Congress punts on farm policy
Updated: Friday, February 01, 2013 12:30 PM
Groups disappointed with vote to extend 2008 Farm Bill
By MATEUSZ PERKOWSKI
Commodity groups say they are disappointed with an extension of the 2008 Farm Bill passed by Congress.
The stopgap measure prevents a major hike in crop price support levels -- including one that could have sent milk prices spiraling -- but will retain subsidies that seemed destined for change last year.
Chris Galen, senior vice president of communications for the National Milk Producers Federation, called the extension "disappointing" because dairy programs in the 2008 Farm Bill focused on milk prices without sufficiently taking feed costs into consideration.
"We need a modern safety net that looks at margins and not just milk price," he said. "The challenge is we don't have a meaningful safety net."
Hopefully, Congress will be able to use the draft legislation from 2012 as a template and quickly devise a new farm bill without lengthy deliberations and hearings, said Dale Moore, deputy director of public policy for the American Farm Bureau Federation. "We're hopeful they don't have to start over but rather pick up where they left off."
The speed with which Congress can take up the new farm bill will likely be impeded by the influx of new House members in early 2013, said Dana Peterson, CEO of the National Association of Wheat Growers.
Even getting a meeting with a new member of Congress can be challenging when they first take office, she said.
In the House Agriculture Committee, about 40 percent of the representatives will be new, and some staff changes are also likely in the Senate Agriculture Committee, Peterson said.
"That's a pretty significant changeover," she said. "We have a lot of education to do in the next few months."
The nine-month extension Congress passed New Year's Day forestalled U.S. farm policy from reverting back to antiquated farm policies enacted more than 60 years ago. It was tacked onto the deal aimed at preventing a "fiscal cliff" of tax hikes and budget cuts.
The 2008 Farm Bill expired on Sept. 30, 2012, which meant that subsidy programs had technically been dictated by "permanent law" passed in 1938 and 1949 for several months.
However, USDA hadn't actually begun implementing the changes.
Those laws would have increased price support levels for commodity crops beyond current market prices, which was widely seen as uneconomical and unrealistic.
The permanent law price supports are based on the "purchasing power" that crops commanded during a time of high prices roughly a century ago, adjusted for inflation.
Most crops are harvested later in the year, so the higher price supports wouldn't have kicked in until later in 2013, giving Congress time to devise new legislation.
Milk, on the other hand, is a commodity produced year-round -- leading to worries of an imminent and drastic price hike early in the year.
"Milk is the first one out of the gate," NMPF's Galen said.
Uncertainty about how USDA would handle the legal obligations and the possibility of much higher retail milk prices prompted Congress to extend the previous farm bill, the Farm Bureau's Moore said.
"That was the motivating factor," he said.
Though the extension keeps the USDA from implementing farm policies that are out of step with modern agriculture, the action postponed reforms to subsidy programs, Moore said.
"It's better than nothing but it would have been nice if they would have been able to sort out their differences and get the new farm bill plugged into this," he said.
Draft versions of a new farm bill were passed by the Senate and the House Agriculture Committee in 2012 but a final agreement was never reached. Both versions would have scrapped direct payments to farmers in favor of updated crop insurance tools.