* Plan extends 2008 farm law until Sept 30
* Bill gives lawmakers time to finalize new 5-year farm bill
By Charles Abbott and Roberta Rampton
WASHINGTON, Jan 1 A deal approved by the U.S.
Congress late on Tuesday t o avoid the automatic tax hikes and
spending cuts known as the "fiscal cliff" also includes measures
to avert the "dairy cliff" - a steep increase in milk prices.
The tax agreement contains a nine-month fix for expiring
farm subsidy programs by extending a 2008 farm law. That gives
lawmakers time to come up with a new five-year replacement.
Without the fix, the farm law would have expired and dairy
subsidies would have reverted to 1949 levels, meaning retail
milk prices could have doubled to about $7 a gallon in coming
weeks or months.
Lawmakers have so far failed to finalize a new $500 billion,
five-year farm bill to replace the 2008 legislation, which
authorizes spending on food stamps and crop subsidies.
They had agreed to eliminate $5 billion in annual direct
payments to grain, cotton and soybean growers - subsidies deemed
wasteful at a time of high prices and record farm income.
The extension of the 2008 farm law is designed to buy time
for Congress to complete a new farm bill and still allow for
another round of direct payments.
But three dozen programs in the law have no money left,
including disaster relief and biofuel development as well as a
soil conservation program and some rural economic development
and agricultural research programs.
As the year-end deadline drew closer, farm-state lawmakers
had drafted a one-year fix that would have included disaster
relief money for livestock producers hurt by drought.
It also would have created a dairy subsidy program to
compensate farmers when feed costs are high and milk prices are
That was nixed by Senate Republican Leader Mitch McConnell
during the final hours of fiscal cliff talks, a Senate aide
Dairy processors said the proposed new dairy plan would have
interfered too much with the market.