The Hagstrom Report

Agriculture News As It Happens


Farm bill, dairy program prospects remain uncertain

It looks like the nation will go over both the fiscal and the dairy cliffs, but maybe not for long.

Amidst reports that the Senate will vote later this evening on the “fiscal cliff” bill, but the House will not vote on the legislation until Tuesday, prospects for an extension of the 2008 farm bill remain uncertain, particularly because House Speaker John Boehner, R-Ohio, and Senate Minority Leader Mitch McConnell, R-Ky., appear opposed to inclusion of a new dairy program.

And, according to a Senate aide, McConnell is trying to extend only portions of the farm bill, rather than accept the nine-month extension that has been agreed to by members of both parties in the Senate and House Agriculture committees.

It seems unlikely for the farm bill extension to be considered as part of the fiscal cliff legislation the Senate is expected to vote on tonight.

If action is taken early in 2013 on dairy, milk prices are unlikely to rise.

But the content of an extension bill is still uncertain.

Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., and others are fighting McConnell’s proposed changes, the aide said, which would have no disaster assistance and eliminate the energy title, conservation programs, specialty crop and organic provisions.

Stabenow said in a floor speech this evening that she is furious about the way Republican leaders are handling the farm bill issue.

Noting that the bill would extend the direct payments but only parts of the rest of the farm program, she said, “I want to hear somebody justify that on the floor,” according to a Washington Post report.

“People are sitting in rooms trying to decide how we get deficit reduction, and we passed something that saves $24 billion in a fiscally responsible way. … We went through every single page of the farm bill, which is what we ought to be doing in every part of government … We did that. And now, at the last minute, none of that matters?” Stabenow asked, according to the Post.

Sen. Mitch McConnell, R-Ky.

Sen. Mitch McConnell, R-Ky.

The McConnell plan would also provide no direct support for dairy farmers, the aide said.

“It continues direct payments, $5 billion in direct payments,” the aide said of McConnell’s plan. “Yet McConnell can’t do $50 million for dairy farmers.”

According to the aide, the Congressional Budget Office reported that the McConnell language would extend the Milk Income Loss Contract (MILC) at the lower post-August 2012 levels.

“McConnell doesn’t understand agriculture policy, yet he’s trying to write a new farm bill extension in the fiscal cliff deal, rather than take a bipartisan recommendation from leaders of the House and Senate Agriculture committees,” the aide said.

McConnell, at least initially, wanted to address the dairy issue through a government purchase program similar to permanent law “that producers have hardly used and dairy producers would hate more than current law,” the aide said.

That program is a product purchase program under which the government buys up products (cheese, non-fat dry milk, and butter) at roughly the equivalent of a $9.90 all milk support price.

“It’s basically what is in the permanent law we’re all trying to avoid, just at a lower level,” the aide said.

The current support levels are so low that they’re meaningless and have rarely been triggered, the aide added. He also noted that the McConnell dairy program is one that “means processors produce for the government, not the market. It destroys trade relationships while not even adequately supporting farmers. It’s a lose, lose.”

Four other separate farm bill proposals are under consideration. Three were filed in the House on Saturday — a one-year extension until Sept. 30, 2013, with the new dairy program, a one-month extension, and a separate bill to stop the 1949 dairy law from going into effect.

But there is also a fourth proposal that has not been filed that would extend farm programs through Sept. 30, 2013, but would not include the dairy proposal that was included in both the Senate-passed farm bill and the House Agriculture Committee-passed bill.

Boehner is so opposed to the new dairy stabilization program that he went so far as to call it “communism” in a Sunday meeting, Politico reported.

Meanwhile, the International Dairy Foods Association, which represents the dairy processors, and the National Milk Producers Federation, which represents the farmers and the co-ops, continued their war over the dairy program.

IDFA said in a news release today that it remains vigorously opposed to the dairy market stabilization program on the grounds that it would require the government to intervene in milk markets to manipulate the supply, in order to keep milk prices artificially high.

“It is ironic that the threat of higher dairy prices for consumers, caused by the possible implementation of the 1949 act, is being used to force Congress to pass a new program that will result in higher prices,” said Jerry Slominski, IDFA senior vice-president for legislative and economic affairs.

“The Dairy Security Act is a problem, not a solution,” Slominski said.

“IDFA supports an extension of existing dairy policies in the current farm bill to give Congress time to complete action on a new five-year farm bill and to allow for consideration of the alternative to the Dairy Security Act offered by Reps. Bob Goodlatte, R-Va., and David Scott, D-Ga.,” he said. “We believe that alternative will pass if it is brought to the full House of Representatives for an up or down vote.

“A clean extension of the 2008 farm bill will avoid having the 1949 act become relevant law and allow payments to dairy farmers when milk prices fall,” Slominski said.

“The 1949 act represents agriculture policies from the past, and unless Congress passes a clean extension of the farm bill, Secretary [Tom] Vilsack would be placed in the unenviable position of proposing rules to implement such policies. Although he will be able to delay any increase on consumer dairy prices for weeks if not months, Congress should still take action to avoid that situation,” Slominski concluded.

The National Milk Producers Federation agreed with extending the farm bill, but only with the dairy program.

"The one-year farm bill extension containing the Dairy Security Act is the only option on the table that provides a comprehensive safety net for dairy farmers,” the NMPF said in an emailed statement.

“At least what’s in this version moves us into the future, not back to 1949, and it doesn’t give us more of the same status quo programs that we want to replace with the DSA. It also reflects the sentiment of the House and Senate Agriculture committees because it is similar to their farm bill dairy titles.”