* Passage appears unlikely ahead of election
* Congress has option to extend current farm policy
* Current Farm Bill programs to expire Sept 30
By Carey Gillam and Charles Abbott
KANSAS CITY/WASHINGTON Aug 28 Congress needs to pass a new Farm Bill and fast or risk putting U.S. farmers in financial jeopardy as they need to decide on how much winter wheat to plant and how much to spend on corn and soybean seeds, plus make other decisions critical to American food production, a number of farming experts said this week.
With the current package of Farm Bill programs due to expire Sept. 30, the chorus of voices from the countryside demanding action by lawmakers is growing louder.
However, even these farm experts acknowledge that passage before Sept. 30 appears unlikely because of election year politics and a deeply divided Congress
"We are pushing Congress to get it done in September," said Dana Peterson, chief executive officer of the National Association of Wheat Growers. "But the likelihood of that is pretty slim. The likelihood before the election (in November) is pretty slim."
About 40 farm and agriculture-related organizations have formed a group called Farm Bill Now. They plan to rally on the grounds of the U.S. Capitol Sept. 12 to lobby lawmakers for swift passage of a new Farm Bill.
The group represents a broad base of agriculture from corn and soybean farmers, to sheep and sugar producers.
"It really matters. It's not just important to the people who work the land, it's important to everybody who buys food in the grocery store," said Pam Johnson, who grows corn and soybeans with her husband in north-central Iowa.
Congress returns to session Sept. 10 but is actually in session for only eight days during that month. And though farm advocates are demanding action, they say they fear a heavily divided Congress will scuttle any progress that might be possible.
SELLING OFF HERDS
One of the most immediate needs is assistance for livestock ranchers, industry experts said. Drought has burned up pastures normally used for grazing cattle, forcing ranchers to pay for pricey hay and supplemental feed. Many ranchers have started liquidating herds as a result.
Livestock feed assistance was part of 2008 Farm Bill but has expired and ranchers say the drought has made the need for a renewal of that program extremely urgent.
"Cattle are being sold daily, hay prices have skyrocketed because there is so little of it," said Mike Martin, a livestock farmer and president of the Miami County, Kansas, chapter of the Kansas Farm Bureau.
The large sell-off of cattle is suppressing beef prices and ultimately could lead to reduced meat production later and higher prices, experts say.
Bankers who make loans to farmers for seed, equipment, fertilizer and herbicides are also worried that a lack of action by Congress will roil agricultural production.
Lenders generally want farmers to present risk management plans before they are extended credit, and crop insurance is a key risk management tool for many producers of key crops like corn and soybeans, which are planted each spring.
"The Farm Bill controls the federal crop insurance program. If its future is uncertain... lenders are less likely to take a chance on a farmer with more risk. That's not fair to that borrower," said Bob Frazee, CEO of MidAtlantic Farm Credit, which has more than $2 billion in outstanding loans. "The lack of a Farm Bill could hurt their chances to get a loan."
If there is no agreement on a farm bill next month, the most likely step would be for Congress to pass a short-term extension of current law, a common step used in the past when Congress needed more time.
The House lacks a clear majority for its farm bill, which would save $35 billion over 10 years. Tea Party-influenced Republicans want larger cuts while Democrats object to that bill's $16 billion in cuts for food stamps, the largest cut in the nutrition program for the poor in a generation.
Before adjourning for a five-week summer vacation, Republican leaders in the House, unable to proceed on a farm bill, won approval of a $383 million disaster relief bill for livestock producers. The Senate refused to act on it, holding out for its farm bill, which would cover the drought losses.
The result was stalemate, and an angry populous.
"The government is such a mess," said Dennis Worley, a wheat farmer in northwestern Kansas who is exiting farming, selling his equipment and renting his land.
FOOD STAMP FIGHT
While agreeing on many points, the Republican-controlled House and Democrat-led Senate disagree sharply on key farm bill points. Chief among them are the size of cuts in food stamps -- $4 billion in the Senate and $16 billion in the House - and the shape of the farm program.
The Senate would eliminate almost all traditional farm subsidies in favor of a new system that compensates grain and soybean growers when revenue from a crop is from 11-21 percent below normal, with crop insurance covering other losses.
House Majority Leader Eric Cantor has declared the Senate farm bill to be unacceptable, and the House Agriculture Committee approved a farm bill that boost crop support prices by up to 40 percent and gives farmers the choice of traditional subsidies or a less-generous revenue protection plan.
The House bill omits crop insurance reforms sought by the Senate. The Senate would require farmers to practice land stewardship to qualify for federally subsidized insurance and require big operators to pay a larger share of the premium.
Congressional researchers say federally subsidized crop insurance would continue past Sept. 30 even if the 2008 farm law expires, but the reassurance has not stopped jitters about it.
Kansas wheat farmer and cattle rancher Dean Stoskopf said he will plant his winter wheat crop as he normally does this September, and hope and trust that Congress will find a way to pass a Farm Bill soon.
"It is pretty important to know where we're going to be," said Stoskopf. (Additional reporting by Kevin Murphy in Osawatomie; Editing by Bob Burgdorfer)