WASHINGTON (AP) — The House Agriculture Committee voted July 18 to ban federal subsidies to farmers with incomes averaging more than $1 million a year and stop farmers from collecting payments for multiple farm businesses.

Only farmers whose incomes exceed $2.5 million a year are now disqualified from such aid.

The committee is putting together a five-year farm bill to replace the current law that governs USDA programs and expires in September. The limits are an attempt to appease a growing number of critics, including the Bush administration, who say the farm subsidies need an overhaul.

The bill also would increase the maximum limit on direct payments, which are subsidies not based on current crop production or prices. The committee’s chairman, Rep. Collin Peterson (D-Minn.), said the proposal “is a sound compromise that no one is satisfied with but nonetheless represents real reform.” He said the payment changes would save the government $226 million over five years.

Some critics continued to press for weaning farmers off subsidies altogether. They said Peterson’s compromise does not address demands from nations in the World Trade Organization (WTO) for drastic cuts in the U.S. subsidies.

“It will do very little to make our agriculture policies more equitable, will not address the real challenges we face at the WTO, and it will not do anything to help our farmers produce for the market rather than for the government paycheck,” said Rep. Ron Kind (D-Wis.).

Kind has written an alternative that would replace subsidies with government-subsidized savings accounts. Farmers could use them to cover losses when crop prices are low or yields are poor. He won 200 votes – 18 short of a majority – for a similar plan when Congress wrote the 2002 farm bill.

House Speaker Nancy Pelosi (D-Calif.), supported Kind’s plan then but now must worry about her party holding onto farm state seats in next year’s elections.

USDA Secretary Mike Johanns also has criticized the committee’s attempts at updating farm policy. The administration has made its own proposals, including a limit on payments to farmers who earn an average of more than $200,000 a year.

Last week, Johanns said the committee’s bill was a “missed opportunity” for major change. Deputy Agriculture Secretary Charles Conner, however, said Peterson appeared to be moving in the right direction.

Kind, Johanns and other critics say tight budgets and recent high prices for corn and other crops create an opportunity to save money on farm programs. Farm groups say they still need a safety net if prices drop.

Rep. Earl Pomeroy (D-N.D.), who is on the Agriculture Committee, said he would have liked the bill to have gone further in overhauling subsidies. But it is a good compromise, said Pomeroy.
“This is the fullest concession those advocating for Southern agriculture can accept,” Pomeroy said.

Southern crops, such as rice and cotton, are expensive to produce, and those farmers have strongly resisted major cuts to subsidies.
Peterson’s bill also would boost support for fruit and vegetable producers, including research and marketing assistance and increased government purchases; reauthorize federal nutrition programs, including food stamps; increase subsidies for some conservation programs that pay farmers to protect environmentally sensitive land; and provide loan guarantees for ethanol refineries.
The bill could get a vote in the House this year. There has been no action on it in the Senate.

This farm news was published in the July 25, 2007 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.