Novakovic: Farm Bill failure means predictable 2013, but unknown future

 

Andrew Novakovic, an expert on the Farm Bill and professor of agricultural economics at Cornell University, said Congress’ failure to produce a new long-term Farm Bill it its “fiscal cliff” compromise provides predictability to 2013, but not beyond.

“As anticipated, some accommodation of agricultural and food policy was made as part of the larger fiscal deal,” Novakovic said. “Agricultural policy leaders in the House and Senate had hoped to graft an entire Farm Bill to this deal, but the politics that kept the House from voting on the Agriculture Committee's proposal this fall also made it impossible to squeak a new Farm Bill in through the back door.  Although it was originally opposed by the leaders of both the House and Senate agriculture committees, what was done instead was an extension to the 2008 legislation.

“Some specifics of the extension include the 2008 Dairy Product Price Support Program reauthorized through Dec. 31, 2013,” he continued. “This means the new ‘go back to the 1949 Act’ dairy cliff is pushed to the end of 2013. It also means that the equivalent of a $10 support price for Class III and IV milk remains in effect, which is to say no effect at all.

“The Milk Income Loss Contract (MILC) program that compensates dairy producers when prices fall below specific levels is extended by simply changing all the 2012 dates for MILC in the 2008 Farm Bill to 2013,” Novakovic continued. “This means that the more generous formula and larger production cap goes back into effect and extends through Aug. 30, 2013. This raises the possibility of retroactive payments to farmers. Because of some ambiguity in the bill's language, it is not entirely clear whether this would include milk produced in September 2012, which is important to farmers because it is the only retroactive month with a significant payment opportunity.

“For all other agricultural support programs, the extension simply changes dates from 2012 to 2013, meaning that programs applied to corn, soybeans, wheat, sugar, peanuts and cotton for the 2012 harvest will apply to the 2013 harvest,” he said. “It is extremely unlikely that any action of Congress in 2013 would change those programs and conditions in mid-stream. So, crop growers should plan on the familiar programs continuing for another year.

In other parts of the bill, a number of programs are extended, but the provisions for funding them are not. Among the programs that are reauthorized are the following:

“Lastly, the extension explicitly does not extend certain other conservation, trade, rural development and disaster assistance programs,” Novakovic said.

“A more interesting question may be, where do we go from here? A 2013 Farm Bill could look quite different from the 2012 Farm Bill that emerged from the Senate and the House Ag Committee discussions. Educated guesses are that the 2013 conditions will be less favorable for agriculture and food programs,” he concluded.