Explainer: What's up with the farm bill?

Secretary of Agriculture Tom Vilsack speaks with the Senate Committe on Agriculture about the farm bill in May 2011. Congress has been haggling over the legislation for that long. (USDAgov/Flickr)

With time running out in 2012, Congress is scrambling to get a farm bill passed.

We’ve been tracking the farm bill for months. We’ve seen glimmers of hope and waves of pessimism. We’ve seen opportunities for compromise and partisanship derail negotiations. (For the full day-by-day story, check out our farm bill timeline here.)

Now, though, Washington is re-focusing on the farm bill and it looks, once again, as if momentum is building.

The bill expired on Oct. 1, so what’s the hurry? And what’s the hold up? Here’s an explainer:

The farm bill is a five-year bill, why the sudden rush?

Aside from giving farmers the policy clarity they’re looking for before they make planting and fiscal decisions for next season, there are two reasons why legislators are scrambling to pass a farm bill into law before Jan. 1:

·         MILC – Without a new farm bill, the price you pay for milk at the grocery store could double. The section of the farm bill that deals with federal dairy policy – called the Milk Income Loss Contract (MILC) – expired with the bill on Oct. 1. On New Year’s Day, dairy policy enacted in 1949 and repeatedly suspended by farm bill legislation will kick in. That policy would pay dairy producers about $40 per hundredweight of milk in order to support dairy prices. Currently, dairy producers get about $15 per hundredweight from the market, hence your more expensive bowl of cereal. Legislators don’t want to be on the hook for an increase in milk prices, which has created a “dairy cliff” politicians are wary of.

·         The “fiscal cliff” – The farm bill contains hundreds of billions of dollars in spending, which makes it an appealing place to look for spending cuts. With Congress and the president continuing to look for ways to slim the deficit, both farm subsidies and food stamps look ready for a trim. The farm bill will probably be a part of “fiscal cliff” negotiations whether legislators like it or not and if lawmakers want to help shape the process they need to turn in legislation soon.

What are lawmakers haggling over?

At its core, the fight over the farm bill is a fight over how to spend federal money.

·         Nutrition policy – The farm bill sets policy for the Supplemental Nutrition Assistance Program (SNAP), often referred to as “food stamps.” The bill that passed the Senate way back in June cuts the deficit by about $23 billion according to Senate calculations and would cut funding to SNAP by about $4 billion. The farm bill legislation that came out of the House Agriculture Committee would cut about $35 billion from the deficit, including about $16 billion in cuts to SNAP spending. Obviously, that’s a wide gulf.

·         Farm subsidies – The new farm bill will reshape spending on commodities. Both the House and Senate bills would eliminate about $40 billion in direct payments to farmers, but they differ in what they’d do with that savings. The Senate bill expands crop insurance, while the House bill focuses more on traditional commodity price supports.

What’s going to happen?

Well, according to my crystal ball…

At this point, the future is extremely cloudy. Agriculture Secretary Tom Vilsack claims it isn’t possible to extend the recently expired farm bill. If that’s true, negotiations in Washington this week will be pivotal, with both the “fiscal and dairy cliffs” looming.



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