WASHINGTON — Farm bill negotiators, including Rep. Collin Peterson, said Tuesday that Congress won’t vote on a final deal this year, pushing action off until mid-January, when Congress returns from a holiday recess, at the earliest.
If it plays out that way, it’ll come well after a deadline meant, historically, to force lawmakers to get their farm bills done. On Jan.1, without a new law, 64-year-old agriculture policy kicks in with government-mandated dairy prices so high they’d be felt by consumers — the problem has been dubbed the “dairy cliff.”
But beyond a general sense of optimism about a final deal coming together soon, Peterson and his group had one definitive message on Tuesday: Fear not the dairy cliff, for those in charge of implementing it have said it simply won’t kick in next month at all.
What’s the ‘dairy cliff’?
Here’s why this has even been an issue: Since the 1950s, every time Congress has passed a farm bill they’ve done so on a temporary (five-year) basis while keeping the 1949 iteration of the law “permanent,” or what the law would default to if a new bill isn’t passed on time.
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The 1949 law includes a series of programs meant to prop up the price of commodities by asking the government to step in and buy up the products when prices fall too low. The “permanent” dairy price supports technically kick in on Jan. 1, and they’re high enough to force the government to buy dairy from producers at a much higher price than normal purchasers are paying now.
“In the short-term that would be a good thing for dairy farmers, you would think,” Minnesota Milk Producers Association Executive Director Bob Lefebvre said. “Except our consumers, we want to make sure they would continue to consume our products.”
And that’s where things would get dicey. If the government is offering a higher price for producer’s dairy — by some estimates, up to twice as much as the current market rate — normal purchasers would have to match that price, and pass it on to their consumers. Less than half the cost of a grocery store milk purchase is actually based on the cost of raw dairy, but it would still be enough to send prices up to $5 to $10 for a gallon of milk (that number varies depending on who you ask).
Permanent law would be painful and irritating to consumers if it were to kick in, and that’s kind of the point. The threat is supposed to serve as incentive for lawmakers to pass new legislation on time, University of Minnesota Extension Economist Kent Olson said.
“It’s a bit like why Congress put the sequester in,” he said. “Now it’s become this threat that it’s such a goofy law that Congress will pass a new one and rewrite the rules and not go back to the old rules.”
Vilsack’s decision
Technically, the secretary of agriculture can revert to the old rules as early as Jan. 1 if there isn’t a new farm bill by then.
But USDA Secretary Tom Vilsack has said he’s not going to do that. Vilsack agreed to hold off on implementing permanent law so long as Congress takes up a new farm bill when it returns to work in January, Peterson said Tuesday. But even if he were to begin the process, Peterson said it would take long enough to kick in that Congress would have enough time to pass a solution anyway.
“[Permanent law] doesn’t say the secretary is going to raise dairy prices, that’s not what it says. It says he is going to take steps to raise the price of dairy,” Peterson said. “But he isn’t going to do that for a while because his lawyers are not going to let him until they get everything worked out. He’s not going to do anything the month of January anyway; he’s not going to change anything in January.”
Even so, the threat of a “dairy cliff” has lead House Republicans to consider passing a month-long extension of current law to give lawmakers time to hash out a final deal. A vote on that plan could come before the House leaves town this week. Peterson, given his reasoning above, said he doesn’t think an extension is necessary, and Sen. Debbie Stabenow, who’s leading farm-bill negotiations, said the Senate wouldn’t take it up anyway.
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Producers: ‘Dairy cliff’ talk hurts confidence
The last time the government had to prop up dairy prices was during the 1980s, University of Minnesota dairy economics professor Marin Bozic said. Prices have been naturally high enough on their own since then to keep the government out of the game, but when congressional brinkmanship endangers the chances for a new farm bill, the “dairy cliff” pops up.
That’s what happened last December when lawmakers went until the wee hours of the New Year before passing a yearlong extension of farm policy, staving off the “cliff” along the way. Bozic said this year’s repeat performance feels a bit like the movie “Groundhog Day,” and Lefebvre of the Milk Producers Association said it hurts consumer confidence.
“It gets used as a leveraging tool and everybody likes to talk about it as a tactic to maybe force Congress to do something,” he said. “It certainly doesn’t help give confidence to dairy farmers or consumers every time it’s been brought up.”
Devin Henry can be reached at dhenry@minnpost.com. Follow him on Twitter: @dhenry
