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Sunday, 25 November 2012 23:41

Farm Bill crucial to agriculture, part of the fiscal cliff puzzle

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GRAND RAPIDS — While all eyes are focused on the fast-approaching fiscal cliff, another legislative drama is being played out behind the scenes: the 2012 Farm Bill.

This legislation is particularly important to West Michigan farmers and food processors who struggled through a difficult year so far and have been helped by federal programs. Extreme weather events decimated tree fruit crops and summer droughts withered cash grain and hurt livestock, hampering Michigan’s agricultural economy.

Still, national focus both in the media and in Congress is on resolving the federal budget before the new year. But the passage of a new Farm Bill could become a key part of those negotiations as it could assist efforts to reduce the nation’s deficit, said Sen. Debbie Stabenow, D-Mich., the chairwoman of the Senate Committee on Agriculture, Nutrition and Forestry.

“I’m pushing very hard for the House to be willing to step up and work with us to get this done so that we can use the savings — at least $23 billion — as part of the effort to offset the across-the-board cuts,” Stabenow told MiBiz. “I’m hopeful that they will see that we’re part of the solution.

“We cut spending in our bill and helped pay down the debt, so I view passing a five-year Farm Bill as being part of the solution on the fiscal cliff.”

While going over the fiscal cliff could have dramatic implications on the national economy, Stabenow said allowing some provisions of the Farm Bill to expire would be just as far-reaching.

“Agriculture is almost one out of four jobs in Michigan. It’s been a real strength for us, and we need to be sure that we’re doing everything possible to give them the economic certainty and the tools that they need to be able to remain successful,” Stabenow said. “All that goes away if we don’t have a Farm Bill.”

Stabenow said that without a new Farm Bill, farmers and processors won’t have the have all the tools at their disposal to adequately negotiate with their bankers and lenders to work out financing plans for 2013. Additionally, farmers will be without disaster assistance and less able to obtain adequate crop insurance.

However, industry reports say the negative effects will not just be felt by farmers and food processors; consumers could share in the pain as well.

The Farm Bill is an umbrella term for a number of different pieces of legislation created over the past 80 years largely consisting of nutrition programs — food stamps and other food assistance programs — and agricultural assistance programs. All of the programs have different expiration dates. Nutritional assistance programs will not expire for several more years, however the agricultural assistance measures are quickly approaching their expiration dates.

That includes a program focused on the dairy industry. Part of the dairy program expired Oct. 1, 2012, and another part of the program will expire on Jan. 1, 2013 if Congress fails to act. This expiration of the second part will have a significant impact on the prices consumers pay for all dairy products, said Ryan Findlay, national legislative counsel for the Michigan Farm Bureau.

“That part of the program … is probably the most notable to the general public,” Findlay said. “Milk, instead of costing three or four dollars at the store, will cost $15 or more. ... It will cause a huge disruption in the marketplace.”

This price increase would result from the dairy industry’s parity system going away. Normally, the government purchases milk in order to keep prices low for consumers and high for farmers and processors. Without a new Farm Bill by January, the parity system would cease to operate as it has since the 2008 farm bill was passed, and older permanent law statutes would take effect, a prospect that Stabenow hopes to avoid.

“We’re going to see milk prices go up, and tremendous uncertainty for dairy (farmers) will be a disaster waiting to happen,” Stabenow said. “We need new policies that provide better risk protection for our dairy producers, and extending current policy is not going to do anything to help them.”

Just as important as maintaining policies for dairy farmers is continuing disaster relief and crop insurance, especially for tree fruit and cash grain farmers who bore the brunt of the poor growing conditions of 2012, Stabenow said. A Farm Bill will provide that disaster assistance, she added.

“A new farm bill will address disaster assistance that’s needed for our fruit belt growers that got caught in the freeze. … We also have significant disaster assistance for livestock producers who have gotten caught in the drought last summer,” Stabenow said. “So, we have disaster assistance in the bill, and then, as important, we put in place policies to support our growers being able to have effective crop insurance to protect them in the future.”

In addition to the parity system and disaster assistance for farmers, the bill also includes conservation programs to assist farmers in a variety of ways, including in the maintenance of their land. This effort, known as the Conservation Reserve Program, (CRP) allows farmers to receive government compensation for allowing some of their land to recover from environmental damage, such as wind erosion.

“If you have 40 acres that you think have an adverse resource concern — wind erosion or soil erosion, for some reason — and you’re not going to plant it and harvest it for … 10 to 15 years, the government will pay you an annual payment per acre for that ground that you pull out of production,” said Findlay of the Michigan Farm Bureau.

The CRP expired on Oct. 1, meaning that no future contracts can be signed with the government and no contracts can be renewed, though existing contracts will continue to be funded, he said.

With all these programs riding on this package of legislation, Stabenow is anxious to see the 2012 Farm Bill voted on and passed before any more programs expire.

“Simply, we need to have the House (of Representatives) make it a priority to get it done quickly,” Stabenow said. “We’re ready to pass it, and we’ve passed a bipartisan bill in the Senate. We just need the Speaker (of the House John Boehner) to make this a priority for the House in the next couple of weeks to get it done.”

Read 2095 times Last modified on Sunday, 25 November 2012 17:00
Carl Dunker

Contributing reporter

cdunker@mibiz.com

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