Elizabeth G. Dunn reported last week at The Wall Street Journal Online that, “It began for Matthew Accarrino, the chef at SPQR in San Francisco, when he grew weary of sifting through farmers’ markets, vying with other chefs for the same carrots and tomatoes. Truly unusual produce, he realized, wasn’t sold this way—it wouldn’t make financial sense for a farmer. So he started ordering and buying directly from farms, but he struggled to come up with crops to request. Then, in 2011, he got to know a regular diner at SPQR named Peter Jacobsen, who owned a small farm in Yountville, Calif.

Rod Mauszycki indicated last week at DTN that, “The recently passed budget bill contains a ‘fix’ for the Section 199A dilemma with respect to sales to cooperatives. As such, it’s appropriate to review the changes to get an idea of how it will work.

“For non-corporate farmers, the changes to Section 199A will have minimal detrimental effect compared to the pre-2018 Section 199 provision. Section 199A’s deduction is limited to 20% of the taxpayer’s ordinary income, except for the pass-through deduction from a cooperative (discussed below).

“Lower-income farmers may claim a deduction equal to 20% of qualified business income. A high-income farmer’s deduction may be limited to the greater of 50% of W-2 wage expense or 25% of wages plus 2.5% of qualified investment in depreciable property (the wage/investment limitation).”

The update explained, “In almost all cases, Section 199A will result in a larger deduction than under the pre-2018 Section 199, Domestic Production Activities Deduction (DPAD). At worst, a farmer will get an 11% deduction. This is greater than then 9% under DPAD, which was limited by 50% wages paid. Under DPAD, if you had no wages, the only DPAD that could be claimed was the amount of DPAD passed through a cooperative.

“For those non-corporate farmers selling to cooperatives, a deduction equal to 20% of net business income on such sales, subject to wage or wage/investment limitations, is available. The deduction will be reduced by an amount equal to the old DPAD benefit (9% of net income from sales to a co-op or 50% wages attributed to those sales). In addition, the farmer will be able to claim the pass-through deduction from the cooperative, regardless of character of income, wages or qualified investment in depreciable property.

“Farmers that operate as a C corporation may or may not benefit from the new 199A. Under the new law, C corporations are not entitled to any Section 199A deduction. As a tradeoff, C corporations’ tax rates dropped from a maximum 35% to a flat 21%. That is a 40% tax reduction. However, if the farm C corporation taxable income was always under $50,000, it was previously taxed at 15%. The increase to 21% is a 40% tax increase. The purpose of the Section 199A deduction is to lower the business tax rate for non-corporations to level the playing field.”

DTN writer Emily Unglesbee reported yesterday that, “The Arkansas attorney general is appealing the surprise decision by a judge to allow six Arkansas farmers to use dicamba on cotton and soybeans during the 2018 growing season.

“As part of the appeal, the state will ask the court to halt the farmers’ in-season access to dicamba until the appeal is decided, most likely in the fall, said Jessica Ray, deputy communications director for the Arkansas attorney general’s office.

“The group of farmers, dubbed ‘the Arkansas 6’ on social media, came into the public spotlight after they sued the Arkansas State Plant Board for its refusal to amend its current ban on dicamba, which runs from April 15 through Oct. 15. Sixth Judicial Circuit Judge Tim Fox dismissed their lawsuit on Good Friday, but made the surprise decision to declare the ban null and void for these six farmers, after ruling that the dismissal violated their due process rights.”

The DTN article noted, “The Arkansas attorney general’s office immediately filed an appeal with the Arkansas Supreme Court on April 4.

“‘Judge Fox acknowledged that the Plant Board is immune to suit, but decided to exempt the plaintiffs from the Plant Board’s rule,’ said Ray. ‘This is a serious legal error, and we have asked the Arkansas Supreme Court for review. The Plant Board’s rule preventing the spraying of dicamba was lawful.'”

Yesterday’s article added that, “The attorney general’s office will ask the state Supreme Court to stay the judge’s order until the appeal is decided, which can take up to eight months, Ray told DTN.

“‘But the court will decide in the coming days or weeks whether to stay Judge Fox’s order pending the full appeal,’ she added.

“Grant Ballard, the attorney for the farmers, said he will fight that request. ‘We believe a stay of the order will bar us from applying the product and could inflict financial damages,’ he said. ‘We’re going to fight them on it, because we obtained some relief and believe we’re entitled to it and will try to hold on it.'”

The Associated Press reported last week that, “Drive past clustered hog sheds containing thousands of animals in the country’s No. 2 pork-producing state on the wrong day and the reason hundreds of North Carolina neighbors are suing in federal court is clear: it really stinks.

“The question facing jurors in a federal lawsuit starting Monday is whether the open-air animal waste pits that proliferated over a generation generate intense smells, clouds of flies and noise.

“The trial’s outcome could shake the profits and change production methods of pork producers who have enjoyed legislative protection and promotion in one of the nation’s food hubs. Supporters see industrial-scale hog complexes as generating jobs and revenues in rural communities. Friendly lawmakers last year sought to retroactively sink the lawsuits by more than 500 neighbors now lined up to go to trial one after another.”

The AP article stated, “The plaintiffs’ attorneys also say that information uncovered about company influence campaigns show their ‘knowledge of the harmful health effects of its hog operations,’ the inadequacy of regulations to address those health effects, and the availability of feasible alternatives.

“Pork producers say they not only care about their rural neighbors, but their operations are inspected annually to make sure they comply with environmental regulations. There are 14 state inspectors checking 2,100 hog operations.

“Hog growers are keeping an eye on the litigation that could force them to make changes or part with big payouts.”

Last week’s article added, “Such test cases allow lawyers to measure the strength of their evidence. The resulting verdicts – and any financial penalties – create guiderails for a possible settlement, said Christopher Seeger, a New York attorney who helped negotiate a $4.85 billion settlement over the health risks of arthritis painkiller Vioxx.

“Perhaps more important in shaping the ultimate resolution are the precedent-setting decisions judges make to accept some evidence and keep other details from jurors, Seeger said. Hog industry attorneys say the trial should be strictly limited to whether the 10 suing neighbors are suffering with a foul nuisance. They don’t want jurors to hear about alternative disposal hog waste methods used elsewhere, industry lobbying, or evidence of Chinese ownership.”

A news release yesterday from USDA’s Farm Service Agency (FSA) stated, “U.S. Secretary of Agriculture Sonny Perdue is encouraging dairy producers to consider enrolling in the new and improved Margin Protection Program for Dairy (MPP-Dairy), which will provide better protections for dairy producers from shifting milk and feed prices. With changes authorized under the Bipartisan Budget Act of 2018, [FSA] has set the enrollment period to run from April 9, 2018 to June 1, 2018.

“‘We recognize the financial hardships many of our nation’s dairy producers are experiencing right now. Folks are losing their contracts and they are getting anxious about getting their bills paid while they watch their milk check come in lower and lower each month. The Bipartisan Budget Act provided some much-needed incentives for dairy producers to make cost-effective decisions to strengthen their farms, mitigate risk, and conserve their natural resources,’ said Secretary Perdue. ‘This includes our support of America’s dairy farms. We encourage dairy producers to review the provisions of the updated program, which Congress shaped with their feedback. Those changes are now in effect, and I’d ask any producers who are interested to contact their local USDA service centers.'”

The FSA update noted, “The program protects dairy producers by paying them when the difference between the national all-milk price and the national average feed cost (the margin) falls below a certain dollar amount elected by the producer.

“Changes include:

• Calculations of the margin period is monthly rather than bi-monthly.
• Covered production is increased to 5 million pounds on the Tier 1 premium schedule, and premium rates for Tier 1 are substantially lowered.
• An exemption from paying an administrative fee for limited resource, beginning, veteran, and disadvantaged producers. Dairy operators enrolled in the previous 2018 enrollment period that qualify for this exemption under the new provisions may request a refund.”