US farmers could soon have access to a raft of new incentives to drive production of fuel crops after the Senate passed a replacement to the existing US Farm Bill by a majority vote.

The $256bn Farm, Nutrition, and Bioenergy Act of 2007 (also known as the Farm Extension Act 2007) passed by a vote of 79-14 in the Senate.

The legislation demands financial support for farms in the areas of conservation, food stamps and nutrition, and exports and trade assistance. A significant inclusion is the provision of $40m each year between 2008 and 2012 for the purpose of disaster recovery, to cope with famine relief.

The bill also includes a number of measures designed to bolster production of biofuels and promote more sustainable farming practices. Tax credits will be available for farmers involved in cellulosic and other biofuels production, while funding will also be available for community and residential wind energy developments in rural areas.

Furthermore, the Bill proposes that foods be labeled with their country of origin.

Much to the concern of some environmentalists who insist that using land to grow energy crops drives up food prices and leads to water scarcity biofuels have emerged as a central component of the US government's energy plans. Generous subsidies have helped to drive a booming US biofuel market and earlier this year President Bush announced plans to increase the use of biofuels for transportation from 5bn gallons a year now to 35bn gallons a year by 2017.

The National Farmers' Union welcomed the vote. "It's good news that they passed it before the end of the year, because the 2002 Farm Bill expired at the end of September," said spokeswoman Liz Friedlander. "It increases funding for nutrition, conservation, and renewable energy programmes. It maintains the safety net for farmers."

However, the World Trade Organisation has launched an investigation into US farming subsidies following complaints from Canada and Brazil in the wake of the Senate vote. Existing WTO rules place a $19.1bn cap on domestic farming subsidies. The president may yet veto the bill, preventing it from becoming law.

The Grocery Manufacturers' Association was unimpressed at the Senate vote, and at equivalent legislation in the House. "Both bills include just enough grease to get this pig out the barn door," said vice president of federal affairs Scott Faber, waving aside the conservation and nutrition provisions and pointing to record prices for US crops. The drive for ethanol production has increased prices and made farmers wealthy, he said.

"The Senate bill includes a generous disaster programme that will concentrate farm-related spending in the hands of very few farmers in a few states," Faber added. "The safety net in the senate bill was better suited for the dust bowl and the depression than the problems facing modern agriculture."