With the hubbub over the fiscal cliff a few weeks ago, the agricultural community was also watching to see what Washington would do about expiring farm legislation, too. Recall that the 2008 Farm Bill provisions were set to expire last fall, at the end of the federal fiscal year, Sept. 30, 2012. The agriculture committees in both the Senate and House of Representatives had already developed and passed farm legislation out of committee and on for consideration by each full chamber in Congress. In June, the entire Senate approved the basic package sent forward from its Ag Committee, and the House Ag Committee moved its bill forward to the entire House in July.
However, the House Ag Committee never saw its bill reach the floor of the House for consideration by that full body. There were many political cross-currents at work to delay this process. Among other things, Speaker Boehner was not supportive of the dairy program as written, and there was disagreement on spending cuts on the Supplemental Nutrition Assistance Program, as the current food assistance or food stamps program is called. With the fall elections approaching and the budget battles brewing, the Farm Bill got put on the back burner.
Actually, major budget savings on farm programs were a big part of both the House and Senate Ag Committee proposals. The most expensive of the commodity-related programs, the direct payments program, was dropped in both the House and Senate proposals. Direct payments were replaced by risk-related programs which would provide revenue or price protection mainly designed to help with so-called, “shallow losses,” those losses not covered under current crop insurance plans because of the deductible on crop insurance coverage. Replacing direct payments with these programs was expected to result in government budget savings of about $2 billion per year, with total of about $23 billion from all programs over the life of the legislation. These savings were very significant for the USDA budget.
But of course no deal was reached on these proposals. Instead, as part of the fiscal cliff arrangement, a last-minute deal was developed to extend most of the 2008 Farm Bill provisions one more year, to September 30, 2013. This also avoided reversion to permanent farm legislation established in the Agricultural Act of 1949, including USDA commitments to purchase dairy products at $38 per hundredweight, more than double the current market price.
So which farm programs were extended? The direct payments program, counter-cyclical payments, and the ACRE program which provides revenue support when national crop prices and state and farm yields fall below preset levels. Dairy support prices are maintained at current levels, and most other commodity program provisions remain in place, too. Some agricultural disaster programs were also authorized, including some which will cover losses from the 2012 drought, although funds have not yet been appropriated. Some conservation programs such as the Wetlands Reserve Program, and a variety of programs for energy, horticulture, and organic agriculture were not extended.
Page 2 of 2 - Because the direct payments represent the most expensive program under the 2008 legislation, and since payments aren’t usually made until autumn, many think that the House and Senate will try to pass farm legislation before that to avoid making those payments and achieve some budget savings. What’s not so clear is how closely the new farm program proposals will reflect those produced in 2012. It’s a new Congress, and some committees and subcommittees will have changed.
Carl Zulaf, agricultural economist at Ohio State University, explains why committee changes may turn out to be important. He said, “A key feature of the 2012 Farm Bill debate was the division between southern and midwest agriculture over the future structure of the farm safety net. Southern agriculture was more concerned about the loss of direct payments and more skeptical about the ability of crop insurance to meet its needs. Thus, a 1-year extension of the 2008 farm bill is more closely aligned with the desires of southern agriculture.
Senator Cochran of Mississippi replaces Senator Roberts of Kansas as Ranking Minority Member (Republican) on the Senate Committee on Agriculture, Nutrition and Forestry. Three of the five subcommittee chairs in the House Agriculture Committee are now from southern states. In contrast, two of six subcommittee chairs in the House Agriculture Committee were from southern states in 2012. Representative Conaway of Texas remains as chair of the Subcommittee on General Farm Commodities and Risk Management.”
Zulaf sees a couple of potential paths forward. One is that new farm legislation is included in a package deal when the federal debt ceiling gets addressed in March. Another path that farm legislation is developed on a separate track of its own prior to September 30, 2013, when the current one-year extension expires. If neither of these tracks produces anything, we might even see another one-year extension of the old farm bill again this fall.
So all we can say at this point is, “Wait and see.” UNL specialists have already developed some tools for analyzing the kind of revenue protection plans proposed in the 2012 debate, so we should be ready to quickly evaluate whatever programs may finally be developed when new legislation is passed. So stay tuned!
Remember, Extension is your front door to the University of Nebraska-Lincoln. Through 83 local offices throughout Nebraska, Extension educators, specialists, and researchers deliver unbiased, relevant, and empowering information to help improve your life.
Extension is committed to helping Nebraskans know how, and know now. This has been Monte Vandeveer, your University of Nebraska-Lincoln Extension educator.