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House drought bill keeps $5 billion subsidy targeted by reformers

Drought-damaged ears of corn and dry, brown stalks are seen in a field near Georgetown, Illinois July 24, 2012. REUTERS/Karl Plume
Drought-damaged ears of corn and dry, brown stalks are seen in a field near Georgetown, Illinois July 24, 2012. REUTERS/Karl Plume

By Charles Abbott

WASHINGTON (Reuters) - Farmers would get another round of the $5 billion a year "direct payment" subsidy, targeted by reformers as wasteful spending, in a Republican-drawn offer of disaster aid for farmers hurt by the worst drought in half a century.

The package, unveiled on Friday, combines drought relief with a one-year extension of the farm program. If passed by the House next week and accepted by Senate, it would end a farm-bill stalemate by deferring work until 2013, when cost-cutting pressure may be intense.

An estimated $1.2 billion in drought relief would be provided under the bill, half to livestock producers and half to crop growers. While crop insurance will provide a safety net for many growers, livestock producers face parched pastures and rising feed costs.

The direct payment, paid to cotton, grain and soybean growers regardless of need, was marked for elimination in farm bills in the House and Senate this year. Budget hawks and environmentalists said the direct payment is wasted money, considering the farm sector enjoys boom times and the huge federal deficit.

An advocate for small farmers, the National Sustainable Agriculture Coalition, called for the House to "vote down this dirty extension bill." The bill would cut soil and water conservation programs while keeping the direct payment, it said.

Two-thirds of the continental United States is under moderate to exceptional drought and 40 percent of U.S. counties are listed as agricultural disaster areas. The worst drought conditions since 1956 fueled demands for Congress to act.

House Agriculture Committee chairman Frank Lucas said the package responded to "devastating drought conditions afflicting most of our country" and, by extending the 2008 farm law expiring on September 30, would end any doubts about the farm program for the new crop year.

Collin Peterson, the Democratic leader on the committee, said he opposed an extension unless it was a vehicle for a speedy compromise on a successor to the 2008 law that expires on Sept 30. There is virtually no way for Congress to meet that deadline without resorting to unusual parliamentary methods.

House Republican leaders are sitting on a $491 billion farm bill that was approved by Lucas' committee earlier this month because it faces strong opposition. Majority Leader Eric Cantor says the Senate-passed farm bill is unacceptable.

The Senate bill could save $23 billion over 10 years compared to $35 billion in the House bill. The House bill would raise crop support prices by up to 40 percent while the Senate would eliminate almost all traditional farm subsidies and, instead, compensate growers for low prices and poor yields.

Food stamps for the poor would be cut by $16 billion in the House farm bill, the largest cuts since the 1990s. Democrats want to eliminate the food stamp cuts while some Republicans want deeper cuts throughout the farm bill.

The disaster bill would revive disaster programs that share feed cost for livestock producers and compensate them for animals killed by drought as well as programs to assist fruit, vegetable, tree and fish farmers. The so-called SURE program for crop growers also would be extended.

On Thursday, Senate Agriculture Committee chairwoman Debbie Stabenow said she was ready to make a legislative sprint and complete a new, full-scale farm bill. "If Congress does what Congress always does and kicks the can down the road with a short-term extension, there will be no reform, direct payments will continue, we'll lose the opportunity for major deficit reduction and we'll deliver a real blow to our economic recovery," said Stabenow.

(Reporting By Charles Abbott)

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