Farm Bill Fiasco: Where's The Program Payment Check?

The quick answer may be: "Don't expect farm program checks to be the same sized. Some may not continue.

Published on: Jan 11, 2013

The good news is: Congress gave itself a reprieve in passing a new Farm Bill. The bad news is: Expect some farm program payments under a 2013 Farm Bill to shrink or be disappear.

That's the bottom line of this week's comments from Andrew Novakovic, a Cornell University ag economist. Congress' "fiscal cliff" compromise may have extended the 2008 Farm Bill through 2013. But funding for all programs is not assured.

The 2008 Dairy Product Price Support Program is reauthorized through Dec. 31, 2013. So the equivalent of a $10 support price for Class III and IV milk remains in effect, he adds, which is to say no effect at all.

The Milk Income Loss Contract program that compensates dairy producers when prices fall below specific levels is extended by simply changing all the 2012 dates for MILC in the 2008 Farm Bill to 2013. This means the more generous formula and larger production cap goes back into effect and extends through Aug. 30, 2013.

SO NOW WHAT? Cornells Andrew Novakovic says "Educated guesses are that the 2013 [funding] will be less favorable for agriculture and food programs."
SO NOW WHAT? Cornell's Andrew Novakovic says "Educated guesses are that the 2013 [funding] will be less favorable for agriculture and food programs."

It also raises the possibility of retroactive payments to farmers. Because of ambiguity in the bill's language, it's not entirely clear whether this would include milk produced in September 2012. That's important, because it is the only retroactive month with a significant payment opportunity for farmers.

"For all other agricultural support programs, the extension simply changes dates from 2012 to 2013. So programs applying to corn, soybeans, wheat, sugar, peanuts and cotton for the 2012 harvest will apply to the 2013 harvest.

~~~PAGE_BREAK_HERE~~~"It's extremely unlikely that any action of Congress in 2013 would change those programs and conditions in mid-stream. So, crop growers should plan on the familiar programs continuing for another year.

Funding not assured for some
A number of programs are extended, but provisions for funding all of them aren't assured, according to Novakovic. That includes:

*The Conservation Reserve program

* The Nutrition Education and Employment and Training Programs associated with the Supplemental Nutrition Assistance Program. However, basic SNAP benefits are continuing.

* Certain research programs are continued, including the Organic Agriculture Research and Extension Initiative, the Specialty Crop Research Initiative, and the Beginning Farmer and Rancher Development Program. 

* Certain bio-based energy and products programs are extended.

* Certain horticulture and organic ag programs are extended, including the Farmers Market Promotion Program and the National Organic Certification Cost Share Program. 

* The extension explicitly doesn't extend certain other conservation, trade, rural development and disaster assistance programs.

So, now what?. "A 2013 Farm Bill could look quite different from the 2012 Farm Bill that emerged from the Senate and the House Ag Committee discussions, surmises Novakovic.

Some are destined to fall off USDA's own fiscal cliff. Keep in mind that drastic fiscal cliff spending cuts were delayed only for two months. So budgetary gamesmanship isn't over.

Flood insurance extended|
In separate legislation passed last week, farmers having flood insurance were assured of claim coverage. Congress extended the borrowing authority of the National Flood Insurance Program. That enables NFIP to pay flood claims stemming from Superstorm Sandy.