While there is a lot of justified concern about congressional inaction to avert the so-called “fiscal cliff” at the end of the year, another deadline is looming on the horizon that could have dire consequences, farm experts say.
Congress passes a new Farm Bill every five years and the current one is set to expire in less than two weeks. Without approval of a new one everything from crop production to school lunches could feel the impact.
The Senate has passed a version of the legislation but it became bogged down in the House. Speaker John Boehner confirmed Thursday the House won't take up the Farm bill until after the election. There appears to be a split among Republicans who either think the massive bill makes too many changes to farm and nutrition-related programs or doesn't make enough changes.
Dairy producers feeling effects
Meanwhile, Andrew Novakovic, a professor in the College of Agriculture and Life Sciences at Cornell, says the U.S. dairy industry is already paying the price.
“On Sept. 1, provisions for the Milk Income Loss Contract program reverted to pre-2008 levels that render the program meaningless,” Novakovic said. “Under the MILC program, dairy farmers have been receiving substantial countercyclical subsidies to help them offset the large imbalance between the price of milk they receive and the prices they pay for corn and soybean meal that they use to feed their cows. MILC payments began in February 2012 and would continue through November or December based on currently expected prices, if the 2008 provisions stayed in effect.”
However, under current law, the last payment made for milk produced was in August. The exact amount of the payment varies each month and across farms, but for many of the nation's farms of average size or smaller, the payment amounts to almost 10 percent of their monthly milk check and can mean the difference between losing money and breaking close to even.
The dairy industry itself is split over the Farm Bill. Producers support it but dairy processors oppose a provision in the bill they saw unfairly manipulates prices.
Takes issue with price management
“This year’s Farm Bill goes in the wrong direction and calls for more government regulation and intervention into milk markets -- not less,” the International Dairy Foods Association, an industry trade group, said in a position statement.” “Instead of helping farmers manage through hard times, some dairy producer organizations want government to guarantee profit margins for producers by imposing new regulations and 'growth management' on processors.”
While corn growers will continue to be covered by the crop insurance they purchased last spring, dairy producers won't -- exposing them to heavy losses from the summer's drought.
Several mandatory research programs that are in the Farm Bill will receive no funds once the legislation expires and there is no new Farm Bill to replace it. Scientists working on subjects critical to the health of the nation and the rural economy, such as specialty crops and organic production would have their primary funding programs suspended.