The prospects of moving a Farm Bill prior to the 2012 elections are fairly dim, says Scott Brown, associate director of the Food and Agricultural Policy Research Institute at the University of Missouri. Brown spoke at the Minnesota Milk Producers Association annual meeting this week.
There are a number of factors which will likely hold up the process. First, the turnover in the House of Representatives means there are new chairmen and, thus, new staffs to be hired and brought up to speed. That process alone could take several months.
In addition, net farm income has rebounded from its low of $60 billion last year to $80 billion in 2010. It could climb to $90 billion next year, which could be record. "With that kind of farm income, the Farm Bill discussion might not be front and center," says Brown.
In addition, Congress will be under tight budget pressure to reduce spending, and budget reconciliation rules will likely be instituted. "Budget reconciliation is a process that requires nearly all authorizing committees to change their mandatory spending programs in an effort to lower federal spending," says Brown. Though budget reduction targets are set, which programs to cut or eliminate are left to the authorizing committees.
But that’s where the fights start. For agriculture, it’s a particularly daunting prospect since some 37 provisions have no baseline spending levels beyond 2012. If those programs, such as the Supplemental Revenue Assistance Program (SURE) and some in horticulture, are to remain, other programs will have to be cut. "If you’re a member of Congress, what is your interest in going home and telling constituents you just had to cut their program, especially right before an election?" asks Brown.
What is most likely to happen is a resolution to continue current programs until after the 2012 election. For dairy, for example, the Milk Income Loss Contract (MILC) program could revert to its original form for fiscal year 2013, which begins Oct. 1, 2012. Rather than 2.985 million lb. of annual milk production covered, the level would drop back to 2.4 million lb. In addition, the feed cost adjuster would increase to $9, increasing the trigger level and lowering the probability of payments. And the payment ratio, now at 45%, would drop to 34%.
Moving other dairy legislation without a Farm Bill, such as Foundation for the Future or supply management programs already introduced, will be difficult. At the very least, the industry will have to form strong consensus behind a single plan. And it will have to be cheap. "For dairy programs, the Congressional Budget Office baseline averages nearly $100 million per year in outlays," says Brown. "This level of projected outlays is well below the $994 million spent on dairy programs in fiscal year 2009."
For its part, the National Milk Producers Federation (NMPF) is having its general counsel draft legislative language to write Foundation for the Future into bill form. NMPF hopes to have that completed in January. "We have had conversations with key players from both parties about the Foundation plan," says Chris Galen, NMPF spokesperson. "We hope to move forward with the plan next year, but we have no control of what Congress does with it."
Galen notes that the margin protection and market stabilization provisions of the plan are fairly well set. Most of the discussion now revolves around resolving Federal Milk Marketing Order issues.