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New programs to find money in farm bill, says Ag Committee chairman

House Agriculture Committee Chairman Collin Peterson said Friday that he has found ways to save about $3 billion over the next five years in order to finance some new programs in the next farm bill, including about $685 million that would go to programs for fruit and vegetable producers.

Peterson said he's moving ahead with a farm bill that won't have any of the $20 billion in reserve funds that have been promised to congressional ag committees. The leadership of the House still hasn't told Peterson how those extra funds would be financed. Under "paygo rules" approved by the House, any new programs must be offset by cuts in other programs or with new revenue. Peterson is still trying to get part of that reserve approved for supporting crops for cellulosic ethanol, a permanent disaster program and the conservation security program.

Next Friday his committee will post on its website the details of two farm bill proposals - the farm bill with the $3 billion shift in spending and another that would tap reserve funds and spend more. The full House Agriculture Committee will debate its farm bill on July 17.

Peterson said the $3 billion savings will come mainly from two sources. The first is a $1.5 billion five-year savings that comes from doing away with advance direct and counter-cyclical payments in the last year of the farm bill. He said he realized that might be a hardship for some farmers, but that there would be no cuts in the actual direct payments available. He is not proposing major changes to loan rates, either, except for changes to some minor crops, he said.

He said there are several sources for the other half of the savings but that a large part of it would come from changes in the crop insurance program.

"Clearly there needs to be something done. The premiums in my part of the world have almost doubled," Peterson said.

Under the current crop insurance program, that means federal reimbursements to crop insurance companies who offer federally-backed insurance have also doubled. "There's not anywhere near a doubling of the effort," he said.

Peterson said representatives of crop insurance companies have discussed with the ag committee possible cuts in their federal subsidies for administrative costs. While they support making changes they are also worried that permanent cuts in federal administrative reimbursements would hurt the industry if crop prices and premiums fall.

Peterson said that members of the committee are still debating what form of payment limits should be imposed. He said he has doubts about the Bush administration's proposal to stop commodity program payments to anyone with adjusted gross income of more than $200,000. For one thing, enforcement would put a huge burden on Farm Service agency staff, he said. Still, he expects a strong effort to impose limits by all members of the House if the committee doesn't take action.

"I think if anybody things there's not going to be anything done on payment limits, they're kidding themselves," he said.

Peterson is also considering including some type of revenue-based safety net program in his committee’s version of the farm bill. Peterson said that USDA Deputy Secretary Chuck Conner has suggested allowing farmers to choose to participate in the current counter-cyclical program or to sign up for a revenue-based program.

"I don't think there's time for members and the (commodity) groups to get comfortable with jumping off that cliff completely," Peterson said. But allowing farmers to opt into the program would be one way of testing it, he said.

House Agriculture Committee Chairman Collin Peterson said Friday that he has found ways to save about $3 billion over the next five years in order to finance some new programs in the next farm bill, including about $685 million that would go to programs for fruit and vegetable producers.

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