WASHINGTON — Largely overlooked in the Capitol Hill standoff that led to a partial shutdown of the federal government, separate legislation that extended portions of the nation’s farm programs — including a financial safety net for dairy farmers — also expired with the Tuesday start of the 2014 fiscal year.
While it appears the expiration of the farm legislation will have little immediate impact on Vermont’s 1,000 dairy farms, the situation could change dramatically if a new farm bill is not approved by the end of 2013 — and so-called permanent law governing farm programs is allowed to kick in Jan. 1.
“We’re in a dysfunctional mode arguing about a government shutdown and fall(ing) down on our debt, so many things could be a casualty in a destructive fight — and action on the farm bill could be one of them,” said Rep. Peter Welch, D-Vt., alluding to the forthcoming fight when the federal government reaches its debt ceiling in about two weeks.
Among the farm provisions that expired Tuesday was the Milk Income Loss Contract Program. As a result, MILC will no longer compensate dairy farmers across the country when milk prices fall below a certain level — currently $16.84 per hundredweight in the Boston market.
Sen. Patrick Leahy, D-Vt., said milk prices are currently high enough that, in the short term, the absence of MILC or a similar program should not have a major impact on the dairy industry. But looking down the road, Vermont farmers need more consistent policy-making from Washington in order to make a living, said Leahy, a former chairman of the Senate Agriculture Committee.
Meanwhile, agriculture officials in Vermont are nervous. Alison Kosakowski, communications director for the Vermont Agriculture Agency, said it is important to have a safety net in place in case the price of milk drops.
“Right now, farmers are not going to feel any impact because MILC is not making payments,” Kosakowski said. “But should things change and MILC is not available, that would cause a problem.”
The last permanent farm bill, enacted in 2008, expired a year ago at the end of the 2012 fiscal year. In January, Congress approved an extension of many of the programs in the 2008 bill; that extension ran out Tuesday.
Legislators and lobbyists see several possible scenarios between now and the end of the year. One involves passage of a new long-term farm bill before Jan. 1; another could be a further extension of the 2008 farm legislation.
If Congress fails to take such actions, permanent farm law — which involves provisions of a farm bill passed more than 60 years ago, in 1949 — would kick in. The activation of permanent law would require the government to buy milk at a price that is about twice today’s rate.
According to statistics compiled by the National Milk Producers Federation, a gallon of milk cost about $3.45 in grocery stores in August. Federation spokesman Chris Galen said this could double if permanent law takes effect.
“If you take away these (MILC) programs, it goes to a boom-or-bust (cycle),” Leahy said. “It hurts consumers, it hurts the farmers.”
But there is currently no indication that Congress will focus on passing a long-term farm bill anytime soon. Welch said he has had conversations about such legislation with House Speaker John Boehner, R-Ohio, and House Majority Leader Eric Cantor, R-Va., but that both leaders exhibited reluctance to move ahead on the matter.
The Democrat-controlled Senate in June approved a long-term farm bill reauthorization on a bipartisan vote, but the Republican-controlled House has struggled to pass similar legislation. House conservatives have demanded sharper cuts in farm program spending, and many Democrats have objected to reductions in the Supplemental Nutrition Assistance Program, formerly known as food stamps.
The Senate bill contains a provision designed to replace the MILC program, while creating a more comprehensive safety net that focuses on feed costs as well as milk prices. Critics of the MILC program contend that it has not been tied to the cost of feeding cows and covered only a limited amount of annual milk production.
Galen said the National Milk Producers Federation prefers the Senate version of the farm bill, which includes the proposed Dairy Market Stabilization Program. That program is intended to provide incentives to farmers to reduce milk production when margins are low, thereby raising milk prices and reducing the overall cost of the program.
The House version of the farm bill does not contain that provision.
“The bottom line is we don’t want an extension of the current program. We want a new farm bill,” Galen said.
Kang Liu is a representative of the Boston University journalism program.
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