As deadline looms, farm bill extension seems likely

WASHINGTON -- U.S. lawmakers are considering an extension to the current farm bill as an October deadline to pass a new $500 billion law rapidly approaches.

Lawmakers remain optimistic that Congress could still pass a bill before the current measure expires on Sept.30. But a series of hurdles stand in the way including the upcoming election, pressure to reduce government spending, a short legislative calendar to get work done and fundamental differences between House and Senate lawmakers.

"We have had this discussion for the last year-and-a-half that an extension might have to be an option that we pursue," said Rep. Kristi Noem, R-S.D., a member of the House Agriculture Committee. It's been an option "recognizing the challenges we face in Washington getting things done in an election year."

The U.S. farm law covers everything from farm programs to trade and conservation. Dozens of programs administered by the U.S. Agriculture Department would come to an end without a new bill or an extension.

USDA's food stamp and other nutrition programs, which command nearly 80% of the farm bill funding, would be largely spared. These programs continue to operate even when the farm legislation expires, and any changes must come from a new law.

Agriculture Secretary Tom Vilsack remains optimistic Congress could finish a bill. He warned an extension of the current farm law would fail to provide the necessary clarity to farmers and ranchers, and could slow or even stop the torrid economic growth in rural America.

The rural economy has been humming along in recent years with high crop and land prices and a record of $136.3 billion in farm exports during 2011. Farmers also are flush with cash after farm income vaulted past $100 billion for the first time in 2011, and this year is forecast at $91.7 billion, the second-highest on record.

"If an extension can be easily done then so can a bill," Vilsack told reporters last week. "We've got momentum in the rural areas, why wouldn't we want to continue it? If there is going to be a series of extensions that's just going to add uncertainty. It's going to make life a lot more difficult."

If a new farm bill is not put in place by October, Congress has two options: extend the existing law or let measures from 1949 and 1938 go into effect. Reverting back to these laws, known as the only "permanent legislation" of farm policy, would lead to a cascade of disruptive changes in the agricultural sector that would impact farmers and lead to higher prices for consumers on the grocery store shelves.

Among the changes, USDA would be required to limit the amount of acres farmers can grow and penalties would be imposed on farmers who exceed these acreage limits.

A price support provision also would lead to an increase in the price farmers receive from the government for commodities such as corn, cotton, wheat, and rice compared to what they would sell for on the open market. The price of wheat, for example, could surge as much as 156 percent from its current market price of about $6.37 per bushel to between $11.77 and $16.29, according to USDA. Corn could see a jump to as high as $10.62 per bushel from its current market price of about $6.25.

If history is any indication, Congress won't meet the September deadline. The last three farm bills, 1996, 2002 and most recently in 2007, were finished a year later than expected.