February 13, 2008 / 12:00 AM / 10 years ago

Farm bill compromise may toughen subsidy rules

WASHINGTON (Reuters) - The farm bill compromise being drafted by House Agriculture Committee leaders would set stricter eligibility rules for crop subsidies, lobbyists said on Tuesday.

The package also would drop the idea of higher subsidy rates for crops including wheat and soybeans; end the so-called loan deficiency bonus; and limit enrollment in the largest U.S. land stewardship programs.

U.S. Rep. Collin Peterson chairman of the Agriculture Committee in the House of Representatives, was expected to unveil the proposal on Wednesday although a time was not set formally. Peterson and Virginia Rep. Bob Goodlatte, the Republican leader on the committee, say they want to offer a "framework" that will lead to enactment of a new farm law, now months overdue.

Congress and the White House have been deadlocked on the bill since the start of the year. Agriculture Secretary Ed Schafer said on Monday that progress was made in the past few days. The White House says it will not accept tax increases and it wants to end crop subsidies to the wealthiest Americans.

According to three lobbyists, the House proposal would include:

--denying crop subsidies to people with an adjusted gross income above $500,000 a year unless at least two-thirds of the income is from agriculture. The income cap now is $2.5 million unless 75 percent of income comes from farming.

--capping the Conservation Reserve at 32 million acres.

--no "direct" payments in the ninth year of the 10-year lifespan of the farm law, saving $5.2 billion.

--no increases in crop subsidy rates.

--requiring growers to sell their crops when they claim loan deficiency payments. Some farmers have collected windfalls

by claiming an LDP when market prices are low and selling the crop when prices are higher.

--ending windfalls to growers who manipulate the rules for loan deficiency payments.

"The question is, where is the Senate on this?" asked one farm lobbyist, who asked not to be named. There were several significant differences between the House and Senate farm bills passed last year, including crop subsidy rules.

For example, the House voted for a $1 million AGI "hard" cap and a $500,000 "soft" cap that would not apply to people with at least two-thirds of their income from farming. The Senate proposed a $750,000 "soft" cap.

The White House has called for a $200,000 AGI "hard" cap. Schafer suggested on Monday there was flexibility on the issue. The White House says the $200,000 cap would end subsidies to roughly 40,000 people.

"It's totally non-effective," said Ferd Hoefner of the Sustainable Agriculture Coalition. He said landlords could elude an AGI limit by renting their land for cash, rather than taking a share of the crop as payment, a common practice.

Ellen Vollenger of Food Research and Action Center said the antihunger group hoped the compromise would include "significant" increases in funding for food stamps. "There is broad bipartisan support for nutrition programs," she said.

Reporting by Charles Abbott; Editing by David Gregorio

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