US farm law overhaul may cut crop payment acres

WASHINGTON, June 8 (Reuters) - This year's overhaul of U.S. farm policy may result in fewer grain, cotton and soybean acres being eligible for direct payments, the chairman of the House Agriculture Committee said.

An Agriculture subcommittee voted this week to make direct payments on 74 percent of eligible acres, down from the current 85 percent. Minnesota Democrat Collin Peterson said on Thursday, "That could be where we end up with all commodities."

Next week, an Agriculture subcommittee is scheduled to draft language for public nutrition programs such as food stamps and school lunch. Public nutrition is the largest part of Agriculture Department spending, projected to get $186 billion for fiscal 2008-12, when USDA outlays would total $280 billion.

Highlights of the bill so far:

Renewable energy

--$2 billion in loan guarantees covering 90 percent of principal and interest for construction or retrofitting of biorefineries and bioproduct plants: $1 billion for projects costing up to $100 million each and $1 billion for projects costing $100 million-$250 million apiece. Intended to promote cellulose or biomass as feedstocks.

--$1.5 billion for cellulosic material and other biomass for ethanol, biodiesel and other biofacilities that expand production.

--$500 million for biomass research, mostly on making cellulose a cost-competitive feedstock.

--$500 million in grants for development and use of renewable energy in rural areas.

Land stewardship

--Double funding, to $2 billion a year, for Environmental Quality Incentives Program. It shares the cost of controlling farm and feedlot runoff.

--Up to $300 million a year for Farm and Ranchland Protection Program, which helps buy easements to prevent urban sprawl.

--No enrollment in "green payment" Conservation Security Program through 2012. Rewrites CSP to emphasize payments for new efforts for soil, water and wildlife stewardship and less on "maintenance" payments for past work.

--No enrollment in Wetlands Reserve or Grasslands Reserve unless more funding is available. If it is, 1.5 million acres can be added to Wetlands Reserve and 5 million acres to Grassland Reserve.

Livestock

--Dairy supports based on price of butter, cheese and nonfat dry milk, replaces current program that buys surplus dairy products with goal of a minimum price of $9.90 per 100 lbs of milk. USDA would buy dry milk for at least 80 cents per lb, butter for at least $1.05 per lb, and cheddar cheese for at least $1.10 per lb in barrels and $1.13 per lb in bricks. Prices adjusted downward if USDA stockpile become too large.