Trade promotion, dozens of other programs at risk as existing farm bill nears expiration

Key Points
  • The current farm bill is set to expire after this weekend, coming after a House and Senate conference committee failed to reach a compromise before the deadline.
  • That expiration impacts 39 so-called orphan programs because they have authorization or funding tied to the current farm bill.
  • They include a government-funded trade promotion program widely utilized by various agricultural sectors.
  • In all, the affected programs had estimated mandatory spending amounting to about $2.8 billion during the five-year farm bill.
Farmers hand pick sweet corn on in Olathe, Colorado.
Helen H. Richardson | The Denver Post | Getty Images

With the existing farm bill set to expire after Sunday and no deal reached by a joint House and Senate conference committee, it's likely the legislation will be taken up by a lame-duck session of Congress after the November midterm elections.

Yet the looming expiration has more immediate ramifications for 39 so-called orphan programs because they have authorization or funding tied to the 2014 Farm Bill. They include a government-funded trade promotion program utilized by various U.S. agricultural sectors, including some targeted with retaliatory tariffs by China and others.

Senate Agriculture Committee Chairman Pat Roberts, R-Kan., who chairs the House-Senate farm bill conference committee, said in a statement Friday that the focus is "on getting a conference agreement on the farm bill as soon as possible to minimize the impact."

"Time is getting short," said Kevin Skunes, a corn and soybean grower from North Dakota and president of the National Corn Growers Association. "If the bill expires, some funding for our export program called 'Foreign Market Development' will be impacted."

Another program that doesn't have baseline funding after Sept. 30 is for organic agriculture. Also at risk are certain bioenergy and rural business development programs as well as a program to assist military veteran farmers.

In all, the affected programs had estimated mandatory spending amounting to about $2.8 billion during the five-year farm bill, according to a Congressional Research Service report issued in May.

"While this total may be a relatively small fraction of total farm bill spending (0.6 percent of the $489 billion five-year total projection), the effect may be particularly important to specific farm bill titles and to the programs' beneficiaries," the report said.

Regardless, the USDA's big-ticket programs such as crop insurance as well as nutrition programs would still continue on after the current farm bill expires Sunday.

Both chambers of Congress passed a farm bill in June but major differences between the bills have led to delays in finalizing an agreement.

Faith activists hold signs during a news conference with faith leaders to 'urge lawmakers to reject proposed cuts to the Supplemental Nutrition Assistance Program (SNAP) in the Farm Bill' on Monday, May 7, 2018. 
Bill Clark | CQ-Roll Call Group | Getty Images

For one, the Senate's $428 billion farm bill didn't have stricter work rule requirements for food stamp recipients, or people participating in the Supplemental Nutrition Assistance Program (SNAP). The White House and conservatives in the House has pushed for the SNAP changes, but Democrats oppose tougher work rules for the government's food assistance program.

Farm subsidy reform, meantime, is another sticking point in reaching a compromise along with policy on land conservation programs. The House version of the farm bill eliminates the Conservation Stewardship Program (CSP), which is utilized by forest and farm landowners. CSP is the nation's largest conservation program with more than 70 million acres enrolled in the program, according to the USDA.

'Big Four' meeting

Agriculture committee leaders from both the House and Senate met Wednesday and issued a joint statement afterward reporting they had made "progress toward an agreement." The so-called Big Four — Agriculture Committee Chairmen Roberts, and Rep. K. Michael Conaway, R-Texas, and ranking members Sen. Debbie Stabenow, D-Mich., and Rep. Collin Peterson, D-Minn. — didn't meet in person Thursday and nothing was planned for Friday, according to congressional sources.

Even with orphan programs at risk, agriculture committee leaders are hopeful a solution will be found.

"Provisions in both House and Senate farm bills would address funding uncertainty for several programs going forward," Senate Agriculture Committee Chairman Roberts said in a statement Friday. The Kansas Republican added, "It is expected that this situation will be similar to previous experiences, including during 2012 and 2008."

The farm bill is usually renewed every five years, and the lion's share of the bill's funding is devoted to programs such as food stamps.

There's been a history of the legislative delays with previous farm bills. Sometimes the bills have lapsed for a month or more and led to temporary extensions.

Even if Congress votes for an extension of the current farm bill, however, agricultural executives say it won't replace funding gaps for the government's Foreign Market Development (FMD), or trade promotion program.

"Foreign Market Development is one of 39 programs that are below $50 million per year that won't be funded without a new farm bill," said Steve Mercer, a spokesman for U.S. Wheat Associates, a trade group that markets American wheat to international buyers.

Still, some lawmakers have suggested that the third leg of the USDA's massive emergency relief plan for farmers impacted by retaliatory tariffs could be used to cushion any FMD funding gaps. The emergency plan includes $6 billion in initial relief, including $200 million specifically for an Agricultural Trade Promotion Program. But that trade-related aid isn't scheduled to be allocated to participants until early 2019.

Organizations such as U.S. Wheat Associates receive funds from the $34.5 million FMD program to help develop, maintain and grow export markets. Other groups that receive trade promotion funding under the FMD program include the U.S. Meat Export Federation, U.S. Grains Council, American Hardwood Export Council and American Soybean Association.

'Double whammy'

"It's kind of a double whammy when you look at it," said Mercer, explaining that the industry is facing an approaching funding gap on top of the retaliatory tariffs imposed by two large importers — China and Mexico.

According to Mercer, China essentially stopped purchasing U.S. wheat imports in March and Mexico slowed imports of the commodity. "If we don't have this cornerstone funding program to limit those losses, we're really getting handicapped to get our exports back on track," he said.

But with midterms elections less than 40 days away and potential for political risk, there's a growing recognition that Congress will wait despite missing the Sept. 30 deadline.

"The mood in Washington is the real deadline is maybe not until December," said Andrew Walmsley, director of congressional relations for the American Farm Bureau Federation, a trade group for agricultural producers.

If Congress fails to agree on a new farm bill in December, though, Warmsley said the situation could get "daunting" and create uncertainty for the industry since it would essentially mean restarting the whole process for a new bill in 2019 with a new Congress.

Moreover, if Congress punts the farm bill into 2019 without an extension it could have a major impact on dairy farmers and also result in some programs reverting back to what's known as "permanent law," or rate structures based on legislation from the 1940s.

'Dairy cliff'

The USDA's Margin Protection Program for dairy — a financial safety net for milk producers — is authorized by the 2014 Farm Bill through Dec. 31, 2018. The industry is facing tough times due to low milk prices and rising production costs along with oversupply issues.

During a standstill on the federal farm policy in 2013, there were worries of a "dairy cliff" and predictions of milk prices soaring if the government's dairy policy reverted back to permanent law. Yet industry experts believe that's unlikely to happen this time around since Congress would face political pressure to help struggling dairy farmers with an extension of the farm bill.

In a statement issued Thursday, the American Soybean Association and its state affiliates urged "Congress to complete the next farm bill this year rather than consider an extension when they come back to Washington. A short-term extension would avoid the 'dairy cliff' at the end of December, but would mean starting the farm bill process over again with a new Congress and potentially new members and leaders of the agriculture committees."

The association added, "Faced with continuing low prices and a volatile trade environment, no one in production agriculture wants to see added uncertainty in the support provided through the farm bill. As a result, and if the farm bill isn't finished in the lame duck session, there has been discussion of possibly extending the 2014 Farm Bill for three years – beyond the term of the next Congress and hopefully to a more stable farm economy."