Senate Farm Bill Expected to Include Tighter Annual Income Cap on Subsidies
The Bureau of National Affairs, Inc., October 24, 2007

Senate Agriculture Committee staff director Mark Halverson said Chairman Tom Harkin's (D-Iowa) mark includes a lower income cap for eligibility for farm subsidies.

The current income cap for farmers to be eligible is $2.5 million annually. However, the cap does not apply if the applicant's income derives from 75 percent or more of farm income.

Halverson said Harkin's mark would lower the farm income percentage to 67 percent and keep the $2.5 million cap for fiscal year 2008. However, in FY 2009 the cap would drop to $1 million and then drop again in FY 2010 to $750,000.

This can be viewed as a compromise with committee ranking member Saxby Chambliss (R-Ga.) and other southern senators who fear a sudden cap drop could adversely affect farmers and producers in their states.

The House bill includes an immediate cap of $1 million, and the administration favors lowering the cap to $250,000. A bipartisan group of senators intend to offer an amendment when the bill hits the Senate floor lowering the cap to $250,000.

Halverson, speaking to reporters outside a postponed Harkin briefing on the bill, said the total cost of the bill is expected to be between $288 billion and $290 billion, including a $5 billion permanent disaster assistance program and some $3 billion raised by the Senate Finance Committee mostly for conservation and specialty crop programs.

Halverson also said that the mark includes language permitting the interstate shipment of state-inspected meat products. Currently, only federally-inspecting meat can legally cross state lines.

It is unclear how many amendments will be offered during the tentative markup.

Alternative Bill Offered.

Separately, a group of seven bipartisan senators introduced an expected alternative farm bill which seeks to slash farm subsidies and use the savings to bolster conservation programs.

Sens. Richard Lugar (R-Ind.) and Frank Lautenberg (D-N.J.) introduced the bill Oct. 23 and intend to offer the language as an amendment to the farm bill during the eventual floor debate.

“The current farm bill is an antiquated system of giant payments to a handful of farms, while ignoring the needs of most American farmers,” Lautenberg said. “The farm bill, as it stands, is bad policy. It increases our fiscal deficits and fails to provide a safety net for most farmers.”

The proposal seeks to phase out direct payments by lowering payments to 25 percent of past payments in FY 2008 through FY 2011, 20 percent of past payments in FY 2012 and FY 2013, and eliminate payments in FY 2014.

“Over the past ten years, farm subsidies have gone to just one out of three farmers with only six percent of farms receiving more than 70 percent of that money—namely $120 billion,” Lugar said. “Subsidy programs have spurred farm consolidation, violated international trade agreements, and still left most farmers heavily exposed to risk.”

For a safety net, the proposal seeks to provide farmers with expanded county-based crop insurance policies that would cover either 85 percent of expected crop revenue or yield, or 80 percent of a farm's five year average adjusted gross revenue.

The proposal is similar to an amendment, offered by Rep. Ron Kind (D-Wis.) and Rep. Jeff Flake (R-Ariz.), that the House rejected with a 117-309 vote during that chamber's farm bill deliberations July 27 (145 DER A-16, 7/30/07).

Lugar said his bill would save $3 billion over five years.