D.C. Watch: No Real Action on Farm Bill

Published online: Sep 17, 2013 Rich Pottorff, Doane chief economist and Washingto
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Well, Congress is back, but there was no real action on the farm bill last week. Over the past month, there were hints that one of the first orders of business for the House when Congress returned would be a vote on a nutrition bill, followed by the beginning of the House-Senate Conference Committee on the farm bill.

Now, maybe the nutrition bill will be voted on next week - but that is far from a sure thing. Until the House moves forward, the farm bill is going nowhere and rumors of another extension of the 2008 farm bill grow stronger.

Another extension of the 2008 farm bill will be "unacceptable" to many, including Senate Agriculture Committee Chairperson Debbie Stabenow, D-Mich., and Agriculture Secretary Tom Vilsack.

House Agriculture Committee Ranking Member Collin Peterson,D-Minn., says that if Congress just passes an extension President Obama will veto it. House Agriculture Committee Chairman Frank Lucas, R-Okla., predicts that Congress will finish a new farm bill before the end of the year. My view?

There were plenty of people arguing against an extension of the farm bill last year, but once Congress failed to deliver, an extension was approved to avoid a huge increase in milk prices. That same scenario may well play out at the end of 2013.

Direct payments would be a thorny issue if the '08 bill were merely extended. These payments, made regardless of prices or profits, are among the hardest to defend. But if an extension excludes them, not only would it cut government funding for agriculture by about $5 billion in 2014, it would also reduce the budget baseline by that amount whenever a new farm bill is finally developed.

The budget baseline is the amount of money the Agriculture Committee has to work with for the legislation. According to the Congressional Research Service, the budget baseline has already been reduced by between $9 billion and $14 billion due to the expiration of 37 other agricultural programs.

The loss of the baseline funding for direct payments, say its defenders, would weaken the farm safety net in future farm bills.

Congress is working on bills that will keep the government running past the end of September. The proposal currently being discussed in the House would extend government funding at current levels through Dec. 15.

The current sequester cuts would remain in place. Additional sequester cuts will go into effect in January unless Congress changes the law. Congress will also need to start discussions about raising the country's debt limit, which is expected to be reached by mid-October. The federal budget deficit for fiscal 2013 is expected to come in near $750 billion. That would be down from deficits of $1.1 trillion in fiscal 2012 and $1.3 trillion in 2011.

Other news from Washington includes:

  • The $4.7 billion acquisition of Smithfield Foods, Inc. by a Chinese-based company has been approved by the U.S. Committee on Foreign Investment. The Committee had to determine if the effects of the sale would affect national security. The deal is now subject to shareholder approval in a vote scheduled for Sept 24. The long-term impact of the sale of Smithfield to a company in China is uncertain, but many people hope that the result will be significantly higher exports of U.S. pork to China.
  • This summer the Senate passed an immigration reform bill and the House was expected to work on its own plan starting this month. However, it now appears that the House debate will be put off until at least the end of the year and probably longer. The agriculture sector is probably the largest employer of people in the country illegally and reforming the immigration laws could significantly improve the availability of workers, especially in the production of fruits and vegetables and in the dairy industry. Since the immigration issue has significant political implications, there is still a good chance that the House will take up reform legislation sometime before the Congressional elections next fall.