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020520 Farm Bill Passes; Meatpacker Livestock Ban Killed

May 10, 2002

Washington - The Senate sent President Bush a bill boosting crop and dairy subsidies by $6.4 billion a year, a plan that angers U.S. trade partners and could tip control of Congress in the autumn elections.

The six-year farm bill, a retreat from free-market reforms begun in 1985, was newly estimated to cost $51.7 billion. That was 15 percent more than expected due to bleak commodity prices showing no sign of improvement.

Bush has promised to sign the bill so grain, cotton and soybean growers will see fatter subsidies this year. Senators passed it, 64-35. The House passed it last week, 280-141.

Written every few years, farm bills bundle crop subsidy, anti-hunger, land stewardship, rural development and farm export programs totaling tens of billions of dollars a year.

"This is the economic stimulus package for rural America," said Senate Agriculture Committee chairman Tom Harkin.

The Iowa Democrat, one of the "prairie populist" Democrats who routinely oppose farm bills, voted for this one, which he helped write. Many of the Senate's farm-policy hands voted against it -- "a real paradox," said Kansas Republican Pat Roberts, author of the 1996 law that deregulated agriculture.


While Harkin extolled the farm bill for strengthening the farm safety net, critics predicted price-crushing surpluses.

There was little reform of rules that allow virtually unlimited payments to large operators, although the limit was lowered to $360,000 a year, down $100,000.

Crop and dairy subsidy spending would climb by 67 percent under the farm bill, which raises grain, cotton and soybean support prices. It also revives "target" prices, last used in 1995, to release extra money to farmers during hard times.

Spending on soil, water and land conservation would increase by nearly 80 percent. Most of the increase goes to a program that shares the cost of controlling manure and farmland run-off. Ranchers and feedlot operators say they will need $1 billion a year to satisfy clean-water rules.

For five years, legal immigrants in the United States would regain eligibility for food stamps, the major U.S. anti-hunger program. Eligibility was cut off by a 1996 welfare reform law.

Canada, the European Union, Australia and Brazil say the flood of new money was a clear contradiction of U.S. calls for the world to lower trade barriers and forsake unfair farm subsidies. Trade specialists say the bill will complicate ongoing talks for freer world trade in agriculture.

A University of Missouri think tank calculated the bill posed a one-in-five chance this year of violating world trade rules that limit U.S. spending on trade-distorting farm subsidies to $19.1 billion a year.

Besides the increase in farm subsidies, U.S. competitors were concerned by a provision to require country-of-origin labels in three years on meat and produce as well as creation of price supports for dry peas, lentils and garbanzos.


Indiana Sen. Richard Lugar, Republican leader on the Agriculture Committee, led a chorus of opponents in lamenting the farm bill as an election-year document.

"Bidding was intense to satisfy the most vocal participants in the farm program," said Lugar. Nebraska Republican Chuck Hagel said the bill was "a glorified carbon copy" of ideas that failed in the past.

Both parties, eager to curry favor with the sometimes pivotal farm vote, rushed to enact $30.5 billion in farm bailouts since late 1998 to shelter growers from low market prices. The new bill institutionalizes those payments and would keep aggregate farm income at near-record levels.

With control of the House and Senate split closely between Republicans and Democrats, the farm bill could affect the November congressional elections.

By most accounts, all of the vulnerable Democratic senators running for re-election were from farm states. Some of them had major initiatives at stake in the farm bill.

For example, Harkin won creation of "green" payments for land, water and wildlife stewardship, although on a much smaller scale than he originally asked.

South Dakota Democrat Tim Johnson lost a fight to ban meatpackers from raising hogs and cattle. But he and Minnesota Democrat Paul Wellstone claimed victory on a provision to require country-of-origin labels on meat, fruit, vegetables, fish and peanuts -- a rule also sought by Republican Rep. John Thune, who is running against Johnson.


Farmers can expect gross returns of $3.84 a bushel on wheat, $2.60 for corn and $5.86 a bushel on soybeans this year under the farm bill, according to the University of Missouri.

By comparison, gross returns averaged $3.73 a bushel for wheat, $2.47 for corn and $5.65 for soybeans last year, when sales and routine federal subsidies were inflated by a $5.5 billion farm rescue bill.

Agricultural economist Daryll Ray at the University of Tennessee said the farm bill amounted to "super Freedom to Farm" -- a bigger-spending version of the 1996 law. Farmers get larger subsidies without any attempt by government to control output or stockpile against crop disasters, Ray said.

Economist Bruce Gardner of the University of Maryland agreed it was "an enshrinement" of large payments to growers. But it avoided "strongly market-distorting" steps, he said.


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