Analysis: It usually takes a year to draft new Farm Bill but the cost of failure may be too high to bear
(Reuters) U.S. lawmakers are short on time and money to make the biggest cuts in agriculture in a generation and failure risks unintentionally driving up food prices and adding to an already onerous deficit.
Fractious Republicans and Democrats may wait until the last minute to agree to significant cuts to farm supports amid historically high crop prices.
The U.S. farm law, mammoth legislation that covers everything from food stamps to soil erosion, expires Sept. 30 and without a new one or extension, a 1949 law — the bogeyman of Farm Bill showdowns — automatically goes into effect. It would limit plantings and have the government pay farmers up to twice what crops would sell for on the open market — pushing up farm subsidies and grocery bills.
Read Also
Thunderstruck Ag Equipment celebrates innovation win
Winkler-based company earns top name in equipment innovation at 2025 Ag in Motion awards for their Razor’s Edge combine concaves.
The issue could be a factor in the fall elections. Iowa, the No. 1 corn, soybean and hog state, is one of the toss-up states where the fight between President Barack Obama and the eventual Republican nominee will be fiercest. So are Ohio and Wisconsin, also agricultural powers.
Two changes are all but certain if there is a new Farm Bill — an end to the $5-billion-a-year “direct payment” subsidy that is paid regardless of need and the return of millions of acres of idle farmland to crop production.
However, odds are long that the bill can get done because of the legislative gridlock expected by mid-year due to election year politics and budget pressures. Congress usually needs a year or more to enact a farm law.
Analyst Mark McMinimy of consultants Guggenheim Partners says, “this is about as dysfunctional a Congress as you can remember.” But his “low-confidence assumption” is a bill will be enacted this year “because the budget situation is going to be worse next year.”
Farm policy experts and half a dozen major U.S. farm groups are calling for a new insurance system that would protect revenue against disastrous drop in incomes while allowing the government to save money on a five-year farm law.
A sizable number of growers, however, particularly rice and peanut farmers, are skeptical revenue protection will be a good deal for them. They prefer the decades-old system, with a dose of higher support prices. There is strong sentiment in farm country that a strong crop insurance program should be top priority, even if other farm supports wither.
As a result, Congress is on track for a farm law that lets farmers choose the approach they want.
