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Sunday, December 30, 2012

Congress Decides a New Farm Bill Is Better Than Consumer Ire Over Milk


Congress began working over two years ago to replace the 2008 Farm Bill when it expired last September 30th.  Hearings in Washington and across the US were held to gather information to make the necessary additions, deletions, and corrections.  Then the top four House and Senate Ag Committee leaders furiously tried to write their own bill before the “Super Committee” did it for them in the fall of 2011.  When that fell through, the full Senate and the House Ag Committee developed their own individual versions using party-driven funding and philosophy to create divergent legislation.  And there the process came to a halt in the summer of 2012.  The Farm Bill was going nowhere…..until the USDA said the price of milk could rise to $6-8 per gallon when the 1949 dairy legislation would become the default support program beginning in 2013.  Suddenly, there was a need for a Farm Bill and it is in the works.  But what is in it?


The 2008 Farm Bill was over 1,000 pages.  However, the 2013 extension of the Farm Bill is only 78 pages, since it makes references to provisions in the 2008 legislation and does little more than to delete some sections or adjust spending.  While it will take time to completely digest the changes, a brief survey of the 2013 extension language can provide some guidance on what the House and Senate Ag Committee leadership agreed upon, and prepared for their respective houses to approve at the earliest opportunity. 


It should be noted that the legislation only is effective through September 30th, 2013, which is designed to allocate enough time for the Congress to approve a full 5 year Farm Bill. It is also noteworthy that the preamble to the legislation sets out the purpose of the extension, which is focused on providing supplemental agricultural disaster assistance (to livestock producers who suffered from the drought) and to establish dairy producer margin protection and dairy market stabilization programs (to replace the 1949 default law that was based on parity pricing.)  For the 2013 growing season, direct payments would be paid, but at a rate of 82.5% of what would normally be expected.  The Congressional Budget Office estimated the savings at $1.270 billion in the current fiscal year, without spending of $986 million


Among the provisions of the 12 month law of interest to Cornbelt farmers,

  1. The complete provisions of the 2008 Farm Bill will be extended from October 1, 2012 to September 30, 2013.
  2. The Dairy program will be extended through December 31, 2013.
  3. Livestock producers sustaining weather-related mortality of cattle, swine, sheep, poultry, and horses, can receive a USDA payment at a rate of 75% of the market value of the animal on the date of death.
  4. Livestock (except those in a feedlot) owned or managed 60 days prior to a drought designation are eligible for compensation if they had to sell or dispose of the livestock because of the lack of forage and a “extreme drought” rating on the University of Nebraska Drought Monitor.  The payment would be 60% of the cost of 1 month’s worth of feed.
  5. There is a $100,000 payment limitation on disaster funds received, and recipients must comply with the Adjusted Gross Income provisions for typical farm program payments.
  6. The disaster assistance program covers any weather related problem from October 1, 2011 to September 30, 2013.
  7. Monetary provisions were increased for the Non-Insured Crop Assistance Program, which is maintained by the Farm Service Agency.  Insured yield limits remain at 65%.
  8. Half of the extension is devoted to the dairy program, the provisions of which are too extensive to detail here.  The provisions begin on page 39 of the legislation.


Two other options have been presented to the Congress, which only have a one month lifespan:

  1.   One of them extends 37 programs that expired last September because they did not have a 10 year budget and spending plan.
  2. The other legislation addresses the dairy issue and suspends the 1949 law, extends the dairy product price support program, extends the dairy export incentive program, and extends the Milk Income Loss Contract program, all until January 31, 2013. 


The only thing now is to see what the decision is of the House and Senate in approving the proposed legislation.  That may happen within a few minutes or a few days.



The urgency of preventing a doubling of consumer milk prices has lead to a rapid negotiation between House and Senate agriculture leadership on a replacement for the dairy program and potentially a 9 month Farm Bill.  Several options are being given to the House and Senate that will have to be approved before January 1. 



Posted by Stu Ellis on 12/30 at 10:48 PM | Permalink

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