Deal Reached for $15B in Farm Aid

Thursday, May 25th 2000, 12:00 am
By: News On 6

WASHINGTON (AP) — Many of their crops are just coming out of the ground, but farmers are already about to reap a harvest — of government cash.

Congressional negotiators agreed Wednesday on a $15 billion, election-year package of farm assistance that would compensate growers for a third straight year of low commodity prices. The money also would reduce the cost of buying crop insurance.

The measure was expected to receive final approval in both the House and Senate. The House began debate on the legislation this morning.

The package includes $5.5 billion in direct payments that would reach farmers by Sept. 30, in the midst of the congressional campaigns.

Some $8.2 billion would go toward reducing premiums on federally subsidized crop insurance over the next five years, and the legislation makes a series of changes in the insurance program designed to get more farmers to buy the coverage.

Sen. Kent Conrad, D-N.D., said the aid ``is hugely important'' to farmers.

``This economic package is a testament that a strong farm economy is important for all Americans,'' said Sen. Richard Lugar, an Indiana Republican who is chairman of the Senate Agriculture Committee.

Grain prices collapsed in 1998 in the wake of the Asian financial crisis and have yet to recover.

Congress has given farmers $15 billion in extra income assistance over the past two years, and the Agriculture Department estimates that net farm income this year would drop $7.6 billion, or 16 percent, without another round of aid.

The latest package will meet ``a significant need out in farm country'' but ``it hasn't addressed the long-term difficulties facing American farmer and the long-term problems in the 1996 farm bill,'' said Andy Solomon, a spokesman for the Agriculture Secretary Dan Glickman.

Glickman objects to the way that the direct farm payments would be distributed, contending the money is not targeted to producers who need it the most, but he has stopped short of recommending President Clinton veto the measure.

Glickman says the market-oriented 1996 law does not provide enough of a safety net for farmers.

The extra money for crop insurance could pay for itself by making farmers less dependent on federal disaster assistance and other government programs, USDA officials say.

The government splits the cost of crop insurance with farmers. Under the legislation, the federal share of the premium for the most popular type of insurance would jump from 40 percent to 59 percent.

The measure also would offer coverage for the first time to livestock producers and expand coverage for fruit and vegetable growers.

The chairman of the House Agriculture Committee, Texas Republican Larry Combest, said the insurance system will give farmers ``comprehensive protection to manage risk from low market values and weather losses.''

The $5.5 billion in direct farm payments would go to grain and cotton producers who have annual ``market-transition'' contracts with the government. That cash is in addition to $5.1 billion in payments that those producers already were scheduled to get this year.

The extra payments would mean an additional $16,000 this year for a 500-acre corn farm. A typical wheat grower would get about $19,000 more. A farmer who grows 300 acres of cotton would receive an additional $12,000.

An additional $1.6 billion in the legislation is earmarked for a variety of special commodities — including soybeans, peanuts, tobacco and various fruits and vegetables — that are not covered by the market-transition contracts.

The House-Senate conference committee that crafted the final version of the legislation attached to it another measure that would authorize nearly $250 million in research over the next five years on ways to make ethanol and other chemicals from crops, grass and trees.


The bill is H.R. 2559

On the Net: Senate Agriculture Committee:

House Agriculture Committee: