The giant New Year’s tax package rushed through the Senate on Tuesday morning includes a nine-month Farm Bill extension that forestalls any immediate spike in milk prices, but also represents a bitter blow for farmers who had hoped for long-sought changes in the dairy support program. In the final hours, Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) found herself pushed aside in favor of legislative language generated by the office of Minority Leader Mitch McConnell (R-KY). The upshot is a victory for Southern agricultural interests with the greatest stake in a costly system of direct cash payments to often already profitable producers. In the dairy arena, processors like Dean Foods Co. come out ahead, while the outcome is a major blow for the National Milk Producers Federation.
Jerry Kozak, President and CEO of National Milk Producers Federation, blasted the extension and the rejection of reform in dairy policy, “These stop-gap efforts don’t even qualify as kicking the can down the road. It’s little more than a New Year’s Day, hair-of-the-dog stab at temporarily putting off decisions that should have been made in 2012 about how to move farm policy forward, not offer more of the same.” Ironically, it was the threat of sharp spikes in milk prices if action on a Farm Bill was not taken that even got the issue included in the tax package in the first place. Lawmakers were willing to pass on tax hikes, but not willing to pass on $6 a gallon milk prices to consumers.
Almost 2 years of work by Congressional ag leaders on both sides was pushed aside in an effort to get a fiscal cliff compromise passed. “This package amounts to shoving farmers over the dairy cliff without providing any safety net below,” said Kozak. Ferd Hoefner, policy direct for the Sustainable Agriculture Coalition told Politico, “The message is unmistakable – direct commodity subsidies, despite high market prices, are sacrosanct, while the rest of agriculture and the rest of rural America can simply drop dead.” Kansas Senator Pat Roberts, ranking minority member on the Senate Ag committee, tried to put the best face on the situation, “I am pleased that the final agreement also includes an extension of the 2008 Farm Bill through the end of September 2013. While this extension is not the best possible bill, I believe it is the best bill possible at this time. It provides consumers certainty by avoiding the dairy cliff, and it provides certainty to our producers and their lenders as Congress continues work on a Farm Bill in 2013.”
The focus now moves to the House which is expected to take up the Senate passed measure on Tuesday. Vice President Joe Biden, who brokered the deal with Senate Republican leader Mitch McConnell of Kentucky, was expected to personally lobby House Democrats to get behind the arrangement when they met at noon ET. House Speaker John Boehner was scheduled to brief House Republicans on the agreement at 1 p.m. ET. Boehner’s deputy, Republican leader Eric Cantor of Virginia, said no decision had yet been made on whether the House would vote on the measure.