Congress Will Manage To Avert "Dairy Cliff"

A farm bill extension will be part of a Reid-McConnell agreement. If there is one.

Scott Olson / Getty Images

WASHINGTON — With one day left to avert the fiscal cliff, Congress looks poised to at least avoid going over the second-most prominent legislative ledge this year: The so-called “dairy cliff.”

This secondary cliff, unrelated to the fiscal cliff and stemming instead from the five-year farm bill that expired earlier this year, would see milk prices roughly double, rising a few dollars per gallon if Congress failed to extend the existing farm law.

It is now expected that Congress will approve such an extension. The question is what form it will take.

If Senate leaders Harry Reid and Mitch McConnell strike a deal to address the rash of tax hikes and spending cuts set to take effect Jan. 1, a nine-month extension of the farm bill will be included in that package, said a Democratic Senate source with knowledge of the negotiations.

Should Reid and McConnell not agree to a compromise, however, a nine-month extension, drafted by the agriculture committee leaders in each chamber, has also been introduced in the House, and would likely garner the votes to pass independently.

“If a new farm bill is not passed in the next few days, Agriculture Committee leaders in both chambers and both parties have developed a responsible short-term farm bill extension that not only stops milk prices from spiking, but also prevents eventual damage to our entire agriculture economy,” Agriculture Committee Chairwoman Debbie Stabenow said in a statement Sunday.

Less likely options to extend farm policy, which could be voted on by the House, include approving it the law for only another month, or approving only an extension of dairy price regulations.

In any event, Congress would again face a dairy cliff, as well as general uncertainty in agricultural markets, in the near term until a new five-year farm bill is approved — but there are many disagreements still to hash out.

In the House in particular, Republicans and Democrats have butted heads over the extent to which food stamps, also included in the bill, should be cut; meanwhile, conservative Republicans have held up the bill over concerns that it spends too much on farm subsidies, which farm-state lawmakers support.

Despite that gridlock, there was not serious panic among lawmakers that milk prices would be allowed to rise; an extension of the existing law was always a viable option. But the agriculture committee chairs hoped Senate and House leadership would accept a five-year bill over an extension, and thus pushed for a bigger deal for as long as possible.

Now, House Agriculture Committee Chairman Frank Lucas has said he plans to begin anew the work to remove those remaining obstacles to a five-year farm bill at the end of February.

In the meantime, a few provisions that might have been nixed from, or diminished in, a new farm bill will survive for at least a few months more, including direct payments to farmers to not grow certain crops.

“They’re the fucking zombies that never die,” said one Senate Democratic aide of the payments. “No one wants them. But they’re going to continue on.”

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