U.S. farmers and agriculture companies are cheering the passage of U.S. President Donald Trump’s spending legislation, known in Washington, D.C. as the “one big, beautiful bill.”
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Farmers in rural heartland states such as Iowa and Indiana praise the legislation for delivering tax relief, enhanced death tax exemptions, extension of the biofuel tax credit, and strengthened crop insurance at a time when there is uncertainty in the U.S. agriculture sector.
The legislation’s passage is expected to benefit leading American agriculture companies such as Archer-Daniels-Midland (ADM), Deere & Co. (DE), and Tyson Foods (TSN). The American Farm Bureau Federation, which serves farmers in all 50 states, said that the legislation provides some much needed “certainty” to farmers and ranchers.
Biofuel Boost
If there’s one aspect of the legislation that is winning universal praise, it is the extension of incentives on crop-based biofuels, and the exclusion of foreign feedstocks from U.S. tax breaks. The bill extends tax credits by two years and restricts the eligibility of these credits going to fuels made from feedstocks in neighboring Canada and Mexico.
The legislation also relaxes restrictions pertaining to greenhouse gas (GHG) emissions. Analysts and advocates say the new provisions strengthen the U.S. biofuel industry while restricting foreign competition faced by U.S. farmers and companies.
Biofuels are fuels produced from renewable biological sources such as animal waste and crops like corn. Biofuels serve as a sustainable alternative to fossil fuels and are used in transportation, heating, and electricity generation. It is a growing industry that is helping the agriculture sector diversify.
Is ADM Stock a Buy?
The stock of Archer-Daniels-Midland has a consensus Hold rating among six Wall Street analysts. That rating is based on one Buy, three Hold, and two Sell recommendations issued in the last three months. The average ADM price target of $49.00 implies 10.57% downside from current levels.
