Lack of farm bill leaves farmers with uncertainty in 2014

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With just a few legislative working days remaining in 2013, the likelihood of a new farm bill is waning, leaving farmers in limbo once again, a Purdue Extension farm policy expert says.

The Farm Bill Conference Committee, composed of congressional representatives from the Senate and House, has been working since October but as yet has failed to agree on what should be in the bill. House Speaker John Boehner has said that his chamber will recess Friday (Dec. 13) until the new year.

The Senate and the House have each passed their own vastly different versions. Dairy support programs, the subsidy payment basis and nutrition assistance have been the most heavily debated issues.

"With the start of fiscal year 2014 on Oct. 1, authorization for previous farm legislation written in 2008 has already lapsed, triggering a reversion to farm subsidy laws first enacted in the mid-20th century," said Roman Keeney, an associate professor of agricultural economics. "With the 2013 crop just harvested being the last that is subject to the 2008 law, farmers are left making plans for their 2014 crops with uncertainty about the rules and regulations that will govern the farm commodity system."

But farmers won't be the only ones affected by a lapse in farm policy. With no farm bill before Jan. 1, milk procurement prices could double. According to Keeney, that could sharply increase dairy product prices at the grocery store within just a month.

The rapidly approaching deadline could mean legislators would again extend the five-year 2008 farm bill - either for the short term or long run. They previously extended it for one year, and that extension expired Sept. 30.

"Extensions of the 2008 farm bill ranging from one month to two years have been discussed," Keeney said. "The shorter is far more likely as a stopgap to allow the farm bill conference committee to finalize its report and present it to the chambers to vote."

Such an extension would prevent the jump in dairy prices until a new, long-term bill could be passed.

What the extension wouldn't do is give farmers any more certainty about what farm regulations will entail in coming years.

"As we close out the year, it seems that the most farm and agribusiness decision-makers can hope for before the end of the year is continued signs of progress and a declared timeline for the conference committee to finish its work in early 2014," Keeney said. "Farmers already will be making their planting decisions for the 2014 crop with the uncertainty of markets and weather. The odds would seem to favor that those unknowns will be compounded by the uncertainty of the regulations and support mechanisms that govern the agricultural economy via the farm bill - just as they were for the 2013 crop year."

According to Keeney, a new farm bill passed quickly in 2014 would necessarily be closer to the Senate version, which includes smaller reductions in nutrition assistance and a greater reliance on historical planting for determining subsidy payments. The Obama administration has declared a preference for the Senate version and would likely threaten a veto to any law that reduced nutrition spending by more than $1 billion per year.

While public statements indicate that progress is being made toward resolution and passage, Keeney cautioned that this Congress has been difficult to gauge.

"After a fall session that included a government shutdown over failures in budget negotiations, we can't assume that entrenched positions on reducing spending in the farm bill have softened and that the bill will move smoothly to passage - especially with Congress set to renew the debate over the budget and debt ceiling in mid-January," he said.


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