As the week moves along it’s becoming more and more apparent the 2014 farm bill will expire on Sept. 30.
“I’m afraid we’re going to go past the Sept. 30 date,” said Senate Ag Chairman Pat Roberts (R-Kan.) to reporters on Monday. “Miracles can happen. We’re not giving up.”
Lawmakers can’t give up, because if they aren’t able to resolve their differences before they go back to their districts for fall break, several programs critical to agriculture’s success will expire.
“There's an acute sense of urgency on two fronts,” explained Tom Dogget CEO of national corn growers. “No. 1 is there are programs in the current Farm Bill that are going to lose funding after September 30 and it will take a special act of Congress to go ahead and reopen that back up and re-establish those programs. One of them is the market at one of the market access programs FMD and that's what funds overseas offices for groups like U.S. Wheat, the Grains Council and other organizations that are doing the very much needed job of building those foreign markets.”
Dogget said the second issue is commodity prices are not getting better. Still, ranking member Debbie Stabenow (D-MI) and Roberts have both said on the record that an expired Farm Bill won’t be a big deal.
“I think there's about 33 programs who lose their funding authority,” says Jim Wiesemeyer, Pro Farmer policy analyst. “Right at the time that we have this tariff increase impacts that you need to develop other markets or other places are expanding existing markets. So, on the one hand Conaway doesn't even want to talk anything beyond September 30 and both the Stabenow and Roberts tended to signal you could go until the end of December for most programs, so there is a disconnect there.”
So, should the farm bill expire on Sept. 30, which programs expire and which continue without a hitch? Here’s the skinny:
- The Supplemental Nutrition Assistance Program (SNAP) would not be affected by farm bill expiration as long as appropriators have passed a funding package that covers USDA, lawyers from Michael Torrey Associates said in an explainer published by Edge dairy cooperative. “The program will be continued via appropriations action even if its authorization for appropriations is expired.”
- Similarly, the federal crop insurance program would continue without issue because it is permanently authorized and funded through mandatory dollars.
- When it comes to conservation titles, funding deadlines vary. That’s because some are funded through appropriates and some are funded through mandatory funds. Bottom line: most conservation programs are implemented through contracts with farmers which will continue to be honored. The appropriations process can impact how conservation programs are treated in an expired farm bill environment. The state of ag appropriations is not determined through the end of the year.
- Most trade and food aid programs would expire without an extension or a new farm bill. While some of these programs are scheduled to expire on December 31 instead of September 30, once expiration occurs, authority for USDA to finance or provide emergency or non-emergency food aid ends, according to Michael Torrey Associates.
- Funding for the Foreign Market Development (FMD), which Doggett referenced at the beginning of the story, would also end, putting the staff and offices of numerous commodity promotion programs in jeopardy. While some commodities say they have reserves to keep offices open for a few months past expiration, eventually offices would be closed, and staff would no longer be paid.
- Title 1 programs like Ag Risk Coverage (ARC) and Price Loss Coverage (PLC) expire with the farm bill and revert back to permanent law. What does that mean? Michael Torrey Associates explains it this way: “What we refer to as “permanent law” is a set of farm policies enacted in the Agriculture Adjustment Act of 1938 and the Agricultural Act of 1949. The policies are suspended for the life of a farm bill, but once a farm bill expires, they come back into force.”
The cornerstone of permanent law is parity pricing. That means the price guarantee today should be set so that the difference between price and input costs are at the same ratio today that they would have been during a 1910-1914 benchmark, Michael Torrey Associations explains. “Permanent law sets a nonrecourse loan rate at a percentage of the parity price. This would set the price support for covered commodities well above market prices,” they say.
Permanent law includes production controls through acreage allotments and marketing quotas for wheat and cotton. And not every commodity, including soybeans, is covered by this support.
- Good news for dairy producers is that a farm bill expiration would not change the Margin Protection Program or make retroactive any of the recent changes made to the program.