National Sustainable Agriculture Coalition

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Path to the 2012 Farm Bill: Farm Bill Expires on Monday — What Does It Mean and What Happens Now?

We have been fielding lots of questions in the past few weeks following the congressional meltdown on the new farm bill.  This is not surprising, given Congress’ failure to date to either pass a new farm bill or to enact a short-term extension of the existing farm bill before the farm bill expires at midnight, this Sunday, September 30.

In an attempt to answer the questions we have been getting in a more public way, we are publishing this post in the form of frequently asked questions.  Interested readers can plow through in order, or jump to any question below:

 When and why does the 2008 Farm Bill expire?

Congress generally reauthorizes farm bills — which help establish our food and agriculture policy as a nation — for a period of about five years, sometimes a little more or a little less.  When Congress adopted the 2008 Farm Bill (officially the Food, Conservation, and Energy Act of 2008), they made the law sunset at the end of Fiscal Year 2012 — which is midnight on September 30.  When you wake up on Monday morning (October 1), the current farm bill will have expired, without a new farm bill to take its place or a short-term extension to provide comprehensive ongoing legal authority.

Before the 2008 Farm Bill, Congress had never scheduled a farm bill to expire in a Presidential election year.  Some advocates, including NSAC, strongly advised against breaking that precedent while Congress considered the 2008 bill.  But alas, the unwritten rule was violated, and the chickens have now come home to roost.

Why didn’t Congress extend the current farm bill for a few months?

Darn good question.  As with most things congressional, it comes down to politics.  The House GOP leadership actually did make an attempt at a one-year extension of the current farm bill just prior to their August recess.  GOP leadership withdrew the bill when it was clear there were not enough votes to pass it.

NSAC opposed that measure for several reasons, including the fact it was a long-term rather than short-term extension, and also because it failed to extend current farm bill programs that would have needed a renewal of funding to continue in 2013.  In other words, it was a selective extension that left out critical programs (more on that below).

In September, most of the forces and policy makers who want to get a new farm bill done this year felt that any extension might quite possibly undermine the push to finish the new bill.  Meanwhile, forces and members of Congress opposed to the bill did not see a tactical advantage to extending current law.  Combined, that situation meant an extension would likely have been impossible to pass anyway, though some floated the idea.

Hence, starting Monday, we wind up in limbo land instead.  It is not exactly the first time this has happened, but it’s close.  It had never happened before 2007.  In 2007, as the fiscal year came to a close, Congress extended some but not all farm bill authorities in a Continuing Resolution that otherwise dealt primarily with appropriation matters.  Congress then came back and passed the first of several short-term extensions of the entire 2002 Farm Bill at the end of December, a process which continued until the new bill became law in June 2008.

This year, Congress also needed to resort to a Continuing Resolution rather than finishing normal appropriations bills.  The Continuing Resolution for Fiscal Year 2013 approved last  week  included an extension for food stamps and several closely related smaller nutrition programs, but nothing else, which is a perfect segue to the next question.

Why aren’t food stamps and crop insurance affected by farm bill expiration?

Many commentaries on farm bill expiration focus on the fact that the two biggest farm bill programs –SNAP (Supplemental Nutrition Assistance Program, formerly food stamps) and federal crop insurance, which together equal nearly 90 percent of all farm bill spending — are unaffected.  That is true.  As explained above, Congress extended food stamp authority as part of the just-passed Continuing Resolution that keeps the government as a whole funded through the end of March 2013.

The authority for federal crop insurance is in the Federal Crop Insurance Act.  While farm bills, especially in the recent past, make changes to crop insurance law, the farm bill has not normally been the vehicle for authorizing the program.  In any event, there is currently no sunset date in its authorization (making it a “permanent” authorization, in Hill-speak).

Why are many people saying there is a lot more time remaining before the deadline for commodity program changes?

Many commentators and lawmakers focus on commodity programs when speaking about the farm bill, because they have been the bill’s long-time central feature.  In the context of farm bill expiration, an oft-repeated comment is that farm commodity subsidies and support structures are not in any kind of final jeopardy on October 1.  Dairy programs do not radically change until January (although certain very significant changes started on September 1, see below), and other subsidized crops aren’t really affected until later in the spring through early fall of 2013.  While some suggest, therefore, that expiration has no major consequence, this takeaway message is not entirely accurate.

While the 2008 Farm Bill covers commodities through the 2012 crop year, and while some of the 2012 crop year subsidy payments are made in 2013 and are not affected by expiration, both the Senate-passed and House Committee-passed new farm bills make huge changes to commodity programs, including an end to direct payments.  To make those brand-new programs operable for the 2013 crops, USDA needs significant time to prepare new rules, forms, computer programs, and guidance materials with which to enroll farmers, and farmers (and their bankers and credit suppliers) need to time to make informed choices and to enroll.

This cannot happen at the drop of hat if Congress waits until the last minute.  From an administrative implementation perspective and from a farmer planning perspective, all the talk of harvest time next calendar year as being the real legislative deadline is seriously misguided and legislative-centric thinking.

For dairy programs, the turmoil already began on September 1 because a change to the formula for determining milk payments to farmers effectively ended those payments on that date.  On January 1, the dairy price support program itself will expire, becoming the first program to revert to permanent law.  Under permanent law, government-supported prices would be about four times higher than current law and about twice as high as current market prices.  Why the huge price increase?  Good question, which leads us to the next question.

What happens if we were to revert to the 1949 Farm Bill?

If a new farm bill is not enacted or the current farm bill is not extended for a period of time, the farm bill commodity programs revert to permanent law contained in the 1938 and 1949 farm bills.  Each successive farm bill since that time has suspended permanent law for the period of time provided for the newly enacted farm bill.  But the permanent law provision is scheduled to pop back up and become the law of the land again if Congress does not enact a new bill or extend current law.

This peculiar feature normally induces Congress to get its work done on each new farm bill in a timely fashion.  Without a 2008 Farm Bill extension or a new farm bill, dairy policy reverts to permanent law on January 1, and grain and other commodities do so once the new 2013 crop is ready for planting.

USDA’s job to get ready to implement the 1949 Act actually begins next week, though few expect the Department to spend much time on the matter.  Why?  Because reverting to permanent law would re-introduce a radically different farm program, one with much higher support prices (through nonrecourse loans instead of payments) that would require much smaller crop production and much higher consumer prices.  It would also leave out any mandatory coverage for soybeans and other oilseeds as well as peanuts and sugar.  In other words, it is widely considered so extremely anachronistic as to be unworkable.

Still, as impossible as it is to imagine it going into effect, permanent law will be the law of the land unless Congress acts to agree on a new farm bill, extend the current farm bill, or suspend or repeal permanent law.

What about conservation programs — what happens to them?

After food stamps and crop insurance, the next largest farm bill accounts in terms of funding are the commodity subsidies and conservation assistance.  Farm bill conservation programs with mandatory funding comprise more than 85 percent of total USDA conservation spending, with the balance coming from appropriations.

The working lands conservation programs — Conservation Stewardship Program (CSP), Environmental Quality Incentives Program (EQIP), Wildlife Habitat Incentives Program (WHIP), and Agricultural Management Assistance (AMA) Program — had their legal authorities extended through 2014 by the Agricultural Appropriations Act for Fiscal Year (FY) 2012.  The same was true for the Farmland Protection Program (FPP), but not for the other easement programs — the Grassland Reserve Program (GRP) and Wetlands Reserve Program (WRP) — and not for the Conservation Reserve Program (CRP).

Right now, with farm bill expiration upon us, the earlier extension of some conservation program authorities through 2014 is proving to be very helpful.  At the time the appropriations bill was written, however, the extension served a very different purpose.  The FY 2012 appropriations bill stole over $900 million in farm bill conservation funding — through something called “changes in mandatory program spending” or “chimps” in Hill-speak — to make up for shortfalls in the discretionary agricultural spending under the purview of the Appropriations Committee, as opposed to the mandatory farm bill spending that is the purview of the Agriculture Committees.  (Roughly 80 percent of USDA funding is mandatory, with most of that coming through the farm bill.)  Were it not for the extension of authority to 2014, the 2012 “chimps” to conservation spending would have permanently altered the farm bill budget baseline and made the task of agreeing on a new farm bill all the more difficult.  To prevent that long-term negative impact, the extension was agreed to.

So here in a nutshell is the admittedly complex conservation program situation on October 1:

  • EQIP, WHIP, AMA, and FPP are all in good shape due to the extension until 2014.  USDA can hold normal enrollments for those programs this fall and winter.  The just-passed Continuing Resolution holds over from 2012 the “chimps” to those programs, so their funding levels are lower than they would be otherwise, but they are operative and farmers can enroll without interruption.  The same thing holds true for the various EQIP subprograms and special initiatives.
  • CSP would be in good shape (due to the extension until 2014) except for a huge new problem in the new Continuing Resolution.  The Continuing Resolution has the effect of limiting CSP funding to just the amount necessary to pay for existing contracts but not enough to pay for any new ones.  At least until Congress takes corrective action, hopefully during the lame duck session, new FY 2013 CSP enrollments are on hold.
  • GRP, WRP, and CRP (including the conservation buffer initiative or so-called continuous CRP) all have acres under their 2008 Farm Bill acreage cap remaining.  There would, therefore, be funding available for these programs in FY 2013 if it weren’t for the fact there is no legal authority to use those available acres and dollars after September 30.  The same is true of the Chesapeake Bay Watershed Initiative (CBWI) — it has a funding baseline but no authority to actually spend the available money.  Hence, there can be no new enrollments in any of these programs until Congress passes a new farm bill, extends the current farm bill, or extends these authorities in a new Continuing Resolution or final appropriations bill.  Payments and maintenance of existing contracts from prior years is allowed.
  • Special note – GRP, WRP, and CBWI are all consolidated into larger, overarching programs in the Senate-passed and House Committee-passed 2012 Farm Bills.  Hence, if and when those bills pass, they will be known by different names.  But their functions, as well as their remaining budget baselines, will all be carried forward.

So, CSP, GRP, WRP, CRP, and CBWI are all shut down for new enrollments starting October 1.  Are there other programs that also screech to a halt on October 1?

Yes, there are!  A lot.  The last two farm bills in 2002 and 2008 began the long-overdue process of providing farm bill funding for emerging priorities outside of the traditional farm bill areas (food stamps, commodity subsidies, and more recently, conservation assistance).  These include, for instance, the following eleven programs that we at NSAC believe are among the most innovative and forward-looking programs the farm bill has to offer:

Each and every one of these programs, plus others, while they will still exist on paper, will have no renewed farm bill funding come October 1.  This means that USDA will not be able to move forward with these programs in FY 2013.  All the grants, loans, and research projects funded by these programs will be on hold until Congress acts.  Two of the programs above — REAP and VAPG — will thankfully have small appropriated discretionary dollars to work with, though even those two would have far less money than they would likely wind up with under a new farm bill.  All the rest, however, will have no farm bill or appropriations funding.  Absent congressional action they will simply wither on the vine.

With the expiration of the farm bill, therefore, beginning farmer training opportunities and minority farmer assistance projects will dry up.  Microloans and training for very small businesses — businesses that drive economic recovery in rural America — will cease.  Emerging farmers markets in rural and urban food deserts will not have access to startup grants.  Organic farming and fruit and vegetable researchers will not be able to compete for any dedicated research funds.  No funds will be on hand to help transition land coming out of CRP into the hands of new young farmers.  Incentives to create a new generation of sustainable biofuels based on perennial crops will stop.  In other words, the programs that directly address rural and urban job creation, renewable energy, and improved production and access to healthy food will be left high and dry.

But wait!  There’s even more bad news.  In addition to these programs that need renewed funding to continue, there are also programs that have funding, but as of October 1, lack the authority to use that funding.  We address this question with respect to conservation programs in the preceding question.  But those conservation programs aren’t the only such stepchildren of farm bill expiration.  Other important programs, for instance the Senior Farmers Market Nutrition Program and the Specialty Crop Block Grant Program, have a strong continuing funding baseline but will now lack the authority to make use of it, so effectively they, too, will come to a halt until a new bill or an extension of the existing bill becomes law.

Do these program expirations really matter?

We believe they do.  In fact, we think they matter as much or more than anything else in the farm bill.  Following the last hired, first fired rule in employment situations often yields terrible results for the long-term health, well-being, and productivity of a business.  The same is true here.  The newer, more innovative and forward-looking programs that will help create a new 21st century farm and food system should not be neglected.  In fact, they should be the programs that are growing not shrinking or disappearing.

To date, it seems that Congress agrees, at least in part.  Each of these programs is included for renewed mandatory funding in the Senate-passed 2012 Farm Bill, the House Committee-passed bill, or both.  Only three are included in the pending 2012 bills at higher levels of funding than under the 2008 Farm Bill and most are unfortunately set at lower levels — a problem we hope Congress will fix before the new bill is finalized.

But be that as it may, it is clear that there is political support for these programs in the new farm bill.  It is also clear that they have been left, for now, without funding for at least the next few months.  What is not clear is whether, should the current farm bill be extended into calendar year 2013, these programs will get their funding restored for that interim period of time.  We believe they should and that, in addition to reversing the misguided shut down of the Conservation Stewardship Program (see above), this should be top priority for any extension bill.

(Note to readers: We will be posting articles on each of these priority programs, starting next week and through to the lame duck session of Congress.)

How does the disaster assistance bill factor into this discussion?

Both the Senate-passed and House Committee-passed versions of the 2012 Farm Bill include comprehensive disaster assistance provisions.  Passage of the new farm bill in the lame duck session of Congress in November and December would eliminate any need to consider separate disaster assistance legislation.

If Congress fails to enact a new bill, then disaster assistance to respond to drought, freezes, and other disasters from the past growing cycle may get separate consideration.  The House passed a disaster bill just prior to its August recess, but it was not a comprehensive bill and it paid for disaster aid through an incredibly short-sighted set of cuts to working lands conservation programs.

The best thing Congress can do to respond to disaster needs is to pass a new farm bill.  If that does not happen and a separate bill is considered, Congress should pass it under the disaster aid provision provided for by the Budget Control Act of 2011 — not by raiding the very conservation programs that help farmers become more resilient and thus better able to deal with drought and other extreme weather conditions.

What is the relationship between the farm bill and the Continuing Resolution?

As mentioned above, the Continuing Resolution (CR) keeps the entire government and all discretionary programs funded at nearly static 2012 levels through the end of March 2013.  That is halfway through the fiscal year, which starts on October 1.  The expectation is that Congress will either return to the regular, full year new appropriations bills, including the agriculture bill, in the lame duck session or in the new session of Congress that begins in January.  Whenever that omnibus appropriations bill passes, it will govern discretionary spending for all government agencies through the rest of the fiscal year.

Also as noted above, the CR extended the authority of the SNAP or food stamp program through the end of March as well, freeing that program from any damage due to congressional inaction on the new farm bill.

Unfortunately, the CR did not include a much-needed provision to extend the authorities for new enrollments in the Wetlands Reserve Program, Grassland Reserve Program, Conservation Reserve Program, and Chesapeake Bay Conservation Program.  The failure to include such an extension in the bill for those programs or for programs like the Senior Farmers Market Nutrition Program or the Specialty Crop Block Grant Program means they become temporarily inoperative for new enrollments and grants beginning October 1.

Worse still, the CR included, unintentionally, a provision that effectively shuts down the 2013 Conservation Stewardship Program, at least until Congress fixes the mistake.  By failing to adjust the CSP funding level to its 2013 amount before cutting the program, the CR essentially freezes the program in place with little or no room for new enrollments.  That the CR robs farm bill conservation accounts (including CSP, EQIP, FPP, and WHIP) to pay for unrelated expenditures in the appropriations bill is wrong to begin with, but to then also make the cut from the wrong baseline funding level in the case of CSP adds a very big insult to injury.  This error will hopefully be corrected in the lame duck session after the elections.

What is the relationship between the farm bill and the automatic budget cuts scheduled for January 1?

The new farm bill, when and if it becomes law, will cut more spending from farm bill programs overall, on a net basis, than the automatic budget cuts scheduled to begin on January 1 under the requirements of the Budget Control Act of 2011.  It has been assumed since the start of the farm bill debate that, by achieving greater savings and a larger contribution to deficit reduction than would be required under the automatic cuts (known in Hill-speak as sequestration), the farm bill would take the place of automatic cuts to mandatory agricultural spending.  Our blog post on this subject goes into more details.  Whether Congress postpones the start date for automatic cuts or in other ways amends the Budget Control Act when it returns to DC after the elections is one of the biggest issues hanging over the lame duck session.

What are the farm bill choices that Congress has during the lame duck session?

There are two theories about what happens next.  In one, the House returns after the elections and finally brings its bill to the floor, passes the bill with amendments, the House and Senate versions then get reconciled in a farm bill “conference” committee, and a melded final bill is approved by the conference, sent back to both bodies for a final vote, and sent to the President for his signature — all within the three to five weeks of the short “lame duck” session.

In the other theory, Congress returns after the election and works out the details of a bill to extend, with some modifications, the 2008 Farm Bill until a date in the spring, summer, or fall of 2013.  Under this scenario, the new session of Congress that begins in January (and lasts for the next two years) will start the five-year farm bill process all over again, with both House and Senate Agriculture Committees formulating a new bill that will then go through the entire legislative process all over again.

One of the big factors that should concern food and agricultural interests with choice number two is the fact that a new farm bill finished in 2013 will operate under a different budget baseline than if the bill is finished in the lame duck session.  It is too early to say for sure what the impact of the new baseline would be, but expenditures for crop insurance subsidies will most certainly be higher, increasing the total cost of the farm bill, and projected savings from changes to commodity programs in the pending 2012 bills will almost certainly be lower.  Absent a reversal of the conservation cuts in the Continuing Resolution during the lame duck session, the conservation budget baseline will be lower, making that title more difficult to put together.  All things considered, there is a very strong possibility that the new baseline alone will make the task for finishing a farm bill more difficult.  And that does not even include factoring in the politics around any long-term budget deal that may or may not be reached next year.

Could a new Congress next year simply revert to the farm bills passed this year?

No, not exactly.  Legislation does not carry forward from one Congress to the next.  The process must start all over again, with bills introduced, markups in Committee, and votes on the floor of both bodies.  So in that sense, things really do start all over again.  That said, if the leaders and members of the Agriculture Committees (some of whom will be new next year) decide to bring forth and approve essentially the same bill they produced in 2012, that is an option open to them.  But it still must go through the normal process and be subject to amendments and voting all over again.

What is the best path forward?

There can be little doubt that the best path forward is for Congress to finish its work on the 2012 Farm Bill in 2012.  That will mean getting the House bill to the House floor very quickly when the lame duck session begins, but leaving plenty of time for debate and amendments.

In our view, while the House bill has a range of fairly good titles and program improvements, the farm program provisions in the House bill are in particular are in need of major reform.  We expect major House floor debates on very important reform amendments.

(Note to readers: We will be publishing another post soon detailing the many farm program reform provisions in the Senate bill that are missing from the House bill, with additional thoughts on how to improve both bills to improve their effectiveness and lower their cost.)

The House bill also contains a handful of very bad legislative riders that harm competitive markets, environmental protection, and public health, that should be struck.

Assuming House passage of a new bill, hopefully a much improved bill compared to what came out of the Committee, there will then be a period of time needed to work through the significant differences between the Senate and House bill.  Some of those differences can be worked out and settled ahead of time, but many of the most significant ones will come down to the conference committee,  which is made up of representatives, usually the more senior members, of both committees.

If, however, the best path forward is not the chosen path come November and December, then an extension of the entire farm bill must be enacted before this session of Congress ends.  That could be a short-term extension, until, perhaps the end of March or May, or it could be an extension through the end of the 2013 fiscal year and/or the 2013 crop year.  Whatever choice is made about the length of the extension, we will insist the extension must actually extend all farm programs and not leave the smaller but very important programs listed in an earlier question above without farm bill funding for 2013.

What can I do?

It’s up to all of us to hold Congress accountable and get a 2012 Farm Bill done before the end of the year.  All of our victories in the draft versions of the farm bill thus far – historic commodity payment limitation reform, conservation protection for highly erodible land and sensitive wetlands, grant funding for local and regional food infrastructure, and much more – are on the line.  Calls from folks like you will be crucial in November when Congress comes back to Washington.

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