MSU Extension

The U.S. House of Representatives passed a new version of the Farm Bill (HR 2642) on July 11 which contained 11 of the 12 titles of the original bill. The House removed the nutrition title, which includes the controversial Supplemental Nutrition Assistance Program (SNAP), generally referred to as food stamps. The new House version of the Farm Bill also included the Goodlate-Scott dairy proposal and voted out the Dairy Security Act which contained provisions for supply management of milk production by the U.S. dairy industry.

From a procedural standpoint, the new House Farm Bill will have to go to a conference committee made up of both Senate and House Ag Committee members who must hammer out a compromise Farm Bill before they can send it to the president for his signature or veto. This will be very problematic considering there are very few legislative days available until the current extension of the 2008 Farm Bill expires on September 30. Congress is scheduled for their August recess beginning Aug. 2 and will not return until Sept. 9. Then the September recess begins on Sept. 20 with a return on the evening of Sept. 30. This schedule leaves precious little time for the joint House and Senate conference committee to come to an agreement given the two chambers are so far apart.

According to some Michigan State University agriculture economists, there are four possible outcomes. The joint House and Senate conference committee:

1. Reaches an agreement that is signed by the president and becomes law.
2. Does not reach an agreement and the 2008 Farm Bill is extended further, most likely for an entire year. A two-year extension is also possible if conference conferees seek to avoid another Farm Bill debate in the 2014 election year.
3. Does not reach an agreement and the 2008 Farm Bill is extended with modifications. The most likely modification would be a reduction in direct payments to farmers.
4. Does not reach an agreement and permanent law is repealed ending farm commodity support programs.

The new Farm Bill represents about $500 billion in government spending over five years. Food and nutrition programs, such as SNAP account for about 80 percent of Farm Bill spending while more traditional farm programs, such as crop insurance and land conservation programs, account for only about 20 percent. The big battle in Congress is over SNAP spending. The issue pretty much follows party lines with the two political parties viewing how and if cuts in SNAP will take place. It is estimated that if $20 billion was cut from the bill, food stamp benefits would end for about 2 million people, which amounts to about 4 percent of the current total enrollment of 45 million. The house version of the bill also contained a controversial amendment that would require food stamp recipients to either be working or at least seeking work. The President has promised to veto any bill that contains the monetary cuts and work provisions currently supported by a majority in the House.

Dairy policy is minor portion of the Farm Bill despite being extremely important to dairy producers, milk marketing cooperatives and dairy product manufacturers. The Senate version of the Farm Bill retains the Dairy Security Act; while the newest House version rejects the Dairy Security Act in favor of the Dairy Freedom Act commonly referred to as the Goodlate & Scott Dairy Amendment. Both dairy provisions would provide dairy producers with subsidized income over feed cost insurance programs. The primary difference between the acts is that in the Dairy Security Act dairy producers who opt to participate in the margin insurance protection program would also be required to cut milk production under certain circumstances when there was considered to be a national surplus of milk. The Goodlate & Scott Dairy Amendment program does not contain the mandatory supply management clause.

As one might imagine, support for either the Dairy Security Act or the Goodlate & Scott Dairy Amendment depends on which side of the dairy industry one is on. Generally, producers and producer organizations are supportive of the Dairy Security Act. For example, Jerry Kozak, president and CEO of the National Milk Producers Federation said, “The Farm Bill passed today by the House of Representatives is seriously flawed, in that it contains the Goodlate-Scott dairy amendment, as well as repeal of permanent agricultural law. Neither of these measures serves the best long-term interests of dairy farmers. The Senate, by contrast, overwhelmingly passed the complete Dairy Security Act, which the National Milk Producers Federation and nearly all dairy farmers enthusiastically supported.”

On the other side of the dairy industry, Jerry Slominski, senior vice president of legislative and economic affairs for the International Dairy Foods Association, a major dairy processor group, praised the new House version by saying, “The House-passed version of the Farm Bill will allow our industry to continue to grow and create thousands of more jobs. The Senate-passed version of the Farm Bill, however, continues to include the divisive milk supply management policy that is opposed by national consumer groups, supermarket chains, restaurants, taxpayers, the Teamsters union and many dairy producers, including the second-largest dairy cooperative.”

One thing is sure: the ultimate passage of the Farm Bill will not revolve around the dairy title. The Farm Bill is now completely a “food fight” that revolves around the nutrition title (food stamp and nutrition programs).