Money source for farm disaster-aid plan not set

By Charles Abbott

WASHINGTON (Reuters) - The chairman of the Senate Finance Committee said he has not nailed down the finances for the multibillion-dollar disaster relief program that he insists must be part of the new U.S. farm subsidy law.

Chairman Max Baucus said on Wednesday he intended to settle the matter by early October, also the informal target for the Agriculture Committee to draft a farm bill.

Creation of an ever-ready disaster program is a top priority for senators from the Plains and the West. It would be an expensive item at a time when funding reserved for agricultural programs in the farm bill is down sharply, the result of high market prices.

Baucus said he plans to create a trust fund for disaster relief by using tariff receipts that now go into the federal general fund.

"We'll find it," said the Montana Democrat, when asked what he would use to offset the expenditure. Baucus said the Finance Committee would meet October 3 to write its agriculture package.

Overall, it would provide $8 billion-$10 billion, mostly for the disaster fund. The package would allow landowners to claim tax credits for land preservation work and offer tax credits for renewable energy projects.

During a news conference, North Dakota Democrat Kent Conrad, a Finance Committee member, said the aid program would focus on "shallow losses" not covered by crop insurance. Yield and crop-quality losses would be covered, Conrad said, as well as livestock, specialty crop and forage losses.

"If you don't have a safety net, one bad year can put you out of business," said Sen. Jon Tester, Montana Democrat, one of five senators to join Conrad, Baucus and Tom Buis, president of the 300,000-member National Farmers Union, in support of writing disaster aid into the farm bill.

Utah Republican Orrin Hatch said a stand-by disaster program would end "annual congressional circus act" of deciding whether to enact aid.

On Tuesday, Senate Agriculture Committee Chairman Tom Harkin, Iowa Democrat, said a "modest" disaster program would fit in the bill if a revenue protection plan was optional.

"I think it (the farm bill) is coming together," said a farm lobbyist, because of common views about elements for the farm bill, which could require billions of dollars in new funding.

The lobbyist, who asked not to be named, said the Senate farm bill probably would resemble the bill passed by the House on July 27. The House bill would make minor changes in crop support rates and boost funding for public nutrition, biofuels, land stewardship and specialty crop programs.

Conrad said the Senate bill should "improve the equity between commodities" in their support rates without changing the overall structure of grain, cotton and soybean subsidies. The bill also should put more money into biofuels and public nutrition.

It must "also have reform ... by way of payment limits," said Conrad. In the House, the proof of farm bill reform was a provision to bar people with an adjusted gross income of more than $1 million a year from crop and stewardship subsidies. At present, the income cut-off is $2.5 million.