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Farm bill lapses; what's next?

10/01/2012 @ 1:55pm

It's October 1, 2012, the first day U.S. agriculture should be functioning under a new farm bill.

But, lawmakers left Washington, D.C., without signing off on a new legislative package. So, now what?

"As of today, USDA's authority or funding to deliver many of these programs has expired, leaving USDA with far fewer tools to help strengthen American agriculture and grow a rural economy that supports 1 in 12 American jobs. Authority and funding for additional programs is set to expire in the coming months," Agriculture Secretary Tom Vilsack said Monday. "Without action by the House of Representatives on a multi-year Food, Farm and Jobs bill, rural communities are today being asked to shoulder additional burdens and additional uncertainty in a tough time."

By law, the policy falls back on the Agricultural Act of 1949, or the "permanent" law that is highlighted by commodity pricing parity, something that experts say likely isn't feasible in today's ag environment.

"In the permanent legislation, there is a very specific safety net for commodity programs, including the concept of parity prices that we have been tracking by statute but haven't implemented in over 50 years," says University of Nebraska Extension public policy specialist Brad Lubben. "Support prices really aren't economically feasible given the current ag situation we have."

Lubben says parity price for corn -- based on an average of past prices -- would likely be around $5.50/bushel.

But, the relapse to the 1949 law doesn't take effect until the 2013 crop year. So, at this point, the only crop that would be affected is winter wheat, since that crop for 2013 is being sown right now. But, that doesn't mean wheat farmers should plan for next year's crop to be raised without a farm program.

"Chances are the proposals for the new farm program don't substantially change the economics of planting wheat, so producers can still make good decisions this fall," Lubben says. "But, before that crop is harvested, we better have some kind of program in place."

Some things could change, though. Take the Conservation Reserve Program (CRP), for example. Without a new law in place, new CRP sign-ups won't happen. So, according to a report from the National Corn Growers Association (NCGA) and a group of other commodity groups, Congress' lack of action on the farm bill means fewer acres could be enrolled in the program, putting overall soil and water conservation at risk.

"While current contracts are protected, no new signup will be allowed for CRP or the Conservation Reserve Enhancement Program (CREP). Both of these programs are voluntary land retirement programs that helps agricultural producers protect environmentally sensitive land, decrease erosion, restore wildlife habitat, and safeguard ground and surface water," according to NCGA. "In addition, there cannot be sign up for the Wetlands Reserve Program or the Grasslands Reserve Program."

It also puts at risk some future disaster assistance for livestock producers, many of whom this year have faced some of the worst drought conditions in decades. And, federal assistance for dair producers will lapse at the end of this calendar year if a new program isn't approved.

"Both versions of the new farm bill contain funding for the disasters facing the livestock industry due to the drought," the NCGA report says. "However, programs are currently only available for lack of forage, as well as death of animals."

Though the 2008 bill has technically expired, the likelihood of the farm program lapsing back to the 1949 bill is low, Lubben says. Even if the roster of lawmakers involved in the process changes immensely after the November election, he's confident a new bill will make its way through Congress in time for the 2013 crop year.

"There is the impetus to do it by the end of the year. Congress has to address tax legislation, a spending bill prior to automatic sequestration prior to January 2. The fact they have a consensus farm bill ready will go to saving money for those things. If they can pass some of that legislation, attaching farm bill to it is a viable option," Lubben says. "Not knowing how the election pans out, if you have a shift from one party or another, a new Congress might choose to rewrite the full farm bill. At that point, we get just enough of an extension in December to forestall 1949, just enough of an extension to give the new Congress to act."