The failure of the super committee derailed efforts by some in Congress to pass a new farm bill this year and avoid floor fights in both Houses of Congress. The details of the plan drafted by Senate Agriculture Committee Chairman Debbie Stabenow (D-Mich.) and House Agriculture Committee Chairman Frank Lucas (R-Okla.) were never made public, but leaked reports indicate that a “shallow loss” revenue protection program was a key component.

The proposal would have eliminated direct payments, the ACRE program, and the SURE program and gradually reduced the cap on the CRP to 25 million acres. With the super committee option for passing a farm bill now gone, development of policies will now revert to what is called “regular order”. Agriculture committees will hold hearings and get input from stake holders. Then, whatever plan the committees devise will be subject to changes when the proposals are voted on by the full House and Senate. The ideas put forward in the plans provided to the super committee by Stabenow and Lucas may or may not survive.

Unless new legislation is passed and approved by the president, the government now faces more than $1 trillion in automatic spending cuts, beginning in 2013. Under the current law, spending on agriculture programs will be reduced by about $15 billion over 10 years. Some programs, including food stamps (the Supplemental Nutrition Program) and probably the Conservation Reserve Program, will be exempt from the automatic spending cuts. The cuts that are implemented will be concentrated on crop subsidies, other conservation programs, and crop insurance. Some members of Congress will try to change the law that requires the automatic cuts, but the president has promised to veto any such effort.

In the near term, Congress needs to focus on an appropriations bill for the current fiscal year. The continuing resolution now in place expires on December 16 and parts of the government will shut down if new funding is not approved. Congress is expected to roll remaining spending bills into a huge “must pass” continuing resolution. These must pass bills typically become vehicles for riders (“pork barrel spending”) that probably could not pass on their own. And then once this stop-gap funding bill is passed, Congress will probably adjourn until next year.

The World Trade Organization has ruled against the U.S., agreeing with charges the U.S. Country of Origin Labeling law (COOL) violates global trade rules by discriminating against imports of livestock. The law, which was a part of the 2008 Farm Bill, was challenged by Canada and Mexico. The Office of the U.S. Trade Representative will appeal the ruling, contending that COOL provides valuable information to consumers about the meat products they buy. With the appeal pending, the dispute over COOL will continue for at least several more months.

USDA updated the farm income forecast this week and while down $5 billion from its August projection, the forecast still shows a 19% year-to-year increase in net cash farm income from 2010 to 2011. Net cash farm income is forecast at $109.8 billion for 2011 up from a record high of $92.3 billion in 2010. Crop cash receipts are forecast to increase by 16% this year, and livestock cash receipts are forecast 17% higher. The value of farm real estate is forecast to increase by 6.8% this year, even slightly better than the 6.6% increase in 2010. Further, USDA predicts the farm debt-to-asset ratio will decline again, keeping the overall farm sector in good shape financially.