Faced with the looming threat of the “dairy cliff” driving up milk prices to $7 per gallon and a stalemate in the debate over regulation of government assistance, Congress' conference committee is scrambling to cobble together a new federal Farm Bill before mid-January.
The “dairy cliff” refers to the impact of Congress' failure to pass a new Farm Bill before the last bill expired in October. When the bill expired, federal laws automatically reverted to the 1949 version of the Farm Bill.
The older Farm Bill is oriented around the agricultural practices during the Truman Administration, which is out of sync with modern farming practices, and lacks the legislative improvements passed during the last 50 years. The distorted funding for milk could drive prices to $6 or $7 per gallon, and the lack of funding for corn and sugar beets could drive up other food costs.
The 1949 law will go into effect Jan. 1, although some federal officials indicated consumers will not see the impact until mid-January.
Negotiations on the Farm Bill have stalled due to strong divides between the Republican-controlled U.S. House and the Democrat-controlled U.S. Senate over the funding levels for food assistance and crop subsidies. Because the House will go on break for the rest of the year this weekend and the Senate next weekend, lawmakers announced that no new Farm Bill will be completed in 2013.
Lawmakers plan to avoid the "dairy cliff" by passing a new Farm Bill before the impacts can take effect after mid-January. However, lawmakers could still face criticism over the "dairy cliff" from constituents when they return home.
Mankato lawmaker U.S. Rep. Tim Walz's office said they were optimistic the Farm Bill could see a vote by Jan. 15 and that negotiations are near completion.
Regardless of how Congress proceeds next month, the conference committee still has to settle the debates over how to implement subsidies to farmers and how deeply to cut the nutrition portion of the bill, which contains food stamp legislation.
The debate about the nutrition cuts is oriented around the sheer size of the gap between the House's proposed $40 billion in cuts and the Senate's proposed $4 billion in cuts.
Reports from the committee indicate Senate lawmakers are compromising toward deeper cuts. But sources involved with the negotiations report the billions in cuts have not yet exceeded double digits. Additionally, any compromise cuts will have to be passed with the Republicans in the House, who turned down $20 billion in cuts as insufficient earlier this year.
Walz voted in favor of the $20 billion cuts to progress the Farm Bill earlier this year. But he strongly opposed the $40 billion cuts and has advocated for reduced cuts.
With debate over crop subsidies for farmers, House and Senate leaders have agreed on ending the direct payments to farmers but are divided over the best method to replace the program. The Senate proposal calculates payments on the averaged use of the land over several years. The House proposal seeks to calculate payments with what was produced in a given year.
The Senate proposal benefits the farm practices of Midwest farmers but has great risk of higher payouts in farm subsidies. The House proposal avoids that risk and favors the more challenging crops raised by Southern farmers, but could distort the market by changing what farmers grow to obtain subsidies.
Reports from the negotiations indicate farmers have largely moved toward the Senate proposal.