Money gap of $4 billion for new U.S. farm law

WASHINGTON, March 11 Tue Mar 11, 2008 3:15pm EDT

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WASHINGTON, March 11 (Reuters) - Congress and the Bush administration are $4 billion apart on funding for the new U.S. farm law and where to spend the $10 billion increase, such as a standby disaster program, said the Senate Budget Committee chairman on Tuesday.

Congress was not expected to complete work on the farm law until mid-April, six months behind schedule. Negotiators hope to agree on a farm bill "framework" covering funding, allocation of money and overall policy by week's end.

There were signs the administration may accept creation of an ever-ready disaster program costing $4 billion to $5 billion. It is a priority of senators from the northern Plains, who feel the government is slow to act when crops fail.

Farm bills, written every few years, are omnibus legislation covering crop subsidy, public nutrition, land stewardship, export, rural development and biofuel programs. Nutrition will get two-thirds of the money in the new law.

"There is still a gap between what we need and what we've agreed to," said Senate Budget Committee chairman Kent Conrad, North Dakota Democrat, during a session with soybean growers.

He placed the gap at around $4 billion both on how to pay for the bill and for how much larger are proposals for outlays compared to the target of an increase of $10 billion over 10 years.

"We've gotten a lot of resistance on a permanent disaster program," said Conrad, but the administration took part in discussions this week of how to craft a program.

"They seem to be working with us on it," said House Agriculture Committee chairman Collin Peterson, Minnesota Democrat, separately to reporters.

The House and Senate passed bills last year that would spend far more than the $10 billion increase now on the table. As a result, lawmakers must trim back on outlays.

"Everybody has to give a little ground," said Conrad.

Conrad said there were nonstop discussions on ways to pay for the farm bill. The White House says it will not accept tax increases. Conrad said customs and users fees could be a large part of the "payfors."

Iowa Sen. Charles Grassley told reporters he would press for more stringent subsidy rules in the farm bill. The Senate was debating an annual budget resolution that included Grassley's "hard" cap of $250,000 a year per farmer in subsidies.

"It's to keep the issue alive," said Grassley, a Republican. He said the farm bills passed by the House and Senate last year are riddled with loopholes while claiming to tighten subsidy rules. (Editing by Christian Wiessner)

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