Several new tax policies provide incentives for the formation of farmer-owned 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 recently enacted tax provision allows farmers to take a tax credit on their investment in a farmer-owned new generation cooperative.

RULES

• Agriculture Value-Added Development Fund Program - Colorado
  In May 2001 the Colorado legislature passed a bill which created the Agriculture Value-Added Development Board within the Department of Agriculture. The Board makes grants, loans and loan guarantees, and equity investments, and also offers tax credits to eligible agricultural value-added cooperatives. The tax credit is available for members of eligible agriculture value-added cooperatives in an amount equal to the lesser of 50 percent of the member's investment or $15,000, up to a maximum amount per project of $1,500,000. More...
• Agriculture Value-Added Agriculture Investment Tax Credit - Iowa
  In 1999 the Iowa legislature passed a law allowing value-added agricultural businesses to claim a ten percent corporate tax credit on new investment which is "directly related to new jobs created by the location or expansion of an eligible business." But co-ops, which don't pay state income tax, weren't eligible. A bill signed into law on July 1, 2001, changes that by making ethanol cooperatives eligible for the $4 million in annual available tax credits. It allows investors in non-profit co-ops, organizing to create new ethanol plants, to use tax credits up to 10 percent of their investment.
• Agriculture Cooperative Tax Credit - Missouri
  The Missouri New Generation Cooperative Incentive Tax Credit Program is provided by the Missouri Agricultural and Small Business Development Authority to encourage investments in new-gen co-ops. Authorized under HB 888 passed last July, the credit is allocated specifically for incorporated cooperatives that own or develop facilities producing products derived from agricultural commodities or renewable fuel production facilities. The tax credits are only available to individuals or entities that are members of the new-generation co-ops- outside investors are ineligible. More...
• Agriculture Cooperative Income Tax Credit - North Dakota
  In 2001 North Dakota lawmakers approved Senate Bill Number 2386, which gives a state income tax credit of up to a maximum of $6,000 annually for people who invest in agricultural processing cooperatives. The tax credit is equivalent to thirty percent of the amount invested in the cooperative by the taxpayer, up to a total annual investment of $20,000. Investors in cooperatives or limited liability corporations are eligible for the credit, so long as the business has an agricultural commodity processing facility in this state and is more than half farmer-owned. More...
• Agriculture Value Added Producers Tax Credit - Oklahoma
  The Oklahoma Producers Tax Credit (H.B. 2959) passed n 1996, giving a value added processing tax credit to farmers and ranchers. For every dollar an Oklahoma agricultural producer invests in an agricultural processing venture, they receive a 30% tax credit. Outside investors may invest in facilities, but do not qualify for the tax credit. The credit can be carried for 7 years. 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...

More:

• Carbohydrate Economy Clearinghouse
• Center for Cooperatives - at the University of Wisconsin
• Rural Cooperatives Magazine (formerly known as Farmer Cooperatives) - full text of selected articles since 1995.
• USDA Rural Development Program - has an enormous collection of information resources on cooperatives including, Cooperative Information Reports, Cooperative Research Reports, and Cooperative Service Reports.
• Coops 101: An Introduction to Cooperatives - by USDA
• The Impact of New Generation Cooperatives on Their Communities - USDA
• Centre for the Study of Cooperatives
• Illinois Institute for Rural Affairs - has a section called the Illinois Value-Added Rural Development Center
• National Council of Farmer Cooperatives
• Missouri Agricultural Product Utilization and Incubation Center
• Missouri Value Added Development Center