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Corn+Soybean Digest

Market News

USTR: Farm Program Reform Needed

The Bush administration would like to see "even more reform in our agricultural programs," U.S. Trade Representative Susan Schwab told Reuters News Service, as Congress prepared to overhaul U.S. farm subsidies.

During an interview with Reuters, Schwab said the farm policy law written this year should comply with world trade rules and be "reform-minded." She didn’t suggest specific revisions for U.S. supports dating from the Depression era.

"We want to embrace even more reform in our agricultural programs. We want to do it for its own sake," said Schwab, who stressed Congress and USDA traditionally take the lead in setting farm policy.

Agriculture Secretary Mike Johanns says the crop subsidy system is outmoded and should be revised so it will be "reliable, equitable and beyond challenge." Some analysts believe the White House will spell out its ideas by the time it releases its proposed fiscal 2008 budget on Feb. 5.

While the largest U.S. farm groups want to preserve the current system of farm supports, costing $20 billion a year, there was interest in an alternative, insurance-like program aimed at protecting farm income.

Ralph Grossi of American Farmland Trust, a land preservation group that advocates reform of the farm program, pointed to so-called revenue assurance as a potential change in course for U.S. supports.

The National Corn Growers Association supports revenue assurance and the American Farm Bureau Federation lists it among the options if changes must be made.

"I think the way is paved to move away from loan programs and counter-cyclicals," says an agricultural economist, who spoke to Reuters on condition of anonymity, referring to components of the current crop support system. He listed revenue assurance as the most likely alternative to the subsidies now in use.

Later this week, another proponent of farm program reform, Environmental Defense, is expected to propose a system of savings accounts that would help growers weather hard times.

The government would contribute to the accounts and decree how the money could be used. The concept was discussed in the past.

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