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.
The half-trillion farm bill that passed the Senate in June would reduce spending by almost $24 billion, mostly through cuts in conservation, food stamps and the end of direct payments in favor of new crop insurance programs.
The House Agriculture Committee is set to take up the bill on July 11. The committee on Thursday proposed deeper cuts of more than $35 billion, including a larger reduction for food stamps and price protection to farmers that would end in the Senate's version. They also would end direct payments and consolidate 23 conservation programs into 13 to save money.
A spokeswoman with the House Agriculture Committee said House Majority Leader Eric Cantor, R-Va., has not said he is unwilling to move forward on the farm bill, and members of the committee are doing all they can to get it to the floor. "My priority is to advance a bill out of committee," said Frank Lucas, R-Okla., chairman of the House panel. "Once we've done our work, (we) will ask leadership for floor time."
Senate lawmakers have begun ratcheting up the pressure on their counterparts in the House to move quickly. "It's up to the House to get it done," said Sen. Tim Johnson, D-S.D. "The farm bill will not expire, at worst it will be extended for the time being."
Iowa Republican Sen. Chuck Grassley, a member of the Senate Agriculture Committee, said the farm bill is likely the only shot lawmakers will have to pass a major piece of legislation this year that reduces government spending. "For the sake or rural America and the nation's food supply, it makes more sense to take care of the farm bill this year than to kick it down the road with an extension," said.
Even if the full House passes its bill, members will embark on a five-week recess starting in August before returning in mid-September, leaving precious time for the House and Senate to merge their bills, vote on the measure and get it signed into law by the president before Sept. 30.
David Swenson, an economics professor at Iowa State University, said an extension appears to be the most likely option. Congress is "going to take the path of least resistance no matter what," said Swenson. "And I think that path…is to extend the current provisions until we have a final law."
Analysts and lawmakers fear that if a farm bill is delayed until after the November election or till 2013 it could be subjected to even deeper spending cuts.