Last week, the House of Representatives defeated a Republican proposal to reauthorize the farm bill, which contains farm subsidies and the Supplemental Nutritional Assistance Program, also known as food stamps.
And so it’s time to talk about the “Milk Cliff.”
If the farm bill expires, the Department of Agriculture will revert to 1940s-era rules about how to support dairy product prices. This would force it to buy up dry milk, butter, and cheese until it gets milk prices to roughly double to $8 per gallon.
The threat of the Milk Cliff got Congress to include an extension of the old farm bill as part of January’s fiscal cliff deal. But that extension was only for a year, meaning the Milk Cliff looms again.
Of course, the farm bill is about a lot more than just milk. Here’s what else would happen if no agreement is reached, with guidance from the Congressional Research Service:
- Some big programs, including food stamps, probably wouldn’t be affected. Unlike most of the programs in the farm bill, the Supplemental Nutritional Assistance Program, also known as food stamps, doesn’t need to be reauthorized to stay in effect. This program accounts for almost 80% of spending in the farm bill. Congress would still need to appropriate money to fund SNAP, but that’s done separately through the appropriations process and would likely proceed even if the farm bill were tied up. Subsidized crop insurance also stays in place whether a bill passes or not.
- The milk cliff also comes with a honey cliff. As with milk, reverting to 1940s-era rules would force the government to buy up honey to drive up prices. On the bright side, instead of doubling, honey prices would only go up about 40%.
- Some farmers would get big windfalls from the farm bill lapsing. Aside from milk and honey, the government doesn’t usually buy up crops to raise prices. Instead, it effectively pays farmers to make them whole when crop prices fall below targets. If the farm bill expires, price targets for wheat, rice, and cotton would rise far above current market prices, meaning big payments to farmers producing those crops. No such luck if you grow sorghum, oats, corn, or barley.
- Other farmers would lose programs dedicated to their interests. Lots of crops have been added to farm subsidy programs since 1948, and farmers growing these crops would see their price supports go away. These are chickpeas, lentils, mustard seed, various oilseeds, peas, sesame seeds, sugar beets, and sugar cane. But because today’s agricultural prices are high, these crops are already selling above support prices set in the 2008 law, so these farmers wouldn’t be any worse off in the short term.
- Nothing would get reformed. Both the House and Senate farm bills reduce and restructure the subsidies that the federal government provides to farmers. They also change SNAP: the Senate adds new enforcement measures aimed at reducing fraud, while the House bill tightens eligibility requirements in a way that would take benefits away from about two million people. Making any of those changes depends on passing a new farm bill.
You shouldn’t worry too much yet: the farm bill almost never gets done on time. The last time a new farm bill got enacted before the previous one expired was in 1977.
The reauthorizations keep getting later: typically, the bills expire on September 30, and reauthorizations in the 1980s and early 1990s were completed in the fall, with only a few weeks of lapse. Since the Clinton Administration, they’ve been done in the spring, meaning we went six months with a lapsed farm bill. That’s worked since a new bill was in place by the time any crops got harvested.
Congress always acts sooner or later because the reversion to “permanent law” as written in the 1940s is so unacceptable. As CRS puts it, “The existence of permanent law thus likely forces Congress to take action, because inaction generally is considered to have unacceptable consequences—that is, reverting to a policy that almost everyone would regret.”
Avoidance of disaster is about the only thing that can get this Congress to move, and it’s the only reason we’ll get a new farm bill, sooner or later.
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