WASHINGTON — House and Senate negotiators met for the first time Wednesday in an effort to draft compromise legislation that would reauthorize many farm subsidy programs through 2018, as Sen. Patrick Leahy, D-Vt., emphasized the need for proposed reforms to dairy programs in the so-called farm bill.
While the House and Senate have passed separate versions of the farm bill in recent months, both bills would eliminate the current Milk Income Loss Contract program, which compensates dairy farmers when milk prices fall below a certain level. The MILC program would be replaced by a new plan that makes payment to farmers when the national margin between milk prices and feed costs falls below $4 per hundredweight of milk.
But the Senate-passed version of the farm bill also contains a provision — the Dairy Market Stabilization Program — not included in the House bill. The Dairy Market Stabilization Program would provide incentives to farmers to reduce milk production when the margins between feed cost and milk prices are low. The aim is to raise milk prices, thereby reducing the overall cost of the federal dairy program and increasing profits for farmers.
Leahy, a former chairman of the Senate Agriculture Committee, said this proposed new dairy program would mean an increase in stable markets for dairy farmers and protection for farmers and consumers from “extreme price fluctuations.”
“There will be realistic prices on milk, and without it I think we will have a real problem and eventually consumers will pay a lot more,” Leahy said in a telephone interview shortly before the House-Senate conference committee on the farm bill, of which he is a member, convened.
The last multi-year farm bill was enacted in 2008, and expired last year. A nine-month extension of the 2008 legislation ran out on Sept. 30.
If Congress fails to act between now and Jan 1 — either to extend the 2008 farm bill or to enact a new one — the provisions of a farm bill passed more than 60 years ago, in 1949, would kick in. Known as “permanent law,” the 1949 provisions could result in a doubling of current milk prices.
“The fact is that we should have (gotten) the farm bill done a year ago — and the Senate has,” Leahy said. “If they don’t vote for (a farm bill) or the House blocks one, they are going to see the taxpayers spending an awful a lot more money than they are spending today.”
Chris Galen, spokesman of the National Milk Producers Federation, said his group prefers the version of the farm bill passed by the Senate last summer. He said current dairy programs do not reflect changes in the cost of feeding cows, and only cover the first 3 million pounds of milk produced.
“We don’t support an extension of the status-quo, but I think some farm groups would be OK with it,” he added.
Assuming so-called sequestration, the across-the-board automatic spending cuts intended to reduce the federal deficit, does not kick in again in the coming months, the Senate-passed version of the farm bill is estimated to cut spending by $24 billion over the next decade, compared to $50 billion in the House-passed bill.
A major point of contention in House-Senate negotiations will be the Supplemental Nutrition Assistance Program, or SNAP, formerly known as food stamps. About 48 million lower-income Americans benefit from that program.
The Republican-controlled House has passed legislation to reduce the program by nearly $40 billion over the next decade, while the Senate farm bill would cut it by about $4 billion during the same period.
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