Copyright 2001 Star Tribune  
Star Tribune (Minneapolis, MN)
June 27, 2001, Wednesday, Metro Edition
SECTION: NEWS; Pg. 13A

LENGTH: 706 words

HEADLINE: House approves $5.5 billion in farm aid;
The bipartisan package would provide Minnesota farmers with more than $305 million.

BYLINE: Kevin Diaz; Staff Writer

DATELINE: Washington, D.C.

BODY:
The House passed a $5.5 billion aid package Tuesday for struggling U.S. farmers, setting the stage for debate this summer over agricultural subsidies and trade policy.

   The bipartisan aid package, prompted by slumping commodity prices, was overwhelmingly approved by a voice vote even as supporters said it wasn't enough.

   "Our needs are greater this year, and prices are at historic lows," said Rep. Mark Kennedy, R-Minn., who backed an unsuccessful effort to increase the aid package to $6.5 billion.

   The legislation marks the fourth consecutive year of multibillion-dollar bailouts for farmers since 1996, when Congress passed the market-oriented "Freedom to Farm" bill that was intended to phase out major agriculture subsidies.

   The new aid provides $4.6 million in "market transition" payments to grain and cotton farmers and $900 million to growers of other crops, such as soybeans, peanuts, fruits, vegetables and tobacco.

   More than $305 million will go to Minnesota farmers, according to Rep. Gil Gutknecht, R-Minn.

   The farm payments, expected to be approved by the Senate and distributed to farmers by Sept. 30, come amid growing pressure to reformulate "Freedom to Farm" and pass a new bill.

   More than 90 House members _ including the entire Minnesota delegation _ have signed a letter co-written by Kennedy pressing the Senate to join in writing a new farm bill this year.

   "Farmers and ranchers _ and their lenders _ need a level of certainty that ad hoc assistance simply can't provide," Kennedy wrote, noting that real net cash farm income is at its lowest point since the Great Depression.

'Race to the bottom'

   Meanwhile, one of the leading proponents of a new farm bill, Rep. Collin Peterson, D-Minn., joined a leading consumer group Tuesday in releasing a report critical of the North American Free Trade Agreement (NAFTA) and other free trade efforts that he said make farmers' problems worse.

   "These treaties have permitted the big grain companies to buy outside the U.S., searching for the cheapest prices, so it's a race to the bottom," Peterson said.

   The report, which was released by Public Citizen, a nonprofit group founded by consumer activist Ralph Nader, said U.S. farm income is projected to decline 9 percent between 2000 and 2001 _ from $45.4 billion to $41.3 billion _ compared with annual farm income of $59 billion before NAFTA was enacted in 1994.   The report also noted that while U.S. food prices have increased 20 percent under NAFTA, worldwide commodity prices have fallen.

   NAFTA supporters, including Kennedy, say too many factors go into farm commodity prices, including unprecedented yields and the strong U.S. dollar, to blame falling prices on NAFTA.

   But the trade report and the farm-aid package underscore the tough climate farmers face as the Bush administration pushes for broader trade negotiating authority known as "fast track." Bush also is trying to persuade Congress to expand NAFTA _ which covers the United States, Canada and Mexico _ to an additional 31 nations through the proposed Free Trade Area of the Americas.

   Bush and his supporters say free trade sustains the U.S. agricultural economy, noting that U.S. farm exports to Mexico have nearly doubled under NAFTA. "The future of agriculture is tied to developing new markets," said Rep. Jim Ramstad, R-Minn., one of Bush's strongest free trade allies.

   Trade issues have heightened legislators' sensitivities to farm bailouts. Agriculture Secretary Ann Veneman announced last week that she would classify market price supports as "trade distorting" subsidies in reports to the World Trade Organization.

   That move angered House Agriculture Committee Chairman Larry Combest, R-Texas, prompting him to withdraw as a sponsor of the GOP's fast-track bill. Other free trade supporters, however, said the move will force foreign governments with bigger subsidy programs to do the same.

   "Europe subsidizes their agriculture to the tune of $342 an acre," Gutknecht said. "The United States spends only $43 an acre."

     _ Kevin Diaz is at kdiaz@mcclatchydc.com.



LOAD-DATE: June 27, 2001