A CSF operates on the same principles as community supported agriculture (CSA). Clients of a CSF purchase shares in the year’s catch, just as CSA clients pre-purchase a share of the season’s harvest of meats, fruits, grains and vegetables, made available via regular pickups or deliveries. This puts money directly into the hands of the farmers or fishers to get through the off-season, to buy seeds, equipment, and infrastructure needs like greenhouses or wind tunnels, nets, et cetera.

I spoke recently with Sonia Strobel, who married into a B.C. fishing family. By the time Sonia’s first child was born, her father-in-law Otto was considering selling the boat and retiring as the fishery declined. Sonia realized if she wanted her children to be fishers too, something had to change. Then literature and life collided: Sonia had been involved with a CSA when she lived and taught in inner-city Brooklyn, N.Y.; after reading Barbara Kingsolver’s book Animal Vegetable Miracle, Sonia was “starstruck with the idea of local food systems. But how to connect fishing families with home cooks through a CSA for fishers?”

Sonia and her husband Shaun adopted a Field of Dreams mentality: they built a website and founded Skipper Otto. Forty local families came to the table, collecting their share of the catch at the wharf, then at farmers’ market stalls. Then, Prairie friends started asking if they too could buy shares. When 20 Prairie residents joined, the team loaded a freezer and hit the highway, with clients picking up directly from the truck en route.

The co-operative grew cautiously, inviting fishing families they knew personally: fishers focussed on conservation, a love of the sea, a deep respect for the ecosystem, and using small-scale, low-impact harvesting methods. Eventually they found a community-minded organic store in the Prairies with spare freezer space, perfect as a common pickup spot for frozen fish. Sixteen years later, the co-operative lists pickup spots across Western Canada, and has 45 fishing families providing seafood for 8,000 member families.

What can we do as consumers to not be part of the problem? How to be a better solution? What does a robust, just, equitable fishery system look like?

Fishery reform requires an act of social change, a political act, Sonia says. The world she wants to see is what she and her family have created in a small scale with Skipper Otto: direct personal relationships, meaningful connections and access to traceable, high-quality seafood. That is, a system where diners know exactly who their dollars are supporting.

READ MORE: Fish on the flatland

“We need guidelines of sustainability, treating the ecosystem with respect,” Sonia says. “We must trace every piece of fish from catcher to cook. Our members agree to shop differently, to only eat X dollars’ worth of seafood this year, and eat with the ecosystem — maybe not sockeye, not halibut, not tuna. We need partners who believe in this community system, and partners who distribute. They say a rising tide floats all boats. So we are community builders first. And you get great fish.”

I bought a membership, sold on the idea of smaller amounts of ethically caught fish, bought directly from the fisher. I do the same with chicken, eggs, wine — and if I didn’t keep a garden, I’d join a CSA again for vegetables, all topics for another day. First we eat, then we read more about Skipper Otto.

Roasted halibut, sablefish or ling cod, with chanterelles

This simple dish makes the most of amazing ingredients.

Serves 4.

• 2 Tbsp. olive oil
• 6 cloves garlic, minced
• 1 medium onion, diced
• 2 c. sliced chanterelles, fresh or frozen
• 1 tsp. minced fresh thyme (or ½ tsp. if dried)
• 1 lb. densely textured white fish (halibut, sablefish or ling cod), thawed if frozen, sliced into 4 equal pieces
• salt and pepper to taste
• a drizzle of white wine, optional
• 4 large wedges lemon

Heat oven to 400 C. Preheat a cast iron sauté pan on a high flame. Add oil, then garlic. Cook briefly, until golden. Stir in onions, reduce heat, and cover. Sweat onions until tender, 10-15 minutes, stirring several times.

Raise heat to high, add chanterelles and sauté until nicely coloured. Season with thyme, then move vegetables to outer edges of pan. Centre fish in pan, season to taste, add wine or a splash of water, and sauté without stirring for 2 minutes. Transfer pan to oven, uncovered. Roast for 10-12 minutes, until fish is flaky. Remove from oven and serve with chanterelles and a wedge of lemon.

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During a meeting Tuesday of the Commons standing committee on finance, the president of Quebec-based Sollio Co-operative Group shared plans to limit consequences of the COVID-19 pandemic on the agrifood supply chain.

Sollio employs more than 15,000 people and has three agri-food divisions, including meat packer Olymel.

President Ghislain Gervais told MPs the government needs to invest in increasing productivity by improving its automating and robotizing infrastructures, while continuing to support exporters through investments in food processing.

The company is also calling for the fast deployment of telecommunications infrastructure to ensure the different regions of the country remain strong.

Sollio also listed the need for supporting a “sustainable economy” which, according to its submission, involves “significant support for the digitization and performance of agriculture, as well as promoting and supporting the co-operative business model.”

Citing ongoing labour challenges, the company also requests the federal government promote front-line trades to ensure the industry has enough workers.

“Canadian government support must be well targeted and sustained to protect our supply chains,” Gervais told the committee. “Supporting us in our investments, in a context of scarce resources, means ensuring that Canada will be able to increase its food self-sufficiency, as well as better protect its capacity and its reputation as a world-class exporter.”

Gervais finished his testimony by telling the committee members the COVID-19 shock was just the latest challenge for supply chains, noting the CN strike, rail blockades and difficulties accessing the Chinese market were all recent issues.

The finance committee has met regularly to discuss the financial impacts of the pandemic since the start of April, hearing from dozens of witnesses since.

At its meeting a week earlier, Denise Allen, CEO of Food Processors of Canada, told members “the COVID-19 pandemic has placed extraordinary strain on our entire supply chain.”

She said her organization’s members have spent an approximate $1 billion in added operational expenses to mitigate the pandemic’s impact. She called for more funding to assist in operating expenses and an injection of working capital “to backstop a minimum of three to six months’ worth of food orders to offset the receivables risk to distributors and discourage changes to payment terms.”

Other groups representing the agri-food and agriculture sectors have also testified before the committee, including the Canadian Federation of Agriculture and the Canadian Cattlemen’s Association.

— D.C. Fraser reports for Glacier FarmMedia from Ottawa.

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When the First World War broke out in 1914, the demand for wheat was unprecedented, and all energies were devoted to growing the crop. The Canadian Wheat Board was formed as a temporary war measure to market the country’s entire crop, and this stabilized wheat prices for the first time. With the end of the war and dissolution of the Wheat Board, prices began to plummet and farmers were in crisis. The power players within the Winnipeg Grain Exchange prepared to recapture the wheat market.

Farmer groups like the Farmers’ Union and the Saskatchewan Grain Growers’ Association believed the solution was for farmers to combine their crop and market it themselves. This was the start of the co-op grain elevator movement across the three Prairie provinces.

Grain co-op history

The first grain co-operative to be formed was in Saskatchewan in 1906. It was the Grain Growers’ Grain Company.

The Alberta Farmers’ Co-operative Elevator Company was established in 1913 by the United Farmers of Alberta, and in 1917 they amalgamated with the Manitoba-based Grain Growers’ Grain Company to form the United Grain Growers Company.

Alberta Co-operative Wheat Producers Limited (Alberta Wheat Pool) was formed in 1923. Manitoba Pool started in January 1924 as the Manitoba Co-operative Wheat Producers Limited and the Saskatchewan Wheat Pool was formed in 1923–24.

In 1996, the Saskatchewan Wheat Pool became a publicly traded company, putting an end to 73 years of co-operative ownership.

In 1998, Manitoba Pool merged with its counterpart the Alberta Wheat Pool to form Agricore Co-operative Limited. In November of 2001, Agricore and United Grain Growers ultimately formed a new corporate entity known as Agricore United, issuing public shares.

In 2007, Agricore United was taken over by the Saskatchewan Wheat Pool and the company took on the name Viterra. The merger marks the end of co-operative grain marketing in Canada. This publicly traded corporation operated until 2013 when it was purchased by Glencore International.

So what happened?

Back at the peak of the country grain elevator system in 1933, there were 5,758 elevators in operation across the Prairie provinces. In the 1930s, falling farm incomes led to rural depopulation.

In the 1950s, rising expectations, improved roads and mechanized farm equipment accelerated this trend. Fewer people working larger farms meant many small branch lines became unprofitable. Rail companies sought permission to abandon them. Deregulation of the railways and the demise of the Crow Rate in 1996 led to major rail line abandonments. This greatly affected the grain companies as they had to abandon many elevator locations that for them may have been profitable.

All of these events forced the grain elevator companies to revamp their business strategies going forward. For some — those that did not have the vision to see what was coming — it was too late, and they were either forced out of business or consolidated with other companies.

When I look at today’s reality where we now have only 354 grain elevators operating across the Prairies, that is a massive rationalization of an industry within a 90-year time frame — a 94 per cent reduction in numbers.

However, when I look at what companies are still in the grain game today, there are some that were there at the beginning before this all happened, and they are strong and viable today — which makes me ask the question, “How did they survive while the co-ops did not?”

I was working in the grain elevator business in Alberta from 1982 until 2006, so I was there for the transitions from Alberta Pool to Agricore, Agricore to Agricore United, and then to Viterra.

Here is my take on what happened or did not happen that could have allowed the grain co-ops to survive those years of change and to still be viable, member-owned co-ops today for the long-term benefit of its members.

In the early ’90s as all of the changes were happening, there were discussions amongst the three sisters as they were called (Alberta Pool, Sask Pool and Manitoba Pool) about merging together to become one large co-operative.

Rumour has it there were too many big egos at the negotiating table to ever allow the discussion to get to a meaningful point of possibility. There were more arguments about who was going to take over, what the company would be called, who would run the company and who would be on the board, that the discussion never got past the point to where it would ever become more than just an idea. They had lost focus on the fundamental philosophy of why a co-operative existed: for its members’ benefit and betterment.

Then, in 1996, the board of Sask Wheat Pool brought in a CEO from the United States who was incentivized to turn the company around. His idea was to take the company public and turn away from the member-owned co-operative model, which did not match up with the U.S. business philosophy of corporate enterprise.

This, in my opinion, were the first nails in the lid of the coffin of grain co-ops in Western Canada.

In 1998, the two remaining co-ops (Alberta Pool and Manitoba Pool) merged to form Agricore Co-operative.

So why couldn’t the three pools have come to an agreement earlier and kept a Prairie grain co-op alive?

Back to big egos and bad decisions made at the board tables of all of these co-ops. Sask Pool was the bigger co-op and it wanted to run the show, which no doubt upset the other two, and the beginning of the end of grain co-ops was the end result.

The rest is chronicled above.

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Gay Lea Foods said Monday it has completed a deal to buy Thornloe Cheese from its current owner, Guelph-based dairy genetics firm EastGen, for an undisclosed sum.

Thornloe Cheese on its website says the business takes in over three million litres of milk per year to make cheese, curds and butter and “remains an outlet for local dairy producers who wish to ship to a northern Ontario location.”

The cheese business was founded in 1940 by producer Rene Laframboise at Thornloe, a small northeastern Ontario community about 175 km north of North Bay, and has changed hands several times since then.

It was picked up in 1978 by Balderson Cheese, which in 1982 became part of Ault Foods, which in 1997 was bought up by Parmalat, which went on to make plans to shut down the Thornloe business. Dairy A.I. co-operative Gencor stepped in to buy Thornloe in 2007.

The cheesemaker came to EastGen in 2011, when the genetics company was formed through a merger of Gencor with Eastern Breeders of Kemptville, Ont.

Thornloe now employs about 30 people, serving wholesale customers including retail and foodservice buyers in northern Ontario and Quebec. It also operates its own central retail store in its home community.

The cheese company, Gay Lea said, is “celebrated for its specialty cheeses,” among which are the first to be made with milk sourced from Dairy Farmers of Ontario’s (DFO) Verified Grass Fed program.

More recently, Thornloe noted, it began developing new cheeses for ethnic markets as well as for the “emerging functional food market.”

“Thornloe Cheese has a long and storied history in northern Ontario and holds a special place in the hearts of northern dairy farmers and consumers alike,” Gay Lea Foods chair Rob Goodwill said in Monday’s release.

“We are pleased to keep Thornloe Cheese in the hands of a wholly Canadian dairy farmer-owned co-operative and help keep northeastern Ontario’s rich agricultural legacy alive.”

The Mississauga-based Gay Lea dairy farmers’ co-op has been in both acquisition and expansion modes in recent years. It stretched its membership to Manitoba in 2017 when it partnered with Vitalus Nutrition to set up a milk processing operation in Winnipeg.

Gay Lea in September this year also bought North York, Ont.-based Western Creamery from General Mills. Other recent acquisitions include Alberta Cheese Co. in 2017 and Stirling Creamery and Black River Cheese in 2016.

The co-operative in 2016 also announced plans to set up a nutraceutical-grade dairy ingredients hub and research and development facility in its home province. — Glacier FarmMedia Network

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Agropur Co-operative announced Friday it plans to close the former Les Aliments Lebel plant at Lachute, Que., just northwest of Montreal, in August 2020 and transfer the plant’s operations to other Agropur sites.

The co-op said the plant closure, which is expected to affect 177 employees, is meant to allow Agropur to “optimize its ice cream manufacturing operations,” as it “needs to make the requisite efforts in a highly competitive market.”

The Lachute plant, which makes ice cream and frozen novelties, was run by Les Aliments Lebel until 2015, when that company was taken over by Truro, N.S.-based Scotsburn Co-operative Services. The Lachute plant at the time was Quebec’s largest for making ice cream and frozen desserts.

Agropur in turn bought Scotsburn in early 2017, including its plants at Truro and Lachute and the Scotsburn brand name. That deal was announced in 2016 but was delayed pending approval from the federal Competition Bureau.

After closing that deal, Agropur “made a strategic decision to concentrate its ice cream manufacturing operations at two other Canadian facilities” in Truro and Edmonton, the co-operative said Friday.

Longueuil, Que.-based Agropur said Friday it’s “aware of the impact this decision will have.”

Affected employees, the company said, will be able to take advantage of available programs, such as severance packages employment opportunities at other Agropur sites, and an assistance program for workers and their families. — Glacier FarmMedia Network

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Saskatoon-based FCL said Thursday it had received notice from Calgary Co-operative Association that it would “discontinue the procurement of all products for their grocery stores from FCL” at that time.

The Saskatoon StarPhoenix newspaper on Wednesday quoted a Calgary Co-op spokesperson as saying the grocery chain “operates in an increasingly challenging economic and competitive market” and will “reflect our members’ needs” by “positioning our food business model for unique differentiation.”

The Calgary association told the newspaper it plans to continue working with an increasing number of local producers.

FCL, which is owned by retail co-operatives across Canada’s West, said Calgary remains an FCL member co-op and its decision affects its grocery procurement alone.

Calgary Co-op, FCL said, continues to be part of the Co-operative Retailing System (CRS) and will continue to get its fuel supply from FCL.

The CRS serves member co-ops’ grocery stores, gas stations, convenience stores, agro centres, home centres and liquor vendors.

“Working together is at the heart of Co-op, which is why this news is so disappointing,” FCL CEO Scott Banda said in a release Thursday.

“It’s sad to see (Calgary Co-op) moving away from the co-op family they’ve helped build, and that has supported them in the past, but our senior leadership team and board of directors had prepared for this possibility and we’re now evaluating impacts and planning our next steps.”

That review will look at impacts from this decision on other local co-ops across Western Canada, FCL said, and at the “hundreds of positions” at FCL’s distribution centres in Calgary, plus the “business support positions (at FCL) that are largely dedicated to serving Calgary Co-op and its grocery business.”

Banda said Calgary’s move will have a “short-term impact” on the CRS, but FCL “remains committed to ensuring that local co-ops continue to provide high-quality food store services in their communities.”

Calgary Co-op grossed $1.3 billion in sales across its various business lines in 2018, including food, fuel, liquor, home centres, health care and cannabis products. Of that, $671.55 million was in food alone.

Calgary Co-op, in its 2018 annual report, said it holds about 10 per cent of the shares in FCL. Calgary Co-op’s total purchases from FCL in 2018, across all business lines, were valued at $720.5 million, representing about 70 per cent of the Calgary association’s total purchases that year. –– Glacier FarmMedia Network

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The two co-ops announced the combination Wednesday, noting it’s already been approved by Granny’s producer members in a “unanimous” vote taken in May, and by the federal Competition Bureau in a decision last month.

“The main objective is to create a large co-operative that will be a leader in the poultry sector in Canada with operations in Quebec, Ontario and Manitoba, while keeping its ownership in the hands of producers committed to serving their customers well from coast to coast,” Exceldor said in a release.

The majority of the two co-operatives’ customers handle procurement nationally, and a merger allows Exceldor and Granny’s to more effectively serve markets in the West and East respectively, Granny’s CEO Craig Evans said Wednesday.

The plan for the merged business, he said, is about “How do we stay a co-operative, and how do we create a national poultry co-operative… serving national customers?”

Exceldor, based at Levis, Que., has plants at Saint-Anselme, Saint-Damase, Saint-Bruno-de-Montarville and Saint-Agapit, Que. plus the former Parrish and Heimbecker turkey processing plant at Hanover, Ont., as well as a new $35 million Montreal-area distribution centre at Beloeil now under construction.

It also co-owns three Quebec meat companies — Unidindon, Volailles Giannone and, since April, Les Viandes Lacroix — and has a stake in processor Golden Valley Farms at Arthur, Ont.

Granny’s, meanwhile, has its corporate office and hatchery facilities in Winnipeg and a major processing plant just north of Steinbach at Blumenort, Man., where the company undertook a $37 million expansion in 2016.

The two co-ops will operate under the Exceldor name, with combined membership of about 400 producers in Quebec, Ontario, Manitoba and Saskatchewan — and are expected to reach the $1 billion mark in annual sales and a staff count of over 3,450 employees across Canada.

For Granny’s farmer members, Evans said, the unanimous vote shows their enthusiasm for the deal, which he described as an opportunity for the co-op to “stabilize earnings” and better reach and serve its customers.

Asked about possible synergies in the deal, Evans said one of the biggest will be in terms of freight cost savings. Neither co-op’s production facilities are expected to close, he added, although the plants might not continue to produce all the same product lines they’ve handled up until now.

Exceldor, in its release, said it “feels strongly that recent partnerships will allow it to improve its position within an industry that is experiencing marked changes and thus, to become an even stronger and more agile organization in a highly competitive market.”

With this merger and its stakes in other meat companies, Exceldor “is becoming a key player across Canada, enabling us to better serve our customers nationally and to generate value for our members, employees and partners,” CEO Rene Proulx said in the same release.

The merger, Granny’s said in the same announcement, is “securing the future of the co-op and ensuring continued stability and growth for Manitoba poultry producers.” –– Glacier FarmMedia Network

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Private crop handlers — including the “big four” merchants Archer Daniels Midland, Bunge, Cargill and Louis Dreyfus — fear they will struggle to buy grain supplies when the next harvest season comes if the provision is not overturned.

Lawmakers have admitted they made a mistake by including the clause in last-minute changes to the bill.

The new code has pushed the private companies to spend thousands of dollars to form co-ops or find alternative ways to get their hands on billions of bushels of U.S. corn and soybeans.

In Minnesota, private handler Minn-Kota Ag Products is among the companies establishing a co-op so farmers can supply grain to the company and still receive the tax benefit. The move, which involves legal filings and setting up a board, could cost up to US$100,000, chief financial officer Dale Beyer said.

“It’s wasted money,” he said. “It makes us inefficient but it’s what we have to do for this law.”

President Donald Trump signed into law in December the Republican tax overhaul that allows farmers a 20 per cent deduction on payments for sales of crops to co-ops, but not for sales to private or investor-owned grains handlers.

The provision is the latest challenge for merchants such as Cargill and ADM. They are also facing a supply glut that is making it tough to turn a profit on their core business: buying, processing and selling corn, soybeans and wheat.

Cargill is planning for ways to remain competitive under the tax provision, spokeswoman April Nelson said, without providing details. As it stands, the rule “would create a proliferation of co-ops,” she said.

ADM is also working on options to offset the rule, after suffering a minor commercial impact from it, the chief executive said last week.

Some farmers and grain companies believe lawmakers will craft legislation to fix what they call the unfair advantage for cooperatives. Still, many say they cannot wait to make alternative plans.

In Minnesota, farmer Kirby Hettver said he will start committing grain he will harvest this autumn to a local co-op, instead of to Cargill, if the tax issue is not fixed by the time he starts planting crops in April.

“It’s just creating turmoil and this uncertainty is just driving everybody crazy,” said Bob Zelenka, executive director of the Minnesota Grain and Feed Association, a trade group that represents co-ops and private companies.

Crops flow to co-ops

The provision was introduced to compensate co-ops and their farmer owners when Congress eliminated a part of the tax code that had benefited them for more than a decade.

On Wednesday, Republican U.S. Senator Orrin Hatch said he and other senators were working toward “a solution to this issue that does not choose winners and losers.”

Since the provision was approved, Chicago Board of Trade corn futures have climbed about five per cent and soybean futures have gained about eight per cent, prompting farmers to increase sales of crops they harvested last fall.

Citizens LLC, a privately held grain elevator in Michigan, has seen its share of those sales fall as farmers have booked more deals with co-ops because of the tax rule, said Angie Setzer, vice president of grain.

Citizens is working on a deal in which its customers would technically sell crops to the company through a local co-op, she said. The arrangement would allow the elevator’s customers to receive the tax benefit. However, Citizens would have to pay the co-op a fee for each bushel of grain under the deal.

“It is not an easy fix and it is not a clean one so I hope we do not have to do it,” Setzer said.

U.S. ethanol producer Green Plains Inc., which buys about three per cent of the nation’s annual corn harvest, recently obtained approval to operate a co-op in Indiana, Minnesota and Colorado, CEO Todd Becker said. It is awaiting approval in other states.

Green Plains has not yet activated the co-op because Becker is holding out hope lawmakers will address the imbalance. However, the company could do so quickly if business is suffering or it appears there will not be a legislative solution soon, he said.

“We can’t be at such a significant disadvantage to the co-operative down the street,” Becker said.

— Reporting for Reuters by Tom Polansek and Mark Weinraub.

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A provision in the Republican tax overhaul that President Donald Trump signed into law on Dec. 22 allows farmers a 20 per cent deduction on payments for sales of crops to farmer-owned co-operatives, but not for sales to private or investor-owned grain companies such as Archer Daniels Midland and Cargill.

That has driven fears among U.S. ethanol producers and privately run crop handlers they could be squeezed out of the competition to buy farmers’ harvests.

Senator John Thune told reporters that lawmakers are aiming to get a solution into spending legislation that Congress would need to take up next month. That would replace a measure to keep the government funded through March 23, which lawmakers hoped to adopt on Thursday.

“We haven’t gotten consensus within the stakeholder community on the language, but we have I think probably as good as we’re going to get at a solution,” the South Dakota Republican said.

He declined to disclose details of the prospective solution.

Thune and other Republican lawmakers from grain states have been working to find a solution with interested parties for about six weeks.

“What we found was trying to satisfy co-ops and private grain operators was a challenge, and trying to get both of them to agree on final language has been a real challenge,” Thune said.

Lobbyists initially expected an agreement to be attached to one of the short-term funding bills that Congress has considered this year.

But Thune said it could find a home in a longer-term spending measure, if Congress can agree on a proposed two-year spending plan now before lawmakers.

“It’ll give us a little more time to perfect it. But I think … we’ve got it about as good as we can,” he added.

— Reporting for Reuters by David Morgan; additional reporting by Tom Polansek in Chicago.

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It was included during final revisions of the tax bill that passed the Republican-controlled Congress last month. The restructuring of the tax code, the biggest in 30 years, handed President Donald Trump his first major legislative victory since taking office.

The provision gives farmers a 20 per cent deduction on payments for sales of crops to farmer-owned co-operatives, but not for sales to private or investor-owned grains handlers such as Archer Daniels Midland, Cargill and Bunge.

The modification was introduced to compensate co-ops and their farmer owners when Congress eliminated a part of the tax code, known as Section 199, which had benefited them for more than a decade.

Republican Senators John Hoeven of North Dakota and John Thune of South Dakota are among the lawmakers whose offices said their attempt to create an equivalent to the old tax code had backfired by incentivizing sales to co-ops at the expense of others in the market.

“Sen. Thune is now aware of the unintended situation this new provision could create in the agriculture industry,” his spokesman Ryan Wrasse said in a statement. He added that Thune believes tax laws should not sway where farmers sell their harvests.

The government wants to correct the disparity, and the U.S. Department of Agriculture said on Friday it expects a solution to be forthcoming.

“The federal tax code should not pick winners and losers in the marketplace,” Greg Ibach, an undersecretary at the USDA, said in a separate statement.

ADM and Cargill, two of the world’s top agricultural traders, joined talks with Hoeven, Senate aides and trade associations that represent co-ops and private firms to come up with a way to even the playing field. Representatives of grain companies and lawmakers met in Washington twice this week in a sign of the urgency of the matter.

If legislators don’t address the provision by the autumn harvest, private grain companies could lose out on deals to buy billions of bushels of corn and soybeans. Farmers already are looking at how they can transfer grain stored at private elevators to co-ops to take advantage of the new law.

“It’s a massive issue for people like us, ADM, Cargill, all the private ethanol buyers and on and on and on,” said Dale Beyer, chief financial officer for Minn-Kota Ag Products, a private grain handler in Minnesota.

Thune and Hoeven began hearing in early January that the provision would influence where farmers sell their products, according to the National Grain and Feed Association, a trade group that has met repeatedly with the lawmakers’ aides this month to discuss the issue.

The association told members in an email that it learned of the provision in late December, after it was included in the final version of the tax law, and immediately asked tax experts for advice. The group then met with Thune and Hoeven staffers to learn why the senators included it in the law.

The association, in a separate statement with the National Council of Farmer Co-operatives, said it was working with Hoeven, Thune and Senator Pat Roberts of Kansas, also a Republican, to reach “an equitable solution” that preserves benefits formerly available to co-ops under Section 199.

Tensions rise

Farmers generally decide to whom they want to sell their grain based on the prices offered by different handlers, how close they live to delivery sites and personal affiliations.

However, the wording of the new provision wrongly assumes that all farmers deliver their grain to co-ops, said Bob Zelenka, executive director of the Minnesota Grain and Feed Association, a trade group that represents co-ops and private companies.

“It tells me that someone who wrote this is unused to how things work in the ag industry,” he said.

Efforts to adjust the provision have some co-ops pushing back out of concerns farmers could lose tax benefits.

Chris Pearson, chief executive of the South Dakota Wheat Growers co-op, said on Twitter on Wednesday that the law “gives farmers some nice tax advantages when doing business with the ORGANIZATION THEY OWN!”

Pearson did not respond to calls and emails seeking comment.

“I would hate to see private companies raise our farmers’ taxes!” he tweeted on his account @CEOWheatGrowers.

— Tom Polansek reports on agriculture and agribusiness for Reuters from Chicago; additional reporting by David Morgan in Washington.

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