Focus on Ag

What Will Happen to the Farm Bill?

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On July 11, the U.S. House of Representatives passed a new farm bill (HR-262) by a margin of 216-208, with all voting Democratic House members and 12 Republican House members opposing the legislation. Last month, the U.S. House voted down another version of the new Farm Bill by a vote of 195-234, with opposition from both parties. The previous version of the legislation had been passed by the U.S. House Agriculture Committee, and was supported by a wide-range of farm organizations.

The so called “farm only” version of the farm bill passed by the U.S. House proposes a big shift in farm bill policy, as it would eliminate the Nutrition Title of the new farm bill, which funds food and nutrition (SNAP) programs. The proposed House farm bill would also eliminate the permanent farm law of 1949 and 1938, which is currently in place if Congress does not act on a new farm bill, once the legislation for a current farm bill expires. The proposed legislation would save approximately $19 billion on farm commodity programs over the next 10 years by eliminating direct payments and making other adjustments; however, about $8.9 billion would be added by the initiation of a new “STAX” program for cotton and other crop insurance enhancements. Most other commodity provisions in the House farm bill are similar the version of the farm bill that was defeated last month.

The U.S. Senate passed their version of the new farm bill in mid-June by a wide margin, with very strong bi-partisan support. The Senate version of the farm bill does include a Nutrition Title, which maintains future funding for the SNAP programs, and also continues the 1949 and 1938 permanent farm law. The Senate version of the farm bill also has some other differences in dairy and crop insurance policy from the House farm bill that was just passed. The 2008 Farm Bill, which expired in 2012, was extended earlier this year for one more year through Sept. 30, 2013.

The elimination of the Nutrition Title and the SNAP programs in the House version of the new farm bill is likely to result in some interesting political dynamics, if and when a Senate and House Conference Committee is named and meets. It is not known at this time if the U.S. House will now pass separate legislation to deal with the SNAP programs that are in the current farm bill, and whether or not that legislation will get rolled into the Conference Committee, or get considered separately. Regardless of how these dynamics play out in Conference Committee, it will be challenging to get a final version of a new farm bill that can garner enough votes for support by both the full U.S. Senate and the U.S. House. Once passed, the new farm bill still needs to be signed into law by President Obama.

Food stamps were added to the farm bill legislation 40 years ago in 1973, mainly because the food stamp program was considered part of the U.S. food security program, and food stamps are administered through USDA. Nearly 80% of the proposed funding for the U.S. Senate version of the new farm bill will go to the Supplemental Nutrition Assistance Program (SNAP), which includes the food stamp program, the women, infants and children (WIC) program and the school lunch program. The needs in the SNAP program have more than doubled since 2008, due to the economic downturn in the U.S., higher food costs, and an easing in eligibility requirements for food stamps.

The new farm bill passed by the U.S. Senate would cut the spending on SNAP programs by about $4 billion over the next 10 years, while SNAP funding would have been cut by about $20 billion over 10 years in the previous U.S. House farm bill that failed. Most of the SNAP programs are governed by continuing legislation, so the SNAP programs would continue with very few spending reductions if these programs are not in the farm bill and there is no new legislation passed by Congress.

The version of the new farm bill passed by the U.S. House proposes to replace the current 1949 and 1938 permanent farm law with a new Title I in the farm bill. This new Title I would provide for continuing farm commodity programs, in the event that a new farm bill was not enacted by the expiration date of the previous farm bill. Many farm organizations feel this will make it much easier for Congress to totally eliminate farm supports and safety nets in the future. Conservation programs, rural development, trade programs and other USDA programs would not be part of the proposed Title I in the House farm bill; however, most of these programs are also not covered by the current permanent farm law.

 

Key questions remain in the political process for a new farm bill:

  • Will the U.S. House now pass additional legislation dealing with the Nutrition Title (SNAP programs) in the current farm bill, which are included in the Senate version of the farm bill?
  • Will the U.S Senate be willing to go to Conference Committee with the U.S. House on a new farm bill that does not include a Nutrition Title?
  • Will removal of the 1949 and 1938 Permanent Farm Law, which is in the House farm bill but not in the Senate farm bill, end up in the Conference Committee farm bill?
  • Will the Conference Committee be able to resolve differences on dairy policy, crop insurance eligibility, and other differences in the Senate and House versions of the new farm bill?
  • If the Conference Committee were to reach agreement on either the Senate version of the new farm bill or the so-called “farm only” House bill, will there be enough support in both the U.S. Senate and U.S. House to give final passage to a new farm bill?
  • If the Conference Committee farm bill is passed by the U.S. Senate and U.S. House, will President Obama sign the new farm bill into law?
  • If the Conference Committee can not reach agreement on a new farm bill later this year, will the 2008 Farm Bill be extended for yet another year through 2014?

 

Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at kent.thiesse@minnstarbank.com.

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