Congress Approves Farm Bill By Veto-Proof Margins

James A. Morrissey, Washington Correspondent

Both the U.S. House of Representatives and Senate have approved a five-year Farm Bill by veto-proof margins, opening the door to a textile subsidy program that could be worth some $75 million a year for textile producers who use cotton.

President Bush has indicated he will veto the bill because of other provisions in the bill that he says are budget busters. However, the House passed it by a vote of 318-106 and the Senate, by 81-15, well in excess of the two-thirds majority needed to override a veto.

Under the textile economic assistance provisions, the federal government will pay mills 4 cents per pound for every opened bale of cotton for the first four years of the program and 3 cents per pound for the final year. It would become effective August 1, 2008.  In order to qualify for the payments, the funds must be used for capital investments to improve efficiency and competitiveness.

The new competitiveness program replaces the so-called Step 2 program under which the federal government made payments to mills and shippers to offset the difference between the world and domestic prices for raw cotton. That program was terminated August 1, 2006, after it was ruled illegal by the World Trade Organization.

May 20, 2008