The Farm Bill Expires This Week. Does It Matter?

Not much -- for now. But lawmakers, especially those from agriculture-producing states, have warned Congress about the troubles that could ensue.
by | September 26, 2012

The farm bill, one of the most complicated and wide-ranging pieces of legislation that Congress deals with every few years, will expire next week. But does it really matter?

Not much -- at least for now.

In recent weeks, Washington wonks have been scratching their heads to determine what, exactly, the impact of the bill's expiration will be. Congress left for its pre-election recess without doing anything to address the coming expiration, and members won't return until November -- well after the Sept. 30 expiration date for existing law.

Some federal lawmakers, especially those from farm states, have been loudly calling on House leadership to push a bill through, issuing warnings about economic trouble that could ensue if the legislation expires. That rhetoric has been fueled by the fact that it's an election year, and the farm bill is always a hot-button issue in agriculture-producing states. For the most part, however, it appears that major disruptions won't occur immediately when the bill lapses.

"The fact that we don't have a farm bill is a serious and significant problem, but as far as things going off a cliff, it doesn't look like on Monday the implications are immediately felt," says Matt Russell of the Agricultural Law Center at Drake University Law School in Des Moines. "Apparently, lawmakers think there's still time to undo the mess before it gets completely messy."

Federal Funds Information for States, the research shop that examines how federal budget policy affects states, released a report earlier this month explaining the impact of a farm bill expiration.

With the fiscal year set to expire at the end of the month, Congress passed a continuing resolution (CR) last week that essentially keeps federal funding on autopilot through March 27, 2013, or until it can finalize its appropriations laws. That CR will help mitigate most of the problems that might have occurred with the farm bill's expiration.

The CR didn't extend the farm bill itself, it keeps funds flowing for any program in the farm bill that received money through the previous FY 2012 appropriations law. Additionally, it extends funding for programs in the nutrition section of the farm bill.

That means business as usual for the Supplemental Nutrition Assistance Program, also known as SNAP or food stamps, which is probably the most important piece of the legislation to states. The federal government recently reported that there were 46.67 million people enrolled in the food stamps program in June -- a new record.

What may be more of a challenge are programs in the farm bill that receive what's known as mandatory funding and aren't covered by annual appropriations that the CR extends.

According to FFIS, a slew of programs will expire Sept. 30 and won't get money without a new or extended farm bill. Those include programs that deal with conservation, trade, rural development, research and energy, among other areas. But some conservation programs have already been extended through FY 2014.

The Congressional Research Service also provides light on the situation. This summer, CRS examined the impact of a possible farm bill expiration. The report downplayed some of the concerns.

The bill's farm commodity programs fall under the category of mandatory spending, so it too would need re-authorization to continue beyond September. But those commodity price and income support programs don't really have a Sept. 30 deadline.

Those programs, which offer payments to farmers when market prices fall below targets, would likely be fine for some time after expiration. CRS writes the last year of support under the existing bill's commodity programs in the 2012 crop year, or crops harvested during calendar year 2012 and marketed the year after that.  "Thus, the effective deadline for enacting a new farm bill is when the first supported commodity is harvested in the subsequent (2013) crop year, not the end of the fiscal year," CRS writes. In other words, Congress still has time to deal with the issue.

It goes on to note that history suggests the real deadline for a farm bill is late spring 2013.

Crop insurance is permanently authorized, so it's safe. So too is the Noninsured Crop Disaster Assistance Program, which provides funding for crops ineligible for insurance.

How did Congress get to the point that this conversation is even taking place? The Senate passed a five-year farm bill back in June, and the House Committee on Agriculture passed its version in July. But the House's leadership hasn't allowed a vote on the bill produced by that committee amid policy differences and a fear that it may not actually get the votes in needs to pass in the full chamber.

The House proposal would have saved $35 billion over 10 years, according to the Des Moines Register, with $16 billion of that come from cuts to nutrition programs, and some House Republicans have called for even deeper cuts. The Senate has proposed less dramatic savings.

The National Governors Association is urging Congress to move forward with the legislation, arguing that it is necessary to stabilize the economy.

The biggest concern, many observers say, is the implementation of something called  "permanent law" that could be implemented in January unless Congress intervenes. Permanent law is a series of policies and price supports developed in the 1930s and 1940s that are out-of-sync with today's practices and market. Many believe a reversion to permanent law would be so disruptive that it would be unlikely that Congress would let it take effect.

The farm bill overrides permanent law, and Congress has left permanent law in place to provide a disincentive against inaction. If Congress waits too long without taking action the old standard would be revived.

Despite the headlines and rhetoric blasting a Congress that let the bill expire, the situation isn't all that uncommon.

According to CRS, in the last 40 years, Congress has only twice passed farm bills before Sept. 30, and the three most recent farm bills were passed in April 1996, May 2002, and June 2008 -- well after expiration of their predecessors, but before the first crop covered by the next farm bill was harvested.

"For now," the Des Moines Register notes, "the agriculture sector should see little if any major impact if the 2008 farm law expires at the end of this month."

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