Congress will reconvene this week and one of the first things on the agenda for the Senate Agriculture Committee will be the new farm bill. The current farm bill expires at the end of September, but even the optimistic members of Congress say that chances are just 50-50 that a new farm bill will be passed by then.
If there is no new farm bill in place, Congress will need to pass at least a short term extension of the 2008 bill. But that won’t be easy with significant funding cuts likely for fiscal 2012 and beyond. At this point it is nearly impossible to say what policies will be in place as producers plant their winter crops this fall.
There will be lots of wrangling when Congress gets serious about drafting a new farm bill, but there is a good chance that the main fights will be over the parts of the program that have little to do with farming. A big battle is looming over food and nutrition programs, which account for more than 80 percent of the total Agriculture Department funding.
The House passed budget cuts funding for the food and nutrition programs by about $133 billion over 10 years, while the agriculture committee leaders proposed cuts totaling $4 billion over that period in their proposal to the super committee last fall. Some (mostly democrats) in Congress don’t want the nutrition programs cut at all citing the programs effect on poverty among children.
Almost all farm groups want Congress to make crop insurance the centerpiece of the next farm bill. Crop insurance has been a critical risk management tool for farmers. The program had a huge impact in 2011 due to serious weather problems around the country.
A report from the University of Illinois contends that “Lost revenue due to low prices during the mid-1980s and late 1990s would not have been covered by crop insurance because projected prices would have adjusted downward.” The study suggests programs that have the coverage based on historical revenue. Several ideas that are circulating in Congress would base the guarantee on the “Olympic average” of revenue over several years of history. Under this type of plan, protection is provided even when crop prices decline over several years. (An “Olympic average” is when the high and the low year over the specified time span are not counted and just the remaining years are averaged.)
Senate Budget Committee will begin work on a budget proposal next week, says Chairman Kent Conrad (D-ND). But he also says he doesn’t expect the bill to make it to the Senate floor until after the fall elections. Senate Majority Leader Harry Reid (D-NV) says that discretionary spending for fiscal 2013 is already capped at $1.047 trillion under last summer’s Budget Control Act. The recent House-passed budget limits fiscal 2013 spending to $1.028 trillion and the differences between the two limits will make passing appropriations bill extremely difficult. The House plan would also redirect savings under sequestration away from the defense budget to other departments. (Automatic cuts to defense and other programs are set to take effect next January unless Congress passes new legislation.)