US ag leaders overspend on farm bill modernizing

Fri Nov 18, 2011 12:51am GMT
 

* New farm bill would cost billions more than allowed

* Farm panel leaders seek new subsidy law a year early

* Plan could violate WTO spending limits-Farm Bureau

* "Clear and positive path forward" now, says Senate aide

By Charles Abbott

WASHINGTON, Nov 17 (Reuters) - U.S. agricultural leaders in Congress are writing a farm bill that is already billions of dollars over budget at a time when they are trying to cut costs and modernize the U.S. farm safety net.

Amid squabbling among farm lobbyists, the lawmakers are feverishly working behind closed doors to forge a new farm bill so it can be added to a government-wide deficit bill being negotiated by the super committee.

"They're (senators) asking for things that are way more expensive than we can afford," said Minnesota Rep Collin Peterson, Democratic leader on the House Agriculture Committee, when cost estimates were delivered early this week.

Only a handful of senior lawmakers are involved in drafting the farm bill; by some accounts, only the chairs of the House and Senate Agriculture committees.

If their plan is accepted by the super committee, the farm bill would be immune from amendment and could become law by the end of December. Critics say it would be a dangerous break from precedent of writing farm bills after broad public discussion.

Some lawmakers doubt if Congress would pass a free-standing farm bill amid Tea Party-driven desire to reduce spending. The current farm law expires in fall 2012 and its successor could cost $480 billion over five years, most of it for food stamps.

Besides cost over-runs, the leaders face arguments among farm groups over who is getting the sweetest deal. The bill is $7 billion-$8 billion over budget for crop subsidies, said the newsletter Politico.

With traditional subsidies dwarfed by record-high market prices and rising production costs, Agriculture Committee leaders would embrace the new approach of protecting farmer revenue from ruinous slumps and end some traditional supports.

A key dispute over the new system was resolved so "there now appears to be a clear and positive path forward," said a Senate aide on Thursday. However, the bill was not completed.

Leaders agreed a "shallow loss" revenue plan will treat each farm individually rather than be triggered by revenue losses on a regional basis. Corn, soybean and wheat groups, among others, wanted the farm-level trigger, which is more expensive than a regional approach.

Under the shallow-loss revenue plan, the government would cover losses that exceed 10 or 15 percent of average revenue from a crop. Federally subsidized crop insurance would cover deeper losses, such as losses that exceed 25 percent of average. Traditional subsidies react to low prices, but offer no aid when yields plummet.

To reduce costs, leaders could say the revenue plan will cover a smaller range of losses, a smaller area than planted acres or apply to all of a farm's income instead of crop by crop.

While the revenue plan is intended for most field crops, the bill would offer higher price supports for some crops, particularly rice and peanuts, and a separate program of a higher price-support loan and crop insurance for cotton.

The three-track farm bill could violate World Trade Organization limits on subsidies, said the American Farm Bureau Federation.

The farm bill was expected to deny farm subsidies to people with more than $1 million a year in adjusted gross income. The House and Senate each voted for that limit in the past month. The cut-off now is $1.25 million AGI. (Reporting by Charles Abbott; editing by Bob Burgdorfer and Andre Grenon)

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