ALTOONA, Wis. (WEAU) -- Agricultural issues are very much at issue as events take shape in Washington. As the Congress tries to pass another short term spending bill to keep the government open, some members want to include a fix to the Section 199A provision of the new tax bill in that measure. Right now the law gives farmers a big tax advantage if they sell their crops and other production through farmer owned cooperatives. That leaves private grain operators with potentially no crops to buy. Also, the next round of negotiations to modernize the North American Free Trade Agreement begins later this month in Mexico. U.S. trade officials say the new talks are moving forward but at a very slow pace.
(Image Source: MGN)
Progress was made last month in Montreal on sanitary and phytosanitary measures, customs and trade issues as well as technical barriers to trade. Negotiators still say they want to wrap up the talks by the end of March but most observers say that won't happen until after the Mexican presidential election in July and maybe not until after our mid-term elections in November.
If President Trump does decide NAFTA isn't in the best interests of the United States and opts us out of the deal, it will be felt by Wisconsin agriculture. Currently Canada and Mexico are our 2 biggest trading partners. In 2017, we exported $1.1 billion worth of agricultural products to Canada-and that was actually down about 1% from a year earlier. Our sales to Mexico last year totaled $346 million-up over 55% from 2016. But already Mexico has started to source some of the products it needs from the European Union and South America just in case we get out of the deal and they need to find other sources for their inputs.
After an afternoon of debate on the floor, the Senate yesterday did pass a 2 year budget deal to keep the government operating. And it does include language affecting agriculture. The senators agreed on language to include $800 million for dairy and cotton programs as well as more than $2.3 billion for disaster aid for Florida citrus growers and other farmers hurt by last year's hurricanes. But the bill doesn't include a fix to the Section 199A tax deduction that's in the new tax law. That section gives farmers a bigger tax break if they sell their grain and other production through farmer owned cooperatives rather than private companies. And the writers of the new tax law say it may take some time to get the problem fixed. Meanwhile, members of the Ag committees say inclusion of funding for dairy, cotton and disaster relief gives them the go ahead they need to start writing the 2018 farm bill.
The latest estimates of U.S. farm income show things aren't getting any better in rural America. Those numbers show an expected drop in both crop and animal prices this year, dropping net farm income to 59 and a half billion dollars-6.7% less than in 2017 and to the lowest levels since 2006. Crop receipts are expected to be down 1% because of huge supplies and more competition from around the world.
That mega-merger of Bayer buying seed giant Monsanto isn't a done deal yet and some groups are still trying to stop it. A group called Farmers and Families First is launching a major media campaign to try and stop government approval of the deal. The group says the merger would put farmers under attack and let these giant conglomerates take control of American farming. They estimate the merger would mean seed prices would go up at least 5%. But Bayer officials expect the deal to be approved and the deal to be done in the first half of this year.