Editor's Note: This story was updated 11:18 a.m. to include the letter from the GOP governors.
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OMAHA (DTN) -- Congress returns this week facing a Dec. 20 deadline to approve a new funding resolution to keep the government operating, as well as potentially pass a disaster package and a farm-bill extension before wrapping up the year.
Lawmakers will be negotiating the funding and provisions of a disaster aid package after the White House earlier proposed nearly $100 billion in disaster relief. At least some lawmakers want to include specific provisions to help commodity farmers who may not have been hit by a natural disaster but have experienced price collapses this year. (See, "GOP Senators Say Any Aid Package Needs to Help Farmers With Market-Related Disasters," https://www.dtnpf.com/…)
As far as fully funding the federal government, Congress is mainly looking at another short-term extension, known as a Continuing Resolution, that would avoid a shutdown. But the extension would shift most of the major funding decisions for FY 2025 to the new Congress and President-elect Donald Trump early next year.
GOP GOVERNORS WANT FARM BILL NOW
While Congress is looking at another extension of the 2018 farm bill, 17 Republican governors on Monday wrote House and Senate leaders calling on them to pass a new farm bill now rather than wait for 2025. Citing that agriculture "serves as the foundation of our economies," the governors stated, "this crucial industry has faced powerful headwinds beyond its control."
The governors pointed to inflation, input costs, natural disasters and the agricultural trade deficit as all having an impact on producers.
"Our nation's agriculture industry is in trouble and if meaningful support is not provided soon, the well-being of the nation is at risk," the GOP governors wrote. "Reauthorization of a farm bill and immediate assistance in the interim will allow farmers and ranchers to do what they do best -- provide for America and feed the world."
Governors on the letter were from Alabama, Arkansas, Georgia, Idaho, Indiana, Iowa, Louisiana, Mississippi, Missouri, Montana, Nevada, Ohio, Oklahoma, South Carolina, Tennessee, Utah and West Virginia.
Sen. Debbie Stabenow, D-Mich., the retiring chairwoman of the Senate Agriculture Committee, introduced her plan for a farm bill last month as Congress returned from break. Republicans criticized the proposal, though the House Agriculture Committee version of a new farm bill has been waiting floor action since it cleared committee in May.
An extension would likely run until Sept. 30, 2025. Lawmakers will then vow that they can surely get the job done if they just have nine more months to work on a new farm bill under a Republican-led Congress and the Trump administration. Trump signed the last farm bill at the end of 2018.
A lot of USDA programs expired at the end of September, when the last extension officially ended, but there is always an increased risk at the end of the calendar year without congressional action. If Congress fails to act, on Jan. 1, 2025, "permanent law" goes into effect, reverting to commodity programs written into law in 1938 and 1949.
Permanent law is also known as "parity" for dairy prices, as well as corn, cotton, rice and wheat. Each of those commodities would end up with price supports significantly higher than 2024 market prices. Other commodities such as soybeans and peanuts are not part of permanent law.
PERMANENT LAW AND DAIRY CLIFF
The "dairy cliff" is often mentioned as the biggest issue with permanent law. Under the law, USDA would be required to buy dairy products to help boost prices to the mandated levels of 117% higher than the current all-milk price. At current prices, around $22.80 per cwt, the mandated price for milk would jump to more than $49.43 per cwt. This would effectively drive private buyers of milk out of the market.
During the 2013 fight over the farm bill extension, the White House projected permanent law would cost $12 billion a year for taxpayers and double milk prices at the grocery store. The Congressional Research Service this year also estimated costs would be $10 billion to $12.5 billion.
"This level of intervention in the market would be expensive to the government, expensive for consumers, and disruptive to the marketplace by changing the available shares of fluid milk, butter, cheese and nonfat dry milk," the Congressional Research Service noted. "While farmers would be paid more, the disruption may jeopardize the market for dairy products."
OTHER COMMODITIES UNDER PARITY
Other commodities under permanent law are affected by parity prices and acreage allotments.
Corn would see a parity price that would offer farmers price support at $7.45 a bushel.
Wheat would see a parity price offering farmers $15.08 a bushel, but the policy also requires USDA to set acreage allotments.
Cotton would see parity prices paying out to producers at $1.59 a pound with acreage allotments also mandated.
For more information on the next administration, catch the DTN Virtual Ag Summit "New Administration ... New Markets?" on Dec. 5-6 from 9 a.m. to 11 a.m. CST. For more information and registration, go to https://dtn.link/….
Chris Clayton can be reached at Chris.Clayton@dtn.com
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