A New Year’s deadline that could send the price of milk skyward looms over congressional negotiators as they try to reach agreement on a five-year farm bill. They’ve been tripped up by differences over the nation’s food stamp program and how to restructure farm subsidies.
The two chambers have been far apart on both issues for more than two years. But the leaders of the House and Senate agriculture committees expressed optimism after a private meeting Wednesday that they may be able to find a resolution in time to narrowly avert the expiration of dairy subsidies on Jan. 1. If those subsidies expire, new laws will kick in that could result in decreased dairy supply on the commercial market and higher prices for a gallon of milk.
Rep. Mike Conaway of Texas, a Republican on the House-Senate farm bill conference committee, said negotiators could possibly hold a public meeting next week to settle some of the remaining issues before the House leaves for the year on Dec. 13. But with a final deal still elusive, it seems unlikely that Congress will finish the bill before the end of the year.
On Thursday, House Speaker John Boehner said the bill should be extended through January while negotiators work out their differences. Boehner also contradicted the optimism of House Agriculture Committee Chairman Frank Lucas, R-Okla., who said Wednesday that the two sides had made “great progress.”
“You know, I’ve not seen any real progress on the farm bill,” Boehner said. “And so if we’ve got to pass a one-month extension of the farm bill, I think we ought to be prepared to do that.”
An extension is not certain, however. Senate Majority Leader Harry Reid, D-Nev., has said he doesn’t want to extend the bill again after Congress already extended the bill at the beginning of this year.
Among the issues negotiators are working out is how farm subsidies should be restructured in the absence of a traditional subsidy called direct payments, which are paid to farmers regardless of crop price or crop yield. Both chambers’ bills would eliminate this $5 billion annual subsidy in response to critics who say it pays farmers not to farm. But they have argued over how to replace those payments, with major farm groups squabbling over whether subsidies should kick in based on crop prices or farmer revenue, and how to count the acreage on which the subsidies are based.
Minnesota Rep. Collin Peterson, the top Democrat on the House Agriculture Committee, said negotiators had tentatively resolved some of those subsidy issues. But they are still waiting for analysis of how much their proposals would cost, a process that could take until next week.
If the negotiators can’t agree on a bill and Congress allows the dairy supports to expire, 1930s and 1940s-era “permanent” farm law would go into effect. Those laws would raise the price the government currently pays to purchase dairy products, prompting many processors to sell to the government instead of commercial markets. That would decrease commercial supply and consequently raise prices for shoppers at grocery stores.
Prices wouldn’t go up immediately, as the Agriculture Department would have to write the new rules based on the old laws and then put them into place. But Agriculture Secretary Tom Vilsack is warning that it may not take that long, saying USDA was prepared to implement the dairy law in “short order” if current law expires.
