Louisiana Farmers Need Capital, Not a New Tax

Louisiana’s agriculture industry is no stranger to adversity — hurricanes, floods, heat waves, and volatile commodity prices all take their toll on the farmers who power a vital part of the state’s economy. Yet amid these challenges, one quiet but essential policy tool has helped keep many Louisiana farms and agri-businesses afloat: carried interest.

Often vilified as a Wall Street “loophole,” carried interest is in fact a tax mechanism that encourages long-term investment — particularly in sectors like agriculture, where traditional financing can be scarce and capital needs are large. In rural Louisiana, where many farms operate on razor-thin profit margins, outside investment from private equity firms and ag-focused funds often provides the critical resources needed to modernize equipment, scale operations, or recover from a bad season.

According to the LSU AgCenter, agriculture contributes over $11 billion annually to Louisiana’s economy and supports thousands of jobs across sugarcane, rice, soybeans, cotton, and livestock production. But farming is inherently unpredictable, and Louisiana’s small and midsize farms often find themselves shut out of conventional bank financing due to cyclical income or land-based collateral constraints. That’s where private capital — enabled by the carried interest framework — steps in.

These investments aren’t speculative bets; they’re strategic partnerships that help Louisiana producers invest in irrigation systems, upgrade machinery, or expand storage capacity. In many cases, they’re the difference between a generational family farm surviving or shuttering.

Take Avoyelles Parish, for example. In 2021, institutional farmland investor Farmland Partners Inc. acquired over 7,200 acres of farmland in the parish for $25.1 million. The land supports crops such as soybeans, rice, cotton, and grain sorghum — key components of the state’s ag economy. In nearby West Carroll Parish, the same firm invested another $3.6 million in a 732-acre farm producing corn, sweet potatoes, and wheat.

And the trend continues. In Morehouse Parish, Farmland Partners purchased 1,523 acres of cropland in 2023 for roughly $11 million, with plans to lease the land back to local operators. These types of deals, structured through investment partnerships that rely on carried interest for long-term returns, offer critical capital infusion to local farms without forcing families to give up control of their operations.

These are not isolated examples. Louisiana’s rich farmland is attracting growing interest from private capital — from Delta rice producers to sugarcane growers near Iberia Parish. Even the Teachers’ Retirement System of Louisiana has invested in ag-focused private equity funds, recognizing the strong long-term value and economic contribution of farmland.

Yet proposals in Washington to change the tax treatment of carried interest — essentially taxing it as ordinary income rather than capital gains — may seem like an abstract budget fix to some. But for Louisiana’s agricultural economy, such changes could lead to real-world consequences: fewer investments, fewer rural jobs, and a loss of financial lifelines that many farmers depend on.

Critics argue that carried interest benefits the wealthy. But in places like Morehouse, Avoyelles, and Richland Parish, it’s helping seed capital projects that banks won’t touch. The investors taking these risks often wait years to see returns, and taxing their share of profits as short-term income disincentivizes long-haul commitments to sectors like ag, energy, and infrastructure — precisely where we need them most.

With inflation driving up input costs and the climate adding new layers of uncertainty, now is the worst time to make capital harder to access for Louisiana’s farmers. Instead of punishing investment, Congress should be encouraging it — especially in rural economies that depend on it to grow, adapt, and survive.