WASHINGTON, Feb 8 (Reuters) - U.S. lawmakers are close to resolving a problem with the new federal tax law that gives grain cooperatives an unintended market edge over private companies, but have had a hard time getting agreement among members of the farm sector, a Republican senator said on Thursday.
A provision in the Republican tax overhaul that President Donald Trump signed into law on Dec. 22 allows 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 companies such as Archer Daniels Midland Co and Cargill Inc.
That has driven fears among U.S. ethanol producers and privately run crop handlers they could be squeezed out of the competition to buy farmers' harvests.
Senator John Thune told reporters that lawmakers are aiming to get a solution into spending legislation that Congress would need to take up next month. That would replace a measure to keep the government funded through March 23, which lawmakers hoped to adopt on Thursday.
"We haven't gotten consensus within the stakeholder community on the language, but we have I think probably as good as we're going to get at a solution," the South Dakota Republican said.
He declined to disclose details of the prospective solution.
Thune and other Republican lawmakers from grain states have been working to find a solution with interested parties for about six weeks.
"What we found was trying to satisfy co-ops and private grain operators was a challenge, and trying to get both of them to agree on final language has been a real challenge," Thune said.
Lobbyists initially expected an agreement to be attached to one of the short-term funding bills that Congress has considered this year.
But Thune said it could find a home in a longer term spending measure, if Congress can agree on a proposed two-year spending plan now before lawmakers.
"It'll give us a little more time to perfect it. But I think ... we've got it about as good as we can,” he added. (Reporting by David Morgan; Additional reporting by Tom Polansek in Chicago; Editing by Chris Reese)