Congress' Pot of Stew

DC Dialogue

No one knows what Congress will cook up as deep divisions exist on everything ranging from farm bill to solving the nation's budgetary woes.

Published on: October 4, 2013

I've always been a big believer that government functions better with different viewpoints/balance of parties that allow for compromise and coming to the middle. But this week I learned that might not be the case.

Instead of coming together and doing their jobs, Congress has decided to draw deep lines in the sand and may not be able to salvage work on everything ranging from the farm bill to solving the nation's deep budgetary woes.

This week Congress gave us the trifecta Oct. 1 as the government shutdown including furloughing all non-essential employees at the U.S. Department of Agriculture, the farm bill expiration and another round of budget sequestration cuts took effect.

Unlike the government shutdown in the 90s, this one has many more issues at play including deep philosophical differences beyond just the numbers for spending that extrapolates out to the farm bill, the debt ceiling and any other policy decision needed to be made.

But at the end of the day, we don't know what will be in the pot of stew Congress cooks up, stated Dave Ladd, president of RDL & Associates.

Ladd explained the government shutdown delays further action on a farm bill. "Even if we were to get to a conference report on the farm bill, and that remains an open question, where is it going to fall on the agenda? Is it a back burner item," he asked.

There is widespread skepticism whether the House will even name conferees and if they do whether the non-Ag Committee influencers will be allowed to shape the policy traditionally left to those serving ag constituents.

On Sept. 28, the House approved the rule to allow for debate over the government funding bill without any delays, a rule which also combined the farm-only and nutrition-only farm bills back into a single comprehensive bill. 

It remains to be seen whether this vote leads to the House appointing its farm bill conferees and starting the House-Senate farm bill conference. The Senate renamed its conferees as it did earlier this summer after the House passed its farm-only farm bill with a list of farm-state champions on the slate.

Significant differences exist in the commodity title as well as wide spending differences within the nutritional title. "If leadership or the White House could just give a number [on the target for cuts], legislators could get the policy to fit," Ladd added. But that's not the case with the big ticket philosophical differences that have bogged down funding talks.

If as anticipated by many political insiders that the negotiations over funding the government drags on for more than a week, incremental impacts will be seen on each sector including agriculture and agribusinesses, explained Ladd.

"The longer the shutdown goes, those ripples will continue to go out," Ladd said. A lot of time those ripples start small and get bigger as time goes on, he explained.

Most U.S. Department of Agriculture employees were sent home Oct. 1 and will not return to work until an FY 2014 appropriations bill that includes USDA funding clears Congress and is signed by the president.

One of the most top-of-mind marketing issues will be whether USDA will be able to release reports scheduled for publication Oct. 11. One of the major ones is an update of crop production figures, which at least some of the surveying of producers would have occurred during the first week of October after staff had been furloughed, explained Pat Westhoff, director at the University of Missouri's Food and Agriculture Policy Research Institute.  He said USDA could potentially update its World Agricultural Supply and Demand Estimates report assuming staff is back.

CME Group was also forced to suspend the calculation of its Lean Hog Index and Feeder Cattle Index since the data needed to compute the indexes came direct from USDA's Livestock Market News which is closed as part of the shutdown.

We're on pace to breach the debt ceiling sometime between Oct. 18 and Nov. 5. So if the latest trifecta wasn't enough, there's another fiscal crisis just around the corner. We can only pray that will jolt legislators into action.