Agriculture Secretary Tom Vilsack said he’s certain Congress will meet the Dec. 31 deadline to pass the farm bill or temporarily revive its predecessor, but it will require a dose of creativity to do it. Lawmakers have been deadlocked for weeks over farm group demands for a larger safety net when there are few ways to pay for it.
“Here’s the challenge. … They have to be creative. They have to be innovative,” Vilsack told reporters on Wednesday. “They can’t just look at the four corners of the farm bill to try to deal with all the issues that people have decided need to be dealt with … to improve things out in the countryside.”
Leaders of the Senate and House Agriculture committees have set a December target to enact the new farm bill. Their original goal was Sept. 30, the date the 2018 farm law officially expired. Meeting an end-of-year deadline would avoid the “dairy cliff” on Jan. 1, when the government-guaranteed price of fresh milk would more than double. Dairy would be the first major commodity to feel the effects of a reversion to the 1949 statute that comes into force when a farm bill lapses. Row crops would be affected at harvest time.
“The consequences of inaction are unacceptable,” said Vilsack, so odds are high that Congress will either extend the life of the 2018 farm bill or pass a new farm bill. “My belief is people will do what they need to do.”
In recent speeches, Vilsack has called for a broader view of the “multiple tools” the government can use to assist rural America, including a $30 billion USDA reserve; the $20 billion earmarked in the 2022 climate, healthcare, and tax law for USDA conservation programs that emphasize climate mitigation; and USDA programs that operate outside of the farm bill. But lawmakers face knotty challenges in drafting the bill.
“You can’t do reference prices, because there is not enough money in the existing farm bill to do that. And everybody up there knows that,” said Vilsack. Farm groups are calling for higher reference prices — a factor in calculating subsidy payments — to offset high production expenses. A 10 percent increase in reference prices would cost at least $20 billion over 10 years, said one farm policy expert, when the baseline for commodity supports is $62 billion.
“And you can’t take the [climate] money because it is critically important to embracing what farmers across the country are interested in doing, which is climate support activities,” said Vilsack. Senate Agriculture Committee chair Debbie Stabenow has been adamant that the climate money will stay in conservation accounts, although some farm-state lawmakers want to use it for crop subsidies.
“And they should not constrain the ability of the department and the [agriculture] secretary to utilize in appropriate ways” the $30 billion reserve, said Vilsack. Republicans were angered that Vilsack used the reserve, the Commodity Credit Corp., to launch a $3.1 billion climate-smart initiative, and they have proposed strict limits on his access to it.
The 2018 farm law included an escalator clause to increase reference prices by up to 15 percent if there was an extended run of high commodity prices. Corn and soybeans will see the 15 percent increase in three of the next five marketing years if Congress simply extends the current law, said Jonathan Coppess of the University of Illinois. Wheat would peak at a 9 percent increase in 2027. Cotton, rice, and peanuts would not benefit. Corn, soybeans, and wheat are the most widely grown crops.
“What might be most surprising is how little attention the ERP [effective reference prices] has received compared to the amount of attention focused on (or distracted by) political disputes about raising the SRP [statutory reference price],” Coppess wrote at the farmdoc daily blog.