WASHINGTON -- Legislation that will help protect agricultural lenders against the risk of crop failure was approved by the Senate last week.
The Senate-passed bill attempts to replace the current system of ad hoc disaster relief with low-cost federal crop insurance. Under the bill, farmers must purchase insurance in order to qualify for agricultural subsidies.
Currently, when crops fail, uninsured farmers gamble that Congress will grant ad hoc disaster aid to their area. However, if the funds are not mandated, farmers end up with nothing, and agricultural lenders often end up with a bad loan.
The Senate passed the Federal Crop Insurance Reform Act by voice vote late Thursday, squeezing it in before passing the crime bill and leaving for recess.
The House passed a similar measure on Aug. 5. The bill is now cleared for both chambers of Congress to meet in conference and hammer out their differences on the legislation.
Although the conferees have not been named yet, the conference committee could meet as soon as the week of Sept. 12 - the first week after recess - according to Mark Scanlan, agriculture and rural America representative at the Independent Bankers Association of America.
"Farmers are going to be making planting decisions and are going to have to make arrangements With banks for loans," Mr. Scanlan said. "That means that they'll be wanting to address the issue pretty quickly."
Federal disaster aid is currently designated as emergency off-budget spending, but the reform package requires that any future crop disaster bills he offset by spending cuts, fettering congressional approval of ad hoc disaster relief.
The Senate measure differs from the House version in that it contains a provision to close 1,200 Department of Agriculture field offices, something that may be a sticking point in the HouseSenate conference.
"It'll be a lengthy debate," said an aide to Senate Agriculture Committee member Jesse Helms, R-N.C. "A lot of House members are concerned about losing USDA field offices in their districts. It's not going to he an easy conference report."