Farm law overhaul completed, veto possible

By Charles Abbott

WASHINGTON (Reuters) - Facing a possible veto, House and Senate negotiators agreed on a $285 billion farm bill on Wednesday that puts more money into public feeding programs and denies one crop subsidy program to the wealthiest Americans.

The compromise bill could be sent to the White House by the middle of next week, seven months overdue. White House spokeswoman Dana Perino said earlier in the day "it seems unlikely" the bill will satisfy the administration's drive for farm-program reform.

Ethanol incentives would be revised under the bill to encourage development of renewable fuels from cellulose, found in grasses, trees and crop residue. The tax credit for corn-based ethanol would be cut by 12 percent and a cellulosic ethanol credit of a dollar would be created.

Senior negotiators said they moved toward the White House position on crop subsidy limits during their final meeting. A wide gap remains.

Sen. Charles Grassley said the farm bill would bar people with more than $500,000 in off-farm income or $750,000 overall from receiving "direct" payments. Grain, cotton and soybean growers are guaranteed $5.2 billion a year in those payments.

There would be no income test for the other two strands of the farm safety net, price supports and counter-cyclical payments, which are available when market prices are low. Price are sky-high now.

Maximum payment would remain $40,000 per person for direct payments, according to a small-farm advocate. Last week, lawmakers mulled a $10,000 increase.

Administration officials called for an eligibility ceiling of $200,000 in adjusted gross income for all crop subsidies. They said they would accept a $500,000 cap if Congress made broad reform in farm programs.

Funding for public nutrition programs including food stamps would rise by $10.4 billion over 10 years in the farm bill. Rep. Rosa DeLauro, Connecticut Democrat, says 10 million people would see larger food stamp benefits as a result.

Land stewardship programs would gain $4 billion, specialty crops $1.35 billion and biofuel development $1.2 billion, including loan guarantees for cellulosic ethanol plants and a program that would pay farmers to experiment with biomass crops.

Crop insurance, crop supports and agricultural research funds would be cut to expand programs in other areas. Lawmakers also wrote in a $10 billion spending increase for the bill.

President Bush said last week there was no reason to give more money to multimillionaire farmers when Americans feel the pinch of rising food prices.

"I'm still hopeful the president will sign this bill," said Senate Agriculture Committee Tom Harkin, Iowa Democrat, who recognized the possibility of a veto. "We've got to get the votes to override a veto, and we will."

Rep. Bob Goodlatte, Virginia Republican, said Bush "said he was not supportive of the legislation" when he met Republican congressional leaders on Wednesday but did not vow a veto.

Among the major points in the bill were: