Battle lines have been drawn in Washington, with the Bush administration threatening to veto a new US Farm Bill, as put forward by the House of Representatives.
The full House approved its version of the Farm Bill, which will set out the details of US agricultural support for the next five years, late last week.
“It represents a carefully crafted compromise that includes substantial reforms and new investments in programmes that matter,” said House agriculture chairman Collin Peterson. “It implements country of origin labelling and improves food safety, while preserving the safety net that our farmers and ranchers need.”
In particular, the House Bill retains the full array of farm income supports – direct payments, loan deficiency payments and countercyclical payments – and in many cases increases the target prices to make them more effective.
It also sets a new cap on payments, so that any farmer with an income of over $1m is no longer entitled to taxpayer support. But that would only affect 3000 farmers out of 900,000, and is way above the $200,000 cap the Bush administration was after.
The House Bill now has to be merged with an equivalent Bill from the Senate. Once agreed, this Congress version will go to the White House for ratification.
But US agriculture secretary Mike Johanns has made it clear that, unless there are substantial changes, “the President’s entire team of senior advisers will recommend that he veto it”.
Spelling out his objections at a National Press Club luncheon, Mr Johanns said he was especially angered by a provision to tax non-farming businesses with overseas headquarters to raise funds for US farmers. “It’s just not the way to fund a Farm Bill,” he said.
Over a 10-year period, the House version would cost taxpayers about $36bn more than proposals put forward by the US department of agriculture earlier this year. “That is not acceptable.”
The cap of $1m was way too high, while the increases in commodity support prices – “the most trade distorting programme under our WTO obligations” – was tantamount to “painting a bull’s eye on the back of American farmers”. “We are also disappointed that the House Bill provides virtually no increase in mandatory funding for renewable energy.”
Mr Johanns said he was looking for the Senate to come up with a more acceptable Farm Bill.
But his comments prompted a hostile rebuke from Mr Peterson. “This is not the first time the administration has turned its back on American agriculture,” he said. “They repeatedly threatened to veto disaster assistance for agriculture, which the Democratic leadership passed this year.”