<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN">
<HTML><HEAD>
<META http-equiv=Content-Type content="text/html; charset=iso-8859-1">
<META content="MSHTML 6.00.6000.16544" name=GENERATOR>
<STYLE></STYLE>
</HEAD>
<BODY bgColor=#ffffff>
<DIV>
<TABLE class=article cellSpacing=0 cellPadding=0 width=946 border=0>
<TBODY>
<TR vAlign=top>
<TD id=contentcol><A href="http://www.sfgate.com/chronicle/"><IMG
height=21 alt="San Francisco Chronicle" hspace=0
src="http://www.sfgate.com/templates/brands/chronicle/images/chronicle_logo.gif"
width=150 border=0></A><BR>
<DIV id=divider><!-- dont write <hr /> here --></DIV>
<DIV class=headlines>
<H1>California could reap windfall</H1>
<H1>from farm bill deal</H1></DIV>
<P class=byline><A href="mailto:clochhead@sfchronicle.com">Carolyn
Lochhead, Chronicle Washington Bureau</A></P>
<P class=date>Thursday, October 18, 2007
<SCRIPT language=javascript><!--
OAS_RICH('x90'); //--></SCRIPT>
</P><!--/sharelinks--><!--/sharepop1--><!--/fontpopup--><!--/fontbutton-->
<SCRIPT language=javascript type=text/javascript>
document.getElementById('fontpopup').onmouseout = sfgate_chfont_mo;
</SCRIPT>
<!--/.toolset-->
<DIV class="clear loweredge"></DIV><!--/.articletools-->
<DIV id=articlecontent>
<DIV id=articlebox>
<DIV id=objbox>
<DIV id=contentobjects><A
href="http://www.sfgate.com/cgi-bin/object/article?f=/c/a/2007/10/18/MNL1SRF6N.DTL&o=0"
target=""><IMG
alt="Growers of dried corn, which is used to produce ethanol, ..."
src="http://www.sfgate.com/c/pictures/2007/09/23_t/ba_farmbill_179_mac_t.gif"
vspace=1 border=0></A> <A
href="http://www.sfgate.com/cgi-bin/object/article?f=/c/a/2007/10/18/MNL1SRF6N.DTL&o=1"
target=""><IMG
alt='"This is a forward-looking bill with critical investments...'
src="http://www.sfgate.com/c/pictures/2007/10/18_t/mn_harkin_dean_dcn_t.gif"
vspace=1 border=0></A> </DIV>
<DIV class=clear></DIV></DIV></DIV><SPAN class="georgia md" id=bodytext>
<SCRIPT language=javascript
type=text/javascript>
sfgate_get_fprefs();
</SCRIPT>
<P><STRONG>(10-18) 04:00 PDT Washington -</STRONG> -- Senate Democrats
announced a breakthrough in a long-stalled farm bill Wednesday that would
provide billions of dollars for California fruit and vegetable marketing,
farm conservation and food stamps - but would maintain costly, traditional
crop subsidies for corn, wheat, cotton, rice and soybeans.</P>
<P>The linchpin of the deal was $3 billion in new money that suddenly
appeared when the Congressional Budget Office determined that a new option
for subsidized farmers to choose an alternative insurance-style program
would save money. That money could pay for environmental and nutrition
programs while shielding subsidies from cuts.</P>
<P>But it was unclear whether the deal would appease the unusual
left-right alliance of reformers hoping to change the 70-year-old system
of crop subsidies that they contend has speeded farm industrialization,
harmed the environment and contributed to the nation's obesity epidemic.
Fruit and vegetable growers said they might not be happy, either.</P>
<P>All this poses a quandary for California's Democratic Sens. Barbara
Boxer and Dianne Feinstein, who are being lobbied vigorously by the
state's cotton and rice farmers and fruit and vegetable growers who want
more money for research and marketing, and Bay Area environmental and food
activists seeking to change the government's role in agriculture. Neither
senator has yet taken a position. </P>
<P>Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, said he has
broad support on his committee, a bastion of traditional farm interests,
and plans a vote as early as next Wednesday. The deal fended off powerful
opposition from subsidy supporters in both parties from the South and
Midwest who threatened to thwart any compromise that reduced their
subsidies.</P>
<P>Harkin conceded that the agreement was not a big break with the
past.</P>
<P>"Farm programs don't take sharp turns, but we do try to bend the rails
a little bit," Harkin said.</P>
<P>Whether the deal forestalls fights in the overall Senate remains to be
seen.</P>
<P>Andy Fisher, a spokesman for Sen. Richard Lugar, an Indiana Republican
who is teaming with New Jersey Democrat Frank Lautenberg on an alternative
that would eliminate traditional subsidies and divert the savings to the
wish list of reformers, said the deal was "a bad bill. It's bad for
taxpayers, farmers and the American economy."</P>
<P>Environmental groups were cautious, waiting for more information. "It's
a step in the right direction, but it's still insufficient to meet demand"
from the two out of three farmers who are turned away from conservation
programs, said Sara Hopper, an attorney with Environmental Defense.</P>
<P>All sides have a lot at stake in the $286 billion farm bill; farm laws
are renewed just once every five years. Decisions made now will lock in
policies until 2013 that will have an enormous impact on the American food
system.</P>
<P>Advocates for changing the system are spread across the political
spectrum.</P>
<P>Food activists contend that farm subsidies encourage production of the
starches, sugars and oils that now permeate processed foods and meats.
They want to end that system and encourage the farm-to-fork movement of
healthier and more local foods.</P>
<P>Environmental advocates contend that the subsidies encourage pesticide
and fertilizer use that has created a "dead zone" in the Gulf of Mexico
the size of New Jersey from farm runoff in the Mississippi River. Rural
development activists say the subsidies have speeded farm consolidation
and emptied small towns.</P>
<P>Overseas development lobbyists say the payments hurt poor farmers in
Africa and elsewhere who have to compete on depressed world markets. Trade
specialists say the subsidies violate U.S. trade treaties and invite
retaliation on other industries. Economists say the subsidies discourage
innovation and serve no public purpose. Budget hawks say most of the
payments go to a small number of the most prosperous farmers who earn far
more than the average taxpayer - at a time when farm income is breaking
records.</P>
<P>Even some subsidized farmers object. "It seems to me it's poor
government when in a time of tight budgets and good economic conditions,
we have the same old programs, rather than taking the opportunity to
reform when economic conditions are good," said Ed Carter, a Minnesota
corn and soybean farmer who has joined the reform alliance. </P>
<P>Harkin, a liberal populist and no fan of traditional subsidies, has
been battling fellow Democrats on his own committee to divert money to
conservation and nutrition programs. The standoff has deadlocked Senate
action since the House passed its farm bill in July that increases
subsidies. </P>
<P>Harkin said the newfound money took him by surprise and "really helped
us out a great deal" to pay for what everyone wanted.</P>
<P>Harkin said he was especially proud of getting $1 billion to increase
fruit and vegetable consumption by poor children, money to help farmers
through the expensive transition to organic farming, and new funds to
promote biomass fuels.</P>
<P>"This is a forward-looking bill with critical investments for the
future in energy conservation, nutrition, rural development, and promoting
better diets and health for all Americans," Harkin said.</P>
<P>Harkin said there also will be no cut in the $5 billion spent each year
in automatic direct payments to people who own land that has grown
subsidized crops, regardless of market conditions or even if they produce
anything now. </P>
<P>Sens. Kent Conrad, D-N.D., and Saxby Chambliss, R-Ga., have insisted on
preserving those payments as a safety net for farmers. </P>
<P>Farmers could, however, opt instead for a "revenue assurance" plan
devised by the corn growers' lobby that would guarantee farmers a base
level of revenue regardless of prices or yields. Unlike price supports
that give aid only when prices drop, this program would also make payments
in case of drought or other events that destroy crops, even if prices are
high.</P>
<P>But there may be a big sticking point with California produce growers:
Grain and cotton farmers who opt for the new program would be allowed to
plant fruits and vegetables on their land. </P>
<P>Currently, farmers in the Midwest or South who get federal money are
not allowed to switch to specialty crops because California farmers
contend that would give those farmers an unfair advantage.</P>
<P>Fruits, nuts and vegetables are not eligible for federal subsidies.</P>
<P>Tom Nassif, head of the Western Growers Association, said the $3
billion that budget estimators think the new program would save the
government on crop subsidies is about what California produce growers
would suffer in losses if subsidized farmers start competing with them by
growing fruits and vegetables.</P>
<P>The federal aid those farmers receive "makes it much easier for them to
grow more crops and have more production without increasing demand, and
that lowers market prices," Nassif said. "A subsidy is a subsidy. We are
very much opposed to it and have been from the beginning."</P>
<P>California's produce industry has had an on-off alliance with
environmental, religious and other groups opposing the farm bill. They
broke off to support the House measure after they secured $1.6 billion for
research and marketing, angering reform groups who continued to oppose the
subsidies for commodity crops.</P>
<P>California also grows heavily subsidized cotton and rice. Most of these
growers want to continue those programs.</P>
<P><I>E-mail Carolyn Lochhead at <A
href="mailto:clochhead@sfchronicle.com">clochhead@sfchronicle.com</A>.</I>
</SPAN></P></DIV><!--/articlecontent --></TD></TR></TBODY></TABLE></DIV></BODY></HTML>