Most of agriculture, and particularly dairy and livestock producers, consider the Congress to be the Christmas “Grinch” for its failure to approve a successor to the expired 2008 Farm Bill. It ceased to exist on Oct. 1, and three months later the Congress may be no closer than Feb. 27 in addressing itself to a renewal of farm policy.
While cash and futures markets are continuing to operate without problems, while wheat remains dormant, and while USDA employees continue to report for work, what could be the problem, if there is any problem? If the U.S. farmer and consumer can survive three months without a Farm Bill, why can’t they survive three more months, or three more years? There are reasons.
The lack of a 2012 Farm Bill, which soon will be re-labeled a 2013 Farm Bill, may not have an impact at the grocery store today, or in the feedlot today, or in the machine shed today, but overtime a finely tuned food machine will begin to show wear and tear without the daily maintenance that is necessary.
Where we are now
When Congress recessed for the election, the Senate had passed its Farm Bill proposal that cut $23 billion from the 10-year baseline for agricultural appropriations. The proposal included a stronger crop insurance program and nearly full funding of USDA’s nutrition programs. In the House, only the Agriculture Committee has approved a proposal, which cuts $35 billion from the 10-year baseline spending, half of that in nutrition programs.
House leadership has not called the bill for a vote, contending there are insufficient votes to pass anything. Since the election recess and the lame-duck session, there has been no overt effort to approve farm legislation and the Chairman and ranking Democratic member of the House Agriculture Committee both say they cannot see the opportunity to address the issue before the end of February.
What is the impact of the delay?
Any government support programs, such as direct payments, marketing loans, ACRE are in effect for a commodity until the end of the current marketing year. For example, that will be June 30, 2013 for wheat and August 31 for corn and soybeans. However, the dairy support program ended September 30, 2012 without any replacement. Under 1949 Permanent Law, parity prices become effective January 1, 2013 for any commodity for which the Permanent Law has not been suspended. (Typically, each new Farm Bill suspends the 1949 legislation, but that has not happened.) Subsequently, at the expiration of the current marketing year for a commodity, familiar commodities will have some unfamiliar prices that the USDA says producers shall be paid. USDA economists calculated those prices at the end of November to be: