Ag Aid Bill Passes Senate;
Clinton Expected To Sign It

WASHINGTON —(AP)— President Clinton is expected to sign a record $8.7 billion bailout of the farm economy, despite concerns about the way the money will be distributed and the lack of aid for producers washed out by Hurricane Floyd.

The measure approved by the Senate 74-26 last week is the second multibillion-dollar package of farm aid in as many years for growers hurt by low commodity prices and bad weather.

``It will mean the difference between some producers staying in business or not,'' said Bob Stallman, a Texas rice farmer and president of the Texas Farm Bureau.

The money is included in a $69 billion appropriations bill that will fund operations of USDA, with its myriad farm and nutrition programs, and the Food and Drug Administration for the 2000 budget year.

The first checks to farmers would go out within two weeks or so of the president signing the bill. Clinton hasn't threatened a veto, although his administration wanted Congress to come up with a new method of making payments to growers. Some of the money could go to growers who didn't plant a crop.

``There are some real issues and real problems with this bill; however, there are tremendous immediate needs that farmers are facing,'' said Linda Ricci, a spokeswoman for the White House budget office.

Agriculture Secretary Dan Glickman said he reluctantly supports the package but complained that Congress had made ``some of these programs unnecessarily complicated. That means we will not be able to get some of these payments out as quickly as I would like.''

Congressional leaders are considering additional assistance for farmers who lost crops and livestock in Floyd's wake. Democrats estimated $1 billion would be needed, but USDA has not finished calculating the losses.

North Carolina Sens. John Edwards and Jesse Helms both voted for the farm bill. Edwards said he had won assurances from Glickman that North Carolina farmers will qualify for a share of $1.2 billion in emergency funds for losses caused by natural disasters, including Floyd.

What opposition there was to the package came primarily from eastern senators who said it didn't provide enough disaster assistance or who wanted authority for New England to continue controlling its milk prices.

Most of the money in the measure, about $6 billion, is intended to help farmers cope with a second year of depressed commodity prices, with the bulk of the aid going to the Midwestern Cornbelt. Farmers in Iowa would share $610 million, the most of any state, followed by Illinois with $535 million, according to the Agriculture Department.

The measure also provides:

— $1.4 billion for weather-related crop and livestock losses, including $200 million earmarked for eastern livestock producers who were hurt by this summer's drouth.

— $328 million to compensate tobacco producers for falling cigarette sales.

— $125 million in subsidies for dairy producers.

Additionally, the legislation extends the government's price-support program for dairy products through next year and requires meatpackers to start reporting the prices they pay for cattle and hogs. Livestock producers say that will make it easier for them to bargain with meat processors.

Democrats seized on the size of the bailout to argue that the market-oriented Freedom to Farm law Congress enacted in 1996 isn't working, and even some Republicans are saying it's time to consider ways to guarantee more help to producers when commodity prices fall.

The 1996 law ended a Depression-era system of production controls and price supports in attempt to get growers to wean farmers from their dependence on government programs.

The stockpiles of grain that have kept commodity prices low for two years continue to grow and are expected to persist well into next year. With USDA predicting only a modest increase in farm exports next year, farm groups are likely to be pushing for another multibillion-dollar aid package in 2000.

``Sooner or later we're going to have to ask the fundamental question, 'Is this going to be the only sector of our economy not governed by the free market?''' said Pete Sepp, a spokesman for the National Taxpayers Union.

``As long as Congress regards low prices in agriculture as a crisis, taxpayers will be footing the bill forever.''

Republicans said the Clinton administration hasn't done enough to boost farm trade.

``The long-term solution (is) opening up more opportunities for our producers to sell their products,'' said Sen. Chuck Hagel, R-Neb. ``The basic underlying principle of Freedom to Farm should be preserved.''

``Prices have collapsed, farmers are in desperate trouble and there must be a government response,'' said Sen. Kent Conrad, D-N.D., speaking in support of the bill.

Sen. Thad Cochran, R-Miss., said it was ``a generous response to the needs in agriculture.''

The Senate's 74-26 vote sends the package to President Clinton for his expected signature.

One complaint about the bailout bill is that it provides assistance to large operations as well as small ones. That makes it politically incorrect.

An individual farm, for example, could claim up to $460,000 in subsidies a year, double the current restriction.

The new limit would be high enough to cover a 6000-acre corn farm in the Midwest or a 3000-acre cotton operation in Texas. The average farm in the country is less than 500 acres.

``It's a terrible idea,'' said Sen. Byron Dorgan, D-N.D. ``I just think that's a sorry state of affairs when we're short of money to help family farms that you have some large producers getting $460,000.''

But farm organizations that pushed for raising the subsidy limits say low commodity prices are hurting big farms as well as small ones.

``Producers need to get their income from the marketplace (but) the marketplace simply isn't providing it right now,'' said Steve Pringle, legislative director of the Texas Farm Bureau.

The payment limits apply to two different programs: crop subsidies that vary according to fluctuations in commodity prices; and annual ``market transition'' payments, which were guaranteed to producers under the 1996 farm law.

Farmers are technically allowed to receive no more than $75,000 in crop subsidies and $40,000 a year in market transition payments under current law. But many farms, especially in the South, legally claim twice that much because they are divided into different entities. A husband and a wife, for example, can claim separate payments on the same farm.

The aid package would double those caps, so farms could get up to $300,000 in crop subsidies and $160,000 in market transition payments this year.

With commodity prices at the levels they are, a cotton operation in west Texas would reach the $75,000 cap on crop subsidies at about 700 acres, while a corn grower in Iowa would reach it at about 1500 acres. The subsidies vary by commodity and region.

Last year, about 550 farmers nationwide claimed the maximum amount in crop subsidies, USDA officials said.

Another provision in the legislation would allow farms to avoid the restriction on crop subsidies entirely. It would permit the Agriculture Department to issue certificates redeemable for government-held commodities in lieu of cash. The certificates would not be subject to any payment limitations.

The certificate program was written into the bill by Sen. Thad Cochran, R-Miss., chairman of the Senate's agricultural appropriations subcommittee, at the request of cotton producers.

Advocates of the certificate program say farmers can already avoid the payment limits on crop subsidies though a program that allows them to take out a loan on their crop and later forfeit the crop to the government, then keep a portion of the loan.

Critics of the looser payment rules fear they will encourage the consolidation of farms and hasten the demise of smaller-scale operations. Big farms will use the extra cash to buy up land from the neighbors, driving up land prices in the process, claimed Chuck Hassebrook, program director of the Center for Rural Affairs in Walthill, Neb.

``What is the purpose of these farm programs? Is it to help very wealthy, very large landowners get bigger and get richer? If it is then this all makes sense. ... I don't think that's what the public supports,'' he said.

Limits on subsidies do ``retard the movement to larger farms and fewer farms,'' but raising them is unlikely to have much effect on farmers' expansion plans unless producers are convinced Congress won't lower them later, said Don Ethridge, an agricultural economist at Texas Tech University.

Pringle of the Texas Farm Bureau said it will take more than the prospect of bigger subsidies payments to get most farmers to buy or rent more land.

``Let's face it. People in agriculture aren't going to expand their operations with prices where they are. The government payments aren't a good enough incentive,'' he said.