Washington (Platts)--25Jul2007

US President George W. Bush's advisers will recommend he veto the farm
bill, which is laden with energy and biofuels provisions, if it passes in the
form currently proposed by the US House, the White House said Wednesday.

     "The final farm bill should include further real reform, should identify
offsets without gimmicks or tax increases, and should not include an expansion
of [the] Davis-Bacon" requirements to grants and loan guarantees for ethanol
plant construction projects, the Office of Management and Budget said in its
statement of administration policy.

     OMB said it supports the inclusion of the Bush administration's proposal
of $1.6 billion for programs designed to reduce US dependence on oil by
encouraging the development of cellulosic ethanol. But it called the expansion
of the Davis-Bacon Act unnecessary and too costly to justify.

     The farm bill, currently being considered by the House, contains a number
of energy programs that are estimated by the Congressional Budget Office to
cost $2.4 billion over five years and $5.8 billion over 10 years.  CBO on
Tuesday said it would cost $800 million to cover the subsidy costs of
guaranteed loans for biofuel plants alone for the 10-year period from
2008-2017.

     OMB's opposition to the farm bill is much broader than the energy
provisions. It has problems with a number of parts of the bill, including
provisions that would raise taxes on payments by US subsidiaries to foreign
affiliates, expand the Farm Credit System, and several related to crop
insurance and nutrition programs. OMB also said the bill raises constitutional
concerns.

		--Cathy Landry, cathy_landry@platts.com