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Dairy Policy Fight Is Delaying Farm Bill, Lucas Says

January 8, 2014
Dairy employee
  

A longstanding dispute over dairy policy is holding up an agreement between U.S. House and Senate lawmakers on a new farm bill, House Agriculture Committee Chairman Frank Lucas said.

The most obvious sticking point "is the dairy policy," Lucas said in an interview today in Washington. "We’re just not quite there yet," said Lucas, who said that once a "handful of things" are resolved, a conference meeting will be held to resolve remaining issues.

Lawmakers have been debating the bill for more than two years. The measure governs farm subsidies, which encourage the planting of soybeans, cotton and other crops that reduce the cost of materials for commodity processors including Bunge Ltd.

The bill also subsidizes crop insurers such as Ace Ltd. and funds consumer purchases at Kroger Co. and other grocers through food stamps, its biggest expense.

Under a bill passed by the Senate in June, a new program offering farmers profit-margin insurance for dairy products would require producers who voluntarily enter the program to agree to cut milk production once prices fall below a set limit.

Producers who ignore the agreement would receive less from the government. Money saved would buy dairy products for distribution to the poor -- another way to reduce inventories.

 

House Version

 

Language endorsing that approach was stripped from the House version of the bill at the urging of Speaker John Boehner, an Ohio Republican.

House Democrats including Agriculture Committee ranking member Collin Peterson of Minnesota supported the Senate provision. Peterson has said supply management is needed to deal with price swings and to protect small farmers.

Other unresolved issues include potential changes to country-of-origin labels on meat products, farm-subsidy payment limits, and a proposal to ban states or localities from passing laws requiring specific production practices to be followed in other jurisdictions as a condition for sale within their own boundaries.

Those issues will be dealt with in a meeting of the full farm-bill conference committee, according to Senator Charles Grassley, a Republican from Iowa who is not a conferee.

Boehner and the leaders of the House Agriculture Committee, Lucas and Peterson, spoke Jan. 3 by phone, according to several aides familiar with the call. They reiterated their positions on dairy, the aides said. No deal was reached.

 

‘Just Tough’

 

"It’s just tough, it’s just tough," Lucas said before House and Senate Agriculture Committee leaders met today in Senate Agriculture Committee Chairwoman Debbie Stabenow’s office. "If you’re between your ranking member and your speaker, that’s a tough position to be in a conference committee."

A farm conference may come as soon as tomorrow, with votes next week, if leaders are able to resolve their differences today. A room on the House side of the Capitol is reserved.

Plans for a meeting tomorrow appear to be evaporating, said Representative Steve King, an Iowa Republican who is a conferee and the sponsor of the production-practices proposal.

"As each hour goes by, the likelihood of a conference this week gets less," King said in an interview.

 

Food Stamps

 

The dairy snag is unrelated to debates over food stamps, the biggest USDA program. Negotiators are "pretty much" agreed on the program, Stabenow, a Michigan Democrat, said last month.

Lawmakers are coalescing around a reduction in food stamp costs of about $8 billion to $10 billion over a decade, much closer to the Senate’s goal of a $4 billion reduction than the House plan for $39 billion.

Supporting the Senate language on the dairy issue is the National Milk Producers Federation, which represents dairy marketing cooperatives including Arden Hills, Minnesota-based Land O’ Lakes Inc.

The International Dairy Foods Association, whose members include Dean Foods Co., Nestle SA, Unilever NV and Kroger Co., has warned against that approach, saying it could lead to occasional price spikes that would harm trade and consumers.

The previous farm bill was passed in 2008, and an extension of that law expired Sept. 30. That may force the Agriculture Department to reinstate farm programs governed by a 1949 law, potentially doubling dairy prices.

The Senate farm bill is S.954. The House bill is H.R. 2642.

 

--Editors: Jodi Schneider, Laurie Asseo

 

To contact the reporters on this story: Derek Wallbank in Washington at dwallbank@bloomberg.net; Alan Bjerga in Washington at abjerga@bloomberg.net

 

To contact the editors responsible for this story: Jodi Schneider at jschneider50@bloomberg.net; Jon Morgan at jmorgan97@bloomberg.net

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RELATED TOPICS: Dairy, Policy, 2013 Farm Bill

 
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