Congress Eyes Milk Prices, Politics in Farm Bill Talks

October 28, 2013 02:46 AM
Congress Eyes Milk Prices, Politics in Farm Bill Talks

If the bill isn't passed this year, dairy supports could expire and milk prices could skyrocket.

By MARY CLARE JALONICK, Associated Press

The fight over renewing the nation's farm bill has centered on cuts to the $80 billion-a-year food stamp program. But there could be unintended consequences if no agreement is reached: higher milk prices.

Members of the House and Senate are scheduled to begin long-awaited negotiations on the five-year, roughly $500 billion bill this week. If they don't finish it, dairy supports could expire at the end of the year and send the price of a gallon of milk skyward.

There could be political ramifications, too. The House and Senate are far apart on the sensitive issue of how much money to cut from food stamps, and lawmakers are hoping to resolve that debate before election-year politics set in.

Minnesota Sen. Amy Klobuchar, a Democrat who is one of the negotiators on the bill, says the legislation could also be a rare opportunity for the two chambers to show they can get along.

"In the middle of the chaos of the last month comes opportunity," Klobuchar says of the farm legislation. "This will really be a test of the House of whether they are willing to work with us."

The farm bill, which sets policy for farm subsidies, the food stamps and other rural development projects, has moved slowly through Congress in the last two years as lawmakers have focused on higher-profile priorities, like budget negotiations, health care and immigration legislation.

But farm-state lawmakers are appealing to their colleagues to harken back to more bipartisan times and do something Congress hasn't done very much lately — pass a major piece of legislation.

Even President Barack Obama, who has been largely silent on the farm bill as it has wound through Congress, said as the government reopened earlier this month that the farm bill "would make a huge difference in our economy right now."

"What are we waiting for?" Obama said. "Let's get this done."

The main challenge in getting the bill done will be the differences on food stamps, officially called the Supplemental Nutrition Assistance Program, or SNAP. The House has passed legislation to cut around $4 billion annually, or around 5 percent, including changes in eligibility and work requirements. The Senate has proposed a cut of around a tenth of that amount.

"I think there are very different world views clashing on food stamps and those are always more difficult to resolve," says Roger Johnson, president of the National Farmers Union.

Johnson says coming together on the farm issues, while there are differences, will be easier because the mostly farm-state lawmakers negotiating the bill have common goals.

Passing a farm bill could help farm-state lawmakers in both parties in next year's elections, though some Republicans are wary of debating domestic food aid in campaign season. Republican House leaders put the bill on hold during the 2012 election year.

One way to pass the bill quickly could be to wrap it into budget negotiations that will be going on at the same time. The farm bill is expected to save tens of billions of dollars through food stamp cuts and eliminating some subsidy programs, and "that savings has become more key as we go into budget negotiations," Klobuchar said.

If that doesn't work, lawmakers could extend current law, as they did at the end of last year when the dairy threat loomed. But Senate Majority Leader Harry Reid, D-Nev., has said he wants to finish the bill and won't support another extension.

One of the reasons the bill's progress has moved slowly is that most of farm country is enjoying a good agricultural economy, and farmers have not clamored for changes in policy. But with deadlines looming, many say they need more government certainty to make planting decisions. Most of the current law expired in September, though effects largely won't be felt until next year when the dairy supports expire.

Some farmers are feeling the effects of the expired bill now, however. An early blizzard in South Dakota earlier this month killed thousands of cattle, and a federal disaster program that could have helped cover losses has expired.

Rep. Kristi Noem, R-S.D., also a negotiator on the conference committee, says her constituents aren't concerned with the differences between the House and Senate versions of the bill, but they just want to see a bill pass.

"Maybe the biggest question is can we put together a bill that can pass on the House and Senate floor," she said.

Farm Bill at a Glance

Members of the House and Senate will start formal negotiations on a wide-ranging farm bill this week. A look at some of the issues they will be talking about:

OVERALL COST: Current farm and food stamp spending is around $97 billion a year, with about 80 percent of that money going to food stamps. The Senate bill would save about $1.8 billion a year, while the House bill would save around $5.2 billion a year.

FOOD STAMPS: Food stamps, now known as the Supplemental Nutrition Assistance Program, or SNAP, for decades have been part of the farm bill in an effort to attract urban lawmakers' votes for rural programs. The Senate farm bill would cut about $400 million from the almost $80 billion annual total by targeting states that give people very small amounts of heating assistance so they can automatically qualify for higher food stamp benefits. The House bill would cut $4 billion yearly by making similar changes and eliminating "broad-based categorical eligibility," or automatic food stamp benefits when people are signed up for certain other programs. The House bill would also allow states to create new work requirements and end government waivers that have allowed able-bodied adults without dependents to receive food stamps indefinitely. Senate Democrats have opposed all of those major changes to the program.

DIRECT PAYMENTS: Direct payments, farm subsidies that cost the government almost $5 billion annually, would be phased out in both bills, with the savings split between other subsidy programs and deficit reduction. Direct payments have been controversial because they are paid out every year regardless of crop prices or crop yield. The Senate bill would eliminate the program immediately, while the House bill would phase it out over the next two years for cotton farmers who rely on the program.

CROP INSURANCE: Both bills would increase subsidies for federally subsidized crop insurance and create a new crop insurance program that covers small revenue losses on planted crops. This revenue protection program favors Midwestern corn and soybean farmers and would be more generous in the Senate bill. The Senate bill also includes language that would lower government crop insurance subsidies for the wealthiest farmers — an amendment added on the Senate floor over the objections of Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich. In addition, the Senate bill includes language that would require farmers who get crop insurance to comply with certain environmental standards. House Agriculture Committee leaders are firmly opposed to that provision.

PRICE PROTECTION: Both bills would raise "target prices" for some crops. Certain subsidies kick in if prices drop to those targets, meaning farmers will only receive the subsidies if prices are low. While many of these programs haven't been used for the past several years because crop prices have been at unprecedented highs, these subsidies exist as a safety net. Both the House and Senate bills would raise target prices for rice and peanuts, since those also often depend on direct payments that would be eliminated. The House bill would raise those target prices higher than the Senate bill would, making it easier for the subsidies to kick in.

DAIRY SUPPORTS: Both the Senate bill and the House committee-passed bill included a dairy overhaul that would create new insurance for dairy farmers and also a stabilization program that could dictate how much milk is produced. But the House passed an amendment backed by Speaker John Boehner, R-Ohio, that would eliminate the stabilization program. Boehner has called the program "Soviet-style," but supporters say it is needed to avoid overproduction if milk prices drop as they did in 2009.

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Spell Check

10/29/2013 06:09 AM

   When an article begins by saying "if they don't finish it(the Farm Bill), dairy supports could expire at the end of the year and send the price of a gallon of milk skyward". I stop reading right there. Anyone so brainwashed to think that the government will actually buy all this milk at that depression era price level is delusional. Even our dysfunctional government is not stupid enough to do that. Besides, THERE IS NO MONEY to do something so stupid. Does not matter what some stupid law says. THE COUNTRY IS BROKE! Before any farm bill is passed I wish they would repeal this idiotic depression era law so that I do not need to listen to fools talk about it like it is reality. Then we can pass a much lower cost farm bill(end peanut quotas, no milk supply management, lower crop insurance subsidies, etc.) and we can get on with life.


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