Wed September 19, 2012
So What Happens If The Farm Bill Expires? Not Much, Right Away
Originally published on Wed September 19, 2012 4:53 pm
Congress is set to make a brief appearance in Washington this week, then recess until after Election Day. That means a farm bill is likely to be left undone, just one of the many items on lawmakers' "to-do" lists that won't happen anytime soon.
The 2008 farm bill, which provides funding for a variety of nutrition programs, including the Supplemental Nutrition Assistance Program (formerly food stamps), as well as payments to farmers and agricultural programs, will technically expire Sept. 30.
So what does it mean if Congress just leaves it on the table? In theory, some fairly scary things. For example, in the absence of either a new bill or an extension of the 2008 law, federal price supports revert to their 1949 levels.
Some farmers would be big winners — the government would pay huge bonuses for wheat, for example — while some farmers would get nothing at all. That's because some commodities, including soybeans, were added to the list of those supported by government after 1949.
"At that point, we'll have $38 milk," Rep. Collin Peterson, D-Minn., told a rally at the Capitol last week. "So what do you dairy farmers think about that?" (That $38 refers to the price per 100 pound weight — the wholesale pricing unit. Basically, it works out to nearly four times what dairy farmers are guaranteed now.)
But the reality is, almost none of the changes would happen right after Sept. 30.
"We actually have until about Jan. 1 before we run into a lot of administrative problems with this bill reverting to some very high prices," says Mary Kay Thatcher, director of congressional affairs for the American Farm Bureau Federation.
That's because while the date on the law matches the federal fiscal year, the 2008 measure covers all of 2012's crops. So even if they haven't been harvested yet, things growing now are covered by the 2008 legislation. The first crop that would be affected by the new price supports "would be next spring when we harvest winter wheat," Thatcher says.
Vincent Smith, a professor of economics at Montana State University and a visiting scholar at the American Enterprise Institute, says the real reason supporters of the farm bill are in such a rush to get their bill done has more to do with budget politics than with the actual mechanics of the programs.
"They want to have a farm bill now that locks Congress and the taxpayer into obligations based on either the Senate or the House bill," he tells NPR. "What they're concerned about is that, if serious deficit-reduction talks take place, then a lot more money than was initially identified to come out of the farm bill by the "supercommittee" a year and a bit ago will have to come out of the farm bill."
When was the last time Congress let the farm bill lapse? The last time it was up for renewal: 2007. "The bill expired on Sept. 30, and we didn't pass the first extension until the 26th of December," says Thatcher. "And then I think it was extended another four or five times after that before we finally got the actual bill done."
So both Thatcher and Smith say to look for Congress to do some kind of extension of farm programs during its postelection lame duck session. But also, don't panic in the meantime.
STEVE INSKEEP, HOST:
Members of Congress return to Washington today for a last brief session of lawmaking before the November election. Among the things likely to be left unfinished is a new five-year farm bill. The current one expires at the end of this month.
But as NPR's Julie Rovner reports, the consequences are not that dire.
JULIE ROVNER, BYLINE: Farmers and other supporters of the bill that funds a broad swath of agriculture, nutrition and conservation programs gathered on the west front of the Capitol last week to express their frustration.
Bucking this year's trend of partisan discord, the Senate passed a bipartisan farm bill in June. The House Agriculture Committee passed a different, but also bipartisan bill in July. But House GOP leaders have refused to bring that bill to the floor. And it appears, now, they won't vote on a short-term extension before the current law expires September 30th, either, said Senate Agriculture Committee Chair Debbie Stabenow, Democrat of Michigan.
SENATOR DEBBIE STABENOW: We know that if the farm bill's allowed to expire, and things begin to unwind, we turn back the clock in rural America to 1949. And you know what that means. The government planning restrictions; expensive price supports, and we see the markets, frankly, in total disarray. It's crazy.
ROVNER: Stabenow's referring to the fact that in the absence of a farm bill, the farm commodity programs revert back to something called the Agricultural Act of 1949. It would result in farmers getting some very high prices from the government, says Vincent Smith. He's a professor of economics at Montana State University.
VINCENT SMITH: For example, the price that farmers would be paid by the government for wheat would be $13.58 a bushel. Well, that compares with a record, almost, market price today for wheat of $8. So you can see, this is a lot of money here that could potentially flow out of the Treasury, to the farmers.
ROVNER: Of course, there would be losers, too. Dairy farmers would see a key program expire, even though they've been paying record prices for feed. But the fact is, nothing really dire is likely to happen, at least not right away, says Mary Kay Thatcher. She's with the American Farm Bureau Federation.
MARY KAY THATCHER: We actually have until about January 1st before we run into a lot of administrative problems with this bill reverting to some very high prices.
ROVNER: That's because the existing farm bill, even though it will technically expire, will still cover 2012 crops, even those that haven't been harvested yet. Big problems wouldn't crop up, as it were, until next year, she says.
THATCHER: The first crop that would come time for harvest, would be next spring when we harvest winter wheat.
ROVNER: So what's been holding things up? Thatcher says it's mostly the non-farm parts of the bill, particularly nutrition funding like the $78 billion food stamp program.
THATCHER: You have the Senate that's cut about four billion out of the food stamp program; you have House that's cut about 16 billion. In general, you've got a lot of Tea Party Republicans that would like to cut way more than 16 billion, in general, you've got a lot of Democrats that would like to cut zero.
ROVNER: And what accounts for the panic in farm country over not having a farm bill? Some is that farmers want the certainty of knowing what the ground rules will be for the next five years. But there's something else, says Vincent Smith. Budget politics, and what might happen if this year's bill slips into next year.
SMITH: They want to have a farm bill now that locks Congress and the taxpayer into obligations based on either the Senate or the House bill. What they're concerned about is that, if serious deficit reduction talks take place, then a lot more money will have to come out of the farm bill.
ROVNER: Meanwhile, a bit of trivia: when's the last time Congress allowed the farm bill to expire temporarily? That would be 2007, the last time it was up for renewal. The sky didn't fall then, either.
Julie Rovner, NPR News, Washington. Transcript provided by NPR, Copyright NPR.