End-of-year farm bill status

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Congress was unable to pass a farm bill again in 2013 but members of the House-Senate Conference Committee continue to work on one. In actual fact, only the four leaders of the House and Senate Agriculture Committees are working on the bill while the other 37 members of the conference committee wait for work on a draft bill to be completed. Key negotiators are still hopeful that a new farm bill can be voted on by the full House and Senate before the end of January, but these are the same people that believed the bill could be finished by Thanksgiving.

Senate Agriculture Committee Chairperson Debby Stabenow says “nothing is agreed on until everything is agreed on.” Still rumors indicate that negotiators have settled on SNAP (food stamps) cuts totaling $8 billion over 10 years. This is double the proposed cuts in the Senate passed version of the bill but far below the $40 billion 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.

It also appears that the farm bill proposal will calculate government payments on a farmer’s base acres, instead of actual planted acres as proposed by the House. Many people believe that payments calculated using actual acreage planted tend to influence crop planting decisions. This would cause excessive surpluses of some crops with farmers responding to government payment potential instead of market signals. In the past the World Trade Organization has generally ruled that programs based on planted acres are trade distorting and violate world trade rules.

House Agriculture Committee Chairman Frank Lucas has drafted an extension of the 2008 Farm Bill that would last through the end of January. House Speaker John Boehner wants an extension and House leaders have reserved space on the agenda to vote on an extension. Friday is the last day this year that the House will be in session. Senate Majority Leader Harry Reid says the Senate will not vote on an extension. With no extension, the 1949 Farm Law kicks in at the beginning of January, in theory causing a near doubling of milk prices. But it will take some time for USDA to implement the 1949 law and the Agriculture Secretary says there will be no impact on milk prices in January.

One reason negotiators gave for their failure to get a farm bill done before adjourning for the week is that the snow storm on Tuesday kept the Congressional Budget Office from scoring (calculating the costs) of some recent proposals. However, the scoring of these proposals is expected to understate their actual costs since the price projections used in the CBO baseline are already too high given the recent weakness in crop prices.

Reported progress suggests that the conference work on the farm bill may be completed in early January.

Once the full conference committee approves a farm bill draft, the proposal must be approved by both houses of Congress and then sent to the President for his signature. There is still a significant possibility that the full House will reject a bill that cuts food stamps by less than $1 billion per year as well as other changes from what the House passed with significant difficulty a few months ago. If that happens – an extension of the old farm bill will definitely be needed and the path forward will be uncertain. It will be awhile before farmers and everyone else in the agriculture industry can determine what policy will be in place for the 2014 crops.

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