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UPDATE 2-Farm bill could be used to shield U.S. farmers from trade spat -senator

(Adds comments by USDA official and analyst, background on farm bill, other details)

By Tom Polansek

OVERLAND PARK, Kan., April 6 (Reuters) - U.S. Senator Jerry Moran of Kansas said he assumes the Trump administration would try to use U.S. farm bill legislation, which helps farmers withstand economic slumps, to shield the sector in a growing U.S.-China trade dispute.

However, no specific proposals for protecting farmers have been suggested as of yet, and lawmakers and the agricultural industry said the escalating trade battle could add to uncertainty in coming months.

The farm bill, the U.S. government's main food and agricultural policy mechanism, is up for renewal this year. The bill typically uses crop insurance and other programs to help farmers withstand economic slumps.

Moran, a Republican, spoke on the sidelines of a commodities conference in Kansas on Friday. He said he would support help for farmers, even though taxpayers would have to foot the bill for additional support for agriculture.

He added that the "better way to handle this is not to put the farmer in the damaging position in the first place."

Beijing rattled grain and oilseed markets on Wednesday by threatening extra levies on U.S. goods including soybeans, the most valuable U.S. farm export to China, in retaliation for earlier U.S. trade actions. Fears later eased as many cited China's reliance on U.S. soybeans.

But on Friday, China warned it was fully prepared to respond with a "fierce counter strike" if the United States follows through on President Donald Trump's latest threat on Thursday to impose tariffs on an extra $100 billion in Chinese goods.

The administration has said it would find a way to protect farmers, but U.S. Department of Agriculture Under Secretary Bill Northey told Reuters on Thursday there were no specific plans yet. "There's a lot of different options out there," he said.

On Thursday, before Trump threatened the extra tariffs, U.S. Senator Pat Roberts, also of Kansas, said the trade conflict created a background of uncertainty for negotiating the farm bill. The current bill was passed in 2014 and was expected to cost $489 billion over five years; it expires at the end of 2018.

"Farmers have to have some degree of predictability and stability," he said on the sidelines of the U.S. Commodity Futures Trading Commission conference in Kansas. "This kind of environment certainly doesn't provide that."

Soybean futures have dropped 1.5 percent over the last five days as the dispute has heated up. "If (farmers) are worried about the price that they’re going to get eventually, they’re going to invest less, they’re less likely to spend on fertilizer and seed, though most of those decisions have been made already," said Jonas Oxgaard, senior analyst at Sanford C. Bernstein & Co.

Added Roberts, referring to the imminent expiration of the farm bill and the possibility of a trade war: "This is not a good situation. It just isn't."

(Reporting by Tom Polansek in Overland Park, Kansas; additional reporting by Ayenat Mersie in New York Writing by David Gaffen Editing by Susan Thomas and Matthew Lewis)

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