D.C. Watch: When will Congress approve a farm bill?
The 2008 Farm Bill expired on Sept. 30 and it is not clear when or if Congress will approve a replacement bill. The expiration of the legislation has had little impact on most of the agricultural sectors, but that could change if nothing is done before January. Crops produced in 2012 are covered under the provisions of the 2008 farm bill. However, the end of the farm bill has put an end to the Milk Income Loss Contract program. Congress will face a huge backlog of critical problems when and if they reconvene after the election for a lame duck session and passing a new farm bill will probably be a relatively low priority. Key provisions of the 1949 permanent farm law begin to kick in after Jan. 1, such as the $38 per hundredweight milk support price, so Congress will need to take some action before then. An extension of the 2008 law seems like the most likely outcome at this point in time.
Congress is now adjourned until after the election. The failure in the House to pass a new farm bill is having an impact on some Congressional races for both the House and the Senate, especially in North Dakota, South Dakota and Montana. A lot of House races in states where agriculture is a key part of the district could be affected by the lack of progress on a new farm bill.
The sign-up period for the now-expired Supplemental Revenue Assistance Program (SURE) will open Oct. 22 and run through June 7, 2013. The program will provide assistance to farmers and ranchers who suffered crop losses in 2011, but will not cover losses incurred in 2012 and beyond. To be eligible for SURE a farmer had to be 1) located in a county that was declared a 2011 primary disaster area, or, 2) a contiguous (adjacent) county, or, 3) a farm with actual production loss is 50 percent or more. Check with your Farm Service Agency Office to find out more or to sign up for 2011-crop losses.
Crop insurance companies have already paid out about $2 billion in indemnities to farmers who suffered production losses this year, even with fall harvests of major crops only about 50 percent complete. The president of the National Crop Insurance Services says the industry has 5,000 claims adjustors working to expedite claims. Total crop insurance payments for 2012 crop losses could top $30 billion by the end of this year.
The “Gang of Six” has added two new members and is meeting next week to try to develop a plan to avoid the “fiscal cliff” that looms at the end of this year if Congress fails to act. Billions of dollars of tax cuts expire at the end of this year and automatic spending cuts totaling $109 billion kick in at the beginning of January. This combination, coupled with a few other things that happen as we head into 2013, are called the “fiscal cliff” and would lead to a significant recession next year, according to most macro-economists. The stalemate in Congress over tax increases and spending cuts is expected to once again be a stumbling block when Congress tries to resolve these issues after the election. (And the outcome of that election may impact how “willing to compromise” members of Congress will be!)
It is not clear what actions Brazil will take if Congress fails to pass a new farm bill, or if whatever farm bill they do pass does not meet the changes required under the WTO cotton case ruling of a few years ago. Since 2010, the U.S. has paid Brazil $147 million annually so that Brazil would not impose tariffs of about $1 billion on U.S. products. Brazil agreed to hold off on the sanctions until Congress changed cotton policies. But Brazil’s officials say neither the current Senate bill nor the current House Ag Committee bill will adequately address the WTO settlement that country won.