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Increasingly, a small handful of corporations control inputs, credit, elevators, processing facilities, and markets necessary to grow and distribute agricultural products. Since the last half of the 19th century, farmer owned cooperatives have provided farmers a stronger presence in the marketplace and greater bargaining power to control the costs of inputs and the value of outputs. These new forms of agricultural cooperatives are commonly referred to as "value-added coops" or "new generation coops." In 1994, 2,200 marketing coops sold 31 percent of all U.S. farm commodities and 29 percent of the nation's farm supplies. The 240 farm credit cooperative banks made 25 percent of all agricultural loans. But as costs of inputs continue to rise and prices of commodities fall, farmers need ways to add value to the raw materials they produce. Rather than only growing and selling commodities, many value-added agricultural cooperatives have formed to process crops and return added value to producers rather than middlemen. While value added dairy and fruit cooperatives are not a new phenomena, a new generation of diverse cooperatives is on the rise - corn processing coops produce ethanol and fructose, and cooperatives owned by wheat farmers produce pasta.
RULES
- Biodiesel Use By School Districts - Missouri
In 2001 the state of Missouri passed a new law that gives school districts an incentive to purchase biodiesel fuel for their bus fleets. The law begins with the 2002-03 school year and lasts through the 2005-06 school year. Any school district may contract with an eligible new generation cooperative to purchase biodiesel fuel for its buses of a minimum of B-20 (20 percent biodiesel). The state will then reimburse the school district so that the net price to the contracting district for biodiesel will not exceed the rack price of regular diesel.
- Small-Scale Ethanol Production
The conversion of biomass into ethanol provides farmers an additional market for their crops. Over the years, many federal and state rules have been developed to promote ethanol production for use in industry and reformulated gasoline. The rules highlighted on this page are unique in that they encourage ethanol production on a small scale. More...
- Tax Policy Encouraging Value Added Cooperatives
Several federal and state policies provide incentives for the formation of farmer-owned,value-added cooperatives. On a federal level, a new Internal Revenue Code gives a tax credit to owners of agricultural processing facilities that sell to farmer cooperatives. In Missouri, a tax provision allows farmers to take a tax credit on their investment in a farmer-owned new generation cooperative. More...
- Cooperative Ownership Tax Provisions - Federal
The Internal Revenue Code, Section 1042(g) is a new provision passed by Congress in 1998 that allows the owners of agricultural and horticultural processing plants to defer the capital gains tax as long as they (1) sell to a farmers' cooperative whose members include the farmers who supply the facility, and (2) reinvest the proceeds in corporate stocks and bonds. The purpose of this tax break, according to the National Council of Farmer Cooperatives, is to give farmers a "tax-leveraged self-help mechanism to encourage them to move into further processing and capture a larger share of the nation's food dollar. More...
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