A new study says agriculture co-ops are a strong economic force in states like South Dakota - but their future is murky, because of federal tax cuts set to expire.

Farm cooperatives have been around for more than a century, allowing smaller farmers to pool together resources to buy supplies and market their products.

South Dakota State University Ness School of Management and Economics Associate Professor Matthew Elliott helped lead research into co-op profits in North and South Dakota and Minnesota.

Even though corporations and industrial farms have a growing presence in agriculture, he said co-ops have staying power.

"There is consolidation going on to achieve efficiencies, but generally we see cooperatives still maintaining a good business volume in these industries," said Elliott, "and that's been pretty consistent, steady, for a long time."

He said co-ops benefit from the tax cut law enacted during the first Trump administration by allowing income from member sales to be taxed at lower rates.

The study says in 2022, that newer deduction helped generate $255 million in economic activity in South Dakota farming towns.

Republicans in Congress want to extend the broader tax cuts. But skeptics say that would require drastic spending cuts, which would harm rural communities and eat away at farmers' profits.

When focusing solely on the co-op tax deduction, Elliot said it's likely a more effective tool in this part of the country.

"It can be a struggle to get investment interested in our region," said Elliott. "It's one of those ways the dollars we do generate, we can keep here and keep multiplying and growing our economy."

He said those are extra dollars farmers can use to boost worker pay or buy equipment from local dealers at a time when small towns struggle with population loss.

If the deduction expires, observers say these farmers will have higher tax bills.

Overall, the planned extension of the Trump tax cuts has renewed debate about whether they mostly benefit wealthier Americans, and leave middle- and low-income workers behind.




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President Donald Trump is set to impose sweeping global tariffs this week, a move expected to spark retaliation against a range of American products including food.

Tad DeHaven, policy analyst at the libertarian think tank the Cato Institute, said farmers in Colorado and across the U.S. who endured losses during Trump's first-term tariffs are again facing uncertainty.

"What's frustrating to me is that taxpayers end up footing the bill," DeHaven pointed out. "Last time around, it cost taxpayers $23 billion in farm bailouts, and I think it looks like we're headed down that road again."

Trump said tariffs, which are taxes on imports mostly paid for by U.S. consumers, will compel companies outsourcing labor to places like China to move their operations back to the U.S. Trump has also floated the idea of replacing income taxes with tariffs in what would amount to a national sales tax.

DeHaven believes Trump's tariff strategy will backfire.

"The administration talks about shrinking government and cutting waste," DeHaven observed. "But I'd argue these trade wars create exactly the opposite: more bailouts, more government spending and more taxpayer-funded damage control."

Republicans in Congress have proposed $230 billion in cuts to ag funding, mostly from SNAP, formerly food stamps. But a recent poll found 60% of Trump voters said cutting SNAP is unacceptable. Trump has also canceled $13 million in funding for Colorado food banks and schools to buy food from local producers.

DeHaven added many U.S. farmers still have not recovered from Trump's first-term tariffs.

"You have to feel bad for farmers, they're getting squeezed from both ends," DeHaven emphasized. "Not only are they losing foreign markets but they are also seeing higher costs at home for essentials like equipment and fertilizer, all thanks to tariffs."


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Cuts at the U.S. Department of Agriculture have affected farming communities nationwide but a national group said its Black farmers remain unaffected.

The Memphis-based Black Farmers and Agriculturalists Association represents more than 20,000 heirs of Black landowners and ranchers across the country.

Thomas Burrell, president of the association, said because of long-standing discrimination, its members, many of whom are farmers or descendants of farmers, have not been impacted by the USDA freeze.

"What our concern has always been, notwithstanding any administrative efforts or the lack thereof, is the constant, unfortunately, of discrimination that prevents our members from being able to participate," Burrell explained. "Key phrase is 'food production.'"

Burrell noted the association's farmers operate under the USDA and still face challenges from the Pigford v. Glickman settlement. He added Congress has introduced multiple measures this year to compensate Black farmers for past discrimination. Last summer, the Biden administration provided more than $2 billion in direct payments to minority farmers affected by USDA discrimination.

Burrell argued tariffs will have both short- and long-term effects on Tennessee farmers and beyond. Agriculture Secretary Brooke Rollins recently announced the USDA will distribute up to $10 billion to agricultural producers through the Emergency Commodity Assistance Program for 2024 crops, with another $20 billion for disaster-affected farmers.

"Now the administration is going to use this $30 billion to sustain these farmers," Burrell observed. "While that pain is being as a result of the tariffs, and hopefully, in theory, at least once the ship rights itself again, it's full speed ahead, and the economy should benefit in the long term."

Burrell pointed out the Secretary of Agriculture has promised tariffs will not harm them and disaster and commodity payments should help. But Black farmers who are long victims of discrimination still struggle to access the benefits. The core issue remains: Are they receiving equal resources to stay competitive?


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By Seth Millstein for Sentient.
Broadcast version by Alex Gonzalez for Arizona News Connection reporting for the Sentient-Public News Service Collaboration

We're in the fifth year of a worldwide avian flu outbreak, and there seems to be no end in sight. The standard containment measures haven't been working, and as a result, egg prices are at record highs, and over a hundred million chickens are dead. But a closer look shows how egg farming helps facilitate the virus's spread - and how the government's attempts to stop the bird flu outbreak have fallen short.

"This is historic. We never had anything this big, geographically or species-wise," Maurice Pitesky, an associate professor and expert in poultry disease modeling at the UC Davis School of Veterinary Medicine, tells Sentient. "This is way beyond [farmers'] skill set."

The government has stepped in and attempted to end the outbreak through various means, but none have worked. And this is in part because egg farming itself, on a foundational level, is highly conducive to the spread of dangerous pathogens like avian flu.

Egg Farming At a Glance

As of 2022, the latest year for which data is available, there were a little over 168,000 farms in the U.S. that produced poultry products, in whole or in part.

Livestock chickens are generally divided into two categories: broilers, who are raised and slaughtered for meat, and layers, who are raised to lay eggs. At any given point, there are around 389 million layer hens at poultry farms across the U.S., and they produce about 109 billion eggs every year.

In the U.S. alone, farmers slaughter around 9.5 billion chickens every year, including both broilers and layers.

Bird Flu At a Glance

Avian influenza, also known as avian flu or bird flu, is nothing new. It was first discovered in the late 1800s, and there have been a number of high-profile outbreaks since then. In fact, a number of high-profile outbreaks happened in 2014.

But the most recent bird flu outbreak has proven much more resilient and deadly than those in the past. It began in 2020, and while previous outbreaks have died off after a few months to a year, this current one is now in its fifth year and showing no signs of letting up. It's also been spreading to non-avian species, including pigs and cows, as well as people. Backyard chickens and small farms are also far from immune from the virus.

How Egg Farming Facilitates the Spread of Avian Flu

The current strain of avian flu is believed to have originated in wild birds, not animal farms. But there are a number of things about animal farms, and chicken farms specifically, that make them especially susceptible to spreading the disease.

To begin with, the living conditions on poultry farms are almost tailor-made to facilitate the spread of disease. This is especially the case when the chickens are confined in close spaces, as they are on factory farms, but it's also just an intrinsic fact about chicken husbandry itself. Chickens are highly social creatures who interact regularly with one another, and disease spreads rapidly through flocks even when the animals have a healthy amount of space.

That said, practices common to factory farms make the situation much worse, and not solely because the chickens in them are typically crammed together in tight spaces. The poultry industry has selectively bred chickens in order to maximize egg output, but selective breeding leads to a low level of genetic diversity within flocks. This, in turn, might make the flocks more susceptible to diseases, according to a 2008 study.

The sheer size of factory farms is another exacerbating factor for avian flu: If one chicken gets the disease, everyone else in the flock is also at risk, and when the flock in question has tens of thousands of chickens in it, that's a whole lot of potentially exposed birds. On smaller farms and backyard farms that follow different practices, the risk is still there. It's just mostly owing to spread from wild birds rather than these other factors.

One reason this recent outbreak has worried epidemiologists so much is its ability to spread to non-bird species. This aspect, too, is potentially related to chicken farms: Dairy cows are sometimes fed "poultry litter" - a euphemistic name for the mixture of chicken manure, feed, feathers and other organic garbage from poultry farms - and it's been speculated that this practice may be responsible for spreading the virus to dairy cows, who in turn have been spreading it to people, mostly farm workers.

What Has the Government Done?

The federal government authorizes chicken farmers to slaughter their entire flock if even one case of avian flu is detected, and farmers who do this are compensated by the USDA for their losses. These are called indemnity payments, and the USDA has doled out over $1 billion of them so far.

But although the government pays farmers to kill their flocks after detecting H5N1, it has not, until very recently, required farms to implement biosecurity measures in order to receive those payments. For the bulk of the outbreak, farms that experienced outbreaks were required to submit biosecurity plans, but the USDA did not engage its oversight powers to ensure that these plans were actually being implemented. And in December, a USDA report found that the bailouts were inadvertently incentivizing farms not to strengthen their biosecurity measures.

This may be why, according to the USDA, a total of 67 egg farms have been infected with H5N1 more than once, even after culling their flocks and receiving bailout money from the government.

It also may be why the USDA updated its biosecurity policies this year, and is now requiring H5N1-infected farms to pass a visual audit in order to receive any future indemnity payments.

Most of these biosecurity measures concern the structures and policies at the egg farms themselves. But Pitesky says that they should also account for what's going on near the farms, given that wild waterfowl are one of the main ways the virus spreads to poultry farms in the first place.

"There's this whole concept of what I call 'outward facing biosecurity,' and I don't think we really do any of that at this point," Pitesky says. "And that's really focused on what's going on within about a four kilometer diameter of your facility."

The closest to what Pitesky is describing, at least on the governmental level, is the Biden administration's Wildlife Biosecurity Assessments program, a pilot program in which the USDA sends staff to infected farms to survey the surrounding areas for potential security holes.

The Trump administration recently announced an expansion of this program, but crucially, it only involves a one-time survey of each farm. What's really needed, according to Pitesky, is ongoing monitoring and surveillance of the surrounding areas, as that's the only way to account for constantly changing environmental conditions in the wild.

"The thing that we all have to realize is that the farm doesn't change location, but the habitat around the farm changes," Pitesky says. "Until we really understand what's going on outside the facility, we're just going to be reactive. We're going to see which places get affected, and then we're going to respond. But then a year later, it's going to be something 50 kilometers to the west or east that gets hit."

Egg Prices

According to the CDC, H5N1 has affected over 166 million birds in the U.S. since 2022. Needless to say, this has dramatically reduced the national egg supply, which in turn has caused egg prices to skyrocket - at least, according to the egg industry. While that's been a very unwelcome development for consumers, many egg farmers have been enjoying record profits during the outbreak regardless, in part due to these higher prices.

"If you're lucky enough to not have been hit by bird flu, then your costs haven't changed very much, and the price of eggs is double," Aaron Smith, Gordon Rausser Distinguished Chair and Professor of Agricultural and Resource Economics at the University of California, Berkeley, tells Sentient. "So you're making some pretty big profits right there."

However, some have also accused egg producers of price-gouging to take advantage of the bird flu outbreak, and a coalition of farmers has demanded that the FTC investigate this possibility.

It's also been suggested that general inflation has played a role in the high egg prices we're seeing now, but Smith believes this isn't the case.

"The worst inflation was in 2022-2023," Smith says. "Pretty much everything in the economy went up by 20-25 percent. Egg prices are, what, approximately double what they were, so it's mostly the flu" [driving up prices]."

The Bottom Line

There's one very cheap step the government hasn't taken to try and stop the spread of bird flu: Advising people to eat fewer eggs. Americans tend to not be so fond of the idea of being told what to eat, but it is our enormous appetite for eggs that egg farms are as ubiquitous as they are, and without that level of consumption, bird flu would be a fraction of the problem it is now.

The uncomfortable truth is as long as animal agriculture exists on both an expansive and industrial scale, we'll be dealing with zoonotic diseases and their fallout. In this case, that fallout is over 150 million dead chickens and an increasingly expensive breakfast.


Seth Millstein wrote this article for Sentient.


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