Farm Bill Future Tied To Fiscal Cliff

It may be a good thing that the so-called fiscal cliff of automatic budget cuts and tax increases coincides with the ongoing farm bill debate.

Published on: Nov 27, 2012

The debate over the 2012 Farm Bill involves many aspects of the broader policy discussions currently occurring in the U.S., says Carl Zulauf, Ohio State University agricultural economist. 

In a paper written the day after the election, Zulauf says that while it is risky to simplify the policy environment in any country as large and diverse as the U.S., "many issues confronting the U.S. at present can be viewed as a debate over the components, administration, and funding of a U.S. safety net modernized for the 21st century," he says, noting health care.  

"Debate is occurring over both the form and cost of the farm safety net, as well as whether the safety net should be delivered through private agents, (for example via) crop insurance, or via government agencies, (such as) the Farm Service Agency," Zulauf says. 

Farm Bill Future Tied To Fiscal Cliff
Farm Bill Future Tied To Fiscal Cliff

"While entirely speculative, it is possible that history may reveal that the 2012 Farm Bill ultimately served to inform the resolution of the policy issues surrounding the broader U.S. safety net for the 21st century."   

Movement on the 2012 Farm Bill stalled when the Republican controlled House and Democratic-led Senate disagreed on key farm bill provisions including the amount of cuts to the food stamp program and the shape of Title 1 farm safety net programs. 

Zulauf says that while numerous paths exist for the bill debate, the two most prominently discussed are a short term extension of the 2008 Farm Bill that could range from several months to a year in length and passage of a compromise version of the existing House and Senate drafts of the 2012 Farm Bill.  

"Which path is taken will depend upon the debate over the broader policy direction," he said. "The willingness to compromise on differences in the existing farm bill drafts, and assessments of the impacts of potential changes in the budget baseline and how changes in the membership of the House and Senate with the seating of a new Congress might impact the process of passing a farm bill next year." 

Zulauf also speculates that the drought of 2012, which devastated growers and producers across the country, particularly in the Midwest including Ohio, will lead to ad hoc disaster assistance for livestock producers, given much higher feed prices. 

"It is likely that cuts in spending on farm programs are likely in any so-called grand agreement to address the fiscal cliff," he says. "These cuts might exceed those agreed to in the farm bill, or the farm bill might be written to accommodate the size of these cuts. 

"In short, the debate over the farm bill is intertwined with the debate over the fiscal cliff."