SENATE KEEPS PEANUT, SUGAR PRICE SUPPORT

JOYCE BARRETT

WASHINGTON (FNS) -- The Senate rejected attempts last week to eliminate government price supports on sugar and peanuts, terminations the grocery industry said would have cut consumer costs.

This development came as the Senate passed a sweeping bill that sets the nation's farm policy for the next seven years. The bill would phase out decades-old federal programs that pay farmers to limit the planting of certain crops, like wheat and corn, and also subsidize farmers when market prices are low.

But while the farm bill passed by a 64 to 32 vote, an amendment that would end sugar price supports in two years was rejected in a 59 to 36 vote. The government has estimated that the price supports raise prices on sugar and sweetener products by $1.4 billion yearly.

Another amendment that would have lowered price supports on peanuts from $678 per ton to $475 per ton by 2000 was tabled. Senate Majority Leader Bob Dole, R-Kan., who wanted to see a farm bill passed before he heads for the presidential campaign trail in Iowa, backed the effort to kill the amendment on the grounds that if the package were picked apart by critics, it would never get passed.

Sen. Richard Lugar, R-Ind., chairman of the Senate Agriculture Committee, said the changes prescribed in the bill come at a time of transition for American agriculture. The ranking Democrat on the committee, Sen. Patrick Leahy of Vermont, agreed that the changes in the bill are needed. "Our country is changing, farming is changing, and our needs are changing," he said.

The debate is not over, however, because the House will take up the controversial bill and amendments later this month. It's unclear whether the administration will back the Senate plan since it incorporates some changes sought by President Clinton.

Grocery industry executives expressed dismay with the voting on the amendment.

"It's not looking good for our agenda," said Harry Sullivan, senior vice president and general counsel of the Food Marketing Institute here.

Kevin Burke, vice president of government relations for the National-American Wholesale Grocers' Association, Falls Church, Va., called the current sugar supports an "antiquated" program that benefits a few. "It's outlived its usefulness," Burke said.

The United Fresh Fruit and Vegetable Association, Alexandria, Va., is backing a plan in the House bill that would continue the policy of preventing farmers from growing fruits and vegetables on land that has been set aside under a subsidy program that limits production of other crops. To permit growth of fruits and vegetables would flood the market and depress prices farmers get, said John Acguirre, vice president of government relations with United. "We want to make sure this policy continues," he said.

Two provisions in the House bill affecting milk are staunchly opposed by the grocery industry. One plan would completely overhaul the federal dairy programs. Sullivan said the reform would raise the prices of milk, cheese and all dairy products.

The food industry sent letters to all 435 members of the House objecting to the plan, introduced by Rep. Steve Gunderson, R-Wis. If passed, the plan would increase consumer costs by more than $2 billion yearly, cost the government almost $103 million more yearly for feeding program purchases, and knock 151,000 recipients from the rolls of the Womens Infants and Children program, according to industry figures. Organizations signing onto the letter include FMI, NAWGA and the Milk Industry Association.

Another provision in the House bill opposed by the industry is one that would require all milk nationwide to follow a higher California standard for nonfat dairy solids. Sullivan estimated that the higher solids content would raise the price of a gallon of regular milk by 4 cents, the price of 2% milk by 14 cents, the price on 1% milk 22 cents, and the price on a gallon of skim milk 5 cents.

Lugar predicted that resolving differences in the dairy programs would be among the most difficult issues when the House and Senate bills are eventually reconciled.