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Fiscal Cliff Deal Includes Farm Bill Extension

As the Senate raced to beat the clock on a tax package compromise, along the way they swept up the farm bill.

Published on: Jan 1, 2013

It looks as if from an ag perspective, the U.S. Senate has essentially kicked the can down the road adding a nine-month extension of the current bill. The fiscal cliff deal was negotiated by Vice President Joe Biden and Senate Minority Leader Mitch McConnell.

Over the weekend,  Senate and House Ag Committee leaders had worked out a compromise extension that did include changes to dairy supports and was more comprehensive in nature. As Politico reports, the initial winners of an extension are Southern farmers - direct payments will continue in some form - and dairy processors.

LATE NIGHT DEAL: Truly midnight oil was burned as the Senate reached a fiscal cliff deal, which includes a farm bill extension. The House steps up next for a vote.
LATE NIGHT DEAL: Truly 'midnight oil' was burned as the Senate reached a fiscal cliff deal, which includes a farm bill extension. The House steps up next for a vote.

The National Milk Producers Federation issued a statement early Tuesday calling the Senate vote "a devastating blow to the nation's dairy farmers. After months of inaction, the plan that passed overnight as part of the fiscal cliff package amounts to shoving farmers over the dairy cliff without providing any safety net below."

The U.S. House will take on the fiscal cliff measure next, including that nine-month farm bill extension. NMPF President and CEO Jerry Kozak adds: "Dairy farmers across the country have united behind the Dairy Security Act provisions in the original farm bills that have already been approved by the full Senate and by the House Agriculture Committee. These stop-gap efforts don't even qualify as kicking the can down the road."

Kozak notes that if Congress had passed the 2012 Farm Bill as approved it would have ended direct payments, export subsidies and established "a voluntary risk management tool for farmers that saves the government money."

It was dairy policy that drove the farm bill extension into the fiscal cliff negotiated settlement. Worries that the permanent 1949 farm bill with its parity language would influence dairy prices caused a stir. While some were claiming the permanent law could double consumer milk prices, other economists and House members note that processors would not have been pushed to those higher prices so quickly.

However, the worry over $8 milk pushed the compromise along and for now maintains status quo for nine more months.

This wrangling over the farm bill and the inability to get something passed, whether the full bill or the elaborate compromise worked out by House and Senate Ag Committee leaders may raise concerns about the farm lobby's strength in Washington. It's a New Year and it appears the next step will be to write a 2013 Farm Bill - once the House votes on that fiscal cliff compromise.