Congress avoids ‘fiscal cliff,’ but fails farmers
The U.S. agriculture sector is crying foul over the last-minute actions of the U.S. Congress, which approved an extension of the 2008 Farm Bill during the New Year’s Day “fiscal cliff” negotiations.
The extension was part of House Resolution 8 -- the American Taxpayer Relief Act of 2012. According to beta.congress.gov, the “final passage of the ‘fiscal cliff bill’ on Jan. 1, 2013, averted scheduled income-tax rate increases and the spending reductions required by the sequestration process.”
Why the delay for passage of a Farm Bill? The need for drought assistance was evident, since federal disaster assistance programs -- such as the Livestock Forage Disaster Program -- expired Sept. 30, 2011, in the 2008 Farm Bill and 54 percent of the nation’s pasture is suffering from an ongoing drought.
Disaster programs in the extension of the Farm Bill do little to aid the ag sector. The programs were authorized, but not with mandatory funding, except for the Supplemental Revenue Assistance Program -- which was not reauthorized.
If a program was tagged “extended without mandatory funding,” these programs must be funded from the appropriations process. In other words, Congress must approve additional funding.
A one-year extension of agricultural programs was approved in Title VII, including the Supplemental Nutrition Assistance Program (SNAP), also known as “food stamps.” This program was designated until fiscal year 2016.
Congress already had secured SNAP funding by passage of a House joint resolution in September. This allows for the federal government to continue until March 27, and dodge a government shutdown.
One topic that received much publicity, if a Farm Bill extension had not been approved, was the ripple effect on milk prices.
According to a Sept. 28 Sustainable Agriculture Coalition Farm Bill report, the Farm Bill contains a dairy program formula that determines milk payments to farmers. If no action had been taken on the Farm Bill, the dairy price would have expired on Jan. 1. Reports abounded that a gallon of milk could double in price, to $6 to $7 per gallon.
“Under permanent law, government supported prices would be four times higher than current law and about twice as high as current market prices,” according to the Coalition Farm Bill report. To avoid the “permanent law” clause, Congress had to enact a new farm bill or extend the current law.
While milk made the headlines, crops -- such as grain -- also would have been impacted.
The importance of avoiding this permanent law, according to the Coalition Farm Bill report, is that reverting “to permanent law would reintroduce a radically different farm program, one with much higher support prices (through nonrecourse loans instead of payments) that would require much smaller crop production and much higher consumer prices. It would also leave out any mandatory coverage for soybeans and other oilseeds as well as peanuts and sugar.”
U.S. Rep. Henry Cuellar addressed this in September.
“The old laws on the books, known as ‘permanent law,’ would be put back into action once the current farm bill expires,” Cuellar said. “These provisions would radically change how American agriculture works, and would drive up prices to unseen levels, while violating countless international trade laws. Simply put, allowing this to happen would devastate American agriculture,” Cuellar said.
American Soybean Association President Danny Murphy echoed Cuellar’s comments, after the extension was passed on Jan. 2.
“While the extension is certainly preferable to the alternative of no bill at all ... it is only a stopgap measure, which does not provide the long-term certainty and stability that farmers need.”
The National Sustainable Agriculture Coalition said in a press release, “... We are extremely disappointed in the Republican leadership for posing this deal and in the White House for accepting it. The message is unmistakable -- direct commodity subsidies, despite high market prices, are sacrosanct, while the rest of agriculture and the rest of rural America can simply drop dead. We commend the Agriculture Committee leadership for trying to pass a more responsible extension measure.”
The National Corn Growers Association released the following statement in response to Congress not completing a five-year plan:
“America’s farmers have clearly made known the importance and need of a new farm bill in 2012,” said Pam Johnson, president of the National Corn Growers Association. “Once again Congress’ failure to act pushes agriculture aside, hampering farmers’ ability to make sound business decisions for the next five years. ... The system is clearly broken.”
Johnson continued, “We hope the 113th Congress proves to be more fruitful and that the leaders in Congress can place petty partisanship aside, to create a bill that benefits all of America.”