter today to provide a long-term fix to the Forest Service’s funding for wildfires, arguing that the current practice of using the 10-year average when budgeting for suppression is inadequate.

— Aid bill passes: The Senate approved a second emergency aid measure to help areas devastated by hurricanes and wildfires, Pro’s Sarah Ferris reports. All the $36.5 billion bill needs now is Trump's signature.

— Doud clears one hurdle: The Senate Finance Committee on Tuesday approved Trump's pick for USTR chief agricultural negotiator, Gregory Doud, by voice vote, Doug Palmer and Megan Cassella report.

— Save the grasslands: Roughly 2.5 million acres of grasslands across the Great Plains region of the United States and Canada were converted to cropland in 2015-2016, according to a new report from the World Wildlife Fund. Converting grasslands to crop production can harm habitat for wildlife, damage nearby waterways and release carbon into the atmosphere, WWF says.

— Grazing battle: Hispanic ranchers have been feuding with the federal government over grazing rights on New Mexican land that their families have used for centuries. The ranchers' attorneys argue that the U.S. Forest Service didn't consider the negative social and economic impacts on the ranchers when deciding to limit grazing, but a federal judge dismissed the counts against the Forest Service. More from the Associated Press here.

— But will lawmakers eat it up? More than 30 chefs, farmers and organic food makers are heading to Capitol Hill today as part of the Plate of the Union campaign to urge lawmakers to include in the 2018 farm bill provisions for more resources and funding for the National Organic Program.

— Better data needed for fishing industry: Witnesses during a Senate subcommittee hearing on the Magnuson-Stevens Act agreed that the industry needs better data about its ever-slippery and on-the-move subjects: fish. More from Christine here.

— USDA handling a growing number of FOIAs for commodity checkoffs: In the last five years, the USDA Agricultural Marketing Service has fielded 104 FOIA requests for commodity checkoffs and taken an average of 77 days to complete them, according to a Government Accountability Office report published Tuesday. The agency handled 21 requests in fiscal 2012, which dropped to 12 the following year. It has since reached a high of 35 in fiscal 2016. The report was requested by Democratic Sens. Cory Booker (N.J.) and Richard Blumenthal (Conn.), who have called for greater transparency and accountability in the checkoff programs. Check out the report here.

— The fate of glyphosate in Europe: It is still unclear. The European Commission is backtracking on its proposal to renew the weedkiller for a decade in favor of seeking to extend its license for 5-7 years. Although not legally binding, the European Parliament passed a symbolic resolution to phase out glyphosate in Europe by the end of 2022. More from POLITICO Europe here.

— And the fate of glyphosate in you: Researchers have found higher levels of glyphosate in urine samples of cohort study participants in California than they did even a decade ago, according to a paper published in the Journal of the American Medical Association.

— Ethanol fight victor: Bloomberg examines how the corn lobby beat out the oil lobby on the Renewable Fuel Standard issue.

— Pingree wins James Beard leadership award: Rep. Chellie Pingree was honored with the James Beard Foundation Leadership Award Monday for her legislative work on organics and other parts of the food system. The congresswoman’s hometown paper, the Portland Press Herald wrote about it here.

—Spotted, CSPI edition: The Center for Science in the Public Interest held its first-ever gala Tuesday night to honor the work of its longtime leader and co-founder Michael Jacobson. There were plenty of notable names in the room to raise a toast to Big Food’s longtime foe, including: Sen. Richard Blumenthal, Rep. Rosa DeLauro, former Sen. Tom Harkin, Marion Nestle of New York University, and Michael Moss, formerly of the New York Times and author of the book “Salt Sugar Fat.” Both Ralph Nader and Former New York City Mayor Michael Bloomberg delivered video remarks.

Lurie at the helm: The group also formally welcomed its new executive director and president, Peter Lurie, who most recently served as an associate commissioner for public health strategy and analysis at FDA.

THAT'S ALL FOR MA! See you again soon! In the meantime, drop your host and the rest of the team a line: [email protected] and @ceboudreau; [email protected] and @jennyhops; [email protected] and @hbottemiller; [email protected] and @chaughney; [email protected] and @jmlauinger; and [email protected] and @pjoshiny. You can also follow @POLITICOPro and @Morning_Ag on Twitter.

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