CHICAGO, March 13 (Reuters) - U.S. lawmakers have agreed to language revising a portion of the new tax code that gave farmers a massive tax break for selling grains to cooperatives rather than private firms, agriculture lobbyists said on Tuesday.
The agreement, which lawmakers have been scrambling to reach for months, replicates the tax benefits given to farmer-owned co-ops that existed in December 2017, according to a statement released by the National Council of Farmer Cooperatives and the National Grain and Feed Association.
The controversial provision to the tax bill, known as 199A, gave farmers a 20 percent deduction on payments for sales of crops to farmer-owned cooperatives, but not for sales to private or investor-owned grain handlers such as global firm Archer Daniels Midland Co.
That has driven fears among U.S. ethanol producers and privately run crop handlers, such as Minnesota's Minn-Kota Ag Products, that they could be squeezed out of the competition to buy farmers’ harvests.
"It's time to have a party," said Dale Beyer, chief financial officer for Minn-Kota, in reaction to the agreement.
The section was added to the tax bill amid of a flurry of last-minute negotiations and lawmakers have admitted that the changes were a mistake.
A spokeswoman for U.S. Senator Pat Roberts, a Republican of Kansas and chairman of the senate agriculture committee, had no immediate comment on the amendments.
National Grain and Feed Association President and Chief Executive Randy Gordon had previously said he hoped a fix could be included in a spending bill that must be passed by the end of March.
"The old Section 199 had a proven track record of letting farmers keep more of their hard-earned money," Chuck Conner, president and chief executive of the National Council of Farmer Cooperatives, said in a statement. "We expect these provisions to do the same." (Reporting by Mark Weinraub and Tom Polansek in Chicago Editing by Suzannah Gonzales)