Policy Updates and Issue News October 2024

Congress left town at the end of September to campaign for reelection. They did not pass a new farm bill before leaving. In fact, neither the Senate nor House farm bill versions have been sent to the floor for a vote. In the meantime, the 2018 Farm Bill expired on September 30. In some ways, the current farm bill has been dying the last few years, thanks to unanticipated price inflation. The dollar is only worth 80% of what it was in 2018. The fixed reference prices for commodities in that farm bill, which define the help from USDA farmers depend on in rough times, are only worth 80%of what they were in 2018. Also, dollars set aside for research and innovation grants and certain conservation programs are only worth 80% of what they were in 2018. So, what will we miss with no new farm bill?

Some programs were shut down immediately October 1:

• Numerous international programs, including the Market Access and Foreign Market Development Cooperator trade promotion programs and Food for Progress.
• The Biobased Markets Program and Bioenergy Program for Advanced Biofuels
• The Specialty Crops Block Grants Program
• The National Organic Certification Cost-Share Program
• Several animal health programs
• New enrollments in the Conservation Reserve Program, livestock projects under the Environmental Quality Incentives Program, the Agricultural Conservation Easement Program and the Regional Conservation Incentive Program, and several wetland, forest and watershed restoration programs.

Conservation funds outside the farm bill

The inflation Reduction Act and the Infrastructure Investment and Jobs Act added nearly $18 billion to farm bill conservation programs deemed “climate-related” by the law’s authors. These programs are at least partially funded outside the farm bill with supplemental funding that doesn’t have to be spent until fiscal year 2031. These funds can be used to supplement “climate -related “ conservation practices in the absence of a farm bill.

Permanent law

A number of farm bill programs operate under permanent law, meaning law without a sunset date. These include crop insurance programs, the Supplemental Nutrition Assistance Program, the Emergency Food Assistance Program, and several disaster programs. These will continue to operate but without improvements and updates that would happen in a new farm bill. Normally when people talk about permanent law and the end of a farm bill, they are talking about farm programs dating back to the 1930’s and 1940’s that are still on the books, but which are suspended by modern farm bills. Various current commodity support programs will be extended through the current crop year then replaced with permanent law that will kick in with the 2025 crop.

Congress has chosen to leave these old laws on the books as a guarantee that it will take some action to prevent the return of these programs. The old programs would support certain farm prices far above current support prices and so far above market prices as to be disruptive to the agricultural economy and very costly to the federal government. These permanent law support prices account for rising input costs but not for vastly improved yields and input efficiencies. These “parity prices” are still published every month by USDA.

If there is no new farm bill or extension through next year, USDA would pay commodity prices under these old programs through purchases and nonrecourse loans. Milk and honey pricing would kick in January 1. The current milk price per hundredweight of $22.80, for example, would go to $49.43. Pricing for barley, corn, cotton, oats, rice, rye, sorghum and wheat would kick in with the 2025 crop. Corn would go from the July 2024 market price of $4.24 per bushel to $7.45 per bushel and wheat from $5.52 to $15.08 per bushel. There are no permanent law programs for peanuts, canola, seeds, soybeans, sunflower and several other crops.

CCC Authority

The commodity Credit Corporation (CCC) has historically been used as the secretary of agriculture’s emergency slush fund regardless of the party in power. The farm bill directs numerous programs to draw funding from the CCC. The secretary has broad ad hoc authority to support farm prices, farm income, agricultural marketing, exports, domestic consumption, conservation programs and to provide emergency relief. When the Department of the Treasury pays the Agriculture secretary’s bills this fall, he’ll have a $30 billion line of credit to work with. This gives the secretary flexibility to operate farm income support and disaster programs to fill in behind actions not taken by Congress.

What’s next?

Congress will return to Washinton after the elections for a “lame duck “session. They could spring into action and pass a new farm bill before January 1. That’s highly unlikely given the mood and politics in Congress right now. Congress could do nothing and let permanent law kick in January 1. Congress can’t afford that option. So, at this point it looks like the only palatable option for Congress to take is to pass an extension of the current farm bill. The only argument may be to extend for how long?