* Proposal adds year to expired 2008 law; Monday vote
* Follows rising alarm about potential milk price doubling
* Plan creates new dairy subsidy program keyed on feed cost
* Another year of costly 'direct payment' subsidy to growers
By Jim Wolf
WASHINGTON, Dec 30 Farm-state lawmakers have
agreed to a one-year extension of the expiring U.S. farm law
that, if enacted, would head off a possible doubling of retail
milk prices to $7 or more a gallon in early 2013.
The extension would end a 32-month attempt to update farm
subsidies dating from the Depression era, when farmers were
crushed by low prices and huge crop surpluses, to meet today's
high-wire challenges of tight food supplies, high operating
costs and volatile markets.
House Agriculture Committee Chairman Frank Lucas, an
Oklahoma Republican, said on Sunday he hoped the legislation
would be passed by Congress and signed by President Barack Obama
by Tuesday to avoid higher prices for milk in grocery stores.
The bill was listed among measures that could be called for
a vote on Monday in the House of Representatives although action
was not guaranteed.
Despite consensus on the need to extend the farm bill,
lawmakers continue to discuss how long the extension should be.
Representative Tom Cole, an Oklahoma Republican, told
reporters late on Sunday a nine-month farm bill extension was
being considered as part of deal being crafted in the Senate to
stave off the "fiscal cliff" of automatic tax hikes and spending
cuts that begin kicking in on Jan. 1.
"There's good chance that if there is a package out of the
Senate, it will include something on the farm bill. The easiest
thing to get done would be nine months of current law," Cole
A second Republican, Representative Steven LaTourette, said
a nine-month extension could be part of the fiscal cliff package
or could move separately if the fiscal talks fail.
House Republican leaders refused to call a vote during the
fall on a full-scale, $500 billion farm bill on grounds it might
fail because it did not cut spending enough.
Grain, soybean and cotton growers would get another round
of the $5 billion "direct payment" subsidy that all sides agreed
to kill in a new farm bill. The payments are made regardless of
need. Reformers say the payments are unjustified when crop
prices and farm income are at near-record levels.
DISASTER MONEY AND A NEW DAIRY PROGRAM
Also in the extension, lawmakers would revive agricultural
disaster-relief programs that ran out of money a year ago and
create a new dairy subsidy program. It would compensate dairy
farmers whenever milk prices are low and feed prices are high.
The so-called margin protection program would require farmers to
limit production to avert a long run of low dairy prices.
Traditionally, the dairy program sets a minimum price for
milk through government purchase of butter, cheese and dry milk.
If Congress does not act, the dairy support price will revert on
Tuesday to the level dictated by an outmoded 1949 law and which
is roughly double the price now paid to farmers.
The potential retail milk price has been estimated at $6 to
$8 a gallon versus current levels near $3.50.
Agriculture Secretary Tom Vilsack, during an interview
broadcast by CNN, said higher milk prices - if it comes to that
- would ripple throughout all commodities "if this thing goes on
for an extended period of time."
Senator Debbie Stabenow, chairwoman of the Senate
Agriculture Committee, said the "responsible short-term farm
bill extension ... not only stops milk prices from spiking, but
also prevents eventual damage to our entire agriculture
TWO FALLBACKS IF EXTENSION FALTERS
House Republican leaders readied two alternatives, if
needed, to the one-year extension. One was a one-month extension
of the now-expired 2008 farm law without disaster funds or the
new dairy program and the other was a one-month suspension of
the dairy provisions of the 1949 law.
It was not clear which bill would be called for debate, a
farm lobbyist said on Sunday. A small-farm activist said any
package passed by Congress must include rural economic
development funds and money for soil conservation on "working
lands," the largest of USDA's conservation programs.
"If a new farm bill doesn't pass this Congress, we'll soon
hold another mark-up and just keep working until one is enacted
next year," said Stabenow, a Michigan Democrat.
It would be the first time on record that Congress began
drafting a farm bill during a two-year session and had to carry
it into the following session, congressional researchers said.
Hearings on the new farm bill began April 21, 2010.
HOUSE, SENATE DISPUTE ON BIG CUTS
While dairy producers generally support the so-called
margin-protection program as the answer to high feed costs,
processors and foodmakers oppose it. They say it is wrong-minded
in its premise of curtailing production when prices are low, and
it will destroy a healthy export market for dairy products.
The rejuvenated disaster programs would cover losses from
this year's widespread drought, especially for livestock
producers, although tree farmers, honey bees and farm-raised
fish are also covered. Maximum payment would be $100,000.
Senators passed a farm bill in June estimated to save $23
billion over 10 years, with most of the cuts in crop subsidies
and conservation programs. The House Agriculture Committee
approved a bill with $35 billion in cuts in July, half of it in
food stamps for the poor - the biggest cut in food stamps in a
Fiscally conservative House Republicans have called for
larger cuts in farm subsidies and food stamps while some House
Democrats opposed any food stamp cuts.