Senate panel aims to cut farm subsidies

WASHINGTON Tue Oct 2, 2007 1:26pm EDT

A field of soft red winter wheat about a week away from harvest is pictured in the Chicago suburb of Naperville, Illinois, June 24, 2007. Senators will try to cut the $5.2 billion in subsidies guaranteed annually to U.S. grain, cotton and soybean growers when they debate the new farm bill, Agriculture Committee chairman Tom Harkin said on Tuesday. REUTERS/Peter Bohan

A field of soft red winter wheat about a week away from harvest is pictured in the Chicago suburb of Naperville, Illinois, June 24, 2007. Senators will try to cut the $5.2 billion in subsidies guaranteed annually to U.S. grain, cotton and soybean growers when they debate the new farm bill, Agriculture Committee chairman Tom Harkin said on Tuesday.

Credit: Reuters/Peter Bohan

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WASHINGTON (Reuters) - Senators will try to cut the $5.2 billion in subsidies guaranteed annually to U.S. grain, cotton and soybean growers when they debate the new farm bill, Agriculture Committee chairman Tom Harkin said on Tuesday.

Harkin said his committee probably would try to draft the bill on Thursday, the same day the Finance Committee was to meet on an ag tax bill that would pay for some farm bill programs, chiefly disaster relief and land preservation.

"You can anticipate there is going to be a number of amendments on the Senate floor to revise the direct payments," Harkin, Iowa Democrat, told reporters, referring to the guaranteed subsidies.

Created in 1996, the payments are based on a farm's record of crop production. Critics say the payments are not justified now that corn, wheat and soybean prices are at record highs and money is needed for other Agriculture Department work.

Harkin said Agriculture Committee members might agree to a small cut in direct payments as part of some across-the-board cuts. Based on discussions with committee members, he said, "we are beginning to rally around" a farm-bill outline that includes more money for specialty crops, land stewardship, renewable energy and rural economic development.

In discussing topics for the bill, Harkin said:

--"I'm going to put an option in the bill" for farmers who want to try revenue protection. It would protect farmer income against price and yield disasters. Traditional subsidies are based on price alone.

--renewable energy, including fuel ethanol and biodiesel, may be offered less than $2 billion in funding, lower than he earlier suggested.

--"It seems the forces are at work to cut out conservation" from large gains in funds. Harkin said he would fight for land stewardship money. He wants an additional $1.6 billion for the Conservation Security Program, the first "green payment" program, so 80 million acres can be enrolled in the next 5-6 years.

--The Senate bill will be "pretty close" but below the $4.2 billion approved by the House in new funding for public nutrition programs, mostly food stamps.

--He does not support a proposal to allow state-inspected meats to be sold across state borders. The House farm bill includes the provision, which is opposed by some consumer groups. State agriculture officials say their inspection systems are as reliable as federal inspection.

Finance Committee members were expected to work on a bill providing $9 billion for agricultural programs. Some $5 billion would pay for a stand-by disaster relief program. Finance chairman Max Baucus, Montana Democrat, and Budget Committee chairman Kent Conrad, North Dakota Democrat, say disaster aid must be part of the farm bill. They are Agriculture Committee members.

A report by the Environmental Working Group, which favors boosting funding for land stewardship programs, said disaster aid would assure more money for a handful of states, mostly in the arid Plains, that already get a large portion of crop subsidies, crop insurance and stewardship spending.

"EWG's analysis raises the questions of whether it is fair to designate such a large portion of revenues to a single purpose that mostly benefits just a few states ... " the group said in a report.

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