Subsidy reform is touchy subject for farm law

By Charles Abbott

WASHINGTON (Reuters) - Farm bill negotiators are trying to wrap up language to deny subsidies to farmers with large off-farm income, a touchy issue for months, said the Senate Agriculture Committee chairman on Monday.

"It is a dicey subject. I believe we can reach an accord," said Chairman Tom Harkin, Iowa Democrat. The matter was believed to be one of the final issues for the legislation.

Subsidy rules became the test of reform following the collapse of proposals for a radical farm-program overhaul last year. The Bush administration says the wealthiest Americans should not qualify for crop subsidies.

Farm bill negotiators were scheduled to meet on Tuesday to begin the final phase of writing a House-Senate compromise bill. As it stands, the bill would cost $610 billion over 10 years, two-thirds of it for public nutrition.

"The farm bill proposal currently being discussed by conferees lacks important reforms the president has repeatedly called for," said White House spokesman Scott Stanzel.

Stanzel said the bill included budget gimmicks to disguise its cost and could increase farm subsidy spending. The bill calls for small increases in subsidy rates for some crops and for a $3.8 billion disaster fund for agriculture.

"Now is the time to modernize our agricultural policies for the future, but members of Congress have not risen to the challenge," said Stanzel when asked the White House view.

The Bush administration says it would accept $500,000 in adjusted gross income as the cut-off point for eligibility for crop subsidies. It initially proposed a ceiling of $200,000 in average AGI. The limit now is $2.5 million AGI unless at least 75 percent of income is from farming and ranching.