[Congressional Record Volume 143, Number 118 (Tuesday, September 9, 1997)]
[Extensions of Remarks]
[Pages E1704-E1705]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  INTRODUCTION OF RESOLUTION DISAPPROVING PRESIDENT'S VETO OF FARMER 
                       COOPERATIVE TAX PROVISION

                                 ______
                                 

                        HON. CHARLES W. STENHOLM

                                of texas

                    in the house of representatives

                       Tuesday, September 9, 1997

  Mr. STENHOLM. Mr. Speaker, last month, the President exercised his 
line-item veto authority to strike out a provision in the tax bill 
providing a tax deferral on gains from the sale of agricultural 
processing facilities to farmer cooperatives. I was very disappointed 
that the President chose to exercise his line-item veto on a proposal 
that is very important to U.S. agriculture. However, I welcome the 
opportunity to debate this proposal on its merits. I am confident that 
this provision can withstand scrutiny and will receive strong 
bipartisan support.
  Today, I am joining with my colleagues, Kenny Hulshof, to introduce a 
resolution of disapproval overturning the President's veto of this 
provision to ensure that this debate occurs. In addition, we are 
continuing to explore other legislative options to address this issue. 
I hope that this issue can be resolved without resorting to a veto 
override. That notwithstanding, I am prepared to use all means 
available to me through the legislative process to enact this 
legislation.
  This provision has been repeatedly mischaracterized in the press as a 
provision narrowly targeted to benefit Harold Simmons. As the principal 
Democratic cosponsor of this provision, I can say with confidence that 
this is not the case. I support this provision because it will be 
beneficial to the entire agricultural cooperative community.
  Refining and processing of commodities represent an ever-increasing 
share of total profit in the agricultural sector. The price paid to 
farmers for farm commodities represent less than 25 percent of the cost 
of the final product purchased by the consumer. It is imperative for 
the American farmer to increase his ownership stake in processing and 
refining in order to survive in an increasingly competitive market. 
Allowing farmers to become vertically integrated in their products will 
permit farmers to better adjust to fluctuations in commodity prices.
  Now that we have adopted an agricultural policy that will leave 
farmers to compete in a more market-oriented system, we must enact 
provisions to help farmers and ranchers compete in the market place if 
these farmers and

[[Page E1705]]

ranchers are to survive. Farmer cooperatives allow farmers and ranchers 
to improve their bargaining power and benefit from economies of scale. 
Strengthening farmer cooperatives will provide a counterweight to the 
increasing concentration of U.S. agriculture in large corporations.
  This proposal provides tax fairness by allowing farmer cooperatives 
to receive the same tax-deferred status for sales of processing 
facilities available to other businesses and entities under current 
law. Under current law, there are several strategies available to 
corporate agribusinesses to structure tax deferred purchases of 
processing facilities that farmer cooperatives cannot utilize.
  I appreciate the President's commitment to address this important 
issue, and look forward to continuing to work with the White House and 
representatives from the Department of Treasury to craft a provision 
that will aid our Nation's farmers and ranchers. Although we are 
introducing a resolution of disapproval in order to preserve our 
legislative options on this issue, Mr. Huslshof and I would prefer to 
resolve this issue by working with the administration in a cooperative 
manner. I am hopeful that we can reach an agreement with the 
administration on legislation to help farmers and ranchers, through 
their membership in farm cooperatives, become more involved in the 
profitable, value-added production of agriculture products.
  Enactment of this legislation is an important part of an agricultural 
strategy of helping individual farmers survive in an increasingly 
competitive global marketplace. I encourage all Members to support this 
effort.

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