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U.S. farm law expires amidst Congressional standoff

Reuters / Expiration of U.S. farm law on Oct. 1, shutting off dairy supports and putting 2013 crop subsidies in limbo, was expected to cause pain for some farmers and frustration for many, but programs like food stamps and crop insurance will roll on, analysts said.

U.S. government funding is assured through March 2013 for many programs based on a July deal to extend budget authority reached by feuding Republicans and Democrats ahead of the November elections.

Analysts said that the expiration will not affect food stamps and nutrition programs — about 75 per cent of the USDA budget — and crop insurance, the biggest “safety net” tapped by farmers in this drought year.

But dairy farmers will be hit financially.

“Immediate impact will be felt by dairy farmers because the supplemental payment many of them have been receiving, the Milk Income Loss Contract Program, expires on Sept. 30,” said John Blanchfield, senior vice president for agricultural and rural banking at the American Bankers Association.

“Since milk check payments run 30 days behind the delivery of milk, dairy farmers will notice the suspension of these payments with the November milk checks,” he said.

Dairy farmers and livestock producers have been hit hardest this year by drought. Crop losses have been covered to a great extent by insurance, supported by USDA programs. But soaring feed prices have squeezed livestock producers, prompting herd liquidations and financial failures.

“Congress has to got to do something in November,” said Jackie Klippenstein, vice president of industry and legislative affairs for Dairy Farmers of America. “The farm bill provided a measure of hope. The fact that Congress went home without addressing it has really deflated a lot of folks out there who are struggling.”

“There’s been so much equity lost,” said Ray Souza, a California dairy farmer. “Many dairy farmers have had to borrow against their equity to stay afloat.”

After the Nov. 6 election, Congress will return to work on the farm bill. The House of Representatives was splintered over how deeply to cut food stamps and farm programs. The Senate passed its version in June but both chambers must reach agreement before it can become law.

“The best angle I’ve heard is that if Obama wins, a farm bill completed during the lame duck is more likely; if Romney wins, they’ll extend and save changes for 2013,” Gary Blumenthal, head of Washington-based agricultural consultancy World Perspectives, told the Reuters Global Ag Forum this week.

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