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.

Last week, farm bill negotiators promoted a formula to reduce direct payments by 10 percent for each $100,000 in income above $950,000. Under that plan, payments would end when income topped $1.9 million a year.

Along with the $750,000 hard cap, negotiators suggested a cut-off of $500,000 in off-farm income, a $45,000 a year limit on direct payments and a $1 million "soft" cap for eligibility for land stewardship payments, with no limit if more than two-thirds of revenue was from farming, two farm lobbyists, who asked not to be named, said.

Because spouses are eligible for subsidies, the income limits effectively could be doubled.

Sen. Kent Conrad, North Dakota Democrat, said negotiators discussed adjustments in crop subsidy rules. Conrad said hard-nosed tactics by the White House made compromise more difficult to achieve.

Seven dozen members of farm, antihunger and food retailer groups met Peterson at the National Farmers Union offices on Tuesday to encourage passage of the farm bill.

"This is the best bill ever for nutrition and for conservation and for specialty crops and for renewable energy," said NFU President Tom Buis afterward.

"I think if we have a good vote in the House and Senate, that would influence the president's decision," said Buis, referring to the veto threat. Congress can override a veto by a two-thirds majority in each chamber.