House bill cuts U.S. farm aid, payment to Brazil

Tue May 31, 2011 11:05pm EDT

Related Topics

* Bill would lower cap on farm payments by two-thirds

* Cut proposed by Republican is larger than Obama plan

* No payment to Brazil, winner of WTO cotton case

* Bill is cleared for vote on U.S. House floor

WASHINGTON, May 31 (Reuters) - A House committee voted to cut off crop subsidies to growers with more than $250,000 a year in adjusted gross income on Tuesday -- a dramatic tightening of the farm safety net.

The Appropriations Committee also voted to make cotton growers effectively pay for the $147 million a year U.S. payment to Brazil, the victor in a trade dispute over American cotton supports.

"It's a great sign Congress is ready to end these subsidies," said Jeff Flake, Arizona Republican and sponsor of the cuts. Both were adopted by voice vote. Only one dissenting vote was heard on the vote for a lower eligibility cap.

During an impromptu interview, Flake, a longtime proponent of farm subsidy cuts, pointed to billions of dollars in crop and ethanol supports and said, "Overall, you can't justify it."

Committee members cleared the $125 billion for a floor vote. The bill provides money for the Agriculture Department and related agencies for fiscal 2012, opening on Oct 1. The House and Senate must agree on terms before it can become law.

Appropriators are under orders to reduce federal spending to match a House-passed budget plan. The fiscal 2012 USDA bill is a $280 million increase from this year but includes a 14 percent cut in so-called discretionary accounts.

The wealthiest Americans are barred under the 2008 farm law from receiving crop subsidies. People with more than $500,000 in adjusted gross income from off-farm sources or $750,000 in on-farm AGI are not eligible for payments.

Flake won support for a $250,000 AGI limit by saying, "That's still pretty good income. Anything above that, we cannot do."

President Barack Obama attracted little immediate support with a Feb 14 proposal to set the eligibility cap at $250,000 AGI for off-farm income and $500,000 on-farm AGI. USDA estimated the limits would affect 30,000 people out of 1.2 million farm subsidy recipients.

A year ago, the United States said it would pay $147 million a year to a technical assistance fund for cotton growers in Brazil as partial resolution of a cotton dispute.

Brazil won a World Trade Organization ruling that U.S. subsidies distorted global production. Lawmakers are expected to revise cotton supports in a 2012 overhaul of farm policy.

"We don't have to wait for another farm bill to address this," said Flake.

Under his approach, the money for the payments will be subtracted from payments guaranteed annually to cotton growers, beginning in fiscal 2013.

The National Cotton Council declined comment on the committee vote.

Committee members voted later on Tuesday to shift the $147 million for payment to Brazil in fiscal 2012 to a public nutrition program. Sponsor Rosa Delauro said she was not concerned by prospect of noncompliance with Brazil when funding may run short for the Women, Infants and Children feeding program. (Reporting by Charles Abbott; Editing by Kim Coghill)

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