US food manufacturers will in the long term see a fall in prices if a US$45.1bn US farm bill becomes law next week, says the European Commission, but not before world markets are glutted with foods.

The bill calls for an increase in crop and dairy subsidies to farmers and for mandatory country-of-origin labelling for meat, fruit, vegetables, fish and peanuts. EU agriculture commissioner Franz Fischler has said that the bill will artificially shield American farmers from low prices, leading to what he is warning will be a “trade-distorting over-production.” The US says the farm bill was intended to give its farmers a stronger safety net.

By Philip Fine, correspondent