Senate panel aims to cut farm subsidies

By Charles Abbott

WASHINGTON (Reuters) - Senators will try to cut the $5.2 billion in subsidies guaranteed annually to U.S. grain, cotton and soybean growers when they debate the new farm bill, Agriculture Committee chairman Tom Harkin said on Tuesday.

Harkin said his committee probably would try to draft the bill on Thursday, the same day the Finance Committee was to meet on an ag tax bill that would pay for some farm bill programs, chiefly disaster relief and land preservation.

"You can anticipate there is going to be a number of amendments on the Senate floor to revise the direct payments," Harkin, Iowa Democrat, told reporters, referring to the guaranteed subsidies.

Created in 1996, the payments are based on a farm's record of crop production. Critics say the payments are not justified now that corn, wheat and soybean prices are at record highs and money is needed for other Agriculture Department work.

Harkin said Agriculture Committee members might agree to a small cut in direct payments as part of some across-the-board cuts. Based on discussions with committee members, he said, "we are beginning to rally around" a farm-bill outline that includes more money for specialty crops, land stewardship, renewable energy and rural economic development.

In discussing topics for the bill, Harkin said:

--"I'm going to put an option in the bill" for farmers who want to try revenue protection. It would protect farmer income against price and yield disasters. Traditional subsidies are based on price alone.

--renewable energy, including fuel ethanol and biodiesel, may be offered less than $2 billion in funding, lower than he earlier suggested.