House Passes Farm Bill, Defers Action on CCC

The House passed and sent to President Reagan on Thursday legislation partly shielding dairy farmers from spending cuts mandated by the Gramm-Rudman deficit-reduction law as well as revising the 1985 farm bill to protect many other farmers’ incomes.

The measure, approved by the Senate on Wednesday, was passed by the House on a 283-97 roll call vote.

However, the House took no action on a Senate-passed appropriations measure that would provide $5 billion in emergency funds to the Commodity Credit Corp.

The CCC has run out of money needed to send crop subsidy checks to thousands of farmers. The House adjourned for a long weekend and will not be able to consider the matter until Tuesday.

Relief for Dairy Farmers

The farm package, sent to Reagan for his expected signature, would provide relief to dairy farmers who face a 4.3% cut in milk price supports demanded by the first round of spending cuts under Gramm-Rudman.

The bill would cancel a scheduled 55-cent cut in the federal price support for 100 pounds of milk but impose a 10-cent increase in an assessment that dairy farmers must pay for a milk surplus reduction program.

Urban liberals, led by Rep. Barney Frank (D-Mass.), sought to delete the provision, arguing that dairy farmers should not receive special treatment. But the amendment lost, 267 to 120.

Backers of the provision said that it would not add to the federal deficit and that it would avoid driving some dairy farmers out of business by having all farmers pay the extra assessment.

The farm package also corrected a pair of newly perceived deficiencies in the 1985 farm bill that lawmakers feared would cost them many farm votes this election year. These so-called mistakes would affect the incomes of subsidized corn and wheat farmers as well as unsubsidized vegetable growers.

One provision would change a formula in the farm bill that is used to compute the amount of income subsidies that grain farmers receive. Many farmers had complained that the old formula would drastically reduce their incomes.

Another provision would repeal a section in the farm bill that allows grain and corn farmers to continue receiving crop subsidies even if they switch some of their acreage to “specialty” vegetables. Growers of unsubsidized California asparagus, Idaho potatoes and Michigan navy beans, among others, protested that their markets would be glutted and prices thereby depressed under the old legislation.

“This is a big, big victory,” said Rep. Tony Coelho (D-Merced). “All we wanted to do was make some corrections which would have been devastating to farmers in the (San Joaquin) Valley, not to mention all over the country. My office has been flooded with calls from farmers who have been waiting for some news as to what was going on.”

Reagan is expected to sign the bill, congressional sources said, because the $1-billion cost of protecting farmers’ incomes is offset by reductions in export subsidies. “The Administration won’t have to give free grain to the Soviets,” said a source, who asked not to be identified.

In a related development, key Senate leaders made clear that, despite Administration objections, the Senate is headed toward rapid approval of a major relief bill for commercial banks and their troubled farm borrowers. The bill, introduced by Sen. Alan J. Dixon (D-Ill.), would allow commercial banks to defer for up to 10 years losses that result from debt restructuring.

Fast Legislative Track

Senate Majority Leader Robert J. Dole (R-Kan.) and Banking Committee Chairman Jake Garn (R-Utah) signaled that the measure, which would permit banks to offer many debt-ridden farmers easier terms, has strong support and is on a fast legislative track.

At a committee hearing, Assistant Treasury Secretary Charles O. Sethness objected that the approach may keep insolvent banks alive too long, damaging the federal deposit insurance system.

Sethness said the Administration believes that “farm assistance programs currently in place make the problems at agricultural banks manageable. . . . Most agricultural banks are handling their problems well and remain sound institutions.”

“This gives banks an incentive to write down debt to manageable levels and keep productive farmers in business,” said Rep. Charles E. Grassley (R-Iowa).

Sen. William Proxmire (D-Wis.) agreed that the proposal “makes a lot of sense,” adding that it would cost the government nothing unless there were massive bank failures and the Federal Deposit Insurance Corp. had to be shored up.