Ag Policy Blog
Chris Clayton DTN Ag Policy Editor

Tuesday 09/04/12

Grassley Says a Farm Bill Extension is Likely

As much as Sen. Charles Grassley would like a new farm bill, the member of the Senate Agriculture Committee acknowledged Tuesday that it's far more likely a new bill isn't forthcoming.

"I would imagine at this late stage and with farm legislation sunsetting Sept. 30 that is it most likely we will have a one-year extension of the farm bill," Grassley, an Iowa Republican, told reporters in a weekly call.

Simply put, not much is going to get done in Congress before the election, other than likely extending current policies and delaying final passage of major bills such as the farm bill. Grassley predicted a one-year extension because House members will likely meet only eight days in September while senators are scheduled for 12 days.

Congress' earlier passage of more than $1 trillion in budget sequestration cuts are scheduled to kick in Jan. 1. Grassley said he believes if Romney is elected, Congress will put off major changes on sequestration cuts and taxes until next year to allow Romney to formulate his own economic plan to Congress.

If Obama is re-elected, then a compromise could be reached before the end of the year. That may translate into approving tax increases, Grassley said. Further, he believes Congress would make changes to sequestration to avoid cuts to the military.

The problem with an extension is obvious for USDA programs. "When we come back next year to negotiate, we are going to be negotiating under more strict budget guidelines and it's going to make it more difficult for us to pass a farm bill -- a good safety net."

The difficulty with these scenarios is that if direct payments are cut, or eliminated as part of any extension or continuation of the sequestration cuts, then some major commodities end up with little or no safety net until the next farm bill is adopted. Cotton and rice producers rely heavily on direct payments now.

Understanding the influence of southerners on the House and Senate Agriculture Committee, Grassley said he believes there would be some safety net there. "It's possible there will be direct payments next year."

In terms of drought protections, Grassley said he thinks any extension would follow the House-passed legislation extending disaster programs that expired last year.

Farm groups are planning a rally on Sept. 12 at the Capitol to demand a new farm bill be passed. Grassley, however, doesn't see a huge groundswell of farmers urgently needing a new bill. Grassley said throughout about 20 town-hall meetings in August he did not see any "farmer revolt" over not getting a farm bill completed.

A one-year extension would minimize uncertainty for another crop year, Grassley added.

Looking not only at the need for the House to pass a bill, Grassley said his review of the 2008 conference negotiations highlights that such talks would have to be much speedier. Those talks took nearly five months in 2008 before a conference bill was ready for passage.

Farmers will also be paying close attention to the estate tax. The current $5 million exemption and 35% rate expires Jan 1. Without new authorization from Congress, the exemption goes back to $1 million. Yet, those decisions also will be delayed until after the election.

I can be found on Twitter @ChrisClaytonDTN

Posted at 9:38AM CDT 09/04/12 by Chris Clayton
Comments (3)
The dark cloud of uncertainly drifts only above the major Commodity "Players" and the Betting Window at the Derivatives Market. Farmers can expect what they have now with the extension...it hasn't hobbled them too much the last couple of years-small to medium farms that is. That's a very general analogy, as there are likely exceptions to every rule manufactured in D.C. The giant industrial operations are not going to be "happy campers", nor are the companies that deal with them. Whenever the real bill comes to the floor, it's likely going to look like a pool of piranhas in a feeding frenzy.
Posted by Ric Ohge at 10:05AM CDT 09/04/12
The Food Bill may well take on a different perspective in the near future. All of the ethanol credits, snap ebt. cards. meals on wheels, etc. will mean nothing if Old Mother Hubbards Cuppoard is bare.
Posted by Bonnie Dukowitz at 10:23AM CDT 09/05/12
And the cupboard shelves will bare this disaster drought and policy that keeps food producers from getting equitable pay for products. Love to read people write of 2013 and beyond. If things don't change somehow for many livestock producers/ dairy, hog chicken than spring 2013 may claim a large portion of these weakened operations. Grassly and cronies can't grasp the depth and seriousness of the food producer at this point. They are only looking at things with yesterday glasses and looking to future to further the cronies money grab. Only problem is, harsh times may come unexpected to the blind politicians. Only when their power and wealth is on the line will they act like they care for their country and people.
Posted by Frank Thomas at 5:17PM CDT 09/05/12
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