Two years after President Bush signed a farm bill criticized around the world for doubling payments to farmers, federal farm and conservation program outlays are running well below CBO's original projections and are now expected to follow those projections over the next decade.

New CBO figures released Wednesday by Senate Budget ranking member Kent Conrad, D-N.D., one of the chief negotiators of the 2002 farm bill, show payments are estimated at $13.9 billion this year and $13.8 billion in 2005 -- both at least $5 billion below what CBO estimated the costs would be.

Payments in 2002, the bill's first year, were $15.7 billion and rose to $17.4 billion in 2003. CBO estimates spending will rise to $16 billion in 2006, but a Conrad aide said most of that increase would go to expanded conservation programs.

But all those numbers are substantially below the spending recorded under the preceding 1996 Freedom to Farm bill, which hit $32.3 billion in 2000 and $22.1 billion in 2001.

Conrad said the reason federal outlays have gone down under the 2002 farm bill is that farm prices are up, and the "countercyclical bill" automatically reduces federal payments to farmers when prices are high.

While the 1996 Freedom to Farm law had some countercyclical elements, it was primarily a fixed payment plan that kept payments steady even when prices rose.

Conrad said he hoped the budget picture would encourage critics of the 2002 bill to take a second look at it. "If there was ever a farm bill that was working, this is it," Conrad said. "Hopefully, this will change its image at home and abroad."

Conrad said he believed the 2002 farm bill was "misreported in the beginning," because journalists confused it with the additional agricultural disaster bills that doubled the fixed payments under the 1996 bill, after prices fell in the late 1990s.

"This bill is totally different than how it was portrayed, especially internationally," Conrad said. "This is a countercyclical program that functions the way that farm programs should."

In an interview Wednesday, USDA Chief Economist Keith Collins said of the 2002 law: "There is a substantial decline in outlays. The taxpayer burden isn't as great. People ought to look at that more favorably."

Collins attributed most of the increase in farm prices to weather problems around the world and increased demand from China, adding that commodity prices for both meat and grains had been "remarkable, just remarkable."

But Collins noted higher commodity prices have led to higher food prices. He said the consumer price index for food is expected to go up between 3 percent and 3.5 percent in 2004, compared to 2.2 percent in 2003 and 1.8 percent in 2002.

While "not runaway inflation," the higher food prices are "a little more of a burden for consumers, coming when they have to pay more for gasoline," Collins said. By Jerry Hagstrom

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