Farm Bill Extension Explained
Iowa corn field
by Aaron Riggs
And even more good news for farmers was the extension of the Farm Bill. The expiration of the farm bill would have meant cuts to farmer subsidies and a lot of uncertainty as farmer’s plan for next year’s crop. CRI’s Aaron Riggs explains what the extension means not just for farmers, but for all of us.
In simple terms, the farm bill allots subsidies to farmers in order to make food affordable for consumers and farming profitable for farmers. Congress voted on an extension of the farm bill Tuesday night.
“They passed a one year extension of the current farm bill that we’ve been under for the last four years,” says Bob Wells.
This means farmers can know what to expect for the year ahead as they make farming decisions in 2013.
“It gives the farmer and his banker direction that can make for better planning,” says Mark Jackson.
But since it’s only a one-year extension, it’s not ideal.
“The same questions we had going into 2012 are the same questions we have going into 2013,” says Wells.
Because farmers rely on programs like the farm bill to make long term decisions.
“And when decision making gets harder, the likelihood of profitability is also affected,” says Wells.
And for the consumer, an extended farm bill means affordable prices at the supermarket, especially for milk.
“part of the bill includes dairy subsidies and it prevents the price of milk going sky high to the consumer,” says Jackson.
Because when a farm bill extension expires, the original law from the 1930s takes over.
“So if you indexed it off of 1930s inflation milk would be like $16 a gallon versus what it is now,” says Jackson.
Beef prices, however, will still be going up due to farmers liquidating their herds last year as a response to the higher corn prices caused by the drought. Less supply causes greater demand and a higher demand means higher prices, an effect that might last for more than a year.
“A lot of people sold more than they would have in a normal year because of the drought, and we’re talking specifically about cows,” says Wells.
Wells says you can expect the price of beef in 2013 to go up 1% more on top of inflation. For CRI Weekly News, I’m Aaron Riggs.
As the farm bill debate continues into this year, you can voice your opinion on the matter by writing to your representatives in Washington or by joining a trade organization.
