U.S. Secretary of Agriculture Tom Vilsack was in Des Moines last week. The former Iowa governor says he's hopeful Congress will pass a new farm bill by the end of 2013. He cites several reasons for bipartisan support, why Republicans and Democrats in the House and Senate should iron-out their differences.
First, consumers will pay substantially higher prices for milk and other dairy products if a farm bill isn't passed and signed into law. USDA will be forced to revert to the enabling farm bill legislation of the 1940s and that would inflate milk prices. Economists estimate milk prices would double.
But the adverse effects of reverting back to the permanent legislation could be even more widespread. The U.S. recently lost a trade dispute over cotton with Brazil and now faces retaliation—unless we get a new farm bill that revises cotton subsidies. Brazil has the right to retaliate against U.S. products that are exported, by up to $850 million. This isn't just limited to ag exports, says Vilsack. It's across the board. All kinds of U.S. products and services could be subject to these penalties.
Vilsack says reforms in a new farm bill—cutting out direct payments and cutting back on some other programs—could provide billions of dollars' worth of savings and help Congress create a new budget, especially if Congress wants to lessen the impact of sequestration—across the board cuts—on military spending. That's another good reason to pass a new farm bill, he says.