Senate Okays $7.4 Billion in Farmer Assistance

August 5, 1999

The Senate has approved $7.4 billion in financial assistance for farmers, marking the second year in a row Congress has reacted to low prices by making the "freedom to farm" law more generous. The Senate defeated a larger package of aid offered by the Democrats in the day-long debate Wednesday. The aid will be included in the agricultural appropriations bill, and a September conference with the House of Representatives will be needed before the assistance package becomes final.

Slightly more than $5.5 billion will be supplemental agriculture market transition payments made annually under the 1996 farm law. The money appropriated would effectively double producers' 1999 payments. Another $470 million goes in direct payments to soybean and producers of minor oilseeds. For livestock and dairy assistance, $322 million was included along with $134 million for specialty crops, $328 million for tobacco and $201 million for the cotton Step 2 program.

The assistance will take the form of direct payments under the same formula used in the 1996 law. Agriculture Secretary Dan Glickman, echoing complaints from Senate Democrats, has said that such payments often benefit absentee landlords rather than producers.

Democrats prefer to make payments in the form of additional loan deficiency payments. That method would effectively base assistance on farmers' present production of crops rather than the historical patterns on which the 1996 payments are calculated. Although the debate sounds arcane, Republicans' method leaves income aid "decoupled," or separated from production. Democrats' preferred method would effectively be an increase in loan rates.

The Senate also included a doubling of the loan deficiency payment limit from $75,000 to $150,000 per producer and added $400 million for the federal crop insurance program. The House Agriculture Committee has passed multi-year crop insurance reform legislation.

Democrats had wanted as much as $10.8 billion, but Republicans defeated several attempts to enlarge the assistance package. The House has yet to consider any type of disaster assistance. The disaster aid portion could be considered in conference committee and voted in final version by both Senate and House as part of agricultural appropriations.

Senate Democratic Leader Tom Daschle (D-SD) said he was "deeply disappointed" that Republicans blocked his attempt to put $10.8 billion into the appropriations bill. "As the farm crisis continues to worsen, it is urgent that we get an effective bill put together as soon as possible to get some sort of assistance out to our producers," he said.