Senate draft of new U.S. farm law boosts Southern crop supports
* Senate and House panels expected to vote on farm bill next week
* Southerners objected to "shallow-loss" revenue program for months
* Farm bill would cover crops from 2014-18
WASHINGTON, May 9 (Reuters) - In a concession to Southern lawmakers, the new U.S. farm law would set sharply higher support prices for rice and peanut crops under a draft prepared for a Senate Agriculture Committee vote next week and released on Thursday.
The $500 billion farm bill is seven months overdue. Senate Agriculture Committee Chairwoman Debbie Stabenow, Democrat of Michigan, called a meeting of her panel to consider the bill on Tuesday. The House Agriculture Committee confirmed that it will start its markup on Wednesday.
Stabenow's decision to continue the "target" price system - although under a new name and with higher rice and peanut supports - could resolve a major dispute over the program. In 2012 the Senate committee voted to replace almost all traditional crop supports with a guarantee of crop revenue.
The text of the roughly 1,100-page Senate draft was posted on the Internet on Thursday. Stabenow said her bill would cut spending by $23 billion over 10 years, more than half of it in crop supports. The House bill was expected to cut $36 billion, with more than half it of from food stamps for the poor.
In the Senate draft, rice would get a target price of $13.30 per 100 lbs, up 26 percent from current law, and peanuts a target price of $523.77 per ton, up 6 percent. Targets for other major crops would be stay at current rates, well below current market levels.
Farmers get federal payments when the average price for a crop is below the trigger level set by the farm bill. The Congressional Budget Office expects rice prices to exceed $14 per 100 lbs in coming years and peanut prices to average around $500 a ton.
Target prices would provide a long-term floor for federal support of grain, oilseed and cotton crops. The draft Senate bill, like the 2012 version, would create an insurance-like program to shield grain and soybean growers from the year-to-year impact of poor yields and low prices.
Payments under the so-called shallow-loss program would be triggered when a farmer's revenue from a crop was from 12 percent to 22 percent below a guaranteed level. The guarantee would be based on an average of recent prices and would be recalculated annually.
Sugar support prices would remain at current levels under Stabenow's proposed five-year bill, while the dairy program would be revamped into a margin-insurance format.
A $5 billion-a-year "direct payment" subsidy, paid regardless of need, would be eliminated in the Senate bill - a cost savings long sought by lawmakers.
"The era of direct payments is over," Stabenow said in a statement touting the bill's deficit reduction goals.
"Passing the farm bill will yield a total of $23 billion in cuts to agriculture programs," said Stabenow.
The bill would require farmers to practice soil and water conservation to qualify for subsidized crop insurance policies, said the Environmental Working Group, a pro-conservation group.
It also said the bill needlessly cuts conservation programs in order to lavish more money on crop supports and crop insurance subsidies.
The text was available here (Reporting By Charles Abbott; Editing by Steve Orlofsky)