With each passing day, enacting a new five-year farm bill in 2012 becomes more and more of a challenge. While the best outcome is to get a new five-year farm bill yet this year through regular order, what if that does not happen? What then?
In that situation, it is paramount Congress enact a modified extension of the 2008 Farm Bill before the end of the year. The alternative—leaving the farm bill in the limbo land it has been in since Oct. 1—is not a viable option and should be given no credence.
A “clean” extension bill would simply change policy and program ending dates from 2012 to some specified date in 2013. The main issue is how long of a delay to make. Some argue for a short delay, perhaps three months, to keep the pressure on Congress to come up with a deal sooner rather than later. Others argue for a full-year extension to ensure there is enough time to get the job done.
In all likelihood, an extension actually would be for whatever length of time Congress decides to kick the can down the road on the “fiscal cliff” set of issues. In other words, if other authorizing committees of Congress are required to report deficit reduction packages by June 1 or July 15 or whenever, then it seems likely the Agriculture Committees will also be required to report the farm bill at the same time.
A clean extension, while simple, would not be a good extension. In addition to deciding on the length of the delay, there are at least five other “Ds” that Congress must bring into the deal.
- Disaster: A modified extension would almost certainly have to include a disaster provision. In the pending five-year farm bills, disaster money for the livestock and fruit sectors is renewed. However, that would not be the case with a simple clean extension, and hence new disaster assistance funding would not be available in 2013.
- Dairy: Dairy needs to be included in the extension because the old Milk Income Loss Contract (MILC) program has expired and has no funding baseline, while the new Dairy Margin Protection Program included in both the Senate-passed and House Committee-passed farm bills will not yet exist. Here Congress will have at least two choices for the extension bill—either go ahead and pass the new margin protection program or recreate a modified one-year only version of the MILC program.
- Development: The extension also must deal with development programs—programs that spur economic growth and development created by the 2002 or 2008 Farm Bill that had mandatory farm bill funding until it ended on Oct. 1. This includes program funding to develop the next generations of farmers, farm-based value-added business and rural microenterprise, renewable farm-based energy, new direct marketing opportunities and organic agriculture. Most of these newer, innovative programs receive new mandatory funding in the pending House and Senate five-year farm bills, but in the extension context must be provided for during the 2013 gap year.
- Down Payment on Reform: While more comprehensive farm program reform will await the resolution of the 5-year farm bill, the extension must include a significant down payment on reform. With both houses and both parties having already decided that direct payments will disappear in the new farm bill, it is only common sense to begin the phase out now. Additional reforms might also be possible, but a phase out of direct payments would be the centerpiece. It would take less than 25% of the direct payment budget to take care of the disaster, dairy and development items mentioned above, leaving additional sums for the fifth “D” word—deficit reduction.
- Deficit Reduction: Any extension would likely have to contribute to deficit reduction as part of the larger negotiations over the “fiscal cliff” suite of issues. Contributing a portion of the direct payment budget is the most likely candidate. It would not impact the baseline for a new five-year farm bill to be decided on next year, and would come at a time of high commodity prices when its economic impact would be small anyway.
Disaster, dairy, development, down payment and deficit reduction—those are the five key Ds of a farm bill extension should the effort to pass a new five-year bill yet this year stall out.