The Senate's $498-billion, five-year farm bill would compensate growers when revenue from a crop falls, rather than prop up prices. The bill saves at least $23 billion by cutting crop subsidies, conservation funding and food stamps for the poor. Crop subsidies provide the rest of the savings.

"This is about reform,” says Agriculture Committee chairwoman Debbie Stabenow at a celebratory news conference. “This is about reducing the deficit."

The House Agriculture Committee won’t start working on the bill until mid-July, just before a five-week recess. But analysts say it will be tricky for the House to act or for Congress to enact a farm bill before the 2008 law expires on Sept 30.

Agriculture committee leaders in the House and Senate disagree on fundamental points for the new law, ranging from how much to cut spending to how extensive reforms should be. The House wants much deeper cuts in food stamps and $10 billion more in cuts overall than the Senate and would offer higher price supports to farmers when the Senate would end them.

The Senate farm bill ends the $5-billion-a-year "direct payment" subsidy, a target of reformers, as part of creating a new safety net aimed at the agricultural exigencies of the 21st century—high and volatile market prices and rising global food demand.

Grain and soybean growers would qualify for federal payments when revenue from a crop is from 11% to 21% below normal. Crop insurance would help to cover further losses. The Senate bill makes federally subsidized crop insurance the centerpiece of the farm program and expands outlays on the program to an estimated $9.5 billion per year. The escalating costs of crop insurance has been criticized as too generous to farmers and big insurance companies.

Southern senators reportedly say the revenue plan in the farm bill was designed for corn and soybean growers in the Midwest and that it would provide inadequate support for rice and peanut growers.

Agriculture Secretary Tom Vilsack urged Congress to keep the farm bill moving forward.

Source: www.reuters.com