Milk, grocery prices on the rise if Congress ignores farm bill
Santa suit-clad warriors who've stormed the Hill protesting for a Christmas free of concern that their tax rates will soar Jan. 1 may have more at stake than they realize: Even if lawmakers manage to patch together a makeshift bridge across the so-called "fiscal cliff" by year's end, it's looking increasingly doubtful that a farm bill will be included as one of its planks. And with milk prices set to spike to $6 to $8 a gallon come January, Saint Nick may see the average family's budget cuts affecting his favorite milk-and-cookie spread.
The "dairy cliff" is just the most immediate of what would be gradual price increases on foods across grocery stores if Congress doesn't pass a farm bill to replace the one that expired nearly three months ago. Technically, farm regulations since the end of September have been operating under a 1949 "permanent" law. Because the 2008 law covered all crops planted in 2012, though, and federal funding for many agricultural programs is assured through March 2013, lawmakers have enjoyed a bit of a grace period until Jan. 1, when products like milk could skyrocket to prices based on dairy farm production costs 64 years ago.
But just days before the end of the year, farmers and their bankers – left in the lurch with decisions about next year's crops – are still waiting and hoping for a holiday miracle in Washington. Agriculture Secretary Tom Vilsack might advise they don't hold their breath: After weeks of aggressively campaigning to get the House and Senate Agriculture Committees in a room to hash out the makings of a new five-year plan, Vilsack this week conceded that the passage of a bill by Jan. 1 was unlikely.
"The reality is that there is a very serious risk that we might not get a farm bill done this year," he said Wednesday at a U.S. Chamber of Commerce event, according to USA Today. "The uncertainty of not knowing what the policies are going to be will create difficulties. We need a farm bill and we need it now."
Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., and her House counterpart, Rep. Frank Lucas, R-Okla., have both blamed their parties' leadership for keeping them out of the loop on the best- and worst-case scenarios for a farm bill. Lucas told Politico last month that House Speaker John Boehner, R-Ohio, had indicated to him, however vaguely, that farm legislation — the urgency for which has largely been ignored by Congress, and the media — was being strongly considered as part of the deficit reductions necessary to avert the far more publicized "fiscal cliff."
In a statement to CBSNews.com, Stabenow said she's holding out hope that the spending cuts offered in potential farm legislation are appealing to leaders trying to negotiate past the "fiscal cliff." "The farm bill is the only bipartisan deficit reduction bill that passed the Senate this year, and including it in a larger deficit reduction agreement would help the country avoid the fiscal cliff," she said. "Without a 5-year farm bill by the end of the year, milk prices could begin to rise sharply and America's agriculture economy will continue to be significantly impacted."
But even if Boehner does decide to slip farm legislation into the "fiscal cliff" package, no single bill exists right now for the agriculture committees to offer: The House farm bill, approved by Lucas' committee in July, never made it through the GOP-controlled chamber, due primarily to disagreements over how deeply to cut food stamps. The Democratic-controlled Senate passed its version – the "Agriculture Reform, Food and Jobs Act of 2012" – in June.
It's a turf battle as much as a spending-cut war. Peanut and rice farmers back the House version, which proposes $35 billion in spending cuts, and replaces the current agriculture subsidy program with what is essentially a safety net, guaranteeing government payments if crop prices fall below a certain point; corn and soy farmers prefer the Senate bill, which proposes $23 billion in spending, and offers insurance when revenue from a crop is more than 11 percent below average.
One thing both chambers, and parties, agree on: Extending the 2008 law shouldn't be an option. Between having to scramble for additional funding for already-expired programs and extending payment for disaster assistance, which was significant this year following a prolonged Midwest drought, any temporary measure would cost more than a full five-year bill, without offering any spending cuts. But while Lucas, according to House Agriculture Committee spokesperson Tamara Hinton, remains devoted to getting a five-year bill through the hoops of Congress, he is "planning for all contingencies." That could include a one-year extension.
Still, the chance for any form of farm legislation to be included in rush negotiations to avoid tumbling into a recession at the start of the year, as Vilsack said, has faded, along with the likelihood of a big-picture "fiscal cliff" deal at all. Cornell University professor of agricultural economics Andrew Novakovic told CBSNews.com that Stabenow's commitment to a five-year bill may be disconnected from reality.
"Needless to say, I have no idea what sweet nothings the President and the Speaker whisper to each other, or what the Republican conference is really prepared to support, but I have to say that it seems to me that Senator Stabenow has had her rose colored glasses firmly in place for several months now," he said in an e-mail. "Far be it from me to suggest I know more about it than she does, but it seems to me that it's pretty hard for folks on the Senate side to do much more than watch.
"I know there are several scenarios floating about out there, but I wouldn't bet money on any of them (i.e., I think any number of things are about equally probable)," he continued. "Like most folks, I find it plausible that a farm bill gets attached to some last minute fiscal cliff solution, but it also seems that the kumbaya between the two Ag Committees has suffered lately, as [the Congressional Budget Office] is saying you can't have all of the above. …From the outside anyway, it has become less clear what farm bill would get tacked on to a broader fiscal bill."
Story courtesy CBS News