New reform-minded farm law needed, says big farm group

NASHVILLE, Tennessee (Reuters) - Farmers want a new reform-minded farm law even if it means the end of a popular $5 billion-a-year subsidy that is paid regardless of need, the president of the largest U.S. farm group said on Sunday.

"There's a great deal of concern how this drought is going to play out in 2013," President Bob Stallman said at the opening of the American Farm Bureau convention. Sixty percent of the nation is currently under severe to extraordinary drought.

Congress is months overdue in an overhaul of U.S. farm subsidy law. Lawmakers extended the now-expired 2008 law, including the direct-payment subsidy, at the start of this month to avert a potential doubling of milk prices in the grocery stores.

Elimination of the direct payment is a top goal of reformers. They say the subsidy is wasteful during an agricultural boom that dates from 2006.

Bills approved last year by the Senate and by the House Agriculture Committee proposed an end to the subsidy with some of the savings put into a new insurance-like farm program that shields growers from low prices and poor yields.

"We are willing to accept that (elimination) as a foregone conclusion," Stallman told reporters, as part of phasing down traditional subsidies in favor of crop insurance and other risk management tools.

Although the Senate passed its five-year, $500 billion farm bill in June, House Republican leaders refused to call a vote on a House version because of infighting over additional spending cuts. The Senate bill cut spending by $23 billion over 10 years and the House bill called for $35 billion, including the largest cuts in a generation in food stamps for the poor.

"Now, we need the new Congress to show the leadership needed to pass long-term farm policy and enact the kind of reforms that the Senate and House Agriculture Committee have approved," Stallman said in a convention-opening speech.

Both bills could cut farm subsidies by $13 billion and conservation programs by $6 billion. They disagree on food stamp cuts and how extensive the new revenue protection program would be.

With election-year pressure gone, prospects are brighter for a new farm bill, Stallman said.

Continuing budget pressures could prompt Congress to look at farm programs for budget cuts this year, he added. Agriculture is willing to do its share, Stallman said, but "we don't want to be the piggy bank."

(Reporting By Charles Abbott; Editing by Maureen Bavdek)