16 February 1996

USapproves draft Farm Bill

STIFFER competition from across the Atlantic has moved a step closer, following approval of a draft Farm Bill by the US Senate.

Although this is just one step in the legislative process (the bill now moves to the House of Representatives) it is clear that significant cuts in farm support and export subsidies are now in the pipeline.

"It is fair to assume that, for basic commodities (such as wheat, maize and feed grains) there will be an end to deficiency payments and set-aside, as this has already been endorsed by the House," said US agricultural attache in London, Richard Barnes.

The Senate plan is for these measures to be replaced by lump sum payments, decoupled from production and reducing progressively, regardless of market price movements. This payment would be capped at $50,000 a farmer.

It is also proposed to eliminate the annual reserve programme (short term set-aside), though the conservation reserve (permanent set-aside) is set to remain at 15m ha (36m acres) until the year 2002.

On the trade front, the draft includes cuts in export subsidies, both through the export enhancement programme and the market promotion programme.

The Senates plan is less radical than the Freedom to Farm bill originally drawn up by the House of Representatives. But by decoupling support payments for certain key commodities, the latest draft bill is expected to get a smoother passage than would otherwise have been the case.

The Clinton administration, which has the right to veto whatever comes out of the House and Senate, is known to have reservations. But given the urgency in getting something sorted, observers believe a veto is unlikely if both the chambers agree.