D.C. Watch: No farm bill in 2013

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House-Senate Conference Committee on the farm bill failed to draft a proposal by the time the House adjourned for the year on Friday. There is no chance that a new farm bill will be approved this year.

While the House passed an extension of the 2008 farm bill through January, Senate leaders say the body will not vote on an extension. So the provisions of the 1949 law kick in on January 1 with the substantially higher milk prices as the first result. But it will take some time for USDA to implement the 1949 law and the increase in milk prices will probably be delayed for a few weeks.

That will give Congress a little more time to complete work on a new farm bill. It is not clear that it will be enough.

Meanwhile, the House-Senate Budget Conference Committee has agreed to a deal that, if approved, will avoid another government shutdown and fund operations through fiscal 2015. Under the deal the federal spending in fiscal 2014 would be $1.012 trillion, midway between the levels sought by the House and the Senate. For fiscal 2015 spending would increase only slightly to $1.014 trillion.

The budget would replace about half of the sequester cuts with permanent savings from other programs. Higher fees would also be a part of the proposed budget. The compromise budget must still be approved by both Houses of Congress.

“Nothing is agreed on until everything is agreed on” insists Senate Agriculture Committee Chairperson Debby Stabenow. Still, rumors indicate that negotiators have settled on SNAP (food stamps) cuts totaling $8 billion over 10 years.

This is double the modest cuts proposed in the Senate passed version of the bill but far below the $40 billion cutback approved by the House. It is not clear that a final proposal with cuts of $8 billion can win approval in the full House of Representatives.

Three other updates of note:

  1. Leaks indicate that government payments under the emerging conference committee farm bill draft will be calculated using historical base acres, not actual planted acres as proposed under the House bill.
  2. The final draft will probably link conservation compliance to crop insurance and impose payment limits.
  3. House Ranking Member Collin Peterson expects the supply control provision of the new dairy policy to survive.

Other news from Washington:

  • The Food and Drug Administration is attempting to phase-out the use of key antibiotics in livestock production. Under the FDA’s “final guidance” drug makers have 90 days to decide if they will comply with changes to the drug labels eliminating claims that allow use for growth-promotion. If the companies agree to comply, they have three years to actually make changes. If the guidance is fully implemented it will be illegal to use certain antibiotics that are also used for human health for livestock without a prescription from a veterinarian.
  • Trade ministers from the 12 countries working on the Trans-Pacific Partnership trade agreement met this week but did not reach the goal of completing a deal by the end of the year. Differences between the U.S. and Japan appear to be the major stumbling block and the fact that Japan’s Trade Minister was unable to attend the meeting limited progress. Japan wants to protect certain products (including agricultural products) from competition and says that negotiators cannot compromise on these due to a parliamentary resolution.
  • EPA’s proposed biofuel blending requirements would have little impact on the ethanol industry in the short term according to a report released by CoBank this week. But the same report says the new rules could influence the size and profitability of the industry over the longer term. One reason: The proposal sends a signal that investments in higher blend infrastructure are not necessary.

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