The Hagstrom Report

Agriculture News As It Happens


Extension could be as difficult as new farm bill


House Agriculture Committee Chairman Frank Lucas, R-Okla., said today that he still favors passing a new farm bill before the end of the year, but is preparing a “backup plan” involving an extension.

Meanwhile, congressional aides and farm lobbyists said that writing and assembling the votes to extend the 2008 farm bill during the lame duck session may prove at least as difficult as finishing a new farm bill before Congress leaves town in December.

Rep. Frank Lucas, R-Okla.
“My goal remains to reauthorize a full five-year farm bill by the end of the calendar year,” Lucas told The Hagstrom Report in his first formal statement on the farm bill since the election.

“But, as chairman, I have to consider the limitations before us and plan accordingly,” Lucas said.

“The responsible thing to do is to have a backup plan, and that backup plan entails an extension. There are still many questions about what an extension would look like and how certain programs without a baseline would be addressed, but what we know for certain is reverting back to an antiquated system that is permanent law is not responsible and not acceptable.”

But congressional aides and lobbyists in interviews over the past week said that the need to help dairy, livestock and fruit producers who have been hurt by this summer’s weather raises many questions about what kind of extension bill the House and Senate would support, how it would be financed and what would happen to the budgetary savings that the agriculture committees had offered as their contribution to reducing the federal deficit.

Mary Kay Thatcher
In addition, the bills passed by the Senate and the House Agriculture Committee contained cotton provisions that U.S. trade negotiators hoped will resolve the World Trade Organization cotton case that Brazil won against the United States.

“We are saying an extension is a lot harder than passing the real bill,” said American Farm Bureau Federation lobbyist Mary Kay Thatcher.

Ferd Hoefner
“It will have to be a modified extension, so a big question will be what modifications will be made beyond a simple change of ‘2012’ to some specified date in 2013, added Ferd Hoefner of the National Sustainable Agriculture Coalition, which has also called for completion of the bill this year.

A Senate Republican aide said today that finishing the bill may be easier.

“Many of the issues you have to address in a five-year bill are the same issues that have to be addressed in an extension,” the Senate aide said. “The only difference is that between the House and Senate bills you have an idea of the target you are shooting at with a five-year bill. On an extension, no one has even started to draw the size of the target. It is starting from scratch and is a total unknown.”

A Senate Democratic aide said that despite the differences between the Senate and the House over the size of the cut to the food stamp program and the structure of the commodity title, compromises could be reached.

“All we need is a signal from Boehner,” the aide said, referring to House Speaker John Boehner, R-Ohio.

House Agriculture Committee ranking member Collin Peterson, D-Minn., declined to comment on the intricacies of an extension because he has already said that he will oppose any extension.

Spokespersons for Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., and ranking member Pat Roberts, R-Kan., declined to comment today. But Stabenow and Roberts have repeatedly called on the Senate to finish the farm bill this year.

Extension questions

The farm bill’s structure makes writing an extension complicated, not to mention raising the issue of convincing members of Congress — many of whom have been hoping for cuts to food stamps, farm programs or both — to support it.

When the 2008 farm bill expired on September 30, authority for many innovative programs authorized in that bill ended, while traditional farm programs reverted to antiquated laws passed in the 1930s, ’40s and ’50s that make up what are known as the “permanent law” that is suspended each time a new farm bill is passed.

Among the questions that Congress would face in authorizing an extension are the following, the aides and lobbyists said:

  • What kind of dairy program will the bill include? The milk income loss contract program known as MILC has already expired, and dairy farmers are united in their quest for a new program even though dairy processors don’t like it. If the dairy price support program is not extended or a new one passed by early January, the milk support price would rise to $38 from $16.80 per hundredweight.
  • Will there be disaster aid for livestock producers and fruit farmers? The House earlier this year passed disaster aid for livestock producers. The House did nothing for fruit farmers, but Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., would insist on aid for fruit farmers in her state who experienced frost early this year and are not covered. The Senate farm bill includes a disaster aid program.
  • What will happen to the direct payments program? The farm bills passed by the Senate and by the House Agriculture Committee eliminated this program, which has been much criticized because the $4.9 billion in payments have been going to crop farmers whether prices are high or low. The Agriculture Department sent out the 2012 direct payments in October. It would be easy not to renew the program, but the direct payments have been a key provision in the farm program since 1996 and farmers would be upset if the direct payments were eliminated and the new proposed crop provisions were not passed.
  • How would a dairy program and disaster aid be financed? Programs that lost their budget authority on October 1 would need offsets. The direct payments are a logical source of budgetary authority, but would crop farmers — and their representatives in Congress — agree to give them up if the new crop programs are not written into the bill?
  • What will happen to conservation programs? Since the 2008 bill expired, no signups for conservation programs are allowed. Congress has often cut conservation programs in the past to pay for what are interpreted as more immediate needs. Would that happen again?
  • Will Congress extend payment limitations? The current limits expired with the farm bill.
  • How long would the extension last? The Congressional Budget Office is scheduled to conduct a fresh analysis of the baseline for each federal program in March, and Congress will be under pressure to write a new farm bill before that analysis, which might indicate that the baseline is lower. But can a new Congress with new members on the House and Senate agriculture committees write a new farm bill in three months?
  • Will Congress agree to extend a wide range of important and innovative programs that lost their authority to operate on September 30? Besides the well-known programs to promote sales of U.S. farm products overseas, the expired programs include those to help senior citizens buy produce at farmers’ markets, assistance for organic farmers and specialty crops, and help for beginning farmers.

Impact of permanent law

Peterson has said he would rather see permanent law go into effect rather than an extension enacted. But it seems impractical to go back to antiquated laws.

If Congress does not pass a new farm bill or extend the 2008 farm bill, the price support provision from the 1949 Act allows the Agriculture secretary to provide support prices that are equivalent to parity price, a historical price that gives current producers the same purchasing power as producers had in the early 1900s, to support selected commodities such as corn, cotton, wheat, rice, and milk.

The first impact would be felt in dairy in January, but as the time for planting crops arrives, the Agriculture secretary will be required by permanent law to reduce acres planted to some crops, which could double the price of some commodities.

Without an extension or a new farm bill, marketing allotments for wheat and upland cotton would be triggered, which would limit the amount of acres farmers could grow and impose penalties on farmers who exceed acreage limits.