Washington (Platts)--2May2008

Key US congressional negotiators said Thursday night that they hoped a
final agreement had been reached on the farm bill, after months of gridlock on
everything from taxes to farm subsidies.

Conference Chairman Tom Harkin, Democrat-Iowa, said he was hopeful the
committee could "put this puppy to bed," voting on the bill's remaining
sections, including the energy and tax titles.

The conference committee voted last week to reauthorize the Commodity
Exchange Act, granting the Commodity Futures Trading Commission additional
authority to regulate electronically traded futures and financial contracts
that serve a significant price discovery function. The change closes the
so-called "Enron loophole."

The latest round of discussions was prompted by a threat from the Bush
administration officials Tuesday that the president would likely veto the bill
if it arrived at his desk in its current form. The president objected to farm
subsidies, and wanted Congress to reduce spending for the bill across the
board.

Senator Kent Conrad, Democrat-North Dakota said the final agreement
represented significant cuts. "We are trying to be responsive to the
president's concerns," he said, and the bill pays for itself.

Energy tax credits played a role in paying for the bill. The ethanol
production tax credit would be reduced next year from 51 cents to 46 cents/
gal. The bill will also extend a tariff on imported ethanol through 2010 at
its current level of 54 cents /gal.

Congress agreed to spend $1.2 billion on energy projects in the bill,
but that number has since been reduced. It is not yet clear by how much.

The top Republicans on the House and Senate Agriculture committees,
Senator Saxby Chambliss of Georgia and Representative Robert Goodlatte of
Virginia, have visited the White House in the last days trying to persuade the
administration to accept the most recent proposal.

Bush administration officials, meanwhile, have continued to say more
change is needed. Deputy Agriculture Secretary Chuck Conner said yesterday
that the new deal "is not reform and does not move Congress closer to a farm
bill that the President would sign."

The most recent farm bill agreement has not yet been evaluated for cost,
which will have to be done next week. The president has said he would consider
signing a bill that cost up to $10 billion more than the $280 billion
five-year "baseline" limit. If the bill is scored and found to cost more than
that limit, Harkin said further reductions would be made next week.

--Jean Chemnick, jean_chemnick@platts.com