Shutdown Showdown: What Farmers Need to Know

September 28, 2015 05:00 AM
Shutdown Showdown: What Farmers Need to Know

If you’re wondering if there’s anything you need to know about the current budget battles in Congress, the answer is yes.

If the House and Senate can’t reach an agreement on the federal budget—or more likely, a continuing resolution to fund the government while they hammer out a budget—by Sept. 30, the federal government will shut down on Oct. 1, the first day of its new fiscal year.

Why does this matter to farmers on their combines, harvesting corn in fields hundreds of miles away from Capitol Hill?  Because a government shutdown, depending on when it happens and how long it lasts, could affect everything from market-moving USDA reports to producers’ farm program payments for 2014, which are scheduled to be released in October.

Here’s what you need to know about what is happening in Washington.

Farm Bill Payments: Late to Arrive and a Little Light?

If you’re expecting a 2014 farm bill payment, you may want to plan on it arriving late—and a little lighter than you projected.

Due to the threat of a shutdown and ongoing negotiations over sequestration, Congress has plenty of things to discuss that could affect those checks. (Congress adopted sequestration a few years ago to reduce the federal budget; it will cut federal spending across the board by approximately 7% in fiscal 2016.)

It’s a frustrating situation for Agriculture Secretary Tom Vilsack, who highlighted the difference in cuts (7.3% in fiscal 2015 and 6.8% in fiscal 2016) applied to producer payments from one fiscal year to the next. “We think there needs to be equity. We think people need to be treated equally under similar circumstances,” he said on AgriTalk. “We’re still trying to work through all of this. The best thing that could happen would for Congress to get its work done.”

Listen to Vilsack's comments on AgriTalk:

Regardless of the final number, it does appear that farmers should expect their checks to be trimmed.

“The 2014 payments will be reduced unless Congress takes steps to lift the sequester,” said Jonathan Coppess, a former Farm Service Agency Administrator who now teaches in the University of Illinois’ Department of Agricultural and Consumer Economics, speaking on an Illinois Corn podcast. “I would not be surprised if these payments will be delayed,” between the time required to negotiate a change in the sequester cuts and the possibility of a shutdown, where there simply wouldn’t be the employees there to cut the checks.

Stephanie Mercier, senior policy and advocacy adviser for the Farm Journal Foundation, agrees. “It would be hard for Vilsack to say sending farm bill payments was a critical function and keep those people at work.”

Time to Skip a USDA Report?

When the federal government shuts down, it keeps only “essential” employees on the job, furloughing the rest without pay until a budget is passed. In 2013, the last time the feds shut down, that added up to more than 850,000 civilian workers. That shutdown lasted more than two weeks.

How did it affect farmers? Well, without time to gather and collect the data, USDA simply skipped the October 2013 World Agricultural Supply and Demand Estimates report. It also didn’t produce the weekly crop progress numbers or livestock reports during the shutdown.

That could certainly happen again if there’s another shutdown, especially it lasts longer than a few days.

“The Administration strongly believes that a lapse in appropriations should not occur,” a USDA spokesperson told AgWeb in September. “…..However, at this time, prudent management requires that the government plan for the possibility of a lapse and USDA is working with [the Office of Management and Budget] to take appropriate action. This includes reviewing relevant legal requirements and updating our plan for executing an orderly shutdown. Determinations about specific programs are being actively reviewed. It is our hope that this work will ultimately be unnecessary and that there will be no lapse in appropriations.”

(Click here for details on USDA’s contingency plans.)

Such a situation could disrupt USDA operations around the globe. Mercier notes that a shutdown could close Foreign Agricultural Service offices overseas, too, which means U.S. farmers could be lacking market information for both the U.S. and abroad.

The absence of information could make the current market even harder to predict. If the October report gets missed, “it would put a little more volatility into the market,” says Chip Flory, editorial director of Pro Farmer. “It extends the waiting game on USDA’s numbers.”

Of course, given the controversy that those USDA numbers can inspire, perhaps farmers wouldn’t mind missing a report.

Not so fast, says Mercier. “I think there is always a loud minority who don’t trust the release, but the vast majority rely on them for a snapshot of the market, and there would be a loud outcry if they got rid of them.”

Now What?

With the unexpected resignation of House Speaker John Boehner on Friday, though, the potential for an October shutdown may be fading. “My impression is that it’s less likely that the government will shut down on Oct. 1, because Speaker Boehner doesn’t have to worry about spending political capital to get a deal done” to temporarily fund the government.

Known as a continuing resolution, the measure basically gives Congress more time—until Dec. 11, to be exact—to pass a federal budget for 2016.

But the shutdown threat has hardly vanished. Depending on who the Republicans elect as the new Speaker of the House, Congress may have an even harder time coming to a budget agreement.

The new leadership “is going to have six to eight weeks to make a deal for a real appropriations bill or settle for a new continuing resolution,” Mercier observes. “They’ll have relatively little time to figure it out and probably even less power than even Boehner had.”


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Spell Check

Chappell, NE
10/1/2015 08:42 PM

  WHAT farm program payments?

Katy, TX
9/28/2015 08:38 AM

  On food stamps, there is an internal order of funds to trim and those not. As you can guess, food stamps is last to be cut back. Milo is right on the 2014 budget however, they can and have held multi year funds without distribution before. Also, if they time it right, they will hold crop insurance companies' funds which squeezes them on claim payments - like 2013.

9/28/2015 09:36 AM

  Food stamps? If people would get job and quit relying on free handouts we wouldn't need all this money to be put into food stamp program.