Milk prices may spike without new Farm Bill
Milk prices could jump to $7.50 per gallon. Farmers are planting without knowing if crop insurance reform will be approved by Congress or what government programs will be available to aid them. These are issues facing consumers and ag producers, as 2013 comes to an end without a new Farm Bill being passed by Congress. Automatic cuts to federal programs are a real consequence.
Ranchers contend with the ongoing drought, with no financial help, since the extension approved last year did not include disaster programs. Texas ranchers dispersed their herds during the drought of 2011-12 and South Dakota ranchers lost entire herds to the pre-winter storm, dubbed “Atlas,” in October 2013.
The Senate declined a last-ditch effort by the House Agriculture Committee chairman to approve a second extension of the Farm Bill. The Senate believes a Farm Bill can be resolved before the “dairy cliff” -- a formula determining milk payments to farmers -- would take effect.
According to a number of sources, including the Dec. 16 U.S. Cattlemen’s Capital Update newsletter, Chairman Debbie Stabenow said that U.S. Department of Agriculture Secretary Tom Vilsack “has assured negotiators that there would be no reason for milk prices to spike if a farm bill can be put in place quickly in January.”
Sen. Patrick Leahy gave a second reason for the Senate’s failure to approve an extension -- subsidies.
Leahy said during the Dec. 20 Senate Farm Bill Conference, “... this short, 1-month extension could allow direct payment subsidies to continue for another full year. We have already agreed on a bipartisan and bicameral basis to get rid of these unnecessary and expensive direct payment subsidies to agribusiness.”
House Agriculture Committee Chairman Frank Lucas of Oklahoma sponsored HR 3695, which provides a temporary extension of the Food, Conservation, and Energy Act of 2008, and was approved by the House Dec. 12. The following day, the House adjourned for the winter recess.
According to the American Soybean Association, Senate members -- along with Lucas and Ranking Member Collin C. Peterson -- were to remain in Washington, D.C., to “hammer out their deal before the end of the year.” Preliminary plans are to have a final framework for Congress to consider upon its return Jan. 7.
One thing Congress will have to agree upon is the level of reduction in the Supplemental Nutritional Assistance Programs (SNAP), also known as food stamps.
The American Soybean Association’s Farm Bill update advises that Congress will have to compromise; some expect the reduction will be around $8.8 billion over a 10-year span. The Senate bill’s version cuts $4 billion from the program, while the House version proposes cuts up to $39 billion.
Subsidy payments for some crops also are in question as the Farm Bill languishes.
U.S. Cattlemen’s Association Executive Vice President Jess Peterson, in an update Dec. 17 to cattlemen across the nation, said a major division is occurring on Capitol Hill about commodity programs; elimination of direct payments is being debated.
He said other programs -- such as Country of Origin Labeling (COOL), approved in the 2008 Farm Bill -- might be in jeopardy. See “Future of COOL” for more on this.
Direct payments were established in the 1996 Farm Bill, according to the Environmental Working Group website, with payments “based on a formula involving the historic production on a given plot of land in 1986.” Currently, the “entitlement program for farmers” costs about $5 billion per year.
The American Soybean Association reports that a “draft framework would offer a choice for producers between keeping their current base or updating their base to an average of what they’ve planted the last five years [2009-2013].”
Agricultural groups are watching closely, with lobbying efforts in full swing. Congress will return to Washington Jan. 7. It remains to be seen if a compromise will be reached in time to avoid budget-breaking milk costs and further consequences.
Future of COOL
In the House version of the new Farm Bill, representatives may include language to repeal Country of Origin Labeling (COOL). The revised COOL regulations went into effect Nov. 23, after a six-month grace period.
U.S. Cattlemen’s Association Executive Vice President Jess Peterson said Dec. 17 that a joint House and Senate conference committee public meeting is set for Jan. 13, and he anticipates COOL opponents could introduce language to alter or repeal the program.
At the current time, COOL is being challenged in the U.S. District Court in Washington, D.C., and Canada has asked for a review of the revised rules at the World Trade Organization. The U.S. Cattlemen’s Association is involved as a defendant-intervener in the lawsuit in support of COOL.
“Thus far, the plaintiffs in this lawsuit have failed to establish any right to a delay in the implementation of COOL,” said U.S. Cattlemen’s Association President Jon Wooster Nov. 15. “Congress should not intervene legislatively at this juncture and should allow the legal process to move forward to its conclusion.”