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Grain Companies Fear Harm From New Tax Law
USAgNet - 01/11/2018

The new U.S. tax law is poised to drive more control over the nation's grain supply to farmer-owned cooperatives, provoking concern among ethanol producers and privately run grain handlers that they could be squeezed out of the competition to buy crops. Until now, the cooperatives, private companies and publicly traded firms had a more even opportunity to handle the grain supply used in everything from loaves of bread in supermarkets to livestock feed.

The changes mean massive grain traders such as Archer Daniels Midland Co, Bunge Ltd and Cargill Inc could find it difficult to source corn, soybeans and wheat, reports Reuters. The perceived threat to these companies stems from a provision included in the final stages of the law's passage in December. It gives farmers such a big tax deduction for selling their produce to agricultural cooperatives that private firms fear their grains supply will dry up.

The provision was championed by Republican farm state senators including John Thune of South Dakota and John Hoeven of North Dakota.

Privately held Cargill said on Tuesday it was surprised the provision was added to the bill at the last minute and is evaluating its potential impact.

Rival ADM, which also produces ethanol, said it too was evaluating the provision and various potential solutions to it.

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