Time running out for farm bill this year

by Jay Sjerven
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WASHINGTON — Prospects for the lame duck Congress passing a farm bill to replace the Food, Conservation and Energy Act of 2008, which expired on Oct. 1, 2012, were increasingly dim as Christmas week approached.

The Senate passed its version of a 2012 farm bill in June, but the House of Representatives failed to consider the farm bill approved by the House Committee on Agriculture in July.

Each bill called for budget savings in response to efforts to reduce the federal deficit. The Senate bill aimed to save $24 billion compared with an extension of the 2008 farm act, and the House bill as approved by the agriculture committee aimed to save $35 billion. Savings primarily would have come from eliminating direct payments made to farmers without regard to what or how much they produce and by reducing spending on the Supplemental Nutrition Assistance Program. But without action on the latter bill by the full House, there was no opportunity to fashion a final bill, and time was running out.

Negotiations over the “fiscal cliff’ took precedence over virtually all other matters, and an aide to Speaker of the House John Boehner told Politico there was no intention of affixing a farm bill to a prospective deal to prevent across-the-board federal spending cuts that may take effect Jan. 1, 2013.

“If we can agree on a top-line number, we suspect the committees will have a much easier time getting to a bill next year under regular order,” the aide said.

With no farm bill likely to be considered before the next Congress convenes, the challenge may be to pass an extension of the 2008 farm law until there is agreement on a new farm bill next year. An extension raised problems of its own. For instance, both the Senate and House agriculture committee bills would end direct payments to producers. But will an extension of the 2008 act require direct payments to be made for at least another year even if a new farm bill is adopted sometime in 2013?

Even more problematic was the federal dairy program. If there is no extension of the 2008 farm bill before the end of 2012, the dairy program was expected to revert on Jan. 1, 2013, to provisions the foundational 1949 farm act, which would require the government guarantee higher farm prices of milk by offering to buy producers’ supply at a level that policy analysts maintained would be sharply higher than the current market. This raised the prospect for spikes in consumer prices of milk and a massive increase in government ownership of dairy products with all the market-distorting ramifications that would entail.
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By Jackie Schmidts 12/19/2012 3:00:40 PM
The extension to this story is that if a Farm Bill is passed without any amendments to the Dairy Title, we'll end up with a dairy farmer supply control program called market stabilization. Dairy farmers who sign up for the new margin insurance will be forced into this new supply control. This will be a first time ever supply control of a commodity will be implemented in the dairy industry. The ramifications will be milk supply will be forced down when farm prices are low and costs are hight. This is contrary to common sense and good supply and demand economics. The final resul will be higher wholesale prices for all dairy products for bakeries, retailers and eventually to consumers. Higher prices mean lower sales, hurting everyone. Another good example of government intervention in business where they don't belong. If you don't want to see milk supply control and higher prices, call your congressional representation and ask they approve the Goodlatte/Scott amendment before passign the Farm Bill! Otherwise it will mean a new good dose of socialism in your business!