U.S. farm bill limits affect few growers: Reformers

WASHINGTON (Reuters) - Despite claims of reform, the $285 billion U.S. farm bill awaiting a final vote in Congress will reduce subsidies to very few growers, a coalition of groups trying to defeat the bill said on Tuesday.

The House was expected to vote on the five-year bill on Wednesday, followed by the Senate. Two-thirds of the money would go to public nutrition programs, such as food stamps.

"If this bill makes it to my desk, I will veto it," President George W. Bush said in a statement, criticizing the bill for overspending and embracing too little reform. "In the absence of a good farm bill, I call on Congress to extend current law for at least one year."

Nutrition programs would get a $10.3 billion increase in funding over 10 years under the bill. Land stewardship would get an additional $4 billion, specialty crops $1.35 billion and biofuel development $1.2 billion. Crop insurance and crop supports would be cut.

With food prices forecast to rise by 4.5 percent this year, anti-hunger groups say the bill will help poor Americans buy food. It would adjust the food stamp formula, resulting in slightly larger benefits, and increase federal donations to food pantries.

"These provisions will stop the erosion in food stamp benefit purchasing power," two anti-hunger groups and a group speaking for elderly Americans said in a letter to Congress.

A coalition of fiscal hawks, small-farm advocates and the international development group Oxfam America said the farm subsidy reforms in the bill were nearly toothless. They urged Congress to defeat the bill and try again.

"There really isn't reform in this bill," said Chuck Hassebrook of the Center for Rural Affairs.

The center, based in Lyons, Nebraska, said that, when it looked at large-scale operators in seven major farming states, only five would see a cut in payments due to a farm-bill reform -- ending the opportunity to collect payments indirectly. Most farmers would not be affected because spouses are eligible for subsidies, said Hassebrook.

Two other coalition members, Taxpayers for Common Sense and Council for Citizens Against Government Waste, said the farm bill continued to lavish large payments on big farmers.

Lawmakers say the marquee reform is language that denies farm supports to people with more than $500,000 in nonfarm income and cuts off "direct" payments to people who have more than $750,000 a year adjusted gross income from farming. The income ceilings are estimated to save $62 million a year.

Direct payments are guaranteed to growers based on past production of crops eligible for subsidies and are paid regardless of market prices. They total $5.2 billion a year.

Skeptics say only a few thousand people will be affected. Hassebrook said landowners can evade the limit by switching to cash rent, married couples can split assets and income to remain below the limit and big farmers could expand operations so their adjusted gross income stays below the limit.

Senate Agriculture Committee Chairman Tom Harkin suggested last week the limits would touch less than 1 percent of farmers. That is the wrong yardstick, he said, to size up a bill that helps stewardship, specialty crops and biofuels.

"That's what the farm bill does. It really helps the average working farmer out there," the Iowa Democrat said.

In some instances, operators would be allowed to count revenue from farm-related businesses, such as equipment sales, as farm income.

People with more than $1 million in adjusted gross income would not be allowed to enroll in land stewardship programs, unless more than two-thirds of their income was from farming. Waivers would be allowed for major environmental gains.

(Editing by Walter Bagley)