Farm law writers ask tighter subsidy limits

By Charles Abbott

WASHINGTON (Reuters) - House and Senate negotiators suggested on Tuesday the new U.S. farm law could deny "direct" payments to growers earning more than $750,000 a year, down sharply from earlier proposals in Congress.

Iowa Sen. Tom Harkin, the Democrat in charge of the negotiations, said there "may be some discussions with the White House" on Wednesday with the goal of resolving the final issues in the five-year, $285 billion bill.

The Bush administration disagrees with farm-bill writers on several points, most prominently on farm program reform. The administration called for an income ceiling of $200,000 a year for access to crop subsidies but said it would accept $500,000 if lawmakers make broad reform in subsidies.

"We have been very clear ... that now is the time for reform when it comes to the farm bill," said White House spokeswoman Dana Perino when asked if the bill may be vetoed.

Sen. Saxby Chambliss said "a couple of scenarios" were being considered on payment limits. Senior negotiators said they need an additional $300 million in savings.

"I told the White House this morning if they do veto it, my goal will be to override them," said Chambliss, Georgia Republican.

House Agriculture Committee chairman Collin Peterson, Minnesota Democrat, told reporters that he would suggest to other negotiators on Tuesday a $750,000 "hard" cap on access to direct payments. Negotiators agreed to try the $750,000 limit, a farm lobbyist said afterward.

Direct payments, guaranteed annually to farmers because they grew subsidized crops in the past, total $5.2 billion a year with a $40,000 a year limit per person. When market prices are low, growers also benefit from price supports and counter-cyclical payments.