United States President George W. Bush proposes to reduce farm subsidies by US$18 billion over five years. - Reuters

TRYING TO tighten the United States (U.S.) Government's budget, the Bush administration on Wednesday proposed to reduce farm spending by US$18 billion (euro13.9 billion) over the next five years.

The announcement is likely to give fillip to hopes of finalising the Doha development round of negotiations, which talks in Davos last week appeared to have reinstated.

Huge agricultural subsidies to farmers in Europe and the U.S., especially, had been a sticking point in multilateral trade talks at the World Trade Organisation (WTO).

In fact, Caribbean Community (CARICOM) trade ministers and technocrats meeting in Jamaica this weekend, appeared to have made that assumption and will be relooking negotiating strategies for Doha and the European Partnership Agreements (EPA).

"Given the re-launch of the Doha negotiations, and that we have entered the final stage of the EPA, this meeting is happening at a critical juncture in the mapping of the region's economic future," said Dr Richard Bernal, director general of the Caribbean Regional Negotiating Machinery, in a release from the trade body.

"Given the extremely ambitious timeline for completing the Doha Round it is crucial at this time for us to re-examine our options and strategic position."

The 20th special meeting of the Council for Trade and Economic Development (COTED), February 2-3, is taking place in Montego Bay.

U.S. Agriculture Secretary, Mike Johanns, is not seeking major changes in the nation's farm subsidy programme, which major farm groups and lawmakers in Congress want to retain.

"I believe so strongly in what farmers said," Johanns said, describing forums he held in dozens of states. "They like the structure of this farm bill, but they have a big vision for the future."

However, there is one big change: The administration is seeking to eliminate farm payments for wealthy producers, limiting subsidy payments to those making less than US$200,000 (euro155,000) in adjusted gross income annually. The current income cap is $2.5 million (euro1.9 million).

That would rule out payments for about 80,000 producers who currently are eligible, officials said. Those producers collect about 4.5 per cent of overall farm payments. The limit on payments would save an estimated $1.5 billion (euro1.1 billion) over 10 years.

"I don't know if there is anywhere in the country you can go where $200,000 (euro155,000) adjusted gross net income is not a lot of income," Deputy Secretary Chuck Connor said. "You're the richest guy in the county."

Lawmakers are anticipating having fewer dollars for farm programmes when Congress writes a new farm bill this year. U.S. President George W. Bush has promised to balance the budget within five years, and the Democratic-run Congress is insisting on budget cuts to pay for new spending.

The farm bill - really a series of federal programmes - gives farmers payments and other help to supplement their incomes, support crop prices and manage supplies.

Johanns' plan would cost US$87.3 billion (euro67.3 billion) over the next five years, not counting food stamps and other nutrition programmes, compared with US$105 billion spent on farm programmes over the past five years.

Most subsidy payments go to growers of five major crops - corn, soybeans, wheat, rice and cotton.

The administration proposes to: