Clinton Administration Touts
New Agriculture Subsidy Plan

WASHINGTON —(AP)— The Clinton administration is proposing new farm subsidies that would take effect when commodity prices are low.

The ``supplemental income'' payments, estimated to cost taxpayers $3.1 billion this year, would vary in size according to fluctuations in crop revenue. They are meant to substitute for emergency subsidies that Congress has voted the past two years to compensate growers for a collapse in exports and commodity prices.

Agriculture Secretary Dan Glickman said the program would ``strengthen the farm safety net'' until Congress rewrites existing farm policy in 2002.

``Payments will increase when times are the toughest and will taper off when prices rebound,'' Glickman said in a conference call Friday with farm broadcasters.

The administration's proposal, which is similar to an idea offered last year by Rep. Charles Stenholm, D-Texas, is certain to run into opposition from many producers and lawmakers because of the limits on the payments.

The payments would be pegged to the average gross income nationally over the past five years for eight major crops — corn, wheat, cotton, rice, soybeans, sorghum, oats and barley — and would be capped at $30,000 per operation. Most farmers would get far less than that because their annual ``market-transition'' payments, the fixed subsidies they receive under the 1996 law, would count toward the $30,000 limit.

Some 1.3 million farmers currently receive market transition payments, and 200,000 get at least $10,000 a year. Of those, 30,000 receive more than $30,000.

``The size of an operation doesn't necessarily limit the difficulty that anybody has financially,'' said Dick Newpher, chief lobbyist for the American Farm Bureau Federation, the nation's largest farm group. ``We would like to help all of agriculture.''

But John Schnittker Sr., a private consultant and former Agriculture Department economist, said that capping the payments ``is the right thing to do, both from the fiscal standpoint, to avoid runaway costs, and from the standpoint of getting most of the money to relatively modest-size farmers.''

The program would fix what the Clinton administration and some producer groups see as a major flaw in the 1996 farm law, which scaled back income-based farm subsidies, ended controls on planting and gave farmers a series of fixed annual payments. Critics say the fixed payments were insufficient when commodity prices fell sharply in 1998.

The new subsidy program will be included in Clinton's 2001 budget along with $1.3 billion in farm conservation spending that Vice President Al Gore announced earlier this month and an additional $640 million earmarked for cutting premiums on federally subsidized crop insurance. The government has offered similar insurance discounts in 1999 and again this year to encourage more farmers to buy the coverage to protect against weather-related losses.

Because commodity prices are only expected to rise slowly during the next several years, support has been building in Congress and among farm organizations to come up with a new way to subsidize growers when prices are low.

The administration's new program was originally proposed by economists at the Agriculture Department and Ohio State University in the early 1990s. Critics have said the payments could worsen the worldwide grain glut by encouraging farmers to plant crops in areas where they do not do well, something the 1996 farm law was intended to discourage.

Newpher, the Farm Bureau lobbyist, praised the administration for proposing the program. Clinton had proposed improving the farm ``safety net'' in his State of the Union message a year ago and again Thursday night, but the administration never spelled out a proposal of its own until Friday.

``We need to get started on this discussion right away,'' Newpher said.