The federal fiscal cliff crisis is lending its name and political stalemate politics to the as-yet unresolved federal farm bill, what has now been dubbed the “dairy cliff.”
A new farm bill is enacted about every five years, with the most recent bill having expired on Sept. 30.
Without action from the U.S. House of Representatives to either enact a new farm bill or extend the 2008 bill by Jan. 1, the last permanent law would take effect — a bill from 1949.
“We can’t be going back to 1949 policy,” U.S. Rep. Ron Kind (D-La Crosse) said. “That’s ridiculous.”
If the 1949 bill is reenacted, consumers could see the price of milk at least double.
Kara Slaughter, government relations director for the Wisconsin Farmers Union, said she can’t foresee Congress allowing the 1949 bill to be reenacted.
“If they don’t do their job and get a new bill passed by the end of 2012, then the most likely scenario is they’ll extend the current bill,” she said.
But extending the 2008 bill poses two significant problems, according to Slaughter.
First, under the recently expired bill, farmers that grow main commodity crops, such as corn, receive payments from the government as part of the Direct Payments Program.
“In times like this where corn prices are at record highs, it’s absurd for government to be giving farmers incentives to grow corn,” she said. “They have all the incentive they need to grow corn.”
Slaughter said extending the 2008 bill would end up costing taxpayers millions more, versus introducing a new bill.
Slaughter said the Senate and the House Agriculture Committee each wrote new legislation for a 2012 bill that excludes such outdated programs.
But Kind said Republican House leadership is refusing to bring this legislation to the floor for consideration.
“Allow this to be debated,” he said. “That’s how things are supposed to get done around here.”
Both Kind and Slaughter think the motives behind the filibuster are political.
Jim Holte, newly-elected Wisconsin Farm Bureau President, also said the sticking point on the farm bill has little to do with programs involving farmers.
“There’s been a relatively high level of agreement on most all of the actual farm programs and the changes there, but the two sides of the aisle have not been coming together on how to best change or keep the same food-type programs,” he said.
Although dairy farmers are able to cope with the loss of federal aid for now because of high milk prices, they can’t bet on that security.
“(Dairy) farmers will be in a real bind if we have another significant dip in milk prices,” Slaughter warned.
One measure of the previous farm bill that compensated dairy farmers for lost profit was the Milk Income Loss Contract.
“When milk prices plummeted, that assistance would kick in,” Kind said.
As of Sept. 12, nearly 12,000 dairy farmers in Wisconsin received $84 million under MILC in 2012, according to the U.S. Department of Agriculture.
“The MILC program was the one backstop against total devastation for Wisconsin dairy farmers during the 2009 dairy crisis,” Slaughter said.
Mark Dietsche, who owns a dairy and crop farm in rural Bloomer, is expecting Congress to replace the MILC program with milk insurance coverage.
“A lot of farmers don’t like the MILC program because it doesn’t make up for their losses but insurance won’t cover them either,” he said.
Dietsche explained that a dairy farmer can estimate the future price for commodities based on quotes, purchase insurance for that fixed amount, and receive federal aid if the price per hundredweight dips below that.
If it rises above, the farmer counts it as a loss.
“It used to be supply and demand, but it’s not anymore,” he said. “Now, it’s speculative investing.”
Although Dietsche favors MILC to milk insurance, he recognizes the budget needs to shrink.
“The farm bill is only one percent of the budget, but it’s where they can cut,” he said.
Dietsche added there is little incentive for a new generation of farmers to pick up where their fathers left off, like Dietsche’s family has done since their arrival in Bloomer in 1864.
“The farm programs are designed to stabilize the farm base,” he said. “I don’t know if we’ve been real successful.”