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U.S. Senate panel approves farm bill that expands crop insurance

By Charles Abbott

WASHINGTON (Reuters) - The Senate Agriculture Committee approved a farm bill on Tuesday, costing $500 billion over a decade, that would expand the scope of the federally subsidized crop insurance program and modestly trim spending on food stamps for the poor.

The 1,000-page bill now goes to the Senate floor, where a vote could be called as soon as this month.

The House Agriculture Committee was scheduled to draft its farm bill on Wednesday. The new five-year farm law is months overdue after an election-year deadlock in 2012.

Expansion of crop insurance in the Senate bill would be part of a broad remodeling of farm subsidies. Most notably the $5 billion a year direct-payment subsidy to farmers, long a target of reformers, would end.

Separate insurance programs to guarantee revenue to cotton and peanut growers would be created, as well as an insurance program to compensate growers if revenue from other crops drop by more than 10 percent.

Agriculture Committee chairwoman Debbie Stabenow, Democrat of Michigan, said the bill, by saving $24 billion over 10 years, generated "significant savings."

It would cut food stamps by $4 billion, pare conservation spending by a similar amount and reduce traditional farm subsidies by $17 billion while creating at least three new areas of crop insurance coverage.

Analysts say food stamps are the make-or-break issue for enactment of a new U.S. farm law because Republicans want deep cuts in food stamps and Democrats oppose them.

Farm bills traditionally are carried to passage by a coalition of urban Democrats who support food programs and rural lawmakers who back farm subsidies.

Leaders of the House Agriculture Committee have proposed $20 billion in food stamp cuts that could push 5 million people off the rolls. Some House Republicans want deeper cuts.

In the short run, senators warned of clashes with the House over crop supports. The Senate bill would adjust crop support rates but not raise them as high as the House.

"The House isn't going to accept this," said Senator John Boozman, an Arkansas Republican, who saw the prospect of protracted negotiations. But Pat Roberts, a Kansas Republican, said high support rates "are a big red flag" because they could invite a world trade complaint.

There are large areas of agreement between the committees, though. Both would create an insurance-like program to protect a farmer's crop revenue from low prices and poor yields. And both would expand crop insurance.

Kirsten Gillibrand, Democrat of New York, said food stamps should not be cut at all in view of lingering slow economic growth. But food stamp defenders decided not to ask for a vote to cut crop insurance subsidies as a way to prevent the $4 billion in cuts in the bill.

Republicans on the Senate committee lost three votes based on attempts to curtail access to the program. They said they might try again when the Senate debates the farm bill.

Three food stamp critics - Roberts, John Thune of South Dakota and Michael Johanns of Nebraska - voted against approval of the bill, which was cleared on a 15-5 vote. Also voting no were Gillibrand and Senate Republican Leader Mitch McConnell.

The Senate bill would require farmers to practice soil conservation to qualify for subsidized crop insurance. House Agriculture Committee leaders rejected that idea in their bill. Crop insurance is the largest part of the farm safety net.

(Reporting by Charles Abbott; editing by Ros Krasny and Sofina Mirza-Reid)

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