MILWAUKEE (Reuters) - The Congress could delay passage of a new five-year farm bill until spring planting given the full plate of legislation needed after the election to avoid a fiscal cliff with its mandatory U.S. budget cuts, a top farm policy expert said on Monday.
“My prediction is that we will get a farm bill by April 2013. It will look very close to the Senate version,” Barry Flinchbaugh, a Kansas State University agricultural economist who advises legislators on shaping U.S. farm bills, told an agricultural bankers meeting.
The farm bill is the master legislation that directs government supports and food aid programs.
Squabbling over political issues, the divided Congress adjourned in September without passing a new bill before the old one expired on October 1. That fed more anger in U.S. farm country - which is still reeling from the worst drought in half a century - against partisans in Congress.
Any fallout from the failure to pass a farm bill will be seen in the U.S. farm belt from Ohio to Nebraska and the Dakotas to Texas on Tuesday when voters go the polls for the national election.
Hardest hit by the drought were livestock producers and dairy farmers who lack the crop insurance that grain belt farmers enjoy, and continue to be squeezed by soaring costs to feed their animals.
“If the president is reelected we have more of a chance of getting a farm bill passed in the lame duck. If Romney is elected they are obviously going to want to wait until he can have some input,” Flinchbaugh told Reuters on the sidelines of the meeting.
The Democrat-controlled Senate passed its version of the bill in June, which would replace traditional crop subsidies with an insurance-like program and cut food aid for the poor - food stamps - by $4 billion. The Republican-controlled House of Representatives splintered over demands by some conservatives to cut food stamps and farm programs even more.
Food stamp cuts would account for $16 billion of the $35 billion in savings proposed by the House agriculture committee. The Senate package would save $23 billion with crop subsidies providing half of the cuts.
Since the 2008 farm bill expired on October 1 government supports have been operating under the 1938 Agricultural Adjustment Act passed during Franklin Roosevelt’s New Deal programs. The AAA brought back the concept of “price parity” from the 1900s and led to sharply higher guaranteed crop prices, Flinchbaugh said.
Most policy farm analysts expect Congress to extend the 2008 Farm Bill if they can’t pass the new bill by December 31. But Flinchbaugh said Congress can do what it wants.
“In 1995 and 1996 they didn’t” extend the earlier legislation, Flinchbaugh said.
He believes it will not be as easy to pass an extension as it may look now based on how farm bills are funded.
“If they try a one-year extension, I don’t know where they are going to get the money,” he said. “They might do a 30-day extension or 60-day extension until they get the new one.”
But the farm bill is the minor issue compared to the fiscal cliff the country is facing, Flinchbaugh said.
Under a contentious budget compromise in 2011 neither side liked, Republicans and Democrats locked themselves into massive mandatory budget cuts and tax increases in January 2013 to avoid raising the U.S. debt ceiling after last year’s first-ever U.S. debt downgrade by rating agency Standard & Poor’s. Economists say such automatic drastic measures will likely push the economy back into recession.
“I’m pleading for horse sense,” Flinchbaugh told Reuters. “If Congress attempts to kick the can down the road one more time — by spring we will have federal Treasury bonds rated BB, versus AA now.”
Reporting by Christine Stebbins; Editing by Peter Bohan and Carol Bishopric