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Farm bill will be battle for crop subsidies

By Mary Clare Jalonick
Associated Press Writer

WASHINGTON — Momentum is building in Congress for overhauling farm subsidies because of tight budgets and increasing enthusiasm for renewable fuels and conservation programs.

Major change will not come easily. The current farm bill, which expires in September, provides payments and other help to supplement farmers’ incomes, support crop prices and manage supplies. Any cuts in subsidies will face resistance.

President Bush sought similar reductions upon taking office. But he made little headway in the latest farm bill, which Congress wrote in 2002.

Since then, Democrats have regained control of the House and energy prices have skyrocketed, leading to more calls for ethanol, which is derived from plants. Record prices for corn and other crops have some people questioning the need for subsidies.

The government paid out almost $17 billion in subsidies last year, a drop of more than $10 billion from 2000.

“It’s a different dynamic, there’s just no doubt about it,” Agriculture Secretary Mike Johanns said.

How to change

Some lawmakers are rallying around a bipartisan proposal by Reps. Ron Kind, D-Wis., and Jeff Flake, R-Ariz., to wean farmers from government payments. Kind won 200 votes for a similar plan during the debate on the 2002 bill. At the time, one supporter was Rep. Nancy Pelosi, D-Calif., now the House speaker.

Their proposal would replace subsidies with savings accounts that farmers could use to cover losses when crop prices are low or yields are poor. Some subsidies would be diverted to biofuels, rural development and conservation programs that pay farmers for leaving land idle.

Rick Ostlie, a North Dakota farmer who is president of the American Soybean Association, said prices may be high now, but farmers will need a safety net if they drop. Kind’s savings accounts “aren’t going to help the average farmer who is having financial problems,” he said.

Lawmakers from both parties who represent farm states expect some overhaul. They note that few extra dollars are available for conservation and energy programs and that Congress has much less money to work with this year. But there is little consensus on what changes are needed.

“There’s a very strong but minority viewpoint that somehow you have to protect these largest commodity programs at all costs,” Kind said.

Battling on the floor

In an interview with The Associated Press, Johanns said Kind has approached him two or three times about his proposal. While the Bush administration has put forward its own ideas and does not endorse Kind’s plan, Johanns said the Democrat makes a compelling case.

“He certainly has ideas that I think everybody would like,” Johanns said. “If the approach is let’s just do it all over again like we did in 2002, those who want reform have nothing to lose by battling on the floor of the House.”

A House Agriculture subcommittee took just that approach last month. It unanimously rejected Kind’s proposal and approved a bill that would extend the 2002 law.

Despite that vote, one of the panel’s members, Rep. Earl Pomeroy, D-N.D., agreed with Johanns that the committee must do something to please the wider House membership, many of whom represent urban districts. But Pomeroy also called what Kind and Flake want to do “death by reform.”

In an effort to cut back, some lawmakers want to reduce or eliminate direct payments, subsidies that are not based on current crop production or prices. The chairman of the Senate Agriculture Committee, Democratic Sen. Tom Harkin of Iowa, has supported this approach and encouraged spending more money on conservation programs.

Johanns, Bush and others have argued for a stricter limit on the maximum payment a farmer can receive and said payments are not distributed equitably. Southerners traditionally have balked at the idea, citing the costs of producing their rice and cotton crops.

Nonetheless, some reduction in payment levels is inevitable, said Georgia Sen. Saxby Chambliss, the senior Republican on Harkin’s committee. “We don’t have the funding we had in 2002 so there are certain reforms that are going to be necessary,” Chambliss said.

International trade talks also could affect the debate because the United States is under pressure to reduce farm subsidies.

Montana Sen. Max Baucus, the Democratic chairman of the Senate Finance Committee and a member of the Agriculture Committee, said proposals such as Kind’s would not be helpful.

“Cutting support payments today would further undercut food production in the United States, but also undercut the United States’ bargaining leverage when we go into trade talks in other countries,” Baucus said. “We won’t let it happen.”

Despite continued disagreement, the House Agriculture Committee intends to act on the bill this month. The chairman, Rep. Collin Peterson, D-Minn., intends to skirt the money problems by presenting two separate bills: one would stay within current budget limits and one would have extra money.

Tensions over how to renew the law could become an election-year problem. Presidential candidates are seeking to woo voters in farm states and supporters of overhauling farm policy are trying to capitalize on public scrutiny of federal spending.

Sen. John Thune, R-S.D., whose first bid for the Senate fell victim to the last farm bill debate, suggested Congress may turn to a two-year extension of the 2002 law to keep the election out of it. He said there is growing concern that Kind’s and Flake’s legislation might prevail.

“If there’s a vacuum there, that proposal will fill it,” he said.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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