| SEPTEMBER 27, 2012 -- As many predicted, Congress did not pass the 2012 Farm Bill before they left town. That means that the programs and provisions of the 2008 Farm Bill will be left to expire on Sept. 30.
One of two things will probably happen to the Farm Bill now.
First, Congress can take it up during the lame duck session after the November elections. However, they will have an abundance of things to address at that time, predominantly the expiring Bush tax cuts and the budget sequestration that will trigger more than $1.2 trillion in automatic spending cuts over the next decade.
The second option is for Congress to leave the Farm Bill for the new 113th Congress to deal with in January.
Without a Farm Bill, the next few months will be quite troublesome for certain areas of agriculture, as well as other sectors of our already-sensitive economy.
Although they do technically expire in just a few days, most of the commodity programs in the Farm Bill won’t actually expire until the end of the year because their authorization corresponds with the crop year that ends on Dec. 31.
Direct payments to farmers will continue at $5 billion a year, and SNAP will continue through other programs.
That’s the good news.
However, nearly 40 other programs will not be funded again after the 2012 fiscal year ends on September 30th.
The USDA receives approximately 90 percent of its funding through the Farm Bill and if there is no extension of the current law, then many programs under USDA authority will revert back to the original 1949 farm law.
Every Farm Bill since 1949 has simply been an amendment to this law.
However, Secretary Vilsack has affirmed that the USDA will not shut down completely, although certain programs will most certainly be suspended.
According to the National Sustainable Agriculture Commission, programs that will be adversely affected include, “all the major programs for beginning and minority farmers, farmers markets, organic agriculture, renewable energy, and rural economic development.”
The Market Access Program (MAP) and the Foreign Market Development Program (FMD) will not be funded either.
Dairy farmers will no longer receive any kind of funding or safety net provisions, which will inevitably increase the price of milk. Conservation reserve programs will be put off, as will drought assistance.
The ethanol industry will be marginalized, as will wind energy programs, most of which are housed on farmland.
Research on crops and production techniques will be suspended as well.
These are just a few of the specific areas that will be directly affected from the failure to pass a Farm Bill.
Consumers will start to feel the affects of these postponements in coming months, mostly through higher food prices.
According to Secretary Vilsack, “There’s some indication that that might result in higher milk costs. The fact that livestock producers are not in a position to provide or obtain disaster assistance may result in them being forced to liquidate their herds sooner than they would otherwise do so. Which means that in the short term consumers may see some savings, but in the long term there’ll be some shortages and food prices will go up.”
On top of everything else, nothing disrupts the stock market more than uncertainty.
Without the various commodity programs provided by the Farm Bill, investors will see dramatic increases in the prices of some commodities and probably a dramatic fall in others.
In an economy still struggling, these conditions will not be pleasant.
In the end, Congress will pass some sort of Farm legislation. The question is whether or not they will pass it before the affects of their inaction devastate American agriculture and the many sectors it supports.
For the sake of our economy, American consumers, and the millions of people worldwide that benefit from American agricultural exports, let’s hope that Congress acts sooner rather than later. |
