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Tax law gives unexpected break to farmers who sell to co-ops

MINNEAPOLIS — Key senators and farm groups are trying to fix a provision in the federal tax overhaul that gave an unexpected tax break to farmers who sell their crops to cooperatives rather than regular companies.

Lawmakers say they didn’t intend to give a competitive advantage to co-ops. But it’s not clear they can rework the legislation given the partisan divide on Capitol Hill. That means many companies — from local grain companies to agribusiness giants such as Cargill and ADM — could wind up paying more for crops than co-ops.

The provision from GOP Sens. John Thune of South Dakota and John Hoeven of North Dakota surfaced in the final days of the debate over the tax bill, which President Donald Trump signed last month. Thune and Hoeven wanted to replace a deduction that benefited co-ops in the old law, which was being dropped, and they wanted to make sure farmers didn’t wind up with a tax increase.

But the final language went further than maintaining the status quo.

“I think at the end of the day what it boiled down to is the staff didn’t know what they were doing. … They rushed this thing through,” said U.S. Rep. Collin Peterson of Minnesota, the ranking Democrat on the House Agriculture Committee.