* Insurance-like plan shields farm revenue from downturns
* Senate bill saves $23 billion, ends "direct payment"
* Tighter rules on payments to the wealthy
By Charles Abbott
WASHINGTON, April 26 U.S. farmers will get a new
crop-subsidy program that protects them from ruinous declines in
revenue, the biggest threat to survival with today's high and
volatile prices, a Senate committee decided on Th ursday.
The Agriculture Committee approved the new path for the U.S.
farm program by a 16-5 vote. The package would erase almost all
traditional farm supports, especially the $5 billion a year
"direct payment" subsidy paid regardless of cost, and save $23
billion over 10 years.
Instead, an insurance-like program would compensate grain
and soybean growers when revenue from a crop was 11-21 percent
below the five-year average with a maximum payment of $50,000.
The federally subsidized crop insurance system would cover
deeper losses. Cotton growers would use a separate, but similar,
"The era of direct payments is over," said Agriculture
chairwoman Debbie Stabenow of Michigan. "We are moving to risk
management with additional support to farmers who need it."
Added Pat Roberts of Kansas, the Republican leader on the
committee: "This is truly a reform bill." The five-year farm
bill would cost around $480 billion, with public nutrition
programs accounting for three-fourths of the spending.
Stabenow said the bill could be called for Senate debate in
a few weeks and she aimed for enacting a new farm law before the
current one expires on Sept. 30.
The House of Representatives wants much bigger cuts -- $180
billion. Analysts say budget and election-year pressures may
delay the new law until a post-election session or even 2013.
Revenue protection would be more comprehensive by responding
to low market prices and poor yields than the current farm
program, which responds to low prices only. The only hold-over
from the current system would be so-called marketing loans that
assure a minimum return on crops.
Farmers would be required to practice land, water and
wildlife stewardship to qualify for payments under the new
program, called Agriculture Risk Coverage. U.S. farm groups
generally support the switch to revenue protection but rice and
peanut growers say they will be short-changed by the Senate
"There is no safety net," objected Saxby Chambliss of
Georgia, a peanut state. Chambliss and the three other
Southerners on the committee voted against the bill, as did
Kirsten Gillibrand of New York, who objected to cuts in food
stamps and a new dairy support program.
Farm-subsidy reformers saluted the bill for the strictest
limits yet on farm subsidies. People with an average adjusted
gross income above $750,000 will not be eligible for crop
subsidies, down from the current $1.25 million. And only one
person per farm can claim eligibility for payments, closing a
loophole that let payments flow to people whose only connection
to agriculture might be an occasional phone call.
While revenue program payments would be capped at $50,000,
there is no limit on income from price supports. The 2008 farm
law allows $105,000 in subsidies and also has no limit on price
The government pays 60 percent of the cost to farmers to buy
crop insurance, which is sky-rocketing in cost. The
committee-passed bill would not limit the premium subsidy or
indemnity payments. Reformers say big farmers will benefit the
Most of the farm bill savings would come from crop
subsidies, down by $13 billion or 19 percent, while conservation
programs are cut by $6.4 billion or 10 percent and nutrition is
cut by $4 billion.
"A farm bill that cuts programs for the hungry and the
environment to help finance a new entitlement program and
unlimited insurance subsidies for the largest and most
profitable farm operations should not be called a reform bill,"
said Craig Cox of the Environmental Working Group, which wants
more money for conservation.
The committee added about $1 billion to the revenue program
on Thursday by allowing payments on a larger share of land
planted to crops. It also guaranteed $800 million for bio-energy
(Editing by Dale Hudson)