Life With No Farm Bill

DC Dialogue

As the farm bill expired Sept. 30, the biggest immediate impact comes with MILC, trade programs and no new conservation program sign-ups.

Published on: October 1, 2012

It seems Washington doesn't really blink at threats these days. You've got the fiscal cliff, financial meltdown and now, reverting farm policy to the permanent law of 1949.

But maybe it's not causing you any lost sleep because let's be honest Congress isn't the best at passing a farm bill by the Sept. 30 expiration. And we've got a few months to hope that Congress gets their act together.

The last farm bill, which was supposed to be approved in 2007, saw a handful of extensions including one during the lame duck, before finally getting passed in 2008.  

According to a Congressional Research Service report, in the past 40 years, only the 1973 and 1977 farm bills were enacted before Sept. 30. Farm bills in 1981, 1985, and 1990 were enacted by December 31, a few months after the end of the fiscal year but still before spring-planted crops covered by the new law were planted. The most recent three farm bills have been have been enacted later, in April (1996), May (2002), and June (2008), prior to the first crop harvested and covered by the farm bill.

But if something doesn't pass before the calendar turns to 2013, or at least by next spring, you will see some major changes headed your way.

The main sticking point in permanent legislation law focuses on parity prices - the relationship between prices that farmers receive for their products and prices they pay for inputs. The CRS report noted that wheat, rice, cotton, milk and honey all have higher permanent law support prices than the market price.

"For example, in January 2012, USDA estimated the market price for wheat at $6.86/bushel (bu.). This exceeded the 2008 farm bill support level of $2.94/bu., so no price support is currently needed.  But under permanent law, even this market price is well below the $13.13/bu. calculated minimum support level," the report noted.

Feed grains (corn, sorghum, barley, and oats) currently would not trigger permanent law price support. Some currently subsidized crops, such as soybeans and peanuts, would not be guaranteed any payment under that part of permanent law.

Short-term impact

Mary Kay Thatcher, senior director of congressional relations at the American Farm Bureau Federation, said that overall there will not be any big changes coming down the pipeline in the next few months. Main tenants of the current farm bill including crop insurance and food stamps will continue on. Commodities are covered for 2012 crops, so it isn't until the winter wheat harvest next spring that will notice a change without a farm bill, Thatcher explained.

With no new farm bill on the books, beginning Oct. 1 a variety of USDA programs servicing major commodities, conservation, trade, food aid, nutrition, research, renewable energy, and assistance to disadvantaged producers, will end or be severely weakened.

 Secretary of Agriculture Tom Vilsack saidhe's "deeply concerned" about the changes to the Milk Income Loss Contract Program (MILC) which with the slight decline in MILC payments and no disaster program leaves "dairy producers completely out of luck," he said. (Read more about the dairy situation here.)

Vilsack added record ag trade exports is due to momentum and increased market share. "That is potentially at risk if we're not in a position to finance trade shows or provide assistance to producer groups to advocate overseas," he said.

U.S. businesses, including groups such as the U.S. Meat Export Federation and other checkoff groups, lose the opportunity to apply for $200 million in cost-share awards as part of the Market Access Program (MAP). The Foreign Market Development Cooperator Program (FMD), technical assistance for specialty crops and the Emerging Markets Program (EMP) all see mandatory funding end.

On the conservation side, several programs come to a halt with no new acres enrolled. This includes the Conservation Reserve Program, Grasslands Reserve Program, Wetlands Reserve Program and Voluntary Public Access and Habitat Incentives Program.

The United States is the world's largest food aid donor. Without farm legislation, USDA will be unable to deliver commodities to recipient countries as funding for Food for Progress (FPP) halts. Funding also ends for local and regional food aid procurement projects. North American Miller's Assn. (NAMA) said it has been informed that Title II food aid is expected to continue until the end of the calendar year and The McGovern-Dole program can continue without change or impact.

Specialty crops see their block grants no longer awarded. Research initiatives for organic and specialty crops will not be funded. 

The Biomass Crop Assistance Program (BCAP) can no longer enter into new agreements to establish additional biomass crops for energy production, "hampering a growing industry and disrupting the nation’s efforts to create a homegrown, renewable energy economy," USDA said.

Grants and outreach for beginning farmers also stalls.

Where from here

Thatcher said if Congress attempts an extension (which farm groups continue to call for a farm bill instead), it is important to recognize an extension will not provide an identical farm bill that is already in place. Thatcher said Congress will "take some blood from us" whether in the form of eliminating direct payments or conservation cuts.

But she said Congress can't adjourn from a lame duck without passing some kind of extension, if not the new farm bill. "No one will let it revert to 1949 law."