Despite a statement from its chairman that a $5.5 billion aid package was “out of touch” with the financial crisis facing farmers, the House Agricultural Committee approved a bill Wednesday that capped aid to farmers at that amount for the 2001 crop year.

Mitchell E. Daniels Jr., director of the Office of Management and Budget, told panel chairman Larry Combest, R-Tex., in a letter last week that he would advise President Bush against signing any bill that offers farm aid of more than $5.5 billion.

The government provided 41% of real farm income last year, and improving prices and existing farm support programs are already providing a safety net, the letter said. “In the long run, we need to continue to decrease distortions the federal government creates in agriculture markets.”

Responding to the letter, Rep. Combest said the administration’s recommendation is “based on incomplete and unrealistic economic data, and is not reflective of the President’s commitment to provide economic assistance for farmers.”

The $5.5 billion budgeted in the bill is well short of the $9 billion requested by farm groups and far less than the $9.7 billion approved for farm aid last year.

Along with passing the farm aid bill, the committee heard testimony from Terry Hague, chief executive officer of $76.6 million-asset Farmers Exchange Bank in Cherokee, Okla., and a member of the American Bankers Association’s agricultural and rural bankers committee.

In his testimony, Mr. Hague called for making funding for Farm Service Agency guaranteed loan programs a priority, and he asked Congress to triple the ceiling on loans the agency can guarantee under its low documentation loan program, to $150,000.

He also encouraged lawmakers to oppose the expansion of the Farm Credit System’s move to issue national charters to its institutions.

Mr. Hague also spoke about the need for continued economic development in rural areas, which is supported by the Department of Agriculture’s Business and Industry guaranteed loan program.

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