House Panel Votes to Extend Controversial Farm Subsidies, Signaling Battle to Come

Setting the stage for a contentious congressional debate over farm subsidies, a House panel voted unanimously yesterday to extend for five years the current system of payments to farmers and rejected a series of proposed changes.

The action left in place the system of income supports and guaranteed prices that has cost taxpayers more than $70 billion since 2002. Environmental groups, the Bush administration and budget watchdogs say that the program is too generous to big commercial farmers in a few states. But yesterday’s vote by the House Agriculture subcommittee on general commodities signaled that the farm bloc is geared to defend the subsidies, despite record profits and soaring prices for commodities and farmland.

Rep. Frank D. Lucas (R-Okla.) called on Congress’s agriculture committees to "circle the wagons" against efforts by lawmakers who want to redirect the money to other priorities.

The House Agriculture Committee could revise the subcommittee’s work when it takes up the farm bill later this month, but major changes are not expected.

Before 10 Democrats and eight Republicans voted to extend the program, Charles F. Conner, the deputy secretary of agriculture, implored the subcommittee to think again.

New farm legislation, he said, should be tailored to the "very dynamic changes in American agriculture," which include new markets for biofuel and environmental pressure. The existing farm program, which dates to 2002, "provides the least help when the farmer needs it the most," he said.

But House Agriculture Committee Chairman Collin C. Peterson (D-Minn.) told Conner that a Bush administration proposal to close some loopholes and to make modest cuts in price supports has "not convinced the American farmer that you’ve got the right idea."

Subcommittee members rejected the Bush plan on a voice vote, then shouted out their "no" votes on a proposal backed by a coalition of House and Senate reformers to phase out traditional subsidies and create tax-exempt risk-management accounts.

Yesterday’s action could spell trouble for U.S. trade negotiators seeking a new global trade deal to lower foreign tariffs on American products and commodities. Developing countries and the European Union are demanding major changes in U.S. farm subsidies and protections, which they say distort trade.

"If you were looking for a signal that the U.S. is serious about negotiating lower farm supports . . . the House Agriculture Committee is basically saying ‘To heck with you,’ " said University of California economist Daniel Sumner, an adviser to Brazil in a trade dispute with the United States.

Weeks of backroom lobbying by farm organizations, commodity interests and agribusinesses preceded yesterday’s action. Initially, it appeared that the subcommittee would approve a Peterson draft bill containing what he called "modest reforms."

It would have reduced the guaranteed price for cotton by 2 cents a pound and eliminated federal payments to cover cotton storage. But even those small changes set off what Peterson called an "open revolt in the South."

By jettisoning Peterson’s proposal and substituting the farm program now in force, those benefits were preserved. The panel then approved an amendment by Rep. Jim Marshall (D-Ga.), adding a 4-cent-a-pound subsidy for U.S. cotton mills and giving the U.S. Department of Agriculture broad authority to increase cotton subsidies when prices are low.

Database editor Sarah Cohen contributed to this report.