Congress can't agree on 5 year farm bill
9 month extension of 2008 bill passed in fiscal cliff deal
By Michael Zimmerman
As the year 2012 neared its end, there was a lot of talk about the “fiscal cliff” deal. But one aspect of that deal was taken care of with a nine-month bandage: the Farm Bill.
The Food, Conservation and Energy Act of 2008 was originally set to expire in September of 2012. It’s a version of a law first passed in 1933, and now, a new version is passed every five years or so. With the expiration of the so-called “farm bill,” upcoming, the Senate passed an updated version in June, 2012 by a 64–35 vote. A similar version of the bill, with more cuts to one program, was passed by the House Agriculture Committee on July 5, but never made it to the floor of the House for a vote.
That led Congress to pass a nine-month extension of the 2008 bill, leaving some farmers wondering if the 113th Congress can work together to get a long-term bill passed.
Using the term “farm bill” is a bit misleading, as most of the funds in the current law don’t got to farmers. The law also encompasses conservation, trade, energy, and the biggest portion of the whole thing: nutrition programs.
The actual spending in the bill passed by the Senate (Agriculture, Reform, Food and Jobs Act of 2012) totals about $500 billion over the next five years. The Congressional Budget Office estimates the financial impact, though, over the next 10 years, and the CBO estimated that bill would have cost about $969 billion from 2013 through 2022. Though it sounds like a lot of money, the CBO estimated that total to be $23.6 billion less than if the current law remained in effect during that period.
Of that $969 billion, the vast majority comes from nutrition programs, namely Supplemental Nutrition Assistance Program (SNAP, or food stamps). Nearly 80 percent of the total spending goes toward food stamps and nutrition, $768.2 billion.
According to an Associated Press report on June 21, 2012, food stamp spending has nearly doubled in the past five years. The Food Research and Action Center, a nonprofit organization focused on food policy, one out of every seven Americans, or 47.5 million people total, receive benefits from the Supplemental Nutrition Assistance Program (SNAP), formerly the Food Stamp program.
As far as local farmers go, there is some concern about the lack of a five-year bill, but according to Lane Osswald, District 18 trustee of the Ohio Farm Bureau Federation, it’ll be business as usual for most farmers.
“We’re kind of concerned about it,” he said. “The Farm Bill provides certainty in a very high risk business by knowing what programs will be available. The frustration in the ag community is that Congress passed a proposal in the Senate and House Ag Committee, but couldn’t get it passed.”
One thing the nine-month extension does is retain dairy prices. A common argument around the fiscal cliff talks was about a so-called “dairy cliff,” because many said the price of a gallon of milk would have doubled if no deal was reached. If the 2008 bill would have expired, the dairy policy would have gone back to the one included in the Agricultural Act of 1949, which set the floor for the government purchasing milk at $39.53 per hundredweight. The current price is set around $18.
One of the biggest changes concerning farmers in the proposed 2012 bills from both the Senate and House Ag Committee was an end to direct payments, which are currently paid to farmers whether or not a crop was planted. Both proposals placed more emphasis in crop insurance. The extension passed through Sept. 30, 2013 will keep the direct payments.
According to Osswald, some programs were lost in the extension.
“The extension holds some baseline values, which will help,” he said. “There are 20-some programs that were lost. They didn’t get included in the extension. Those are mainly concerned with conservation and environmental issues.”
What the extension doesn’t cover is funding for organic programs. According to the Center for Food Safety, the extension doesn’t fund The Organic Research and Extension Institute (OREI). The OREI is a part of the National Institute of Food and Agriculture, and was funded around $18–20 million annually. “OREI helps organic producers and processors grow and market organic food,” the Center for Food Safety stated.
In reality, the Farm Bill does a lot more than provide subsidies to farmers. According to Tom Vilsack, U.S. Secretary of Agriculture, one out of every 12 jobs are connected to the agricultural community. “I think farmers are expressing some frustration about the fact that they were close to getting a five-year program that would have been comprehensive, that would have had a series of reforms, that would have assisted in dealing with the fiscal challenges the country is faced with,” Vilsack told NPR in a Jan. 13 interview. “They’re now faced with uncertainty in terms of what the policies are going to be, and they’re faced with uncertainty in terms of how much support there will actually be once a five-year bill is ultimately passed by Congress. A new Congress, a different fiscal challenge because of the sequester discussion, so it’s the uncertainty of it all and the frustration.”
Both versions of the proposed bill in the Senate and House Ag Committee would have saved money. The CBO estimated the savings in the Senate version at $23.6 billion over 10 years, and with the House Ag Committee’s increase in SNAP cuts, that version would have saved an estimated $35 billion.
At its most basic, the Farm Bill is a way to use taxpayer money to keep inexpensive food on the shelves. Statistics released by the United States Department of Agriculture in August of 2012 show that the United States spends a smaller percentage of household expenses on food than any other country.
According to the USDA, Americans spend 6.7 percent of their expenditures on food. For comparison, in the United Kingdom, people spend about 9.4 percent. The Japanese spend 14.7 percent; our neighbors to the south in Mexico spend 22.7 percent. In Egypt, a massive 43.6 percent of annual household expenditures are spent on food.
Those statistics don’t take into account that the money used to subsidize the United States’ food comes from food purchasers in the first place in the form of tax money, so we’re paying the price for the food, but indirectly.
Vilsack spoke at the American Farm Bureau Federation’s annual meeting in Nashville on Jan. 14, and he reiterated his hope for a new five-year farm bill passing Congress in 2013.
“We are committed that 2013 will not be a repeat of 2012,” he said at the meeting. “We need a five-year bill and we need it now.”
He continued: “I think we were all disappointed. We recognized that this was a chance for us to reform the system in a way that was defensible and understandable to the wide variety of people living in this country.”
Michael Zimmerman is a staff writer at The Register-Herald in Eaton.