OTTAWA - The federal government is close to unveiling an aid package worth almost $5.2-billion to ease farmers financial hardship in the face of a global farm subsidy war, senior government officials say.

Insiders say the government will direct the money to bankroll permanent changes in agriculture rather than responding with bailouts to the almost yearly cries of crisis from agricultural producers.

But the five-year program is unlikely to satisfy the provinces, many of which are calling for $1.3-billion in immediate aid for losses they say farmers have incurred as a result of U.S. protectionism.

The federal handout would make available only about $600-million in immediate payments, and even that amount may be reduced as part of an ongoing fight over the exact size of the initiative.

Sources say officials from the Department of Finance claim the total package is too much and are trying to negotiate it downward. The dispute is said to have left hundreds of millions of dollars hanging in the balance, including $100-million the Finance Department wants lopped off the initial payout.

However, a senior Finance official disputed that version of events, saying other arms of government are equally concerned about the size of the package.

The government is worried other groups, such as softwood lumber producers hurt by an ongoing U.S. tariff on exports, would use it to demand money, the official said.

Liberal caucus sources said yesterday that Jean Chrétien, the Prime Minister, jokingly told MPs yesterday that when Lyle Vanclief, the Agriculture Minister, returns from a six-day tour of Iran and Rome, he would flip a coin to decide the amount of the farm aid package.

Tying support for farmers hurt by U.S. and European farm subsidies to the broader farm spending review that has been underway for some time is one way to limit demands for one-time payouts from other groups.

Sources say the $5.2-billion package won approval from a committee of Cabinet that vetted it, and the endorsement in principle of the full Cabinet.

Cabinet is set to approve the farm aid, which is expected to be rolled out by the last week of June, when federal and provincial agriculture ministers meet in Halifax.

The Prime Minister has seized on the farm package as a way to combat suggestions the government is floating with few policy initiatives. Senior officials in his office said last week that it and the ethics package released on Tuesday would be the major initiatives of the late spring.

The provinces would be expected to add to the federal contribution for some of the programs but not all. Traditionally, farm programs are split 60-40 with the federal government picking up the bigger share.

A farm bill recently signed into law by George W. Bush, the U.S. President, boosts subsidies for U.S. farmers by 70% by authorizing US$190-billion in spending during the next 10 years.