HR-1707-119
Referred to the House Committee on Ways and Means.
Sponsored by David Kustoff (R-TN)
What it does
This bill would create a new federal tax credit for businesses that purchase domestically produced agricultural commodities. The credit would equal 25% of domestic agricultural commodity expenses, weighted by the share of domestic purchases relative to total purchases, up to a maximum of $100 million per business. To qualify, a business's three-year average domestic agricultural purchases must meet a rising threshold: at least 50% of total agricultural purchases in 2026, increasing by 5 percentage points each year until reaching 85% after 2033. Covered commodities include crops, dairy, livestock products, poultry, honey, and farm-raised fish, but exclude live animals and commodities that cannot feasibly be produced in the United States.
Who benefits
U.S. farmers and agricultural producers who would gain a competitive price advantage over foreign suppliers. Large food manufacturers, grocery chains, restaurant chains, and food distributors that source heavily from domestic suppliers and could qualify for the credit. Domestic aquaculture and dairy operations, which are explicitly included. Rural agricultural communities that depend on farm income. Agricultural input suppliers (seed, equipment, feed) who may see increased demand as domestic farming becomes more financially attractive to buyers. Businesses already near the domestic sourcing thresholds who could qualify with minimal adjustment.
Who is hurt
Importers and foreign agricultural producers who would face a structural price disadvantage relative to domestic competitors. Food and beverage companies that rely heavily on imported ingredients — such as tropical fruits, coffee, cocoa, or certain spices — and cannot feasibly shift to domestic sourcing. Smaller businesses with thinner margins that may struggle to restructure supply chains to meet the rising domestic-sourcing thresholds. Consumers who may face higher food prices if businesses pass on supply chain restructuring costs. U.S. trading partners whose agricultural exports to the U.S. could decline, potentially triggering retaliatory trade measures affecting other U.S. export sectors.
Supporters argue
Supporters argue that the U.S. food supply chain has become dangerously dependent on foreign sources, a vulnerability exposed by pandemic-era supply disruptions, and that this credit directly incentivizes businesses to rebuild domestic sourcing relationships. They contend that the graduated threshold structure — rising from 50% to 85% over eight years — gives businesses a realistic runway to adjust supply chains without sudden disruption, while the $100 million cap and the 50%-of-tax-liability limit prevent the credit from becoming a windfall for the largest corporations at the expense of the federal treasury.
Opponents argue
Opponents argue that the credit effectively penalizes businesses that rely on imports for commodities that are cheaper or unavailable domestically, raising costs throughout the food supply chain in ways that would ultimately be borne by consumers — particularly lower-income households that spend a higher share of income on food. They contend that the rising domestic-sourcing thresholds function as a de facto trade barrier that may conflict with U.S. obligations under World Trade Organization agreements, and that the complexity of the three-year averaging calculation and the separate tax liability limit create compliance burdens that disproportionately disadvantage smaller businesses without dedicated tax counsel.
Constitutional context
Tax credits fall squarely within Congress's taxing and spending power under Article I, Section 8, Clause 1, and this bill would need to originate in the House under the Origination Clause (Art. I, §7, cl. 1) — which it does, having been referred to the House Ways and Means Committee. No significant constitutional tension is present; the Taxing and Spending Clause gives Congress broad authority to use the tax code to incentivize domestic economic activity.
Checks and balances
Congress gains authority to shape agricultural sourcing decisions through the tax code; the IRS would administer and enforce the credit, and the Treasury Department would issue implementing regulations subject to standard administrative and judicial review.
Historical precedent
The domestic production activities deduction (Section 199 of the tax code, enacted 2004, repealed 2017) similarly used the tax code to incentivize domestic production across multiple industries, including agriculture, and was later challenged as a WTO-inconsistent subsidy.