- Cullman, Alabama


January 3, 2013

'Dairy Cliff' Deal Sends Farmers Back to Square One on New Law

WASHINGTON — The fiscal-cliff settlement, which extends the most-recent agriculture law until September, is frustrating farm groups that spent 2012 pushing new programs and now must start again under a tougher spending outlook.

Congress's approval of a one-year extension of the farm bill that expired Sept. 30 heads off government-mandated higher milk prices. It also preserves subsidies that even farmers call wasteful and means plans approved by the House Agriculture Committee and full Senate last year are moot. Now back to square one, lobbyists and lawmakers may have an even tougher climb as cost-cutting rules the day, said analyst Mark McMinimy.

"The dairy cliff was the moment their leverage reached its peak, and that's passed," McMinimy, of Guggenheim Washington Research Group in Washington, said in an interview. "They're going to have to regroup and may come up with a little bit different strategy this year."

Farm bills, usually passed every five years, set policy and fund U.S. Department of Agriculture programs including food stamps and crop subsidies, which benefit companies such as Archer-Daniels-Midland and Bunge by encouraging lower raw-material costs. Farmers had record profits and exports under the most recent law, approved in 2008, while food-stamp spending has more than doubled since 2007 because of the recession and now accounts for about half of the USDA budget.

The vote Tuesday to raise taxes on the wealthy and postpone difficult debates on spending cuts also extended farm programs until Sept. 30, giving Congress time to craft a new farm bill this year. Without the fix, the government would be required to buy milk, driving up dairy prices to levels mandated by a 1949 law that took effect when the previous policy expired.

Still, many lawmakers and farm groups were disappointed. The top Republicans and Democrats on both congressional agriculture committees had pushed for an extension that contained elements of legislation they had backed last year, including a new dairy program intended to stabilize prices for the boom-or-bust industry. That plan, which House Speaker John Boehner blasted as worse than "Soviet-style" economic management, was stripped from the fiscal-cliff deal.

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