U.S. farm subsidy reforms under attack in Congress discussions

By Charles Abbott WASHINGTON (Reuters) - A congressional agreement to tighten U.S. farm subsidy rules for the benefit of small and family farmers is under attack in the final negotiations over a new, overdue farm bill, two senators said on Tuesday, with time running short. Leaders of the House and Senate Agriculture committees face an informal deadline at the end of this week to strike an agreement on a $500 billion compromise, if they hope to pass a bill this year. Congress could adjourn for the year in mid-December. "The farm bill conference is not going well, I understand," said Steny Hoyer, the Democratic whip and second-ranking Democratic leader in the House of Representatives. While the make-or-break issue remains the size of cuts in food stamps for the poor, farm subsidy reforms are also in dispute although the House and Senate used similar language in their respective bills passed earlier this year. The package would set a "hard" cap on payments per farmer and tighten eligibility rules for subsidies. "That is one of the issues we are really working on," said Debbie Stabenow, chairwoman of the Senate Agriculture Committee, and one of the "big four" negotiators on the farm bill. "I am a strong supporter of reform." Iowa Sen. Charles Grassley, a longtime backer of stricter rules of the payment of farm subsidies, told reporters that the leaders of the House Agriculture Committee want to eliminate the reforms. "I don't understand how anyone can promote closing loopholes for food stamps if they also don't support closing the loopholes non-farmers - many of whom have significant income - are using," Grassley, a Republican, said during a teleconference. House Agriculture Committee Chairman Frank Lucas spoke against "applying layers of regulatory bureaucracy" to the farm program when farm bill talks opened. A spokeswoman for Lucas, also a Republican, was not immediately available to respond to Grassley's comments. The packages sponsored by Grassley and Jeff Fortenberry, a Republican Congressman from Nebraska, would set a limit of $125,000 per farmer, doubled to $250,000 for married couples, and allow only one person per farm to qualify for subsidies by providing management of the operation. At present, there effectively is no limit on crop subsidy payments to a farmer. Non-farmers and investors can qualify for subsidies by declaring they provide management services for a farm. A Government Accountability Office report earlier this year described cases where several people each drew subsidies by saying they provided management of the same farm. The farm bill already is a year behind schedule due to demands by conservative House Republicans for large cuts in food stamps. They proposed $39 billion in cuts over 10 years through stricter eligibility rules. The Senate proposed $4 billion in cuts and the White House has threatened to veto any farm bill with overly large cuts. If there is no agreement on a farm bill by January, the farm program will revert to an underlying 1949 law that would, among other things, double the price of milk in the grocery store. Stabenow also took time out on Tuesday to criticize an administration proposal to scale back the requirement to mix corn ethanol into U.S. gasoline in 2014, but said there was no easy response to the Environmental Protection Agency's plan. "I don't see a legislative fix, certainly not in the farm bill," Stabenow said. (Reporting by Charles Abbott, additional reporting by Richard Cowan, editing by G Crosse)