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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Wisconsin's agriculture industry could see both wins and losses under the new federal budget.

Climate change isn't a priority for the Trump administration, so the new budget redirects funds for farm conservation initiatives. Chuck Anderas, policy director for the Michael Fields Agricultural Institute, said it lacks investments in key areas, such as technical assistance, to help farmers implement conservation measures.

Anderas predicted the gutted support - and incentives that will go to large farms that need it least - will weaken conservation efforts and could have long-term implications.

"And so, you're having more runoff and more nitrates in the drinking water," he said. "But then you're also having birth defects in babies from the nitrates in the drinking water, and you're having huge medical costs beyond the devastating effects to human health from that."

Wisconsin's new state budget does include some funding for programs that incentivize farmers to use conservation practices and reduce nitrogen pollution. Anderas said this kind of investment will help prevent flood damage, improve water quality and make agricultural systems more resilient - all of which affect public health.

As part of its agenda to curb government fraud and waste, the Trump administration has slashed staffing at agencies such as the U.S. Department of Agriculture's Natural Resources Conservation Service. The new budget proposes cutting nearly one-third of additional staff.

Anderas says that agency provides critical technical assistance to farmers - and the lack of support will create barriers for farmers who rely on its guidance.

"Everybody downstream from a farmer doing conservation practices benefits from that, because there's less water running off their fields, there's less nitrates in the drinking water, there's less phosphorus in our streams and rivers," he said. "And the very best people helping people to do that have been NRCS staff."

Anderas said the new federal ag budget appears to mostly benefit large farms through commodity payments and crop insurance, while small and midsize farms primarily rely on conservation programs.

"And a lot of that's been paid for at the expense of SNAP benefits," he said. "And so, that's basically the choice that's been made in this budget bill is, continue investing more and more in the largest farms, and invest less in people and in small and medium-sized farms."

He added that the new federal budget also redirects Biden-era conservation funds that hadn't yet been used away from practices that would reduce greenhouse gas emissions on farms.

Hoosier businesses across the state are feeling the ripple effects of rising tariffs and shifting trade policies, especially in farming, manufacturing and retail.

Aaron Lehman is president of the Iowa Farmers Union, but his concerns extend across state lines.

"We put off buying machinery and making other farm improvements," he said. "We're less likely to support our local suppliers and manufacturers. Sometimes we even put off bringing the next generation onto the farm."

Indiana ranks in the top 10 nationally for corn and soybean production, two markets directly hit by trade volatility. Supporters of tariffs say they protect U.S. jobs and fight unfair trade. However, small business owners in other states say rising costs and unpredictability are hindering their growth.

Americans voiced concerns during a call organized by Farmers for Free Trade and Tariffs Cost US.

Indiana distillers and retailers that rely on exports and imported materials could face similar risks. Nick Colombo, co-founder of Switchgrass Spirits in Missouri, said uncertainty from tariffs is impacting the way he does business.

"We are no longer trying to sell our goods outside of this country," he said. "That's a huge mess not only for us but also for the people we buy grain from and the people we buy barrels from."

Business owners nationwide say they need trade stability to hire, invest and grow.


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Iowa is the nation's number one corn and soybean producer and federal polices are designed to keep it that way but more farmers are moving away from traditional crops to protect the state's waterways.

Corn and soybeans both require a lot of fertilizer, which eventually seeps into groundwater.

Lee Tesdell, owner and operator of the 80-acre Tesdell Century Farm, in rural Slater, about 30 miles north of Des Moines, has adopted conservation methods. Instead of relying on the "big two" crops, he has gone to a four-crop rotation to reduce the amount of fertilizer he needs.

"Soybeans, corn, oats and alfalfa would be just as profitable," Tesdell pointed out. "Yields would be similar (to) a corn-soy, corn-soy, corn-soy, or corn-on-corn."

Some farmers have pushed back on moving away from corn and soybeans because they have been so reliable and profitable for generations. Adding new crops also means adding new costs.

Tesdell noted pollution from fertilizer runoff has become so bad in Iowa, the state's largest utility company has banned lawn watering to reduce nitrates in groundwater.

"Central Iowa Water Works cannot produce enough potable water every day to both send us good drinking water and enough water to water our lawns that's below 10 milligrams per liter, which is the EPA standard for drinking water," Tesdell explained.

Gov. Kim Reynolds recently vetoed a bill which would have banned companies from using eminent domain to construct CO2 pipelines on Iowa farmland, further promoting fertilizer-hungry corn and soybean production which can threaten Iowa's waterways.


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