Senate OKs $54-Billion Farm Bill : Legislation: The measure would freeze subsidies for many basic crops but give flexibility to grow other products to meet market demand.

Acting under a veto threat, the Senate on Friday approved a comprehensive $54-billion farm bill that would freeze subsidy payments for basic crops and the dairy program for the next five years but give farmers greater flexibility to grow other products in response to market demand. The vote was 70 to 21.

Except for a four-year phase-out of the honey program, however, farm bloc lawmakers and their allies preserved controversial quota and price support programs for sugar, peanuts, wool and mohair that critics said have raised consumer costs by billions of dollars a year.

Both the Senate and House measures would re-authorize basic provisions of the 1985 farm law through 1990, expand conservation programs, halt the export of pesticides that are banned for use in the United States and increase food stamp benefits for 20 million Americans.

Officials of the Bush Administration have said they will recommend a veto of the legislation unless the price tag is lowered and provisions are adopted to make the farm program more market-oriented. But several farm-state lawmakers complained that the measure actually would erode farm income by not raising price floors to keep pace with inflation.

This veto threat, however, may be a bargaining weapon during a coming Senate-House conference in September, where the ultimate shape of the nation’s agricultural policy for the next five years will be resolved.

The deficit, overhanging the farm program as never before, has curtailed the normal election-year tendency of farm bloc lawmakers to seek higher target prices, higher loan rates and other steps to raise incomes of their rural constituents.

Instead, they decided to freeze government price supports at their present level for wheat, corn and other feed grains, rice, cotton and dairy products. The bill would raise target prices for oats, however, to encourage greater production of that crop.

In one major change, the Senate agreed to establish a new program for soybeans and other oil seeds that the Agriculture Department opposed, claiming that it would cost $2.4 billion over the next five years. It also decided to let farmers receive higher payments if they idle more of their land in an acreage reserve program.

Another major new provision would encourage farmers to switch to crops to satisfy market needs rather than to get government payments. The Senate bill would allow farmers “planting flexibility” on 25% of land now devoted to wheat, corn or feed grains, cotton and rice without jeopardizing future claims to subsidies on the same acreage.

All sides in the drawn-out debate acknowledged, moreover, that farm program outlays probably would be trimmed back sharply later if a bipartisan agreement is reached on a plan to slash the budget deficit in the coming year.

“This is a good, solid, progressive bill . . . within budget,” said Sen. Patrick J. Leahy (D-Vt.), chairman of the Senate Agriculture Committee. Sen. J. James Exon (D-Neb.), however, said he would vote for the legislation reluctantly, saying, “I’m not satisfied.”

Senate Minority Leader Bob Dole (R-Kan.) said the bill carried on the same philosophy of the 1985 bill but at a lower cost because of budget constraints, adding that additional reductions would be made if a deficit-cutting package is adopted by bipartisan congressional leaders and the White House.

“It’s difficult to come from a farm state and vote for less,” Dole said, noting that the five-year cost of the 1985 bill would total about $80 billion compared to the estimated $54-billion price tag on the Senate-passed measure.

Leahy brushed off the veto warnings, noting that the bill had to go through a conference with the House and would take its “fair share” of cuts if there is a budget summit agreement to reduce outlays across the board.

The Senate action came as the House blocked an attempt to end government payments for honey producers in 1994 but then put off final action on its version of the farm bill until next week. During the seven-day Senate debate, Leahy and Sen. Richard G. Lugar (R-Ind.), ranking GOP member of the agriculture panel, defeated efforts to raise subsidies as well as other moves to reduce government outlays under the sugar, peanut and wool-mohair program.

In another development, the Senate voted 64 to 32 to require banks that make low-interest loans to the Soviet Union to extend the same interest rates and credit conditions to American farmers.

The bill also would authorize $50 million a year to promote farming techniques that would rely less on the use of chemicals and to set up the first national standard for “organically grown” food. Other provisions would extend protection of fragile wetlands from 60 million to 80 million acres and establish a new program to prevent contamination of ground and surface water on more than 10 million acres.

Major changes in the “Food for Peace” program were approved, including a new provision to make surplus crops available free to the neediest countries and forgive past debts incurred under the existing loan program.

In addition, the bill would authorize up to $100 million for a new “Food for Freedom” program to provide nations in Eastern Europe with food and such agricultural necessities as fertilizer and transportation.

Another provision would set up the first-ever program to provide incentives to 8 million private landowners for protection of 25 million acres of forest.