By Charles Abbott
WASHINGTON (Reuters) - With a week left to act, agricultural leaders in Congress are still deadlocked on two major issues for a new U.S. farm bill, cuts in crop subsidies and reductions in food stamps, said two of the four key negotiators on Thursday.
But the leaders of the House and Senate agriculture committees suggested that recent talks had yielded at least some progress. Agriculture Secretary Tom Vilsack urged prompt passage of the new bill.
Without reauthorization, U.S. farm policy would revert to the provisions of the Agricultural Act of 1949, the last "permanent" farm bill and one crafted for an entirely different U.S. economy.
Among other things, if lawmakers do not agree on a new bill, milk prices in U.S. grocery stores could double next month under terms of the fall-back statute which would also limit crop plantings while pushing up farm subsidies by billions of dollars.
A new farm bill would now likely be absorbed into an overall budget-cutting bill that could avert the looming "fiscal cliff" of tax increases and spending cuts. Farm spending cuts of $23 billion to $35 billion have been floated.
In speeches at a farm policy conference in Washington, the leaders of the House and Senate Agriculture committees were adamant the final version of the five-year, $500 billion bill must include elements that are lightning rods for controversy.
Congress is scheduled to adjourn for the year on December 14, although top Republicans have said it will not adjourn until a solution to the fiscal cliff has been announced.
"I would rather have nothing" than a farm bill that does not give farmers the option of price supports, said House Agriculture chairman Frank Lucas. "You need to give our producers a choice."
The Senate version of the farm bill, passed in June with proposed spending cuts totaling $23 billion, would replace traditional farm subsidies with an insurance-like program that compensates grain and oilseed growers when revenue from a crop is more than 11 percent below average.
Senate Agriculture Chairwoman Debbie Stabenow said on Thursday that there were strong differences between the House and Senate versions.
"I would never accept what the House did" in slashing $16 billion in funding for food stamps, the steepest cuts in a generation for a program that helps millions of lower-income Americans keep food on the table.
The Senate bill would cut food stamps by $4 billion.
Nonetheless, Lucas and Stabenow said a compromise may be agreed upon in time to become part of a must-pass deficit bill.
An Oklahoma Republican, Lucas said "a lot of progress" has been made in closed-door discussions among the four leaders of the committees. Stabenow, a Michigan Democrat, echoed that sentiment.
"I am very encouraged by the negotiations ... If people of good will sit around the table, you can work it out," she said.
There are some areas of agreement. Both sides would cut conservation spending by $6 billion and crop subsidies by more than $13 billion, partly by ending direct-payment subsidies now issued regardless of need.
They also would expand the federally subsidized crop insurance system, now the largest strand in the farm safety net, and convert cotton subsidies to an insurance program, which would resolve a World Trade Organization ruling against the U.S. cotton program.
Still, farm subsidies and food stamps are the chief disputes. And Lucas said a transition period may be needed to allow time to put the new law into effect.
He left open the possibility of another round of the $5 billion-a-year direct payment program, depending on the savings demanded by congressional leaders.
The precise target for farm spending cuts may be determined as part of high-level deal-making between the White House and Congress. The White House has suggested cuts of $32 billion, for example, including reduction in crop insurance.
In a speech at the conference that he described as a wake-up call, Vilsack said rural America, with a shrinking share of the U.S. population, "is becoming less and less relevant to the needs of the country," measured by economic and political influence. He called for a "pro-active" attitude and a more strategic approach to issues with an eye to economic growth.
Rural criticism of the food stamp program does not bring more money for farm programs but it antagonizes city dwellers, who like the program, he said. Similarly, he called for an end to infighting among farm groups.
(Reporting by Charles Abbott; editing by Ros Krasny, Jim Marshall and Bob Burgdorfer)