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Stopgap farm bill passes U.S. House, averts 'dairy cliff'

A farm is seen in the distance behind corn fields in Redkey, Indiana June 28, 2012. REUTERS/Brent Smith
A farm is seen in the distance behind corn fields in Redkey, Indiana June 28, 2012. REUTERS/Brent Smith

WASHINGTON (Reuters) - The U.S. House of Representatives passed a stopgap farm measure on Thursday to avert a potential doubling in dairy prices next month while lawmakers wrap up a new farm bill that cuts food stamps for the poor and expands subsidized crop insurance.

Lawmakers passed the bill, which extends current law until January 31, on a voice vote and sent it to the Senate, where the Democratic leaders oppose it and chances of passage are low.

The four top farm bill negotiators hope to agree soon on a framework for the new law so it can be passed when Congress returns to work in the new year.

"Pass the extension ... and we on the Agriculture Committee will take care of our business in January," said Frank Lucas of Oklahoma, the committee chairman. He said House and Senate negotiators were making "incredible" progress on a compromise bill.

Debbie Stabenow of Michigan, who chairs the Senate Agriculture Committee, says a sizable number of senators oppose the extension because it may trigger $5 billion in "direct payment" subsidies to growers. The new farm bill would end those subsidies.

In addition, Democrats argue the "dairy cliff" - an explosion in dairy prices caused by an underlying 1949 law - is a fiction.

"It's not necessary," said Rep. Jim Costa, California Democrat, in opposing the extension. Costa and Lucas were the only lawmakers to speak during the House debate.

Congress is more than a year late in replacing the 2008 farm law, which expired in fall 2012 but was extended until September 30. Dairy subsidies will revert on December 31 to terms of an underlying 1949 law that would double the price of milk in grocery stores.

Agriculture Secretary Tom Vilsack told reporters on Wednesday that "it is unlikely we would have that (price increase) in place" during January. It was the second time he ruled out an immediate price increase.

All the same, Lucas said the temporary extension was a prudent step that would end "panic" at the possibility of $8 a gallon milk.

"We are making significant progress in our negotiations with the Senate," said Lucas. "I'm confident we will complete the conference report in January."

The major issue for the farm bill is the size of cuts in food stamps for the poor.

Majority Leader Eric Cantor spearheaded the House call to cut $40 billion over 10 years with tighter eligibility rules that would disqualify up to 10 percent of food stamp recipients. The Senate voted for $4.5 billion in cuts by closing a loophole on utility costs.

Enrollment in food stamps has doubled and the cost of the program nearly tripled since 2004.

(Reporting by Charles Abbott; Editing by Gary Hill and Bob Burgdorfer)

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