January 3, 2013
On New Year’s Eve, the Senate passed a simple extension of the 2008 Farm Bill through September 30, 2013, as part of a much bigger legislative package to avoid the so-called fiscal cliff. The House approved the Senate bill late on New Year’s Day and President Obama signed it into law on January 2.
The fiscal cliff deal was the final death knell for the 2012 Farm Bill that the full Senate passed in June and that the House Agriculture Committee passed in July. The deal was also a very sudden death knell for the reasonable modified farm bill extension measure that NSAC worked diligently to promote over the past several months.
Approval of the simple farm bill extension also means that the new Congress that begins today will have to start the process of reauthorizing a new, full five-year farm bill from scratch.
Awful Farm Bill Extension Comes Together at the Last Minute
Since July, the biggest obstacle to passing a 2012 Farm Bill has been lack of support from the House GOP leadership for bringing a new bill to the House floor. The House GOP leadership turned aside chances to do that in July, September, and October. Given that opposition, as the fall progressed, it became increasingly likely that Congress would instead have to pass an extension of the 2008 Farm Bill. NSAC campaigned for a modified extension of the 2008 Farm Bill that would:
We also endorsed dealing with dairy programs in some effective manner, and providing disaster assistance for livestock and fruit producers.
With the partial exception of dairy, none of the above was part of the final deal reached between the White House and Senate Minority Leader Mitch McConnell (R-KY) on Monday and then wrapped into the fiscal cliff bill. There was no commodity subsidy reform, no disaster assistance, and no extension of funding for farmers markets, value-added agriculture, rural microenterprise assistance, beginning farmers, minority farmers, organic agriculture, renewable energy, and specialty crop and organic research.
Clearly, Senate Republican leadership and the White House decided during their negotiations there were segments of agriculture that deserved extension and other segments that deserved to die.
NSAC issued a press release on Tuesday morning slamming the farm bill extension:
The farm bill extension deal reached in negotiations between Senate Minority Leader Mitch McConnell and Vice President Joe Biden is a disaster for farmers and the American people […] The deal is blatantly anti-reform. The full Senate and the House Agriculture Committee earlier this year agreed to permanently eliminate direct payment subsidies for commodity production regardless of price and income conditions, yet the deal would lock in those egregious subsidies for another full year at a $5 billion price tag. On the other hand, many smaller, targeted programs to fund farm and food system reform and rural jobs…were left out completely. Also left out of the final deal is any workable dairy policy for the next year and any disaster aid for livestock and fruit producers. The deal also has the effect of keeping farmers from being able to improve soil and water conservation through enrollment in the Conservation Stewardship Program at the present time. We are extremely disappointed in the Republican leadership for proposing this deal and in the White House for accepting it. The message is unmistakable – direct commodity subsidies, despite high market prices, are sacrosanct, while the rest of agriculture and the rest of rural America can simply drop dead.
On the positive side, the nine-month extension of all the basic authorities in the 2008 Farm Bill does allow USDA to restart programs that have ongoing baseline funding but that have, since October 1, 2012, lacked authority to spend the money. This includes programs such as the Wetlands Reserve Program and the Grassland Reserve Program that have a modest amount of funding left over from the 2008 Farm Bill. It also includes programs such as the Seniors Farmers Market Nutrition Program and the Specialty Crop Block Grant program that have permanent funding, but for the past three months have not had spending authority.
Dairy Twists and Turns
Having quickly disposed of programs for new farmers, minority farmers, healthy food markets, rural job programs, renewable energy, specialty crop and organic research, and organic farming — and having protected every last red cent of direct commodity subsidies — the last issue to be settled in the McConnell-Biden talks was dairy. All sides wanted to avoid the political embarrassment of the imposition of permanent law from the New Deal era that would have required massive government purchases of milk to force consumer prices up to double their current levels.
There was huge disagreement, however, over whether to adopt the new margin protection program included in the Senate-passed and House Committee-passed farm bills or return to the Milk Income Loss Contract (MILC) program from previous farm bills. The big dairy processors adamantly opposed the new program and had a champion for their cause in House Speaker Boehner (R-OH). In light of Boehner’s opposition, Senate Majority Leader McConnell proposed returning to the MILC program but at the low rates of protection that existed in September 2012 rather than the higher rates from pre-September, a proposal that raised howls of protest from dairy state Senators. In the end, they went with MILC at the higher rates, a decent compromise given the hour and need to do something to keep permanent law from kicking in.
Other Provisions Relevant to Agriculture in the Fiscal Cliff Deal
There were two other items with great relevance to agriculture in the fiscal cliff deal. First, the estate tax deal came out at the highest and worst possible level – $10 million per couple tax free (in addition to tax free annual gifting amounts), indexed for inflation. This is now permanent law and will be very difficult to change in the future, and it is a disaster for the structure of agriculture. Over time it will further concentrate land holding, raise land prices, and put an even tighter squeeze on new farmers trying to break into agriculture.
Second, the fiscal cliff deal put off automatic budget cuts, known as sequestration, for just two months. The $85 billion in automatic cuts, half for defense and half for social programs, is now set to kick in at the end of February — the same time at which the Treasury Department will be out of gimmicks to forestall going into default on the national debt. Hence, the deal guarantees another tumultuous showdown at the very start of the 113th Congress, one which could put even more pressure on agricultural appropriations in the future if another huge discretionary spending cut is included at that point as it was in August 2011.
A Decent Farm Bill Extension was in the Works
As bad as the farm bill extension turned out in the final fiscal cliff bill, just two days before that awful ending we were cautiously optimistic about a decent conclusion to the farm bill extension negotiations. As the clock ticked down on the calendar year and the 112th session of Congress, Senate Agriculture Committee Chair Debbie Stabenow (D-MI) and House Agriculture Committee Chair Frank Lucas (R-OK) came together on a responsible farm bill extension plan. Their plan was written into a bill that was filed and put on the House calendar Saturday night, December 29. While not perfect, it was at least fair and comprehensive. Had that bill, rather than the McConnell-Biden deal, become law, the following programs would have received the funding indicated in the chart below. Each and every one of the programs listed below was instead left on the scrap heap with no 2013 funding in the final fiscal cliff package.
Stabenow and Lucas extension proposal:
|Conservation||2013 Funding Level|
|Voluntary Public Access||$10 million|
|Desert Terminal Lakes||$35 million|
|Small Watershed Rehabilitation||$20 million|
|Rural Microentrepreneur Assistance Program||$3 million|
|Value-Added Producer Grants||$3 million|
|Organic Agriculture Research and Extension||$20 million|
|Specialty Crop Research Initiative||$50 million|
|Beginning Farmer & Rancher Development Program||$19 million|
|Healthy Forest Reserve Program||$9.75 million|
|Biobased Marketing Program||$2 million|
|Biodiesel Fuel Education Program||$1 million|
|Rural Energy for American Program||$51 million|
|Biomass Research and Development||$33.6 million|
|Biorefinery Assistance||$80 million|
|Biomass Crop Assistance Program||$38.6 million|
|Bioenergy for Advanced Biofuels||$55 million|
|Specialty Crops and Organic|
|Farmers Market Promotion Program||$10 million|
|National Clean Plant Network||$5 million|
|National Organic Certification Cost Share||$5 million|
|Organic Data Initiative||$1 million|
|Outreach and Technical Assistance for Socially Disadvantaged Farmers and Ranchers||$20 million|
All of those programs, plus disaster assistance for livestock (drought) and fruit (freeze) producers, were fully paid for in the Lucas and Stabenow extension proposal by reducing direct commodity payments from being paid on 85 percent of base commodity acres to 82.5 percent of base commodity acres. That modest cut — to a program that would have disappeared completely had the 2012 Farm Bill become law — was too much for some commodity interests and hence was nixed in the final fiscal cliff deal.
The Stabenow and Lucas extension bill also included the new dairy margin protection program that was championed by House Agriculture Committee ranking member Collin Peterson (D-MN) but was anathema to Speaker Boehner, as explained above.
We take heart that the two chairs were able to come together and reaffirm their support for the newer, more innovative farm bill programs, right down to the closing days of 2012. As we said in our press release on Tuesday:
We commend the Agriculture Committee leadership for trying to pass a more responsible extension measure, and on behalf of our member organizations and the farmers they represent we recommit ourselves to getting a true farm and food bill reform measure passed in 2013.
CSP Still Stuck
One item missing from both the final fiscal cliff bill and the Lucas and Stabenow extension proposal was a fix to the mistake included in the Continuing Resolution back at the beginning of October that has prevented USDA from running a 2013 farmer sign-up for the Conservation Stewardship Program. By mistakenly using a 2012 funding number instead of a 2013 funding number, the Continuing Resolution has stopped the 2013 CSP enrollment process. NSAC has appealed to both the Appropriations Committee and the Agriculture Committees to come together and solve this unfortunate problem using the first available legislative vehicle. The best chance to get it done in a timely fashion turned out to be the farm bill extension portion of the fiscal cliff bill, but sadly that opportunity has now come and gone without the issue being resolved. The 2013 CSP sign-up must await action later this year. The more time that passes, the harder it will be to run an effective enrollment, so we hope it will be resolved quickly.
Unknowns Lie Ahead
It is anyone’s guess as to how the farm bill debate will proceed from here. A fiscal deal has been reached, but Congress punted on a number of key issues that it will have to address soon. In February, Congress will be absorbed with the negotiations around raising the debt ceiling to avert a government default. In March, Congress will have to deal with the next Continuing Resolution to keep the government functioning. On March 1, sequestration kicks in and Congress will have to act if it wants to avoid $85 billion in spending cuts to defense and non-defense spending.
For agriculture, there are a number of unknowns that will shape the 2013 Farm Bill debate. There are many new members of the Agriculture Committees, particularly in the House, which will change once again the dynamics and policy discussions. In March, the Congressional Budget Office will issue a new farm bill budget baseline that will be the yardstick against which new farm bill proposals will be measured. It will very likely show higher crop insurance subsidy spending, slightly lower food stamp spending, and lower Conservation Reserve Program spending, all of which will be factored into preparations for a new bill. It is also unclear how much savings the Committees will have to achieve in the new farm bill.
Despite these built-in difficulties, there is every reason to suspect that the Senate and House Agriculture Committees can come up with new bills that are reported out of Committee at some point this spring. Whether those bills will be more closely aligned than the 2012 versions were, especially on the divisive commodity subsidy and food stamp spending provisions, very much remains to be seen.
Beyond those regional and ideological disparities lies the even bigger question of under what circumstances will the House GOP leadership ever bring a farm bill to the House floor for debate and voting. They had every opportunity from July through December 2012 to do so, and never even came close to bringing the House Committee-passed bill forward. Stay tuned for a more in-depth post soon on the possible paths forward for the farm bill in 2013.