* Bill creates new safety net, ends typical subsidies
* Biggest cut in farm spending in a generation
* $498 bln bill makes cuts to food stamps, conservation
* Unlikely new farm law will be passed this year
* House panel won't write bill before mid-July
(Adds analyst comment, context, paragraphs 16-19)
By Charles Abbott
WASHINGTON, June 21 The Senate approved sweeping
new U.S. farm legislation on Thursday that would cut almost all
traditional farm subsidies while expanding a costly crop
insurance program, but chances are slim the bill will pass this
Passed by a 2-1 margin, the Senate's $498 billion five-year
farm bill would compensate growers when revenue from a crop
falls, rather than prop up prices.
The bill saves at least $23 billion by cutting crop
subsidies, conservation funding and food stamps for the poor.
Crop subsidies provide the bulk of the savings.
"This is about reform. This is about reducing the deficit,"
Agriculture Committee chairwoman Debbie Stabenow told a
celebratory news conference.
The House Agriculture Committee will not begin work on its
bill until mid-July, just before a five-week recess. Analysts
say it will be difficult for the House to act or for Congress to
enact a farm bill before the 2008 law expires on Sept 30.
US budget axe may spare costly crop insurance
Agriculture Committee leaders in the House and Senate
disagree on fundamental points for the new farm law, ranging
from how much to cut spending to how extensive reforms should
be. The House wants much deeper cuts in food stamps and $10
billion more in cuts overall than the Senate and would offer
higher price supports to farmers when the Senate would end them.
The Senate farm bill terminates the $5 billion a year
"direct payment" subsidy, a target of reformers, as part of
creating a new safety net aimed at the agricultural exigencies
of the 21st Century -- high and volatile market prices and
rising global food demand.
Grain and soybean growers would qualify for federal payments
when revenue from a crop is from 11 to 21 percent below normal.
Crop insurance would cover deeper losses.
The Senate bill makes federally subsidized crop insurance
the centerpiece of the farm program and expands outlays on the
program to an estimated $9.5 billion a year.
The rising cost of crop insurance has been criticized as too
generous to farmers and big insurance companies. The government
pays 60 cents of each $1 in premiums for crop insurance.
During debate, the Senate voted, 66-33, to reduce premium
subsidies for wealthy farmers making more than $750,000 a year
in adjusted gross income and, 52-47, to require farmers to
practice soil, water and wildlife conservation to qualify for
subsidized insurance. Similar constraints are attached to farm
"The only thing that is missing is payment limits," said
Ferd Hoefner, a small-farm advocate.
There are no limits on how much farmers can collect on crop
A Michigan Democrat, Stabenow said farm bill reforms include
tighter limits on who is eligible for farm subsidies and a
$50,000 limit on revenue compensation to growers.
"Maybe we've done something special here," said Kansas
Senator Pat Roberts, the Republican leader on the committee who
worked closely with Stabenow on the bill. "Even in the middle of
an election year, we can get something done."
Despite the top-line disputes, there are many similarities
between the Senate bill and outlines offered by House
Agriculture Committee leaders, said analyst Mark McMinimy of
Guggenheim Partners. "And we look for the House bill to also
carve out a larger role for federally subsidized crop
insurance," he said.
Southern senators said the revenue plan in the farm bill was
designed for corn and soybean growers in the Midwest and would
provide inadequate support for rice and peanut growers. They
pinned their hopes on the House for a rescue after fruitlessly
holding out for higher support prices.
The Environmental Working Group criticized the Senate for
cutting conservation and food stamps by a combined $10 billion.
It called on the House to strengthen those programs and control
crop insurance costs.
But the Tea Party-influenced House could seek big cuts. It
voted for $34 billion in Agriculture Department cuts. The House
was scheduled to consider an agricultural funding bill next week
that would deny farm subsidies to anyone with adjusted gross
income above $250,000 a year, or one-third of the Senate's
ceiling, and that would cut overseas food aid sharply.
Agriculture Secretary Tom Vilsack urged Congress to keep the
farm bill moving forward.
"Swift action is needed so that American farmers and
ranchers and our rural communities have the certainty they need
to continue strengthening the rural and national economy,"
Vilsack said in a statement.
(Additional reporting by Russ Blinch; Editing by Jim Marshall,
Bob Burgdorfer and David Gregorio)