Farm law, trade expected to surface in Bush speech

By Missy Ryan and Charles Abbott

WASHINGTON (Reuters) - A shaky economy and the Iraq war may dominate President George W. Bush's State of the Union address on Monday, but the lame-duck leader is also expected to mention farm legislation and pending trade deals that are bread-and-butter issues for America's farm economy.

The State of the Union, which will be broadcast around the world, has in the past been a platform to send messages to foreign capitals on pressing issues like national security.

The 40-plus-minute speech also gives the president a vehicle for speaking to a more local audience on issues that normally do not make the headlines, like agriculture.

"That means taking credit for the recently enacted expansion of renewable energy, laying down a marker on expectation for farm policy, and pleading for action" on trade deals, said Gary Blumenthal, an analyst at World Perspectives.

The speech comes as Bush and Congress square off over the farm bill, the $286 billion agriculture plan that is so far behind schedule that sky-high grain and cotton subsidies dating to 1949 will come into force if there is no agreement soon.

House-Senate negotiators are now working on a final version of the bill, but Bush has pledged to veto a farm bill that relies on new taxes and fails to deny crop subsidies to the wealthiest 2 percent of Americans.

Analyst Mark McMinimy of Stanford Washington Research said Bush may use the bill as an example of the Democratic- controlled Congress' penchant for profligate spending.

Lawmakers contend that new money is needed to expand food stamps, land stewardship and biofuel programs.

A new farm bill, along with an energy bill passed last year, would mark a major gain for Bush's drive for alternative energy. The bill would provide $1 billion to $2.4 billion to encourage development of cellulose for making fuel ethanol.

"The tone and language he uses will be an important signal as to how strong (or weak) is his veto threat, and consequently how much further change can be expected," Blumenthal said.

TRADE CRUCIAL TO U.S. FARMERS

Bush is also expected to use Monday's speech to highlight the need for a long-delayed agreement in the Doha trade talks.

After six years of talks bogged down by differences over agriculture, momentum appears to be gaining, and there is talk a breakthrough meeting could be held around Easter.

The prospect of a deal is especially attractive for U.S. farmers, who are looking to further expand exports that are expected to hit $91 billion in fiscal 2008.

A Doha agreement would be a prized addition to Bush's legacy, and the speech might be a useful platform for driving home his desire to make a deal.