Bush committed to farm bill reform -USDA's Schafer

By Christopher Doering

WASHINGTON, Jan 30 (Reuters) - President George W. Bush opposes raising taxes to pay for increases in several programs in the new U.S. farm law, the top U.S. agriculture official said on Wednesday, as he underscored crafting a new farm bill as his top priority while in office.

Agriculture Secretary Ed Schafer, in his first sit-down with reporters since he was confirmed on Monday, said President Bush has told him now is the time to act on farm policy.

"The president comes from an agriculture state and he understands agriculture," said Schafer, who met with Bush on Tuesday. "It's time for some good reforms. The president feels real strongly about that."

The White House has threatened to veto the five-year, $286 billion bill if it raises taxes or fails to end crop subsidies to the wealthiest Americans. Negotiators from the House and Senate are poised to write a bill blending legislation from each chamber.

Schafer said Bush strongly opposes a provision in the House and Senate farm bill that pays for larger public nutrition, biofuel and land stewardship programs. Congress said it gets the billions in new revenue by closing loopholes, but the administration said it amounts to tax increases.

House Agriculture Chairman Collin Peterson has said that unless the House and Senate can come to an agreement on a new farm bill soon, supports for milk, cotton and grain would double from current rates as specified in a 1949 law. Peanuts, rice, sugar and soybeans are not guaranteed a safety net.

Schafer said reverting back to the 1949 law would have "huge ramifications" in delivering programs, in the price of food and in the ability to deliver nutrition programs.

"This is a very serious situation if it were to happen," said Schafer. "I'm sure Representative Peterson, when he becomes aware of the ramifications of allowing that to happen, will see the proper course of action and not allow it."

Peterson responded by saying he was fully aware of the ramifications, but added: "If we can't get a bill signed by the president, we will have permanent law, not an extension of the current farm bill."

The Bush administration also wants to deny crop subsidies to people whose adjusted gross income was above $200,000 a year, or about 2 percent of Americans.

The House voted for a $1 million "hard" cap. The Senate backed a $750,000 limit beginning with 2010 crops but no limit for people who rely on farming for least two-thirds of income.

"The effort is to focus always limited resources in places they can do the most good," said Schafer.

(Editing by Russell Blinch and David Gregorio)