020935 USDA: $752 Million Drought Aid for Livestock

Washington (Reuters) - Agriculture Secretary Ann Veneman, flanked by a Republican farm state candidate for the Senate, announced $752 million in drought aid for livestock producers in 37 states.

Half of the United States has been struck this year by drought ranging from mild to severe. In some parts of South Dakota, Nebraska, Kansas and Montana, conditions were likened to the Dust Bowl era of the 1930s, when drought drove farmers from the land.

The new aid announced by the Bush administration falls far short of the $6 billion in drought assistance approved earlier this month by an overwhelming majority of the Senate.

Veneman was accompanied by Republican John Thune, a congressman who is challenging incumbent Democrat Sen. Tim Johnson in South Dakota. That race is one of a half-dozen hotly contested ones in farm states that could determine control of the Senate, now held by Democrats with a single vote majority.

"This program will provide immediate assistance to producers who need it the most," Veneman said, sounding an administration theme in the election-year tussle over aid.

The aid, in an newly created Livestock Compensation Program, was intended to help drought- stricken ranchers maintain herds of livestock, culled after months of dry pastures.

Cash payments ranging from $4.50 per sheep to a high of $31.50 per dairy cow would help cattle, sheep and bison producers maintain herds until good weather returns with nourishing rain to turn rangeland green with grass again.

Ranchers have suffered months of hot and dry weather and have fewer ways, such as insurance, to buffer their losses. Crop losses, on the other hand, will not be clear for a few more weeks and will be tempered, to some extent, by crop insurance.

Sign-up for livestock aid will begin about Oct. 1.

All producers in Arizona, Montana, Nebraska, New Mexico, North Dakota, South Carolina and Utah were eligible to apply. Producers in 30 other states can apply if their county was declared a disaster area this year or in 2001.

Farm groups welcomed the aid but said billions of dollars more were needed for crop losses.

The Bush administration's action on drought aid has been closely watched by political analysts. Some of the most vulnerable Senate Democrats running for re-election are from farm states, including Iowa, Missouri, Montana, Iowa and South Dakota.

WHITE HOUSE OPPOSES $6 BLN PLAN

The Senate voted 79-16 last week for $6 billion to compensate producers for crop and livestock losses in 2001 and this year. The plan was attached to a now-moribund Interior Department funding bill.

The $6 billion plan was criticized by the Bush administration and House Republican leaders who said any drought aid must be paid for with spending cuts elsewhere in the agriculture budget.

The Democrat-sponsored Senate aid plan was "a giant signal of false hope," said private consultant Bill Lesher, pointing to many roadblocks to enactment.

"In a political sense, it seems the Democrats have gotten the votes they need on the politics of this," he said, by portraying the administration as penny-pinchers.

Farm groups said they would welcome administration action to help ranchers, but a full-scale package was vital.

"We still have to have some assistance for crops," said Mary Kay Thatcher of the American Farm Bureau Federation.

The National Farmers Union also called for Congress to pass the $6 billion plan before adjourning this year. The NFU's Tom Buis said livestock aid would "intensify" demand for a nationwide relief plan.

"It's going to increase the level of awareness of those (producers) not getting assistance," Buis said.

During the summer, USDA announced other steps to help livestock producers. It opened the land- idling Conservation Reserve to emergency haying and grazing and offered $150 million in feed assistance to cow-calf ranchers in the Plains.

A livestock industry official said meat production would drop and prices rise if herds were liquidated due to drought.

"You can't mothball a cow," he said. "This is a time you should be keeping cows."

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