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U.S. farm bill deal could be reached this week -senator

By Eric Beech

WASHINGTON (Reuters) - Negotiations in Congress on the long overdue U.S. farm bill could be completed this week after progress was stalled by a disagreement over a dairy price support program, a senator said on Wednesday.

The five-year farm bill, which covers issues from domestic crop subsidies to exports and global food aid, is being held up chiefly by a dispute between Republican House Speaker John Boehner and Democratic Representative Collin Peterson of Minnesota over a program that would cut milk production if prices decline below a certain level.

But Republican Senator John Hoeven of North Dakota, who is a member of the House-Senate "conference" panel considering the bill but not among the four lead negotiators, said he thought a compromise could be reached that does not include the supply management element, which Boehner opposes.

"Obviously for the speaker, the issue is not having supply management in there. And I think there are a number of ideas and ways to have a dairy program that works for the smaller producers but doesn't have supply management," Hoeven said.

"I just hope we have the (negotiators) agreeing by the end of the week. I think that is possible," he said.

The dairy issue appears to be the last major hurdle to a deal on the farm bill.

Peterson, top Democrat on the House Agriculture Committee and one of the top four negotiators on the farm bill, has championed the Dairy Security Act, a new program that offers producers profit-margin insurance as long as they agree to cut milk output if prices fall below a set level.

Farmers generally support Peterson's proposal, while processors - who make cheese, ice cream and yogurt, and say it could lead to higher prices for milk - oppose it.

Boehner is not one of the four key negotiators but has been a long-standing opponent of dairy price supports. The speaker has derided the support system as "Soviet-style" and has vowed not to allow a bill with supply management to come to the House floor for a vote.

"The speaker has been very clear about his position," said Boehner spokesman Michael Steel.

Peterson was not immediately available for comment.

'TIME GETTING SHORT'

Hoeven said that if a deal is reached, Congress, which is in recess next week, should be able to pass the bill before the end of January.

Lawmakers are more than a year late in replacing the 2008 farm law, which expired in the autumn of 2012 but was extended until September 30, 2013.

If no bill is passed, the Agriculture Department may be forced to peg dairy subsidies to an underlying "permanent" 1949 law that would double the price of milk in grocery stores - an event often referred to as the dairy cliff.

"If we have to institute permanent law, that's absolutely going to create a lot of chaos in the market. It's going to create shortages in the grocery store and it's going to create higher prices," Agriculture Secretary Tom Vilsack told the news organization Agri-Pulse in an interview this week.

Vilsack said previously he did not think a milk price increase would occur during January, giving lawmakers some time to pass the bill.

Hoeven said lawmakers were feeling the heat.

"Time is getting short, so people need to find a way to agree. The deadline is here," he said.

Negotiators have reportedly agreed to about $8 billion in cuts over 10 years to the food stamp program, formally known as the Supplemental Nutrition Assistance Program, which gives about 47 million low-income Americans money to pay for food.

In its version of the farm bill passed in June, the Democratic-run Senate offered $4.5 billion in cuts to food stamps over 10 years The House proposed $39 billion in cuts.

(Reporting by Eric Beech; Additional reporting by Caren Bohan; Editing by Peter Cooney)

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