Nov 8, 2018

Split Congress could be good news for farm economy

A farmer harvests soybeans in Owings, Maryland. (Photo: Mark Wilson via Getty Images)

The House flip could be a game-changer for the embattled farm bill, which must be renewed every five years, several policy experts tell Axios.

Why it matters: Major safety nets for farmers are in limbo while smaller agricultural programs have stopped receiving funding altogether, creating extra anxiety for farmers who are already reeling from tariffs and lower crop prices.

The 2014 farm bill expired in September, after the House and the Senate couldn't reconcile their differences.

  • The House wants work requirements for recipients of food stamps, and to allow unlimited subsidy payments to farms, according to Ferd Hoefner, an adviser at advocacy group National Sustainable Agriculture Coalition.
  • The Senate is opposed to mandating work requirements for food stamps, and wants stricter rules for which farmers get subsidies.
  • President Trump on Wednesday blamed Democrats for holding up the farm bill over worker requirements, but the GOP-controlled Senate did not include major food stamp changes in its version of the bill.
  • "[The farm bill] provides five years of certainty. It reduces risk... so that bankers can be more at ease in terms of extending credit to farmers," explains Tom Vilsack, a former U.S. Senator and Agriculture Secretary who currently heads the U.S. Dairy Export Council.
  • The broadest measurement of farm profitability, net farm income, has fallen 50% since the drought-driven peak in 2013.

While heavily-depended on programs like crop insurance aren't impacted, funding for 39 other programs was cut off when the current bill expired.

  • One example is the Foreign Market Development Program, which helps U.S. farm groups promote their goods overseas — key for corn, wheat, and soybean growers.
  • In a tense trade environment, the program is "increasingly important," and the lack of funding cuts off "vital market development resources," Kevin Skunes, president of the National Corn Growers Association, wrote in a statement.

House Republicans could have more incentive to negotiate before the new Democratic House is sworn in.

  • House Republicans may believe they'll "get a worse farm bill if [they] have to go back and rewrite a House bill under a Democratic chair of the House Agricultural committee," says Vincent Smith, an agricultural economics professor at Montana State University and a visiting scholar at conservative think tank AEI.
  • Rep. Collin Peterson (D-Minn.) is expected to lead the House Agricultural Committee — taking the reins from Texas Republican Mike Conaway. Peterson told reporters on Wednesday that a farm bill deal could be "possible as soon as next week."

Bonus scenario: If there's no deal, the current farm bill has to be extended before the end of the year, or risk reverting to 1940s-era law that requires commodity prices to increase. Were that to happen, the new Congress would have to start all over.

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