WASHINGTON, Nov 3: Subsidies to US farmers would be partly based on exchange rates and weather conditions in North America under a plan proposed by Iowa Sen. Charles Grassley on Friday.

Aides to the Republican senator said three members of the Senate Agriculture committee were expected to broach the plan when the committee resumes work on Tuesday on overhauling US farm policy.

Two other committee members, Arkansas senators Blanche Lincoln, a Democrat, and Republican Tim Hutchinson, announced they would support crop subsidy plans similar to the bill passed by the House of Representatives last month.

There was no consensus on how to replace the Freedom to Farm law, which deregulated agriculture in 1996, or whether to enact a new law this year.

One agricultural economist said support was pretty balkanized among a handful of plans.

Written every few years, farm bills bundle crop support, public nutrition, export, rural development and agricultural research programs that spend billions of dollars a year.

Grassley claims his plan would not violate World Trade Organization rules that limit domestic subsidies linked to farm production.

We are offering something that is WTO compliant, said a Grassley aide. When there is a variance, such as the dollar is getting stronger or...it is too hot or too cold, most likely this could trigger a payment under this system.

Keith Collins, US Agriculture Department’s chief economist, said the proposal could be WTO compliant since subsidies would not be based on farm prices, yields or income.

However, the critical issue would be how (WTO) members would view indicators that mimic, even if not perfectly correlated, prices or income, Collins said in a letter to Grassley.

Grassley’s plan would also continue the guaranteed subsidies introduced by the 1996 law at current rates and create a $0.65 a bushel payment rate.

It would raise support prices for major crops by 5 per cent, lock sorghum loans with corn, and reduce soybean marketing loans to $5.15 per bushel.

The National Corn Growers Association said Grassley’s plan reflects a concept that was, in part, developed with NCGA grassroots input.

The Senate Agriculture Committee is scheduled to spend most of next week drafting new farm policy, using language written by Chairman Tom Harkin as a blueprint.

Harkin, an Iowa Democrat, would allow up to $100,000 in crop subsidies per farmer - well below $230,000 possible now. His bill would double government aid for conservation measures but restrict access to the so-called marketing loans and loan deficiency payments (LDPs) that were a lucrative source of subsidies.—Reuters