Senate panel approves disaster relief for farmers

WASHINGTON – Tapping savings resulting from tighter tax rules on business, the Senate Finance Committee on Thursday approved creation of a new $5 billion fund that would compensate farmers hit by weather-related losses over the next five years.

The proposed Agricultural Disaster Trust Fund was part of a nearly $14 billion package of tax incentives for rural conservation programs, bioenergy development and young farmers, outside the existing farm subsidy program.

Sen. Kent Conrad, D-N.D., who has led the fight for the disaster program, said “an awful lot of people around this country are going to benefit.” Echoing that, committee Chairman Max Baucus, D-Mont., said the fund would be a more efficient way to provide disaster assistance than the current system of sporadic payouts in annual spending bills.

Agriculture Committee Chairman Tom Harkin, D-Iowa, whose panel will draft a new five-year farm bill later this month, has repeatedly questioned the wisdom of a special disaster relief program. He favors creation of a broad safety net that would provide help when a farmer’s revenues fall below a state’s norm.

The disaster program, Harkin said, was “a priority for three or four states, but not for the country.”

In a study released this week, the Washington-based Environmental Working Group noted that most disaster aid goes to a handful of low rainfall states, including the home states of Conrad and Baucus.

To offset the costs of the disaster and conservation provisions, the committee approved a series of measures clamping down on tax avoidance techniques used by businesses.

One provision would spell out in legislation a clearer definition of existing tax rules that require business transactions resulting in tax avoidance to demonstrate some “economic substance.”