Farm bill failure means predictable 2013 and unknown future
Andrew Novakovic, an expert on the farm bill and professor of agricultural economics at Cornell University, commented on Congress’ failure to produce a new long-term farm bill and its “fiscal cliff” compromise to extend the current farm bill through 2013.
“As anticipated, some accommodation of agricultural and food policy was made as part of the larger fiscal deal. Agricultural policy leaders in the House and Senate had hoped to graft an entire farm bill to this deal, but the politics that kept the House from voting on the Agriculture Committee's proposal this fall also made it impossible to squeak a new farm bill in through the back door. Although it was originally opposed by the leaders of both the House and Senate agriculture committees, what was done instead was an extension to the 2008 legislation.
“Some specifics of the extension include the 2008 Dairy Product Price Support Program reauthorized through Dec. 31, 2013. This means the new ‘go back to the 1949 Act’ dairy cliff is pushed to the end of 2013. It also means that the equivalent of a $10 support price for Class III and IV milk remains in effect, which is to say no effect at all.
“The Milk Income Loss Contract (MILC) program that compensates dairy producers when prices fall below specific levels is extended by simply changing all the 2012 dates for MILC in the 2008 Farm Bill to 2013. This means that the more generous formula and larger production cap goes back into effect and extends through Aug. 30, 2013. This raises the possibility of retroactive payments to farmers. Because of some ambiguity in the bill's language, it is not entirely clear whether this would include milk produced in September 2012, which is important to farmers because it is the only retroactive month with a significant payment opportunity.
“For all other agricultural support programs, the extension simply changes dates from 2012 to 2013, meaning that programs applied to corn, soybeans, wheat, sugar, peanuts and cotton for the 2012 harvest will apply to the 2013 harvest. It is extremely unlikely that any action of Congress in 2013 would change those programs and conditions in mid-stream. So, crop growers should plan on the familiar programs continuing for another year.
“In other parts of the bill, a number of programs are extended, but the provisions for funding them are not. Among the programs that are reauthorized are the following:
- “The Conservation Reserve program is similarly extended through 2013.
- “Nutrition Education and Employment and Training Programs associated with the Supplemental Nutrition Assistance Program (SNAP) are extended. The basic benefits of SNAP are continuing regardless of this extension.
- “Certain research programs are continued, including the Organic Agriculture Research and Extension Initiative, the Specialty Crop Research Initiative, and the Beginning Farmer and Rancher Development Program.
- “Certain Bio-based energy and products programs are extended. This has nothing to do with the requirement to use ethanol in gasoline – that is a different bill.
- “Certain Horticulture and Organic Ag Programs are extended, including the Farmers Market Promotion Program and the National Organic Certification Cost Share Program.
“Lastly, the extension explicitly does not extend certain other Conservation, Trade, Rural Development and disaster assistance programs.
“A more interesting question may be, where do we go from here? A 2013 Farm Bill could look quite different from the 2012 Farm Bill that emerged from the Senate and the House Ag Committee discussions. Educated guesses are that the 2013 conditions will be less favorable for agriculture and food programs.”